Is Retirement Age the Wrong Goal?

Now that I'm older and think more critically about money and family, I've started to question whether retirement age is the right goal. I named this blog based on a goal I set back in 2002, to retire at age 55, one year before the age my Dad retired. The objective drives many of my financial decisions.

It has all the markings of a SMART goal – specific, measurable, achievable, relevant, and time-bound.

But now that I’m older and think more critically about money and family, I’ve started to question whether retirement age is the right goal. 

Several factors have led me to rethink the logic, 17 years later. 

Retirement Defined

I’ve always thought of my goal in terms of traditional retirement. That is, to withdraw from active working life. The day my Dad retired was the last day he ever earned money from a job. 

You could say he’s my retirement role model. Sometime before I turn 56, I’ll stop working forever too. That’s still the current plan, at least. 

But the word retirement can be interpreted in other ways. One can retire from a career, but not stop working for money.

For example, an NFL football star that retires from play but becomes a commentator.

I could declare myself retired from my career at age 55, or any age, really, whether I’m fully prepared to retire or not.

Then keep working on something else that I’m more passionate about to earn a living, even though I wouldn’t need the money since I already “retired” (I say this in jest… if you read a lot of early retirement blogs, this may sound familiar.)

At this stage in my savings journey, I expect to exit full-time work at or before age 55, especially the kind of work that involves a commute or firm weekly time commitment.

But I do enjoy entrepreneurial work when it’s at my own pace and may want to continue that kind of work in semi-retirement, perhaps before age 55, or after. Since I have a business now, this is more likely than it was a decade ago.

Then again, I’m not all that ambitious. When I have enough money, laziness might kick in. 

A better retirement goal may be to retire when I’m good and ready, without a specific target. 

Family Demography

We’ve committed to paying for four years of in-state undergraduate college tuition for all three of our children.

The year I turn 55, our oldest child will start his freshman year. If I retire in the same year, we must save everything we need to pay for college before then. 

That fact alone, makes me question my retirement goal.

If all three kids follow a traditional four-year college path, they won’t be fully graduated until I’m 63, which is about the average retirement age. 

Considering the expected cost of a four-year in-state college education for the class of 2037, I’m terrified by the numbers. Working through that year to cash flow education costs makes a lot of sense.

Unless we can sufficiently build our 529 accounts and supplemental income streams well ahead of time, retiring before our kids finish college could put our long-term retirement security at risk. 

I’ve aggressively saved for college since each kid received their Social Security card, but it’s still a trek. 

When we’re done paying for college seems like a safer retirement goal, considering our substantial financial commitment to education.

Travel Considerations

The whole point of setting a retirement age goal was to free my time for extended periods of travel. 

After 14 months of backpacking the world, I had no idea if or at what age I’d begin and stop reproducing new humans.

My youngest won’t graduate high school until I’m 59. So the idea of traveling for several months of the year before then doesn’t make a lot of sense. Our daughter will need to finish high school and go to college before we can even think about leaving for any extended periods.

Assuming our kids all follow a traditional college path.

We can still take adventurous summer vacations with the family from now until college. But the extensive retirement travel I envisioned when I was 27-years-old will likely have to wait until I’m 60 when we become empty nesters

Alternative Measures Instead of Retirement Age

If retirement age isn’t the right goal, what is?

A Random Number

Shortly after the dot-com bust in the year 2000, a coworker told me if he ever got back to having $200,000 in retirement savings again, he’d retire. 

I don’t know how he came up with that number. It seemed a bit low, and completely out of the blue.

But he lived a simple life outside of work and could have probably made retirement work on that amount. 

He lived in a paid-for manufactured three-bedroom home in an over-55 community in Florida. He traveled for work and kept his expenses low. His wife worked. 

His idea of splurging was to buy a cold beer that didn’t come in a can or an occasional porno rental.

To my knowledge, he worked at least another decade, well into the great recession. Eventually, he did retire, but I’d guess that he saved well over the $200k goal he declared in the year 2000.

There’s nothing wrong with modifying goals. We should all keep an open mind about the goals we pursue.

Financial Independence

Because of all the nuance around the word retirement, the term financial independence is often a favored financial goal rather than retirement age.

Financial independence is when you have enough savings or passive income streams to support your desired lifestyle in perpetuity.

Your “FI number” is calculated by estimating your annual spending and multiplying it by 25. Then aim to save that amount in cash and invested assets. 

Aiming for the FI number is a specific, measurable, achievable, relevant, and time-bound goal too.

The only concern I have with this goal is if asset growth is mostly a result of market returns, the market can retract, and the goal could become un-achieved. That would suck. 

If I retire at age 55, no market tumble can take that away from me!

Net Worth

Net worth is an easy number to calculate, which makes it a good candidate for setting measurable goals. It takes just four steps to calculate net worth. 

Or you can cheat and use an automated daily net worth calculator

Net worth includes the value of your primary home, cars, businesses, and other assets. Using the FI number is a preferred measure because it requires a higher liquid savings target and the money is more accessible for living expenses. 

My net worth goal would probably be somewhere around $2 to $2.5 million with a stipulation that it must remain above the goal amount for a year or two before officially declaring victory. 

Market corrections have a scary impact on retirement account savings.

Conclusion

I’ve been a student of finance and investing for my entire adult life. This is what I do for fun on Saturday nights. 

But perhaps I place too much focus on this one financial goal. Maybe I’m shallow.

Then again, I don’t want money to buy a sweet new sports car with all the money I earn and grow. Freedom is my Tesla

Instead, I could focus on more noble purposes, like helping others, donating to good causes, and working to make my community and the world a better place.

