You’ve done everything right. You’ve saved diligently, you’ve invested, and you’ve probably hit a savings number you’ve been chasing for decades. On paper, you’re ready to retire.
So why does the thought of actually handing in your notice feel less like a celebration, and more like a leap into the unknown?
That feeling of uncertainty is common, and it’s because we’ve all been taught to look for the wrong signals. We’ve been trained to focus on one big, arbitrary number, while the real signs of retirement readiness are often much quieter, and have little to do with hitting a specific target.
Let’s go over the five definitive signs that indicate retirement readiness, so you can recognize when you are actually prepared to make the transition.
Sign #1: The Weight of Debt is Gone.
What it is: This is the milestone where you have eliminated all high-interest, non-mortgage debt. Think credit card balances, car loans, and personal loans. This COULD also include paying off your mortgage, freeing up the single largest expense for most households – but it doesn’t necessarily have to.
Why does eliminating high-interest debt matter in regards to retirement readiness? Debt is a direct claim on your future retirement income. According to the Employee Benefit Research Institute, workers who report having a problem with debt are significantly less confident in their ability to retire comfortably.
Being debt-free means every dollar from your portfolio and Social Security can go toward your lifestyle, not to paying back a bank or credit card company.
How do you know if you are in this position?
Look at your balance sheet. Do you have any outstanding loans other than a low-interest mortgage? If the answer is no, you have achieved a foundational level of financial freedom that is a key indicator of retirement readiness.
And while debt elimination creates a financial foundation, understanding your government benefits at certain age eligibilities can help with your struggles with retirement timing decisions.
Sign #2: You Know Your Safety Net is in Place.
What it is: This sign is about reaching key age milestones that unlock the foundational pillars of the American retirement system. This primarily means Medicare eligibility at age 65 and reaching your full retirement age for Social Security—which for most people as of right now is between age 66 or 67.
Why it matters: These benefits provide a guaranteed, inflation-adjusted income floor that market volatility cannot touch.
According to the Social Security Administration, the system provides benefits to nearly 70 million Americans, and nearly 40 percent of people over age 65 are estimated to be living in poverty if they went without the government support program.
Medicare is arguably even more critical, as it dramatically reduces your single largest and most unpredictable expense—healthcare—compared to private insurance.
So, how do you know if this safety net is in place?
This is kind of straightforward. Have you reached age 65, making you eligible for Medicare? Do you have a clear strategy for when you will file for Social Security, based on your full retirement age benefit amounts and what your personal income needs will be? If yes, then your safety net is ready.
And while benefit eligibility provides that security foundation and is a sign you are ready to retire, proper portfolio diversification will show your investment readiness for retirement income.
Sign #3: Your Portfolio is Built for a Paycheck, Not an Arms Race.
This is a strategic shift in your investment philosophy. Your portfolio is no longer a “racehorse” built for maximum growth, but a “workhorse” built for sustainable income.
This often involves a “bucket strategy,” popularized by financial planning experts, where you set aside 1-2 years of living expenses in liquid reserves, another bucket of stable investments for intermediate needs, and a third bucket for long-term growth.
This structure is designed to help answer the question, “How will I get paid each month?” It provides a clear plan for generating income and helps to protect you from having to sell your growth assets during a market downturn. This shift from focusing on daily market returns to focusing on a reliable withdrawal plan is the key to creating added peace of mind.
How do you know if your retirement assets are built for a paycheck?
Look at your portfolio. If the market were to drop 20% tomorrow, do you have a clear plan for where your income would come from? Could your liquidity last for the next two years without having to sell stocks at a (unstrategized) loss? If you have that cash or short-term bond cushion, your portfolio might be mature and you may be ready to retire, even though you didn’t think it.
Now that you understand portfolio diversification’s importance, if you’re wondering whether your specific situation shows these retirement readiness signs, fill out the form below to book a call and we’ll analyze your circumstances to help you recognize when you’re actually prepared to retire.
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Sign #4: You’re in the Driver’s Seat of Your Spending.
What do I mean by this?
This sign is about having absolute clarity on your expenses. It’s not just knowing your total monthly spending, but understanding the difference between your essential ‘needs’ (housing, food, healthcare) and your discretionary spending or ‘wants’ (travel, hobbies, etc.). This understanding is the foundation for calculating your true Portfolio Income Needs, or PIN.
Why it matters? As research on retiree spending patterns has shown, expenses are not flat; they often decrease in the middle years of retirement. Having mastery over your spending allows you to create a realistic, flexible plan.
It means you are in control. In a tough year, you know you can cut back on discretionary ‘wants’ without affecting your core security, which is a powerful form of self-insurance.
