Is $700,000 enough to retire? Opinions please .
Is $700,000 enough to retire? Opinions please .
DH age 64.3 wants to retire unexpectedly from good job ,early in 2 months. Just ready, wants to do new things,work on our low profit side business. I also work and am 59.3 y/o. I think we have inadequate retirement funds to fund our yearly spending of after tax of $65000 (around $80000 taxable). Especially since I am 2 years from reduced SS, and 5 years from medicare.We have a low profit, high labor side business generates $10000 after tax/year; and could be worth $200,000 now and more if we improve profit margin. his SS will be $24k/year. We have $700k in combined 401k's and $35k emergency funds. If DH retires I would love to retire, help with gkids one special needs, but too worried to relinquish well paying job that provides health insurance .and feel same about letting his good job go. He thinks retirement savings would make up balance, and pay health insurance. I could cut my hours but not loving that. Opinions please!
Re: Is $700,000 enough to retire? Opinions please .
So you need to make up $46K/year ($80K - $24K -$10K) until you could get SS? What is you projected SS benefit at 62 and your normal retirement age?cararo wrote:DH age 64.3 wants to retire unexpectedly from good job ,early in 2 months. Just ready, wants to do new things,work on our low profit side business. I also work and am 59.3 y/o. I think we have inadequate retirement funds to fund our yearly spending of after tax of $65000 (around $80000 taxable). Especially since I am 2 years from reduced SS, and 5 years from medicare.We have a low profit, high labor side business generates $10000 after tax/year; and could be worth $200,000 now and more if we improve profit margin. his SS will be $24k/year. We have $700k in combined 401k's and $35k emergency funds. If DH retires I would love to retire, help with gkids one special needs, but too worried to relinquish well paying job that provides health insurance .and feel same about letting his good job go. He thinks retirement savings would make up balance, and pay health insurance. I could cut my hours but not loving that. Opinions please!
If you assume a 3% safe withdrawal rate, a $700K nest egg will only allow $21K/year 1st year withdrawal. At a 4% withdrawal rate, that is only $28K. So I think you are correct to be worrying about whether you have enough with which to retire. See the wiki discussion of safe withdrawal rates. You may also want to run some scenarios in one of the recommended retirement calculators.
Re: Is $700,000 enough to retire? Opinions please .
Additionally, I read your post to mean the 700K is all tax-deferred, meaning you'll owe ordinary income tax on withdrawals, which will take out a good 10%-15%.
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Re: Is $700,000 enough to retire? Opinions please .
I would take the time and enter in all your information in firecalc.com. make sure you fill in all the info under the tabs at the top.
Let's talk in pre-tax dollars.
If you spending requires $80,000 per year of income and you have a side business that generates $12,000 pre-tax (just a guess) then you need to find the other $68,000 per year.
If you were to assume that a 3%-4% SWR is appropriate, your $700,000 nest egg might be able to provide $21,000-$28,000 per year
That leaves $40,000-$47000 per year left unaccounted for.
You would then have your husbands social security of 24k per year. That leaves $16,000-$23,000 left unaccounted for.
You would have your income if you choose to work for 2 more years.
You would need to factor in health insurance if you retire before medicare age.
take a close look at how your SS benefits increase with time. If you're in good health, it might be a good idea to delay taking SS if possible.
Let's talk in pre-tax dollars.
If you spending requires $80,000 per year of income and you have a side business that generates $12,000 pre-tax (just a guess) then you need to find the other $68,000 per year.
If you were to assume that a 3%-4% SWR is appropriate, your $700,000 nest egg might be able to provide $21,000-$28,000 per year
That leaves $40,000-$47000 per year left unaccounted for.
You would then have your husbands social security of 24k per year. That leaves $16,000-$23,000 left unaccounted for.
You would have your income if you choose to work for 2 more years.
You would need to factor in health insurance if you retire before medicare age.
take a close look at how your SS benefits increase with time. If you're in good health, it might be a good idea to delay taking SS if possible.
The way I invest my money is not the right way to invest, it's the right way for ME to invest.
Re: Is $700,000 enough to retire? Opinions please .
You'll have to look at SS (and I'm not an expert). Also, all my numbers are really rough and back of the napkin math.
