Retirement

So this is a real question. I live in an expensive area and will, most likely, have to get some sort of part time thing to live comfortably. I also have to account for costs associated with care of my parents which is an unknown variable, they currently are doing well but the health care lottery has major effects.

I would also consider your Social Security benefit which is calculated based on your highest 35 years of earnings. Might be worth while to work for a few more years and retire once you hit $2.5 million.

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?

Answer:

rtret wrote:

I would also consider your Social Security benefit which is calculated based on your highest 35 years of earnings. Might be worth while to work for a few more years and retire once you hit $2.5 million.

Many do not consider taking the benefit sooner than later. You are getting income for X- years before hitting the max Social Security benefit.

Where do you plan to live? If you live in an expensive, high tax state, you don't have nearly enough.

What is your current mortgage? Do you have any other major anticipated expenses (i.e. college, weddings, etc.) to pay for? What sort of inheritance would you expect to receive from your parents/other elderly family members when they pass? Any other investments/assets outside of your 401k? I would say in general $2 million at age 50 is sufficient to retire on, that is as long as you remain invested in the market (at least in a 60/40 blend if not more aggressive) and take less than 5% of the account balance annually ($100,000). Congrats on making it this far!

Is 2m enough? All these posts and some still don't get it. You have to project your future expenses! House vs Rent? Medical? Do your parents have enough money? Kids? College? Weddings? Cars? On the other side:When to take SS? Inheritance? Pension? And on and on. Yes, there are calculators and rules of thumb out there but YOU have to do the work. Not someone on-line like me or any other poster.

FYI-retired at 55 with way less than you. 66 now. Single but have partner but we only live together part-time (she still has a daughter in HS) Paid for college and weddings and student loan debt and set up Roth for one kid. And I give away a substantial amount of money to charity each year. Won't take SS until 70 (unless my health goes south) or my Pension, with RMD at 70.5. I rent an apartment and drive a 10 year old vehicle. I pay more for Mecicare/Supplemental/Prescription than before age 65. I travel in the US. BUT, I live within my means. And, I have been very fortunate (some would say lucky) over the last several years with my investments.

Again, it's all about your future life-style (=expenses), investments (you WILL have a few more market corrections in your lifetime), and all the other factors mentioned above. And, even then, you should plan for a "fudge factor" for the unexpected.

PS. Think about a long-term care policy too.

And, now you want me to do a track workout at 13 degrees with the wind howling at 15 mph??? Lol.

Stay warm,

Certified Financial Planner wrote:

What is your current mortgage? Do you have any other major anticipated expenses (i.e. college, weddings, etc.) to pay for? What sort of inheritance would you expect to receive from your parents/other elderly family members when they pass? Any other investments/assets outside of your 401k? I would say in general $2 million at age 50 is sufficient to retire on, that is as long as you remain invested in the market (at least in a 60/40 blend if not more aggressive) and take less than 5% of the account balance annually ($100,000). Congrats on making it this far!

IMHO, gotta stay way above 60% in stocks. Heck, I am still at 90%. I think the CFP's and other planners are way too conservative in this area, especially with how long we are living these days. Again, that's just me and how I approach it.

Search up Arthur Lydiard

Yes, I would agree with you. I have a good friend/coach that frequents these boards with his money 100% in equity despite being mid 40s. It is great idea to be aggressive if (and only IF) you are willing to ride the highs and lows of the market. Over the long run (10 yr time frame), a 100/0 portfolio will always outperform a 60/40. However, far too many people see a 20% drop and panic, converting all their portfolio to conservative bonds. Sadly, these people will miss out on the bull market that skyrockets from the bottom of the recession.

Retirement is often viewing as the end of the road for investing (i.e. 0 at the end of a timeline) but most people should plan on living until 90. In the case of the OP, having 40 years of little to no income one would need to earn consistent returns of 6-8% annualized to afford a comfortable lifestyle.

LTC insurance is not bad but it often goes unused. It is very expensive and if I were to suggest anything it would be a Life Insurance Policy with an LTC rider. In the case you die before you use all the benefits of the LTC rider at least your heirs will get a lump sum of money tax free.

