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"Can I Retire?":
5 Questions to Answer Before Making the Decision

The question seems simple enough: “Can I retire?” Yet behind those three words lies a complex web of financial calculations, personal goals, and life considerations that can leave even the most organized pre-retirees feeling overwhelmed.

As a financial planner, I’ve guided countless clients through this pivotal life transition. Today, I want to share insights from a case study that might help you with your own retirement journey.

And don’t forget to watch our YouTube video that was the inspiration for this article, we break this case down on the whiteboard, then jump into more detailed projections in the software – watch below!

Can I Retire?
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By: William Hinder, EA  |  April 22nd, 2025

A Retirement Readiness Case Study

Michael and Sophia, a couple in their mid-50s are wondering if they could retire when their mortgage is paid off in seven years. Their situation might resonate with many of you:

  • They’re 54 and 53 years old with professional careers (civil engineering and nursing)
  • They’ve accumulated $650,000 in workplace retirement plans
  • Their $480,000 home has $120,000 remaining on the mortgage
  • They want to retire at 62, once they’re mortgage-free

Let me walk you through the five essential questions I helped them answer—the same questions you’ll need to address when asking yourself, “Can I retire?”

Question 1: What Will Your Retirement Actually Cost?

Before answering “can I retire,” you must first understand what retirement will cost you.

Michael and Sophia currently spend about $8,000 monthly. After analyzing their expenses, we determined their retirement would require approximately $7,000 monthly (adjusted for inflation in the year of retirement). The reduction comes primarily from eliminating their mortgage payment.

Your Action Step: Track your current expenses for three months, then create a retirement budget that accounts for:

  • Essential living costs (housing, food, utilities, healthcare)
  • Discretionary spending (travel, hobbies, entertainment)
  • Occasional large expenses (home repairs, vehicle replacements)
  • Healthcare costs (often underestimated pre-Medicare)

Remember to factor in inflation—I typically use 3% annually in my projections.

Question 2: What Income Sources Will You Have?

Generally we like to see three sources of retirement income and for many Americans this income will come from:

  1. Social Security benefits
  2. Retirement account withdrawals
  3. Other income sources (pensions, part-time work, rental income, etc.)

Michael and Sophia faced a critical decision about when to claim Social Security. Claiming at 62 would provide immediate income but permanently reduce their benefits by about 30% compared to waiting until full retirement age (67).

Their combined retirement accounts ($650,000 projected to grow to $1.3 million by retirement) would need to fund their income gap—the difference between expenses and guaranteed income sources.

Your Action Step: Create an inventory of all potential retirement income sources and estimate their values. For Social Security, request your current benefit estimate from ssa.gov/myaccount and calculate the impact of claiming at different ages.

Question 3: How Long Does Your Money Need to Last?

When someone asks, “Can I retire?” they’re really asking, “Will my money last as long as I do?”

For Michael and Sophia, we ran projections through age 100—nearly 40 years of retirement. This conservative approach accounts for increasing longevity and provides a margin of safety.

Your Action Step: Consider your family health history and personal health factors to make an educated estimate about your potential longevity. Then add in some buffer when running retirement projections.

Question 4: Have You Protected Against Major Risks?

Answering our initial question of “can I retire” requires understanding and mitigating potential threats to your financial security:

  1. Market volatility: Michael and Sophia’s retirement coincides with what we call the “Fragile Decade”—the five years before and after retirement when market downturns can have devastating effects on portfolio longevity. We incorporated variable returns in our modeling, including potential negative sequences early in retirement.
  2. Inflation risk: Even modest inflation compounds significantly over a multi-decade retirement. Our analysis used a 3% annual inflation rate to ensure their purchasing power would be maintained.
  3. Healthcare costs: While not explicitly detailed in this case study, rising healthcare expenses represent one of the largest threats to retirement security.
  4. Tax efficiency: We identified Michael and Sophia’s tax-deferred accounts as potential “tax time bombs” in retirement and suggested Roth conversion strategies to create more tax diversity.

Your Action Step: For each major risk category, identify at least one strategy to minimize its impact on your retirement security.

Question 5: Do You Have Flexibility in Your Plan?

The most successful retirees build flexibility into their plans. Michael and Sophia did this in several ways:

  • Sophia expressed willingness to work part-time if needed
  • They maintained a significant emergency fund ($45,000)
  • Their paid-off home represents a substantial asset that could be tapped if necessary
  • Their retirement spending plan included discretionary categories that could be reduced

Your Action Step: Identify aspects of your retirement plan that could be adjusted if circumstances change. This might include working longer, reducing certain expenses, or tapping home equity.

The Verdict: When You Can Confidently Say "Yes, I Can Retire"

After careful analysis, we concluded that Michael and Sophia could indeed retire at 62 as planned. Their consistent savings, debt reduction strategy, and realistic spending expectations positioned them well for a secure retirement.

But what about you? When can you confidently answer “yes” to “can I retire?”

The answer comes when:

  1. Your projected retirement income reliably exceeds your projected expenses
  2. Your financial plan has been stress-tested against various market scenarios
  3. You’ve identified and mitigated major retirement risks
  4. You’ve built flexibility into your plan to handle the unexpected
  5. You feel emotionally ready for this significant life transition

Beyond the Numbers: The Emotional Side of Retirement Readiness

While this article focuses primarily on financial readiness, answering “can I retire?” also involves psychological preparation. The transition from decades of work to retirement represents a profound life change that extends far beyond finances.

As you contemplate retirement, consider not just what you’re retiring from, but what you’re retiring to. The most satisfied retirees have clear visions for how they’ll spend their time, maintain social connections, and find purpose in this new chapter.

Your Next Steps Toward Retirement Clarity

If you’re asking “can I retire?” consider these action steps:

  1. Work with a qualified financial professional to create comprehensive retirement projections
  2. Identify specific strategies to address gaps in your current plan
  3. Begin visualizing and planning for the non-financial aspects of retirement
  4. Revisit and update your retirement plan annually

Remember that retirement planning isn’t a one-time event but an ongoing process. With thoughtful preparation, you can transform uncertainty about whether you can retire into confidence that you can—and will—enjoy the retirement you’ve worked so hard to achieve.

📊 If you’d like to go through this same process, reach out to learn more about our Retirement Analysis. Together, we will create a retirement planning solution that helps you enjoy your life while we do the heavy lifting for you.

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