Erickson Financial Solutions Blog
When is the Best time to Retire
1-minute video: When is the best time to retire?
When is the best time to retire?
The answer to this question is incredibly complex. Here we touch upon a few of the key issues.
One issue is how much and when will you spend in retirement. On the surface this may be a simple calculation, but when you factor in taxes, inflation, lifestyle choices, and potential health issues, it becomes less clear.
Another is issues is from where will you get the income to cover the expenses. If you have a pension, these figures may be fairly easily to calculated. Typically, pensions will not cover all of your needs especially later in life. So, you need to calculate how much you can expect your investments to generate in income whether in interest, dividends, or due to the sale of an assets. This is where this issue gets complicate since no knows just how well an investment will perform.
Mentioned above is health care cost. This is a growing issue as more Americans are living longer than before. Depending upon your current age, your life expectancy may exceed thirty years from the time you retire. That may mean you might work fewer years than you are retired. And many of you who are readying this article may live a decade beyond your life expectancy. Retiring too early can be a huge, irrecoverable risk.
Lifestyle issues can alter when you retire. Some people can simplify their lives by downsizing and abandoning the trappings of modern living. Others may want to enjoy the remaining active years they have. Either path will influence when you can retire.
Simply put, the decision to retire is one of the most complex, stress creating decisions you may ever make. There are the objective issues and the subjective issue that impinge on your choice. Make a good one.