Am I Financially Prepared to Retire? Signs You Might be Close

Retirement isn’t just a number in your 401(k)—it’s a new season for your life and your family. If you’re approaching retirement, you probably find yourself asking, “Am I financially prepared ready?” This is one of the biggest transitions you’ll make, impacting both your finances, lifestyle and your family legacy.

The challenge of securing a retirement is more difficult than ever. Not only does your nest egg have to do more compared to previous generations, retirees also need that nest egg to last longer! . Preparation makes all the difference. This guide explores the key signs that indicate you’re coming close to step away from your career with confidence and purpose. Whether you’re a small business owner, recently widowed, have received a financial windfall, or are looking to secure your legacy for loved ones, these principles will help you determine if it’s the right time to begin this exciting new chapter.

Mapping Out Your Future Retirement Expenses

Retirement readiness starts with understanding the costs of your next chapter. It’s not enough to estimate a ballpark figure; you need to map out your actual expenses, adjusted for life’s changes and the rising costs everyone faces.

Picture your ideal retirement. Will you be traveling, picking up new hobbies, or spending extra time with grandchildren? Each dream comes with a price tag. List out all your expected costs:

• Essentials: Housing, food, transportation, utilities.

• Healthcare: Out-of-pocket expenses, Medicare supplement plans, long-term care, and prescription costs.

• Lifestyle: Travel, dining out, family gatherings, hobbies.

Don’t forget inflation. What feels affordable today may look very different in ten or twenty years. Have you included those adjustments in your estimates?

Healthcare is a Special Consideration

Many retirees are surprised by the out-of-pocket costs not covered by Medicare. Medicare supplements, prescription plans, and dental or vision care can add up fast. Planning for health lets you support your family and community, no matter what tomorrow brings.

Crafting a Smart Social Security Strategy

Did you know that your choice of when and how to draw Social Security can affect your lifetime income by tens or even hundreds of thousands of dollars? This isn’t the time to guess.

Take these steps:

• Review your work history and earnings record.

• Understand available options: Spousal and survivor benefits, and how delayed retirement credits work.

• Model different filing ages: The difference between claiming at 62 and waiting until 70 can be absolutely immense.

A thoughtful approach will integrate Social Security and help compliment what you have accumulated in your other retirement accounts. Moreover, if you are married, an important factor to consider is the spousal survivor benefit. If the higher earning spouse draws Social Security Retirement Income Benefits at age 62, the spousal survivor benefit will be significantly lower compared to had they waited until age 70. There's a lot of factors to consider when making this decision. When an informed decision, which integrates your holistic financial picture, the outcome can be significantly improved financial stability and peace of mind.

Aligning Your Portfolio With Your Goals and Values

Retirement transforms your relationship with your investments. Safety becomes as important as growth. Now is the time to review your mix of:

• Stocks (growth for the long term)

• Bonds (stability and predictable income)

• Cash equivalents (reserve for emergencies and flexibility)

• Alternatives (real estate, private equity, etc.)

Is your portfolio still invested according to your risk tolerance? Too much risk can threaten your retirement. Too little can stunt your growth and legacy.

Aligning Your Investments with Your Values

If you’re like many of my clients, you want your portfolio not just to perform but to reflect your personal values. That means avoiding companies whose activities conflict with your principles and choosing funds or investment vehicles that align with your family’s mission.

Values-based investing ensures that your wealth honors both your ethics and your family’s legacy. It’s an act of responsible planning with lasting significance.

Stress-Testing Your Plan Against the Unexpected

We don’t know what tomorrow brings. That’s why every wise retiree prepares their investment portfolio for volatility and uncertainty:

• Market downturns and bear markets

• Unexpected health expenses

• Significant family needs (supporting children, grandchildren, or charitable causes)

• Inflation spikes

A good financial plan will “stress test” your retirement by modeling these difficult scenarios. If your plan still supports your goals under tough circumstances, you can begin retirement with true confidence. And if it doesn’t, now is the time to make adjustments.

Analogy

Think of it like a ship’s captain preparing for a voyage—not just checking the weather, but making sure the vessel is strong enough to withstand a storm. You wouldn’t set sail without these checks; don’t set sail into retirement without them, either.

Clearing Debt Before You Retire

Picture this: entering retirement with little or no debt. Feels reassuring, doesn’t it? High-interest debt can eat away at your income faster than most people realize, leaving you with fewer resources for the things that matter. Before retiring, aim to:

• Pay down your mortgage or have a manageable, fixed-rate payment.

• Eliminate credit card and high-interest personal loan debt.

• Avoid taking on large new liabilities.

Every dollar NOT spent on interest is a dollar freed for meaningful impact—whether it’s supporting your community, helping a child with a wedding, or making memories with family.

Creating a Shared Vision With Your Spouse

Retirement isn’t just a financial change; it’s a life transition that you’ll share with your spouse. Have you talked through key questions, such as:

• What do our days in retirement look like?

• How do we want to spend time—with each other, our family, and our community?

• Are we on the same page about where we live, travel, or how much we help our children and grandchildren?

• What activities do we want to focus on in this season of life?

Open, honest conversations lay the groundwork for a joyful and united retirement. Even the healthiest couples sometimes need support to align visions and tackle tough topics. When there is clarity in the desired outcome it becomes easier to work to achieve the common goal. Without the clarity of a shared vision, it is much harder to achieve the desired outcome.

Factoring in Future RMDs and Taxes

Here’s a surprise that trips up many retirees. The IRS requires you to start drawing from retirement accounts at age 73 (these are called Required Minimum Distributions, or RMDs), which can have major tax implications.

Without a plan, you could find yourself in a higher tax bracket, paying more than necessary. Effective retirement planning tackles this by:

• Strategizing withdrawals to minimize annual tax burden

• Considering Roth conversions to spread out taxes over time

• Planning charitable giving directly from IRAs, which can lower taxable income for those with a heart for generosity

A thoughtful tax strategy means more of your hard-earned money serves your family and your favorite causes—not the IRS.

Reviewing Your Readiness Checklist

Wondering how you stack up?

Here’s a checklist.

If you can check most or all of these, you’re likely headed in the right direction:

• Project future retirement expenses, including healthcare and lifestyle costs.

• Create a Social Security filing strategy that supports the financial situation and goals.

• Adjust the investment portfolio to align and support financial goals, and risk tolerance.

• Confirm the withdrawal rate of the portfolio is sustainable.

• Stress-tested the financial plan for market downturns and surprises.

• Create a plan to address future long-term care costs.

• Create a shared vision for retirement with spouse.

• Plan for future taxes and Required Minimum Distributions (RMDs).

Every box you check helps increase your retirement readiness. Even if you’re not quite there yet, identifying gaps is an important first step.

Charting Your Course for a Fulfilling Retirement

Retirement is more than an endgame; it’s a beginning. For families and small business owners alike, planning with your values, family, and purpose at the forefront brings peace of mind and a sense of fulfillment.

If you’re unsure whether you’re ready or want guidance from someone who respects your values and dreams, I’d love to help. Schedule a consultation to walk through your retirement plan together. Whether you’re looking to secure your legacy, transition your business, or simply retire with confidence, your future can be as bright as your vision.

Start planning with purpose and build a legacy that lasts.

Disclosure: The content in this article is for educational purposes only. Please seek personal recommendations from a qualified financial advisor for advice to achieve your specific objectives.