Theoretically, he could file now, and when you turn 62 you could file for spousal benefits on his SS. If 24k/year is his SS benefit if he took it now, then you would have 24k/year now, and 36k/year in 2 years (that seems high for an early retiree though, so I'm guessing I'm about to throw everything off). You could then file when you turn 70 for the maximum benefit for you. This means that SS would ramp over the years from 24k to 24k + whatever you get (probably more than 12k, I'll go with 24k for fun). Run the numbers yourself on the various scenarios, or post a more detailed SS help request and you could get a lot more help than I'm offering.
I'll also assume you'll be earning $10k/year for the next 5 years of side business and never have the opportunity to sell said business.
That means to get 80k pre-tax you need ~46k now, 34k in 2 years, 44k in 5 years and in 11 years we'll call it 32k/year. That means a 6.25% withdrawal, then 4.85% (based on the original amount of 735k), then 5.98%, then finally 4.35%. While 4% is considered the safe rate based on historical returns, it is possible to live off of 5% or more without destroying your portfolio, the problem is that you don't know if you'll be living in the worst times, the average times, or the best times.
So, my back of the napkin math says you can retire, but it is above the 4% SWR, and I'd probably work 1-2 more years. Your other option is to cut expenses.
Theoretically, he could file now, and when you turn 62 you could file for spousal benefits on his SS. If 24k/year is his SS benefit if he took it now, then you would have 24k/year now, and 36k/year in 2 years (that seems high for an early retiree though, so I'm guessing I'm about to throw everything off). You could then file when you turn 70 for the maximum benefit for you. This means that SS would ramp over the years from 24k to 24k + whatever you get (probably more than 12k, I'll go with 24k for fun). Run the numbers yourself on the various scenarios, or post a more detailed SS help request and you could get a lot more help than I'm offering.
I'll also assume you'll be earning $10k/year for the next 5 years of side business and never have the opportunity to sell said business.
That means to get 80k pre-tax you need ~46k now, 34k in 2 years, 44k in 5 years and in 11 years we'll call it 32k/year. That means a 6.25% withdrawal, then 4.85% (based on the original amount of 735k), then 5.98%, then finally 4.35%. While 4% is considered the safe rate based on historical returns, it is possible to live off of 5% or more without destroying your portfolio, the problem is that you don't know if you'll be living in the worst times, the average times, or the best times.
So, my back of the napkin math says you can retire, but it is above the 4% SWR, and I'd probably work 1-2 more years. Your other option is to cut expenses.
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Re: Is $700,000 enough to retire? Opinions please .
Hello and welcome to the forum!
The other posters have provided detailed explanations, I will say it in fewer words - It will be very tight! with little room for error if you want the portfolio to last 25 years. On the other hand, I've known people who've retired with far less but their expenses were also bare bones - $80K in annual expenses is high and I live in a HCOL area and am not retired. And, I also know folks who thought they'd live until age 95 because they had longevity on both sides of the family, only to give up the ghost early into retirement. It's hard to think about such things and it's good to be optimistic, but I only know 2 out of dozens of relatives who had longevity on both sides who've made it into their 90's. I guess what I'm saying is maybe your spouse is having the same thoughts of "I only have so much time left" and less of the OMG! I'm gonna run out of money at age 84.
Have you looked at your annual take home pay and annual expenses? Is there anything at all that can reduce your outlays on an annual basis without reducing your overall quality of life? I can understand if your husband needs to retire due to health concerns, but stretching it out to full retirement age for Social Security would give you an additional 2 years of savings - that can be huge if you watch your expenses during that time. If you view the IRS website on Required Minimum Distributions using the Joint Annuitant actuarial estimate of your joint life expectancy, that would give you a reasonable estimate of what you could expect to take out of your portfolio on an annual basis without your portfolio being depleted towards the end.
P.S. (I lied! on the "I will say this in fewer words"). Happy Halloween!
The other posters have provided detailed explanations, I will say it in fewer words - It will be very tight! with little room for error if you want the portfolio to last 25 years. On the other hand, I've known people who've retired with far less but their expenses were also bare bones - $80K in annual expenses is high and I live in a HCOL area and am not retired. And, I also know folks who thought they'd live until age 95 because they had longevity on both sides of the family, only to give up the ghost early into retirement. It's hard to think about such things and it's good to be optimistic, but I only know 2 out of dozens of relatives who had longevity on both sides who've made it into their 90's. I guess what I'm saying is maybe your spouse is having the same thoughts of "I only have so much time left" and less of the OMG! I'm gonna run out of money at age 84.
