Hello everybody, it's Sam from Financial Samurai and in this episode I want to talk about the best age to retire to minimize regret and maximize happiness. Because I just spent about an hour and a half updating a post I wrote in 2018 about this subject and I was 41 years old at the time and now I'm 45 years old.

And during the process of updating I realized a couple things that I wanted to share with you. First of all, to get it right off the bat, I believe the ideal retirement age, the best age to retire, is between ages 41 and 45. By this age range most will have had 20 plus years to save and invest.

Most will also be healthy enough to explore the world and do the things they've always wanted. And so I came up with this thesis when I was 41 years old partly because I felt that, ah, if I had just waited until 41 years old instead of retiring at 34 years old in 2012, I would be richer and have less regret and so forth.

And so this is kind of a self-reflective post but also a post to help you figure out what the ideal retirement age is as well. And so now, four years later at the age of 45 in 2022, I'm revisiting this topic to see whether 41 to 45 is indeed the ideal retirement age.

And my quick conclusion four years later is that yes, 41 to 45 is a sweet spot for taking it down a notch, doing something different, taking a long break, retiring forever if you want to. Just to recap and get a baseline, 51% of Americans between the ages of 61 and 65 retire and 63% of Americans retire between the ages of 61 to 69.

Given we want to live a better than average life, it's logical to conclude the ideal retirement age should be at least below 61 to 65 where 51% of Americans retire. Now some of you might say, "Oh, I love my job. It's awesome." But survey after survey from Gallup Poll have showed that most Americans, about 70 to 75% Americans, are disengaged from work.

They're just not interested. They're just going through the motions to get that paycheck, that retirement savings contribution, and to get subsidized health care and other benefits. And on the other end, 18% of Americans retire before the age of 54. Thus, the ideal retirement age should also be under age 54.

Now that I am 45, I've noticed several things since 41 years old. One, I'm much wealthier than I was four years ago, thanks to the bull market and thanks to consistent saving and investing. This added wealth makes me feel more financially secure, especially with two children. And what's also interesting is that the wealth, the absolute dollar wealth amount has increased much faster because I have a larger capital base to earn returns.

Two, and more importantly, my health is starting to fade just a little bit. During the pandemic, I had some breathing issues, shortness of breath. It might have been due to anxiety, you know, a lot of things going on in 2020 especially. I'm not sure. Actually, the doctor said there's probably a relapse of my asthma that I had as a kid.

So that's coming back a little because he said people who have asthma as kids tend to relapse after the age of 40. Noticing my health decline a little bit is a little bit alarming, but it also reminds me, okay, mortality. Father time waits for no one, right? So you got to make the most of life now.

Oh yeah. And I also have this popping hip issue. I've been playing tons of pickleball along with tennis now. So before I would play tennis twice a week for an hour and a half to two hours each time, rest in between. Now I'm playing tennis twice a week, but I'm also playing pickleball two to three times a week, which is an extra, let's say four to five hours of exercise.

And my body has reached that limit where I don't know, the muscles are strained, tendons are strained. It's just popping my left hip back and forth. And usually it doesn't hurt, but sometimes I'm like, oh, oh. So again, these physical ailments remind me that time is finite. And then finally, time really is finite.

It's an awareness that let's say you're at 45 years old and you live till 90. Every single year you live is literally twice as fast or twice as precious as the first year of life you live, right? One divided by 90 is half of one divided by 45. None of us really know when we're going to die.

But while I was doing some updating and research for this post that is linked in the show notes, I looked at the death rate in the United States in 2019 by age and gender. And it says per 100,000 of population between the ages of 45 and 54, the death rate is 490 males and 297 females.

But that significantly jumps between the ages of 55 to 64 to 1,112 for males and 670 for females. And then it more than doubles again in the next up age range and then it more than doubles again and so forth. I'm not exactly sure how to interpret this data because for the age range 85 and over, it says, let's say the male death rate out of 100,000 population is 14,229.

That doesn't make sense if the median life expectancy is about 80, 81. It should be much higher that rate. But regardless of me understanding this data or not, what I'm looking at is the change in the number. How does it go from one age bracket to the next? And that change really starts accelerating after the age of about 40, 44.

