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May 7, 2016

Retirement Planning Step 4: Recalculate Retirement Date with Reduced Spending

My last post covered reducing your spending in retirement and I calculated my family’s spending could pretty easily be dramatically reduced from $108,000 per year now to under $30,000 when I retire. In this post we will discover how this reduction in spending will impact our retirement date.

Editor's Note:  This post belongs to a series on retirement planning. If you haven't seen it, check out the first post in the series and start at the beginning.

It’s pretty obvious that if you significantly reduce your spending in retirement you will be able to retire earlier, but you might be surprised by how much earlier. I will once again use our family’s finances as an example.

For this calculation I created another spreadsheet that is similar to, but slightly more complicated than the last one because it incorporates the sale of a home and the purchase of a cheaper one.  You can download the new spreadsheet here.
After inputting the required data I discovered I can retire after 2022, at age 35.

This is a big improvement from the conclusion of Step Two, where I calculated I would have to work though 2035, or age 48 if we maintained our current spending in retirement.
This means if we reduce our spending in retirement as outlined in StepThree, I can enjoy 13 more years of retirement in the prime of my life! That seems like a no-brainer.

I’m sure retiring at 35 sounds amazing to most people, but I would like to do it even younger, so my next and final post in this series will discuss one option that will allow an even earlier retirement--generating a small amount of income in retirement.

How much sooner can you retire if you reduce your spending? Let me know in the comments.


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