Reluctant to retire? Here are three signs you're financially ready to quit the workforce for good Image Credit: iStockphoto

Many people don't have much choice about when they retire. Illness, job loss or caretaking responsibilities push them out of the labour force, ready or not.

But some people have the opposite problem: They do have a choice, and yet they can't quite bring themselves to quit working.

Some love what they do and never want to retire. Others are paralyzed by fear of the unknown, financial planners say. They may worry about living without a regular income, spending down the money they worked so hard to save or figuring out how to structure their days in the absence of a job.

“A lot of the people I see are financially ready before they're emotionally ready, if not the other way around,” said Cathy Gearig, a US-based certified financial planner (CFP). If you're struggling, here are three signs you may be ready to retire.

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Many people don't have much choice about when they retire. Illness, job loss or caretaking responsibilities push them out of the labour force, ready or not.

You've addressed fears of having no post-retirement pay

Retirement is often depicted as an endless, stress-free vacation. In reality, retirement requires some potentially stressful ‘paradigm shifts’, or fundamental changes in people's approach to life.

Instead of earning a salary, for example, retirees have to create one from their savings and other resources. If something goes wrong - the furnace dies, or their investments don't do well - they can't just earn more money to make up for any shortfall.

Those who have been diligent savers often struggle with the idea of spending their money in retirement.

It's emotional for people because they’re so used to seeing their account balances increase over the years and they find it really difficult to pull money out of their accounts.

Other fears of becoming irrelevant or simply bored can cause people to postpone retirement, according to some financial planners. Gearig said some of her most successful clients, including business owners and top executives, have prioritised work to the point where they can't imagine life without it.

“Honestly, the biggest fear I see is, ‘What am I going to do with myself if I don't go to work all day?’,” said Gearig. Once you know what frightens you about retirement, you can begin to address those fears, financial planners reiterate.

Picture used for illustrative purposes.

Your financial plan has been stress tested pre-retirement

If your fears are financial, you can hire a fee-only financial planner to review your retirement plan. Choose a planner who is a fiduciary, which means they're committed to putting your best interests first.

Getting an expert review is a good idea in any case. The planner can help you maximise retirement benefits, navigate health insurance options, decide the best way to take a pension, plan for possible long-term care and figure out a sustainable withdrawal rate from your savings.

Using sophisticated planning software, the advisor also can stress test your plan to see how it works in the event of a major market downturn, a surge in inflation or the premature death of you or your spouse.

Financial planners worldwide most often run clients' plans through various combinations of events, which includes a ‘maximum spend’ test to see how much money they can spend before the plan fails and they run short of money. When clients see that their plan still works, it eases their retirement fears.

Planning your retirement? This is what you need to do
You have itemised a post-retirement schedule for your money

You have itemised a post-retirement schedule for your money

Many retirees struggle, at least at first, to find a sense of structure for their days post-retirement on how to prudently spend their savings, numerous surveys show.

This is why having a plan for how you'll spend your time and money can help, financial planners further explain.

That plan might include a bucket list of travel plans you can start checking off. These are especially important to plan financially because your post-retirement income is limited or finite, and you can’t afford to go overboard with your expenses.

Or, you could create a pie chart or schedule of how you want to divide your time and money among various other cash-intensive post-retirement pursuits.

The most popular hobbies across the world among people over the age of 65 are boating, golf, antiquing, photography, model-building, gardening, and genealogy, among others. Some hobbies are less expensive than others depending on the tools and gear needed for the activity.

For example, a new digital camera purchased online could cost you around $500 (about Dh2,000), but a boat could cost 10-20 times that amount, if not more.

Although you may need some time to prepare yourself financially, mentally and emotionally for retirement, just don't let the preparation continue indefinitely, Gearig pointed out.