If your ask a hundred people when they plan to retire, they will likely give you an answer based on time: “Sixty-five”, “Sixty-seven”, “When Social Security kicks in” or “In five years”. That’s how future retirement is typically framed – as a moment in time. However, retirement doesn’t depend on you age, the calendar or a specific birthday. Retirement can begin when the numbers work.
That’s the core idea behind this blog, “Your Retirement Equation” and the book by the same name. (See book here). The book originated from my own journey in retirement planning that included debt management, wealth accumulation, withdrawal strategies in retirement, tax optimization, index fund investing and more. I hope to discuss these and many other topics in future posts.
Retirement isn’t about how old you are. It’s about what your financial equation looks like and whether that equation allows you to support yourself without relying on a biweekly paycheck. You don’t retire because the calendar says you can, you retire because the numbers say you can.
Over time, we absorb the idea that retirement is something you reach at a certain age. This misconception is reinforced by Social Security’s “full retirement age”, Medicare’s eligibility age of 65, and pension plans being linked to your age and years of service. But reaching “full retirement age, “65”, or “20 years of service” doesn’t pay the bills. Only number do. Two individuals who have reached “full retirement age” (let’s say 67) can be in very different financial situations. One may be financially independent (and maybe could have retired years earlier) while the second in living paycheck-to-paycheck. It is not likely that the second person’s annual expenses will be covered solely by Social Security. (According to the Social Security Administration, the average monthly Social Security benefit, as of January 2026, is $2,071.) That person will likely need to continue working… and saving… for several more years. Retirement is not unlocked by reaching a certain age. It is unlocked by reaching “financial independence,” a term that we will define and discuss in depth in future posts.
The right question is not “When do I want to retire?”. It’s “At what point do my resources reliably and predictably cover my expected expenses, adjusted for risk, taxes, inflation, and time?” That’s the equation. We’ll discuss all of these issues in depth in future posts, one by one.
Your current assets, if invested properly, will continue to grow between now and your retirement. In addition, you will likely continue to contribute to these retirement savings with each paycheck as well. In upcoming posts, we’ll predict how this initial investment combined with your future investments will grow, using historical averages and some simple math. (Don’t worry. There won’t be any trigonometry or calculus. Just some simple math.) By using these predictions, you will be able to approximate your retirement date, regardless of your age, with some degree of accuracy. It won’t be based on your age, but when you have reached “financial independence.”
Once you’ve accepted the fact that retirement isn’t an age, but a number, you may come to the marvelous realization that you can retire earlier than you ever imagined. Your retirement won’t be bases on age, the calendar or years of service. Your decision will be firmly based on the fact that you are no longer dependent on the income from your job. This knowledge will allow you to retire with confidence.
However, this “number” isn’t simply one number. It’s a set of interconnected numbers:
- Predicted annual spending
- Income sources (Social Security, Pension, Real Estate income)
- Investment assets
- Asset allocation
- Asset location
- Withdrawal rate
- Taxes
- Healthcare costs
- Long term care insurance/costs
- Debt obligations
- Inflation
- Market fluctuations
- Longevity assumptions
- Flexibility in spending
Each of these play a role in the equation and we’ll discuss all of these, and many more, in future posts.
Many uninformed, aspiring retirees will say something like: “I need $1.7 million.” This $1.7 million comes from the average amount 1,000 workers told Schwab they needed to retire in 2022. These workers didn’t come up with number after some length, detailed analysis. They have pulled out of thin air. It wasn’t based on their current spending habits, future expenses or projected earnings. In fact, according to Federal Reserve (around the same time), the average retirement savings for those between 65 and 74 was only $609,230, a fraction of the $1.7 million some predicted. Don’t use either number for your calculations. I can guarantee that they are both wrong… for you. The informed, aspiring retiree says: “I need my resources to reliably produce $XX per year, after taxes, for as long a I live, with room for uncertainty.” He or she will then use the equation to begin to calculate the amount that is required for them and the timeline to get there.
This blog is built around the equation that makes that possible and not just an arbitrary, often inflated number.
In order to outline your retirement equation, you’ll need to learn some things about yourself and your lifestyle. The most basic (and one that very few people know) is “How much do you spend each year?” The next question is “How will my spending change in retirement?”. These two questions are foundational to all future calculations in determining your “number,” how much you think you need to retire. Some simple math will help you predict how your current nest egg, combined with period future investments, will get you to the finish line and define when you get there.
Each future post will target a small, but important, piece of the equation. You’ll see how each piece will fit into your equation. Don’t get discourage. It’s actually a lot simpler than it sounds (and many make it feel).
The entire retirement investment industry, in my opinion, has made the whole concept of retirement planning and investing seem scary and complex. This is likely by design. The idea is to make investing for retirement seem complicated while touting their own “expertise” suggesting that only they can guide you through the maze and “beat the market”….. for a fee. Let me let you in on a little secret abut them beating the market: they can’t. In fact, only 8% of actively managed funds beat the S&P 500 over 20 years ending in 2024 (SPIVA US Scorecard). In addition, it is not likely that that 8% will be the same 8% to beat the marget over the next 20 years. Do you think you can pick one fund manager in thirteen that will beat the S&P 500 in 2026. I know I can’t. We’ll discuss the benefits of index fund investing as apposed to investing in actively traded funds, with their exorbitant fees, higher taxes and worse results. Over time, I hope that you will gain the confidence to fire your fund manager that charges fees based on AUM (assets under management) and do it yourself. It’s easier than your think…. and, on average, you’ll have better results.
About the Author:
I’m just a guy. I’m not a Certified Financial Planner (CFP) or a Certified Public Accountant (CPA). I’m just a guy who, during a thirty year career, lived below his means, avoided debt when possible and used the equation to comfortably and confidently retire at the age of 56. I will ride the ups and downs of the market with confidence since I have gradually accumulated “resources to reliably produce $XX per year, after taxes, for as long a I live, with room for uncertainty.” Your $XX dollars won’t be the same as mine. Your risk tolerance won’t be the same as mine. Your ability to ride the roller coaster of the market won’t be the same as mine. However, you can use the same equation to find you $XX and when you’ll get it.
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The information contained in this blog, including this post and future posts, is the author’s opinion and does not constitute any investment, retirement planning or tax advise. This blog should be used for informational and entertainment purposes only. Consult your financial planning or tax professional before making any investment, retirement, or tax decisions.