When can I retire? That's easy to answer: As soon as you can afford it!
And when can I afford it? Mmm, more difficult to answer. Let's look at that.
I remember, when I was in my mid forties, I was immensely impressed by a guy who claimed that he retired at 'the ripe old age of 35'! He was promoting a training course to learn how to play the stock market. He claimed that his income out of playing the stock market at his leisure, gave him a better income than the top management job he held before he 'retired'.
I've always been naive! I fell for his story, and many stories after that. Needless to say, it is very unlikely that playing the stock market will enable you to retire. I spent two years actively following this training course until I realized that even professional fund managers are reluctant to play the stock market with their own private funds.
So when can you retire? On this Web site we discuss the various issues around retirement planning. Do visit these discussions and educate yourself to take control of your retirement planning. Here I can only summarize the steps required.
To estimate when you can retire you need to do some specific planning. The first thing to do is to draw up a detailed and honest budget for your current spending. It is also a good idea to keep track of your spending and compare it monthly to your budget to ensure that the two ends meet.
Next you need to analyze your current lifestyle and to decide what your desired lifestyle is going to be in retirement. The purpose is to find out how much income you'll need in retirement. Elsewhere on this Web site, we recommend some worksheets, spreadsheets and retirement income planners to assist you in this process.
When you know how much you'll need to retire, you can scrutinize your current retirement provision. What your retirement savings will be at possible retirement dates in future. What will your retirement plans be paying out at these possible retirement dates? How much Social Security would you be able to add to the total? Did you invest in a tax deferred annuity?
There are rules associated with every plan which you must consider when you estimate your future retirement income. Most plans do not have penalties if you are older than 55. For some plans you need to be six months from your sixtieth birthday or older. Your job might have a compulsory retirement age.
There is of course the possibility of liquidating some of your assets to boost your retirement savings account. For example, you'll probably be able to do with a smaller house in retirement. If you own your current house you'll probably be able to release some home equity in downscaling.
When can I retire? The above should give you a good estimate of when you could retire.
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