8 Factors that’ll Help You Check Your Retirement Readiness
It is important to start planning your retirement early on. Ideally, you must begin saving for retirement as soon as you start earning. You might be contemplating about quitting that high-paying job at the age of 58, or you might be planning for a future where you would want to retire early. Retirement is when you can finally begin to live your best life – after all, your retirement years are known as the golden years!
But should you retire early? If not, what should you do? Given below are 8 factors that will help you to check whether you are ready to take the plunge and know how to retire early.
- Retirement Age: You can decide a specific age when you might want to retire, and then figure out the amount of funds you will require for your retirement based on monthly expenses. To calculate that you can go online and use a retirement planning calculator.
- Test your Retirement Fund: If you want to be truly sure whether you will be able to sustain on your retirement funds, you can allocate a budget and try living on that fixed limit for a year or so. This will give you the idea whether you can sustain on your fixed retirement budget or whether you need to save and invest further.
- Career Goals: You might need to ask yourself, are you on track with your career goals in life? Do you see your monetary goals being achieved by the time you retire? Because if you want to voluntarily quit your job and retire at any particular age, you might need to consider these factors. You will also need to decide how you will utilize all the time you will get post your retirement, because lack of a purpose can be daunting for many individuals.
- Unexpected Job Changes: You will also have to keep in mind the possibility that unexpected job changes might occur on the way. What if you have to quit your job for some reason, or what if you are laid off from your job? You need to gauge whether your finances will sustain you through these times, and give you at least a passive income until the time you get back on your feet. Or else you might have to utilize some money from your savings to help you sail through these times.
- Investments: Check whether you are investing enough for your retirement. Very often you might prioritize other goals over your retirement goals. To gauge whether you’re investing the right amount of money, you can use a Retirement Calculator. Alternatively, you can increase your existing investment in your chosen pension plan to gain substantial returns in the long run.
- Debt Repayment: If you have a lot of EMIs to repay, there are fewer chances of you saving sufficient funds for your retirement. You need to cut down on other expenses, strategize a debt repayment timeline and stick to it, so that you can pay off your all your outstanding loans at least 2-3 years before retirement.
- Retirement Plans: Have you planned what you wish to do after retirement? Retirement will mean many changes in your life, and you will have to redesign your life. You can begin figuring out what you might do in all the free time, rediscover your hobbies and keep yourself mentally busy and engaged.
- Passive Income: You must have a passive income stream both before and after your requirement. Having a passive income is a good sign that you are financially stable and independent. Figure out ways that you can create a passive income for yourself while you are working, and post your retirement.
A majority of people don’t think about their retirement benefits, but it is crucial to check and plan towards being retirement-ready. Work towards being retirement ready using our guide and get your life goals done.