How to Figure Out When You Can Retire.

This is one of my favorite comments ever posted on this site, by Meg:

“Every time my husband asks me when we can retire, I tell him that depends on whether he wants to live in a $50K, $500K, or $5M home… We could retire today if we wanted to downsize to the “extreme!”

I love it because it sums up EVERYTHING about money and what we want to accomplish in life. And you can swap it out with a number of other things and it will still remain just as true:

Every time my husband asks me when we can retire, I tell him that depends on whether he wants to drive a $2,000, $20,000 or $200,000 car…

Every time my girlfriend asks me when she can retire, I tell her that depends on whether she wants 10 shoes, 30 shoes, or 300 shoes…

Every time my friends asks me when they can retire, I tell ’em that depends on where they want to drink their drank: at home, at da club or on the motha f*ing boat!

And the game goes on… It’s all about the priorities :)

Of course, there are other factors that go into retirement too, such as:

  • How bad you actually want to retire / become financially free
  • How hard you are willing to work to get there
  • What stage of life you’re in
  • How much debt you’ve racked up
  • How long you’ve been reading Budgets Are Sexy ;)
  • And how much confidence you have that any of this is even possible? (see below)

But in its most simplest terms, freedom comes down to two basic areas: how much you need to survive, and how much you have banked. Tweak either side and the picture shifts – there are no right or wrong answers. You DO, however, need to know what you truly want deep down inside so you can get cranking on the details.

Download this spreadsheet I made up the other month to give you a good snapshot of where you currently stand financially. It’s based on cold hard numbers alone, and it will tell you exactly what the deal is pretty quickly!

If you’re happy with it, continue on! If not, take some time today and really think about what trajectory you’re on and what changes might need to be made. Regardless of what you say to yourself/others, the places you spend your money are the exact areas you’re prioritizing right now. Are your goals aligned correctly?

And lest you think I’m Mr. Perfect myself, may I remind you I have enough financial skeletons in my own closet to supply a Halloween super store :) They’re being crushed one by one over time, but my story is a work in progress just the same.

For some pretty inspiring stories, check out these folks we’ve featured here over time. I’m not nearly as motivating as they are!

When J. Money asks you when you’ll be able to retire, what are you going to tell him? :)

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  1. Daniel October 12, 2015 at 5:24 AM

    J Money, I am gonna retire when I feel I am financially and emotionally ready. That might happen when I am in my 50s where I think I can settle and live life without worrying about source of money.

  2. Mrs DN October 12, 2015 at 6:27 AM

    I’m working towards becoming financially independent in the next 15 to 20 years. What I find challenging is predicting the future, I’m yet to discover a spreadsheet that would allow me to compare different possibilities. I have just started my career and don’t have any kids yet. I would definitely think the amount of kids would have an affect on our savings rate and thus the timeline of our FI.

    1. J. Money October 12, 2015 at 11:24 AM

      Yup, that is a biggie – esp with kids – but I’d imagine if you can figure out how to hit financial freedom in general you’d be able to do so with kids, family, home, travel – whatever the future holds :) And fortunately most of that is within our control!

  3. whiskey October 12, 2015 at 6:53 AM

    For some, this will be looked forward to. Others, dread. $, no matter from what source, will be of primary concern. I think one needs to plan on the amount of cash to be comfortable with but don’t plan on stopping. Once you “stop” its hard to get moving again.
    I don’t plan on retiring. Slowing down, I’m sure, just due to an aged body etc. But I won’t stop.
    I agree with Daniel that being “emotionally” ready is part of it. If your are, go for it, if not then don’t. Figure out whats best for you personally

    1. J. Money October 12, 2015 at 11:46 AM

      Yeah, “retiring” is more about “financial freedom” than just stopping work or doing something… I very much plan on doing cool stuff once I’m “free” myself forever and ever… and who knows, maybe those projects will make even more $$$? Mr. Money Mustache and the others who hit freedom and started blogging are in these awesome stages :)

  4. Mark@BareBudgetGuy October 12, 2015 at 6:57 AM

    I used to stress so much about this until I realized that I’m married to a woman who actually WANTS to work. She is planning to go gangbusters once the kids are gone, teaching violin, which she’s great at. When that time comes, if I’m still working, I’ll be like peace out!

    1. J. Money October 12, 2015 at 11:47 AM

      Haha… your wife and my wife will get along swimmingly :) She cannot WAIT to start working again, just having no luck with the right jobs yet… some day!

  5. Kalie October 12, 2015 at 7:16 AM

    That comment (and the extrapolations following it) is a great way to frame the retirement question. I appreciate that you acknowledge the income and expense side of retirement. Too often the expense side is considered fairly frozen.

