How do you know it is time?

I had a great idea yesterday morning at the gym (Yes I'm back at the gym!)  for a blog about hand sanitizer and how much I love the smell of  alcohol.  That got squashed because I was teleworking and too busy to write a blog.  Plus this morning my old friend told me I can't keep saying I am going to retire.  Having written only two posts so far, I'm not sure what she meant by that, but it reminded me that I said this blog would be about the drama of retirement.  So, let me get started with the first question - "How do you know it is time?"

Really, it's kind of like that question we all had when we were young, "How do you know when you are in love?"  I'm way past that time, so I'm sure I don't remember truly the angst of it all, but now I think "How do you know it is time?" is just as serious and full of potential angst.  From this point forward in this post, I am going to be serious, so if you truly don't care about when to retire or how to figure it out, you might want to stop right here.  Well, one last thought, figuring out when to retire has LOTS of calculations (at least the way I did it), which is a little bit easier if you think about it than trying to figure out if this is the ONE.  WARNING:  Serious stuff follows.

First  a disclaimer:  Most of this is just common sense.  

Ten years ago, I thought I would retire when I was 59.  That was before the stock dive of 2008.  Plus, I revisited the retirement materials I had received in the retirement course I had taken, and realized 62 was the magic number for me (more about that later).  

1. So first, take the government offered retirement class.  If you can take it really early it will help you see where you might need to make a few tweaks to your plans, your saving, etc...
2. If you have not done so already (I hope you have if you are thinking about retirement) put as much as you can into the Thrift Savings Plan.  I have contributed to TSP from the first day it was available at the maximum amount.  When it is taken out of your check before you see it, you won't even miss it.  Believe me.
3. During the year that you turn 50 (you don't need to have already had the birthday), you can also begin putting in a catch-up amount.  Do that, too.
4. It might be overkill (it wasn't for me-I need this income, too), but contribute to an IRA also.
5. I also tried to save money outside of the above "retirement accounts."  That's me, though.  I was/am really nervous about having enough money when I stop working.
6. If you work for the federal government, stay until you are 62, if you can.  At 62 and 20 years, your annuity will be calculated (FERS - I don't know about CSRS) at.1.1% of your high three.  If you retire before 62, it will be calculated at 1%.  It doesn't sound like much, but that .1% makes a big difference in your monthly check.
7. Don't count on Social Security at 62, unless you KNOW you will not work any longer.  If you are younger than full retirement age, $1 in benefits will be deducted for each $2 in earnings you have above the annual limit (source:  Social Security website).  The annual limit is less than $15,000.
8. My dad is 90 years old so I am counting on a long life.  Another reason not to take Social Security too early is that your annual benefit goes up about 8% a year if you don't take it.  If you don't think you will live very long, take it early.  I'm gambling that I will pass the point where I get more benefits by waiting.  Check out the social security website.  It is pretty good.  SSA/Retirement
9. Don't depend on those websites where you can calculate how much you will need to retire.  Do the work yourself by calculating your basic expenses now.  In my case, I have no outstanding debt other than a mortgage, so I listed mortgage, condo fee, utilities, cable, internet, phones (cell and landline).  I also calculated all of the various insurance:  auto, home, umbrella, long term care, and health.  Into this mix, I also averaged my monthly credit card bills because almost everything else in my life has been paid by Visa (gym membership, gas, groceries, clothing, SHOES, hair, etc.)  I did not itemize everything because I've always paid by card and my monthly credit card bills were fairly equal.  I also added in cash and savings for travel and emergencies.  With this spreadsheet, I calculated what I need to live on to maintain my standard of living.  Oh, one more thing ---don't forget to figure in taxes.  Breathe slowly.  Now you have your annual projected expenses.
10. You can estimate your FERS income by multiplying what you think your high three will be by the number of years you work and by 1.1%.  Estimate how much you can take out of your investments (TSP, IRA and Savings) by multiplying the totals by 4%.  YES, that's what most financial planners recommend as the limit you can take out of your savings if you want it to last "until your retirement is over" (that's what my financial planner says rather than "until you are dead.")  This is why I said in #1-4 above to SAVE SAVE SAVE.  Just think, 4% of $1M is only $40,000 a year.
11. So, now it is easy to answer the question financially.  (I'll write another time about how to answer the question emotionally.)  You compare your estimated income from FERS, TSP, IRA, savings and SocSec with your annual retirement budget.  When they look like they will match, you CAN retire!