Have you looked at your annual take home pay and annual expenses? Is there anything at all that can reduce your outlays on an annual basis without reducing your overall quality of life? I can understand if your husband needs to retire due to health concerns, but stretching it out to full retirement age for Social Security would give you an additional 2 years of savings - that can be huge if you watch your expenses during that time. If you view the IRS website on Required Minimum Distributions using the Joint Annuitant actuarial estimate of your joint life expectancy, that would give you a reasonable estimate of what you could expect to take out of your portfolio on an annual basis without your portfolio being depleted towards the end.
P.S. (I lied! on the "I will say this in fewer words"). Happy Halloween!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Is $700,000 enough to retire? Opinions please .
The vast majority of retirees make do with far less.
Re: Is $700,000 enough to retire? Opinions please .
I would add that I'm not seeing how a business that generates 10k a year is worth 200k. How many hours of work does it take to generate that 10k? In a real business valuation, you'd look at paying someone else to do the work as a cost before determining value.
Re: Is $700,000 enough to retire? Opinions please .
They do, but then they can't spend what OP wants to spend annually.patrick wrote:The vast majority of retirees make do with far less.
Re: Is $700,000 enough to retire? Opinions please .
+1 Indeed they do,they live on a lot less.patrick wrote:The vast majority of retirees make do with far less.
"While the typical household headed by someone age 65 or older had a net worth of $170,128 in 2010, most of that wealth is in the form of home equity"
http://money.usnews.com/money/retiremen ... h-declines
Last edited by Toons on Fri Oct 31, 2014 8:43 am, edited 1 time in total.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Re: Is $700,000 enough to retire? Opinions please .
$700K is absolutely enough to retire, but the calculation should be reversed to determine how much one can spend and then make the decision to stay within that budget. As people have suggested the proposed level of spending in the OP is probably dicey.
I don't think that problem can be estimated in the presence of SS, variations in income and spending, and so on by doing anything less than running some of the retirement calculators such as Firecalc, the Fidelity calculator, the Vanguard calculator, Retirement Optimizer, iORP, etc., etc. Recommendations are useful.
The real trick is to think long and hard and gather data regarding where one will spend money in retirement. It is also a good idea to stress test the plan by seeing what happens if there is an unexpected problem or a change such as death or divorce, etc.
I don't think that problem can be estimated in the presence of SS, variations in income and spending, and so on by doing anything less than running some of the retirement calculators such as Firecalc, the Fidelity calculator, the Vanguard calculator, Retirement Optimizer, iORP, etc., etc. Recommendations are useful.
The real trick is to think long and hard and gather data regarding where one will spend money in retirement. It is also a good idea to stress test the plan by seeing what happens if there is an unexpected problem or a change such as death or divorce, etc.
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Re: Is $700,000 enough to retire? Opinions please .
If I were in your shoes, I would get a good budgeting software (I recommend You Need A Budget - YNAB for short) and really get serious about your expenses for the next 12 months. Once you have a data-supported picture of your household expenses, and have weeded out the unnecessary stuff, you might find that you are much more comfortable (and with a higher probability of success) with the decision to retire early.
An elephant for a dime is only a good deal if you need an elephant and have a dime.
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Re: Is $700,000 enough to retire? Opinions please .
Have you considered selling your business, and having your husband spending his labor on something more profitable?cararo wrote:DH age 64.3 wants to retire unexpectedly from good job ,early in 2 months. Just ready, wants to do new things,work on our low profit side business. I also work and am 59.3 y/o. I think we have inadequate retirement funds to fund our yearly spending of after tax of $65000 (around $80000 taxable). Especially since I am 2 years from reduced SS, and 5 years from medicare.We have a low profit, high labor side business generates $10000 after tax/year; and could be worth $200,000 now and more if we improve profit margin. his SS will be $24k/year. We have $700k in combined 401k's and $35k emergency funds. If DH retires I would love to retire, help with gkids one special needs, but too worried to relinquish well paying job that provides health insurance .and feel same about letting his good job go. He thinks retirement savings would make up balance, and pay health insurance. I could cut my hours but not loving that. Opinions please!
Based on the numbers you have posted, I don't see how $700k + SS gets you to $80k per year, and pays for health insurance and expenses.
- Uncle Pennybags
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Re: Is $700,000 enough to retire? Opinions please .
I'm recently retired and don't need nearly as much money as I did when I was working. The big thing is lower taxes, no more SS tax and being out of debt. I save thousands by staying in bead until I want to get up instead of sitting in traffic for an hour. Enjoy.
