When Can I Retire - 2021?

Hey folks....so when can we retire?

Well, I had this exact discussion with a work colleague about 3 1/2 years ago and I thought it was worth sharing again. 

Here is a rough transcript of that conversation had in the office kitchen whilst making coffees:


Phil:  Hey Sam

Sam: Hey Phil....um, I wonder if I can ask you a question about retirement?

Phil:  Yeah sure Sam - but hey I'm not a qualified finance guy or anything  - you know that?

Sam: Yeah, that's alright. How do I figure out when I can retire? Like...the simple version (grins). Do you know how to do that math?

Phil:  Yep - so the simple answer is when you have enough invested to cover 25 times your yearly expenses....you can retire.

Sam: (Chokes on his biscuit) What??!

Phil: So yeah, just say your yearly expenses are say $60 thousand dollars, then times that by 25 and you would need $1.5 million dollars invested to retire and live off that drawing down $60 thousand dollars a year.

Sam:  I will never be able to save up that much!!  (expletive). Well, OK then, what percentage of my wage will I need to save to retire in ....say... 9 years.

Phil: (raises eyebrow incredulously) To retire in 9 years at least 70% of your wage needs to be pure untouched savings Sam.

Sam: OK, OK (snorts) well what about if I wanted to retire in 15 years - just being a bit more realistic.....?

Phil: Then that would require pretty close to 50% savings mate.

Sam: Strewth! Well, what about retiring in 30 years, would that mean 25% savings?

Phil: Nope - only about 20% actually......and 10% savings would be needed if you were to retire in 45 years time.  Look, I'll jot it down for you on the back of this envelope (I scribble on the envelope)

(What I Scribbled Down For Sam)

25 x your yearly expenses (lump sum invested)

Years to retire / net pay savings rate:
45 years - 10% savings
30 years - 20% savings
15 yrs - 50% savings
9 yrs - 70% savings

Sam:  But hang on, work pays us 9.5% into Superannuation so.....(scratches head trying to do the mental arithmetic)

Phil: Yep.... so we'll see you retiring in about 49 years using that percentage alone. (pauses with spoon poised dramatically whilst giving Sam 'the look') (side note...I have conspiracy theories about Superannuation, but I spare Sam that conversation)

Sam: Oh no!!  So if I just rely on my Super' I'm gonna have to work for a lifetime.

Phil: Yup (stirs coffee nonchalantly) pretty much.

Sam: Are....are....are you sure you are doing the math right?

Phil:  Yep. I'm sure.

(long pause as this all sinks in ....)

Phil: (quietly) So....what are you going to do about that Sam? (me now feeling nervous...am I prying too much??  But I can't let this conversation finish unresolved like this)

Sam: Gee Phil -  all of of sudden reducing my expenses is really important - that way I will not need to save so much - Yeah?

Phil: Spot on Sir!

Sam: ...and, and, and earning some more but not increasing my spending also looks pretty important too ..... like, so I don't have to wait so long - Yeah? (looks at me hopefully)

Phil: Right again.

Sam: (sounding more hopeful now) ..... and I'll have to get a grip on how to invest and all that jazz so I get reasonable returns on my savings.

Phil:  Absolutely.....but learning how to invest is actually the easiest bit.

Sam: So in a nut shell (uses his fingers to tick off each item...) 1. Reduce my expenses ..... um, 2. Increase my earnings and, um..... 3. Invest wisely. Yeah?

Phil: ....... and do all three in equal measure. Each of those three is as important as the other. Like a triangle approach. (I roughly draw the triangle picture on this post for Sam on the envelope so he has a visual)

Sam: Got it. Good chat Boss

Phil: Y'welcome Sam. No more chatting but.... now go do it.

Sam: (smiles broadly) Yup.


Now can we see why the math is important?

Deeply boring - but important.

Take care folks and stay nice.



  1. This made me laugh about the shock and conversation however all so very true...

    1. :-) To Sam's credit he is doing really well and taking the conversation seriously. I think it was a wake up call. Most folk do not even ask, or care.


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