5 Milestones You Must Reach Before You Retire

Figuring out if you’re ready for retirement is a difficult challenge. 

If you’re wondering where you stand, compare your progress against these 5 milestones you must reach before you retire.  Once you’ve checked these 5 boxes, you can take comfort that you’re ready to cross The Starting Line.

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5 Milestones You Must Reach Before You Retire

For most of our working lives, we’re focused on balancing our day-to-day lives with our long term preparations for retirement.  We try to balance the goals of living below our means while enjoying the journey.  That’s a great approach for the majority of our careers, but there’s more that needs to be done as you approach The Starting Line.

Deciding on when you can retire is one of the most important financial decisions you’ll make in life.  Don’t take it lightly. It’s important to get it right, and comparing your progress against these 5 milestones you must reach before you retire is a good way to ensure you’re checking the right boxes before you finalize your decision.

With that, here are the 5 milestones you must reach before you retire:

1. You’ve Estimated Your Retirement Spending

Deciding on the lifestyle you want to live in retirement and estimating the costs associated with it is the first of the milestones you must reach before you retire.  It is the foundation upon which your retirement decision is built, and no decision on retirement should be made without a solid estimate of your retirement spending requirements.

How To Do It:   Three years before our retirement, we tracked every dime we spent for 11 months (we tried for a full year, but fell short).  We broke down our spending into major categories, then developed projections for how these costs would change in retirement.  I wrote a post on the details of our process here, which included the following example of our approach:

I’ll be the first to admit that the process is a pain, but I would never make the decision to retire without going through the exercise in detail.  It’s also a good time to think about how your spending will change in retirement, given that your spending in retirement is the number that really matters.  Do you want to live frugally, or do you want to enjoy a few luxuries?  Important decisions that must be made before you finalize your decision on when you can retire.

Don’t:  Use a rule of thumb, like the well established “80% of pre-retirement” spending.

Ready To Begin?  Use this link to make a copy of the spending tracker we used, modify it as necessary, and start logging that spending.  Have fun.  Wink.

Related posts:

2. You’ve Calculated Your Retirement Cash Flow

Once you’ve estimated how much you expect to spend in retirement, the next of the milestones you must reach before you retire is to determine how you’ll cover those expenses through the duration of your retirement.   It’s important to take a holistic approach in analyzing your cash flow, including fixed income, part-time income, and investment withdrawals.

As you’re analyzing your estimated cash flow, it’s important to include tax obligations in your spending calculations.  If you’re going to be pulling before-tax IRA/401(k) funds, recognize that taxes will be due on the withdrawal.  Taxes complicate the matter a bit, but these are real expenses that you will be required to cover from your cash flow, so ensure you’ve included them in your analysis.

How To Do It:  I wrote a detailed post on the process we used to model our retirement “cash flow” through Age 95, which you can read here.  First, you calculate all of your fixed-income sources, as illustrated in the example below:

Once you’ve subtracted your fixed-income from your expenses, the focus shifts to how you’ll fill the remaining “gap” to cover your estimated expenses.  Now is the time to be realistic about any potential part-time income as well as annual withdrawals you’ll need to make from your investments.  Throughout the process, we used conservative assumptions to build a bit of a buffer and didn’t retire until we were confident we could cover our spending with a 3 – 4% Safe Withdrawal Rate from our investments.

Don’t:  Forget about taxes, or be too optimistic with your assumptions.

Ready To Begin?  Use this link to make a copy of our Retirement Cash Flow Model.

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3. You’ve Positioned Your Portfolio For Withdrawals

Moving from decades of accumulating wealth to withdrawing from your investments is one of the biggest challenges of retirement.  The lessons you’ve learned while accumulating wealth are NOT the same as the ones you’ll need to strategically withdraw while funding your retirement lifestyle.

