Guaranteed source of income. Are you already fully vested in your 401(k) or pension? Have you reached the age when you can begin making withdrawals? Before you can retire, you need to have a guaranteed source of income that is predictable.
Liquidity. Do you have a ready source of cash to take care of all your expenses as soon as you retire? If you need to sell stock or other assets to produce income for living expenses, you are probably not ready to retire.
Distribution strategy. Do you have a retirement distribution strategy in place that will provide you with enough income every year to cover your bills? If your retirement investments are still experiencing wide fluctuations, now is probably not the best time to retire.
Health insurance. If you are planning to retire before the age of 65, are you able to afford health insurance until Medicare kicks in?
Contingency planning. Have you done contingency planning so that some unforeseen circumstance like a major health problem doesn’t derail your retirement plan? Some experts suggest doing a “best case” and “worst case” retirement budget to determine if you would be able to survive a large complication.
Gut check. The longer you work, the better off you will be in retirement. Working longer gives you more time to save and less time to spend. However, if continuing to work is harming you emotionally or physically, the trade-off might not be worth it.
Of course, one of the critical elements small business owners needs to have in place prior to retirement is a business succession plan or exit strategy. This is the best way to ensure your retirement years are indeed golden.
For more information on retirement planning for small business owners, contact our Orange County law firm.