How do you decide when you are ready to retire? For some, it is when you reach a certain number of dollars – your ‘F-Off’ number that represents financial independence. For others, it is a specific date, Come hell-or-high water, they are going to walk off the job on the date they’ve always planned – age 55, age 60, or any age they want, regardless of how much money is in their retirement savings.
I’ve been chatting with a lot of folks about their lately and it is interesting to hear people’s retirement plans and if they are driven by DOLLARS or DATES:
- DATE: One friend who has young children bases his thinking on his kids ages. He and his wife have young children and their plans to retire are all based on their ability to get their kids through high school and into college. That’s a ways off at this point, but that’s what they feel they need to do as parents. Recently I published an article that explored how old people’s kids were when they retired and he found that surprising.
- DOLLARS: Another couple we know plans for early retirement just as soon as they can. Their kids are already off to college and they have sold the family home and already downsized into a home for retirement. The money they saved will get them to true financial independence and retiring early (FIRE) in just a few more years – maybe even faster than that.
- DATE: A former coworker has just started his countdown toward early retirement at age 55. He is about 18 months away from his 55th birthday and was happy to see that it falls on a Friday. I also retired on a Friday (April Fool’s Day) and shared with him over lunch how I planned out my final months. He’s excited!
- DOLLARS FIRST: A younger friend isn’t sure when he will hit his number, but he and his wife have been diligent savers since they started working. He is just about 40 years old now and he is not interested in a date, but just a number. He comments that having a laser focus on an aggressive number gives you flexibility later. Once you reach the number, you can decide to keep working or not once you get there.
- DATE REACHED: At lunch last week, I met with someone who isn’t quite on her dollar number, but feels like her retirement date has come due. She is ready to make the jump to early retirement and string together some enjoyable hobby jobs that will bridge her through to where she needs to be financially. There is some risk involved, but she is ready to trade future savings for a life of freedom now. She doesn’t want to get caught in the ‘one more year’ mode of working and delaying retirement.
- DOLLARS NEEDED: One former boss who is more than 10 years older than me would like to retire soon, but hasn’t gotten to his number. At a recent event, I met his wife for the first time and she was positively jealous that I exited MegaCorp before I turned 50. “Retirement’s not yet in the cards for us,” she said, lamenting the fact that they hadn’t been better savers when they were younger.
- DAD’S DATE: I worked with a woman at MegaCorp who retired two years ago fulfilling a goal to retire five years earlier than her father did. She said he had died of a heart attack soon after retiring and never got to enjoy himself. For her, the date was everything because she saw the risk of dying early as very real. I talked with her on her last day at work and she was very excited to get onto her next chapter.
- DATE OPEN-ENDED: One last friend had an interesting approach to the question about dollars or dates, which was that his aim is to maximize his number as much as he could, until he inevitably gets laid off (his company isn’t doing well). He feels that his kids do not have the same economic opportunities that he has in his life, so he wants to build intergenerational wealth to help them out. If you are wondering, he is not overly political and his view didn’t have anything to do with the recent Presidential election.
For us, I had a plan to try to retire by age 50 for quite a few years. At first, it was just a ‘nice to dream about’ DATE, but as I got into my 40s, it also became an actual dollar and cents goal. The date was still more important to me than the dollars at that point, although I also spent a little time calculating the exact number of dollars that would also mark the finish line to financial independence. I wrote about the fun of picking a date plan in this post, from my ‘FIRE Milestones’ series.
I switched companies when I was 46 and felt like I was close to my dollars number. A few months into my new job, I recalculated and realized I had definitely made it. That said, since I hadn’t reached my DATE yet – my son was still in high school – I kept working and ended up building a little financial safety cushion. Eventually, I exited a little earlier than my DATE goal, and a little over my DOLLAR goal.
As you can see from the number of examples I’ve discussed with people in the last couple weeks, there is no better approach when considering dollars or dates. Calculate both and you’ll probably know the best path for you when you cross one of the two possible lines. Are you planning for a dollar amount or absolute date for your retirement?
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MrFireStation 
Great post-it’s good to see the different approaches people have to setting their retirement date. Right now I only have a vague notion of either the dollar or the date. I’m currently in my mid-30’s, and I’ve always found that being younger made it harder to plan. I’ve been saving and investing since my early 20’s, and I know so much can change over the decades. Inflation, interest rates, investment returns, job prospects-my life a decade ago is very different than it is now, and I assume that will continue over time. Generally I have the idea that I’d like to retire before 50, and maybe move into an online and/or part-time income stream.