  6. Penny @ She Picks Up Pennies October 12, 2015 at 8:08 AM

    My favorite part about this post is that it doesn’t focus on retiring early, just when you’re ready. For a long time, I sat on the sidelines and didn’t actually start blogging, because I felt like a fraud for not pursuing early retirement. Being clear about your priorities and how you want to live your life is key, no? :)

    1. J. Money October 12, 2015 at 11:48 AM

      oh really?? I didn’t even know what “early retirement” was until like 5 years into blogging! Haha… to me it’s all about starting convos about money regardless what areas they’re in. That’s why I started blogging at least. To be around other people who like talking about money like nerds! :)

  7. Kate @ Cashville Skyline October 12, 2015 at 8:28 AM

    I’m not seeking early retirement so much as financial freedom. I want more control over my time and location. I’m trying to build up additional streams of revenue and save as much of my current income as possible. I’m in Santa Fe right now and it’s a reminder of why I’m hustling toward financial freedom.

    1. Steve Miller October 12, 2015 at 9:29 AM

      I think Kate has it right — seek financial freedom.

      I like your spreadsheet for planning for retirement. Now that I am retired, I keep an eye on my SWR spending and I have a spreadsheet I built to track how my net worth may look in the future, using ROI rate of 7.5%. I then compare planned to actual each year. Let me know if anyone is interesting in that spreadsheet.

      1. J. Money October 12, 2015 at 11:49 AM

        Nice! Have you posted that spreadsheet online before? If not, might be a good addition to your site :) I’m sure you’re readers (and future retirees) would appreciate!

  8. Amanda S @ Passionately Simple Life October 12, 2015 at 8:39 AM

    My goal is not to retire ASAP but to be financially secure and independent. I greatly enjoy working, it’s one of my favorite things at this point in my life. But that doesn’t mean that in years to come that won’t change So if and when it pops up, I can say okay everyone, it was great knowing you, but I’m headed out the door. Being financially tied to a job because it is my only means of survival in this world would scare me to death.

  9. Mr. SSC October 12, 2015 at 8:56 AM

    That’s a great point about timing. I think if worst things happened and we both lost our jobs in the oil industry downturn, we would probably say, Meh, and start enacting our lifestyle change, our version of FIRE. While we may still have to work somewhere for a year or two more, it comes down to being in a better all around quality of life situation even if it isn’t at the same income as before. since our lifestyle change trigger number targets our optimal income, we also know we can adjust for less if needed. Until we hit that number, or get forced into the lifestyle change by our companies, we’ll just keep feeding the investment funds and counting down the days. :)

    1. J. Money October 12, 2015 at 11:50 AM

      Not a bad position to be in at all :) You’ll reach it before I!

  10. Thias @It Pays Dividends October 12, 2015 at 9:02 AM

    The goal is to retire whenever I want, whether that is 10 years or 30. I just want to be to the point where I am in control of my future and not relying on other forces to determine it.

  11. Lisa O October 12, 2015 at 9:08 AM

    I feel this way too…I am working to obtain the goal of retirement but I will retire when I feel I should…somewhere between 62 & 70! God willing I will be healthy to enjoy a little time of not going to work everyday and maybe have a little travel :) I just turned 50 and we are now starting to plan a few trips before retirement to make sure that we do get a few things off the bucket list while healthy and still working to pay for it…Ireland next year for 2 weeks and happy to say it will be funded!

    1. J. Money October 12, 2015 at 11:51 AM

      WOOHOO!!! Still on my list to visit too one day!

  12. Laura October 12, 2015 at 9:17 AM

    Regardless of when one “plans” to retire, circumstances change. Life is full of unpredictability. I retired earlier than I originally intended to as a result of several factors. The largest financial challenge I’ve encountered as a result is the cost of medical insurance. At Medicare age, you pay for basic hospitalization, a supplemental policy and a prescription policy, plus co-pays, deductibles, uncovered expenses, etc. Before Medicare age, you purchase a private plan (I got mine through Costco). The exchanges are excellent if you’re going to be subsidized by the government but are no cheaper if you’re not, and many medical providers don’t accept the coverage at this point in time in this area. Non subsidized rates are staggering ($800.23 per month for standard 80/20 coverage), and increase annually ($959 for the same plan for 2016), as well as with your age. You’ll also still be paying co-pays ($30 going to $35), deductibles if your plan has that feature, and out of network costs ($50 going to $55). For a couple with one person at Medicare age and one person not there yet, it breaks down to nearly $1200 a month this year, before anyone sees a doctor for anything, increasing substantially next year. A word to the wise: do ALL the research on the actual hard costs of medical insurance in retirement, and remember that even if you own your home free and clear, as we do, the costs of maintaining medical coverage can and will easily exceed most mortgage payments.

