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How to Retire at Any Age
Old 01-22-2011, 03:22 PM   #1
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How to Retire at Any Age

With the How to Retire at X, How Far Below Your Means, LBYM metric & ER Extreme threads, I thought I'd provide THE "irrefudiatable" answer to all such questions. Here's what you'd have to save to work & retire at any given age for a range of real returns. I assume this will be the Sticky to end all...

YearsYearsRetirementReal ReturnReal ReturnReal Return
WorkedRetiredAge2.5%5.0%7.5%
  Savings Rate Req'dSavings Rate Req'dSavings Rate Req'd
9653074%59%47%
14603563%46%32%
19554053%35%22%
24504545%27%15%
29455037%20%10%
34405531%15%7.1%
39356025%11%4.8%
44306520%8.4%3.2%


Assumptions:
  • Start work/income at age 21
  • End of plan at age 95
  • Constant spending throughout whether working or retired
  • I chose a wide range of real returns (actual returns minus inflation) so folks could interpolate
  • No income or benefits of any kind once retired (100% SIRE)
  • Income increases exactly with inflation throughout
  • Constant real return
I've even attached the spreadsheet, but this was just an exercise to kill a half hour. It's deliberately crude, you can modify it all you want. Using the SOLVER function to run it is essential, trial and error would take forever. Accurate (hopefully) but an (entertaining) rule of thumb at best...
Attached Files
File Type: xls LBYM Solver.xls (32.5 KB, 33 views)
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Old 01-22-2011, 05:03 PM   #2
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I've always said that you just need to get married to someone who works, then invest the income of the spouse who makes the most money and live off the income of the lesser paid spouse. It works.
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Old 01-22-2011, 06:31 PM   #3
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Dang, I thought you were going to tell us where to find a lifetime constant real return of 7.5%...

Heck, I'd even settle for 5%!
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Old 01-23-2011, 06:12 AM   #4
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Originally Posted by Nords View Post
Dang, I thought you were going to tell us where to find a lifetime constant real return of 7.5%...

Heck, I'd even settle for 5%!
exactly! was all set to sign up.....
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Old 01-23-2011, 06:54 AM   #5
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Dang, I thought you were going to tell us where to find a lifetime constant real return of 7.5%...

Heck, I'd even settle for 5%!
I'm with you, planning on 2% myself, but hoping for a little better (but not 7.5% by any means).
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Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 01-23-2011, 07:16 AM   #6
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Perhaps we have been too conservative. We have enough PV assets (excluding our home) and future income receivables(SS + pension) to cover our planned income for our expected life (plan uses 95). All I need to do is keep up with inflation (0% real gain). Our planned income is 50% more than we currently spend.

But I am hoping to get a 2 to 3% real gain. We will invest to try to achieve it.


Once I get out of the w*rk rut... I will probably be kicking myself for not retiring 5 years ago.
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Old 01-23-2011, 07:31 AM   #7
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Once I get out of the w*rk rut... I will probably be kicking myself for not retiring 5 years ago.
You shouldn't, no matter what happens...
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Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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working spouse
Old 01-24-2011, 04:01 PM   #8
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working spouse

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Originally Posted by LOL! View Post
I've always said that you just need to get married to someone who works, then invest the income of the spouse who makes the most money and live off the income of the lesser paid spouse. It works.
I have been married 3 times to working spouses. Somehow, for them it wound up being instant retirement.
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Old 01-24-2011, 08:42 PM   #9
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I have been married 3 times to working spouses. Somehow, for them it wound up being instant retirement.
Some people want to live off others. Congrats on not allowing it!
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Old 01-24-2011, 09:35 PM   #10
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Paging Shawn...
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Old 01-25-2011, 09:40 AM   #11
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In the highly unlikely event that a 20-something would ask me for retirement savings advice, I'd start with a table like this.
It emphasizes that there is no accurate answer because you can't know you're future returns. (I'd add a 0% return column in today's environment.)
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Old 01-25-2011, 09:57 AM   #12
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I'd add a 0% return column in today's environment.
+1
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