Take some time in your final year of work to get your strategy in place for the withdrawal phase.  Your life in retirement will be better as a result.

the bucket strategy

How To Do It:  While there are a variety of ways to structure your portfolio for retirement withdrawals, we’ve settled on the Bucket Strategy as the approach we’re using (see how we set it up here).  We also determined a long-term drawdown strategy, including our plans for Roth conversions, which we’re doing annually now that we’re retired.  Starting at least two years before your retirement date, develop and implement a plan for how you’re going to position your investments to fund your retirement.

Don’t:  Wait until you’ve retired to build 2-3 years of liquidity in your portfolio.  Rather, have the liquid money safely set aside by the time you retire.

Ready To Begin?  Use this worksheet to see where your assets fit within the various buckets.

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4. You’ve Conquered Debt

It’s a fact that a full 78% of Baby Boomers are carrying debt as they approach retirement.  While it’s a fair debate whether or not paying off your mortgage is the right move for retirement (especially if you’re carrying a low fixed-rate mortgage), there’s no excuse for carrying any other debt into your retirement years.  If you’ve struggled with debt, make paying it off a priority in your final years of work.

We paid off all of our debt (including our mortgage) before we retired, and I can testify firsthand to the peace of mind that comes from having no debt when the paycheck stops flowing.  

How To Do It:  If you’re struggling with paying off your credit cards, it’s time to get serious.  Track all of your spending for a few months, then establish a firm budget to ensure you don’t overspend.  Put your credit cards in a bowl of water and place them in your freezer for 6 months, or until fully paid off.  Sign up for a Dave Ramsey class, or do some Google searches on effective approaches to get out of debt.  Build some extra income through a side hustle for a year or two, and dedicate every dollar earned to paying off your debt.  Sell anything you don’t use on a Facebook Yard Sale site for your area.  Stop eating out until you’ve paid off your credit cards.  Do whatever you have to do, but get those cards paid off before you retire.

Don’t:  Retire if you haven’t paid off your credit cards.

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5. You’ve Thought Beyond Financial Issues

While most people focus on the financial aspects as the primary milestones you must reach before you retire, the reality is that the non-financial aspects will likely prove to be more important than money in your retirement.  Don’t make the common mistake of focusing on the financial issues without considering what you want your life to be in retirement.

Once you’ve established financial independence, the planning on the non-financial aspects of your retirement is the most important of the milestones you must reach before you retire.   

How To Do It:  As you get closer to The Starting Line, increase the amount of time you spend thinking about what you want your life to be after you’re done working.  At this point, your financials should be in decent shape, so think less about them and more about your ideal life in retirement.  Start putting slips of paper in a retirement activity jar.  Plan a retirement test drive in your final year of work.  If you’ve got nothing better to do, you may even decide to read my book (wink), which you’ll find is focused on the non-financial aspects of retirement planning.  That’s not by accident – this is, perhaps, the most important milestone to ensure a successful retirement.

Don’t:  Ignore the non-financial aspects of retirement planning.

Related posts:


Making the decision on when you will retire is one of the hardest decisions you’ll face in life.  By comparing your status against each of these 5 milestones that you must reach before you retire, you’ll be able to identify any gaps as you finalize your decision.  Done correctly, retirement can be one of the most enjoyable phases of life.  Done prematurely, it can lead to decades of regret.

I trust these milestones will be helpful as you prepare for your ultimate retirement.  My wife and I checked every box as we were preparing and I’m convinced they were critical in helping us achieve a great life in retirement. 

I hope they do the same for you.

Your Turn:  Have you checked every box?  If you’ve already retired, what milestones have I missed?  Let’s chat…


  1. Good list, I’m good on all of them except for number one to be honest. I’m still young as far as I see it and I have a hard time even imagining what I might get myself into in 10 or 15 years. Maybe I’ll pick up a new hobby that will be more expensive, maybe I wont. So that estimation of expenses is hard for me, and there’s also the consideration of possible future inflation being higher.

  2. I agree wholeheartedly with each milestone to reach before retirement Fritz!

    In light of this once in one hundred year pandemic, my concern is for all the folks who will fall short of financial preparation. Whether due to job loss, health issues, or other reasons beyond their control; these are trying times. Options to continue working may be limited.

