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Ask the Right Question: How Long Do You Want to Be Retired?

When most workers reach their fifties, they begin to think about the age at which they want to retire. These expectations can be based on any number of things, such as the ages at which their parents or co-workers retired, the time they'll reach certain milestones such as eligibility for Social Security or Medicare, or the "normal" retirement age in their employer's retirement plan (you do want to be "normal," don't you?). These expectations are an important part of retirement planning, and can help someone decide how they'll spend the rest of their life.

I've got a better idea, however. I'd like to suggest you resist the temptation to focus on a specific retirement age, and concentrate on how long you want to be "not working." How long do you strictly want to be a consumer and not a wage-earner? What is a reasonable length of time for you to rely exclusively on financial resources, given uncertainties in financial markets and politics, and the possibility of unexpected events in your life? To get even more specific, what is the length of time you can realistically and reasonably draw down the principal of your retirement savings?

For me, fifteen to twenty years feels like a reasonable answer to these questions. If I'm fully retired for a longer period than that, it's going to take a boatload of retirement savings to pay for my living expenses during that time. And a lot can happen that I just don't have control over.

Let's do some simple math to see how this translates back to a retirement age. My prior post, How Long Do You Have to Live?, showed that the average age at death for Americans currently in their fifties or sixties is somewhere in the low to mid eighties. If you take care of your health, your life expectancy can reach the high eighties or low nineties. Given this, it's not unreasonable to assume you'll live to be ninety. So if you subtract fifteen to twenty years of retirement, you'll get an age at retirement of 70 to 75.

I'd bet this result is later than your current expectations for a retirement age. If you're currently in your fifties or early sixties, it's pretty common to imagine you won't be able to last that long on the job, for a number of reasons: You're tired of your job, you're burned out, your career is stalled, you have health problems, or your industry isn't doing well. And these are all legitimate reasons to pay attention to.

But the solution to these valid issues isn't necessarily retirement; in fact, you have several alternatives. You can start a new career, stay in your current career but focus more on the things you like to do, or Do the Downshift. Focusing on how long you want to be retired -- rather than at what age you want to stop working -- can give you valuable insights that will help you make important decisions for the rest of your life, such as how long you want to work, the type of work you desire, and how much retirement savings you need.

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