When Should You Retire? Questions to Ask to Set the Date

The following is adapted from the book, Keen on Retirement — Engineering the Second Half of Your Life by Bill Keen.

If you’ve reached an age when many of your peers are retiring, you may wonder if the time is right for you too to put an end to your working days. The question of when to retire is one that plagues many, but it’s not easy to answer.

Everyone is different in terms of their ability and their desire to stop working. If you’re on the fence, here are five questions to ask yourself that may help you make a final decision.

#1: How Old Are You?

Your age can be a help in deciding whether or not it’s time to retire. If you are well past the age when most of your friends and colleagues have stopped working — say, in your 70's — you are probably a good candidate to at least consider retirement, after taking in the other factors below.

Theoretically, you can retire at any age, although for most people, being financially ready, which we’ll discuss in a moment, is a deciding factor. This overlaps with the age issue because you can’t begin taking Social Security until age 62. Many people need this extra income in order to afford retirement. But Medicare doesn’t kick in until 65, so some people advise holding out until then.

Of course, you can start withdrawing money from your IRA at 59 and a half without a penalty, and under certain circumstances, you may be able to take funds from your work retirement plan as early as age 55. If those funds are strong enough to see you through until Social Security and Medicare commence, you may be lucky enough to retire on the early side.

#2: Are You Tired of the Treadmill?

Many people love their jobs, and some professions are easier to continue as an older adult than others. If you have a relatively sedentary career or work from home, you may find you can work well into your 70's or even later.

But other people don’t enjoy their jobs, which are simply a means to make money, or they grow tired of the constant sacrifices they must make to family and hobbies in order to keep working. Work can become a significant stress, which can impact your health and well being. It may not even be your job that’s so demanding; it could be your work commute or your hours that drag you down.

Usually, people sense a kind of crossover point at which work is no longer worth it, even for the opportunity to make more money and save for another year or two. If you can afford to retire, then it may be time to make the switch.

#3: Are You Being Squeezed Out at Work?

Some people would love to work until they physically cannot anymore. They love their careers and the people they work with. But management may not love them back.

Sadly, there are employers who don’t value the wisdom, expertise, and loyalty of older workers. They look at the bottom line and see an employee who is costing them money with a high salary and expensive benefits. In their minds, swapping out the senior employee for a younger model is the solution.

Companies do this in several ways. They may manage employees out, making their jobs so impossible and miserable that they have no choice but to leave. Others may offer an enticing buyout on a company pension, giving a lump sum that’s often less than the total of what the employee might earn with monthly payouts over time.

If this happens to you, it is smart to talk to a financial advisor about a pension buyout. There are pros and cons to this approach that vary with your unique economic situation.

#4: Have You Discussed Retirement With Your Spouse?

Your spouse or partner’s opinion counts when you’re considering retirement, especially if they will suddenly have you home with them all day. Some new retirees don’t know what to do with themselves and drive their spouses crazy in the early phase of retirement.

If your spouse is still working, retiring before them, when they thought retiring together was the plan, may create friction. The lesson here is to discuss everything well in advance and come to a verdict together. Retirement can be tricky enough to navigate without having marital conflict on top of it!

#5: Can You Afford to Retire?

The affordability of retirement is often the deciding factor for many people, but it doesn’t have to be if they plan early enough (usually decades), so money isn’t an object. But if you’re not sure if you can afford to retire, there are a few additional questions to ask.

How long do you think you’ll live? If you have a health condition, your need for funds may be vastly different from someone who is still in optimal health. This question should likewise be extended to your spouse if you’re married.

Could you afford to live on Social Security alone? Depending on how much you’ve put into the system, you might be just fine without a huge supplemental retirement account.

Could you increase your assets and/or reduce your expenses to live on less? Selling your home and renting a residence or downsizing an upscale lifestyle might mean the difference between continuing to work and retiring with ease.

Technically, and from a purely financial perspective, the answer to the question “When is the right time to retire?” is “Never.” You could always keep working and saving and not worry about having to live off savings and Social Security. But for most people, this isn’t a realistic option.

Hopefully, you’ve done some planning in advance to facilitate retiring when it’s best for you, not just when you can afford it. The sooner you start creating your blueprint for retirement, the more likely you’ll be able to retire how you want and when you want.

For more advice on deciding when to retire, you can find the book, Keen on Retirement on Amazon.

BILL KEEN is the founder and CEO of Keen Wealth Advisors. A childhood marked by financial hardship drove Bill at a very young age to learn about saving and investing so he could one day support his family. That desire has fueled Bill throughout a career that includes providing commentary for national media outlets and co-hosting the long-running Keen on Retirement podcast. Bill is a proud board member for Angel Flight Central, a volunteer non-profit organization that provides charitable flights for healthcare and other humanitarian purposes. Bill and his wife, Carissa, reside in the Kansas City area.