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Re: Is $700,000 enough to retire? Opinions please .
It seems like $15,000 is a lot to pay in taxes on $80,000. Off the top of my head it should be closer to:
80,000 Total
-12,400 standard deduction
-3,950 personal exemption
-3,950 personal exemption
59,700 taxable income
18,150 x 10% = 1,815.00
41,550 x 15% = 6,232.50
Total tax bill = $8,047.50
80,000 Total
-12,400 standard deduction
-3,950 personal exemption
-3,950 personal exemption
59,700 taxable income
18,150 x 10% = 1,815.00
41,550 x 15% = 6,232.50
Total tax bill = $8,047.50
- 3CT_Paddler
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Re: Is $700,000 enough to retire? Opinions please .
+1. Also does the OP have a mortgage? If so, when will it be paid off?dbr wrote:$700K is absolutely enough to retire, but the calculation should be reversed to determine how much one can spend and then make the decision to stay within that budget. As people have suggested the proposed level of spending in the OP is probably dicey.
Is the side business really a business or a hobby?
Re: Is $700,000 enough to retire? Opinions please .
You have to add state taxes, if they live in NY it could easily be over $3k in state income tax. But otherwise, the numbers seem a tad bit high.Strevlac wrote:It seems like $15,000 is a lot to pay in taxes on $80,000. Off the top of my head it should be closer to:
80,000 Total
-12,400 standard deduction
-3,950 personal exemption
-3,950 personal exemption
59,700 taxable income
18,150 x 10% = 1,815.00
41,550 x 15% = 6,232.50
Total tax bill = $8,047.50
Re: Is $700,000 enough to retire? Opinions please .
For this to work at your level of spending I would suggest first thinking about delaying retirement (even by 1 additional year makes a difference).
Second, I think you are a prime candidate to annuitize a large portion of your retirement money. If you annuitize (and assuming you don't opt for an inflation indexed annuity) you will have lower buying power over time, but you will be able to enjoy life now and know you will not starve later on in life.
Second, I think you are a prime candidate to annuitize a large portion of your retirement money. If you annuitize (and assuming you don't opt for an inflation indexed annuity) you will have lower buying power over time, but you will be able to enjoy life now and know you will not starve later on in life.
Re: Is $700,000 enough to retire? Opinions please .
This is an idea that should be evaluated and may be an excellent suggestion. Retirement planners can look at alternatives such as diverting part of the assets to fund an annuity.bigred77 wrote:For this to work at your level of spending I would suggest first thinking about delaying retirement (even by 1 additional year makes a difference).
Second, I think you are a prime candidate to annuitize a large portion of your retirement money. If you annuitize (and assuming you don't opt for an inflation indexed annuity) you will have lower buying power over time, but you will be able to enjoy life now and know you will not starve later on in life.
A book that discusses all of this in great detail is the one to be found at this site:
http://www.retirementoptimizer.com/
If Otar is found to be a long and complex read, note that one can peruse the chapter introductions and conclusions for an overview.
Re: Is $700,000 enough to retire? Opinions please .
You don't say what you plan to do when you are retired. If your husband is simply going to stay at home and work on your business, depending on his lunch and commuting practices, you could save a goodly amount of money on those. In addition, if your husband is no longer commuting and you have 2 cars, maybe you can sell one and save a good deal on insurance.
So, I think you need to take a good look at your actual spending both pre- and post- retirement to see exactly how much money you need to generate. As you can see from the above comments, a few thousand here or there makes a big different in your planning.
So, I think you need to take a good look at your actual spending both pre- and post- retirement to see exactly how much money you need to generate. As you can see from the above comments, a few thousand here or there makes a big different in your planning.
No matter how long the hill, if you keep pedaling you'll eventually get up to the top.
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Re: Is $700,000 enough to retire? Opinions please .
And if they live in Long Island, NJ or Connecticut, their property taxes could alone be 2x the total tax bill you calculated above. No joke!nordlead wrote:You have to add state taxes, if they live in NY it could easily be over $3k in state income tax. But otherwise, the numbers seem a tad bit high.Strevlac wrote:It seems like $15,000 is a lot to pay in taxes on $80,000. Off the top of my head it should be closer to:
80,000 Total
-12,400 standard deduction
-3,950 personal exemption
-3,950 personal exemption
59,700 taxable income
18,150 x 10% = 1,815.00
41,550 x 15% = 6,232.50
Total tax bill = $8,047.50
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
- Uncle Pennybags
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Re: Is $700,000 enough to retire? Opinions please .
