Those days when 65 years was a straightforward benchmark for retirement are long gone. People now put in a lot of thought while deciding the right time for retirement and this decision will depend on many factors, particularly the kind of life you wish to lead after retirement.
You might need more money if you want to explore the world or engage in exciting activities to utilize the free time you have after retirement. On the other hand, if you want to live a quiet and peaceful life then you would need lesser savings. Therefore, before finalizing the age when you want to retire, you need to do a careful review of your financial condition and the amount of savings that you have built up.
First, calculate how much you would have to pay for your everyday expenses after you retire. Then check if you have enough funds for traveling and other activities that you would like to engage in. This will help you in deciding how much money should be saved before you can retire. Remember that you would need to take inflation into account when you are doing these calculations.
If you do not have enough funds, then you need to start saving more every year. Too much debt is also an indicator that you need to work on your finances before you can retire.
You can improve your retirement fund by reducing your spending and channeling more money towards savings or for repaying your debts. Consider shifting to a smaller house if you are still living in a big one. It will help you in many ways – your mortgage payments will be reduced, you would be able to generate some savings from the move, and you would have to pay less for maintaining the house. Another important cost would be medical expenses. So get proper health coverage to deal with these expenses after retirement.
The economic meltdown might have burnt a hole in your retirement savings. If you have lost a substantial part of your savings, then you must have invested in instruments that involved more risk than you should take for your retirement investments. Learn from that shock and reallocate your investments so that your portfolio risk is reduced.
Retirement is one of the biggest steps of your life and it should be taken only after putting in a lot of thought and planning.