Someone wrote to Suze Orman and asked the question many baby boomers are asking. “When Can I Retire?” I was listening to her show on TV while at the computer and decided to go to one her sites. This was a question that she answered for a baby boomer. Read it and I may post more of her answers for you to review.

When Can I Retire?

My wife (53) and I (49) have been married for 20 years and live in the San Francisco Bay area. We live simply, have no children, have no debt, own our home (3,000 sq. ft. in a nice area), are in good health, have a long-term care policy, and have $1.2 million in cash equivalents and tax deferred investments. At age 65 I will be eligible for Social Security and approximately $43 thousand a year in pension benefits. At age 56 my wife will qualify for $43 thousand a year in inflation-adjustable pension benefits.We have listened to your specials on KQED and have benefited from your wisdom. Lately we ask ourselves, “When can we realistically retire?” Do you have any advice?

Whether or not you’re ready to retire depends on the answers to two questions. One is emotional; the other is financial. The emotional question is, Do you know how you want to spend your time after you stop defining yourself by your career and start identifying yourself by who you are? Thinking this through is more difficult than most people imagine. Please give it a lot of thought.

Now to the financial part. Since the average life expectancy of a person in good health extends in to the late 80’s, many of us will spend more years in retirement than we spent working. For you, right now, retirement might mean a period of 30 to 35 years or longer. So the following question has to be asked and answered: How long will your retirement income last? Will it last for 35 years-or for 45 or 50 years if you’re one of the growing number of people who live into their 100s? Twenty-five years from now, will you and your wife still be able to live on a combined $86,000 in pension income, plus Social Security and the conservatively estimated interest income that can be taken from your investments? I say that this interest income must be “conservatively estimated” because I want you to calculate your future income based on interest from very safe investments, and also to be sure that you project a level of interest that it’s realistic to believe you can obtain. In this environment, I would not project above 6 percent a year. Please also be sure that you won’t have to invade your principal.

About your tax-deferred accounts: Take into consideration that, if and when you start withdrawing money from those accounts, you must first pay taxes on that money. After taxes, how much will really be left to generate income for you and your wife? Also, take into consideration what would happen if one of you were to die. Would one pension stop or be reduced? Finally, please remember to calculate that the one who remains will also be losing one social security check.

So this is how to figure out whether and when to retire. Calculate your true living expenses today and what you project into the future. Remember to add in expenses that you may not be incurring now, such as medications, additional help around the house, etc., and take into consideration future inflation of at least three percent a year. Next calculate your income and expenses if one of you should die. Bottom line: If the surviving spouse or life partner has more than enough money to meet the bills today and 30 years or more into the future, happy retirement, my friend! If not, keep a working and saving.