If so, you must understand how to determine if you're really ready to leave the workforce and live without a paycheck. Fortunately, there are only a few steps you must take to make an informed choice. If you're hoping 2028 will be your retirement year, here's what you should do.
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Continue » Knowing how much you plan to spend is the first step to determining if you're ready to retire. Since 2028 is approaching fairly quickly, you should be able to make a detailed budget that estimates your costs. Sit down, look at your current expenses and how they'll change in retirement, and add in any extra costs you'll need to pay as a retiree, like for Medicare or private health insurance if your employer is currently covering your costs.
Of course, costs go up over time due to inflation. So your budget should be a little bit higher in 2028. The Federal Reserve targets a 2% inflation rate, but inflation has been running a little higher.
To be on the safe side, you may want to budget assuming an inflation rate closer to 2.5% to 3%. Once you know your income, you have to figure out whether you have enough to cover your spending needs. For many people, Social Security is a key source of income.
But you'll have to decide if that will be the case for you right away or if you plan to retire but not claim benefits immediately. Think about how old you'll be in 2028 when it's time to retire, and whether you'll have reached or gone past your full retirement age yet. If you are going to be 70, then you'll have maxed out your Social Security benefits and will want to claim them.
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