How much to retire at age 55? We are 50

[Anonymous]

Anonymous wrote:

Anonymous wrote:According to Standard and Poor's, the average annualized return of the S&P index, which later became the S&P 500, from 1926 to 2020 was 10%. At 10%, you could double your initial investment every seven years (72 divided by 10). In a less-risky investment such as bonds, which have averaged a return of about 5% to 6% over the same time period, you could expect to double your money in about 12 years (72 divided by 6).

I think money doubling every 7 years is realistic during your working years when you are mostly in equities, you are contributing money to your savings, you are not withdrawing cash, you are not paying taxes on forced withdrawals (RMD). In retirement, you are likely not 100% equities, not contributing, withdrawing money for expenses/forced to withdraw and pay taxes. 5% net worth appreciation on average is more reasonable IMHO and not conservative at all. That's 14.4 years to double your net worth. Actual return would be higher (6-9%) to account for withdrawals and taxes on RMDs.

I don't see really moving from all in on equities -- maybe a little 80-20?. Forced withdrawals don't come for a while. You have also likely paid most of the taxes on non-retirement assets.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:According to Standard and Poor's, the average annualized return of the S&P index, which later became the S&P 500, from 1926 to 2020 was 10%. At 10%, you could double your initial investment every seven years (72 divided by 10). In a less-risky investment such as bonds, which have averaged a return of about 5% to 6% over the same time period, you could expect to double your money in about 12 years (72 divided by 6).

I think money doubling every 7 years is realistic during your working years when you are mostly in equities, you are contributing money to your savings, you are not withdrawing cash, you are not paying taxes on forced withdrawals (RMD). In retirement, you are likely not 100% equities, not contributing, withdrawing money for expenses/forced to withdraw and pay taxes. 5% net worth appreciation on average is more reasonable IMHO and not conservative at all. That's 14.4 years to double your net worth. Actual return would be higher (6-9%) to account for withdrawals and taxes on RMDs.

I don't see really moving from all in on equities -- maybe a little 80-20?. Forced withdrawals don't come for a while. You have also likely paid most of the taxes on non-retirement assets.

Sure but reality is your portfolio will never track the market unless you are 100% invested in an Index clone. If you had a large position in Amazon, it went nowhere in 2021, but could take off in 2024 when the market index is flat. Your portfolio mix will drive actual returns.

While taxes have been paid on non-retirement assets, your retirement assets (401K, IRA) are pre-tax and a lot of people have upto 50% of their net worth in those vehicles. Even assuming it's 30%, and a 22% federal and 5% state tax, you are talking about that bucket of money getting reduced by about 25%. Your overall net worth should be reduced by 7.5% to reflect that.

[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

If $6,000,000 isn't enough for two people to retire on then 99.9% of the country is f***ed.

[Anonymous]

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.

OP or DH likely have retiree healthcare through their employer. The problem with healthcare, at least for folks around here (i.e. with means) is not the cost but the uncertainty. If I'm paying $400/ month for insurance for a family of 4 and retire at 50, I want to know that I will have healthcare from 50-65 even if costs $1500-$2000 a month. If that's not certain because Insurance companies drop out of Obamacare or some Republican president comes around and kills Obamacare, etc. we have a problem.

Yes, but the trend the last decade it to make it much easier for individuals, including individuals with means, to get healthcare outside the employer-based healthcare system. We are early retirees (with some consulting income) and it isn't nearly the problem we anticipated. I can't see Republicans making it hard for people to get health care at this point -- too many of us rely on the ACA.

The biggest thing for us is helping our kids work towards early financial independence from us. We've paid for private school/college but with us not working they really need to be independent at age 23 or so and getting that first professional job is not easy, even for highly educated kids. Our first DC just did it, but we know lots of young college grads who are struggling.

If you don’t think the Republicans would gladly strangle the ACA and leave it to die, you’re not paying attention.

