How much to retire at age 55? We are 50

[Anonymous]

What's with all the doom and gloom?

I think you're fine OP. We plan on retiring before 60 with $3.3 to $3.5 mil. We spoke to our financial advisor, who said we are on track and should be fine based on our expenses. We meet with our advisor every quarter to make sure that we are on track.

Right now, we can live off of $160K, gross. This includes private health insurance which we have now.

Social security will provide about $60k to $70k, and then of course when we hit 65, we will be eligible for medicare.

[Anonymous]

I think you should pay for college and grad school for the kids. I would allocate a million for that and then be pleasantly surprised if it’s not that much. Harvard Law and Med is $100,000 a year or more already.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Still no answer to the health care question, OP. That's the biggest problem with any plan to retire early.

20k per year I’m estimating for Healthcare expenses.

Until you get sick.

Isn't that the point of the 20K? To buy insurance so you can deal with the sickness?

Yes, but the out of pocket and non-deductible costs can really add up. My dad has cancer now and easily has thousands of costs that aren’t deductible or covered by insurance.

[Anonymous]

Anonymous wrote:What's with all the doom and gloom?

I think you're fine OP. We plan on retiring before 60 with $3.3 to $3.5 mil. We spoke to our financial advisor, who said we are on track and should be fine based on our expenses. We meet with our advisor every quarter to make sure that we are on track.

Right now, we can live off of $160K, gross. This includes private health insurance which we have now.

Social security will provide about $60k to $70k, and then of course when we hit 65, we will be eligible for medicare.

May I ask your expense total (net)? How much of that is travel? Any specific insight is much appreciated. Thanks!

[Anonymous]

I'm 60. I retired at 53 with almost exactly $4 million in assets outside of home equity. I've been living off of about $200k a year ever since. I now have almost exactly $7 million in assets outside of home equity thanks to market and real estate appreciation.

I'm having trouble understanding how OP calculates having $100 million to leave their kids when they die. How is that possible given the amount that they have now, at their age, unless they don't plan on spending anything at all for 30 or 40 years?

I'd like to see the math, please, because that's not my reality.

[Anonymous]

Anonymous wrote:My husband and I make 300k combined and have close to 5M saved. Our house is worth 700k and we have 500k in college savings for 2 kids.

Fidelity’s retirement investment calculator calculates that we’ll only be able to spend about 10k a month to weather a significantly below average market.m but an average market would give our kids 100M when we die. Planning for the significantly below average scenario seems crazy conservative. I’d like to retire before age 55 with hopefully 6M.

Is 6M too low? The 4 percent rule would suggest that we would be able to spend 240k per year which would be more than enough.

Thoughts?
TIA

Wow. How did you save so much? That’s amazing!

[Anonymous]

Anonymous wrote:Your current NW is $6.2M. You can retire now. Your money will keep making money - you don't need to leave kids $100M. Perhaps $50M is enough.

You can't live in fear of health scares. Ask me. Because if there is a health scare - you will be surprised at how little difference an extra million will make. My mom without health insurance (visiting) spent 1 night at the hospital, needed ambulance etc. The bill was $135k. All the money you painstakingly saved for 10+ years will go away in a flash. So many people get/will get sick in their 60s - start living now. We retired at 50 and 48 last year. My dad retired at 61 and passed at 64. DH's dad retired at 58 and passed at 75.

PP, just curious, do you have kids?' how old are they when you retired last year?

[Anonymous]

The average price of a single family home in Arlington is 1.3 million. Since you easily can, and benefitted from decades when the stock market gave you huge returns, you should completely pay your kids’ education and provide home down payment money — as long as kids are being responsible, kind etc. That’s what I would budget for. You probably also bought you current home for a low price, unlike now and a decade from now. This was all lucky for you, not a result of your great frugality, so I would pay it forward. At least, that’s what we are planning as two gov workers who got the same benefits.

