“When Can I Retire?” When Your QSR is Greater Than “1”

should_i_stay_or_take_earlyretirement.jpeg.size.xxlarge.letterboxWhen I was thirty, my goal was to retire at fifty, and even though I am now over fifty and financially secure, I am not sure if I ever want to retire completely.  At thirty, work was merely a means to an end; it provided food for our table, clothed my kids, and put a roof over my family.  However, something happened along the way; I discovered that my work has purpose.  I enjoy what I do, and I enjoy the people I do it with.  I consider myself blessed to make a living talking every day to people I like.

However, I understand others are not so lucky.  Many folks feel trapped in jobs that prevent them from doing the things that really make them come alive.  Instead of playing with their grandkids, volunteering at the food bank, or traveling the world, they are slaving away at a job whose only joy is a much-needed paycheck.  Every month clients ask me: “When can I retire?”  My answer is nearly always the same: “It depends on your QSR.”

QSR stands for “Quit Slaving Ratio.”  QSR is a simple formula that helps you determine when you can quit working for a paycheck.  In order to safely retire, you want your QSR to be higher than one.  To figure out your QSR, take the monthly income you expect in retirement (Social Security, pension, rental income, investment income, etc.), and divide it by your anticipated retirement monthly expenses.  The formula looks something like this:


Let’s look at two different couples considering early retirement.  Our first couple’s desired lifestyle will cost $7200 per month in retirement.  This will allow them to  take a couple of international  trips per year, visit children, buy gifts for grandchildren, give generously to their church, and attend monthly music concerts put on by their local orchestra and chorale.  Assuming this couple expects a small pension from Boeing of $600/mo, a Social Security income of $1400/mo, a Spouse’s Social Security of $920/mo, own a rental home that nets $850/mo, and they currently own an investment portfolio worth  $900,000 that will produce $3000/mo (  ($900,000 X 4%) ÷ 12mo =$3000/mo), then this couple’s expected income in retirement is $6770.00/mo; therefore, their QSR looks like this:

$6700/mo INCOME ÷$7200/mo EXPENSES = .9403

Because this couple’s QSR is less than one, I would not recommend they retire just yet.  Unless they either increase their monthly income by $500 (e.g., part-time work) or reduce their monthly expenses (e.g., take only one international trip per year) by the same amount, their retirement years will include the anxiety that always comes from spending more money than is received.  Let’s take a look at another example.

Our second couple worked hard to get their mortgage paid off a few years earlier, and they decided to drop their health insurance at $1100/mo, and instead enrolled in a health care sharing ministry for $360/mo.  Both like to hike and camp, and play cards with friends and family.  In this case, this couple will need $4800/mo to fund their anticipated retirement.  Assuming this couple expects  the wife to receive a $2200/mo teacher’s pension, a Social Security income of $1290/mo for the wife and $1160/mo for the husband, and both have Roth IRA’s of $150,000 that will produce $1000/mo (($300,000 X 4%) ÷ 12mo = $1000/mo), this couple’s expected income in retirement is $5650/mo; therefore, their QSR looks like this:

$5650/mo INCOME ÷$4800/mo EXPENSES= 1.18

Our second couple’s QSR is higher than one, and I would tell them they could quit work today if it was preventing them from doing the things they would rather be doing instead.  Even though our second couple had less income than our first, their QSR was still greater than one, so there is no need for them to be a slave to anyone.

I have many clients who continue to work well into their 60’s and 70’s because they enjoy working, but I think nearly everyone wishes to have the ability to stop doing things they do not enjoy or feel called to do.  By first determining our QSR’s and then working towards getting them above one, we can ensure our retirement years will be filled with activities that are fulfilling, enjoyable, and productive.

If you need help determining your QSR, give our office a call to set up an appointment.   Together, we can help you “quit slaving” as soon as possible.

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