    1. J. Money October 12, 2015 at 11:56 AM

      That’s the one area I haven’t looked at AT ALL. I’m far from being financially free right now, but I agree it’s something to really consider before doing anything drastic. Hell, we pay over $900 right now just for insurance! One of the reasons I’m looking forward to the wife getting back into the work force again :) I love being a blogger, but man – doesn’t bode well for some of those financial perks good ol’ 9-5s have.

  13. Hannah October 12, 2015 at 9:25 AM

    My multi-million dollar beach crash pad is still a few years out, but I could become a ski-bum today (or in November when ski season starts)! Decisions, decisions.

    1. J. Money October 12, 2015 at 11:56 AM

      Get the pad so I can crash it! :)

  14. tyson koska October 12, 2015 at 9:27 AM

    Establishing a plan is about the most important (and difficult) thing you can do… Personally I think most “financial forecasting” tools out there are pretty terrible, so I wrote my own (called ontrajectory if anyone’s interested)… Anyway, the key is to get some vision of the path you’re on because no matter where you want to go, you have to figure out out to get there…

    1. J. Money October 12, 2015 at 11:58 AM

      just poked around it a bit – looks interesting :)

  15. Justin @ Root of Good October 12, 2015 at 10:35 AM

    Ha ha, nice. I just used this line on the wifey yesterday.

    She was mostly joking, but she said she wants to get rid of our house and live in a mansion. I said “sure, how many more years do you want to work to achieve your goal?”. Then in a good hearted but mocking manner, I started listing off how many years of work it would take to save another half million to buy a mansion, then how many more years to save up enough to cover property taxes, insurance, HOA, maintenance, etc. Oh and we would need a maid and a gardener. $$$

    Then we had a good laugh and enjoyed the rest of the day in our non-mansion.

    1. J. Money October 12, 2015 at 12:00 PM

      Haha…. Love it.

  16. Our Next Life October 12, 2015 at 10:46 AM

    The “how bad do you want it?” piece is pretty huge, and we’re letting that be our dominant factor. We’re planning to quit at the end of 2017, pretty much regardless of where our numbers are — though we’re working hard to make sure that they’re in good shape then, market willing. Rather than say “we want 100 shoes” or “we want a certain house,” our goal is time-bound, and we’ll reverse engineer the rest to fit. If we can stay in our current house, great. If we have to downsize, we’ll be fine with that, too. If we can afford to travel internationally three times a year, awesome. If we can only go once a year and need to sleep in hostels, that’s still awesome. We think we’re still young and flexible enough in our thinking to adapt to whatever our financial circumstances are when we pull the trigger.

    1. J. Money October 12, 2015 at 12:03 PM

      That’s actually a GREAT way to think of it! Esp if you’d be fine either way more or less with your money (vs, say, someone with $5.00 in savings and says they’re quitting no matter what next year, haha…).

      I like the way you’re doing it because not only do you get to enjoy the whole purpose of money right away (ie freedom!), but you won’t get tempted to just “work another year” which could turn into 2 or 3+ or until you hit whatever next bench mark you choose for yourself. Not that that would be all that horrible of course, but your route avoids it which is nice. And what a position to be in to do that too! :)

  17. Will October 12, 2015 at 12:10 PM

    Sometimes the simplest posts make the greatest impact. :)

  18. Jason @ Phroogal October 12, 2015 at 12:25 PM

    This is why it’s always a good idea to dig deeper when people say, “I paid off $25k in one year!” or “I retired at 30!” If you make $200k/year, $25 is nothing to pay off. If you retired with only 700k, age 30 isn’t that impressive. Gotta always dig a bit deeper than the Pinterest titles haha.

    1. J. Money October 12, 2015 at 1:06 PM

      You don’t think $700k at age 30 is impressive?? What DO you think is impressive at that age? Haha…

      But yeah – I agree there’s more to the stories than the catchy headlines. Any major achievement is motivating though at least to me when it comes to normal people.

