When Can You Retire?

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“How do I know when I can retire?”

That was the #1 question my clients older than 50 asked me when they were getting serious about retiring. What they were really asking though was “Do I have enough money saved and invested?”

There are numerous financial advisors (professionals and celebrities) who have sophisticated methods of determining how much you need based on your current income and your future plans. However, I had a mentor that encouraged me to set all that aside and give my clients one very simple answer that they can relate to and is simple enough to act as daily motivation. It is as simple as this….

When the monthly income from your savings, investments and pension(s) exceed your monthly income from working, you can financially retire.

However, this assumes you have no debts … including a mortgage. It also assumes that you will save or reinvest at least 5% or your retirement income to offset inflation and other increased expenses related to ageing.

This is the principle I used in planning my retirement. I was able to retire at age 55 and I am saving far more than 5% of my monthly income. (See most recent monthly budget.) As a note, I’m not eligible (due to age) to start receiving Social Security Retirement Benefits until 2024.

With all this being said, having enough money to retire doesn’t mean you should retire. You may want to keep working, you may have a particular special something you are saving for or you just aren’t mentally ready to retire yet. The point, however, is that you know you are in a financial position to retire if you want or need to.

Rest is not idleness, and to lie sometimes on the grass under trees on a summer’s day, listening to the murmur of the water, or watching the clouds float across the sky, is by no means a waste of time.
J. Lubbock

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Published by W. M. Brown

I am a retired U.S. expat living in Ecuador. I was a business owner for 32 years before retiring in 2012.

3 thoughts on “When Can You Retire?

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