When Can I Retire?
Dana Anspach from Sensible Money answers one of the most common questions financial advisors receive. When can I retire?
Key Takeaways
- Start retirement planning by calculating your actual expected spending, not industry rules of thumb—the '80% of pre-retirement income' rule doesn't work equally for all income levels, so audit your personal budget and identify which expenses will change in retirement
- Calculate the retirement 'gap': subtract guaranteed income sources (Social Security, pensions) from projected spending, then use a 30-40 year projection model to determine if portfolio withdrawals will sustain you
- Use Monte Carlo or scenario modeling to plan for a range of outcomes rather than a single number—ensure your plan survives the worst-case scenario (poor market returns, high inflation, long lifespan) so you have flexibility if conditions are better
- Build an emergency reserve fund separate from your retirement cash flow to handle unexpected household shocks like job loss of a spouse, early forced retirement due to health, adult children needing support, or custodial care of grandchildren
- Account for longevity risk explicitly—most people underestimate how long they'll live, so plan your withdrawals to sustain you into your 90s even if you think that's unlikely
When Can I Retire? Dana Anspach from Sensible Money answers one of the most common questions financial advisors receive. When can I retire? To watch more finStream videos featuring Dana Anspach, please click this link: https://www.finstream.tv/featured/dana-anspach/ or check out Dana's website: https://www.sensiblemoney.com/financial-planners/
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