Owning a home free and clear is a must for a comfortable retirement. I pay less per month now to live in my single family home than people pay in rent for a one bedroom apartment. If the OP owes debt, any debt, pay that off before even thinking of retiring. At 63 he is looking at over 20 more years to live. He will also be taking a reduction in SS benefit by retiring before 66?3CT_Paddler wrote: Also does the OP have a mortgage? If so, when will it be paid off?
Re: Is $700,000 enough to retire? Opinions please .
The usual issue here is not about when to retire but about when to claim benefits. One can retire at one age and wait to take benefits at a later age. The OP will likely find that delaying benefits to age 70 is a good idea as running out of money is a clear hazard and delayed SS is the best longevity insurance available.Uncle Pennybags wrote: He will also be taking a reduction in SS benefit by retiring before 66?
Retiring earlier can affect SS benefits if it reduces the income history used to get the benefit computation, and that is a different question.
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Re: Is $700,000 enough to retire? Opinions please .
Try out several retirement calculators. I did this yesterday, figurig that I retire next year (58). I have a small pension but my wife doesn't work. It said I could spend $83,000 a year for 24 years. I have $1.7MM set aside for retirement.
I have to say no, its way too soon for DH to retire unless you plan to work forever.
I have to say no, its way too soon for DH to retire unless you plan to work forever.
Bogle: Smart Beta is stupid
Re: Is $700,000 enough to retire? Opinions please .
Health insurance will be a major drag. You will really need to run the numbers. Get quotes from the govt website. Put together a spreadsheet budget identifying your actual/projected spending. Then use one of the mentioned elsewhere retirement calculators. I did not see bigfoots calculator mentioned as it is worth looking for in the wiki.cararo wrote:DH age 64.3 wants to retire unexpectedly from good job ,early in 2 months. Just ready, wants to do new things,work on our low profit side business. I also work and am 59.3 y/o. I think we have inadequate retirement funds to fund our yearly spending of after tax of $65000 (around $80000 taxable). Especially since I am 2 years from reduced SS, and 5 years from medicare.We have a low profit, high labor side business generates $10000 after tax/year; and could be worth $200,000 now and more if we improve profit margin. his SS will be $24k/year. We have $700k in combined 401k's and $35k emergency funds. If DH retires I would love to retire, help with gkids one special needs, but too worried to relinquish well paying job that provides health insurance .and feel same about letting his good job go. He thinks retirement savings would make up balance, and pay health insurance. I could cut my hours but not loving that. Opinions please!
You do not mention your income nor SS earnings, but given your spending and savings I suspect that your income probably is in the 30s. You might consider continue working until 62 and take your SS then. If he would delay taking SS until that time and then restricting it to as your spouse his could continue to accrue delayed credits at 8%/year to age 70 and be worth $34k/year in todays dollars. This would mean that you would have to take an extra $24k per year out of the 401k for 2.7 years to cover the SS delay and a lesser amount until you are 65. Once you are 62 you would get your reduced SS of perhaps $1000/month your husband would get 50% of your FRA value or perhaps $700/month. Delaying taking of his SS until he is 70 will afford you some insurance against his passing since you would be entitled to his larger delayed benefit.
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Re: Is $700,000 enough to retire? Opinions please .
I agree with others that $80,000 annual spending is too high for a $700,000 retirement portfolio. But you can do it by reducing the expected expenses. Maybe $50,000 a year can be a good figure to start with.
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Re: Is $700,000 enough to retire? Opinions please .
This is a good point. My in-laws are sturggling with this. FIL retired a few years back, he took an early retirement package from his job. I think he was 53. They don't have near enough in retirement assets. Now MIL (who is six years younger than FIL), will likely have to work until at least 65, if not 70. FIL, even with a part time job, early SS, and his pension, hasn't been able to replace his previous income. They already manage their expenses very closely and have about a $55k/year income.Jack FFR1846 wrote:
I have to say no, its way too soon for DH to retire unless you plan to work forever.
An elephant for a dime is only a good deal if you need an elephant and have a dime.
Re: Is $700,000 enough to retire? Opinions please .
I think most of the responses aren't considering some key details. A $700,000 portfolio doesn't need to support $80k in spending indefinitely. It doesn't even need to support $80k - $24k - $10k = $46k. If he takes $24k in SS now and she defers until age 70, they will initially be withdrawing about 6.6% of their portfolio per year. That's obviously not sustainable for 30-40 years, but it doesn't need to be. It only needs to be sustainable for ~10 years until OP's SS kicks in. Once that happens, income needs from the portfolio will drop dramatically.
