7 Signs You’re Ready for Retirement (And How to Prepare if You’re Not)

If you've managed to pay off your debt and your kids have grown, you may find yourself dreaming of daytime walks along the beach with your spouse or that memoir you've been wanting to write.

Deciding to retire is a personal choice; no one knows better than you if you're ready to move on to this chapter of your life. Every situation is unique, but most people should reach the following milestones before retirement.

If you can't check off all the boxes, that's OK — we've also got some tips for how to get closer to achieving these goals.

If you've paid off your mortgage, credit cards, and other debt, you're in a better financial situation than most older adults. 

In fact, it's a growing problem — in the two decades before 2019, household debt for seniors over age 70 exploded by 543%, according to Federal Reserve Bank of New York data. It may be common to retire with debt, but you should still make every effort to become debt-free before you quit working. 

If you're not ready: Consider working part-time or taking a remote job in your line of work so you can still provide income to put toward your debt. Use a debt repayment strategy like the debt avalanche method, or use tools such as balance transfer cards, debt consolidation loans, and refinancing.

Ensuring you have enough to retire comfortably is an individual process. But if you've already started planning for retirement and stashed away 10% to 15% of your income in a retirement account every year, you're probably set up for success.

One rule of thumb is to have 10 times your salary saved by retirement age if you want to maintain your lifestyle. Another is to have enough to comfortably withdraw only 4% per year and adjust that amount for inflation over the next 30 years.

If you're not ready: Make sure you're maxing out your contributions to your retirement accounts in your final years of work. For tax year 2024, the contribution limit for 401(k) accounts is $23,000. You can also contribute up to $7,000 in total to traditional or Roth IRA accounts (if you're eligible based on income and over age 50).

If you're self-employed, you can stash your savings in a SEP IRA, which allows you to contribute up to 25% of your income or $69,000 for 2024, whichever is less. You may also need to reevaluate your budget to put more toward retirement.

Are you still supporting your adult children? Have you put enough time into estate planning? If you're in a leadership position, are your employees prepared to manage things without you? Having people who depend on you could impact when it makes sense to retire.

If you're not ready: Make some adjustments to gradually scaffold the independence of your adult children. You'll need to gradually decrease the amount of financial support you're offering while providing them resources to manage their money.

If people at work depend on you, consider training a replacement so you can feel confident leaving your role.

Most people become eligible for Medicare at age 65, but if you're considering retiring early, make sure to shop for health plans first, since you'll have to pay out of pocket. Unless you're planning to stay on your spouse's workplace retirement plan, you'll likely need to figure out a health insurance alternative for after you leave your job.

You'll also want to consider how you would deal with a diagnosis of a chronic condition or disability. Round-the-clock care can quickly become unaffordable — a private room in a nursing home facility costs an average of $8.821 per month. Make sure you're protected with long-term care insurance.

If you're not ready: Shop around for insurance coverage and determine how it fits into your existing budget. Will you still have enough to retire comfortably, or does it make sense to wait?

The COVID-19 pandemic made us all aware of the effects of social isolation. If you have enough people in your life to stay socially engaged after your social circle at work disappears, you may be ready to retire.

Your connections should include people your age, not just younger family members, and would ideally be located nearby.

If you're not ready: You may need to move closer to friends and family, join a weekly or monthly group that gives you time with people who have shared interests, or sign up for activities in your community outside of work.

Reaching retirement age doesn't necessarily mean giving up on your career goals.

Maybe there's a position you've always wanted to hold or a certification or accolade you've always wanted to receive. On the other hand, if you spend your time at the office daydreaming of your retirement and have completely checked out, that's probably a sign it's time to move on.

If you're not ready: You may be able to get more out of your career without working full time. Talk to your employer about what you hope to accomplish and work out a schedule that helps you transition into retirement. 

After years in the rat race, you might feel like you could nap for a century straight, but most people need something to occupy their time to feel happy and fulfilled. Traveling can certainly be part of your plan for retirement, but you should also add regular activities to your schedule.

Retirement is a great time to find a volunteer opportunity that allows you to give back in a way that is meaningful to you. You might also take up a new sport or form of exercise, learn a new skill or new language, or develop a creative project to keep you busy.

If you're not ready: Think about how you want to spend your time. Is there something you've always wanted to try, but parenthood or work got in the way? Maybe now's the time to test out a few of those ideas.

Retirement is an exciting time when you can pursue your passions and interests without feeling encumbered by the need to work and support your family. But before that, you want to check up on your retirement readiness.

If you have the luxury of choosing, make sure you're financially and emotionally prepared before you clean off your desk and submit your resignation.

You might not always get to choose the timing of your retirement. But if you're in a position to make a decision, evaluate where you're at and weigh your options first. With the right planning, your retirement could become the best years of your life.