Financial advisors know determining an ideal retirement age is a complex issue. People often make the decision of when to retire without fully figuring out if it is really the best time to retire. To-be retirees may have a pre-set notion of retiring at a particular age, like 65, or they might just feel like the time is right, while a few might work well past their optimal retirement age without any good reason.
MarketWatch recently shared an article summarizing a soon-to-be published paper that includes a very comprehensive checklist of factors playing into the equation to determine the best age to retire. The idea behind the checklist is to help people soundly and rationally evaluate the retirement decision, leading to an optimal retirement age.
What’s the Best Age to Retire?
MarketWatch
Sept. 13, 2012
By Robert Powell
Systematic retirement decision checklist:
- Calculate available retirement income and assess adequacy
- Consider life expectancy, expenditures, and risks
- Perform analysis to model plan functionality
- Evaluate the impact of your debt
- Determine the availability of health insurance
- Examine the impact of various Social Security claiming-age options
- Assess the type of retirement plan and the plan’s features
- Analyze the financial status of investments
- Examine earnings prospects if your remain employed
- Appraise the availability of phased retirement
- Factor in early retirement incentives
- Consider your willingness to compromise financial goals
- Assess whether you are and/or will be healthy enough to continue working
- Examine whether your situation will require caregiving for a loved one
- Are you concerned that perceived future health limitations will interfere with personal retirement goals?
- Evaluate whether you will need to retire in order to raise grandchildren
- Appraise the likelihood of your job terminating suddenly and prematurely
- Assess job satisfaction and potential changes in job satisfaction
- Understand and broaden your expectation of how to determine an appropriate retirement date
- Evaluate your ability to adapt to retirement
- Assess the identity, fellowship, and status you receive from working
- Determine your willingness to work
- Determine your desire for leisure
- Weigh the balance between work satisfaction and retirement satisfaction
- Examine the potential for joint retirement
MarketWatch’s article includes a summary of each checklist item; follow the link to the article to read more on the checklist items. The paper’s checklist is 25 pages long, and I am sure it would be a great read for financial planners. Keep a look out for the paper, which will be published in Benefits Quarterly, authored by Kenn and Patricia Tacchino.
Use Money Tree’s professional financial planning software to create a complete retirement projection, addressing several items on this checklist to help your clients’ determined their ideal retirement age. Money Tree’s Silver Financial Planner and Easy Money Power Planner include automatic retirement age solutions, which determines the earliest retirement age of the client to eliminate a shortfall in retirement.
