Can we afford to retire now?

[Anonymous]

Anonymous wrote:Yes, you can retire. The question is, can you enjoy living at the level your current amount of savings will allow?

We retired at 61/65 with a paid off 1.2m home, 3 kids through college, 3m in the bank, and a small pension. We are fine. We visit the kids a couple times per year, and take several shorter trips together, one long trip just the 2 of us, and at least one family trip with all of us. We have yet to touch the principal of the 3m, which has grown since retirement.

I think if the OP was 10-15 years older (as you are!), lots of people would say that retiring with $3+ million in assets is a fine plan. The issue for OP is they are not 10-15 years older - so the period of time they will be spending down assets (health care, college expenses, mortgage) before medicare and social security kicks in is too long.

OP, in your shoes, I'd either plan to stay at current job/HHI until kids are through college or shift to jobs that are more sustainable (part time or some other change) and try to maintain a HHI of $250k+ for the next 10-15 years. You don't want to be drawing down your retirement assets now, but it probably is fine to stop adding to them and live off a (lower) income until you are 60.

[Anonymous]

Anonymous wrote:Yes, you can retire. The question is, can you enjoy living at the level your current amount of savings will allow?

We retired at 61/65 with a paid off 1.2m home, 3 kids through college, 3m in the bank, and a small pension. We are fine. We visit the kids a couple times per year, and take several shorter trips together, one long trip just the 2 of us, and at least one family trip with all of us. We have yet to touch the principal of the 3m, which has grown since retirement.

Yes, you are 61/65, not ~50. Your kids are all thru college (and I'm assuming independent adults). So you only have 4 years of healthcare for one of you (the other is medicare eligible). Very different than the OP. They have a kid still in HS with $180K to just get them thru HS, then they have college (yes part of tuition is covered but living expenses are typically almost $18-20K at most schools now. So I'd assume $40K/year (since not all tuition is covered) at a minimum times 4 years.

Then they have 15 years of Healthcare for themselves and another 6+ for their kid(s). They could be looking at spending $4K/month easily on healthcare premiums and expenses (since the deductible is likely to be $7K/14K for many plans). So when you add in $40-50K for medical that takes a huge chunk out of your yearly allotment of money to spend. They still owe 600K on their home and a $1.2M home has property taxes likely over $15K per year.

Sure they could retire, but they might need to downsize and might not be able to do all the traveling they want, because they have another 10-15 years over what you have to budget for.

IMO, you don't retire before kids are out of college (or at least in college and you have it FULLY saved already). Too many unknowns, unless you have $10-15M+. But you certainly don't do that with $150K+ per year expenses just from HS, medical and house and only have $3-4M to your name.

[Anonymous]

No! Until all education expenses are behind you and Medicare is on the horizon you’d be taking on too much uncertainty.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes, you can retire. The question is, can you enjoy living at the level your current amount of savings will allow?

We retired at 61/65 with a paid off 1.2m home, 3 kids through college, 3m in the bank, and a small pension. We are fine. We visit the kids a couple times per year, and take several shorter trips together, one long trip just the 2 of us, and at least one family trip with all of us. We have yet to touch the principal of the 3m, which has grown since retirement.

I think if the OP was 10-15 years older (as you are!), lots of people would say that retiring with $3+ million in assets is a fine plan. The issue for OP is they are not 10-15 years older - so the period of time they will be spending down assets (health care, college expenses, mortgage) before medicare and social security kicks in is too long.

OP, in your shoes, I'd either plan to stay at current job/HHI until kids are through college or shift to jobs that are more sustainable (part time or some other change) and try to maintain a HHI of $250k+ for the next 10-15 years. You don't want to be drawing down your retirement assets now, but it probably is fine to stop adding to them and live off a (lower) income until you are 60.

I think it's a smart advice here to scale down to enjoy life before you feel like you are too old but not dip into your savings until retirement age or closer to it when medicare is not so many years away. Maybe if a 2 earner household you can take turns who works and who takes a year off, with a stay home spouse life is also smoother and some things with kids (even older kids) are easier to manage, less burnout for the working spouse too.

But if OP is already super burnt out then I think they can totally retire if they scale down expenses and also don't set expectations with the kids that they are going to bankroll them. It requires kids to be serious to earn their own living upon college graduation.

If their kids were already launched and providing for themselves, OP could move overseas where healthcare plans and living expenses are much cheaper for the next decade, or somewhere much lower COL.

[Anonymous]

If it were me I would pay off my mortgage fully, finish paying for private and then reassess.

Though, another option is skipping private all together. It's not required.

