How Do I Know If I Can Afford to Retire?

Financial Situation 

One of the most important factors to consider is your financial situation. How much money do you have saved for retirement? How much will you need to live comfortably? Will you need to rely on Social Security or other government benefits? 

It's important to have a clear understanding of your financial situation so that you can make informed decisions about your retirement. You should consider working with a financial planner to create a retirement plan that meets your specific needs. 

There are a few things you can do to determine if you're financially ready to retire: 

1. Estimate your retirement expenses. This includes things like housing, food, transportation, healthcare, and entertainment. You can use a retirement calculator to help you with this. Here is a Link to an Excel worksheet to get you started.
2. Calculate your retirement income. This includes Social Security, pensions, 401(k)s, IRAs, and any other sources of income you expect to have in retirement. You can access your social security info by logging here: https://www.SSA.gov
3. Compare your expenses to your income. If your income is more than your expenses, then you can afford to retire. If your expenses are more than your income, then you may need to work longer or save more money before you can retire.

Health

Your health is another important factor to consider. How is your health now? How do you expect it to change in retirement? Will you need to pay for long-term care? If you have any health concerns, it's important to factor them into your retirement planning. You may need to make adjustments to your lifestyle or your budget to accommodate your health needs.

Lifestyle

How do you want to spend your retirement? What do you enjoy doing? How much travel do you want to do? Do you want to stay in your current home or move?

Your lifestyle will play a big role in your retirement. If you enjoy traveling, you'll need to make sure you have enough money saved to do so. If you want to stay active, you'll need to find activities that you enjoy and that are affordable. 

Social Connections 

Your social connections are also important. How important are your relationships with friends and family? How will you stay connected with them in retirement?

Retirement can be a time of social isolation, so it's important to stay connected with the people you care about. You may want to join a club or group, or you may want to volunteer your time. 

Emotional Well-Being 

Finally, it's important to consider your emotional well-being. How do you feel about retirement? Are you excited for the change or are you feeling anxious?

Retirement can be a time of great change, so it's important to be prepared for it emotionally. 

Conclusion

Transitioning into retirement can be a daunting task, but it doesn't have to be. You don’t have to go it alone; a financial planner can help you assess your situation to help you determine if you can afford to retire. Considering the factors above and working with a professional can make sure you're prepared for a happy and fulfilling retirement. Encompass Advisory Services is an Independent Registered Investment Advisory firm with financial planners available to assist you.