Deciding When to Retire

Jun 10, 2024

Originally published: August 2021
Updated: June 2024

One of the most common questions our team gets is: “When can I stop working?” Planning for retirement is a major component of financial planning, but it’s not just about having enough funds to support your life — part of deciding when to retire is understanding why you’re retiring and what you’d like to get out of retirement.

Here are a few key things to consider as you plan for retirement.

How much money do you need to support your retirement?

While retirement isn’t only about funds, they are a major factor in deciding when and how to retire. You’ll need to start with an idea of what your cost of living will be and how many years you’ll need to support yourself and your family. We always recommend a conservative look at retirement to make sure you’re fully prepared (this means overestimating both your cost of living and how long you’ll live after retirement). On top of traditional cost of living, we recommend considering your goals for retirement and how much additional money you’ll need to support them. With people living longer and more active lives, you may need to consider more years of retirement than originally planned.

What will retirement look like?

Planning for retirement is about more than just financial preparedness. Research has shown that those who do best in retirement have pre-planned with some idea of what they want for their retirement.  What do you want retirement to look like? Will you move? Buy a new residence? Travel extensively? Each of these decisions can give purpose to your retirement years – but they also carry a price tag and should be included in your overall retirement needs. It’s also important to discuss these goals with your partner and/or family to make sure you’re aligned on what the next phase of your life will entail.

What role does estate planning play in retirement planning?

You may have already started your estate plan with your financial planner, but this is another important element in deciding when and how to retire. You’ll want to make sure you’re prepared for your estate planning needs and will have resources to support any additional educational spending, charitable giving, or legal fees you’ll need to support.

Have you prepared for the risks of aging?

Similarly, an important element of retirement is preparing for your needs as you age. You may feel young and healthy when you choose to retire but your needs will change as you age – and it’s likely you’ll live longer than previous generations! Discuss health and age risks with your financial planner and your personal physician to ensure that you’ve included things like long term care, additional health costs, and other long term needs into your retirement plan. 

Do your accountant and financial planner agree that you’re ready?

Most people want to make the decision to retire on their own, but we know it’s important to include your personal financial advisors. You’ve likely built a relationship with these trusted advisors and trust their perspective. Now is the time to make sure that they’re both aligned with and supportive of this next step for you and your family. 

With your financial advisors on your side, your family prepared for the next step, and your plan in order, retirement can be the start of an exciting next chapter in your life. Make sure that you’ve spent time up front prepping for this next step and protecting your assets, your family, and yourself. And then, enjoy the freedom or a retirement well planned!

Peninsula Wealth is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Peninsula Wealth and its representatives are properly licensed or exempt from licensure. This material is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Peninsula Wealth unless a client service agreement is in place. It is expressly understood that our firm will not provide accounting or legal advice nor prepare any accounting or legal documents for the implementation of your financial planning objectives.