So you think you are ready to retire
* have you paid off all your credit card balances?
* have you thrown the credit cards away?
* is your car totally paid for?
* are all your personal and business loans paid off?
* are your student loans paid off?
* is your house totally paid for?
If you are not able to answer yes to at least all but one of the above questions, then you are not ready to retire!
* what is the status of you 401K and your IRA accounts?
If you haven’t already sent for a printout of what your Social Security earnings are, please do so. You should start early in your working career to get this every couple of years to be sure you are being credited with all of your earnings. A word to the wise, I didn’t do that and had to have them locate approximately three years of my most current earnings in the last ten years that I worked.
I was in for a real shock, I had worked since I was sixteen and if it hadn’t been for my last couple years of work, where I earned over $20,000 a year, I would have been in worse shape than I am! This is another learning lesson for you ladies, get your college degree and earn as high an income as you can the last 10 years that you work before retirement! Only the last 10 years count towards your Social Security retirement, or at least that is how it was structured when I retired several years ago.
I am sorry to say that I didn’t plan ahead. I was like a boat without a sail and without a rudder. I tended to my family and when I divorced, concentrated on having enough money to meet the everyday needs of my children and keeping a roof over our head, food on the table and clothes on our backs. I didn’t put money away for MY retirement or even into an everyday savings account for that matter. There just wasn’t enough left at the end of the month to do that.
You will also need to decide if you are going to take early retirement, where you actually will get a reduced amount from your Social Security and be restricted on the amount of money that you can earn each year until you get to the actual age that you are eligible for your full Social Security payments.
Do the Lifestyle Experiment
Take the amount of money that you would have to live on from your Social Security only and attempt to live on that amount from your present income. Try to do this challenge for at least six months. Can you do it?
Do you have to dip into the other money that is left from your regular salary to meet your monthly obligations? If you do, then that is what will happen when you retire. You will have to also dip into your 401K and your IRA funds to make ends meet.
Perhaps you are trying to keep your 401K or your IRA retirement savings intact, to use for that trip or cruise that you have always wanted to take or to use to have a nice buffer for unexpected expenses.