That fits very well into my thesis about the ideal retirement age at 41 to 45. Because obviously, if you die at 45, you're going to be really bummed if you're working until 45. You won't be able to do everything that you wanted to do. And at 65, okay, that's the traditional retirement age.

You know, that is where you could die then, or hopefully you'll live until the median life expectancy of 80 plus. Nobody really knows. So retiring early is a hedge against an early death. And that's why if you retire by the age of 45, hopefully you will have between 15 to 35 years of relatively healthy living so you can enjoy your retirement.

Now, so far, I've talked relatively subjectively about the ideal retirement age. But if you click over to the post, you'll see me try to quantify the ideal retirement age using four variables. First variable is income, freedom, potential, return on education. I essentially assign a score of between one to 10, 10 being the highest.

And then I have a chart by age and then I total these variable scores. And then whichever age bracket has the highest total score wins. So for example, between ages 20 and 25, I assign an income score of one because you likely make the least amount of income at any point in your life, maybe not after like 85.

But yes, probably at any point in your life, because hopefully your retirement income will be greater than your income between the ages of 2025. Now with freedom, I assign a 10 because it's awesome to do whatever you want at 2025. You don't have a lot of responsibilities, your potential I sign a three, this is subjective, you know, three, you have potential, but it's not that great yet, because you don't know that much.

And then return on education. Well, you spent how many years 13 years going to grade school, then you got college, that's a long time. So if you're going to retire between the ages of 2025, that return on education is very low. So I give you a one and your total score is a 15.

But if I look at my 41 to 45 bracket, I'm giving an income score of nine freedom score of six potential of 10 return on education of nine. So you get a score of 34. And voila, there it is the ideal retirement age. But to be frank, I'm kind of reverse engineering this as well to try to look backwards and see what makes sense.

Finally, I do want to say the sooner you retire, the busier you will probably be in retirement. Because you'll be younger, you'll have more energy, more interest, more things you want to do. For example, here's some of the things I've done post retirement since 2012. I've traveled to 30 new countries in Europe and Asia with my wife.

Angkor Wat, Cambodia was truly amazing. You got to check it out. Just summertime is really brutal, the humidity and heat. For sports, I got my US Tennis Association ranking up from a four and a half to a 5.0. This is a top 1% level. And it wouldn't have been possible with all the free time spent practicing my backhand and my volleys.

Three, let's see, I consulted for several FinTech startups ranging from series C to series C. It was pretty interesting, you know, seeing the startup and tech world. This is a world that I have never truly fully been immersed in, even though I've been living in San Francisco, since 2001.

Four, I became a high school tennis coach. It was really fun coaching teenagers and seeing, you know, what the school system is like. Five, I became a father of two children. This is the greatest joy and the greatest challenge ever. And then finally, I wrote an instant Wall Street Journal bestseller called Buy This, Not That, How to Spend Your Way to Wealth and Freedom.

So I did all these things because I wanted to do them. And I very surgically cut out the things I didn't want to do. And I distanced myself from other people I didn't want to hang out with. So yes, I would have made more money and I would have been richer had I worked for five more years.

But I've minimized regret by doing other things and spending the time how I saw fit. Once you reach your 40s, you will start to feel the importance of making every moment count. Even with a family to support, money depreciates in value while time appreciates in value. It's never more apparent than by 45.

So find the point where the lines intersect and you will find your ideal retirement age. I'd love to hear your thoughts in the comments in the post or an email what you think best ages to retire. When you retired, did you go the traditional age of 60 plus? Or did you go earlier?

Did you have any regrets? What would you have done differently? This is a journey and I love chronicling the journey because we don't know what we don't know. And I'm saying at 45 years old, between the ages of 41 and 45 is the ideal time to retire, take it easy, live life, do something else.

There's always another dollar to make, but there's never another second of time. If you're looking for some great retirement planning tools, my favorite is Personal Capital. I've been using them since 2012 to track my net worth and also plan for retirement. You can check them out at financialsamurai.com/pc and also check out New Retirement.

New Retirement was built from the ground up to be specifically for retirement planning. It's very customizable, a lot more features, and it will empower you to live a more confident retirement lifestyle. You can check them out at financialsamurai.com/nr for New Retirement. Thanks so much, everyone. Until next time.