Retirement is a big decision. Oftentimes, it’s hard to know if you’re ready. For most people, it’s a question of whether they have enough money to make ends meet. But there’s also the question of what you’re going to do after you retire. How will you fill the hours of your day when you’re no longer at your 9-5? 

These decisions can be stressful. As a Christian, you might also wonder what God wants you to do. Does he want you to keep working past retirement age and influence his kingdom in that way? Or use your golden years to spend more time with your family? 

So, how will you know when to retire? At Clear Money Path, we hear these questions from our clients all the time. The short answer is it looks different for everyone, but what’s most important is that you have information to guide you through the process. A support system is your first step in knowing when to retire. This blog is designed to help you make the right decision for you and your family so you can feel financially, emotionally, and spiritually ready for retirement.

How to Know When to Retire Financially 

The first question people often ask when making decisions about retirement is: do I have enough money? And that’s a fair question to start with. When you retire, you don’t have a steady income to rely on. Instead, you have the money you’ve built up in your nest egg, plus Social Security benefits (depending on your age), which can be an unreliable source of income. 

You might think that you have enough money in your nest egg to retire, but retirement also comes with a lot of unexpected expenses like: 

  • Medical bills. As you and your spouse age, you might have more medical bills for surgeries or illnesses, and will no longer be covered under employer insurance. 
  • Taxes. You will still have to pay taxes on your income in retirement, and they can become more complicated when you use funds from your retirement accounts.
  • Inflation. As we’ve seen in the last year, inflation can wreak havoc on your retirement funds. It’s important to plan for worst-case scenarios when you plan for retirement.
  • Long-term care. If you end up moving into assisted living or need extra care in your retirement, you will have added expenses that you potentially didn’t plan for when you retired as a healthy 65-year-old. 

On top of these expenses is also the general cost of living, home improvements or adaptations, and expenses for any travel you want to do in retirement. 

Are You Financially Ready?

There’s no one way to determine if you are financially ready for retirement, but a financial advisor can use tools and algorithms to predict your level of financial readiness. Here are a few other benchmarks you can use to make informed decisions about when to retire: 

  • You are debt free. You’re no longer paying off college debt, cars, homes, or significant amounts of credit card debt. 
  • You are no longer supporting children or parents. Your children are financially independent of you, and you are not currently caring for elderly or infirm parents. 
  • You have a budget. You’ve stuck to a budget for many years and can adapt that budget for retirement. 
  • You have reached retirement age.
    • You’ve waited until your Full Retirement Age (FRA) in order to qualify for Social Security so you can receive full reiterate benefits. 

Creating a Retirement Budget

Positive delighted nice woman hugging her husband and smiling while looking at the budget for retirement.

Even if you think retirement is a few years down the road for you, it’s never too early to start thinking about your retirement budget. As we said before, your stream of income will change after retirement depending on how much you have saved. You’ll no longer have a monthly income from a job. The budget you and your family use now probably won’t be effective after you retire. Here’s what we recommend you do to create a retirement budget: 

  • Estimate your retirement income. A financial planner can help you determine how much money you will have to spend each month in retirement.
  • Calculate expenses. List approximate expenses for groceries, travel, leisure activities, and other cost-of-living expenses you expect in retirement. 
  • Leave room for emergencies. Every budget has an emergency fund that shouldn’t be touched unless a big life change happens—that goes for a retirement budget as well. 
  • Consider your goals. What do you want to do in retirement? Travel more, or spend time with family? Give generously to organizations you love, or save for big purchases for yourself or your loved ones? Write down your goals and talk about them with your financial advisor. 
  • Try it out and adjust as needed. If your budget isn’t working for you, consult with your financial planner to determine what needs tweaking. 

Our team at Clear Money Path uses the #1 financial planning tool in the industry to help our clients make wise budgeting decisions in retirement. 

How to Know When to Retire Securely

Stepping into retirement is a huge change, financially and emotionally. When you start out, it’s hard to know if you’re prepared for the next few decades of your life. That’s why it’s important to have the right retirement investments now so you have income security later. 

Whether you have a retirement account through your employer or have created one yourself, it’s important to have a diverse portfolio of investments so you can rest assured that you’ll have enough income for your retirement years. Below are a few options of investments to have in your portfolio. 

