5 Milestones To Determine “When Can I Retire?”

Retirement planning is, by definition, uncertain.  One of the primary goals of retirement planning is to answer the question, “When Can I Retire?”.  Mathematically, the question seems fairly easy to answer. Simply look at how much money you’ll spend in retirement, and then figure out how much you can draw from your investments.  Once there’s enough money saved to cover expenses for the rest of your life, you can retire.

The problem revolves around the variability on both the spending and income sides of the equation.  Your spending will be impacted by many things beyond your control, including inflation, health care and how long you’ll live. Your income will be volatile as markets boom and bust. “When Can I Retire?”, then, becomes a more difficult question to answer, and some subjectivity must be included in the discussion.  Sorry, but it’s not a question that can be answered via a purely mathematical equation.

The help you answer the “When Can I Retire?” question, I’ve outlined 5 key milestones below.  

If you've achieved these 5 Milestones, you're ready for retirement. Click To Tweet


5 Milestones To Answer “When Can I Retire?”

1.  Your House Is Paid Off


While it’s certainly not a necessity to pay off your home before you retire, eliminating all debt is a significant milestone that speaks well about your retirement readiness.  Once you’ve moved into the fixed income reality of retirement, elimination of your credit card, automotive and housing debt will position you well in the event you face any financial emergencies (health care?) during your retirement.

The picture above is our retirement home, which I wrote about paying off in this article. Some would argue that with the low interest rates, you can improve your financial returns by investing the money in higher yielding assets and continue to maintain your mortgage.  We thought about that argument, but decided the peace of mind was worth a lot to us.  We haven’t regretted the decision, and knowing we’re now debt free brings a sense of accomplishment as we move toward our early retirement in the coming years.

2.  You’re No Longer Supporting Your Kids (Or Parents)

kids financially independent

There’s enough uncertainty in retirement planning already.  Let’s not make it worse by having an unknown expense lingering at our time of retirement.   We all love our kids, but there comes a time when they need to achieve financial independence.  Don’t let your kids ruin your retirement. If they must move back in with you (jobs are tough these days), make them pay rent to offset the cost.  It’s still cheaper than living on their own, and you won’t be draining your retirement funds for someone who still has a lifetime to earn money.  Talk to your kids about your retirement plans. Your kids can take on some debt and work their way out of it, you don’t have the luxury of time with your looming retirement.  To be safe, you should consider continuing to work until your kids have landed on their feet.  As your kids enter the workforce, be a mentor and teach them The First 6 Steps To Financial Wealth.  Also, with many of us Baby Boomers now caring for elderly parents, you should have some serious reservations about retiring if you expect many years of financial support will be required for them.

3.  You Know Your Withdrawal Rate (and it’s 4% or less)

withdrawal rate

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Singer on retirement

While many folks dread this piece of retirement planning, it’s absolutely essential that you’ve put the pencil to the paper and figured out if you have enough money to fund your retirement spending.  Ideally, you should have enough saved prior to retiring to allow a withdrawal rate of 4% or less (we’re targeting 3%, as I’m a bit pessimistic about future investment returns).  For example, if you have $1,000,000 saved, a 4% withdrawal rate would provide $40,000 per year of retirement spending.

Read my four-part “When Can I Retire?” series at this link for a detailed review of the steps you can take to run the numbers yourself.  Below is the outline of the series, which shows the steps I suggest you follow:

when can i retire series

Also read “How much money do I need to retire” from Clark Howard. Play around with a few retirement calculators. If your overwhelmed by the thought of doing this yourself, use Paladin to find a Certified Financial Planner to do it for you.  No matter how you do it, you must complete this milestone before you can consider yourself ready to retire.

4.  Your Investments Are Ready For Your Retirement


As you move through The Red Zone, you need to position your investments for the transition from “inflows” to “outflows”.  Define your personal Portfolio Withdrawal Strategy, and have it in place before you retire. To minimize your sequence of return risk, make sure you’ve set aside a cash reserve equal to 1-2 years of spending requirements before you retire.  In the event of a market downturn, you can live on cash reserve “bucket” and avoid having to sell any of your investments in the middle of a market correction.

