1. Struggling to pay your bills on time
If you are currently working and you are struggling to pay your bills, note that retiring is not a good idea for you, at least not now. In general, people who are retired may need about 75 percent of their pre-retirement income to enjoy a problem free retirement.
That income commonly comes from Social Security, pensions, 401(k)s, IRAs, and other retirement savings. Now, ask yourself this question: Will those sources of income give me enough money to meet my obligations and enjoy my free time?
“Commuting costs and dry cleaning expenses will decrease, but entertainment and travel may increase,” says Marguerita Cheng, CFP®, RICP®, and chief executive officer of Blue Ocean Global Wealth in Gaithersburg, MD. In addition, “It’s important to take taxes and healthcare expenses into consideration,” she says.
Depending on your income, your Social Security check can be taxable. Most pensions are taxable too. As a matter of fact, almost all your income sources are taxable including withdrawals from 401(k)s and traditional IRAs.
And now that you’re retired, you will not have access to an employer-provided health insurance, so you need to enroll in Medicare, which is not completely free. In other words, your retirement translates to financial obligations. Do you think you’re ready for it?
