Financial Advice

Are You Ready to Retire? Ask Yourself These Seven Questions

If you are thinking of retiring, take this retirement readiness test.

Published Dec 5, 2019 | Updated May 8, 2024

After a lifetime of hard work, the lure of retirement is hard to resist. We imagine carefree days spent enjoying all the things we never had time to do before, but how do you know when you’re ready? Adequate retirement planning should include a thoughtful exploration of your retirement income, life insurance, health insurance, remaining debt, and more. Ask yourself the following seven questions to assess your retirement readiness:

    CUSO Financial Services, L.P.1 at UFCU offers solutions that can help you prepare for whatever life brings next. Call (800) 252-8311 or (512) 467- 8080 x21081 to learn more.
  1. Do you have health insurance?
    At age 65, Medicare health care coverage kicks in, but Medicare typically only covers about half of a retiree’s total health care expenses. You’ll need to chip in for out-of-pocket expenses like Medicare Part B and other supplemental health premiums, co-pays, and dental and vision care. If you’d like to retire before 65, you’ll need coverage to span the gap.

  2. Do you need life insurance?
    Now is a good time to review your other insurance needs as well. You may not need as much life insurance2 coverage as in your younger years, but you may want to add coverage for long-term care insurance or other specialized illness insurance.

  3. Have you paid off your debts?
    If paying off your debts is not possible before retiring, factor a debt-repayment amount into your post-retirement monthly budget, and don’t forget to earmark emergency funds for unexpected expenses like unexpected car or home repairs.

  4. How will you replace your paycheck?
    Depending on how much you have paid over your career and at what age you begin collecting benefits, social security can provide a foundation for retirement income. You can check your social security estimated payments at Then consider how much additional income you’ll need to live on after the employer paychecks end. That’s where income from retirement accounts come into play. A financial advisor1 can help calculate how much you’ll need and guide you on ways to maximize your retirement income.

  5. What about taxes?3
    Just because you no longer have earned income doesn’t mean you won’t pay income taxes. You will owe tax on any withdrawals from traditional IRAs and 401(k) plans. Social security income over certain levels is also partially taxable.

  6. Where will you live?
    Where you choose to live can have a big impact on your monthly expenses. Some retirees  downsize or move to retirement communities or nearer to their children. Others choose to retire in place. There is no right or wrong answer — nor does a decision have to be permanent. Compare the cost of living with each of your options, including taxes, utilities, groceries, and transportation.

  7. How will you spend your time?
    A happy retirement is about more than financial health. Emotional health and well-being has been proven to help us live longer, happier, and healthier lives. Before retiring, consider what you’ll do with your newfound time. Consider phasing into retirement, and spend your time on activities that keep you engaged socially, mentally, and physically. These tips won’t guarantee you’re ready for this big step, but it may make the transition easier.

1 Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. UFCU has contracted with CFS to make non-deposit investment products and services available to credit union members.

2 Fixed insurance products are offered through CFS Insurance & Technology Services, LLC.

3 CFS does not provide tax or legal advice. For such guidance, please consult a tax and/or legal advisor.