Most workers dream of the day when they can retire and kick back, but a growing number of retirees are concerned that the money they saved so carefully may not last a lifetime. With retirees living longer and the cost of living rising ever higher this is not an idle concern. In fact it is vital for every worker to take a careful look at his or her financial situation in order to determine the best time to retire.



While there are no guarantees in life, there are some practical ways for retirees and would be retirees to determine if they can truly afford to retire. One of the most critical things to consider is the percentage of the total nest egg that can safely be withdrawn each year. The standard rule of thumb many financial planners use is 4%-5%, but some early retirees may need to scale that percentage back to make their savings last. Those who plan to retire before age 60 may want to look at a withdraw rate of 3% for the first year, with slight increases each year to account for the impact of inflation.

The problem with this small withdrawal rate is that it takes a very large nest egg to generate a realistic annual income for many retirees. For instance, a nest egg of a million dollars would produce only $30,000 in income at a 3% rate of withdrawal. This is of course one of the reasons why starting to save and invest early is so important.

Fortunately there are some ways workers and retirees can supplement their savings and boost their retirement income. One of the most obvious is simply to work a bit longer. Working a few more years carries a great many advantages, including higher Social Security earnings, better cash flow, more security and a sense of accomplishment.

The good news for those who plan to work longer into their retirement years is that many companies are willing to work with their employees as they transition into their new lifestyle. As the baby boomers continue to retire many companies will find themselves short of experienced workers, and many firms are trying to find ways to keep their most valuable workers on board. From allowing workers to transition to part time work to providing more flexible schedules, many companies are finding ways to keep their older workers on the job.

Other workers find that consulting work is a good fit for their new lifestyle. Consulting is a great way for seasoned workers to share their expertise while providing themselves with the financial cushion they need to provide a comfortable lifestyle.

Working part time also may allow workers to take advantage of group health insurance rates, saving additional money and putting off the high cost of individual health insurance. The costs of future healthcare remain a big unknown for most retirees, and these costs can get in the way of even the best laid retirement plans. By staying on the company's health care plan a little longer workers can enjoy additional peace of mind as well as higher cash flow and more security.

Working part time is also a great way for workers to try retirement on for size before making the big leap to full retirement. Many workers who could not wait to retire have quickly found themselves bored and longing for their old working life. Part time work allow workers to enjoy greater flexibility while still providing the mental stimulation and challenge so many seniors find so important.