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Retiring (at 65) Isn’t Supposed to Be Easy

One thing that keeps coming up in emails from readers of my new book is surprise at just how much money one should accumulate before retiring. “Is it even possible for people with normal jobs to save that much money?” has been a common question.

Yes, it’s certainly possible. But I never said it was supposed to be easy.

What Level of Saving Does it Take Per Year?

As a starting point for analysis, imagine that you’re planning on working from age 22 to 65. That means you have 43 years to save enough money to get you through (potentially) another 30. In other words, it’s possible that you’ll be spending down your nest egg for almost as many years as you spent building it up. If we assume that:

  • Your investment returns precisely match inflation,
  • Your income grows exactly in keeping with inflation,
  • The money you pay into Social Security ends up earning a rate of return exactly equal to inflation, and
  • Your lifestyle does not change (so your spending increases in keeping with inflation as well),

…then you would have to save 34.9% (30 ÷ 73, minus the 6.2% you pay into Social Security) of your income each year in order to retire as planned! Obviously, most people don’t save anywhere near that much.

Fortunately, your income is likely to grow faster than inflation over the course of your career. And your investments are likely to outpace inflation as well.

On the other hand, it’s likely that you won’t keep your inflation-adjusted spending flat from age 22 onward. Most people have kids and/or raise their standard of living over time. Also, many people don’t start investing by age 22.

So how much do you need to save each year? There are too many variables to give a rule of thumb that would work for everybody. For most people, it’s probably a good deal less than the 34.9% calculated above. But it’s also a good deal more than the 5-6% that the average person actually is saving each year.

Takeaway: If you want to retire at 65 (or earlier) with confidence that you’ll have the same standard of living throughout retirement that you had prior to retirement, you will have to make sacrifices that most people around you are not making. Your rate of saving has to be unusually high.

Why Retire at 65?

Lifespans get longer and longer, yet most investors are still planning on retirement at 65 or earlier. In other words:

  • We’re saving for longer retirements,
  • We aren’t dedicating many more years to accumulating savings than prior generations did,
  • We’re saving a smaller portion of our income per year than prior generations did, and
  • There’s no reason to think that our investments will earn higher returns than those earned by prior generations.

So it’s no surprise that (according to the Employee Benefit Research Institute) only 16% of workers are “very confident” that they’ll have enough money to live comfortably in retirement.

Thankfully, there’s no biological rule that says that humans must stop working at any particular age. And 65, 70, and 75-year-olds are (on average) in better shape physically and mentally than they’ve ever been.

To me, the obvious solution to both:

  • the societal problem of people not saving enough and
  • the problem faced by individual investors who feel they aren’t on track to retire at 65

…is to abandon the idea that retiring at 65 and traveling the world is something that most people can do.

Instead of asking, “When can I retire?” more investors should be questions along the lines of, “What do I want to be when I grow up? And how soon can I leave my current work to do that instead?”

Retiring Soon? Pick Up a Copy of My Book:

Can I Retire Cover

Can I Retire? Managing a Retirement Portfolio Explained in 100 Pages or Less

Topics Covered in the Book:
  • How to calculate how much you’ll need saved before you can retire,
  • How to minimize the risk of outliving your money,
  • How to choose which accounts (Roth vs. traditional IRA vs. taxable) to withdraw from each year,
  • Click here to see the full list.

A Testimonial from a Reader on Amazon:

"Hands down the best overview of what it takes to truly retire that I've ever read. In jargon free English, this gem of a book nails the key issues."


  1. I think the value of working a year or more longer can’t be underestimated. That’s a year or more when you’re putting off social security, letting your investments compound, and not touching your retirement accounts.

    I ran some numbers at the retirement calculator below. Assume someone age 60, income $100K, savings of $250K, age expectancy 85, saves 10% of income, expects to need $75/year, SS will give him $28K to subtract from that ($57K).

    If he retires at 65, he will have 395354 and deplete savings by age 72. If he retires later (with no other change to savings rate, etc.):
    If 66 = 430018 = 75
    If 67 = 466821 = 77
    If 68 = 505893 = 79
    If 69 = 544395 = 82
    If 70 = 591415 = 88

  2. Margaret writes in via email:

    “‘It occurs to me that people I know (men, especially) who work by the sweat of their brow (carpet laying, tile work–any of the trades, or for that matter, those of us who have maladies in our older age due to the physical strain of long working years at the computer)–will have a hard time making our bodies work for much beyond 40 years. Perhaps to add to your planning points, “What will I do for employment when my body no longer holds out for my current job/trade?”‘

    I don’t have much to add other than, “good point!”

  3. Lifespan is a misunderstood statistic.

    Yes, lifespans have increased over the years, but that number is mainly due to much lower infant mortality. In the old days, if you made it past 10 years, you had a pretty good chance of making it to your 70’s and 80’s.

  4. It’s supposed to be easy when you have a pension. Not so when you don’t. When you don’t have a pension but still live as if you have one, the amount required will seem so unreachable.

  5. I think most people are planning to retire at the age they receive full retirement benefits from Social Security. For most Americans that age is 67.

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