There are many things to consider when you decide to retire. It’s not always about the numbers. For social and emotional reasons, you’ll need an activity plan in place to utilize all that sweet free time you’ve earned.
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However, whether you plan to travel the world or never leave your home, you’ll first need to address your finances to see if you’re ready to retire. Aside from the obvious arguments (no savings, too much debt), there are less noticeable warning signs that you may not be financially prepared to retire. These are the kind that most people don’t notice until it’s too late.
Also see eight key signs you’re ready to retire early.
1. You’re Struggling With Current Expenses
It might not be a good idea for you to retire if you can’t easily pay your expenses with your existing salary. When you retire, some costs, like transportation to and from work, might go down. Others, like entertainment, health and travel, might go up.
Additionally, there isn’t much room for saving and investing if you’re already having trouble keeping up with cost-of-living expenses.
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2. Your Mortgage Isn’t Paid Off
Your housing costs should decrease when you retire, but if you plan on having mortgage payments, you’ll need to withdraw more from your fixed retirement accounts or investment portfolio.
“Paying off your mortgage can eliminate a major monthly expense, save money on interest, improve your cash flow and reduce financial stress,” Stephanie Ford, a financial advisor at Wealth Enhancement Group, told AARP.
3. You’re Not Taking Healthcare Costs Seriously
You might be the picture of health now, but banking on this continuing throughout your golden years is asking for trouble.
Additionally, many retirees minimize potential costs. “Nearly two-thirds of pre-retired investors surveyed are underestimating their prospective healthcare expenses in retirement, anticipating health care expenses at least $1,220 below the $8,600 annual estimate and possibly increasing their healthcare risk,” per Jackson Financial.
4. You’re Supporting Children Financially
According to a study by Ameriprise Financial, 36% of respondents said they worry that supporting adult children financially could impact their retirement plans.
Helping kids out could disrupt your financial security, resulting in more hours at work, a reduced quality of life or the risk of running out of money. And chances are you’ll need more than you think in the hopes that circumstances change.
5. You Have No Emergency Fund
This is hardly a subtle sign, but a cash reserve set aside to cover unexpected bills or financial emergencies is so important it bears repeating. Without one, “a financial shock — even minor — could set you back, and if it turns into debt, it can potentially have a lasting impact,” noted the Consumer Financial Protection Bureau.
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This article originally appeared on GOBankingRates.com: 5 Subtle Signs You’re Not Financially Ready To Retire