How to assess your Portfolio Income Needs?
Can you confidently write down your monthly budget, clearly separating your essential needs from your discretionary wants? Do you know what your lifestyle costs are, and therefore, what income you truly need from your portfolio?
If you can, you can calculate your Portfolio Income Needs and start to determine if you could withdraw that amount on an annual basis from your portfolio for an extended period of time.
As we noted a moment ago, your spending over the years WILL vary, but understanding you have those ESSENTIAL expenses covered can really help you psychologically feel more confident in your readiness for retirement.
And while expense management creates sustainability, its financial independence from supporting others that can make personal retirement feel really possible.
Sign #5: “When You Can Finally Put on Your Own Oxygen Mask.”
What it is: This is a deeply personal, non-financial milestone. It’s the moment you realize your primary mission of financially supporting others is done. This could be launching your children into their own careers, or no longer having to provide care for aging parents.
And here’s why this matters: Supporting family members is a noble and often necessary role, but it introduces massive unpredictability into a financial plan. Research from institutions like the Pew Research Center has shown that a significant number of parents provide financial support to their adult children, sometimes to the detriment of their own retirement savings.
True readiness is when you have not just the financial capacity, but the emotional permission to make your own dreams the primary focus of your financial plan.
Take a look at your life and your budget. Are your financial decisions primarily driven by your own retirement goals? Or are they still heavily influenced by the needs of others? When your own goals can finally take center stage, you’ve hit this crucial milestone.
Now that we understand the signs in depth, let’s see how they show up in a real-life situation.
Let me tell you about a couple, David and Carol. They had hit their retirement savings goal, but they were still filled with anxiety and they convinced themselves that they needed to work for ‘just a few more years.’
With their youngest child now financially independent, they could finally put on their own oxygen masks and really focus on their future together. They knew these were positive signs, but they were still filled with anxiety and felt years away from being ready to retire.
Instead of just looking at their account balances, we looked for the five signs we just discussed.
First, we looked at their debts. They pay their credit card off in full every month (so they can take advantage of come points without paying credit card interest), and with their auto loans recently paid off and only six months to go until they made their very last mortgage payment – David and Carol were set up to be debt-free very soon… Sign #1 was flashing green.
Then, we designed their ideal retirement lifestyle, which allowed us to calculate their true Portfolio Income Needs —their PIN. We discovered they needed – from their portfolio – $65,000 a year after taxes to live the life they wanted. This was their real, tangible target. Sign #4!
Once we had that number, we could properly evaluate Sign #2: Their Safety Net.
We looked at their Social Security benefits and saw that if Carol delayed filing for just two more years, it would create a larger, inflation-adjusted income stream for the rest of their lives. Because we knew their exact spending needs, we could create a plan to bridge that two-year gap using their other assets. David was already 65 and enrolled in Medicare, and Carol was 64 less than a year away from Medicare eligibility.
With their income need defined and their safety net optimized, we could finally focus on Sign #3: Building a Portfolio for a Paycheck. We took their existing portfolio—which was just a mix of stocks and bonds—and restructured it. We created a cash bucket to protect their income from market volatility and optimized their withdrawal strategy to be as tax-efficient as possible.
The result? Seeing how all the pieces fit together was a revelation for them. Their anxiety wasn’t based on a lack of resources; it was based on a lack of having a cohesive plan. By working through the process and seeing that all five signs were now flashing green, they realized they didn’t need to work longer. They were already ready.”
David and Carol realized their anxiety wasn’t based on their financial reality; it was based on the old habit of just looking at one large, arbitrary number.
Now that you understand all five readiness signals, let’s look at how to act on these signs to create successful retirement transitions.
So, how do you take these feelings of uneasiness about moving forward with retirement, and turn them into a confident decision?
First, begin with an assessment. Which of these five signs are speaking to you right now?
Second, connect the dots. Does your secure, mature portfolio and your eligibility for benefits actually support the lifestyle you envision for your retirement?
Third, create your transition plan. How will you navigate healthcare if you retire before Medicare eligibility? What will your spending plan be for that first, exciting year? Build your timeline based on these real signals of readiness, not on some random date on a calendar.
The key to all of this is focusing on these holistic indicators of your life, not just your account balance. This is what turns a scary leap into a confident next step.
Conclusion
Now that you understand the five signs that indicate retirement readiness even when it doesn’t feel like the right time and how to act on these signals for successful transitions, you can recognize your own readiness rather than missing optimal retirement timing.
If you want help evaluating whether these retirement readiness signals apply to your situation and developing a plan to act on them successfully, fill out the form below to book a call and we’ll analyze your circumstances to help you make the best retirement timing decision.
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