If you’re unsure about retiring and are considering delaying retirement, you must consider if you have enough retirement savings. Do this before making your decision. Examining retirement savings benchmarks and having a comprehensive financial plan that outlines specific actions are the first steps toward knowing if you should delay your retirement. Also, some questions to ask yourself to help determine your retirement readiness include:
- Do you save money to cover unforeseen emergencies?
- Do you follow a monthly budget?
- Is your saving and spending in balance?
- Have you discussed significant financial decisions with others before making them?
- Do you have a financial plan that you monitor and adjust?
- When was your last annual money checkup?
- Do you work with a financial advisor?
Other Indicators for Retirement Readiness
In addition, there are several indicators of retirement readiness beside the above topics. All in all, knowing if you are on track or should delay retirement should include age-based benchmarks aligned with your goals and your unique situation. To determine your unique retirement savings benchmark, you will need the following information:
- How much you’ve saved
- Your age
- Your gross yearly income
Income Replacement Strategies
Another key point is to aim to replace 80% of your income in retirement as a starting point for your retirement savings. This may help you maintain the same lifestyle you have today. Once you determine how much you will need in retirement, adjust your retirement savings benchmark up or down. Although adjustments are based on your unique situation and account for all sources of retirement savings income in your calculation:
- Roth IRA
- Social Security
- Other retirement savings
In addition here’s an example of how age-based benchmarks work:
|Current Age||retirement savings need||retirement savings benchmark|
|Age 55||7 times your yearly salary =|
|Age 60||8 times your yearly salary =|
|Age 65||9 times your yearly salary =|
|Age 67||10 times your yearly salary =|
Consult with a Professional before Delaying Retirement
Once you have considered your retirement readiness and age-based benchmarks and delaying retirement. In addition, work with a financial professional to help you identify the actions necessary to pursue or delay your retirement. Your financial professional may also include:
- Insurance analysis
- Tax analysis
- Inflation scenarios
- Identifying retirement savings strategies
- Managing portfolio risks
However, financial planning is about saving enough for retirement and determining specific retirement income goals, strategies, and actions to achieve them. In addition. deciding if you should be delaying retirement, comprehensive planning considers your future expenses, liabilities, and life expectancy. Therefore once you have the information, you can make an informed decision about your situation.
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