What is the perfect age to retire? I personally feel that depends on several factors. Some individuals love their job and have no desire to hang things up early. Others, meanwhile, absolutely hate their job and are counting down the days until the chains of servitude break. Fortunately, I am not in this group. I love what I do. However, at some point I will want to retire. Whatever age you choose, I think you need to clarify a few ground rules. When picking that ideal age an individual should determine what they plan on doing to fill the time, crunch the numbers to make sure you can afford to retire and consider your future health concerns.
Make sure you plan for after you retire. Working 40 plus hours a week takes up a lot of your time. When you retire, it is important to have a game plan on what you are going to do to fill the time? Yes, you might be happy in the beginning sleeping til noon, but after a few months the boredom will inevitably set in.
I personally plan on golfing two or three days a week and working out at the gym nearly everyday. I am even willing to be my wife’s personal male gigolo. I know what you are thinking and yes I know that I am a very selfless individual only looking out for my wife’s well-being.
In all seriousness, I think the most important consideration is making sure you remain physically and mentally sharp. I think a great way to achieve this balance might be volunteering to work with a non-profit group or just simply find a part-time job to supplement your income. Walmart greeter or Chippendale dancer are merely a few suggestions. My bum knee prevents me from harnessing my inner Magic Mike. In the end, doing nothing is not the best option.
You need to crunch the numbers. It sounds like a no-brainier, but if you want to stay retired, a person has to make sure the nest egg is big enough to last. How much money you have is likely to determine the age you retire. Most financial experts argue you need at least 25x your annual expenses.
What is your number you need to retire? That depends on the lifestyle you want to live during those golden years. Do you just want to survive or do you actually want to have a life when you retire? For example, I know that I will end up retiring before my wife, so I need to make sure that I have enough passive income that will help offset my income. If I can generate $20,000 to $30,000 in passive income with my wife’s salary we can easily save during my retirement. Yes, I can actually continue saving money while I am retired.
Most financial experts will tell you that you need around 80% of your current income to maintain a similar standard of living. You should also only withdraw about 4% of your nest egg each year. Once again, I think it all depends on your lifestyle and where you live. If you live in an area of the country where the cost of living is higher you will obviously need to save more to maintain that lifestyle. You need to consider a variety of factors when crunching the numbers.
Making sure you have adequate healthcare insurance during retirement is also crucial. It seems that most people have a hard time retiring early because of this issue. I know several individuals that are forced to stay in the workforce because they need to maintain healthcare insurance.
The Affordable Healthcare Act was intended to help citizens afford insurance, but the reality did not match the campaign promises. I think the Obama Administration tried to help, but after the special interest and insurance companies got done with the legislation, it was so watered down that it was rendered feckless.
I really do not know what the answer is when trying to prepare for this. I am lucky in this regard because I am Native American and I get free healthcare services through the tribe. It is not great insurance, but it is there. That is one of the main reasons I will be able to retire before my wife. I have read numerous articles about the cost of insurance and most tend to argue you will need about $250,000 to help you offset healthcare expenses. Obviously, some people are healthier than others. Prescription drugs seem to be a major expense that is only going higher. The number I mentioned might be high or too low. Either way, you will not be eligible for Medicare until you are 65 years old.
In the end, only you will be able to decide what the ideal age is for you to retire. I am hoping I can retire in my late 40’s or early 50’s. I feel that I will need to save between $750,000 to $1,000,000 dollars to get there. Everyone’s situation is different, but I think it is important to at least be thinking about these issues now. So, the questions I have for you is what is your perfect/realistic age to retire and how much money will you need? Food for thought.