When Can I Retire?

When Can I Retire? Maybe this question has popped up in your head before, or maybe it is popping up more often right now. This may be especially so with the F.I.R.E. (“Financial Independence, Retire Early”) movement that is going on right now in the world. For many people, retirement is the light at the end of the tunnel. It’s a time to relax, travel, and enjoy life without the pressures of work. Maybe for some other people, it is about freedom of choice — to choose whether to continue working because they just love it, or to explore another field of work which may not be as economically rewarding, or just to take life at a slower pace. 

As it is, the definition of retirement can be very different depending on what you are looking for, and what phase of life you are currently in. However, one thing is consistent: Retirement is NOT about your age, it is about whether you are financially well decked out enough to retire. In other words, it is about whether your nest egg is sufficiently big to support your retirement standard of living. As such, the term retirees can refer to people of any age, not necessarily the traditional those who are in their sixties. 

A Simple Retirement Calculator 

That is also the reason why we created a simple retirement calculator for your use. We decided to keep it simple and open so that it can be used to cover all possible scenarios where people need some quick calculations done. 

In this calculator, one of the critical numbers that will determine how much is your annual allowed expenditure in retirement is your current nest egg amount and how much you can contribute towards growing it in your years of still actively working. This could come from anywhere: your social security, your pension fund, your savings and even your investments.

In this blog post, we will look at the current state of things in the United States – what are the common range of retirement ages. Then, we’ll explore the benefits of retiring early. Next we’ll talk about what each of these nest egg categories are and also some tips on how to maximize them so that you can give yourself the option of either an earlier retirement, or afford a larger annual expenditure into retirement.

What Is The Current Retirement Age In The US?

Retirement ages have been increasing across the board in the last 30 years. Based on the 2022 Gallup poll, working Americans expect to retire at an average age of 66. Also, the same poll uncovered that the actual average retirement age is at 61, as of 2022. 

While this may be the average retirement age in the US, it does not stop you from determining what is your own retirement age. If you want to retire early, all you need to do is to start early in planning for your retirement. And if you want to retire later, the most important factor you need to look out for is your health and energy levels, as that is often what forces people to retire earlier than they expect to. 

The Benefits Of Retiring Early

Retiring early can be a very beneficial option for those who are looking to retire. Here are some of the more common benefits:

More Time With Family And Friends

Often, while we are actively working full time, we dedicate a large portion of our mental bandwidth and energy in solving problems for our employers. In retirement, we can put aside that commitment and focus more on the important people in our lives: namely our friends and family members.

More Time To Take Good Care Of Yourself

Another often neglected area of our lives may be our health. With more time on hand, you can now explore and learn more about how to safeguard your health, or how to better manage any illnesses that may have popped up as a result of long hours of work. 

You have more time to exercise, take walks, and participate in activities that you enjoy. You will be able to relax more and do away with the stressors of life. 

Your Health And Energy Levels Are Better

It is no secret that as we age, our health and energy levels deteriorate. By retiring early, we can have more health and energy to enjoy life and the things we want to do. We can travel and see the world even in the most challenging of climates and terrains if that is what you enjoy doing. 

How to Retire Early?

If you are thinking about retiring early, the very first step is in planning. Decide when do you want to retire, and how much is needed for you to maintain the lifestyle you want in retirement. Fill up our simple retirement calculator, to get a general idea of how near or how far are you from your targetted annual allowed expenditure in retirement.

If you get an annual allowed expenditure in retirement that is more than what you think you will need in retirement, congratulations! All you need to do, is to execute on the plan and you will get to your retirement milestone in due time. 

However if you’re like most of us, we’d always like more surplus in retirement. Just in case we live longer, or for some reason inflation rate is higher than what we have projected, we would want to be covered and have more then sufficient funds into retirement. The last thing we want is to have money stress after retiring. 

So here’s some general tips on how we can maximize our nest egg. While not all the ideas may be applicable to you, we hope that you’d still be able to get some value out of it. 

Maximizing the Savings Nest Egg

One of the best ways to maximize your savings is to ensure that saving for your retirement is prioritized. What this means is that before you pay for anything else in your day to day expenses, you will decide what amount you want to save, and automatically transfer it out to another bank account where you assign just for your savings.

As the funds in this account is meant to be saved for the long term, you could make it less assessible by ensuring there’s no ATM cards or debit cards that are used on this account. Make it inconvenient to take the money out. When there is sufficient to meet the minimum amounts, you can even put it into a fixed deposit for better interest rates on it. 

Typically, we’d recommend saving at least 15-20% of your monthly income. However, if you are a high earner, and is able to save more, then definitely by all means do it. Saving more each month only means that you can retire earlier, or enjoy more luxuries in your retirement. F.I.R.E proponents save up to 70% of their monthly income in hope of being able to retire early and enjoy their freedom from the job life.

Maximizing Your Investment Returns

Investing is a whole huge topic in itself, with people using different methodologies that they believe to be able to maximize their returns. Some people invest using technical analysis, others go for company fundamentals, using frameworks such as growth investing, momentum investing and value investing. There are also different investment vehicles, such as index funds, bonds, individual listed company stocks, and other professionally manage funds, and even property.

In investing your money, the most important thing to do is the weigh your risk vs rewards. In all investments, there is definitely a certain level of risk. It may take experience and some calculations to assess the investment opportunities available in the market. 

If investments are done right, you could potentially retire just on this alone, without having to depend on your pension fund or social security. Nevertheless, we’ll still look at the other two categories which may be able to contribute to your nest egg for retirement.

Maximizing Your Pension Fund

Depending on the type of pension fund that you are enrolled in, you may nor may not have a choice on what type of investments the pension fund is investing in. If you do have a choice, do ensure that you do your relevant assessments and make the best informed choice you can.

Maximizing Your Social Security

Part of the taxes paid during your active working years are put into your social security. If you find that your investments are insufficient for you to retire on, you can maximize your social security by working longer and only retiring at your full retirement age of 67 (if you are born after the year 1960). 

Bottom Line

Making the decision about when to retire is a big one. It’s important to weigh all of your options and consider factors like your age, financial situation, and health before making a decision. Once you’ve made the decision to retire, start planning for it as soon as possible. The sooner you start saving, the better off you’ll be. And if you’re still working, there are steps you can take now to protect your income in retirement. So don’t wait – start planning for your retirement today!

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