Do you see any flaw in this very early retirement calculation

[Anonymous]

Wife retired at age 38 when our son was born. Son is 4 and I am 44, make a modest $140k and able to save about 24k a year. House, cars paid off. Hoping that current 2 mil becomes 5 mil in 6 yrs at 8% return (aggressive and moderate investments) to enable me to retire at age 50. Not expecting any ss income and have no pensions. Will that be sufficient?

Yes there are health issues, hence a higher amount than I would have otherwise factored, even for early retirement. Will have worked for 25 yrs and some of those were beyond tough with my health issues. College will be paid from that money as part of it is 529 and a custodial account.

[Anonymous]

OP, you have a good nest egg so I am assuming you know what you are doing with your money. With your circumstances I would be more than happy with that amount, heck even at 45. Though I can’t seem to average anywhere close to that return and I know it’s modest compared to what some other geniuses here at dcum can achieve.
Why won’t you factor in some social security, say $24k a year though from age 70? Though what will the value be in 25 yrs of that piddly amount!
Good luck!

[Anonymous]

How do you expect 2 million dollars to turn into $5 million in six years with an 8% return? By my calculation it’s $3.173 million

[Anonymous]

You won’t get 8% return. You be lucky to get 6 even with inflation factored in

[Anonymous]

Oh, as pp said, your math is wrong too

[Anonymous]

Can you afford $50k a year for insurance that covers about half of your health insurance expenses?

When I checked for us, today (well a few weeks ago), a silver plan with Kaiser would cost our family $36k a year (two children college age). Silver plans are supposed to cover 70%. I would expect that to increase substantially in the next 6-10 years. I know that is not your family, but it is a data point.

[Anonymous]

Anonymous wrote:Can you afford $50k a year for insurance that covers about half of your health insurance expenses?

When I checked for us, today (well a few weeks ago), a silver plan with Kaiser would cost our family $36k a year (two children college age). Silver plans are supposed to cover 70%. I would expect that to increase substantially in the next 6-10 years. I know that is not your family, but it is a data point.

Plus, you may not even be able to get health insurance if they bring back pre-existing conditions clauses.

[Anonymous]

Anonymous wrote:Wife retired at age 38 when our son was born. Son is 4 and I am 44, make a modest $140k and able to save about 24k a year. House, cars paid off. Hoping that current 2 mil becomes 5 mil in 6 yrs at 8% return (aggressive and moderate investments) to enable me to retire at age 50. Not expecting any ss income and have no pensions. Will that be sufficient?

Yes there are health issues, hence a higher amount than I would have otherwise factored, even for early retirement. Will have worked for 25 yrs and some of those were beyond tough with my health issues. College will be paid from that money as part of it is 529 and a custodial account.

There are several questions in here. First, will you be able to retire at 50 if you have $5 million, some health problems, and a 10 yo kid? Probably, yes, although your insurance costs will be significant, and you may have trouble finding coverage for preexisting conditions. But even if you assume an extra $50,000/year for each year until you hit Medicare, you still have more than $100,000 to spend over 40 years, without factoring in any growth at all. However, includes any amounts you have earmarked for college, which should be excluded from this calculation.

Now, this statement, "current 2 mil becomes 5 mil in 6 yrs at 8% return" is problematic. You certainly can hope that your $2 million will turn into $5 million in 6 years. That chances of that happening are vanishingly small, though, and it would require around a 15% appreciation rate, not 8%.

Why are you not expecting any SS?

Finally, your wife didn't retire at 38. She suit work to become a SAHM.

[Anonymous]

Anonymous wrote:How do you expect 2 million dollars to turn into $5 million in six years with an 8% return? By my calculation it’s $3.173 million

+1 OP - use a future value calculator. Assuming you still contribute 24K/yr, at 8%, FV = 3.35Mil in 6 years.

http://www.calculator.net/future-value-calculator.html

I would advise you to get in touch with a financial advisor. We did, and we found that we could retire at 60/55 respective ages with $2.3mil and two kids. However, the biggest unknown is healthcare costs, as PPs have stated. You might be able to retire at 3.35mil at 50, but you are quite young compared to us, and with known healthcare issues, you might run out of money a lot quicker than you think.

Talk to a financial advisor. They can model it for you.

[Anonymous]

Is this 2 million in 4001K or a taxable account?

[Anonymous]

Your wife is not retired, she’s a SAHM.

[Anonymous]

Anonymous wrote:Wife retired at age 38 when our son was born. Son is 4 and I am 44, make a modest $140k and able to save about 24k a year. House, cars paid off. Hoping that current 2 mil becomes 5 mil in 6 yrs at 8% return (aggressive and moderate investments) to enable me to retire at age 50. Not expecting any ss income and have no pensions. Will that be sufficient?

Yes there are health issues, hence a higher amount than I would have otherwise factored, even for early retirement. Will have worked for 25 yrs and some of those were beyond tough with my health issues. College will be paid from that money as part of it is 529 and a custodial account.

Where in todays market are you seeing 8% returns? The party is over and it's back to business as usual.

[Anonymous]

Whether it can work is all about your spending. You haven't given enough information for anybody to give you sound advice. FIRECALC is a useful tool to look at various retirement scenarios. I personally think planning for an 8% return is unrealistic.

[Anonymous]

Here’s the deal. Retirement at 50 is not standard. If you have health issues that mean that you really need to retire in six years, then your wife should plan to go back to work. You need more income-earning years as a family.

[Anonymous]

If you take that and move somewhere with a low COL, you would be ok. I imagine you would take a lot of cash with you, if you've already paid for your home. That would increase the amount you will have for retirement.