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Can I Retire Early?


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Retirement for the average person is usually somewhere in the age 65 range. Many people work even longer into their 70s and sometimes 80s either because they love to work or they can't afford to retire and have to work. For most people, except workaholics, retiring at 65 seems so far away. It also doesn't leave a huge chunk of time afterwards to relax. Wouldn't you love to retire earlier? Wouldn't you love to stop working at 55 or maybe even 45?

The real question is can this be done? Retiring 10 or 20 years earlier than the norm is a huge deal. Not only will you have more years of retirement requiring you to have more saved, but you will have less years of work making less money. Can I retire early?

There are several factors involved here. First of all, how old are you now? If you are 40, have a very small nest egg, if that, and want to retire at 45, let's just say it's not going to happen. If someone works and contributes to a retirement plan from age 25 to 65, that gives them 40 years to save and invest. By retiring early, you cut that down a lot.

Next, how much money do you make and how much can you save? This is the second biggest factor in figuring out if you can retire. The less time you have to save, the more money you have to save. You need to understand that with less time you not only have less time to save as much but you also lose compounding time.

You need to first figure out how much money you will need during retirement in order to live at the comfort level you want. If you want to retire at 50, and you expect to live to 85, you need enough money to live for 35 more years. If you live on $30,000 a year now (after putting aside for savings and things you won't need in retirement), and you want to live at the same comfort level, you will need $1,050,000 and then adjust it by about 3% a year for inflation which would come to just over $1.8 million dollars.

This sounds like a lot, but if you have your money invested during retirement, you won't need as much. Search the internet for a good calculator to help you out. Figure out how much you would need to save at what interest rate each year in order to achieve this. If you can handle saving that much each year, then go for it! If you can't, try adjusting your time table.

Do you want to learn more about financial planning for retirement ? Find out more about financial planning at .


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