Retirement

Retirement question wrote:

I am starting to look seriously at retirement (recently turned 50). I have a little over two million in my 401k and am wondering when it would be safe to get out of the work world. Whs]at is the number that makes it safe?

-10/10

This is a serious question. I have to figure the money needs to last possibly 40 Years.

How much do you spend per year and how long do you expect to live?

Expenses are a little unknown as health bills are, at this time, unknown. So I just want to get some feedback from the wisdom of LetsRun. I will pay my house off before retirement but want to have some idea of what is a realistic amount to have in the 401 to allow me to ‘bail out’.

Why are you so unsure about Health Costs? Don't you have insurance? Do you know what your monthly premiums, deductibles and max out of pocket expenses are?

I am unsure because it is a very volatile industry right now. There is no guarantee that fees will remain stable.

How much do you live on now? Do you plan on living on the same amount, less, or more in retirement?

Retiring at such an early age would probably make it easy to find another job later if needed or wanted (you might find retirement boring).

joho wrote:

How much do you live on now? Do you plan on living on the same amount, less, or more in retirement?

Retiring at such an early age would probably make it easy to find another job later if needed or wanted (you might find retirement boring).

Thanks. I imagine I will find another job to help keep me mentally awake, but I have to figure that one out. It is just kind of hard to say ‘I quit’.

Estimate your Health Insurance Costs now, add 10% per year to be conservative. Then add all your other yearly costs together. Take your 2 million, be super conservative and add 1% per year to that for interest before taking away your yearly expenses. Don't forget the tax payments on your investment income and 401k disbursement See what the draw down is and that'll tell you how long your money will last. Don't forget to add in Social Security income when you want to start taking that. Do you have any potential inheritance coming...add that in too. Do it on an excel spreadsheet, it'll take you a few minutes.

That's a very simple yet fairly accurate way to figure it all out.

This is such a difficult question to answer because you have to calculate what your projected life style will look like. Just google "how much money do I need to retire" and you can start to get your mind around all of the variables. On the income side, do you plan to take SS at 62 or wait? Pension? Any other income? Wife/kids/college?

Only you can do the homework. We would just be guessing...or using the conventional rules of thumb that may or may not apply to your future.

My only advice is to live within (ie. for me, below but more than comfortable) your means, continue to be a savvy investor (can you take a 20%+ market downturn?), and enjoy all the extra time, especially for running/working out.

Good luck!

Retired at 55 wrote:

This is such a difficult question to answer because you have to calculate what your projected life style will look like. Just google "how much money do I need to retire" and you can start to get your mind around all of the variables. On the income side, do you plan to take SS at 62 or wait? Pension? Any other income? Wife/kids/college?

Only you can do the homework. We would just be guessing...or using the conventional rules of thumb that may or may not apply to your future.

My only advice is to live within (ie. for me, below but more than comfortable) your means, continue to be a savvy investor (can you take a 20%+ market downturn?), and enjoy all the extra time, especially for running/working out.

Good luck!

you're feeding the troll, which just causes it to become more hungry.

Why do you label me a troll? This is a legitimate question.

Because with 2 million you could retire yesterday, and live pretty well for 99 percent or so of the planet's population.

The fact that you don't know this makes you a troll for being a PITA and rubbing it in.

(By comparison I'm shooting for 1.4 million to retire, and it's going to take me until I'm 62 approx, and it will include my wife in my plans, too.)

Beautiful Day wrote:

Because with 2 million you could retire yesterday, and live pretty well for 99 percent or so of the planet's population.

The fact that you don't know this makes you a troll for being a PITA and rubbing it in.

(By comparison I'm shooting for 1.4 million to retire, and it's going to take me until I'm 62 approx, and it will include my wife in my plans, too.)

Yeah, it seems inconceivable to me that someone would have 2 million and think it’s not enough. But I guess it all comes down to how much you spend.

I’m hoping to get to 1 million (plus 3 years of a cash fund in case the market tanks) by 59 and a half.

There some decent retirement calculators out there.

Firecalc doens't have the most intuitive interface but it's pretty comprehensive:

https://www.firecalc.com/

Here's another fairly comprehensive one that's a little easier to navigate:

http://www.cfiresim.com/

Beautiful Day wrote:

Because with 2 million you could retire yesterday, and live pretty well for 99 percent or so of the planet's population.

The fact that you don't know this makes you a troll for being a PITA and rubbing it in.

(By comparison I'm shooting for 1.4 million to retire, and it's going to take me until I'm 62 approx, and it will include my wife in my plans, too.)

40 years of $60,000 in expenses growing at 2% annual inflation requires $1.6 million today.

With that context $2 million is not crazy and I’m fact that’s my goal number, though I’ll certainly re-evaluate annually once I get close. I don’t want to work longer than I have e to!

It's a dumb question because with 2 million you should be able to live off of investment income without even touching the principal. You don't just divide the number by 40 years and hope for the best.

Adding numbers for context wrote:

Beautiful Day wrote:

Because with 2 million you could retire yesterday, and live pretty well for 99 percent or so of the planet's population.

The fact that you don't know this makes you a troll for being a PITA and rubbing it in.

(By comparison I'm shooting for 1.4 million to retire, and it's going to take me until I'm 62 approx, and it will include my wife in my plans, too.)

40 years of $60,000 in expenses growing at 2% annual inflation requires $1.6 million today.

With that context $2 million is not crazy and I’m fact that’s my goal number, though I’ll certainly re-evaluate annually once I get close. I don’t want to work longer than I have e to!

Planning for $60K in expenses is fine and dandy as long as you stay healthy. But who will pay the $200K in annual nursing home expenses after your health deteriorates? Are you thinking Medicaid? If so, I suggest you take a tour of the Medicaid nursing facilities before you make your decision. Once your money runs out, be prepared to spend the rest of your time living in your own excrement.

Beautiful Day wrote:

Because with 2 million you could retire yesterday, and live pretty well for 99 percent or so of the planet's population.

The fact that you don't know this makes you a troll for being a PITA and rubbing it in.

(By comparison I'm shooting for 1.4 million to retire, and it's going to take me until I'm 62 approx, and it will include my wife in my plans, too.)

I appreciate the input but those mocking me don’t factor in the fact that 401k dispursement is taxable income. So the @50000 withdrawal is pared down and then medical costs have to be accounted for as well