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Can I Retire Early?

Many individuals at some point in their life and career wonder if they can retire early. First, retiring early is relative to the individual. That is, retiring early for one person may mean retiring at age 55. To another, it may mean retiring at age 30.

When teaching, I’ll ask my students what the “retirement age” is. Answers range from 65 to 70. Inevitably, I will get asked the question, “How much money do you need to retire?” And the answer is the crux of this article.

Whether an individual wants to retire can be based on several factors such as money saved, age, job satisfaction, and health. For example, an individual may never want to “retire” if they love their job, or if they find fulfilment and purpose while at work.

For some individuals, the choice to retire isn’t a choice. They must continue to work to cover expenses, health care, etc. Sometimes these individuals work until they physically cannot do so any longer.  Their only retirement is Social Security.

Back to the crux. The answer I tell my students (and clients) is that how much you need to retire is a function of how much you need to spend in retirement. For example, I have seen clients needing only $38,000 annually to cover expenses and live comfortably in retirement, and half of that amount was covered by Social Security. Meaning, the clients only needed to cover $19,000 of annual expenses themselves. Based on their portfolio, they had more than enough. For other clients, their need hovered around $250,000 annually. And sadly, their portfolio would last less than 10 years.

In other words, some will be comfortable retiring with $500,000 saved, and others may find $5,000,000 will not be enough.

To retire “early” is relative to what early means for the individual and how much money they feel they would need to live on in retirement. For young individuals reading this article, it means saving a lot of money while they’re young, to reap the benefits of not working later, should you choose. For older individuals, it may mean saving much more, and perhaps cutting expenses to achieve their retirement goal. And still for others, it may mean continuing to work, since they love what they do and have no intentions to retire.

The choice is yours.

One Comment

  1. I understood from your blog that investing early is cheap. And the best way is to start early.

    Good Post. I am going to tweet it right away.

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