This may seem strange coming from a fellow who’s not yet forty, but I’ve been thinking a lot about retirement lately. Now that I’ve repaid my debt, now that I’ve begun to save money, I’m curious how much a person actually needs in order to retire. How do you know when you have enough?

Too many experts
It seems like every expert has a different answer. Some say that you need 70% or 80% or 100% of your current income. Others say that you need to calculate your “retirement number” based on actual expenses. There are experts who argue that costs rise during retirement. But there are those who cite figures demonstrating that costs fall.

Whom should I believe?

I’ve also been wondering what is retirement anyhow? For the past three months, I’ve been working from home, writing. This is work that I love. How is this different from retirement? Does it matter? What would I really want to do differently with my life?

To explore these questions, I’ve been reading books like The Number and Work Less, Live More. I’ve been browsing personal finance magazines and online forums. I’ve been watching programs like Retirement Revolution. None of it really helps. I know about the 4% safe withdrawal rate, and I understand that inflation is a silent enemy. Individual pieces of the retirement puzzle make sense to me, but the Big Picture is just as confusing as when I started.

When people ask me where to begin with stock market investing, I feel like the answer is obvious: start by making regular contributions to an index fund, and then expand to other investments as your knowledge increases. But this is only “obvious” to me because I’ve done so much reading on the subject that I’ve been able to develop a strong set of opinions. I haven’t done as much reading about retirement; I find the subject just as baffling as some people find the stock market.

Financial independence
I’ve decided that “when can I retire?” may be the wrong question, especially since I can’t even decide what retirement is. Instead I’ve shifted my thinking to financial independence.

Your Money or Your Life defines financial independence as “having an income sufficient for your basic needs and comforts from [sources] other than paid employment”. Financial independence is “having enough — and then some”.

To me, financial independence implies freedom. It’s the condition of having saved enough money that you can do whatever you choose. Whether or not you elect to keep working doesn’t matter — you have enough saved and invested to follow your dreams. If you’re financially independent — if you’re doing what you want — isn’t that the same as retirement, anyhow?

I have no idea how much money is “enough — and then some”. How do other people determine this? Do they determine it? Have you? What does retirement mean to you? Have you set a target figure that will allow you to stop working? What will you do then? What is your definition of financial independence?

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