Deciding When to Retire: When Timing Becomes Critical

Summary

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Deciding when to retire may not be one decision but a series of decisions and calculations. For example, you'll need to estimate not only your anticipated expenses, but also whatsources of retirement income you'll have and how long you'll need your retirement savings to last You'll need to take into account your life expectancy and health as well as when you want to start receiving Social Security or pension benefits, and when you'll start to tap your retirement savings. Each of these factors may affect the others as part of an overall retirement income plan.

If you hope to trade a full-time job for running your own small business or launching a new career after you "retire," you might be able to lay the groundwork for a new life by taking classes at night or trying out your new role parttime. Testing your plans while you're still employed can help you anticipate the challenges of your post-retirement role. Doing a reality check before relying on a new endeavor for retirement income can help you see how much income you can realistically expect from it. Also, you'll learn whether it's something you really want to do before you spend what might be a significant portion of your retirement savings on it.

Pension plans now are allowed to pay benefits when an employee reaches age 62, even if the employee is still working and hasn't yet reached the plan's normal retirement age. Phased retirement can benefit bouY prospective retirees, who can enjoy a more flexible work schedule and a smoother transition into full retirement; and employers, who are able to retain an experienced worker. Employers aren't required to offer a phased retirement program, but if yours does, it's worth at least a review.

According to a National Vital Statistics Report, people today can expect to live more than 30 years longer than they did a century ago. According to the Bureau of Labor Statistics, by 2012 workers age 55+ will represent almost 20 percent of the U.S. workforce, and many employers are forecasting an eventual shortage of skilled workers.

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Extract

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Deciding When to Retire: When Timing Becomes Critical

Deciding when to retire may not be one decision but a series of decisions and calculations. For example, you'll need to estimate not only your anticipated expenses, but also whatsources of retirement income you'll have and how long you'll need your retirement savings to last You'll nee...

See the full content of this document

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