Retirement is a huge life decision. Few things in life are as personal a decision as when to retire. The perfect retirement age is different for everyone, and there are a multitude of factors to consider when making the decision.
It's not just about when you want to stop working, but also about whether you're financially ready to retire. And for many people, there's no perfect age to retire.
Here are five things to take into account when trying to decide the right retirement age for seniors in Birmingham.
Income: Do you have a nest egg?
One of the most important factors in deciding when to retire is your income prior to reaching retirement age, as this may affect how much money you have saved up for your retirement years.
Many people choose to continue working after retirement age for a variety of reasons. Some may have chosen to delay their retirement in order to continue to enjoy the benefits of steady employment, such as a regular income, social contacts, and mental stimulation.
Other seniors may have experienced financial setbacks due to changing economic conditions or long-term medical expenses, making it necessary to remain in the workforce longer than expected. In addition, there are many seniors who simply find joy and purpose in continuing to work beyond retirement age.
Whatever the personal motivations may be, it is clear that working beyond traditional retirement age is becoming more common among older generations in today's society.
Nonetheless, as you approach retirement, you will want to ask yourself a couple key questions.
Do you have enough saved up to support yourself?
If you have a comfortable nest egg saved up, you may be able to afford to retire earlier than someone who has yet to start saving for retirement. Conversely, if your retirement savings are on the smaller side, you may need to keep working a bit longer in order to make ends meet.
Do you have enough income to cover your expenses in retirement?
This includes not just your regular living expenses, but also any one-time expenses, like travel or a new car. If you're not sure, sit down and create a budget for retirement. Include everything from groceries and utilities to entertainment and travel. Once you know how much you need to cover your costs, you can start planning how to generate that income in retirement.
Retirement Savings: How much have you saved up?
In addition to your income, it's important to take your retirement savings into account when trying to decide when to retire.
Those who have worked until retirement age may retire with financial security if they have built a robust savings plan. These savings could include a 401(k) or other retirement plan from their previous employment, traditional IRAs, Roth IRAs, or SEP accounts.
Additionally, they may also have accumulated stocks, bonds, mutual funds and other investments over the course of their life, as well as pension funds, annuities, and life insurance policies. Social security is another common source of retirement income for seniors; however it is typically not enough to cover all necessary expenses without some form of supplemental savings.
Did you know that you may have hidden savings that you don’t even realize?
If you own your home, you may be able to tap into that equity with a reverse mortgage.
With a reverse mortgage, also known as a HECM, seniors can access the equity they've built up in their home and convert it into cash or income. This type of loan is especially beneficial for those who don't have a large retirement fund, as the loan does not require monthly payments. As long as the borrower lives in the home, they are eligible for this type of mortgage and may use the money however they wish.
Furthermore, with a reverse mortgage there are no monthly payments required; instead the loan becomes due when either the last remaining borrower passes away, moves from the property or fails to meet the loan obligations. The homeowner retains full rights and control of their home throughout the life of the loan. By using a reverse mortgage, seniors can enjoy financial independence, remain in familiar surroundings, pay off existing debts and even make home improvements with some extra funds.
Senior homeowners should consider speaking with a reverse mortgage professional about their qualifications and options so that they can make an informed decision about whether or not a HECM makes sense for them financially. With a reverse mortgage, you may be able to reach retirement age sooner.
If you're not sure, you may want to talk to a loan specialist at Simple Reverse Mortgage to see if it's right for you.
Fill out our Reverse Mortgage Calculator and Proposal form, and one of our knowledgeable specialists will be in touch shortly to answer any questions and see how much you could qualify for.
Your Spouse: Is your spouse close to retirement age?
If you're married, another factor to consider when deciding when to retire is your spouse's age. If you and your spouse are close in age, you may want to retire at the same time so that you can enjoy your golden years together.
But if your spouse is younger, you may want to wait until they're closer to retirement age before retiring yourself. They may not be eligible for social security benefits until later in life. This can impact your decision on when to retire, as you may need to wait until your spouse is eligible for benefits before retiring yourself.
For example, in Birmingham Alabama, the average Social Security income is $14,453 per year. If your spouse's income is not enough to supplement your Social Security income to pay for expenses, you may choose to continue working.
You'll need to decide whether it makes sense for both of you to retire at the same time or if it makes more sense for one spouse to continue working while the other spouse retires.
Cost of Living: Where do you plan on retiring?
The cost of living is another important consideration when trying to decide when the time is right for you to retire. If you live in an area with a high cost of living, you may need to keep working longer in order to afford your lifestyle in retirement. However, if you live in an area with a lower cost of living, you may be able to afford to retire sooner than you thought.
The cost of living can vary significantly from place to place. For example, retirees in Birmingham may find that their costs are lower than retirees in New York City. If you're not sure where you want to retire yet, do some research on the cost of living in different places and factor that into your decision about when to retire.
So what is the right retirement age?
There's no one "right" age at which everyone should retire. The perfect retirement age is different for everyone, and there are a multitude of factors that go into the decision-making process. By taking into account factors like income, retirement savings, home equity, and the cost of living, however, you can start narrowing down what the right age for YOU might be.
Retirement is a big decision, so be sure to weigh all of your options carefully before making a choice. The perfect retirement age is different for everyone, so there's no need to rush into anything. Take your time and make sure it's the right decision for you and your family.
Take advantage of our senior lender specialists who have knowledge and resources to help you make the right decision. If a reverse mortgage will take the financial risk out of retiring to enjoy the rest of your life, we can make that happen.