If you're thinking about retirement then it's probably a good idea to think about some of key issues.
Retirement can mean different things to different people. Some people might want to keep working part-time because they enjoy the work and the mental stimulation it brings. Some just want to stop all work altogether – if that's you then I'd want to make sure you can tick off most or all of these things:
You're at the right age and wealth to retire
A lot of people aren't able to retire until they reach a certain age where they can get the age pension and/or access their superannuation account funds. For most people the pension and their super will be the two main things funding the rest of their lives. So if you're at the right access age, then that's a huge box ticked.
However, you may be part of the financial independence, retire early (FIRE) crowd that younger and are building up a large amount of assets outside of superannuation. You'll need to decide how much wealth and income you need to retire, but if you've hit that figure (or more) then you could be ready.
There are plenty of businesses that are directly or indirectly involved in helping people get into the right financial position for retirement such as IOOF Holdings Limited (ASX: IFL), Hub24 Ltd (ASX: HUB), Netwealth Group Ltd (ASX: NWL) and Countplus Ltd (ASX: CUP).
You have factored in living costs
People who retire have probably got a decent understanding of their income and expenses, but it's important to consider different scenarios.
Sure, this year's life spending is likely to be similar to last year. But have you considered if you and your investments are able to deal with a sizeable increase in inflation. Would your finances be able to cover a serious medical problem?
Do your finances cover all of the travelling and such that you want to do? Qantas Airways Limited (ASX: QAN) and Webjet Limited (ASX: WEB) don't offer their services for free.
You'd be comfortable even during a recession
It's inevitable that recessions happen every once in a while. Your finances need to be able to withstand a recession or else it could ruin the rest of your life.
The GFC was one of the worst financial events in economic history. But in share market terms it only took a couple of years and the dividends from investments like Wesfarmers Ltd (ASX: WES) and Commonwealth Bank of Australia (ASX: CBA) were quick to bounce back.
So I'd want to have at least two years of living expenses saved up in cash before completely retiring.
Foolish takeaway
I'm a long way from retiring, but I've got a long-term plan and I'm slowly working towards it.
