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Complete Guide to Planning Your Retirement

A step-by-step framework for evaluating your retirement timeline and discussing it with your spouse or advisor.

Step 1: Understand Your Numbers

Before you can plan retirement, you need to know three key numbers:

  • Annual Expenses: How much do you spend per year? Include housing, food, healthcare, and fun.
  • Current Savings: How much money do you have today (in retirement accounts, investments, or savings)?
  • Expected Return: What annual return do you expect on your investments? (Historical stock market average is 7-10%.)

Pro tip: Be honest about expenses. Many people underestimate what they'll spend in retirement.

Step 2: Use the FIRE Calculator

The FIRE (Financial Independence, Retire Early) calculator answers a simple question: When can you retire?

How to Use It:

  1. Enter your current age and annual expenses.
  2. Enter how much you save per month (or annually).
  3. The calculator shows when you can retire based on a 4% withdrawal rate.
  4. Try different numbers: What if you save more? What if you retire later?

The 4% withdrawal rate is a retirement planning principle: you can safely withdraw 4% of your portfolio annually without running out of money in a 30-year retirement.

Step 3: Test Multiple Scenarios

Don't just run one calculation. Test at least three scenarios to see the range of possibilities:

Conservative Scenario

Assume lower savings or lower returns (e.g., 6% annual return). When is the earliest you could reasonably retire?

Base Case Scenario

Your best estimate of savings and returns. This is your "most likely" retirement date.

Optimistic Scenario

Assume higher savings or higher returns (e.g., 10% annual return). If things go well, how soon could you retire?

This gives you a range: "I could retire between age 55 and 62, most likely at 58."

Step 4: Validate with Your Partner (or Advisor)

Retirement planning is not a solo activity. Share your numbers with:

  • Your spouse: Do they agree on expenses? Savings? Expected timeline?
  • A financial advisor: Are your assumptions reasonable? What am I missing?
  • A trusted friend: Do these numbers feel realistic based on their experience?

The goal is not to convince them of your timeline, but to stress-test your assumptions and catch blindspots.

Step 5: Create an Action Plan

Once you know your timeline, work backward to annual goals:

Example:

"I need to retire in 12 years. My FIRE calculator says I need to save $2,000/month. That means I need to earn at least $30K more per year or cut expenses by $1,000/month. What's my plan?"

Key Assumptions to Validate

Inflation

Expenses will likely increase over time. Use 2-3% annual inflation in your calculations.

Healthcare Costs

Healthcare is expensive. Don't underestimate this, especially if retiring before Medicare.

Market Volatility

Assume some years will be down (-20%). Your plan should still work.

Lifestyle Changes

Your expenses may change in retirement. Kids in college? New hobbies? Travel?

Next Steps

Ready to run the numbers?

Open the FIRE Calculator

Want to save and compare multiple scenarios? Upgrade to Pro to download PDF reports and share with your partner.

Questions? Contact us or visit our FAQ.