Math and Mortality

Oftentimes, working individuals are unsure as to when they expect to retire.  While this is not a disaster, it is a sign that they have not done the math on their own savings and retirement planning. 

It is important to set a retirement age, because if you do not, you will have no idea if you are saving enough to ever stop working.  An easy way to pick a retirement age is to anticipate what year your life will substantially change in terms of spending needs.  Asking this question puts a fine point on the issue: you might be less bound to a high fixed cost of living sooner than 65.  If this is the case, do the math backward to your current age to come up with the number of years you must continue to work at your current income. 

“Don’t just say ’65 or 70’ and hope for the best.  Sit down and figure out your real retirement target and, if necessary, kick up your savings rate a notch to make it happen.”

See Mitch Tuchman, An Easy Way to Pick Your Retirement Age, Forbes, Nov. 5, 2014.