You know you’re ready to retire when you have a solid budget, a profitable investment, and little to zero debt. You become excited about spending your retired years. However, if you see or experience the following signs, you may not be ready yet financially to retire.

Cannot Pay Current Bills

This is a no-brainer. If you struggle to pay your bills, retiring isn’t one of your best options yet.

As a rule, retirees need about 75% of their pre-retirement income to enjoy a comfortable retirement. This income usually comes from social security pensions, 401(k)s, IRAs, and other savings.

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High Debt Level

Huge debts will definitely strain your savings after you retire.  The best answer to this is reduce or get rid of debt-attractive stuff, such as credit card payments and car loans.

Depending of your personal situation, you can also downsize and pay off your mortgage to help you in the long run.

Paying down debt before your retirement will consume more years than you’d like. However, it will be worth it for the ease that comes after having all those monthly payments removed.

Eliminating debts and mortgage also means bidding goodbye to interest payments that can take a toll on your long-term finances.

With this in mind, it’s challenging to know the best use of your money when you have to choose between putting that money in your retirement account or paying down debts.

No Plan for Future Major Expenses

As much as possible, you shouldn’t ignore some foreseeable expenses like renovating your house, buying a vacation home, or, perhaps, getting married.

These expenses can add up, especially if you withdraw funds from taxable accounts.

It is better if you tackle these larger expenses before you retire to minimize their impact to your portfolio.

No Monthly Financial Plan

After you retire, you no longer have a steady source of income. But your bills continue.

Planning your monthly financial strategy means analyzing when you will start drawing Social Security benefits and how much you’ll receive. You must also consider how much you’ll withdraw from your personal retirement account.

Having a monthly plan also means having a solid understanding of your expenses. Ideally, you should have two to three years of actual spending history summarized by category.

Analyze each category to find how it might change during retirement.

Knowing what your expense will be means knowing how much income you will need. Once you know how much money you’ll need each month, you can assess whether your nest egg is enough to allow you to retire.

No Long-Term Plan

It’s also important to know how long your savings will last and how high a spending level you can maintain.

How much should you withdraw from your portfolio each year? There’s a popular 4% rule, which says you can withdraw 4% of your retirement assets each year.

That amount is expected to allow your portfolio to last at least 30 years in many cases.

Depending on your health, your risk tolerance, and your portfolio, you must have a plan for the percentage of assets you’ll spend each year. This might require the help of a professional portfolio planner.

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