Donavan Group Consulting in Singapore and Tokyo, Japan on How do you tell when it's the right time to retire?
How will I know when it's the right tie to retire? Is there a barometer that experts rely on to know when it's the right time to go?--B.K.
I don't know of any generally recognized gauge or barometer for calling it a career, but I can tell you that the decision to retire definitely isn't just about reaching a certain age. I recently took personal finance guru Suze Orman to task for suggesting as much when she recently asserted in no uncertain terms that "70 is the new retirement age -- not a month or year before."
She's right that many people may need to stay on the job longer these days to accumulate a large enough nest egg to support them in retirement. But to say that 70 -- or any single age, for that matter -- is the right age to retire? That's far too simplistic. The decision to retire involves too many subjective factors that can vary significantly from person to person to be boiled down a single number.
So how can you tell when it's the right time for you, given your specific situation, to make the transition from the work-a-day world to post-career life?
One place to start is by assessing whether you're financially capable of leaving the workforce. One major question: Do you have enough saved so that draws from your nest egg plus income from guaranteed income sources like Social Security, pensions and annuities will allow you to maintain an acceptable standard of living throughout a retirement that could last 30 or more years?
It's difficult to answer that question with absolute certainty because of a variety of uncertainties, including how long you might live, the rate of return your investments will earn, what your expenses will be during your post-career life. And, indeed, research shows that many people don't have an accurate sense of whether they're on track to a secure retirement. Still, without too much effort you can come up with a pretty decent estimate of whether you've got the financial resources necessary to pull the trigger.
Start by doing a retirement budget so you'll have a realistic idea of the amount of income you'll need to cover your ex