It’s not always that the work itself feels like a prison sentence. I like my job well enough and I’ve had a job that I enjoyed so much, I would have done it for free if I was independently wealthy. The thing I don’t like is having to keep to some sort of schedule. It’s not that I can’t take time off ( I can) but I can’t decide on Wednesday to take next week off because I found a really good price for a vacation starting Saturday. Which is why I have no plans to do the sort of volunteer work that requires a schedule when I retire.
In November of 2019, I realized that I had enough saved to retire immediately. I gave them six months notice because there were some financial benefits staying until May 1st and I respected my immediate management and didn’t want to screw them. I was 56. It was a great job but it was very stressful. COVID made it more stressful and in January they announced that they would be acquired by a much bigger place. I got out just in time.
My plan was to spend my time going to even more concerts and festivals than I had already been doing. That obviously didn’t work out but I have had a fine time doing nothing much. I did get a lot of my house fixed up that I had been putting off for years because I didn’t have time to monitor the contractors.
COVID has allowed me to become a much better cook and to get in better shape so that’s good. Overall it’s been the right choice. No question about it.
If I can ask a question, how did everybody here decide they were ready financially?
I have had some professional consults and read some references. Trouble is, most of the information available is promoted by people who make money selling investments, and one-on-one they have consistently said it’d be better if I saved a bit more a bit faster.
I had a figure in mind for what to have saved, and now I’ve reached it, at age 63.7. Now I’m wondering exactly how I came up with that figure. My investment accounts are 19 times my W2 earnings now, and I own my house and have zero mortgage or other debt. Though, my spouse recently retired, with negligible savings, and we don’t have much experience with affording that. My job is pleasant and interesting, and I figured to keep it till age 66.5 for the SS improvement. But I’m enjoying contemplating maybe reducing my work week.
I’m just curious – what did you do to figure this out? Did you blaze your own trail with spreadsheets and actuarial tables? Did you use some software or web site that wasn’t created to sell you gold and annuities and fish farms? Did you hire a fiduciary?
Financial advisor.
Fee-only Financial Advisor
I knew what my retirement money would be like. The house was already mortgage free, we do not have children, and a nicely filled bank account (also because we do not have children). We could easily have a good life based on the monthly retirement money (inflation adjusted), and there was plenty left for special treats or unforeseen setbacks - so we took the plunge.
I used four methods to decide and sanity check my own predictions. The only change I predicted in my desired/expected income was that I would no longer save for retirement. Otherwise I assumed I’d need the same amount of “take-home” pay as before.
I entered everything in FireCalc to see what their calculator thought.
I set up a detailed spreadsheet and projected forward through my (assumed) lifespan, using one line per year. One sheet was current year forward projecting 401K/etc. growth while working. Over time this became more accurate as I used real data, and I could modify projected growth lines to match the past results. Other sheets were for retiring at X age (60, 62, 65) and using values from the growth-while-working sheets. These used Monte Carlo probability to model investment growth along with distributions to see what my income would be for each proposed retirement year. I also added other funds (pension, SS, etc.) to get a good guess at annual income. Mostly these used the standard “Trinity Study” distribution amounts with a fixed COLA over time.
I have a financial advisor, and they have their own software for modeling retirement income. I worked with her to get their best predictions on growth/distribution/etc. and like the above, how long my money would last.
Finally, I wrote my own predictive calculator in C++. I’ve noticed that all the other ones seem* to use some type of Monte Carlo simulation, but don’t seem to model different sequence of returns scenarios. I wanted to model a more realistic series, where bad years were grouped together (as were good years). Mine smoothed the curve (so to speak) of returns to look a little more realistic. It also has the ability to model a Black Swan event of X years duration, with a Y max negative returns floor, occurring N years after retirement. I then set it to run 50 scenarios at a time and determine the likely number of years I could last in a much more grim economic future.
