Over the last several months my mind has been drifting towards thinking about whether I’m ready to retire.
Okay. Not really pondering whether I’m ready to retire; more like trying to decide when I’m going to be ready.
For me the matter of retirement – be it early or not – is not mixed with longing for twisty, ribbed stockings, bubbly cardigans and watching daytime TV. I can’t stand daytime TV.
For me, the matter of retirement is tangled with the lust for independence, the desire to create without restrictions and contribute to people’s lives with no limitations. While I’m employed this is not possible.
‘Oh, but you are a university professor.’ – I hear you say. ‘If you are not able to create and contribute value to people’s life, who can.’
You’d be surprised. In the past, I have made some positive contributions through my research; like contributing to a very substantial increase of the science budget in the UK in mid-1990s. I have touched the destinies of generations of Doctoral, Masters and undergraduate students…reputedly. Still the changes in Higher Education and the universities over the last decade or so, have been consistently robbing my life of meaning.
I want the meaning back. After all, we are all mortal and we are not born to make money, spend money and die with regrets.
So I’ve been trying to decide whether I’m ready to retire – and when I’ll be ready if I’m not there yet – and have had a big problem.
This problem is called ‘enough money to last me for life’. I am not looking to stop being employed so that I could put my feet up and do b*gger all, that’s true. Still, leaving the security of a full professorship and having to make a living is scary. I’d like to know that I have enough at a very basic level so I don’t need to obsess and panic about earning.
So, I played around a bit with our retirement calculator. It is fun but…I had to make too many assumptions that are highly problematic. Like my annual spending in ten years’ time.
While looking for something else, I came across an easy formula that helps you decide whether you are ready to retire; it was introduced by Quora reader Doug Massey and is known as F*ck That Index (or FTI).
Are you ready to retire: what is FTI?
FTI, or your readiness to retire, is calculated using the following:
Your Age * Your Net worth/Annual spending
The index should be greater than 1,000 for you to be ready to retire.
I love this one! I love it not only because it is the kind of thing that tells you ‘yes’ or ‘no’ but also because it allows you to play with the conditions for readiness. For instance, you may be closer if you reduce your annual spending; or you need to wait several more years.
Where do I stand in all this retirement lark?
Remember when I was telling you how important it is to know your net worth and that you should follow it religiously. Hope you did! I do know my net worth exactly and update it every month so calculating my FTI is easy.
…my index is 1,705.
(Had to correct this one up after carefully calculating my net worth. What am I waiting for, I wonder.)
Which is over 1,000 anyway and this means that I can jack my job tomorrow is I want to. And this makes me feel all warm and glowing inside. This is without changing our current level of spending at all.
(Just for the record, John’s FTI is well over 1,000 as well. I haven’t factored keeping a teenage son through university but this may be why I have to make a lot of money some other way.)
What is your FTI value? Are you ready to retire?