When can I retire? How to actually work it out

When people think about retirement, they usually think about a single date: the one set by law. In reality there are two. There's the date the state starts paying your pension, and there's the date you can afford to stop working. They can be the same, but for many people the second one can come earlier, provided you know exactly which numbers you're dealing with.

1. Start from the "official" date: the INPS requirements

In Italy there are three main routes to a state pension:

• Old-age pension (pensione di vecchiaia): in 2026 you qualify at 67 with at least 20 years of contributions.
• Early pension (pensione anticipata): regardless of age, it requires 42 years and 10 months of contributions for men and 41 years and 10 months for women, with a waiting window before the first payment.
• Contribution-based early pension: for people who started contributing after 1995, at 64 with at least 20 years of contributions, but only if the pension exceeds a minimum threshold linked to the assegno sociale.

These requirements are linked to life expectancy and are updated periodically, with 67 and 1 month from 2027 and 67 and 3 months from 2028 already scheduled, plus one extra month of contributions for the standard early pension. So if you're 40 today, it's prudent to plan for an old-age pension age well above 67.

2. Estimate what you'll get (don't anchor on your salary)

If you started working after 1995, your pension will be calculated entirely under the contribution-based system: what counts is how much you paid in, not your final salary. As a result, the ratio between first pension and last income (the "replacement rate") will be noticeably lower for many of today's workers than it was for their parents.

Two details people often miss:

• the INPS estimate assumes you keep working and contributing until retirement. If you stop earlier, your pension will be lower;
• the figure is gross: to compare it with your spending you need the net amount after income tax.

3. Work out what you need to live on

This is the most underrated step, and the one that matters most. You don't need a perfect estimate, you need an honest one: go through the last 12 months of bank statements and add everything up, including yearly costs (insurance, maintenance, holidays, gifts).

Then ask what will change once you stop working: no commuting, maybe more travel, maybe a paid-off mortgage, probably higher healthcare costs with age. The result is your target annual spending.

4. Compare spending, pension and savings

You now have three numbers: what you spend, what the state pension will pay and from when. The difference between spending and pension is the gap your savings need to cover.

• If you want to stop at state pension age, your savings only need to cover the difference between spending and pension for the rest of your life.
• If you want to stop earlier, your savings also need to act as a bridge, paying all your spending until the first INPS payment.

To work out how large a portfolio can sustain a given yearly withdrawal, people usually use a safe withdrawal rate, the best known being the 4% rule. I cover it in detail in the guide on FIRE in Italy and the 4% rule, and there's a full early-retirement example here.

5. See how many years you have left: your savings rate

The factor that decides when you can stop more than any other isn't your investment return, it's the share of your net income you save. Saving more grows your capital and at the same time lowers your target, because it proves you can live on less.

Starting from zero, with a hypothetical 5% real annual return and a 4% withdrawal rate, the years of work needed to reach financial independence are roughly:

The table ignores the state pension and any savings you already have, and both shorten the path. But it makes one point obvious: going from a 10% to a 30% savings rate can bring your freedom forward by two decades.

The result: a date, not a generic age

Putting the five steps together gives you something far more useful than "at 67": a realistic date when your savings and your pension together cover your spending. Above all, you know which levers you can pull to bring it forward: spend less, save more, cut investment costs, work a few extra years part-time.

For a first estimate that also includes your INPS pension, you can use the FIRE simulator. For a plan built on your real numbers, pension included, you can book a free call.