[Anonymous]

Anonymous wrote:I'm 60. I retired at 53 with almost exactly $4 million in assets outside of home equity. I've been living off of about $200k a year ever since. I now have almost exactly $7 million in assets outside of home equity thanks to market and real estate appreciation.

I'm having trouble understanding how OP calculates having $100 million to leave their kids when they die. How is that possible given the amount that they have now, at their age, unless they don't plan on spending anything at all for 30 or 40 years?

I'd like to see the math, please, because that's not my reality.

Go to fidelity calculator and use 50 as age and 5M as current assets and 10k per month as expenses in 4 years. Use average model that’s what I got.

[Anonymous]

Anonymous wrote:I think you should pay for college and grad school for the kids. I would allocate a million for that and then be pleasantly surprised if it’s not that much. Harvard Law and Med is $100,000 a year or more already.

I think you should also pay for your child if they decide to run for high political office. I would allocate $100 million for the Presidency and then be pleasantly surprised if you have some change left over.

[Anonymous]

OP keep in mind on the income streams you want to live off the after tax dollars first. Sure you can find ways to pull $$ out of IRAs before 59.5 but those balances will grow more if left untouched. I am working to build my after tax accounts up more to potentially live off of that at 200K/ yr from age 55-70+ or permanently. The 401K rollover/IRA money is the cushion and the $ that will go to the kids

[Anonymous]

Anonymous wrote:

Anonymous wrote:How did you get to 5M? Apple stock in the 90s?

No student debt. Maxed contribution retirement saving since we were 22. We don’t have fancy cars or hobbies.

If your money is tied up in retirement accounts you can't access it until you are 59.5

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Two thoughts. First retirement is not a one way street but if you decide to reenter the labor market you will take a hit. Second, what’s your return assumption? Have you processed the fact that real interest rates are negative? What do you think that means?

Of course. If we retire , it would be very difficult to find jobs in our field again as we are very specialized unless we are willing to move etc. We are right now invested very aggressively for our age and have most in equities. Obviously if the stock market takes a big hit in the next few years we’ll be singing a different tune. My plan is before we retire to move 1M into safe assets. In 2008, our portfolio dropped by half and as traumatic as that was it was only 400k or so at that time- now it would be a much different story.

Yeah.. Tell me about it. We prob. had close to $1.5m at that time and it dropped to less than $1M. Now at $7.5, a 50% drop would be terrible. In my spreadsheet model, I assume a 50% drop sometime during the current year so the projected beginning balance for the next year is adjusted down 50% (if it doesn't happen this year, I just push it out to next year in my model on Jan 1). I just got to the point where things don't turn negative over the next 50 years even with the 50% drop in the next year. I also assume 5% investment growth, 3% expenditure growth and try to model in all known large expenses - college, home remodel, car purchase every 10 years, etc.

NP. So what is your plan if the market drops by 50%? Will you keep enough in cash for expenses to ride out the drop or plan your retirement based on 50% drop or just plan to live in less? Are there any other mitigation strategies?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think you should pay for college and grad school for the kids. I would allocate a million for that and then be pleasantly surprised if it’s not that much. Harvard Law and Med is $100,000 a year or more already.

I think you should also pay for your child if they decide to run for high political office. I would allocate $100 million for the Presidency and then be pleasantly surprised if you have some change left over.

I agree, and I think OP should also buy houses for their kids. The houses should be in school districts with a Great Schools score of 10 and OP should also furnish them.

I assume OP also plans to pay for their grandchildren's education.

[Anonymous]

Anonymous wrote:The average price of a single family home in Arlington is 1.3 million. Since you easily can, and benefitted from decades when the stock market gave you huge returns, you should completely pay your kids’ education and provide home down payment money — as long as kids are being responsible, kind etc. That’s what I would budget for. You probably also bought you current home for a low price, unlike now and a decade from now. This was all lucky for you, not a result of your great frugality, so I would pay it forward. At least, that’s what we are planning as two gov workers who got the same benefits.

who isn't planning to do that?