In almost all the countries around the world, the recognized retirement age is age just after 60. In most countries, the official retirement age is 65. But some companies do allow you to work beyond that on a contract basis. But who wants to work for others for a good 3/4th of their life?!

Unless you are working on your own company or working is your passion, you should aim to retire as early as possible. This is the core of the Financial Independence, Retire Early (FIRE) concept. You should always aim to not rely on your ‘job,’ because at the end of the day, you’re an employee who is replaceable.

So, at what age should you aim to retire? At what age should you start your retirement planning?

How much money do you need for retirement?

For the purpose of this article, we will take $400,000 as a good amount of money to be having at the time of retirement. If you have invested this money at a 6% yield, you will be getting around $24,000 annual income or $2,000 per month. Depending on your lifestyle, this may not be enough. If so, you need to realize that the calculations shown below will need to be accelerated ever so. We will also assume that you will withdraw small sums of money from this investment if $2,000 per month is not enough for you.

At retirement

If you start planning your retirement in the year of your retirement, this is just too late. Retirement planning includes building up sufficient wealth to rely on some source of income without exhausting your savings. You might be eligible for some pension payments after you retire, but this will be sufficient to survive. Also, you would have sacrificed your entire life to work at this point.

So, you need to magically come up with $400,000 at age 65 to comfortably retire. This is almost impractical.

Age 60

The topic of retirement planning usually begins to loom around our heads as we walk towards that 60-years-old milestone. Needless to say, this is too late unless you are a CEO or a director of a company and can save up a chunk of money in a few years. Even so, the best years of your life have been sacrificed for work.

If you retire at the age of 60, you will need to dump a lump sum of $250,000 with $1,000 additional investments every month to reach the retirement goal of $400,000.

Age 50

Around the age of 50 is a good time to start planning for your retirement. This gives you a good 10-15 years to build up some wealth or extra sources of income. However, this is also an age where you might be drowning in expenses, from your own expenses to your children’s schooling or even marriage, to your extended family members. Saving money aside for retirement may not be your top priority at this age.

With around 15 years left to your retirement goal, you will only need a lump investment of $110,000 with additional monthly investments of $500 to reach that $400,000 retirement goal.

Age 40

The age of 40 is most likely a hectic period in life for all of us. Work responsibilities, family, marriage, kids, buying a house and looking after your parents. The 40s are an expense-heavy period in life. Nonetheless, if you are able to save or invest some money starting around this age, you should still have a good 20+ years to grow your money.

25 years really do magic for your money growing at 6% per annum. Even a mere $50,000 lump investment with $500 monthly contributions takes you to a $550,000 total investment by age 65. So, if you are satisfied with a $400,000 total investment (and its income potential), you can retire around age 60.

Age 30

The 30s are where you really buckle down in life and power through it. Relationships, career progression, responsibilities and really finding yourself as a person. Retirement planning isn’t really something on anyones’ mind at this age. But this is almost the perfect time to start planning. Should you decide to work until the statutory retirement age, you will have plenty of time to set aside money towards retirement. However, if you start investing at this age, you might even be able to retire a little early and enjoy life.

The power of compound investments really begins to show when you allow investments to grow for three decades. A $50,000 investment at age 30 with $500 monthly contributions at a 6% yield, will make you a millionaire by the time you retire. You will reach the $400,000 investment goal by the age of 41. See how the retirement age goes down incrementally fast?!

Age 20

Age 20s are when you first step into the job market in most cases. This is where you should start planning for your retirement (no, we are not joking). Or even better yet, the best retirement planning age is when you start earning money. You have very few responsibilities and you won’t be making any heavy investments such as buying a house.

A $10,000 lump investment at this age with $100 monthly contributions will get you easily to our investment goal by the age of 65. But, there are many ways to accelerate this time. If you contribute $200 per month, you can take off 8 years from your retirement age. Make it $300 per month and you shave off 13 years from your retirement.

Conclusion

Start early as possible!

Give your money time to grow. Invest in good stocks that will grow over time. Invest in dividend stocks that will give you additional income which can be reinvested until you reach your retirement savings goal.

Let us hear your thoughts on this article in the comments below. Do you agree with our theory?