In a nutshell, FireCalc was the most optimistic, followed by the FA’s in-house software, then my spreadsheet. The C++ calculator was by far the most pessimistic model of the future. I felt ready to retire when the first two (FireCalc and Financial Advisor) showed a 100% probability of success, my spreadsheets showed 90% and my C++ version showed 80%. I had originally aimed for retirement at 60, but didn’t reach point where I was comfortable until 62. I was still making up my mind when a few alarming health issues popped up, along with an ill-timed “improvement” in my worklife due to corporate idiocy. Something clicked and I gave all my math one last review, then headed out the door.
*I’m not certain of this, but it looks that way to me.
The online retirement analysis sites are useless. Experiment with them and see. You increase your income 2X and they automatically increase your spending by that much, so they’ll never tell you you’ve saved enough.
When I was ready to retire the first thing I did was see how much we were spending. We did that by looking at the mortgage, taxes, and our credit card history. (We get cash back so we put everything on that we can.)
Then our planner ran a Monte Carlo simulation, which gives you the probability of having certain amounts of money left at a given age under many market conditions. It is far more complex than I could do with a spreadsheet. It came out we had enough. Six years later we’re pretty much ahead of the most optimistic forecast in the model.
How you will do is inherently probabilistic, so that was a very satisfying method of forecasting.
Social security in the US is far from perfect but at least you have it. The Western world has the safety net. Back in India, where I plan to retire, it’s every man and woman for themselves, unless one was fortunate(!) to work in a dead-end government job for the pension. So my approach to retirement is to save every cent I can to live post-retirement in a society with no financial support system at all. Happily, I care little about maintaining a lifestyle; I plan to be up in the mountains anyway, but I will still need to pay the ashram so they will feed me and let me sleep in at night.
I retired without much warning (financial person looked at a huge spreadsheet, said “You should retire… now.” I said I could hang on a couple more years. She looked at huge spreadsheet again, said “You should retire… now.”).
But I really thought I’d be teaching part-time and having art shows and meeting with retired friends for coffee, and watching sports at the local pub. Oh, and had two backpacking-through-foreign-cities trips planned.
Well, every single plan fell through. I’m doing… nothing.
And I love it.
…
For me, I always kept a spreadsheet myself, and had a target number that I felt would support my pre-retirement income level. I was lucky that I flew past the number last year just as COVID killed my project work. So, I retired! I would have continued working for a few more years, I suppose, all else being equal (but it’s not, so I didn’t).
I always had plans in mind for what I would do in retirement, but I find that COVID life really f*d all that up. Much of it relied on getting into classes and meeting like-minded people and creating a social life. Yeah, sorry bud, maybe next year…(hrrrumpf!)
Amen! That’s really my main gripe as well- having to do my job on someone else’s schedule, and plan anything personal at their pleasure. That, and I suppose work expectations in general- dress code, show up/leave time, lunch hour considerations, etc…
I don’t plan to become a total slug when I retire, but any volunteering or hobbies I engage in will likely be entirely at my whim, with nobody but my wife to have any actual input into how/when I engage in them, how long, etc…
I’ve been giving a lot of thought to retirement. I really dislike every aspect of my job - but I make REALLY good coin! It is not terribly onerous and I ought not complain - just extremely irritating and entirely unrewarding.
I’m 60, my wife is 59. I probably have enough of a nut to live perfectly comfortable for the rest of my life. But each additional year I work will make things MORE comfortable. Not sure I NEED to retire today, but the idea of putting in 7 more years to full SS age is pretty darned daunting.
That’s my conundrum too. Benefits really go way up each and every damn extra year I hang in there. Both for pension, SS, and investments. If I last another decade, retirement income will exceed what I’m making now. Yet if I drop dead in 3-4 years, WTF did I hang in there for? So my wife can have a really great life with her next boyfriend? Yet my work is still rewarding, to an extent.
Choices, choices.
I had been burned out for at least five years. My work was transitioning to something I really didn’t enjoy and something I hadn’t a particular talent for. I could do it o.k., but I always felt off-kilter and a little under-successful. If that makes sense.
There’d been talk of out-sourcing our department for probably twenty years. I didn’t want to continue as a contractor to my company (lots of little reasons), so I went to a financial advisor who worked pro bono for the credit union. He took a look at my numbers, and said “You can retire today.” I had a close friend with a money manager she really liked (other than his politics – she used to call him up and harangue him 
), so, I gave him and call, and he took me on as a client. I’ve been extremely happy with him, and he listens to my concerns (he does want me to be a bit more adventurous, heh).
