Setting a realistic retirement date is a critical step in planning for a successful retirement. For some people, the day of retirement is a long anticipated and joyful day, for others it can be filled with anxiety about the unknown. But whatever it is, it needs to be carefully chosen.

A retirement date is more than waiting to reach a certain age or starting to collect Social Security. It is the culmination of years of working, planning, and dreaming, ending with a bungee jump into the next phase of life. With proper planning, it can be the start of many rewarding years with more freedom for personal choices and rewarding activities.

However, in order to enjoy our retirement, we need to have realistic expectations for retirement and the financial resources to implement our dreams. Reality has to balance our desires with our finances.

A key component of our expectations is choosing a realistic date for our retirement. Realistic means, plausible, reasonable, doable. In other words, is the date we are choosing a real possibility?

To help determine a realistic retirement date, consider the following:

• How many years might you be living in retirement - 25, 30, or longer?
• When can you retire from your job? Do you have the required years of service?
• What sources of retirement income can you draw on?
• Will you have the financial resources to afford your desired lifestyle in retirement?
• Do you have plans for another career?
• Could you start another career if your finances required it?
• What activities do you plan to pursue in retirement? What will they cost?
• How is your health? How might it impact your retirement lifestyle and expenses?
• Spouse and family - are they ready for your retirement?

Action-steps:

• List the sources of income you will have during retirement.
• Get an estimate of your retirement payout from your employer’s plan.
• Review your most recent Social Security statement for estimated benefit.
• Set a deadline for eliminating debt prior to your retirement date.
• Prepare a retirement budget.
• Determine the number of years that your financial resources will last, given your sources and amount of income, and anticipated budgeted expenses.
• If your resources will fall short, consider -
  • Working longer.
  • Items in the budget which can be reduced.
  • Part-time work during retirement.

Also, review Chapter 15 in the book Investing for Retirement - Surviving a Financial Tsunami.