Question 1: When can I retire?
Short answer: February 7, 2025*
That is 9 years and 11 months from now or 3,623 days. The bad news: It sounds like an eternity to me. The good news: I have actually figured it out. Now that I know, I can make changes to move the date.
I have noodled over the idea of early retirement for more than a year now. What is it? How does it happen? Is it possible? One day, I woke up and realized that it is possible. I wrote about it at the time in Financial Independence ruined my life. Accepting that it is possible was the first step.
So, it took some time to accept it but I didn’t really do much about it once I did. I knew that we had to control our spending. I knew that we had to save money but I didn’t have a plan and I didn’t have a date. It is hard to accomplish something if you don’t have a plan or a roadmap.
“Retirement” is a fuzzy concept
Retirement means different things to different people, so that brings me to another question.
Question 2: What does retirement mean to me?
Answer: Having the means to do whatever it is I want to do and not relying on a traditional paycheck to support myself. I might work in a traditional job. I might do volunteer work in a developing country. I might decide to become a professional golfer. Doing what I want is key, so retirement = financial independence.
Question 3: How much money will I need to be “financially independent”?
Answer: $1,350,000 (and no debt)
Here’s the math behind this answer: $4,500 monthly income x 12 months x 25
This formula is based on the Trinity study and is considered a rule of thumb calculation for retirement planning. If you want to get technical, there are some great calculators that take into account an array of different scenarios. FireCalc is one such calculator. If you have found a great online calculator-I would appreciate it if you could share it in the comments below.
$1.35 million is a boatload of money. Considering the savings we have now — it means we need to save at least $26,000+ a year and hope for excellent returns for the next 10 years to hit that amount. Wow!
But at least we know these 3 important things:
- The date we will achieve financial independence
- The amount we need to save and
- The income we plan (hope?) to have.
These 3 things are interdependent, and if you change one — the others change. Now I can start working on the date. Remember it is February 7, 2025. If I want to move it up then I can increase the amount we save and/or reduce the level of income we hope to receive. Each time we manage to do that, the date will change. This is something I can get behind, buying my/our future.
~~~Thanks for visiting.~~~
February 7, 2025, is the earliest date that I qualify for retiree benefits from my employer. So, it won’t be an extreme early retirement by any means but I will still be more than a decade ahead of most people. I don’t know if it is worth hanging around for these benefits so I need to figure that out too.
My husband and I are not on the same page about this…yet. I am pretty sure he is going through the same process I did, he is just not at the same stage. I have noticed that he is starting to take a keen interest in our bank balances and has started making calculations of his own. It is a very good sign.