[Anonymous]

I wouldn’t assume that the markets will continue to flourish. I’d assume continued inflation. I wouldn’t assume the ACA will remain intact, and certainly wouldn’t count on subsidies continuing. I would also anticipate major political and social unrest in 2024 and beyond, and plan accordingly.

I’m sure this is too gloom and doom for most folks.

[Anonymous]

Anonymous wrote:

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

If $6,000,000 isn't enough for two people to retire on then 99.9% of the country is f***ed.

It all depends on how much you plan to spend. We are planning 40k a month. That takes 12 million at least.

[Anonymous]

Anonymous wrote:I wouldn’t assume that the markets will continue to flourish. I’d assume continued inflation. I wouldn’t assume the ACA will remain intact, and certainly wouldn’t count on subsidies continuing. I would also anticipate major political and social unrest in 2024 and beyond, and plan accordingly.

I’m sure this is too gloom and doom for most folks.

Markets might not perform as in the past. But that past is almost 140 years. I don’t think it will be different that that. Agree with you on ACA.

[Anonymous]

Anonymous wrote:

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.

I mean we are 46 and maxed retirement contributions since 25 and have no where near that.

Same here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I wouldn’t assume that the markets will continue to flourish. I’d assume continued inflation. I wouldn’t assume the ACA will remain intact, and certainly wouldn’t count on subsidies continuing. I would also anticipate major political and social unrest in 2024 and beyond, and plan accordingly.

I’m sure this is too gloom and doom for most folks.

Markets might not perform as in the past. But that past is almost 140 years. I don’t think it will be different that that. Agree with you on ACA.

I’m concerned about the attempted coup and ongoing subversion of democracy, so I’m inclined to hedge my bets a bit.

[Anonymous]

Anonymous wrote:I wouldn’t assume that the markets will continue to flourish. I’d assume continued inflation. I wouldn’t assume the ACA will remain intact, and certainly wouldn’t count on subsidies continuing. I would also anticipate major political and social unrest in 2024 and beyond, and plan accordingly.

I’m sure this is too gloom and doom for most folks.

I think that if all of that happens (and I agree that it might), retirement as we know it isn't going to be a relevant concept.

[Anonymous]

Anonymous wrote:I wouldn’t assume that the markets will continue to flourish. I’d assume continued inflation. I wouldn’t assume the ACA will remain intact, and certainly wouldn’t count on subsidies continuing. I would also anticipate major political and social unrest in 2024 and beyond, and plan accordingly.

I’m sure this is too gloom and doom for most folks.

Not sure exactly how to plan for the breakdown of democracy, especially if it happens 20 years before I plan to retire, so I think I'll just keep saving as I have been doing until it obviously becomes time to sell everything and flee the country.

[Anonymous]

Anonymous wrote:I wouldn’t assume that the markets will continue to flourish. I’d assume continued inflation. I wouldn’t assume the ACA will remain intact, and certainly wouldn’t count on subsidies continuing. I would also anticipate major political and social unrest in 2024 and beyond, and plan accordingly.

I’m sure this is too gloom and doom for most folks.

This. T

[Anonymous]

Anonymous wrote:

Anonymous wrote:I wouldn’t assume that the markets will continue to flourish. I’d assume continued inflation. I wouldn’t assume the ACA will remain intact, and certainly wouldn’t count on subsidies continuing. I would also anticipate major political and social unrest in 2024 and beyond, and plan accordingly.

I’m sure this is too gloom and doom for most folks.

Not sure exactly how to plan for the breakdown of democracy, especially if it happens 20 years before I plan to retire, so I think I'll just keep saving as I have been doing until it obviously becomes time to sell everything and flee the country.

If fleeing the country is on your radar, you might want to plan for that now.

[Anonymous]

People talking about the ACA isnt the OP just bridging the health ins period from age 55-65? Its medicare after that right?

[Anonymous]

Anonymous wrote:People talking about the ACA isnt the OP just bridging the health ins period from age 55-65? Its medicare after that right?

For now, yes. It’s wise to have a plan to cover health insurance for a 10-year period.