Good and Bad Reasons to Retire

I start every one of my retirement planning workshops by asking, "Why do you want to retire?" Here are just a few of the typical answers I get:

• "I don't want to wake up to an alarm clock anymore."

• "I'm too old to work any longer."

• "I hate my job and just can't wait to be done with it."

• "I want to travel."

• "I want to spend time with my grandchildren."

• "I want to do whatever I want, and not what somebody else tells me to do!"

And while every answer is honest, not every reason is a good one. So what are the good and bad answers to this question?

Let's start with the bad ones. These usually don't get expressed in public at my workshops, but they often bubble to the surface during subsequent private conversations.

• You're bored with or sick of work.

• You don't like your boss.

• Your friends are retiring.

• Retirement is what you're supposed to do at your age.

• Your parents retired at your age.

• You've reached an important milestone when you're supposed to retire, such as the normal retirement age in your employer's retirement plan.

• You got laid off.

• You think you have enough money, though you don't really know for sure.

In this weaker economy, I realize you might get laid off and decide to declare yourself "retired." While I understand why you might want to do this, it's not really a good idea if your financial resources are inadequate. If this happens, I'd suggest you redouble your efforts to find meaningful work--easier said than done, I know, but still possible. By bouncing back from a layoff, there are benefits to your physical and emotional health in addition to the obvious financial advantages.

Just don't make the mistake of retiring while you can still work and then depleting your financial resources at an age when returning to work isn't possible.

The list of good reasons to retire is much shorter.

• You know what you want to do, or you have a plan to find out.

• You've prepared a strong financial plan, and you have sufficient financial resources.

• You have affordable health insurance.

There's one more reason that's hard to classify as "good" or "bad", and that's poor health. It might be more accurate to call this an "unfortunate" reason to retire, because, unfortunately, it happens to many people. Taking care of your health can significantly reduce the odds of this unfortunate outcome, but you can do all the right things and still fall victim to an expensive, debilitating condition or have a serious accident. That's why it's critical to have affordable health insurance.

I strongly recommend that you reflect on your reasons for retiring before you make any permanent decisions. This is a great topic to discuss with your spouse, partner, close friends, and family. Talking through important issues with people who care about you is an excellent way to help you make difficult decisions. Having good reasons to retire and avoiding the bad reasons gets you off to a great start.

What are your reasons for wanting to retire?

Steve Vernon

View all articles by Steve Vernon on CBS MoneyWatch»
Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Retirement Game-Changers: Strategies for a Healthy, Financially Secure and Fulfilling Long Life and Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck.

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