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Ready to Retire? Not Until You Read This!

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Many of us, no matter our age, feel ready to retire right now, drawn by the prospect of having endless job-free days. Most of us know we're not quite ready, though, because we haven't saved enough money yet. And that's a good way to think about it -- that we shouldn't retire until we're ready, with all our ducks in a row -- but it often doesn't work that way. Many people end up retiring before they're ready, and that can wreak havoc on their finances and their personal lives.

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Surprise retirement parties

Last year, the folks at the Transamerica Center for Retirement Studies surveyed 2,000 American retirees and found that most of them had retired sooner than they'd planned to. Specifically, 79% of those in their 50s, 67% of those in their 60s, and 53% of 70-something retirees retired before they had expected to. A 2015 Merrill Lynch report found that 55% of retirees had retired earlier than expected, with 37% of them retiring early because of health problems, 27% because of job loss, and 11% because they needed to care for a loved one.

Clearly, few of us have total control over exactly when we will retire. So what can you do to increase your odds of a timely and comfortable retirement? Here are four ways to get started.

Save and invest more

One obvious way to brace for the possibility of an unplanned early retirement is to sock away more money for your golden years. If you expect to retire in the next 10 to 20 years, here's how much you can accumulate by socking away various sums that grow at an annual average of 8%:

Years Until Retirement

Total Retirement Savings if You Invest...


$8,000 Annually

$10,000 Annually

$12,000 Annually

10 years




15 years




20 years




Note how much less money you'll have in each scenario if you end up retiring five or 10 years before you had planned to. In this example, retiring five years ahead of schedule could cost you between $4,000 and $10,000 in annual income for the rest of your life. On the flip side, just think about how much better off you could be if you saved more every year and perhaps worked for a few extra years. If you can make some financial sacrifices today, then they'll pay off in spades when you clock out for good.

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Get in tip-top shape

If you want to retire on your own terms, then there are few bigger priorities than getting and staying healthy. Being in poor health dramatically increases your odds of an unplanned job loss. A 2015 University of Michigan study found that people are less likely to be leave the workforce early if they have jobs that "entail less physical effort, less stress, and jobs that have not increased in difficulty in recent decades, and those in which people can reduce hours if desired."

Even if you do lose your job unexpectedly, being in good health will raise your quality of life and help keep your healthcare expenses in check.

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Think about alternative income streams

One of the best ways to ensure your retirement security is diversify your income streams. For example, you might consider purchasing an annuity, which provides regular income now or at a later date in exchange for a large up-front payment. Annuities offer better interest rates than CDs or money markets, and you can choose to receive your payouts now (with an immediate annuity) or at a later date (with a deferred annuity, which will offer a better interest rate).

Be careful with variable annuities and indexed annuities, which can come with high fees, restrictive terms, and unpredictable payouts. A more reliable option is a fixed annuity, which makes fixed payouts throughout a set time period (which can be the remainder of your life). They also offer better return on investment than CDs and money market funds.

As an example, a 70-year-old man in Missouri could recently purchase an immediate fixed annuity for $100,000 in exchange for about $600 per month, or $7,200 per year). With $300,000, he could get close to $22,000 per year -- enough, with Social Security income, to support many retirees.

Another potential income stream is rental property. You buying a new property to rent out, or you could rent out your own home, or at least a room, through one of these newfangled services like Airbnb. Read up on each possibility before taking any action, though. Renting out a home or some apartments can generate sizable monthly checks, but it also comes with substantial expenses and headaches, like maintenance and troublesome tenants. In some cases, landlords hardly profit at all once property taxes and insurance costs are factored in. Furthermore, real estate cannot be sold quickly or easily if you need funds on short notice.

Taking the Airbnb route requires less commitment and expense, though you might encounter troublesome renters there, too. To do well with Airbnb, you want to be an excellent host so that you get excellent reviews, which can attract more guests. It also helps to familiarize yourself with the local Airbnb market and make sure you're offering competitive amenities and prices. If you're unfamiliar with rental services like Airbnb, it would be wise to try it out as a customer and learn how it all works.


Image source: Getty Images.

Strategize your Social Security benefits

Finally, read up on Social Security strategies, because they can make a big difference in how much you collect from the program. The most popular age at which to start collecting retirement benefits is 62 -- the earliest age possible. However, the longer you delay claiming your benefits, the bigger your checks will be.

Keep in mind that it's not typically a huge mistake to claim Social Security early, because although the checks will be smaller, there will be more of them. Taking benefits at 62 may also help you retire sooner. Still, if you can delay benefits and you think you may live a long life, then you may want those bigger checks down the road as you draw down your savings.

Remember to synchronize with your spouse, too. If you've earned a lot less over your working life than your spouse, then your spouse's benefit checks are likely to be larger. The two of you might, if possible, start collecting your benefit early while delaying your spouse's benefit so that it can grow larger. That's because Social Security benefits increase by a percentage (about 8%) for each year they're delayed, so the higher the base amount, the more it will grow each year until it's claimed.

Whether you retire on your own terms or not, there are steps you can take now to prepare yourself for the cushiest retirement possible, so don't delay.

The $15,834 Social Security bonus most retirees completely overlook
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Longtime Fool specialist Selena Maranjian, whom you can

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