For now, I remain focused on being able to retire before I turn 56, hoping that I become securely financially independent well before then. At that point, I can either set more meaningful goals, or peacefully enjoy life without the constant nag of trying to achieve something difficult.

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12 Responses to Is Retirement Age the Wrong Goal?

  1. Rita May 2, 2019 at 7:46 am #

    I think you are definitely evolving in your thinking. I “retired” from my full time, 9-5, M-F position at the end of August after working 39 years at a county agency. I am still working very part-time at a private practice. The beauty of “retirement” is the freedom it affords you. I now have the time to explore and pursue other interests. I am traveling more frequently, exercising more, spending more time with friends and family, reading more for pleasure, gardening more, playing tennis more, spending more time in nature…I could go on and on. It is the freedom and flexibility that I have now that is so wonderful. I am having a great time. However, all of this could be threatened by bad health. Currently I am 66 and healthy, but, the body does not last forever.

    • Retire Before Dad May 2, 2019 at 11:17 am #

      Thanks for sharing your experience. Retirement sounds awesome for you. Stay healthy!

  2. Steveark May 2, 2019 at 10:02 am #

    I’d give up on defining retirement. I work about eight hours a week for a substantial amount of money I do not need. When I say something about being retired to friends they almost always say, “But you are not really retired.” I spend more time on volunteer work than paid work but to them I’m not retired because I’m still getting paid by clients. So now I usually say I consult a little, that lets people put me in the still working category, which they seem to prefer. But with six days off a week I feel pretty retired.

    • Retire Before Dad May 2, 2019 at 10:42 pm #

      Steve,
      That’s funny that you need to change the way you talk about it for others to accept your situation. I’ve heard this before, doing a very small amount of work for good money, and totally feeling retired (and actually being retired), but others not accepting it. A long as you’re happy, it doesn’t matter what others think.
      -RBD

  3. retirebyforty May 2, 2019 at 10:14 am #

    There are too many things to consider. That’s why setting an age is really the easiest goal.
    You could go to part time at 55 if the numbers look good. That way the kids will have some help if needed.
    3 kids going to college is tough. That’s probably nearly a million dollars by the time it’s said and done. Good luck.

    • Retire Before Dad May 2, 2019 at 11:16 am #

      I’ve estimated future college costs at around $700,000 for 12 total years of in-state tuition. Lots of assumptions of course. We’re certainly going to look for opportunities to reduce costs. But working through a few of those years will obviously help.

      Age does make the most sense. My fear is that I let the age influence whether I’m actually ready at the time. Mentally and financially. My hope is that my fear drives me to save more than enough by 55.

  4. Lenny Cohen May 2, 2019 at 4:25 pm #

    Feel free to change your mind. It shows you’re thinking! Times change. (You even used the phrase “lots of assumptions” since we don’t have control of things from college costs to war with Iran.) Markets go down at critical times. Your kids may decide on medical school and you could agree to help, even though it’s post-college. People get sick before they can retire, or they have to support a sick person. And others find some sort of work (we all have our own definitions and they vary widely) good for our health or a reason to get out of bed in the morning. My two cents, for what it’s worth: Please keep changing your mind as you and Mrs. RBD see fit, and sharing good advice to your readers as you see fit, but don’t dwell daily on something years away or you’ll go nuts!

    • Retire Before Dad May 2, 2019 at 10:48 pm #

      Lenny,
      That’s good advice. There’s this perceived stigma about changing your mind, especially in the public view. Very little changes day to day, but man, kids really threw a monkey wrench into the plan! In a good way, of course. My hope is that if I do skew from my retirement age goal, it’s to the early side of 55. Thanks for the encouragement.
      -RBD

  5. Steveark May 2, 2019 at 4:36 pm #

    I can’t stress applying for scholarships enough. Total cost for our three kids four year degrees including room and board? Zero. Even though I was earning six figures they all rounded up merit based or non-means tested scholarships. They went in the 2006-2013 time frame at an inexpensive state school so it only saved me around $90,000 by my estimates but that still isn’t insignificant.

    • Retire Before Dad May 2, 2019 at 10:50 pm #

      Only saved you $90,000, that’s not too shabby!

  6. Linda May 3, 2019 at 12:00 am #

    We have three children Two opted for military service (great education benefits) and one lived at home and commuted 30 minutes to to a state school after attending the nearby community college. He worked construction in the summers and did house-sitting for throughout the year. He is now a mechatronic engineer. No loans were needed and I think we only paid for parking two semesters. All three boys were able to attend the local community college for their senior year gaining a full yr of college credits while fulfilling high school graduation requirements. Our youngest started taking general ed classes in the summer at the age of 14 (always trying to one up his older brothers). He continued with one night class a week till he graduated. I believe the tuition was only $12 per unit because they were high schoolers. I guess my point is there are thrifty ways to solve the tuition issue. It helped them have some skin in the game and they enjoyed getting ahead. It helped us out as you can only imagine. The college credits helped the two in the military enter at a higher rank which equaled more money at the onset.

  7. Brian @ SparkRental May 9, 2019 at 6:47 am #

    I’m big on financial independence, and don’t really plan on retiring, but simply changing over to increasingly fun and laid-back careers.
    You mentioned a market correction affecting your financial independence, although I personally don’t view market corrections that way. Most of my passive income is from rental properties, and rents almost never retract the way stocks or even home values do. And I’m aiming for a 3.5% withdrawal rate with my stocks, which should never run out of money (at least based on historical data).
    So while my net worth might fluctuate with the market, my passive income is quite stable. But to your point, it’s always worth questioning these big, hairy, audacious financial goals!

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