The numbers seem workable, although you will probably be cutting it close. A good compromise would be that your husband work another year and you work another 2 or 3 years before retiring. With any lucky, that would push you over $1 million in assets with decent market performance and good savings habits and then it would be a no-brainer.
If you can reduce expenses even just a few thousand dollars per year, I think retiring now on a $700k portfolio is very doable. Don't forget you won't have to pay payroll tax anymore, either, so that $80k pre-tax will go a bit further than it does now.
The numbers seem workable, although you will probably be cutting it close. A good compromise would be that your husband work another year and you work another 2 or 3 years before retiring. With any lucky, that would push you over $1 million in assets with decent market performance and good savings habits and then it would be a no-brainer.
If you can reduce expenses even just a few thousand dollars per year, I think retiring now on a $700k portfolio is very doable. Don't forget you won't have to pay payroll tax anymore, either, so that $80k pre-tax will go a bit further than it does now.
Re: Is $700,000 enough to retire? Opinions please .
No, it isn't a must for a comfortable retirement and many retirees may be better off downsizing from their free and clear owned homes and renting condos instead.Uncle Pennybags wrote:Owning a home free and clear is a must for a comfortable retirement.3CT_Paddler wrote: Also does the OP have a mortgage? If so, when will it be paid off?
- FelixTheCat
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Re: Is $700,000 enough to retire? Opinions please .
How about both of you retiring at 65? He is almost there. You can continue to work and fund the savings. That will achieve both goals.
I suggest you lower your expenses to meet a 4% withdrawal rate of the 700K.
I suggest you lower your expenses to meet a 4% withdrawal rate of the 700K.
Felix is a wonderful, wonderful cat.
Re: Is $700,000 enough to retire? Opinions please .
This may be too conservative of an assumption but, if the annual return on a $700,000 investment will be offset by taxes and inflation, then $700,000/30 yrs = $23,333 per year.
$23,333 - Savings/30 years
$10,000 - Bus.
$24,000 - his SS
$15,000 - your SS at 62 (guess)
$72,333
$23,333 - Savings/30 years
$10,000 - Bus.
$24,000 - his SS
$15,000 - your SS at 62 (guess)
$72,333
Re: Is $700,000 enough to retire? Opinions please .
Double check your tax numbers after you are both a bit older. When I plug in $35K SS, $30K income and both people over 65 it shows less than $2,000 in federal taxes. Even with state taxes you likely will only need around $70,000 in income.I think we have inadequate retirement funds to fund our yearly spending of after tax of $65000 (around $80000 taxable)...... his SS will be $24k/year.
https://turbotax.intuit.com/tax-tools/c ... taxcaster/
Last edited by Watty on Fri Oct 31, 2014 12:53 pm, edited 1 time in total.
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Re: Is $700,000 enough to retire? Opinions please .
You've gotten a lot of good responses, but I'll add my two cents.
IMO, if you feel you'll need to continue to spend at the current level, I certainly wouldn't feel comfortable thinking about retiring with $700,000. While some expenses may go down (no more SS withholding, commuting costs), other costs may actually increase (travel and healthcare, for example).
Each year you both continue to work and add to your savings, you'll increase the likelihood of not running out of money before you run out of breath. Remember, too, that each year you hold off on taking SS, the more you'll receive, thus reducing the amount that your savings needed for your living expenses.
IMO, if you feel you'll need to continue to spend at the current level, I certainly wouldn't feel comfortable thinking about retiring with $700,000. While some expenses may go down (no more SS withholding, commuting costs), other costs may actually increase (travel and healthcare, for example).
Each year you both continue to work and add to your savings, you'll increase the likelihood of not running out of money before you run out of breath. Remember, too, that each year you hold off on taking SS, the more you'll receive, thus reducing the amount that your savings needed for your living expenses.
Best Regards - Mel |
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Semper Fi
Re: Is $700,000 enough to retire? Opinions please .
cararo wrote:DH age 64.3 wants to retire unexpectedly from good job ,early in 2 months. Just ready, wants to do new things,work on our low profit side business. I also work and am 59.3 y/o.I think we have inadequate retirement funds to fund our yearly spending of after tax of $65000 (around $80000 taxable).