    In these instances, how to have a decent retirement becomes even more daunting. Our expectations of retirement, as we currently know it, may be changing.

    1. Good point, Shannon. As you know, in “normal” times many people are forced into retirement earlier than planned. I can only imagine those numbers have escalated significantly in light of COVID and it’s economic impact. Concerning times, indeed.

  3. A very good checklist! We’ve been retired for a decade (today!). We had hit all of your checklist items.
    1. Check. (we had always budgeted & tracked our spending)
    2. Check. (Our withdrawal rate has ranged from 3.15%-3.60%)
    3. Check. (decumulation has simply been the flip side of accumulation)
    4. Check. (We paid off all of our debt – including our mortgage – before we retired)
    5. Check. (Everyone must have a life outside of work; that life continues, and more)

    We started planning our retirement financial targets well over a decade earlier. One of our goals was to maintain the same lifestyle we had while working – we’ve been able to do that.

    The only area we didn’t plan out as well as we should have was in the area of health insurance. We retired at 55y, so Medicare was still a decade out. Our company’s retiree medical plan (which we hadn’t investigated well) turned out to be very expensive.

    Fortunately for us, the ACA was there starting in 2014, and because of our bucket strategy, we were able to selectively pull from various accounts to drive down our MAGI in order to qualify for deeply subsidized health insurance. From there, the transition to Medicare has been seamless. With 20/20 hindsight, healthcare coverage has worked out very well for us. But, it could have gone very badly if not for the ACA coming out of nowhere.

    1. Brian, congratulations on your 10-year Retireversary, sounds like your planning has worked out well for you. You’re fortunate you avoided a landmine with the health insurance, something that’s much more “top of mind” for retirees today than it was 10 years ago, when many folks still had access to retiree plans. Glad to hear things worked out well for you with the ACA subsidy. Credit to you for managing the MAGI to secure eligibility. Well played.

  4. I discovered your blog during our first year of retirement. Better late, than never! 😊. Your 5 Milestones for Retirement Planning should be required reading for everyone in their 30’s, 40’s, and beyond!!!! Thank you for including the links which explain each milestone in detail. We created a similar scenario of milestones for ourselves four years before we retired. It’s good to know we reached all of your suggested milestones before our retirement, but it would’ve been preferable to have your professional information before we retired. I have forwarded this blog entry to my Millennial daughters and their husbands. Thank you fir all your work to educate people about retirement!

  5. Thanks, Fritz! This is one of your best posts yet . . . excellent advice, all consolidated in one place, including links to other key posts you’ve written, and with the downloadable spreadsheets too. I’m sure it took a ton of work to put together a post like this, and people probably don’t often think about all the work it takes you on your end to create such a comprehensive post. I and your readers truly do appreciate the assist. You are helping people!

    1. One of my best posts! Wow, thanks for that.

      More importantly, thanks for recognizing the amount of effort it takes to put together a post like this. These types of posts are definitely my most time consuming, but I feel the value is worth the effort. I suspect you’re right that most people don’t think about it, thanks for recognizing it and sharing your appreciation.

    2. I appreciate you too Fritz and to show you my gratitude I’ve bought and gifted several copies of your retirement book to my friends. Keep up the great work and I hope you find even more inspiration in your new writing studio.

  6. I plan to retire in either April 2021 or April 2022. I have actually completed all these steps. Debt free as of a month ago. Paid off the house last year. That felt great.

    My wife an I both get pensions. I have a huge spreadsheet where I track pensions, SS, how much we will withdraw from Roth/IRA each year, the state and federal taxes, money after taxes per month, etc.

    I can do “what ifs” concerning when to take SS, when to start pensions, etc and instantly see the impact the whole picture.

    I will be either 61 or 62 at retirement so we plan to manage our income to get Obamacare subsidies.

    Our pensions and SS will fund our desired lifestyle in retirement.

    The only thing I have not yet done, which I think is important, is to figure out the finances when one of us dies.


