Vanguard Says There’s One Thing You Should Do Before Retiring

Many people spend decades saving and investing for retirement without ever fully thinking through how they will know they are truly ready to leave work. Yet the decision involves more than money alone, since retirement can bring loneliness or a sense of emptiness if the transition is not planned well.

That is why it helps to make sure you are genuinely prepared to step away from your job and move into retirement. Vanguard highlighted three things to think about, beyond financial readiness, before making that choice. Here is what to consider, along with a few ways to make the transition smoother.

Being ready for retirement means more than having a nest egg

Vanguard notes that retirement looks different for everyone.

It also emphasizes that being prepared is about more than reaching a certain savings target. Moving from a steady paycheck to living on fixed income is a major adjustment, and it comes with changes that affect both finances and emotions. Preparing for those changes is an important part of a successful retirement.

Here are three questions future retirees should ask themselves.

How will you spend your time?

One of the biggest questions is how you want to fill your days. Some people plan to travel, take classes, and stay active. Others use retirement to volunteer more and contribute to their communities.

Some retirees start businesses or take on paid part-time work. In fact, 74% of workers expect to have some form of paid work in retirement, according to the Retirement Confidence Survey.

Many others spend more time with family or friends, playing sports or cards.

No matter what path you choose, it is worth thinking ahead about how you want to spend your time before you stop working. Doing so can make the shift to more free time feel less abrupt.

Where do you want to live?

According to an AARP survey, 75% of people over 50 want to remain in their homes after they retire. Still, some people may want to move to another part of the country. Some states offer more retirement-friendly tax treatment and other advantages.

Others may choose to downsize in order to lower housing costs, or simply move somewhere with better weather. Thinking carefully about where you want to live can make retirement planning easier.

When do you want to retire?

Once you have a clearer idea of the lifestyle and location you want, it becomes easier to determine when retirement should happen. Some people may be able to retire sooner if they plan to downsize and relocate to a less expensive area.

Others may decide they want a more comfortable retirement lifestyle and therefore need to keep working a little longer to make that possible. Retirement timing is deeply personal, but considering these questions in advance can help you decide when to leave the workforce.

Waiting to claim Social Security can raise income later

Although many people concentrate on 401(k) balances, workers will likely also have Social Security income. Benefits can begin as early as age 62, but they generally increase by about 8% each year after full retirement age until age 70. For that reason, many people delay claiming benefits.

If you are married, it is smart to talk with your spouse about the best time for each of you to file for Social Security based on your ages and retirement goals.

Try living on your retirement budget before you leave work

To see whether your retirement budget will work, Vanguard suggests testing it while you are still employed. That means spending only what you expect to have available each month in retirement and saving the rest.

Doing this can help you determine whether you will be comfortable on that income or whether you need to rethink how much you plan to spend.

Seek professional help if you need it

If retirement planning feels overwhelming and you are unsure when you will be ready, a financial planner can help. They can review your numbers, offer tax advice, and ask key questions that may help clarify your retirement plans.