Many people nearing retirement have an idea of how they want to live but aren’t sure they’ll ever be able to afford their vision. For them, the idea of a comfortable retirement — or any retirement — is far from a foregone conclusion.
A recent survey on retirement readiness shines a light on the problem. Among respondents ages 60-67 and still working, only one in four believe they have saved enough for retirement. Those 45 and older estimated they’d need $1.1 million on average to retire comfortably, but just 21 percent thought they’d get there.*
Afraid you’ll fall into that category? If the three signs listed below sound familiar, it may be time to make some adjustments to your retirement planning.
Here are the signs that you’re not ready to retire
#1: You Don’t Have Clear Financial Goals
Do you have your goals written down clearly? Are each of them specific, measurable, and achievable? You should be as specific as possible, so that you know whether or not you’ll hit your target.
Are your goals thorough, substantial, and meaningful? We can have easy, throwaway goals that don’t really move the needle for us. But have you set your sights high enough that you’ve really thought through what retirement is going to look like, that you feel like these are big enough goals that you’re striving for, and that they bring meaning to you in retirement?
Ultimately, what you have to end up asking yourself with respect to your financial goals is, “Will achieving these goals give you the standard of living that you want in retirement?”
#2: You’re Drowning in Debt
Do you have a pretty good sense of what kind of debts and financial obligations you’re going to carry into retirement? If you have a lot of debt, it can take years to pay off, at great expense to you — and to your plans to retire. That’s especially true for high-interest debt like credit card bills, which can get bigger and bigger the longer it languishes.
That’s a serious question because a lot of people don’t take their debt into consideration. Have you thought about those pros and cons of paying off debts, maybe high interest credit card debt or debts that require a high repayment amount like a mortgage? There are pros and cons to paying those types of things off.
And next, are you confident that these obligations won’t interfere with you being able to afford the retirement that you want? If you are under crushing debt, you might have to make some different decisions because it’s going to interfere with your ability to afford the retirement that you want.
#3: You Don’t Have a Retirement Budget
Have you created a budget for your basic living expenses in retirement? Most of you know that there will be some expenses that appear in retirement and some expenses that will disappear in retirement. You want to be clear on not only what the gross is that you’re going to be looking at for income, but how much of that is going to be taken by your basic living expenses.
And I’m not talking about downgrading your standard of living and living with the bare minimum; I’m talking about just maintaining the standard of living that you have right now. What will that cost you? And how will those benefits change over time or those expenses change over time? You’re going to find that many of your benefits get more and more expensive, and so you have to account for that in your retirement budget.
And ultimately, how confident are you that this budget will allow you to maintain your standard of living in retirement? If you’re like, “Oh gosh, there’s all these things I hadn’t thought of putting in my budget and how do I know how much my monthly expenses are going to be?” Well then, you might have a little bit of work to do.
It’s never too late to start making course corrections that will make your retirement planning better. We host retirement training for federal employees all over the country. So, if you know just based on these three signs that you still have a lot of work to do to get ready, I would highly encourage you to attend one of our workshops.
* Source: 2023 U.S. Retirement Survey, Schroders
About Chris Kowalik
Chris Kowalik is a federal retirement expert and frequent speaker to federal employee groups nationwide. In her highly-acclaimed FedImpact Workshops, the FedImpact Podcast, and the FedImpact Webinars, she empowers employees to make confident decisions as they plan for the days when they no longer have to work. Chris’ candid and straightforward nature allows employees to get the answers they need and understand the impact these decisions have on their retirement.
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