Reply to I said we can’t retire yet. Am I wrong?

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[quote=Anonymous][quote=Anonymous]DH and I have about $5M in a combination of retirement and non-retirement accounts.  That figure does not include the house, on which we still owe over $500k.  The 529s for the kids are all set, but I would like to still contribute $4-8k a year to those for the tax deduction, and to beef up the reserve for their grad school.

We are both around 50 years, and currently make about $350Ka year.

DH would like to retire. I would like to work a bit longer (5 years perhaps?), but step down to something less demanding, that would pay a lot less - like $50k annual salary, but I would have health insurance.

My biggest concern with DH retiring and my stepping back is that we may have to scale back spending, and I am not sure I can do that and not feel like we are making a big sacrifice.

I have done an analysis of our spending, and averaging out big costs that don’t necessarily happen every month, but are likely to be costs encountered sometime during the year (e.g. travel, house repairs, kid expenses etc), we spend about $18K a month.  That does include the mortgage, but does not include health insurance premiums that come out from my paycheck directly.  I anticipate both of us will be fully retired well before 65, so we will have to pay for an ACA plan at some point, but not right away as long as I have the lower paying job.

My question is: am I a horrible/paranoid person for objecting to my husband retiring right now?  (I think we need at least $7M in our retirement accounts to account for taxes and a safer withdrawal rate of 3.5%, not to mention in 5 years when I stop by lower paying job we will need to buy an ACA health plan which is $$$. I would prefer to have $8M to be on the safe side before he retires.)

[/quote]

Yes, you can. Especially so, if you can continue to work at some job (since you want to) and cover healthcare.

When we (60/55) were your age (50/45), we had about $3M outside of house (with a 400K remaining mortgage) with only $45K in 529s. Kids were 12 and 9. HHI had never exceeded $250K on average since then. We now have over $8.5m, kid 1 just finished private college (full pay), kid goes in-state (3 more years to go) and we have about $250K remaining in the 529. Of course, we got lucky with stock selection and a great market.

Even assuming you make a 6% on average on the $5M and you withdraw 4%, you are still growing net worth by 2% each year.  It's all about investment mix and managing return expectations. I personally think the market will grow more than that.[/quote]

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