Many people agonize over when to retire, because no matter how much you have saved, it typically means a loss of income and a number of other factors that affect your lifestyle. You’ll have to figure out how to finance all your same expenses, and often with much less money that comes from Social Security benefits, retirement funds and other savings.
However, some people may have organized their finances and lifestyle so frugally, or gotten so ahead of the game with investments or other financial strategies, that they don’t even realize they could have retired already. Here, our experts point out some of the common signs that you could have retired years ago — or can pull the trigger now.
You Don’t Have a Spending Problem
Most Americans spend as much, or more, than they make, according to Joe Wilson, financial expert and owner of Ten Point Financial, LLC,. On the flipside, “Consistently living on less than you make is a great indicator that you are ready for retirement,” Wilson said
You’ve Weathered Stock Market Downturns
Another sign of being retirement-ready is having made smart decisions during market downturns. For example, Wilson said, “During COVID I saw many investors, and some advisors, sell off investments and lose years of progress only to see the stock market rebound in a matter of months. Facing market uncertainty but sticking to your strategy is a great sign you can thrive in retirement.”
You Have More Than 25 Times Your Yearly Expenses Saved
Retirement is the ultimate exercise in budgeting, so the more money you have saved, the more likely you could have retired already. Wilson cited a Trinity Study that says with proper asset allocation, retirement savings can last 30 years with a 4% withdrawal rate. “Withdrawing less than 4% of your holding per year to pay for expenses is a great starting point to being retired.”
You Have Achieved Financial Independence
One significant sign that you could have retired already is if you’ve achieved financial independence, where you have accumulated enough savings and investments to cover your living expenses without relying on employment income, said Frano Grgić, a Forex trader and CEO of GetKnowTrading. “This means you can sustain your lifestyle for an extended period without depleting your invested principal.”
You Have Minimal or No Debt
Having little to no debt is another positive indicator of retirement readiness, as well. Grgić said, “It means you have effectively managed your finances and reduced financial obligations that could hinder your retirement plans. Being debt-free allows you to allocate your resources towards enjoying your retirement years.”
Work Is Optional
If you are still working by choice, and not under financial obligation, it suggests you might have been retirement ready for a while. Grgić said, “If you find joy and fulfillment in your work but could comfortably walk away without financial strain, it’s a good sign that retirement has been within reach.”
Your Spouse Retired
If your spouse has already retired, it may indicate that you could have retired years ago, as well. Grgić said, “Often, couples plan their retirement together and coordinate their financial goals. If your spouse has successfully transitioned into retirement, it might be a clue that you could have done the same.”
Your Savings Exceed Retirement Goals
If you find yourself in the coveted position where your financial assets and savings exceed the amount you estimated for retirement, it’s a strong sign that you could have retired earlier, said Amber Dixon, CEO of Elderly Guides. “The key is to have a financial cushion that covers more than just your expected living expenses,” she said.
You Receive Passive Income
Beyond retirement savings, if you’re in a position to receive a steady stream of passive income, such as rental income, dividends or royalties that covers your expenses, you might have been retirement-ready for some time, Dixon explained.
Healthcare Is Covered
While retirement years are often leisure years, you may also be facing more health issues. If you have a solid healthcare plan that can cover potential medical costs in your retirement years, it’s a good hint you could have retired earlier. Dixon said, “Healthcare costs are often a significant concern for retirees.”
Social Security Benefits Are Enough
Americans become eligible to collect Social Security benefits between ages 62 and 67, according to the Social Security Administration. Though the longer you wait, the more you are likely to get. If you have already reached your full retirement age and your Social Security benefits are enough to support your lifestyle, this is another sign that you could have retired earlier, Dixon said.
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