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, and no one knows better than you if you’re ready to move on to this chapter of your life. But there are a few things you should handle prior to retirement so you can maximize your enjoyment of this new stage.

Every situation is unique, but most people should hit the following milestones before entering 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 prior to 2019, household debt for seniors over age 70 has exploded by 543%, according to data from the Federal Reserve Bank of New York.

It may be common to retire with debt, but you should still make every effort to become debt-free before you quit working. An exception might be if you can comfortably afford to pay off your debts from your retirement savings and still have plenty leftover for your expenses.

If you’re not ready: Consider working part-time or taking a remote job in your line of work. This will help you transition slowly into retirement while still providing income to put toward your debt. Use a debt repayment strategy like the debt avalanche method, or take advantage of tools such as balance transfer cards, debt consolidation loans, and refinancing to get out of debt faster.

Ensuring you have enough to retire comfortably is an individual process — you’ll need to consider your desired retirement age, lifestyle, and potential longevity. But if you’ve already made smart money moves 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 on how much to save for retirement suggests you should have 10X your salary saved by retirement age if you want to maintain your lifestyle. Another rule of thumb suggests you should 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 2022 (filed in April 2023), the contribution limit for 401(k) accounts is $20,500. 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 $61,000 for tax year 2022, 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.

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. 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.

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? Study up now so you don’t fall victim to common Medicare myths.

The COVID-19 pandemic made us all aware of the effects of social isolation. Once your workplace social life disappears, will you have enough people in your life to stay socially engaged? 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.

Most people hope for a fulfilling career, and 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. Maybe you hoped to mentor younger people in your line of work, or establish an innovation for your company.

There’s nothing wrong with spending a few more years in the workforce to achieve those things. 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. Alternatively, going into business for yourself might be a nice change of pace that would allow you to work on projects you care about. There are a lot of legit ways to earn money in 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 unless you plan to travel year-round, you should also plan regular activities into 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 nobody’s dream retirement involves living paycheck to paycheck.

If possible, you want to make sure you’re financially and emotionally prepared before you clean off your desk and submit your resignation. Of course, we recognize you might not always get to choose the timing of your retirement — involuntary reasons like health issues contribute to the timing of leaving the workforce for 45% of retirees.

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.