Oh, and as soon as I declared my retirement, I heard that the out-sourcing was really going through this time. I was a bit po’d though because as a “declared” retiree, I’d be ineligible for the severance package. Fortunately, the percentage used to calculate how much my retirement package lump sum would be gave me about $75K more than I expected which more-or-less erased the “deficit” of losing the severance pay. And the money from the severance was the only thing I cared about — I was not going to avail myself of resume-writing or job-searching classes.
Mostly, I’m happy I don’t have to get up at 4:30 am to drive a total of 80 miles a day to a job I was not happy with. As many people have said, I’m reading a lot more, getting more interaction with the neighbors, and just enjoying life!
I’m sorta similar except I still enjoy my work … a lot. The hourly rate is pretty cozy, especially during the COVID slowdown. I’m age 62.5, and mandatory retirement is 65, so there’s 2.5 years in play right now.
I don’t need the incremental 2.5 years of earnings. But …
My small retirement benefits don’t grow at all, whereas my 401K / IRA / etc., sure have been / can. And every year that asset pile doesn’t have to support me I can live that much higher on the hog once it is. Full SS FRA is 66+ years for me, but I’m hoping to avoid touching SS until age 70. Betting on a long and vigorous retirement. Aren’t we all?
Ref @Icarus just above, COVID has queered about 98% of what I would gain between my normal pre-COVID working life and my planned non-COVID retired life. So at least as of today I see no point in retiring until it’s mandatory or until COVID recedes and it becomes my job, not disease, that traps me at home all day every day instead of being out roaming the world.
At the last meeting with our financial advisor, she said “I’ve got to congratulate you two on how much you’ve been able to save!”
I said “So, being boring pays off, huh?”
“You don’t know how often I counsel clients to be boring, but I don’t get to actually come out and say that.”
Seriously, I’ve got to give props to my wife. I’m an old hippie who could live anywhere, but if she’d needed to move into a larger house*, I would’ve done it… and I’d still be working.
*(Oh, any house would’ve been larger. Our first, and maybe last, house is smaller than the apartment we moved from).
I often compare myself to my brother. He NEEDS his country club membership, cable with multiple sports and movie packages, a heated steering wheel (so has to buy the top options package on his new-every-two-years Suburban Assault Vehicle), and the timeshare on Disney World property ($$$). Oh, he and his wife just “downsized” by building an upscale custom house… that turned out to be bigger than their previous McMansion.
He’s old enough to retire, but that would mean cutting most of that stuff out, so he’ll be working til he’s almost 80. I’m happier not getting those luxuries and suddenly, at 65, having the luxury of free time!
I “retired” about 15 years ago to be a stay-at-home husband, so my decision process isn’t really relevant to most peoples’ decision. Vastly different criteria. 
My wife has decided to retire this June 30, at the end of her firm’s fiscal year when she is 57. She is a partner at one of the Big 4 accounting firms, and would have been essentially forced into retirement at 60, so while she’s retiring early it’s not absurdly so. Oddly enough, it’s one of the few upsides to the 2020 pandemic situation.
She was a real road warrior - gone most of the week, often to multiple locations. 200k+ miles flown every year. We were actually working on moving to India for a few years where she would finish out her career. Then COVID happened, business travel ground to a halt, and India was no longer a practicality. So, we spent 11 months and counting in lockdown and discovered the following:
- We still like each other, which from our observation of other couples she works with is a rarer thing than you might think.
- As much as we love to travel (and enjoyed doing so), we are both homebodies as well. The hardest part about not traveling for the last year has not been not doing it, it is the resentment of not being able to, if that makes sense.
- Being at home all the time gave us a sense of what retirement could look like, and almost a year’s worth of financial data around “steady-state” expenses, so we could start to get a pretty realistic picture of our finances in retirement.
