Preparing yourself for retirement can be scary, as so many variables and questions leave timing up in the air and offer little to no confidence when it comes to selecting the perfect moment to quit your job and spend your time doing what you want to do instead of what you have to do. There are, however, strong indicators that may help you realize that you’re ready to retire. While many savers and pre-retirees set concrete milestones and timetables, only a few of the important signs that you can retire comfortably have to do with your age. Here are some ways to know that you might be ready to leave the workforce.

1. You Have Adequate Savings to Cover Your Projected Lifestyle Expenses

One of the first and most certain indicators that you’re ready to retire is having adequate savings to cover your projected lifestyle expenses throughout retirement. Granted, this will be different for everyone based on desired lifestyle and expected costs, which is why it can be helpful to consult your financial professional as you make your way toward retirement. They can help you determine a retirement budget that suits your spending habits and desired lifestyle, as well as the longevity of your savings in relation to that estimate. It can also be important to consider that your expenses may rise in retirement, as you might work to check off bucket list items you’ve had for years. It’s all part of the planning process that will be unique to you and your goals.

2. You Are Debt-Free

It’s not typically a good idea to take on a pile of debt while living on a fixed income. With that in mind, ensuring that you have little to no debt when you enter retirement can be paramount to your ability to live your desired lifestyle and have a safe, secure post-career life. This could mean paying off credit card debt you’ve accrued while raising children, but it could also mean tackling home loan bills that never quite seemed to stop arriving in your mailbox. The problem with bringing your debt with you into retirement is that you stop working for your money and you start asking your money to work for you. While that’s the best-case scenario, it doesn’t always work perfectly in, for instance, periods of market downturns, which may force you to drain your savings to pay for necessities.

3. You Have Secured Multiple Income Streams

Oftentimes, retirement isn’t as much about total savings as it is about income. That income is what you’ll use to cover your projected expenses, meaning it’s integral to your ability to provide yourself with the lifestyle you both want and deserve. In the modern retirement landscape, it can be helpful to secure multiple income streams that can provide different levels of growth and protection, thereby helping you fund your dreams with different sources of funds. Additionally, one retirement account may not suffice. Rather than relying solely on your 401(k), it can be helpful to add other retirement investment accounts or insurance products that match your goals, thereby allowing you to collect income based on which source is the most advantageous at a given moment, something your financial professional should be able to help with. Additionally, those extra income streams can be helpful if you decide to delay claiming Social Security. Simply by waiting past your retirement age, your benefit can be permanently increased by up to two-thirds of a percent each month—a total of 8% for each year you wait—offering an opportunity to enhance your benefit forever.

4. Those Income Streams are Diversified Between Tax-Free and Tax-Deferred*

Diversification of your retirement portfolio and tax-advantaged accounts may not guarantee success in retirement, but it could position you to offset certain tax obligations depending on future circumstances and legislation. On one hand, tax-free saving and investing vehicles, like Roth 401(k)s, Roth IRAs and permanent life insurance policies, can present a more secure option through offering tax-free growth and withdrawals. Additionally, later tax legislation probably won’t affect your withdrawals, and you may avoid required minimum distributions. Tax-deferred accounts, like traditional 401(k)s and traditional IRAs, are funded with pre-tax dollars then taxed as ordinary income upon withdrawal. While this can present an opportunity for greater growth, the tax landscape is ever-changing, potentially causing less certainty in how much you’ll have when you retire.

*Diversification is a method used to help manage investment risk; it does not guarantee a profit or protect against investment loss. For Roth distributions to be tax-free, all conditions must be met, including owning the account for at least five years and the owner must be age 59 ½. Accessing the cash value tax-free in a life insurance policy involves borrowing cash through loans. These loans are charged interest and reduce the death benefit and cash value of the policy. If a policy lapses or is surrendered with an outstanding loan, a portion may be taxed as a distribution.

5. You Have Liquid Savings

One of the first components of a healthy financial plan, no matter your age, is an emergency fund. The traditional recommendation for an emergency fund is somewhere between three- and six-months’ worth of living expenses, giving you the opportunity to cover necessary costs should you face an unexpected financial hurdle. In retirement, that liquid savings could prove even more important, as you may incur costs you don’t expect while living on a fixed income and drain funds meant to support your lifestyle for decades. As we mentioned above, it’s a good idea to clear most if not all of your debt prior to entering retirement, but having an emergency fund could help you protect yourself from car or home repairs, medical emergencies, part-time job loss and more. This is important even if you’ve shored up your savings and created multiple income streams.

6. You Have Hobbies

While this isn’t necessarily financial advice, having hobbies you really want to pursue can be another sign that you’re ready to retire. Your free time is set to skyrocket, and you’ll need a few ways to spend it to avoid immediately becoming bored. If you don’t currently have hobbies, or ideas of how you’ll spend your free time, it may be a good idea to remain in the workforce a little while longer while you try a few different pastimes. Some ideas include traveling, collecting, learning a new skill, picking up a part-time job, starting a business, golfing, volunteering and more. The possibilities are nearly endless, as long as you’re doing something you love and something that drives you to get out of bed in the morning long after the alarm means that it’s time to get ready for work.

7. You Have a Plan

Finally, having a written plan that is easy to follow and remain dedicated to is key to a successful retirement, and it’s important to create your plan long before you choose to leave the workforce. A successful plan isn’t just for decumulation and distribution of your various retirement accounts. It’s also a comprehensive map and strategy that outlines ways you will cover your many expenses, including those that simply bring pleasure. Furthermore, though you’ll certainly want your plan to be flexible and malleable, it can be helpful to have an idea of how you’ll use your funds, giving you a better grasp of how much you’ll spend on a monthly or annual basis and how much you’ll want to save prior to entering retirement.

This article is not to be construed as financial advice. It is provided for informational purposes only and it should not be relied upon. It is recommended that you check with your financial advisor, tax professional and legal professionals when making any investment or any change to your retirement plan. Your investments, insurance and savings vehicles should match your risk tolerance and be suitable as well as what’s best for your personal financial situation. 

This content, provided by a third-party resource, is believed to be accurate information. This information does not constitute legal or tax advice. Individuals should consult with an attorney or professional specializing in the fields of legal, tax, or accounting regarding the applicability of this information to their situations. The third-party resource is not affiliated with the named broker-dealer, state, or SEC-registered investment advisor firm. The material provided is for educational purposes only. Consulting with your financial advisor and tax professional is recommended to understand the specific implications of your situation.