NEW YORK (MainStreet) -- Chances are, you're not ready to retire.
For many people, even the experts can't fully tell you if you're in the clear to pull the retirement trigger.
Why? Because no one knows the future of health care costs, which could be one of your biggest expenses during retirement.
"There are people who are ready to retire, but a lot of people who retire are assuming we're not going to have runaway health care costs and hyperinflation," said Rick Salus, senior vice president and investment officer at St. Louis-based Wells Fargo Advisors. "If you're paying $600 a month, who knows what it will cost in five years?"
The Centers for Medicare & Medicaid Services said spending on health care costs from 2014 to 2024 will see an average annual increase of 5.8%. And while Salus points to other inflationary expenses like food, health care seems to be the greatest unknown.
"Even the projections [on health care costs in the future] are still a guess," he said.
After all, the older you get, the more health care you're going to need.
"If you're in your early 50s, you're going to live a fairly long time," Salus added. "People who aren't realistic in their cost projections during retirement are kidding themselves."
If you're looking to retire in the foreseeable future, the fogginess of health care costs might make you reconsider. Regardless, now's the time to consider a few other financial factors as you ponder your retirement readiness.
First, define "ready" as having a large enough foundation of investments to allow you to live off the interest this money makes. That foundation could sit inside a 401(k), an IRA or certificates of deposits, among other investment vehicles that earn interest.
"If it costs you $5,000 a month to live, can your portfolio generate that kind of income?" Salus points out.
Determining the interest earned on your portfolio is another big unknown, as it's impossible to predict future market returns.
Remember, if your portfolio of assets is inside a 401(k), brace yourself to pay ordinary income taxes on withdrawals.
"If you're looking to buy a $30,000 car, you're going to have to withdraw around $37,000 to net $30,000," Salus warns.
Don't forget Social Security and, if you're one of the lucky few, a corporate pension. "Add this income to the monthly interest your portfolio earns," Salus added.
Though Certified Financial Planners Kevin Houser and Gary Plessl, authors of The Book On Retirement: Are You Ready for the Second Half of Your Financial Life? (Richter, 2015), say it's not necessarily how much you have, but how your assets are positioned.
"Having enough money for retirement requires three buckets of cash flow," they said. "One bucket for cash and liquidity, one bucket to provide you with your retirement income and one bucket of investments that are positioned for continued growth."
Think about it: you'll need liquid cash for emergencies like broken appliances or auto repairs. You'll also need a pool of money that generates interest income for you to live off of now. The final bucket can be invested to reap robust returns.
"Ideally, if we are able to generate 100% of your retirement income -- when combined with pension and Social Security -- from say 50% of your retirement assets, that puts you in real good shape for retirement," Houser and Plessl said. "It means the other 50% of your assets are there as an additional cushion."