Keep working or retire now?

Nov 23, 2011, 11:32 a.m.

While your heart may be on a beach hammock between two palm trees, your head may be thinking about paying bills and getting by on a fixed income. One of the challenges many Boomers are now facing is determining whether to retire now or wait until pension and Social Security checks start rolling in. While many of the factors you'll need to consider are personal and depend on your own unique financial situation, there are still these points you should consider:

If you have a traditional pension plan, contact your Human Resources department and get a detailed statement that outlines the terms of your pension. Look to see if there is a minimum age to retire or if you are penalized for an early retirement. Also educate yourself about the available options for awarding your pension to your spouse if you were to die, as this could affect your monthly benefits.Review your 401(k) allotments. If you are retiring, you might want to shift some of the funds into a more conservative account. With the rollercoaster ride on Wall Street in the last few years, you certainly can't afford to take a hit at this stage of life.

Talk to a professional financial planner and discuss ways to preserve your capital while enjoying a healthy return.Social Security sends a yearly statement with details about the age at which you can begin receiving benefits. For persons born in 1955, for example, full retirement benefits kick in two months after your 66th birthday. To check when your full benefits would start based on your birthdate, you can visit Social Security's webpage that provides detailed information to help you plan when it is the right time for you to take your benefits. Sometimes, just working a few years longer can up your monthly benefit, making it worth the wait.

Sit down with your spouse and discuss your long-term retirement goals. Are you planning to sell your home and downsize into a condo? Do you want to stay in your home and make the most of your garden? Do you envision spending your retirement tooling around the country in your custom motor home? Have you been bitten by the travel bug and now see yourself jetting off to Paris for a month? Each of these scenarios has different financial needs.

Selling your home and downsizing might mean you have additional capital to invest to finance your retirement needs. Your professional financial planner can guide you through the potential ways to achieve your desired retirement income. Staying in your home, however, usually means there are no financial surprises. You know what your property tax rate is, how much it costs to run your home, and if there are likely to be any significant home repairs. Maybe it's close to being paid off or it's entirely paid off already. Perhaps you can consider a reverse mortgage. You need to take all of this into consideration when downsizing and purchasing another property, as you'll likely encounter some hidden costs along the way.

Traveling the country via motor home has also gained popularity over the years. If you are keeping your main residence, carefully review your finances to ensure you have the income to maintain your residence and that mansion on wheels you've been eyeing--you know the one with the five pop-outs and the spacious sitting area, master bedroom and satellite. Factor in the cost of ever-increasing fuel costs and vehicle insurance, too.

If traveling to foreign countries is part of your retirement dream, you already know how expensive it can be. Research travel costs online to see if there are deals to be had before joining the jet set. The more educated you are, the more fun you're bound to have on your second, third or even fourth honeymoon together.

Whatever you've dreamed up for your life after work, carefully review your budget and what your new monthly income will be to see if you can meet your goals. It might mean delaying your retirement for a few years, but you will be better able to pursue your dreams by doing so.

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