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Well, that sounds like you have a date then – before 50. Yes, life can change a lot over the decades – but before you know it that number will be creeping up on you. The more you save now, the more flexibility you will have later – you will love that!
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We’ve been taking kids’ ages and money needed to come up with a number of years till retirement. My husband wanted to retire early in order to travel extensively with the kids before they’re too old to want to hang out with dad. Of course, we don’t know exactly when that’ll be, but it seems we won’t make it before then. So we may take a year off, then go back to work for a few more years when they are in high school. Great topic!
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That is an interesting approach. I once watched a Ted talk where the person had a life style designed around taking one year off for every five or six years of work. He figured that it would only mean that he worked five years longer than most people, but he would get the benefit of all of those sabbatical years.
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I always enjoy reading about other peoples FIRE plans and strategies. Many times you can learn something and gain a new perspective that you might not otherwise be aware of.
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Yes – that is the one reason that I started this blog. I always enjoyed reading about people’s experiences as they planned for early retirement. There are a lot of personal finance websites, but very few first-hand accounts of how people reach FIRE.
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I have set a date. It is when I become eligible to start my pension (age 55).
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Pension age is another big consideration. We were fortunate to be in a position where we could retire before our pension started, but the bridge years are the most challenging financially.
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Tough question, we both have a date and a number. Albeit the date is somewhat dependent on the number (read: we based the date on the projected financial growth and associated target number). That being said, it might end up being a bid open-ended, as Mrs CF loves her work and Mr CF is still considering starting his own business. We try to remain flexible at this stage considering we don’t know what the future holds.
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Hard to look too far into the future, but having flexibility is really what financial independence is all about. I thought there was a chance that I may want to work longer, but when it came down to it I was happy to walk out and live a life of complete freedom.
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Good for you! Enjoy, you worked hard enough for it.
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Ours is a mix of date and number. Number because that is the value we will need to execute our post retirement lifestyle. Date because honestly that nomadic lifestyle is not necessarily possible with kids. The number should be reached significantly predate which is a nice position to be in.
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It is VERY nice to be over-saved for FIRE. It takes the stress out of watching the market and will take the bumps out of your nomadic travels!
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I am number driven, but it is definitely informed by a date.
I will nominally reach FI in 10 years–at age 55. (I say nominally, as in: I will be very comfortable if my existing investments double in the net 10 years–i.e. return 7% per year) However, I have a 1-year-old at home. Our retirement dreams include someplace warmer than our current Michigan. But, neither my wife nor I want to force a relocation on on our son during his grade school years–while just imaginary now, we don’t want to have to choose to take our some away from important friendships. This makes the 10 year nominal date not really practical. So, I am aggressively invested (and still saving) to shoot for a 5 year early retirement.
If it happens, then we will fulfill our wishes–that is the best-case scenario. And if it does not happen–if we reach the nominal scenario, or if my aggressiveness proves unfortunate, and poor returns mean we retire somewhat later than 10 years, with possibly some ease in my career to make up for it, then we will still make time to be with our son, and look for a more traditional move after he goes off to college. We would probably also look to make more “comfort” investments in our current house if we know we will be in place for that much longer. Call it the silver medal.
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Your aggressive approach with a practical outlook is probably the best of both worlds. I’m betting you will hit your 5 year target- I think the world economy has yet to rebound and you’ve probably planned a little conservatively. Good luck!
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Number driven here!
But given that I’m still not sure about my actual number, setting an age term is also cool.
Current statement is “at least 1M Euro (better 1.2M), before age 45” 🙂
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Love this topic. I fall into the Mom’s date as she passed away at 57 and never got to relax and enjoy herself. I am determined to retire at 57 or earlier and I am on track assuming I keep making it and keep saving. I am about 10 years away. I am expecting 2017 to be the best year for savings up to this point in my life. I really appreciate what you have been able to accomplish. It is not easy and requires focus, discipline, and maybe a bit of luck. Congrats to you and I look forward to reading more about what retirement is like 🙂
-Brian
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Your Mom’s story makes for quite an inspiration for you. I’m sure you will get there if you keep your focus. It’s amazing how quickly your net worth grows – the exponential growth year by year in your 40s is amazing to see.
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