From a purely financial perspective, the best time to retire is ... never!
That's a little joke I tell clients when the subject of timing their retirement starts to pop up. But there is some truth in this! If your sole retirement focus is money, then you shouldn't retire. You should keep working, earning, saving, and investing so that your nest egg keeps growing and growing for ...
What good is that nest egg if you're not going to use it to live the happiest, most fulfilling, most exciting, most surprising retirement you can dream up?
The successful retirees we work with at Keen Wealth aren't necessarily the folks who head into retirement with the most assets. It's retirees who are filled with the most purpose. Discussing these questions with your spouse and/or financial advisor can help you zero in on that purpose, and the best age for you to retire.
1. What do you get from your work that needs to be replaced in retirement?
Even if you don't love your job, work fulfills basic economic, social, emotional, and mental needs. Retirement usually means you've got the economic part covered. Finding ways to cover your other bases is an essential part of your retirement blueprint.
Start by asking yourself three questions:
- What aspects do you most enjoy about your current job? Again, you don't have to work your dream job to enjoy the camaraderie of your team, problem solving, helping customers, leadership, and responsibility.
- What will you miss least when you leave this work? Waking up at 5AM. The two-hour roundtrip commutes. Endless meetings. Grinding for new clients and more sales. A know-it-all boss who won't listen to your ideas. Slacking coworkers who slow down your team. The day after you retire, it's all gone! Imagining your job without the hassles can help you to pinpoint and appreciate the good things you want to incorporate into your retirement schedule.
- What would your ideal scenario look like after you leave this job? List everything that you've been squeezing in around your 9-to-5 all these years: hobbies, interests, trips, sports, continuing education, visiting family more often, coaching your grandkid's baseball team. Also think about things you've never done before, but always wanted to try. The longer the list, the more you'll have to work with when designing your new retirement schedule.
Once you've answered these questions and set some short-term and long-term retirement goals, you can sit down with a financial advisor to start working on using your money to achieve that purpose.
2. How will you practice your ART?
Does planning ahead mean you're going to get retirement right the first time? Of course not!
Plenty of weekend golfers head into retirement determined to play every day, work with a coach, and get their handicaps down. And then a month later, they realize that weekend golf was more fun.
A retiring CEO might think she'll enjoy a full week of volunteering or working part time. But after a few frustrating shifts, she realizes how much she valued autonomy and leadership responsibilities.
And I'm sure many couples who planned to see the world in retirement have scaled back their vacation plans in the last couple years because they've found extensive travel to be more of a hassle than a joy.
If you think about the money side of your financial plan as the science, what you do with that money to achieve your purpose is the ART: Activity, Relationships, and Time. Finding the right balance between the things you do, the people you care about the most, and the way you structure your weeks without full-time work is almost always a process of trial and error for new retirees.
The key is to learn that those errors can be fun too. Play a few rounds of pickleball. Don't like it? Give tennis or bike riding a shot. Have you always dreamed of moving to your favorite vacation destination? Take an extended vacation and you might discover shorter stays are long enough. If volunteering at a local nonprofit doesn't scratch that giving itch, maybe you want to talk to your advisor about starting your own family foundation.
Rather than worrying about your retirement schedule, have some fun tinkering with it, and the journey will be just as fulfilling as the ultimate destination.
3. What are some key ages in your retirement timeline?
Once you have a rough draft of the first two pieces of your retirement blueprint, you and your advisor can start refining your retirement timeline. And at this point in the process, age can be an important factor. For instance:
- 59 ½ A good place to start thinking about early retirement goals, because you won't be penalized for making withdrawals from retirement accounts.
- 62 You're eligible for Social Security. Of course, the longer you wait to take Social Security, the larger your eventual benefit will be. But some folks need these benefits to meet an early retirement goal or to navigate an unexpected early retirement.
- 65 This is when you become eligible for Medicare. If you retire before 65 and you can't jump on a working spouse's plan, you'll need to purchase health care from your state's exchange or pay for COBRA to cover a short-term gap.
- 67 Full retirement age for anyone born in 1960 or later, which is when you can receive your full Social Security benefits.
- 70 Keep working past 67 and don't take Social Security, and your benefits will continue to grow until age 70.
- 72 The age at which you have to start taking annual required minimum distributions from your retirement accounts.
Planning for your best retirement.
Picking the best time to retire is a decision that's as personal as it is financial. Our comprehensive planning process at Keen Wealth will help you keep both in sync. Call us up and let’s start working on your ideal retirement timeline.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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