7 Signs You’re Not Ready to Retire

Credit card debt is bad debt, Mannino says, since credit card interest rates are typically higher than other forms of debt. Nearly half of Americans 50 and older carry a credit card balance from month to month, according to a recent AARP survey. 

If you’re among them, Mannino says to consider taking out a consolidation loan with a lower rate or using a balance transfer card with a low promotional interest rate and paying it down before the rate increases. Or, if you have extra money sitting in a savings account, consider using it to pay off your credit card debt before you retire.

3. You’ll soon need a new roof … or new car

If you expect to make a big purchase or repair in the next few years and don’t have money set aside for it, consider putting off retirement until you’ve either saved enough to cover that cost or worked it into your post-retirement budget, Benz says.

“You don’t know for sure when you’ll need to replace a car, but if it’s got 200,000 miles on it, you could probably say with some degree of certainty that you’ll need to replace it,” says Benz. Consider as well that you may need home renovations. Three in 4 Americans ages 50 and older want to stay in their home as they age, according to a 2024 AARP survey. It might make sense to keep earning, and saving, for home alterations that can accommodate physical limitations in your later years.

4. Your health care needs are complicated

When you’re working, you may take health coverage for granted because your employer pays some or all of your premiums. But if you plan to retire before you turn 65 and become eligible for Medicare, you’ll need a new insurance plan.

“When I get clients that come to me in their late 50s and early 60s and want to retire, I say, ‘OK, well, what is your health care strategy?’ ” says Mannino. “Because if you have to buy your own policy, it could be upwards of $1,000 a month.” 

If you’re leaving a full-time job with employer-provided health insurance, you’ll likely be eligible for a short-term plan through COBRA (the Consolidated Omnibus Budget Reconciliation Act), a federal law that requires companies with 20 or more workers to let employees continue their group health insurance coverage for up to 18 months after leaving their jobs. But you’ll have to pay the entire COBRA premium, with no assistance from your employer. Another option is to buy an insurance plan through the Affordable Care Act exchange, but these plans can be costly, and coverage limits can vary.

If you have a chronic health condition that requires specialized care, you may want to wait until you qualify for Medicare before retiring. Julie Noonan, 61, a professional coach in Orlando, Florida, says family health expenses have caused her to delay her retirement plans. “I will likely need to continue to work full-time and either get benefits from a new employer or continue to pay for [health insurance] through my company,” she says.

Tip: If you are still some years away from your intended retirement date, opening a health savings account (HSA) allows you to save and withdraw money tax-free for qualified medical expenses in retirement, says Brad Clark, founder of Solomon Financial, an independent advisory firm in Carmel, Indiana.

5. You don’t know how much you need to have saved

Clark says many people underestimate their future financial needs. “I can’t tell you how many times I’ve seen people retire and they’ll say, ‘I can live on X per month,’ and when they get going into retirement, they find out real quickly that they can’t,” he says.

He recommends crafting a budget that incorporates not only what you’re spending on food, housing, utilities, transportation and health care but also what you plan to spend on leisure activities when you’re retired, like travel and entertainment. “I don’t care if it’s the gym or some hobby,” he says, “it is probably going to generate some additional expense.”

Once you’ve made a budget, see if your retirement income — from savings, retirement accounts, Social Security and other assets — can support it. If it falls short, working a bit longer can help you grow your nest egg to a sufficient size.

6. Your emergency fund is a little too lean

In addition to retirement savings, you should have an emergency fund of at least three months’ worth of expenses, before you stop working, to handle unexpected hassles like a big home or car repair. Depending on your portfolio’s asset allocation, you might need a larger emergency fund that could cover at least 12 months of retirement expenses to protect you from dips in the stock market. That way, if there’s a downturn, you could use money from your emergency fund to weather the storm and replenish it when the market recovers, Clark says.

7. You haven’t figured out how to fill your time

Money isn’t the only factor to consider while planning when to retire. The Resume Builder survey found the second most common reason retirees returned to work was to combat boredom. “I think it’s a huge blunder to reduce retirement planning to the numbers,” says Benz.

Carefully consider how you’ll spend your golden years. Depending on your retirement vision, you may be happier gradually phasing out of work or continuing to work part-time in retirement.

Editor's note: This article, originally published in 2023, has been rewritten with new information.