Signs You Aren't Financially Ready to Retire

It can be tough for working Americans to determine when to transition into retirement. There are several financial red flags that signal when stepping away from work might not be the best option.

Here are some signs you are not financially prepared to retire:

1. A high debt load.

2. No retirement spending plan.

3. Not accounting for health expenses.

4. Banking on Social Security.

5. No plan to pay off a mortgage.

6. No clear investment picture.

7. You're supporting kids.

8. Not considering extra expenses.

Among Americans who have retired, one in four felt they were not well prepared financially to step away from work, according to a 2019 poll by The Associated Press-NORC Center for Public Affairs Research. Here is how to remedy these financial oversights and map out a retirement timeline you can logistically manage.

1. A High Debt Load

If you have a large amount of debt compared to your income, consider paying off pending balances before moving into the next phase. Say your monthly income is currently $5,000 and you pay $1,000 toward a credit card balance every month. If you get rid of the credit card debt, you won't need that extra $1,000 payment each month in retirement. This will free up your retirement income for other activities. Without debt payments to worry about, "the funds in your retirement savings will last longer," says Lisa Bamburg, owner of Insurance Advantage & LMA Financial Services in Jacksonville, Arkansas.

2. No Retirement Spending Plan

If you don't know the amount you'll need for living expenses in retirement, it is difficult to estimate how much of a nest egg you'll need. When thinking about your retirement lifestyle, "create a monthly budget," Bamburg says. "If you want to travel in retirement or spend more time with grandkids, you need to have an idea of how much that will add to your monthly spending." Once you've laid out a monthly budget, you can compare it to your investments and savings to see whether you have enough set aside to retire.

3. Not Accounting for Health Expenses

If you plan to retire before age 65, which is when you'll become eligible for Medicare, you'll need a separate plan to cover your health costs during the interim. "Health insurance is incredibly expensive," says Logan Allec, a certified public accountant and owner of the personal finance blog Money Done Right. "Depending on your circumstances, health insurance could cost more than $1,000 a month."

Retiring at age 65 or older can bring its own set of health challenges. Medicare doesn't cover all medical expenses, so you'll want to factor health costs into your retirement budget. The list of health costs in retirement could include premiums, copays for doctor visits, home care, dental work and vision care, along with other expenses not covered by your insurance.

4. Banking on Social Security

You can create a my Social Security account and get an estimate of the Social Security benefits you can expect to receive in retirement. Benefits are based on your work history and income. You may find that the benefits won't support the lifestyle you have planned in retirement. "What happens if Social Security benefits are reduced?" Bamburg says. "Your retirement plan needs to be more than Social Security."

5. No Plan to Pay Off a Mortgage

If you still have a mortgage on your home, check how many more years of payments you have on the loan. "A mortgage, as a recurring payment you'll face every month, will likely be your largest and most consistent expense," Allec says. "Until you have a plan for how you can handle your largest expense in retirement, it's not time to retire yet." You may decide to use some savings to pay off the home loan. You could also sell the home and downsize in retirement.

6. No Clear Investment Picture

If you have a number of investment vehicles, such as a 401(k) plan through work, an individual retirement account, stocks, bonds or real estate, you need to understand how they fit together to produce an income for your retirement years. "A collection of retirement savings is not a plan," says Jeannette Bajalia, founder and president of Woman's Worth in Jacksonville, Florida. "They are merely a series of financial products that you happen to own, and this doesn't guarantee retirement success." Sit down with a financial advisor to look at your investments and create a plan that can be used to fund your retirement years.

7. You're Supporting Kids

If you still have children at home or in college, you may be spending funds every month to help cover their living expenses. Retiring and moving to a fixed income could cause a strain on your overall budget. "Retirement should be about you and being comfortable enough not to have to scrimp and worry about your children," Bamburg says. You may decide to wait a few years until your children are living on their own to retire. You could also opt to pick up a job in retirement to boost your income.

8. Not Considering Extra Expenses

Even with a crafted retirement plan, the unexpected could surface during retirement. Inflation might be higher than predicted, health care costs could rise more than expected or there could be an unforeseen house repair. "Make sure you account for the unknowns," Bajalia says. You might keep an emergency fund that can be accessed during the next few years. You could also set aside one retirement account that is easy to access for unexpected costs.

This article originally appeared on Yahoo! Finance.

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