    1. It sounds like you’re on top of things, Bobby. Congrats on getting 100% debt free last month, major achievement. Enjoy your final year (or two) in the working world, you’re going to love life on this side of The Starting Line!

  7. Fritz
    Great post. I retired a year after you (I’m a year older than you) and followed these exact steps. I would add another step and that’s to become a “student of retirement”. Meaning 2 or 3 years out start to get smart on retirement by reading, listening to podcasts, and talking with retirees about their lessons learned. Even if one is using or planning to use a financial advisor being an informed client will be valuable, calming, when the markets get volatile. Some of my favorites are you, Big ERN, Choose FI, New Retirement, and Morningstar’s The Long View podcast series. Thanks for all your work!

    1. Great addition to the discussion, Marc. I agree wholeheartedly, the more time you can study and learn about retirement in your final few years of work, the better. I’ve long been a fan of podcasts and personal finance blogs, it’s amazing the amount of high quality content that’s available. Thanks for adding value to the discussion.

  8. Great list Fritz, unfortunately many will not have pondered these topics until too late. Marc above is spot on, reading blogs, etc (especially yours) well in advance of “pulling the plug” has been super helpful to me. I keep a stash of your books and give them away to friends in that situation. And they are doing the same. Better late than never!

    1. Kirk, I agree with you that many folks don’t get serious about retirement until it’s on top of them. It’s been proven that the more time a person prepares, the smoother the transition. Glad to hear you’re on top of things, and I appreciate you having extra copies of my books to help your friends. Much appreciated!

  9. Thanks for another great post Fritz. Well tomorrow is the big day. I’ll walk out the door for the last time after spending 38 1/2 years with the same company. As I told you before I’m retiring 6 months before I had really planned to but it’s ok. My wife and I have crossed off all five items on your list and we’re prepared to start this next phase of life. Actually my wife is going to continue working as an RN for 1 or 2 years because she says she’s just not ready to stop being a nurse yet, and I’m ok with that. We’re lucky that my employer is going to keep us on the company health insurance plan at no cost to us until we turn 65 and get on Medicare. Great deal! I have set up our buckets and have tracked our investment income, both non-retirement and retirement accounts and I’m confident that the investment income will more than replace my paycheck. What I do have to figure out though is how to take the the income in the most tax efficient way. We’re also doing the Roth conversions to help reduce future tax bills when RMD’s kick in (we’ve got 10 years). Can’t believe I cross the starting line tomorrow! Now it’s time to get my 32 Ford coupe running!

    1. Woot Woot! Dale crossed The Starting Line!!! Huge accomplishment, Dale. I’m hoping that coffee yesterday was the best cup of your life. Welcome to the dark side, you’re going to like it here. 🙂

      The 32 Ford sounds like a great retirement hobby, I always wished I had the skills to restore cars. Good luck getting her going, send pics once it’s done.

      1. Thanks Fritz. I don’t think it will really set in until Monday morning. Believe me I’ll keep following your blog to help keep me moving in the right direction. Yes I plan to devote the next two weeks to finishing the Ford and have it ready to drive to the Thursday night cruise Ins I do at our church once a month. July 16th is my target date! I’ll definitely send pics if I get it there.

  10. I just handed my resignation/retirement form to my manager today! Woo hoo.
    I’ve been tracking my spending since 2006 and have a good sense of what income I need to live a comfortable life. My mortgage was paid off 1.5 years ago. I’m not worried about being bored. Totally looking forward to being retired!

    1. Wow, THAT’s a great way to celebrate Freedom Day on the 4th of July (though I think you’re from Canada, so there’s that). Congratulations on a major move, sounds like you’ve done a great job getting ready. Time to enjoy a life of Freedom!

  11. Thank you for the great list and definitely Milestone 5! Being retired military and currently working toward our “final” retirement in a few years, I’m taking a renewed look at this one in particular. Up to reading your book, my focus was definitely on the financial aspects. These are quite important, however, living a fulfilled life in retirement will be so much more attainable given the guidance you provide. Congratulations on a great book and I’d recommend it to anyone retiring from active duty as well!

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