If your priority is on retiring soon or now, look into FIRE, reduce your expenses, pay off debt and then see where you are in a couple more years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, you can retire. The question is, can you enjoy living at the level your current amount of savings will allow?

We retired at 61/65 with a paid off 1.2m home, 3 kids through college, 3m in the bank, and a small pension. We are fine. We visit the kids a couple times per year, and take several shorter trips together, one long trip just the 2 of us, and at least one family trip with all of us. We have yet to touch the principal of the 3m, which has grown since retirement.

I think if the OP was 10-15 years older (as you are!), lots of people would say that retiring with $3+ million in assets is a fine plan. The issue for OP is they are not 10-15 years older - so the period of time they will be spending down assets (health care, college expenses, mortgage) before medicare and social security kicks in is too long.

OP, in your shoes, I'd either plan to stay at current job/HHI until kids are through college or shift to jobs that are more sustainable (part time or some other change) and try to maintain a HHI of $250k+ for the next 10-15 years. You don't want to be drawing down your retirement assets now, but it probably is fine to stop adding to them and live off a (lower) income until you are 60.

I think it's a smart advice here to scale down to enjoy life before you feel like you are too old but not dip into your savings until retirement age or closer to it when medicare is not so many years away. Maybe if a 2 earner household you can take turns who works and who takes a year off, with a stay home spouse life is also smoother and some things with kids (even older kids) are easier to manage, less burnout for the working spouse too.

But if OP is already super burnt out then I think they can totally retire if they scale down expenses and also don't set expectations with the kids that they are going to bankroll them. It requires kids to be serious to earn their own living upon college graduation.

If their kids were already launched and providing for themselves, OP could move overseas where healthcare plans and living expenses are much cheaper for the next decade, or somewhere much lower COL.

This is good advice except for the part where one spouse works and the other one doesn't and then you switch off. It's hard to get back into the workforce in your 50s. One of you can indeed quit (if you agree on it) but you certainly can't take turns. That's not a good plan.

[Anonymous]

The problem is the private school tuition followed by two kids in college. You need to fully fund that apart from your retirement funds, which it doesn’t sound like you have done. You need to pay off the house too unless you plan to move/downsize.

[Anonymous]

If you are willing to spend 90k a year on private school you are a big spender. You are too young to retire with the assets you have.

[Anonymous]

Definitely not.

[Anonymous]

How are you going to get tuition remission if you retire? Also, you’re going to spend $200k on private from your principal?

[Anonymous]

Anonymous wrote:

Anonymous wrote:How much is your mortgage?

We are aiming for $250k/year after paying off mortgage and kids’ college costs.

Mortgage and property tax is $4000 a month


Our HHI is $650 k. I forgot to mention that too.

Looks like we need to keep working! Ugh

You’re not a math professor are you?

[Anonymous]

People used to living on 650k don’t retire on $3M. Retiring on $3M is for people used to living on 200-250k. The lifestyle you are used to dictates how much you need.

[Anonymous]

Anonymous wrote:People used to living on 650k don’t retire on $3M. Retiring on $3M is for people used to living on 200-250k. The lifestyle you are used to dictates how much you need.

3 million gives you a safe $120k (pre tax) in withdrawals per year so even that would require a major lifestyle shift for a family used to making 250k.

If you’re in your 60’s and eligible for social security, Medicare, and have a paid off mortgage and launched kids then yes, a 50% cut in HHI becomes much more doable without making big sacrifices.

Obviously none of this is the case for op and spouse, who would be dropping to less than 1/5 of their current 650k HHI in safe withdrawals if they retired now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:No. You have $4m in investible assets, which means you could draw down $160k per year, and you'd have to pay taxes, tuition, and your mortgage out of the $160k annual spend. If I were you, I'd work for at least two more years to cover the $90k per year in private school expenses and see where they land for college, and then reassess.

+1 We will have about $3.8 mil when we retire next year (I'm 56; spouse is 62), two kids in college by then with 529 funded to what they need.

ACA insurance is ridiculously expensive, even with the subsidies but even more so without, and who knows what the Rs will do about the subsidies.

PITI is $2300. Monthly expenses all in without having to budget is about $10K, with travel about $12K.

No way would I retire at 50 with only $3mil and two kids, and paying for private school at $90K/yr. Insane.

OP has 4 million, not 3.

still.. not enough to retire at this point.

[Anonymous]

Thanks for all the feedback. Just wanted to clarify that we have 4 million total, not 3. We wouldn’t consider retiring on just 3 million.

I agree with the points that we should probably at least finish paying off private school first before retiring and also pay down the mortgage some more. I don’t think we should pay it off completely though because it’s a good tax deduction.