5 Questions to Ask Before You Retire

Deciding when to retire is often treated as a feelings decision, are you ready, are you tired of working, rather than a numbers decision. Both matter, but the numbers should come first. Here are five questions worth answering clearly before you give notice.

1. What will my guaranteed income actually cover?

Add up Social Security, any pension, and any other guaranteed income sources. Compare that number to your essential monthly expenses, housing, food, insurance, utilities. If guaranteed income doesn't cover essentials, the gap needs to come from somewhere reliable, not from hoping the market cooperates.

2. What happens to my plan if the market drops in year one?

A market downturn in your first few years of retirement can do more lasting damage than the same downturn happening ten years in. This is called sequence of returns risk. Before you retire, it's worth stress-testing your plan against a bad first year or two, not just an average one.

3. Have I actually modeled my healthcare costs?

If you're retiring before 65, you'll need to bridge the gap until Medicare eligibility, and that gap is often more expensive than people expect. Even after 65, Medicare doesn't cover everything. Get a real number, not a guess.

4. When am I claiming Social Security, and why?

Your retirement date and your Social Security claiming date don't have to be the same day. Many people retire and delay claiming for a few years to let the benefit grow. Know your specific break-even point before you decide.

5. Is my withdrawal order actually tax-efficient?

Pulling from the wrong account first, or in the wrong order, can mean paying more in taxes over your retirement than you need to. This is worth mapping out before your first withdrawal, not after.