Once upon a time, the American dream meant owning a small piece of land with a house and picket fence, taking a modest vacation in the family sedan, and saving enough money to send your children off to college. How times have changed! (Living comfortably can be easy if you follow a simple plan. For additional reading, see Stretch Your Retirement Budget.)
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For the 76 million Baby Boomers - people born in the United States between 1946 and 1964 - the American dream has shifted dramatically and, for most, points to one goal: retirement. But how do you know when it's time to leave the work force? And, more importantly, are you really ready?
Probably the biggest question one asks before retiring is, "Can I afford it?" Your house is paid off and you have little or no outstanding debt (car loans, credit cards, etc.). But will you have enough to live comfortably during your retirement years?
Most banks and financial institutions provide retirement calculators to help put money issues in perspective. They take into consideration aspects such as one's age (and at what age you'd like to retire), current savings and income (including expected rate of return for investments, pensions, and Social Security benefits), current and anticipated expenses and estimated inflation numbers.
When all is said and done, conventional wisdom estimates that one will need well over 50% of his or her current annual income to live at the same or similar level as when you were working. (Make sure you can reach your retirement goals. Read Retirement Savings Tips For 45- To 54-Year-Olds.)
Retirement is not only about the finances. Jim Nash, PhD at Montclair State University in New Jersey, thought he was ready to retire two years ago. He had put in 35 years as professor of the English department and had sufficient savings to put his career behind him. But, he said, after announcing to the school he was leaving, he had second thoughts.
"I got in my car that last week of classes and thought, 'This is the last time I'll walk through this lot, past these trees, across this street,'" said Nash, who changed his mind so late that his class assignments had already been given to other professors for the following semester. He wasn't ready to leave his students, specifically the writers in his graduate nonfiction class, who "were so talented, dedicated, and intense it made me worry that I would never work with people like that again," he said.
He needed a few more semesters to fully appreciate all the things he really wanted to do upon retiring: spend more time with family and loved ones, travel, write and exercise more.
"My work was engaging and satisfying… and endless," said Nash. "Besides, apart from my teaching, I was dragging a comet's tail of unfinished and almost abandoned things behind me."
He retired nine months ago, finally ready to take the next step. (Find out the best way for you to plan your later years, in Which Retirement Plan Is Best?)
Making Plans: Volunteer
Once you retire, it doesn't mean you suddenly don't do anything. Before you're ready to retire, you'll need to make plans to fill your time once you leave the workforce.
Is a community organization or charitable cause calling your name? Do you find yourself spending just as much time in volunteer activities as in your job? If so, this may be a signal that you're ready to leave the workforce and take up more philanthropic ventures.
Volunteering, which may consist of any service from helping in a food pantry to coaching your child's soccer team, is a wonderful way to stay involved, feel productive and engage in activities that there simply wasn't time for when working full time. More than 63 million Americans volunteered in their communities in 2009, contributing approximately 8 billion hours of service. (Don't miss out on your best years. Read Five Retirement-Wrecking Moves.)
Making Plans: Travel
Many of us would love to "see the world", but travel is often curtailed by a busy work schedule or other obligations such as raising a family, paying a mortgage, etc.
Now that the kids are grown and you've paid off those major bills, that cruise in the Mediterranean or excursion to the Great Wall is a definite possibility. If the "pros" have outnumbered the "cons", it's time to call the travel agent. And why not? You've earned it.
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Ready to Relax
"Chill out" was the mantra for the '60s generation. Maybe you find yourself revisiting that notion more often than you used to. As an English professor, Jim Nash spent his career reading and writing but still felt a void. He wanted to read "War and Peace" for years, but never did. "I haven't gotten very far into it yet, but I do spend an hour or so with the [New York] Times almost every day - a real luxury," he said.
When your to-do list includes things like taking a nap every afternoon, starting a vegetable garden or going to a ballgame or movie with your grandkids, you're ready to pack up your stapler and start the next chapter of your life.
The Bottom Line
Leaving the workforce is not easy for everyone. For some, it may never be an option. But if your priorities have changed, your finances allow it and your heart drives you in that direction, then you're probably ready for the "Big R." (Find out if you'll be able to have a comfortable retirement, in Will Your Retirement Income Be Enough?)
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