Hold on, I didn't think the OP meant that their income was $80,000. I thought she was saying they had $65,000/year in living expenses. Then, in addition to the 65k in living expenses, they paid $15,000 in taxes on his and her combined income ... because they are both still employed.Strevlac wrote:It seems like $15,000 is a lot to pay in taxes on $80,000. Off the top of my head it should be closer to:
80,000 Total
-12,400 standard deduction
-3,950 personal exemption
-3,950 personal exemption
59,700 taxable income
18,150 x 10% = 1,815.00
41,550 x 15% = 6,232.50
Total tax bill = $8,047.50
Last edited by Bustoff on Fri Oct 31, 2014 12:35 pm, edited 1 time in total.
Re: Is $700,000 enough to retire? Opinions please .
Uncle Pennybags wrote: I save thousands by staying in bead until I want to get up instead of sitting in traffic for an hour. Enjoy.
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Re: Is $700,000 enough to retire? Opinions please .
If nothing else leave your hears free and clear real estate. I feel I owe it to them as much of what I have today came form my grandfather and father's homes. I cringe when I see revers mortgage commercials. I may lose all money in Peruvian gold mines but I will leave my castle to my children.avalpert wrote: downsizing from their free and clear owned homes and renting condos instead.
OK that has nothing to do with living comfortably in retirement unless one likes to play Led Zeppelin at 3AM without having a neighbor banging on the ceiling.
Re: Is $700,000 enough to retire? Opinions please .
This. Is your house paid-off? Can you downsize into a house with no mortgage?dbr wrote:$700K is absolutely enough to retire, but the calculation should be reversed to determine how much one can spend and then make the decision to stay within that budget. As people have suggested the proposed level of spending in the OP is probably dicey.
I would suggest tracking your expenses to figure how much you actually spend. Is there any way to reduce those expenses?
I would suggest you continue to work for another year or two (or cut back hours) for the health insurance.
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Re: Is $700,000 enough to retire? Opinions please .
You say your husband's desire to retire is unexpected. You've been married long enough that you should know why. Find out why. It might make a difference in what you decide to do. I think there is more to the story, and his wife deserves to know.
My gut instinct is that it's too early to retire, but I always like a cushion, and maybe you don't. However, in my opinion, if people are discussing whether it's feasible and disagree, and are literally computing it down to the cents of income and expense, that's not a good sign.
A high-labor side business that generates $10k being worth $200k? It sounds more like a job than a business. What would I pay for it? You couldn't give it to me.
Sorry, but I think it's a bad idea all around until you have a lot more clarity on what's going on.
My gut instinct is that it's too early to retire, but I always like a cushion, and maybe you don't. However, in my opinion, if people are discussing whether it's feasible and disagree, and are literally computing it down to the cents of income and expense, that's not a good sign.
A high-labor side business that generates $10k being worth $200k? It sounds more like a job than a business. What would I pay for it? You couldn't give it to me.
Sorry, but I think it's a bad idea all around until you have a lot more clarity on what's going on.
I get the FI part but not the RE part of FIRE.
Re: Is $700,000 enough to retire? Opinions please .
Personally, if my parents leave me anything I prefer it be cash to free and clear real estateUncle Pennybags wrote:If nothing else leave your hears free and clear real estate.avalpert wrote: downsizing from their free and clear owned homes and renting condos instead.
Re: Is $700,000 enough to retire? Opinions please .
To the OP: I would say no. Sorry.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell
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Re: Is $700,000 enough to retire? Opinions please .
If I were inheriting I'd rather get a nice selection of highly liquid investments with a step up in basis or in tax advantaged accounts that could be converted to cash quickly and easily rather than real estate that will take time and money to sell.Uncle Pennybags wrote:If nothing else leave your hears free and clear real estate.
Re: Is $700,000 enough to retire? Opinions please .
Yeah, usually an old house has to be cleaned, and fixed up before you can sell it. And what if one kid wants to keep it and live in it? Then you have to argue about how much it is worth, so that the other siblings can be paid off.placeholder wrote:If I were inheriting I'd rather get a nice selection of highly liquid investments with a step up in basis or in tax advantaged accounts that could be converted to cash quickly and easily rather than real estate that will take time and money to sell.Uncle Pennybags wrote:If nothing else leave your hears free and clear real estate.
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Re: Is $700,000 enough to retire? Opinions please .
I would do it in a heart beat. You guys are at that age of life is too short (sorry if I offended you). You guys should retire and enjoy the rest of your life with your grand kids.
