Retirement Planning: How to Know Exactly When You Can Retire

The retirement planning question nobody answers clearly

Every article about retirement planning tells you to "save more" and "start early." Almost none of them answer the only question that actually matters: At my current trajectory, what age can I retire?

This article gives you a framework to answer that question with real numbers — not rules of thumb like "save 10-15% of your income" or "you need 25x your annual expenses." Those are approximations. You deserve actual numbers.

The retirement equation

You can retire when your passive income (from investments, pension, and savings) covers your living expenses indefinitely. That means three things need to be true at retirement:

1. Your investment portfolio is large enough to generate annual returns ≥ your annual expenses
2. Your pension (if applicable) covers part or all of your expenses
3. Your savings buffer covers unexpected expenses without depleting your portfolio

The classic "25x rule" says you need a portfolio worth 25 times your annual expenses to retire (based on the 4% safe withdrawal rate). But this ignores pension income, part-time work, different withdrawal rates, and country-specific tax treatment. Model your actual situation instead.

Step 1: Define your retirement expenses

Start with what you'll actually spend in retirement — not your current expenses. Retirement expenses are often lower because:

• No commuting or work-related costs
• No mortgage (if paid off)
• No pension contributions
• Children are financially independent

But some expenses increase:

• Healthcare costs (especially in countries without universal healthcare)
• Travel and leisure (if you've deferred it during working years)
• Home maintenance (more time at home)

Be honest about what your retirement lifestyle looks like. A retired couple spending €2,500/month needs a very different portfolio than one spending €4,000/month.

Step 2: Add up your future income streams

List every income source you'll have in retirement:

• State pension: what age can you claim it? What will it be (in today's money)?
• Occupational/workplace pension: defined benefit (fixed payment) or defined contribution (pot you control)?
• Investment income: dividends, rental income, bond coupons
• Part-time or consulting income: if you plan to do any work in early retirement

The gap between your retirement expenses and your passive income is what your investment portfolio must cover. If expenses are €3,000/month and pension is €1,200/month, your portfolio needs to generate €1,800/month (€21,600/year).

Step 3: Calculate the target portfolio size

Using the 4% safe withdrawal rate (the amount you can draw from a diversified portfolio each year without depleting it over 30+ years):

Target portfolio = annual portfolio income needed ÷ 4%

If you need €21,600/year from investments: €21,600 ÷ 0.04 = €540,000 target portfolio.

Note: The 4% rule assumes a roughly 60/40 stock/bond portfolio. More aggressive or more conservative allocations should use different withdrawal rates (3.5–5%). Adjust for your risk tolerance and country-specific market conditions.

Step 4: Project when your portfolio reaches that target

This is where a financial forecasting tool becomes essential. You need to project:

• Current portfolio value + monthly contributions + compound growth
• Minus management fees (often overlooked but significant over decades)
• Accounting for inflation on both your contributions and your target

For example: You currently have €80,000 invested, contribute €800/month, and assume 6.5% annual return with 0.5% fees. At that rate, your portfolio reaches €540,000 in approximately 17 years. If you're 40 now, you can retire at 57.

Change one variable — say you increase contributions to €1,200/month — and the retirement date moves to age 53. This is why a forecast is more useful than any rule of thumb.

The scenarios that most affect your retirement date

Model these scenarios to see which lever moves your retirement date most:

• Save €200 more per month (often 1–2 years earlier retirement)
• Reduce investment fees by 1% (often 2–4 years earlier, surprisingly)
• Work 3 more years (adds contributions + reduces years of withdrawal)
• Reduce retirement expenses by €500/month (reduces target portfolio significantly)
• Claim state pension 2 years later for higher payment (reduces portfolio needed)

Seeing these side by side makes the trade-offs real. Most people discover that small changes to fees or expenses have a bigger impact on retirement date than large changes to income.

Using MyRunway for retirement planning

MyRunway is built for exactly this kind of scenario modelling. You can enter your current investments, pension contributions, expected retirement expenses, and growth rates — then see a month-by-month forecast showing exactly when your portfolio crosses your retirement threshold.

Create a "retire at 60" scenario and a "retire at 55" scenario, compare them side by side, and see what you need to change to make 55 viable. The Pro plan gives you a 30-year forecast horizon — essential for retirement planning that spans decades.