We’ve saved a lot over the years, and compared to a number of my wife’s peers, have lived quite below our means, at least by societal standards. The entirety of our debt is our mortgage, which is currently about 37% of the value of our home, and the day she leaves her firm the equity she gets back from the partnership pays off the mortgage and then some. We will have $0 in debt within a month of her retirement.
We have good cash reserves, a healthy 401(k), and my wife vested in her firm’s retirement plan a year ago. She can take most of that in a lump sum payment, with the rest coming as an annuity. My wife thinks in Excel, so has multiple spreadsheets to game-plan various scenarios, and if we can consistently get around 4% return on our money, we should run out when my wife hits 100 (and I reach 96). With some judicious, but not radical, paring of our expenses we shouldn’t see a significant change in our lifestyle, if at all.
We are incredibly fortunate that things have turned out the way they have, and I know that a large number of people don’t get to simply decide to retire when they feel like it. OTOH, I can’t wait for June 30, and more importantly for 4-6 months later when all of the stress hormones have finally flushed out of my wife’s system, she’s caught up on her sleep, and she’s able to do all the exercise she loves. I am really looking forward to her future happiness.
And she’s already signed up for multiple garment-making seminars and couture sewing classes. She will have no problems whatsoever filling her days. 
I am retiring this year. I have told my boss and have given him 5 months to find a replacement, but if he’s comfortable with a replacement sooner, I will give my notice at that time.
As I prepared for retiring, I spent some time trying to figure out if we would be ready (my SO will retire when I do). A few years ago, I did some “free” retirement planning things, but these were all put on by financial/investment groups that just wanted you to use them to manage your investments. I was turned off by this.
First, I put together a spreadsheet of my monthly/annual expenses. I figured I would need a “minimum” to start with as far as how much I would need. I came up with an average monthly “expenses” amount, but knew that this was subject to change.
We then consulted the financial advisor that is associated with our investments (IRAs), and she ran a couple models. This factored in our social security, so this brought up the question of when to start drawing on social security. The model/tool she used seemed a bit simplistic. So though it gave us an answer that sounded good, it didn’t give a lot of details.
The key tool came via a co-worker who was also looking to retire. He recommended this online tool. The makers of this tool hold these online seminars, and the co-worker sent me the link to this one - kind of a general how to use their tool type of deal. Though the presenter was not a professional instructor, what he had to say and the examples really changed my view on when to draw my social security (I had originally been planning to start at 62 - the earliest I could). And there was a lot of good info. So it sold me on trying this tool (plus it’s not all that expensive).
This tool (message me for more info - I don’t want to sound like I’m selling anything) takes kind of a different approach. Whereas it does take into account certain annual expenses like taxes, property tax I was kind of surprized it did not require my “monthly expenses” information. Instead, based on things like where you can draw cash from (IRAs, investments, social security), and your expected life span (you specify), it calculates a monthly/annual “discretionary income”. Your actual expenses need to come out of this amount (if your estimated expenses are greater than this amount, then you need to readjust something). I’m not sure why they chose this approach, but based on “some” known expenses, the tool is focused on coming up with this annual “discretionary income” that remains constant through your retirement. They kind of leave it to you as to whether this amount will work for you based on your expected expenses beyond what they factor in.
The software is pretty sophisticated, and allows you to investigate different options on things (when you want to start social security, etc.). What I like is that it isn’t associated with any investment organization. So there’s no bias in where/how to handle your investments.
The tool can be used long before retirement as well. It can help show you how things will pan out given what you’re doing with your 401k or IRAs while you are working.
One question and one comment.
Question: what made you think that taking Social Security at 62 was the best way to go. Nearly everything I’ve read on this says that it isn’t, unless you have reason to think your life expectancy would be low or would have trouble paying bills without it. I don’t mean to be challenging, since you clearly got better information and acted on it, I’m curious.
The comment is that based on my experience and that of our parents the constant discretionary income model is inaccurate. Many people spend more just after retirement, since you are free from vacation constraints. We did. And spending declines as time goes on, since you have everything you need and don’t particularly feel like jetting off to Europe.
Our model has been low average monthly expenses punctuated by capital outlays like buying cars and home improvements. (And paying off the house.)
There are medical expenses, but that depends on your Medicare plan to some extent.