Retirement Readiness: Signs You’re Ready to Embrace the Transition

Everyone dreams of exiting the workforce, but how can you be sure you’re truly ready to retire?

Retirement is more than just a dream—it’s a phase of life many long for but few are truly prepared for. It’s a time when you say goodbye to the daily grind and embrace the freedom to pursue your passions, travel the world, or simply enjoy the tranquility of a slower pace of life. But how do you know when you’re truly ready to leap into retirement bliss? 

Here are some signs that indicate you’re primed and prepared for transitioning to this exciting new chapter. 

Financial Confidence

Achieving readiness for retirement hinges significantly on attaining financial stability. Imagine successfully paying off your mortgage, eradicating credit card debt, and settling any lingering loans. The commitment to a debt-free existence helps relieve financial stress and unlocks additional funds, helping you to savor and embrace your retirement years fully.

Coupled with years of dedicated saving and strategic investing, you likely have cultivated a substantial nest egg with the goal of sustaining your desired lifestyle throughout retirement. Working with a financial advisor is another stepping stone that can help you assess your numbers and comprehensively understand your varied retirement income sources. Whether it be pensions, investments, or accounts such as 401(k)s or IRAs, an experienced advisor can help identify holes in your current plan and introduce additional suggestions and strategies you may not even be aware of.

You Have an Estate Plan & Life Insurance Plan

As you venture on to the next chapter of your life, planning for the future is essential. More than 1 out of 4 Americans say inflation has caused them to see a greater need for estate planning, yet 2 out of 3 Americans do not have any type of estate planning document. Life insurance is also an important part of an estate plan and the retirement planning process.

Having a proper estate plan and life insurance coverage helps ensure that your assets are distributed as you choose and that your loved ones will not experience financial hardship following your death. An effective estate strategy can spell out your monetary wishes and help ensure that they’re carried out – even if you cannot communicate. It can even designate someone to manage your financial affairs if you cannot.

You have a Diverse Portfolio

We’ve all heard the old adage “Don’t put all your eggs in one basket”, and that couldn’t be more true than when it comes to investing your money. When it comes to creating sources of income for retirement, you can help mitigate risk by spreading your savings and investments across multiple streams for future income.

Suppose you’re trying to build momentum early in your retirement savings journey. In that case, it might be smart to invest in securities with the potential for higher returns (like stocks), but are also riskier. If you’re closer to retirement, investing in safer but slower-growing accounts like certificates of deposit, treasury bills, or money markets might be smart. If you have three years or less to invest, you can consider yourself a short-term investor. A four- to seven-year timeline is considered intermediate. Long-term investors may enjoy less risk due to the fact they have more time for their portfolios to make up for potential losses.

You Can Afford Healthcare

If you are truly ready for retirement, you will have your future healthcare needs accounted for.

Healthcare costs can rise exponentially in retirement. According to the Centers for Medicare and Medicaid Services, it is predicted to increase by an average of 5.1% per year, reaching $6.8 trillion by 2030.

Many people receive health insurance through their employers, but this benefit typically ends once the individual no longer works there. It’s important to weigh all your healthcare options and invest in reliable plans, such as Medicare

Utilizing a health savings account (HSA) can help you save for upcoming medical costs. An HSA allows you to allocate income before taxes to cover eligible medical expenses like deductibles and copayments. Using untaxed funds from an HSA can frequently reduce your total healthcare expenses. To be eligible for an HSA, you must have a high-deductible health plan. You can also establish an HSA through a bank or credit union.

Another very important expense to factor in is long-term care, or LTC. As life expectancies increase, so does the likelihood of requiring long-term care services due to age-related illnesses, chronic conditions, or unforeseen health events. In fact, 70% of adults aged 65 years and older will require long-term care at some point in their life, this could range from assistance with daily activities to specialized medical services. One-third of people may never need long-term care, but 20% will need it for longer than 5 years.

Nationally, these monthly median costs according to the Genworth Cost of Care Survey 2022 are:

In-Home Care Community and
Assisted Living
Nursing Home Facility
Homemaker Services
$4,957 / month
Community and Assisted Living
$1,690 / month
Semi-private room
$7,908 / month
In-home care – Home Health Aide
$5,148 / month
Assisted Living Facility
$4,500 / month
Private room
$9,034 / month

Monthly median costs by care setting (national).
Rates have climbed considerably in recent years, a trend that looks to accelerate over the next several years. In fact, if projections hold, the monthly cost of a semiprivate room in a nursing home will be over $10,000 by 2030, an increase of about one-third. For private rooms, expected annual costs already have passed the six-figure mark. Need we say more about the importance of exploring long-term care insurance? A sound insurance strategy can help protect your family from the financial consequences of those events. 

You Have a Sense of Fulfillment

Retirement isn’t just a financial and logistical transition; it’s also an emotional one. You’ve mentally prepared yourself for the shift from a structured work life to a more flexible schedule. You’ve thought about how you’ll find meaning and fulfillment outside of your career, and you’re excited about the possibilities that lie ahead.

Ultimately, you just know that you’re ready. You’ve reached a point in your life where you feel fulfilled professionally, personally, and financially, and you’re excited about the prospect of writing the next chapter of your story in retirement!

How Johnson Wealth and Income Management Can Help

Our skilled Fiduciary advisors help serve as a crucial ally in navigating the complexities of your retirement planning. We help assess your current financial situation, including assets, investments, debts, insurance, and expenses, to create a tailored retirement strategy aligned with your goals. Through in-depth analysis and projections, our Fiduciary advisors can help you determine how much you need to save and invest for retirement so you can rest assured you are financially ready to make the transition.

Additionally, we provide valuable insights on tax-efficient strategies, retirement account options, and risk management techniques to help you optimize your retirement income and help mitigate potential pitfalls

Contact us here today to learn more about how we can help you reach retirement dreams.

All written content on this site is for informational purposes only. Opinions expressed herein are solely those of Johnson Wealth & Income Management and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. Investing involves risk. There is always the potential of losing money when you invest in securities. Asset allocation, diversification and rebalancing do not ensure a profit or help protect against loss in declining markets. All information and ideas should be discussed in detail with your individual advisor prior to implementation. The presence of this website, and the material contained within, shall in no way be construed or interpreted as a solicitation or recommendation for the purchase or sale of any security or investment strategy. In addition, the presence of this website should not be interpreted as a solicitation for Investment Advisory Services to any residents of states where otherwise legally permitted to conduct business. Fee-based financial planning and Investment Advisory Services are offered by Sound Income Strategies, LLC, an SEC Registered Investment Advisory firm. Johnson Wealth & Income Management and Sound Income Strategies LLC are not associated entities. Johnson Wealth & Income Management is a franchisee of the Retirement Income Source. The Retirement Income Source and Sound Income Strategies LLC are associated entities. © 2023 Sound Income Strategies.