Nobody wants to live their golden years in a dilapidated metal shack, snacking on cat food to make ends meet between Social Security checks. A common fear among retirees, in fact, is running out of money and not being able to sustain a dignified lifestyle. These five questions to ask yourself when deciding at what age you should retire will help you make a decision with confidence.
Do you have enough money? It's time to take an honest look at your post-retirement income. Check your pensions, your retirement savings accounts and what you can expect from Social Security. This is not the time to bust out the rose-colored glasses. It's time for brutal honesty. You'd be wise to sit down with a non-commissioned financial advisor — whose success doesn't involve selling you something — to go over retirement options. Keep in mind that delaying when you begin accepting benefits from pensions and Social Security will affect the amount you receive.
How long do you expect to live? The Social Security Administration reports that a man who turned 65 in 2011 can expect to live an additional 18-plus years. A woman of the same age is expected to live nearly 21 more years. Of course, those are just the averages. Individuals need to take into account family medical history and determine whether income from pensions and retirement savings accounts will be there if they outlive the average. You'd be wise to investigate options such as annuities, especially if you have a family history of longevity.
How is your health? One's health is a critical component in deciding when to retire. If you're in poor health and are not expected to live long, you may want to start receiving benefits early. Another key factor regarding health is health insurance. If your insurance runs out when you retire from your job, be sure to factor that in to the cost of retirement. Before retiring, contact your employer's benefits department and determine retirement health insurance options.
What are your family responsibilities? If others are depending on your income, make sure your retirement timing and reception of benefits takes that into account. Accepting Social Security benefits early, for example, affects the amount of income your surviving spouse receives if you die. Take a look at how your pension, annuities and other retirement savings will take care of your spouse and any other dependents before you decide when to retire.
What other income options do you have? It's common for individuals to live 20-plus years after retiring. Many use these years to supplement their income doing something they enjoy. If you can earn enough money to supplement your retirement income and that allows you to receive less money from retirement savings, then retiring a little early isn't a bad idea.