If you’ve not yet built a 1-2 year cash cushion, plan on achieving that milestone before you retire.

Beyond the cash cushion, read my article on 7 Strategies To Make Your Money Last Through Retirement. Revisit your Asset Allocation to insure you’ve adjusted your investments to a more conservative profile.

If you’ve accomplished all of the above, consider this milestone achieved.  If you’re still young and not too interested in the specifc timing of your retirement, use the chart below from a recent Boston College study to insure you’re saving enough for your potential retirement age target:

Savings targets by age

5. You Know What You’re Going To Do

purpose in retirement

Have a purpose in mind before you retire.  Don’t let your retirement become depressing.  In the final few years of your working career, be intentional in your efforts to expand your interests outside work.  Spend time talking about your post-retirement plans with your spouse. Experiment with a “trial retirement” vacation.  Develop alternative means to replace the socialization and self-esteem that work brings, and begin that development as part of your retirement planning. Begin populating a bucket list of items you’d like to do in retirement.  Broaden it to include categories beyond travel.  Stretch yourself.


There you have it.  5 Key Milestones.  Achieve all 5, and you’re ready to retire.

  1. Your House Is Paid Off
  2. You’re No Longer Supporting Your Kids (or Parents)
  3. You Know Your Withdrawal Rate (and it’s < 4%)
  4. Your Investments Are Ready For Your Retirement
  5. You Know What You’re Going To Do

What do you think?

The list could clearly be expanded (e.g., line up your health care, but I consider that a subset of understanding your numbers).  From my perspective, the 5 Milestones listed above are solid criteria as you plan for your retirement date.

Are there any other significant milestones that should be in place before you pull the retirement trigger?


  1. I meet 4 out of 5 requirements, but I definitly won’t be waiting until my boys no longer depend on me to retire. In fact, one of the biggest reasons I have early retirement aspirations is to spend a lot more time with those boys while they’re still around.

    I’m looking at about a 3-year plan, at which point my boys would be 8 and 10. We can have some awesome family adventures without a work schedule getting in the way.

    And the bonus is that we’re planning our retirement budget based on what we spend with a family of four. Our withdrawal rate will be safe with them around, and should go down when they’re off on their own, finding their own path to financial independence.


    1. Hey Doc – you’re a lucky man, indeed! What a blessing to be able to retire while you can still enjoy the quality time with your children. Congrats on a great FIRE plan!

  2. If SWR is lower than 3%, mortgage paid off, asset allocation is mapped out, college funds in good shape (well as good as they can be in this rather messed up system we have here) and safe cash reserve is 3x of living expenses, I see no reason why retiring early with kids would be a problem. That is our plan.

    I do agree that it would be a challenge if they were skating on the thin ice that is a 4% withdrawal rate. Despite the excitement about the recent market surge, everybody needs to carefully assess the 4% rule. Like you, we also err very much on the side of caution.

    1. Mr PIE, it looks like both you and Doc will be able to pull off an early retirement with kids in tow! Happy for you both!! As a general guideline, and for those flirting with 4%+ withdrawal rate, I do think caution is warranted. In your case, it sounds like your in good shape to over ride the “grown children” milestone. Congratulations!

  3. Oh my, seems I am still far away from retirement readiness. The only points I can tick off are number 1 (I don’t have a house) and number 5 (I know what I want to do!). Thanks for this overview and reminder of the steps we need to take to get ready for retirement.

    1. Maggie – keep the faith. The journey to retirement is important, and long. Persevere, and you’ll succeed!

  4. Fritz – I think this is a great list but I think as long as you have a good plan I don’t think you need to achieve all of these. We still have a mortgage on our home but at a great interest rate. I felt it was better to have the funds available but we also made sure that the mortgage payment fit well within our annual spending plan. It’s just another component to our housing expenses that include utilities, insurance, property tax and maintenance (and for some it could be rent). Our sons are still in college with us footing most of the bill. We have a healthy savings set aside for this to ensure our sons don’t have to start off their financial lives with the burden of student loans. This savings is not included in our retirement savings.

