5 Key Signs 2025 Is Your Year To Retire
Written by
Kerra Bolton
Edited by
Amen Oyiboke
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Knowing when to leap into retirement can be one of the most important decisions of your life. However, if you can meet essential financial, lifestyle, and emotional milestones, you can retire without second-guessing yourself.
Here are five key signs that 2025 is your year to retire.
You Can Afford It
A solid financial foundation is the biggest factor in deciding when to retire. Following the 4% withdrawal rule means you’ve saved 25 times your annual expenses or have multiple income streams to cover your needs.
However, if your finances aren’t quite there yet, you might want to wait to retire until your nest egg is sufficient.
“I see two common reasons people continue to work past their retirement date,” said Curt Scott, president and investment advisor at Scott Financial Group. “They haven’t saved enough, so they need to keep working or once they achieve the necessary amount to retire, the stress of life reduces, and they enjoy their job again.”
Reliable Income
Beyond savings, having steady income streams such as pensions, annuities, rental income, or dividends from investments can be another retirement indicator.
However, individuals considering retirement should ensure that multiple income streams can cover expenses without worrying about exhausting their savings too quickly.
“As you age and retirement comes more into focus, it’s helpful to know what you’re working towards and where you are currently,” said Megan Yost of Segal, a human resources and employee benefits consulting firm. “This includes looking at the numbers more closely.”
For example, Yost said individuals should gauge how much money they’ll need to enjoy a comfortable retirement and identify income sources.
“You’ll also want to understand any requirements you need to meet to access pension, retirement savings, or Social Security. Then, figure out if you have any gaps and how to boost your savings to reach your retirement income goals,” she said.
You Have a Manageable Debt Plan
According to the latest LendingTree analysis, nearly all (97.1%) of American adults aged 66 to 71 still have nonmortgage debt.
The report stated, “Across the U.S., credit card debt is the most common nonmortgage debt type for retirement-age Americans, with 92.6% carrying a balance. Meanwhile, 36.8% of retirement-age adults have auto loans, 19.3% have personal loans, and 8% have student loans.”
Retirement is much easier when you aren’t burdened by debt. If you’ve paid off your mortgage, car loans, and credit cards or have a solid plan to do so without depleting your savings, you’re in a strong position to retire.
A Solid Healthcare Plan
Medical expenses can be one of the biggest financial risks in retirement. According to a RBC Wealth Management report, retirement wealth and health intersect.
The report stated, “Increases to the cost of care have led to some staggering numbers across a full retirement period, creating a price tag of over $680,000 for the future cost of care for an average 65-year-old couple in retirement.”
If you have private health insurance that fits your budget, you’re in good shape. Individuals retiring and relying solely on Medicare to provide for their health insurance needs should keep up to date on any Medicare-related policy changes before deciding whether to retire.
Scott said that individuals should also be mindful of how quickly their circumstances can change and take the necessary steps to handle those changes with the least negative impact on their lives.
“Don’t overspend to the point where you are beholden to your current income and keep yourself as healthy as possible,” Scott said.
A Successful Trial Run
AARP recommended testing your retirement budget by living on your projected retirement income for a few months.
Individuals planning to retire could make a budget for their normal expenses, including their projected income, interests, and where they want to retire. Weigh those numbers against your expected income and see if there are any gaps.
“If someone has planned properly and is financially and emotionally prepared for retirement, it can be a great thing,” Scott said. “It can allow someone to spend more time with friends and family and explore areas of interest that wouldn’t be possible working full-time.”
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