How to Know When to Retire


How to Know When to Retire. Knowing when to retire is a very difficult decision. Lots of factors come into play, and it doesn't just affect the person retiring. Something this important affects the retiree's family, as well. Here are some things to think about when considering retirement.

Search the Internet for retirement tools to help you find out if retiring now is the best answer. A retirement calculator can help you run scenarios. Go through a few different time scenarios to get the best prognosis of when you should retire (see Resources below).

Keep your theories traditional. Don't postulate that stocks will sky rocket and you can get a big time cash out. This will help leave room for error, so you won't be disappointed when investments don't give you as high of a return as you'd like.

Remember that you will receive social security. The social security program is facing financial issues right now, but it's a program where today's taxes will pay for today's benefits. If you are under 55 years of age now, assume that you will not be getting as much as retired people get today. Run your retirement scenarios accounting for a 25-percent to 75-percent cut in social security and see where you are at.

Handle your expenses by eliminating or reducing debt. It is common for people these days to spend 30 percent of their income on services to get rid of debt. Have aspirations to pay off your credit card in full each month.

Obtain a surplus, which means that your expenses are less than your income. Once you have gained a surplus, either put it into savings or into a 401K plan through your employer.

Invest in things like stocks and mutual funds wisely. Don't use investment services that require commissions and large fees in order to invest. Put money into investments yourself and make decisions on your own to avoid fees. This will add 2 percent to your investments and help you be able to retire earlier.

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