When can I retire? This is a question we help people answer all the time, and is, in fact, one of the most common (and important) questions we hear. There is no universally “best” time to retire; it’s really what is best for you!
However, here are some things to consider:
- Year-end retirement (December): Retiring at the end of the calendar year can simplify tax reporting by consolidating income within one tax year, potentially avoiding complexities of partial-year income tax filings.
- Healthcare coverage: Retire at a time that minimizes gaps in health insurance coverage.
- Seasonality of lifestyle preferences: Retiring in spring or early summer can provide immediate enjoyment of warmer seasons and ease transition into new routines, especially if relocating.
- Social connections: Many retirees prefer to retire at times that align with family events, fiscal year ends, or community activities.
- Employer policies: Some retirement plans have restrictions or incentives tied to certain months or quarters for bonuses, stock options vesting, or retirement plan distributions.
- Maximizing benefits: Coordinating retirement date with pension plan rules or health benefits can optimize overall retirement income.
As for the numbers, this is an oversimplification of the analysis, but it involves adding up your investment balances and income sources, and then considering what you’ll spend in retirement.
Let’s say you are a married couple living on $10k per month and will have $6k per month from pensions and social security, leaving $4k per month supported by your portfolio. A starting point would be to multiply that monthly income needed by 300 to figure out how big a nest egg you’d need to have for retirement. In this case, that would be $4k * 300 = $1.2M of investments. Now, there is a lot more to this analysis, but this is a fine place to start the conversation.
Ready to move from rough estimates to real clarity? Schedule a conversation with our advisors to explore what retirement could look like for you.
