Can we afford to retire now?

[Anonymous]

Anonymous wrote: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.

+1

WHOA!!

[Anonymous]

Anonymous wrote:

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.

Depends on what one does. Some people can be self employed or work W2 contracts. W2 contracts also provide healthcare plan discounts

[Anonymous]

Anonymous wrote: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.

yes. I would say send your kids to community college and then transfer to a state school for much lower education costs, have kids fund their own grad school later, but judging by OP willing to pay for private HS in the first place, it's unlikely she wants this route for her kids. She likely plans on private college 4 yr cost which is going to be more years of bondage for her unless they already funded their college fully.

[Anonymous]

depends on what your yearly spend is.

[Anonymous]

Anonymous wrote:How much is your mortgage?

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

then you would probably need 6M.

we have 3 and our yearly spend is about 120.

[Anonymous]

Anonymous wrote:

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.

Well, duh, if they are eligible for SS/Medicare, aren't they already technically "retirement age"? How is this "early" retirement?

Also, what's up with this 4% withdrawal rate? Is the assumption here that your principal is supposed to be a "brick" earning zero income for you? You should be able to make at least 5% low risk investing on that 3mil, which would be more than your withdrawal rate and principal won't be touched. If you are good with investing you can even make 10% return, which would be a nice HHI in retirement given no crazy expenses like private school and college bankrolling.

Sometimes I wonder about ppl here, or maybe it's the going advice from the financial planners to keep people working? scaring them that they will end up in a trailer park or skid row unless they have multiple millions sitting like dead weight earning zero for the rest of their lives.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How much is your mortgage?

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

then you would probably need 6M.

we have 3 and our yearly spend is about 120.

Who are you crazy ppl who think one needs 6 million to retire?? What is the percent of US population able to even get close to accumulating anything like this?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much is your mortgage?

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

then you would probably need 6M.

we have 3 and our yearly spend is about 120.

Who are you crazy ppl who think one needs 6 million to retire?? What is the percent of US population able to even get close to accumulating anything like this?

people on here spend LOTS of money. that's why! people don't want to retire and then have to scale their lifestyle/spend WAY DOWN.

[Anonymous]

Anonymous wrote:Can we retire now, and if not, when?

We have 2 kids and 3 million in all our retirement accounts, 1 million in liquid, $700 in home equity (about $600k left to pay) and no other debt.

Main expenses besides mortgage is two more years of private school expenses at about $90k a year and then college expenses.

About half of the college tuition expenses will be covered through my employer’s tuition remission benefit, even if I retire now. We only only $100k in 529 accounts for each kid though.

We are not big spenders in general but love to travel! What do you think?

Does 3 mil in retirement accts mean that you cannot draw on any of it until you are 65? I think it's plenty to retire after 65 and have a nice cushy life, but you only have 1 mil liquid investable capital, which means you have to be very crafty to cashflow it enough for you to live on for the next 15 years, likely doing riskier investments unless you have some amazing business idea that would cashflow quick.

But you make 650K, you are likely used to a nice lifestyle and you like to travel. It's not bare bones living. Dining and travel is a huge expense people with small fixed income don't afford themselves at all.

Obviously you need to finish paying for private school, so have to work for another 2 years. I think you have almost enough to cover college costs if you don't insist on $$$ private college with $$$ on campus living and summers in Europe

Here is the main question that boggles me. With such a nice HHI, why do you want to quit now, what is the issue? Is this 2 incomes or only one income? If it's one income, then I would honestly keep working for a few more years because it's such a nice opportunity that doesn't easily come to people 50+, and also layoffs for higher paid professionals over 50 are very common. I would wait to get laid off and get a package personally with this pay.

If it's 2 incomes then are they both the same or one is much higher than the other? In that case, you can scale down and have a person with lower pay quit and focus on making a better home environment for the higher earning spouse taking pressure off having to run the rat race with HS kids, activities, etc.

If I were to have 4 mil liquid investable capital and no private school tuition I think I'd retire at your age.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much is your mortgage?

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

then you would probably need 6M.

we have 3 and our yearly spend is about 120.

Who are you crazy ppl who think one needs 6 million to retire?? What is the percent of US population able to even get close to accumulating anything like this?

people on here spend LOTS of money. that's why! people don't want to retire and then have to scale their lifestyle/spend WAY DOWN.

This post is written by a person whose yearly spend is supposedly 120k... That's not a lot of money for a family of 5.. That's austere modest living. And if these type of people think they need 6 mil I want to know what's going through their head.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much is your mortgage?

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

then you would probably need 6M.

we have 3 and our yearly spend is about 120.

Who are you crazy ppl who think one needs 6 million to retire?? What is the percent of US population able to even get close to accumulating anything like this?

people on here spend LOTS of money. that's why! people don't want to retire and then have to scale their lifestyle/spend WAY DOWN.

This post is written by a person whose yearly spend is supposedly 120k... That's not a lot of money for a family of 5.. That's austere modest living. And if these type of people think they need 6 mil I want to know what's going through their head.

My bad. It's in response to a post of people making 250K. Still 250K for family living doesn't translate to having to spend this in retirement to maintain the same lifestyle (child related expenses, college savings, etc go away). It definitely doesn't require 6 mil liquid to be able to maintain this lifestyle especially if your home is already paid off or mortgage is modest. This HHI doesn't buy lavish lifestyle with vacation homes, abundant dining/travel, luxury shopping, etc. It's a middle class lifestyle for HCOL areas. And ppl wanting middle class life in retirement have to have 6 mil saved? That's crazy talk.

Ok, I think one factor that adds up to the anxiety I see here about retirement is healthcare costs, which for self insuring 50+ ppl are high. It's why we should hope this gets fixed to some extent, so that people don't have to pay another mortgage to get health insurance. I guess if your house is already paid off then you can afford private health insurance. But if you have limited income don't you also qualify for discounts?

[Anonymous]

Anonymous wrote: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.

Well you should add to your $4M and have enough to pay off the house, in addition to paying for all of college and finishing off $90K/year HS. Those are huge extras, and cannot really come out of $4M unless you want to live on significantly less for retirement +

[Anonymous]

Anonymous wrote:

Anonymous wrote: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.

yes. I would say send your kids to community college and then transfer to a state school for much lower education costs, have kids fund their own grad school later, but judging by OP willing to pay for private HS in the first place, it's unlikely she wants this route for her kids. She likely plans on private college 4 yr cost which is going to be more years of bondage for her unless they already funded their college fully.

Yeah, someone paying $90K for private HS (I'm guessing $45K/year per kid) is NOT going to do CC to 4 year state school. They are sending their kids to a 4 year school immediately.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much is your mortgage?

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

then you would probably need 6M.

we have 3 and our yearly spend is about 120.

Who are you crazy ppl who think one needs 6 million to retire?? What is the percent of US population able to even get close to accumulating anything like this?

Most of us don't want to be "those people" and live on $50K/year and struggle. If you want $250-300K/year you need more than $3M to be comfortable

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much is your mortgage?

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

then you would probably need 6M.

we have 3 and our yearly spend is about 120.

Who are you crazy ppl who think one needs 6 million to retire?? What is the percent of US population able to even get close to accumulating anything like this?

people on here spend LOTS of money. that's why! people don't want to retire and then have to scale their lifestyle/spend WAY DOWN.

Exactly! if you are used to spending $300K+ yearly, you likely don't want to drop to $50-75K in retirement. So yes kids cost something and that will go down/disappear, but many of us want to travel, enjoy retirement and plan to spend similar until we are 75+ (and can't travel as much)