    Our withdrawal rate is well below the 4% rule of thumb and because we’re fortunate to have a healthy pension we could actually go for some time without needing to make any withdrawals. We have reviewed our spending plan and identified areas to make some reductions if necessary to keep us within the pension. Over the next decade and more we will start taking our social security benefits. We looked at our spending plan not only for the next year or two but also out several decades to ensure the expected income and savings withdrawals are more than adequate to meet our expected spending (including health care).

    We started planning for what to do in retirement long before we made the decision to retire. We volunteer at several different organizations that keep us busy and engaged but not stressed and committed like we were during the working years. And we always seem to have a vacation scheduled and another couple more in planning along with more frequent visits from out of state family and friends. We’ve done our best to plan and prepare along with identifying other options if the markets don’t do so well for a while and we have a great bucket list if the markets excel. Making the decision to retire early was the greatest thing we’ve done but we began the preparations decades before.

    1. Bert, thanks for your note. The two keys I picked up in your note are that you’re well below 4%, and you’ve been PLANNING for a long time. Knowing those two things, I suspect you’ll be fine. I understand your mortgage argument, and can understand your decision. Thanks again, I appreciate your involvement with The Retirement Manifesto!

  5. This is a great list. We have been watching your progress as we also aspire to retire in the mountains and have narrowed it down to Blue Ridge or Waynesville, NC. We’ve been visiting the area for 20+ years and have decided we need to get there sooner rather than later. The selling off of large items in the family home has started, with a planned “For Sale” sign going into the yard 03/17. Your posts have helped us refine our plan. Thanks for the inspiration and we can’t wait to read more.

    1. Sharee, thanks for your encouraging words! I can’t tell you how rewarding it is to know others are learning from our transition to retirement. That’s the primary goal of this blog, and it’s nice to know I (occasionally) hit the mark with the readers! Thanks again, and good luck with your plan. Maybe we’ll see you in Blue Ridge some day!

  6. Another great article and its good to have the first 4 of them checked off anyway. I agree with the sub 4 withdraw rate and like Bert we are set with a good pension so its a while before we need to withdraw anything which kicks in a different strategy of continued growth vs income in the market. Maybe that’s another blog idea?? With regards to the 5th item on the list (still working on that one) am headed out to complete the Benton Mackaye on Wednesday – am excited, just 150 miles and making final plans for our first “Nation Park” extended tour!! Will be watching for your posted time on the upcoming swim and to see if you win your bet. Would be excited to hear what your readers have on their “Bucket List”…

  7. Good list! On our planned retirement date our daughter will be only 4 years old. So part 2 will not be in place. Some people even became parents while in early retirement (go curry cracker), so I figure that’s the one rule with the most leeway.
    But the other 4 criteria are spot on.
    Have a great weekend!

  8. Excellent list. We also have to learn to enjoy the journey to get there. What we are retiring to is as important, if not more important, than what we are retiring from. Great blog. Best wishes in your 10! Journey.

  9. I like the last point, knowing what you’re going to do in retirement. I find that some people retire but they have no idea what to doing and get real bored after a few weeks wishing they’re back at work. Having a bucket list to start on after retirement is a great idea!

    1. Thanks for stopping by, Tireless. I agree focusing on what you’re going to do in retirement is one of the most important areas of preparation. Shame on us if we can’t turn “freedom” into something that we want.

  10. Each of these items may be modified by personal circumstances. For example, I have sources of income that will not start immediately upon retirement, so my initial withdrawal rate won’t be 4% or less. My plan for paying off my mortgage is to sell the house, but that isn’t the only approach. Saving enough, like 25x your expenses including your mortgage works just as well.

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