Once you have a decent handle on expenses , you can plug that figure , along with such information as your age , current retirement savings balance , the amount you ' ll collect from Social Security any other guaranteed income sources , into a good retirement income calculator that uses Monte Carlo analysis to estimate the probability that your resources will be able to generate the income you ' ll need for the rest of your life .
Again , we ' re dealing with approximations here ; no tool can predict the future . But if after going through this sort of analysis you find that your chances of being able to generate the income you ' ll need are uncomfortably low -- say , less than 80 % or so -- then you may want to postpone retirement until they improve or find other ways of tilting the odds in your favor , such as downsizing , taking out a reverse mortgage or paring your discretionary expenses .
As you ' re going through this financial review , you ' ll also want to take a look at your retirement investments . The single most important thing you want to do is ensure you ' re properly balancing risk and reward . During your career you have plenty of time to rebound from severe market setbacks , so you can afford to tilt your portfolio mix heavily toward stocks to generate higher long-term returns . In retirement , however , the combination of big losses plus withdrawals from your portfolio can increase the risk you ' ll outlive your nest egg .
So as you near and enter retirement , you ' ll likely want to scale back your stock holdings to prevent a market downturn from decimating your nest egg .
Just as there ' s no single retirement age that ' s right for everyone , neither is there a stocks-bonds mix that suits retirees and near-retirees . But you can get a decent idea of how to divvy up your portfolio between stocks , bonds and cash by completing this risk tolerance-asset allocation questionnaire .
But deciding the appropriate time to retire isn ' t just a numbers game . To make a smooth transition into retirement , you also want to consider how you actually want to live and whether you ' re socially and emotionally prepared to leave the work-a-day world . Do you have activities that will keep you occupied -- and better yet , make your time in retirement fulfilling and meaningful -- now that you won ' t have the structure of a job to plan your days ? Do you have a solid network of friends and family to help you stay socially connected ? Will you spend most of your time close to home or do you plan to travel ? Do you expect to seek part-time or occasional work for pay or volunteer ?
These are the sorts of issues I put under the general heading of lifestyle planning , and it ' s better that you look into them before you leave your job than after . That ' s especially true if you ' re thinking of working in retirement , as finding a job you ' ll enjoy and that pays an acceptable wage may be more challenging than you think .
It would be nice if after going through the process I ' ve described , you could be sure to arrive at firm yea or nay on retiring . But things aren ' t always so clear . For example , you may find that you ' ve got all the resources you need to call it a career , but you enjoy working too much to give it up now , which is fine . Conversely , you could come up short on financial readiness but because you feel you ' re simply unable to go on with your job you figure you ' re better off retiring anyway , even if that means scaling back your retirement vision .
And sometimes you may not have much of a choice . Almost half of retirees left their jobs earlier than they planned , according to the Employee Benefit Research Institute ' s 2017 Retirement Confidence Survey , often due to health problems , being laid off by their employer or because they had to take care of a spouse or other family member . Faced with such a situation , one person could decide to try to find work , any work , and postpone retirement . Another person may decide to retire and fashion the best post-career life as possible , given the circumstances . There ' s no one correct response .
Ultimately , deciding when to retire is really about deciding how you want to spend whatever time you have left in this life . So while I recommend that you weigh the issues I ' ve raised above , recognize that neither I nor anyone else can know what the right decision is for you . This is a call you ' ll have to make as best you can give the circumstances you face .