I Just Hit $20,000 Annually -- Am I Ready to Retire in 8 Years?
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Earning $20,000 in dividend income is an impressive accomplishment, but there's more to do to ensure he's ready for retirement.
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4 min read
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investment
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July 9, 2025
06:45 AM
The Motley Fool
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Earning $20,000 in dividend income is an impressive accomplishment, but there's more to do to ensure he's ready for retirement
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When you're getting ready for retirement, you need to make sure your investments can duce enough income to keep you comfortable
A Reddit poster is wondering exactly what needs to happen in order to make that happen
The poster has just hit $20,452 in annual dividend income
He is 50 years old, and he's hoping to retire in eight years
After he reached this milestone, he wondered what steps he should take to make it happen
So, what should the Redditor do
Just hit 20k annually
Byu/Slaureto individends How to make sure you're on track for retirement when the deadline is looming The Reddit poster seems to have a good mix of investments, with most of his money spread across a variety of different exchange-traded funds (ETFs), so while several posters ed that he may want to diversify his investments a bit to be exposed to less risk, he's not necessarily too off-base on his asset allocation
However, with just eight years to retirement, it may not be a bad idea to move some of his money out of stocks
Generally, a portfolio allocation involves subtracting your age from 110 and that percentage of your portfolio in equities with the remainder in bonds or other similar assets
Image source: Getty Images
What the poster did not do, though, is specify how much income he needs his retirement investments to duce
While he has $20,000 in dividend income coming in right now, he will have to carefully consider things what his withdrawal rate will be and how distributions from his accounts will be taxed once he retires
That's especially true since some of his money is in a taxable brokerage account
Running these numbers is going to shape exactly what he needs to do for the next eight years
Most experts recommend a 4% withdrawal rate (or less) to reduce the risk of running short of money, so the poster should think what his retirement budget will look to determine the total size his nest egg must grow to before he can stop earning a paycheck
Since he's hoping to retire before he becomes eligible for Social Security and before Medicare age, he's also going to have to make sure he can cover healthcare costs, and do so without Social Security benefits coming in until at least age 62
Doing this work to define his income needs will make it possible for him to get his top-line number and, armed with that information, he can calculate the monthly amount he needs to invest so that, when combined with the growth of his current portfolio, he ends up with enough
If the poster is hoping to spend $80,000, for example, he would need a nest egg of $2. 8 million to be able to retire in eight years, assuming he ed the 4% rule
The amount he has to to get there will depend on where he is starting from, as compound growth can help put him over the edge
Making a detailed plan is key when retirement is drawing near The Redditor has ly done a lot of work to get his portfolio to the point where it is ducing $20,000 a year in dividend income, but that's almost certainly not going to be anywhere near enough for the poster to on
While he's rightly ud of his accomplishment, an eight-year retirement goal is a tight timeline to make sure he's financially prepared for the future
When you're this close to retirement, if you don't have a path forward, often the best option will be to get fessional help in setting goals and allocating investment dollars
Doing this can help the poster to ensure that when he hits his preferred retirement age, he's ready to give notice and join the ranks of the comfortably retired
Christy Bieber has no position in any of the stocks mentioned
The Motley Fool has no position in any of the stocks mentioned
The Motley Fool has a disclosure policy.
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