  19. Joe October 12, 2015 at 3:34 PM

    I think $700k at 30 is pretty impressive, but probably not enough to retire on. :)
    Yeah, the key is to find the balance you can live with. I don’t have expensive taste so I can retire earlier than most people who makes the same salary I did.
    I also had a big “push” factor to retire early. I hated my old job and it was literally killing me. You can always find an alternative when you know you have to make a big change in your life. Luckily, we saved and invested early in life and live a modest lifestyle.
    Best wishes

  20. James @ October 12, 2015 at 4:22 PM

    I think of this topic as a financial freedom equation more than retirement. At least that’s my desire. A lot of people end up with poor health and short lives when they don’t stay active. I think the idea of the 30 year pension-funded retiree sitting on his porch all day is kind of outdated. It also doesn’t sound very appealing. A responsible budget within the confines of the lifestyle you desire and sources of income that don’t involve a day job are the ideal scenario. I think it’s also achievable far earlier in life than most people would think, but as you pointed out in your article, there are definitely some sacrifices that have to be made. Good post!

  21. Dominic @ Gen Y Finance Guy October 12, 2015 at 4:55 PM

    I think that every question that relates to finances always should be prefaced with “it depends on what you want.”

    As a personal finance blogger myself, it is all about sharing one perspective, and one persons ideas and strategies to reach FI given my own goals. We are not here to hand out cookie cutter FI plans. It’s just not possible with an infinite number of permutations of what people really want from life.

    But we can lay a solid foundation of financial skill and acumen that will help people pick and choose the financial strategies that will help them get where they want to go.


  22. Harmony @ CreatingMyKaleidoscope October 13, 2015 at 12:19 PM

    Your metric is so true and simple . . . for complete retirement. I would add that you don’t necessarily need to choose between working and retirement, as with almost everything else, there is a grey area in between the two. We are still working on paying off debt, so full retirement will be completely out of reach for quite some time. We can, however, semi-retire. For us, semi-retirement is all about escaping from the grind and doing a variety of part-time jobs to support ourselves, with more time for living. This option makes the equation a bit more complicated, but provides more flexibility when it comes to the numbers.

    1. J. Money October 19, 2015 at 1:27 PM

      YUP! Semi-retirement is a nice place to be too. And in fact, will probably be where I am for the rest of my life after hitting financial freedom :) I won’t ever stop working, but I’ll stop working on stuff that I hate and/or is just for the money.

  23. Ron M. October 13, 2015 at 12:46 PM

    The classic quote that summarizes this question comes from George Foreman:

    “It’s not WHEN I want to retire, it’s at what INCOME.”

    1. J. Money October 19, 2015 at 1:27 PM

      Good one!

  24. Tawcan October 13, 2015 at 4:31 PM

    Totally. Many of us in the FI blogsphere can probably retire today if we sell our houses and just become nomads. Ultimately it’s what we want to do that dictates when we can retire.

  25. Andrew October 13, 2015 at 5:47 PM

    “When J. Money asks you when you’ll be able to retire, what are you going to tell him? :)”

    Probably after I get done reading all 7 years worth of advice”- Too bad I’m a slow reader.


    1. J. Money October 19, 2015 at 1:28 PM


  26. Freedom40 October 13, 2015 at 8:32 PM


    I’m a long time reader and always appreciate your insights and observations. When you shared this tool earlier this year, it set me on a path to create my own version. It has two tabs, one to track traditional retirement funds (401k, IRA, etc) that can likely not be withdrawn until 59 1/2. The other tab helps plan for that gap between your early retirement / FI date and when you can get out that tax advantaged money. If you have time to check it out and let me know what you think, that’d be great!


    1. J. Money October 19, 2015 at 1:30 PM

      Cool! Love seeing people tweak spreadsheets! Will poke around for sure – thanks man.

  27. The DeLeon October 14, 2015 at 8:14 AM

    Nicely written, simple article J. People make retiring much more complicated than they need to sometimes. The basic principles of 4% per year or expenses*25 are great methods to work with to decide when to make that leap. If one wants to retire earlier lower the expenses or increase the income.

  28. Syed October 14, 2015 at 3:39 PM

    This is what it’s all about. With this in mind, I think the number one thing you can do to make sure you have “enough” in retirement is learn to live on less. Once you start driving luxury cars, you get addicted and it’s tough to downsize. Once you’re used to large houses, it becomes difficult to imagine living in a small house. Be proactive and learn to live on less.

  29. Elle October 17, 2015 at 1:01 PM

    This is a great article. My husband wants to retire in his mid-to-late 30s, only because he’s been in the military for so long and it took a great toll on him. I however only want to retire in my late 40s or even early 50s. I would gladly work. My husband says he would gladly stay at home and take care of our children.

    1. J. Money October 19, 2015 at 1:31 PM

      Well it sounds like it’ll work out nicely for the two of you then :)