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Re: Is $700,000 enough to retire? Opinions please .
IMHO: It all depends.
What is your life expectancy and what is your DH 's life expectancy? If you both die soon, it is more than you need.
If you are going to live in your nineties and need healthcare, you both may want to keep working for another 5-10 years and/ or cut your expenses down dramatically.
I clearly have no idea about your husband's business, but it seems ludicrous that he would be able to sell this business for $ 200,000. It would be a no brainer to sell this business now and investing it in the stock market without having to put in any work. My guess is, it is more likely it will cost you to wind the business down.
Have you considered to have your husband undergo a medical evaluation?
What is your life expectancy and what is your DH 's life expectancy? If you both die soon, it is more than you need.
If you are going to live in your nineties and need healthcare, you both may want to keep working for another 5-10 years and/ or cut your expenses down dramatically.
I clearly have no idea about your husband's business, but it seems ludicrous that he would be able to sell this business for $ 200,000. It would be a no brainer to sell this business now and investing it in the stock market without having to put in any work. My guess is, it is more likely it will cost you to wind the business down.
Have you considered to have your husband undergo a medical evaluation?
The Golden Rule: One should treat others as one would like others to treat oneself.
Re: Is $700,000 enough to retire? Opinions please .
I would continue to work.DH age 64.3 wants to retire unexpectedly from good job
All the Best, |
Joe
Re: Is $700,000 enough to retire? Opinions please .
Stepping back a bit from this picture, I see a person (OP) somewhat fried about the fact that her husband wants to quit when she doesn't want to. The most obvious solution: OP keeps working while husband attends to his other interest. Whether it makes money or not, at least he's occupied in an endeavor with which he is pleased.
Folks can reach burn-out. Husband may have hit that point, while OP clearly has not.
Folks can reach burn-out. Husband may have hit that point, while OP clearly has not.
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Re: Is $700,000 enough to retire? Opinions please .
No. It's not enough given your spending level. It will require you to spend much less than you're used to spending. You can spend less or work longer (at least one of you), your choice. Even if you assume he works in the $10K per year business until he keels over at 95, you're not there yet. You might only be a couple of years away though, or if you work for another 5 or 10 perhaps that's enough. If you can get $20K after-tax from SS, and $10K after tax from the business, you still need more than you have. I don't even think you can get there if you annuitize a big chunk of it.cararo wrote:DH age 64.3 wants to retire unexpectedly from good job ,early in 2 months. Just ready, wants to do new things,work on our low profit side business. I also work and am 59.3 y/o. I think we have inadequate retirement funds to fund our yearly spending of after tax of $65000 (around $80000 taxable). Especially since I am 2 years from reduced SS, and 5 years from medicare.We have a low profit, high labor side business generates $10000 after tax/year; and could be worth $200,000 now and more if we improve profit margin. his SS will be $24k/year. We have $700k in combined 401k's and $35k emergency funds. If DH retires I would love to retire, help with gkids one special needs, but too worried to relinquish well paying job that provides health insurance .and feel same about letting his good job go. He thinks retirement savings would make up balance, and pay health insurance. I could cut my hours but not loving that. Opinions please!
When will his SS be $24K a year? If he retires now? Or at 70.
BTW, a business that only gives you $10K after tax AND requires you to work in it seems like a terrible use of a $200K asset. If it's really worth $200K, I'd sell it.
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4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Re: Is $700,000 enough to retire? Opinions please .
to the OP, your ability to retire depends on your life expectancy and how healthy you are.
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Re: Is $700,000 enough to retire? Opinions please .
A lot of good and diverse replies.
I wonder when/if the OP will return to read and respond to them?
I wonder when/if the OP will return to read and respond to them?
Attempted new signature...
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Re: Is $700,000 enough to retire? Opinions please .
This is what happens when there's a significant age difference, although six years is not that big.john94549 wrote:Stepping back a bit from this picture, I see a person (OP) somewhat fried about the fact that her husband wants to quit when she doesn't want to. The most obvious solution: OP keeps working while husband attends to his other interest. Whether it makes money or not, at least he's occupied in an endeavor with which he is pleased.
Folks can reach burn-out. Husband may have hit that point, while OP clearly has not.
If there's not some transient problem with the OP's husband and he really wants to retire, so be it. The OP can keep working.
That side business sounds less than optimal, but if the husband can generate $10K a year out of it, that will help. Also that may remove some of the OP's resentment about his sitting at home while she works.