Retirement question wrote:

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’.

To be in your situation (2mil in the 401K in your 50's) means you have a pretty high-paying job. Why would anyone that doesn't absolutely hate their job give up that high-paying job to take on a lower-paying job to keep them mentally awake. Either you hate the current job or you have something very specific you'd rather do for money (and staying mentally awake doesn't seem to fit that bill). Doesn't your current job do that? Why not just keep working that one and keep throwing money on the pile?

The answers to these questions are what keeps me from retiring right now.

elviejo wrote:

To be in your situation (2mil in the 401K in your 50's) means you have a pretty high-paying job. Why would anyone that doesn't absolutely hate their job give up that high-paying job to take on a lower-paying job to keep them mentally awake. Either you hate the current job or you have something very specific you'd rather do for money (and staying mentally awake doesn't seem to fit that bill). Doesn't your current job do that? Why not just keep working that one and keep throwing money on the pile?

The answers to these questions are what keeps me from retiring right now.

I agree with the above. My father was more than likely in your shoes... made $480k a year for the last ten years of his career. He told me once that retiring was the hardest decision he had made in decades. He didn't want to leave because the money was so good, he had 3 months paid vacation each year and in his own words, no longer worked but rather was so high up in the company that all he did was meet with people to think tank. He said he used to work, now he is just a person who makes decisions for the company and other people work. Eventually he retired only because my mother made him.

I'm getting to that situation. I own a company and LOVE it. I could retire within 5 years with enough money to maintain my current lifestyle indefinitely. However, I'm positive I'll continue working into my 60's just because it's really gratifying working high up in a company/owner (which, with your 2mil you must be too).

Conclusion: Keep working until you no longer want to work. 2mil is WAY more money than you need to retire, I know many people in their early 60's who have less than a half mil in retirement but are still retired (also pulling social security) and live a blessed life in their own home with new cars here in the Pacific NW.

Why do you think he must be a high earner? Anyone with a halfway decent job, saving regularly for 30+ years could accumulate this.

Conclusion: Keep working until you no longer want to work. 2mil is WAY more money than you need to retire, I know many people in their early 60's who have less than a half mil in retirement but are still retired (also pulling social security) and live a blessed life in their own home with new cars here in the Pacific NW.

I've got a target number in mind, but like the above states, it's not difficult at all to retire with FAR less than 2 mill and still live comfortably. The OP must be one of these who buys a Pro GM SUV every spring for $60K.

Not necessarily wrote:

Why do you think he must be a high earner? Anyone with a halfway decent job, saving regularly for 30+ years could accumulate this.

Some people with a family can't save enough to accrue 2 million by the time they're 50. One million yes, two million?

coach wrote:

Not necessarily wrote:

Why do you think he must be a high earner? Anyone with a halfway decent job, saving regularly for 30+ years could accumulate this.

Some people with a family can't save enough to accrue 2 million by the time they're 50. One million yes, two million?

I guess "high earner" must be subjective. Let's assume he's worked 30 years prior to his retirement. Let's pretend there are no expenses, just 100% net of income after taxes. He'd have to make around $95k (prior to income tax) if he saved every penny and had zero expenses. Obviously he had expenses (owning a home, car(s), and general necessities of life even if he's single with no kids). I would think a absolute minimum of $150k per year for those 30 years, and that's with minimal expenses.

You decide if that's high or not. It's subjective, but that's in the top 5% of household incomes in the US.

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?

You've gotten a lot of responses, some serious, others not so. One basic rule of thumb to do this very quickly is to assume you can take out 3% of your retirement savings annually. Can you live comfortably on this amount? I guess the other thing about this is that financial assets are so inflated right now that if you are invested in stocks or similarly risky financial assets then you risk having significantly less than $2mil at some point.

Probably a good time to cycle to a much higher short term bond mix.

https://www.hussmanfunds.com/comment/mmc171218/

If someone is getting something from another source other the themselves like pension or health care coverage, don t assume that it is a garantee. Companies go bankrupt all.the time leaving the retirees holding the bag.