Am I Ready to Retire? How to Know If You’re Financially and Emotionally Prepared

How Do I Know When I’m Financially Ready to Retire?

Saving for retirement is one of the most important financial goals you’ll ever set. But, like many people, you might find yourself wondering: how much money will I need to retire comfortably? 

Your answer depends on a variety of things, including your lifestyle, expenses, retirement savings goals, and how long you plan to be retired. 

Here are a few guidelines to help you estimate how much money you will need for a financially secure retirement. 

How Much Money Do I Need to Retire Comfortably?

These retirement withdrawal strategies can help guide your retirement budgeting and ensure your savings last throughout your retirement years. 

Read the full article >  

• The 70-80% Rule: This common rule of thumb says that you’ll need 70 to 80% of your pre-retirement income. For example, if you currently earn $100,000 annually, you will need $70,000 – $80,000 after you retire to maintain a similar lifestyle. 
• The 25x Rule: According to this rule, to live comfortably in retirement for 30 years, you will need savings of at least 25 times the annual amount you plan to spend. For example, if you plan to spend $80,000 annually, you will need $80,000 x 25 = $2 million in savings. 
• The 4% Rule: This rule provides guidelines for withdrawing retirement savings. With this rule, if you withdraw 4% of your retirement savings each year, adjusting for inflation year-to-year, your savings will provide you with enough income for about 30 years. 

How Much Do Federal Employees Need to Save for Retirement? 

Retirement planning for Federal employees can be especially tricky to navigate. Fortunately, the Office of Personnel Management (OPM) provides a FERS Retirement Calculator to help you assess your general needs, including your Thrift Savings Plan goals. 

For a more in-depth look at Federal retirement, we encourage you to explore our free guides and checklists, designed especially for Federal employees: 

• Federal Retirement Guide: this highly detailed guide gives you the ins-and-outs of your Federal retirement.  
• Saving for Retirement Guide: this guide is designed to share several strategies and actionable steps for saving for retirement. 
• Are You on Track for Retirement?: this downloadable checklist can help you check your progress to make sure that you’re on the right path. 

Am I Emotionally Ready to Retire? 

Planning for retirement means more than just financial preparation. It also involves deciding if you are emotionally ready to leave your full-time job.  

To help you assess your psychological preparation for retirement, consider these questions from the National Active and Retired Federal Employees Association: 

• Now that I am preparing for my life after retirement, how do I prepare for the non-financial aspect of retirement? 
• How do I define my purpose in retirement? 
• What are my core values that have guided me throughout life? 
• How do I discover what I do best in planning my life after retirement? 
• What is required to create a vision for my next chapter? 
• How do I research resources that I need to prepare for this vision? 
• How do I rehearse my next chapter while I am still working? 

Your answers to these questions can hopefully give you a sense of if you are emotionally ready to transition out of the workforce, or if you still need a few more years. 

Am I On Track for Retirement? 

As you work towards retirement preparedness, it’s important to ensure that you are on the right path. WAEPA’s free downloadable checklist can help you assess whether you are on track as you continue with your pre-retirement planning. 

Download the checklist > 

To consider yourself “on track” for retirement: 

• Your retirement goals should be clearly defined 
• You should have a clear sense of how much you need to save 
• You’re saving enough in your 401(k) or Thrift Savings Plan 
• You regularly review your investment mix for retirement  

Related: Top 3 Things to Know About FERS Retirement Benefits > 

When is the Best Time to Retire?

Is There Actually a Best Date to Retire?

In short, yes. 

As a Federal employee, your retirement date is set at the first day of the month after you choose to retire. You’ll receive your first FERS annuity check on the first day of the following month. 

For example: 

• Paul chooses to retire on May 15. His retirement date is set as June 1, with payments starting on July 1. 

This will result in a gap between your last working paycheck and your first annuity payment. There are some strategies that can help minimize this gap and its impact on your cash flow: 

• Retire at the end of the month: your retirement date will be set as the first of the next month (the very next day), with your annuity payments starting four weeks later rather than up to eight weeks. 
• Retire at the end of a pay period: this can help you make the most of your accrued leave. The leave that you cash out can help mitigate interruptions in your cash flow while you wait for annuity payments to begin. 
• Retire on December 31: this is always a good option and allows you to begin with a fresh start in the new year. 

Explore the best dates for FERS employees to retire this year >  

Wherever you are in your retirement planning, it’s important to consider both the financial and emotional aspects of retirement. Doing so can help you ensure that your next phase of life will be both financially stable and emotionally fulfilling. 

For a deeper dive, explore WAEPA’s full library of retirement resources planning, which has (almost) everything you need to prepare for Federal retirement.