Retirement Numbers: Save 8 x your yearly income

Saved enough to retire?   That is always the question if it means you have to live fully on that savings without additional income.

Cash Flow from Earned Income Can Make Retirement Easy and Safer

The easy way to guarantee a safe retirement is to keep some income flowing from work.  If you have that hobby or special skill that lets you dial down work based on your interest or need then you have an excellent tool for a sliding into retirement rather than leaping into it like most do in corporate environments. Your momentum of work vs savings can shift the need for work down to only a minimal earned income requirement that lets you cherry pick only the work that gives you the most satisfaction for the hours invested.  Coaching, teaching, and creative endeavors usually fit that bill well.  I have found this myself when the need to scale back work came as I took over as a caregiver for an aging parent.

Debt Free Living Always Acts as a Cushion Against Adversity

Having no debts can give you even more flexibility.  If your pre-retirement income is sufficient to cover a mortgage, car payment, and other sundry debts then not having these debts can change the ratios you maintain to guarantee a well funded 25 year retirement.   If the standard for that is 8x your pre-retirement income then you either have a built in buffer or the ratio can change to less.  Working a budget can show you exactly where you need to be.

Manage Your Withdrawal Ratio to Extend Your Retirement

The standard withdrawal rate is 5% so taking 6% can put you at risk but scaling back can give you some breathing space and safety.  If you find a way to create earned income that reduces your withdrawal rate of savings down to 4% or less you can extend your retirement savings another 5 to ten years.  This becomes important if you plan an early work phase down.

Keep Earning

If you have an earned income source that fits your lifestyle then keep it going as long as you feel good about it.  Not only will it keep you involved but it will add to your safety net.