retirement horizon

so, i've been thinking about retirement, but i'm nowhere close to the standard retirement age. i imagine -- and i have a pretty vivid imagination -- that it might take me anywhere from 5 to 10 to 20 years to build up the savings and investments that we would need to retire. but, why the big range? well, it's all about a standard of living in retirement. i imagine (again, don't forget about my vivid imagination) that we could retire today if we drastically downsized, took the occassional part-time, temporary, or contract work, really lived frugally, and gambled our futures by neglecting medical, life, and other insurances, but that's not really the type of living that i think i'd enjoy in retirement.

i've punched in some numbers on various online retirement calculators, but arriving at a 'what do i need to retire' amount is a problem that's bigger than the sum of its parts.

for one, there are a lot of unknowns -- what age do you want to be when you retire? well, the sooner the better is probably the answer for a lot of people, but that begs the question -- what's the soonest i can retire? that depends on what your income requirements are in retirement, the rate of inflation, the return on your investments, and how long you'll live. these are not the easiest things to arrive at, especially if you're not close to the traditional retirement age.

let's say you have got all these things answered, or at least approximated. that means you have a total dollar figure that you need to retire and a withdrawal rate that will allow your money to outlive you. well, next that means that you have to plan on how to position your investments so that you can safely earn the return you expect from the previous exercise while minimizing risk and having at least some part of that liquid enough so that you can draw from it.

even if you've got all that figured out, you have to account for some level of risk -- medical surprises, downturn in your investments, spiking cost of goods, any number of things that could throw a monkey wrench into your plans.

in the face of all that, people do it every day -- not millionaires -- normal people retire everyday. so, take a deep breath and smile, it can't be all that hard if everyone's doing it. just wait and see -- here in 5, 10, or 20 years, we'll be one of them!