When can I retire?(opinions)(Statistical data)

Retirement seems to be on a lot of readers' minds these days, and one of the more common questions I'm receiving is, "How will I know when I've accumulated enough money to safely retire?"

It's good that more physicians are turning their attention to this issue, because the road to retirement is fraught with many challenges. The most common mistake made by physicians and other professionals is saving too little. We either never calculate or we underestimate how much we'll need to last through retirement.

We also tend to live longer than planned. As life expectancy increases, we run the risk of outliving our savings. And we don't face facts about long-term care. Not nearly enough of us have long-term-care insurance, or the means to self-fund an extended long-term-care situation.

Many people lack a clear idea of where their retirement income will come from, and even when they do, they don't know how to manage their savings correctly. Physicians in particular are notorious for not understanding investments. Many attempt to manage their practice's retirement plans with inadequate knowledge of how the investments within their plans work. Seeking the guidance of a qualified financial professional is often a far better strategy.

So, how will you know when you can safely retire? As with everything else, it depends. To arrive at any sort of reliable ballpark figure, you'll need to know three things: how much you realistically expect to spend annually after retirement, how much principal you'll need to generate that annual income, and how far your present savings are from that figure.

According to one oft-quoted rule of thumb, in retirement you should plan to spend about 70% of what you're spending now. That's nonsense. A few significant expenses, such as disability and malpractice insurance premiums, will be eliminated, but other expenses, such as travel, recreation, and medical care (including long-term-care insurance), will increase. My wife and I are assuming we will spend about the same in retirement as we spend now, ...