The Retirement Newsletter: When should I retire?
Issue Number: -128 — picking a date to retire
Photo by Austin Schmid on Unsplash
Welcome
Wow! Already in August — the summer in the northern hemisphere is slipping by fast.
So, this week, I will explain how I got to the date for my planned retirement.
Planning — the retirement date
OK, so in the last newsletter (Planning for your retirement — a summary), I said I had finished looking at planning, but then receives an email asking for a little more detail on how I fixed my retirement date.
Back in newsletter -134, I said there were four reasons to retire:
Money — you retire when you feel you can afford to retire — when you have enough money in your pension pot.
Health — you retire at an age you feel will give you the correct number of years to enjoy retirement before your health becomes an issue.
The government or your employer says you have to retire — becoming rare, but it can happen.
You have had enough and feel you can no longer do the job, or you need a change, and there are other things you want to do. And retirement is a way to support the change.
And that for me, it is number 4 — I need a change, plus there are other things I want to do, with points 1 (money) and 2 (health) also coming into it.
For some people, health may be the driving factor. For example, a friend of mine looked at his family, and he even asked family members:
“When do you think your health started getting in the way of what you wanted to do in your retirement?”
From these conversations, he came up with an age of mid to late 70s when health became an issue.
He then thought about how long he wanted to have 'fun' when he retired and thought 20 years sounded about right. He then took 78 (the mid to late 70s), subtracted 20 (the number of years he felt was a good number of years of fun), and came up with 58. And he retired at 58.
When he told me about this approach, it seemed nuts to me, as I was driven by 4 (change), followed by 1 (money). Yet, his call is about right, particularly when you look at life expectancy tables if you want 20 years of fun retirement.
Once we had health out of the way, I asked him about money, and he said:
“You’ll never think you have enough to retire.”
Which, is a fair point.
I asked him if he thought he had enough to retire, and his reply surprised me:
“I think so. I have spoken to a financial advisor, and we have run the numbers, and as long as I am careful, I think I can do it.”
And that raises an interesting point, how much money do you need to retire? And I will start looking at that in following newsletters.
So, my friend came up with his retirement date by back calculating from an age when he thought his health might become an issue, and he is not worrying too much about the size of how pension pot.
I'm looking at money and have identified a minimum age to go, based on my pension income.
Other people I know have based their retirement date around a mixture of the above four, and some people I know have had to base their retirement around their health. And then again, you get some people who don't want to retire or feel they will never have enough money to retire.
It can be a tough call.
How are you going to identify your retirement date? Have you identified a date?
Health
After the conversation with my friend about how he picked his retirement date, it got me thinking about health.
How long can I expect to live after I retire, and for how much of that time will I be healthy?
A worrying and depressing couple of questions!
You can get some idea of how long you might have by looking at life expectancy tables. For the UK, where I live, it is 81.3 years, 79.6 years for men, and 83.0 years for women.
Is there anything you can do to improve your health and have a long and healthy retirement?
Money
And, my friend got me thinking about money.
Do I have enough to retire?
It is an interesting and worrying question, and in the next few weeks, I will start to explore the problem.
Travel
I am still dreaming about and researching trips to do when I retire. Did you know you can Inter-railing across Europe when you retire?
Interrailing at 50: reliving our backpacking days … in style — The Guardian
I never had the opportunity to go Interrailing as a teenager, friends did, and they had a great time.
One for the bucket list!
Nostalgia corner
Last week I wrote about how I had been listening to Pink Floyd — The Dark Side of the Moon and how it was a great trip down memory lane.
Well, this week it has been Dire Straits — Love Over Gold. The stereo effects and level of production are not as good as on The Dark Side of the Moon, but it was still great to sit back and listen to them on my headphones.
And it is funny how listening to albums brings back memories. I saw Dire Straits on tour in Birmingham, UK, in (I guess) 1982 or 3. I had forgotten going to that concert until I listened to the album.
Useful links
UK Government Website — How to avoid pension scams
Next week
Next week, I will start to look at money, and I will ask the all-important question — how much do you need to retire?
Thanks
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Until next time,
Nick
PS, If you have something you would like to contribute to the newsletter — a story, advice, anything — please get in touch.