July 2023

It can be difficult to know when you’re ready to retire, but checking these seven boxes may be a sign that the time is coming.

Preparing yourself for retirement can be scary, as so many variables and questions leave timing up in the air and offer little to no confidence when it comes to selecting the perfect moment to quit your job and spend your time doing what you want to do instead of what you have to do. There are several indicators that may suggest you are on track to retire comfortably. While many savers and pre-retirees set concrete milestones and timetables, only a few of the important signs that you may be ready to retire comfortably have to do with your age. Here are some ways to know that you might be ready to leave the workforce.

1. You Have Adequate Savings to Cover Your Projected Lifestyle Expenses

The adequate amount of savings will be different for everyone, which is why it can be helpful to consult your financial professional as you make your way toward retirement. They can help you determine a retirement budget that suits your spending habits and desired lifestyle, as well as the longevity of your savings in relation to that estimate. It can also be important to consider that your expenses may rise in retirement, as you might work to check off bucket list items you’ve had for years. It’s all part of the planning process that will be unique to you and your goals.

2. You Are Debt-Free

Ensuring that you have little to no debt when you enter retirement can be paramount to your ability to live your desired lifestyle and have a secure post-career life. This could mean paying off credit card debt, tackling home loan bills or more. The problem with bringing your debt with you into retirement is that you stop working for your money and you start asking your money to work for you. While that’s the best-case scenario, it doesn’t always work perfectly in, for instance, periods of market downturns, where you may have to potentially turn to your savings for necessities.

3. You Have Secured Multiple Income Streams

In the modern retirement landscape, it can be helpful to secure multiple income streams that can provide different levels of growth and protection. For example, instead of relying solely on your 401(k), you can add other retirement investment accounts or insurance products that match your goals. Your financial professional should be able to help with this. Additionally, those extra income streams can be helpful if you decide to delay claiming Social Security to maximize your benefit.

4. Those Income Streams are Diversified Between Tax-Free and Tax-Deferred

Diversification of your retirement portfolio may not guarantee success in retirement, but it could position you to offset certain tax obligations depending on future circumstances and legislation. On one hand, saving vehicles, such as a Roth IRA, can offer tax-free growth and withdrawals. On the other hand, tax-deferred accounts, such as a traditional IRA, are funded with pre-tax dollars then taxed as ordinary income upon withdrawal. While this can present an opportunity for additional income streams, the tax landscape is ever-changing, potentially causing less certainty in how much you’ll have when you retire.

5. You Have Liquid Savings

The traditional recommendation for an emergency fund is somewhere between three- and six-months’ worth of living expenses, ideally providing you with liquid savings that could prove even more important when living on a fixed income. As we mentioned above, it’s a good idea to clear most if not all your debt prior to entering retirement, but having an emergency fund could help you protect yourself from car or home repairs, medical emergencies, part-time job loss and more.

6. You Have Hobbies

Your free time is set to skyrocket, and you’ll need a few ways to spend it to avoid immediately becoming bored. Some ideas include traveling, collecting, learning a new skill, picking up a part-time job, starting a business, golfing, volunteering and more. The possibilities are nearly endless, as long as you’re doing something you love and something that drives you to get out of bed in the morning long after the alarm means that it’s time to get ready for work.

7. You Have a Plan

It’s important to create your plan long before you choose to leave the workforce, and it should cover more than just decumulation and distribution of your various retirement accounts. It’s your comprehensive map that outlines ways you will cover your many expenses, including those that simply bring pleasure. Furthermore, though you’ll certainly want your plan to be malleable, it can be helpful to have an idea of how you’ll use funds, giving you a better grasp of how much you’ll spend and how much you’ll want to save prior to entering retirement.

The perfect time to retire will vary based on your unique circumstances, but we’re here to provide you with the education, tools and preparation you need. To learn more about your options, please call Bulwark Capital Management at 253.509.0395.

This article is not to be construed as financial advice. It is provided for informational purposes only and it should not be relied upon. It is recommended that you check with your financial advisor, tax professional and legal professionals when making any investment or any change to your retirement plan. Your investments, insurance and savings vehicles should match your risk tolerance and be suitable as well as what’s best for your personal financial situation.

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