  • Annuities: An annuity is a contract between you and an insurance company.  An annuity might be a good fit if you want to put off paying taxes while accumulating assets before retirement, or if you desire guaranteed income during retirement.  Given there are many different types of annuities, it’s best to review the costs and benefits with a qualified advisor or fiduciary.
  • Fixed income investment:
    • This is the payout from the dividends and interest of lower-risk investments such as bonds, certificates of deposit (CDs), or money-market funds. This provides a good supplement to Social Security (which only covers about 40% of your income post-retirement).
  • Income-producing equities: Having a diverse portfolio of stocks can provide dividends and consistent payouts. However, not all companies reliably pay out dividends and stock prices can be more volatile over the short term.  

Since all of these options have both benefits and drawbacks, it’s important to have a diversified portfolio that has elements of each of these. Find out more about how we do this at Clear Money Path. 

How to Know When to Retire Emotionally

Mature man sitting on the deck of his yacht enjoying the day sailing on the open ocean on a sunny afternoon. Enjoying retirement life.

While financial preparation is top-of-mind for many soon-to-be retirees, so is the forthcoming shift in their lifestyle and daily routine. When you stop going to your 9-5 job, your schedule shifts significantly. And if you don’t consider what that could mean for your well-being, you might not be fully ready for what retirement will bring. 

Establish A New Routine

Several studies show that mental and physical health declines rapidly after retirement. In fact, many retirees wish they’d worked longer, or didn’t feel prepared for retired life. Here are some common feelings that recent retirees experience: 

  • Loneliness. More and more, people are finding camaraderie with their coworkers on a deeper level. When you leave a job behind, you also say goodbye to coworkers you enjoy seeing every day. 
  • Boredom. When your day job no longer fills your week, you have to find something else that does. 
  • Purpose. After people leave their jobs, it’s common for them to lose their sense of purpose. Even Christians, who know their value is rooted in Christ, struggle with this. 

As Christians, we know that God created us for a purpose, and to do the work He prepared for us to do. That means it’s totally normal to want to continue to work if you enjoy your career! However, retirement is also a great opportunity to find new ways to glorify God and advance the kingdom. Here are some examples.

Get Involved

Now that you have more time on your hands in retirement, you can find more opportunities to volunteer in your community. Your time is valuable to so many organizations, and it will give you something to look forward to each week! Find a cause you care about and look for opportunities to serve, whether that be at a food bank, animal shelter, or performing arts organization. Nonprofits always look for volunteers to do administrative work or advocate for them during community events

Retirement is also a prime time to get more involved in your church. Ask your pastor or leader in your church where you can be of most help, and where you could volunteer that aligns with your gifts. 

Discover New Hobbies

Is there a hobby you’ve always wanted to try, but never had the time to do it? Retirement is the perfect time to try new things or do more of the things you love. For some, this includes more outdoor activities like hiking or fishing, while others take up more home improvement projects or crafting. 

Spend Time with Family

Retirement can quickly become lonely or isolating for some, especially if their spouse has not yet retired or has passed away. But retirement is a great opportunity to spend more time with your family—offer to host a meal or watch the grandkids for a day. With more time to travel, you’re also able to visit family who may live far away. 

Plan With Confidence

In this blog, we covered some of the financial and emotional factors of knowing when to retire. But whenever and however you decide to retire, it’s important to have someone in your corner to help you manage your finances God’s way. At Clear Money Path, we introduce our clients to Biblically Responsible Investing, which provides an ethical portfolio of businesses of all shapes and sizes. If you’re curious to see how Clear Money Path can help you pave the way to retiring and continuing to serve God’s kingdom, schedule a call with us today! 

Information presented does not involve the rendering of personalized investment advice, but is limited to the dissemination of general information on products and services. This information should not be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein.

Information presented is believed to be factual and up-to-date and was obtained from sources known to be reliable. It should not be regarded as a complete analysis of the subjects discussed.  

All expressions of opinion reflect the judgment of the author as of the date of presentation and are subject to change.Clear Money Path is registered as an investment adviser with the state of Missouri. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements.