Can I Retire at 38?

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assistca1
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Can I Retire at 38?

Post by assistca1 » Mon Mar 19, 2018 4:15 pm

Good afternoon,
Me and my wife are 38 years old. We have a net worth of 2.7 million comprised of real estate and retirement accounts. We live in Southern California and have two small children. Currently, we work for CA state government and have a combined annual salary of 215,000 a year. We got three rental properties purchased around 2011 which net approximately 3,000 a month. We will be receiving a pension starting at 55 and full medical coverage for life. However, if we retire earlier, we will not be entitled to medical coverage until medicare kicks in. Our pensions will kick in at 55 but a reduced amount since we are considering retiring much earlier. If we stay till 55, our pensions would be approximately be $150,000 a year. If we retire at 38 and start collecting our pensions at 55, then the pension will be approximately be $55,000 a year. We have no consumer debt except for the mortgages on the primary and rental properties. We also stand to inherit about 2 million from our parents in the next 10 years. Our kids go to a really good public school and we are planning for them to attend public universities. Our expenses are minimal. Our jobs are pretty stressful and are not that flexible in taking time off. Do you think we are able to retire at age 38?

DesertDiva
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Re: Can I Retire at 38?

Post by DesertDiva » Mon Mar 19, 2018 4:23 pm

assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
We also stand to inherit about 2 million from our parents in the next 10 years.
Please don't make this a factor in your retirement planning. It may not work out as you expect.
♫ Stocks go up ♫ Stocks go down ♫ Stocks go up ♫ Stocks go down ♫

Dottie57
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Re: Can I Retire at 38?

Post by Dottie57 » Mon Mar 19, 2018 4:29 pm

DesertDiva wrote:
Mon Mar 19, 2018 4:23 pm
assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
We also stand to inherit about 2 million from our parents in the next 10 years.
Please don't make this a factor in your retirement planning. It may not work out as you expect.
+1

Not enough info. What are your expenses? How much in taxable? What would accounts generate as of today?

I doubt you can retire. 50 tp 55 yes.

amitb00
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Re: Can I Retire at 38?

Post by amitb00 » Mon Mar 19, 2018 4:31 pm

If job is stressful you can change it.

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greg24
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Re: Can I Retire at 38?

Post by greg24 » Mon Mar 19, 2018 4:31 pm

It would be a roll of the dice, but possible. Dependent on the fluctuations of real estate values and how much, if any, you actually inherit.

WhiteMaxima
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Re: Can I Retire at 38?

Post by WhiteMaxima » Mon Mar 19, 2018 4:33 pm

No you can't. Not because of financial reason. What are you going to do for the rest of life? if you don't care about money, at least doing things even it makes no money.
Last edited by WhiteMaxima on Mon Mar 19, 2018 4:42 pm, edited 1 time in total.

assistca1
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Re: Can I Retire at 38?

Post by assistca1 » Mon Mar 19, 2018 4:34 pm

Approximately $400,000 in taxable accounts. The rest of my new worth is in primary residence, rental properties, and retirement accounts such as 401k, 457, and ROTH IRA. If full retirement is not an option, I have also considered working consultant gigs for approximately $50,000 a year.

alex_686
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Re: Can I Retire at 38?

Post by alex_686 » Mon Mar 19, 2018 4:39 pm

Welcome to Bogleheads.

We don't have enough You need to ask some questions first.

What is your minimum goals? What are your desired goals?

What is the expected return of your portfolio?

What is your risk tolerance? What is your ability and willingness to take risk.

As an exercise, take your portfolio though both the 2001 and 2008 crash. Plus throw in family emergency. What do you look like at the end of these scenarios?

A 2.7m portfolio should be able to throw off 80k per year assuming a 3% real return. I am somewhat skeptical when you mentioned real estate and 3k per month. Almost everybody overestimates their real estate value and underestimates maintenance costs. Look at this with a cold eye and give it a hair cut because it does represent a concentrated risk.

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Sandtrap
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Re: Can I Retire at 38?

Post by Sandtrap » Mon Mar 19, 2018 4:40 pm

Welcome.
1. You would need roughly 25-30 X your annual expected income/expenses, (a common baseline to calc from)
If retiring at 65 a common starting point "rule of thumb" is 25 X annual expenses. A lot depends on your income streams and expenses going forward. More uncertain the farther out because of the always inevitable "personal and financial black swans".
2. Never count on an inheritance or future "windfall".
3. Health expenses are a major concern once leaving employee provided health care.

For a more comprehensive evaluation, it would be wise to request a portfolio review in this format. Otherwise, there's not much but generalized input based on the information provided.

Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212

aloha
j :D

*edited to correct the "senior dixlixic moment" flipping 52x and 25x. Oops.....
Last edited by Sandtrap on Tue Mar 20, 2018 10:42 am, edited 5 times in total.

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MP123
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Re: Can I Retire at 38?

Post by MP123 » Mon Mar 19, 2018 4:50 pm

Having to buy your own health insurance for the next 27 years is a very scary thought. Seriously look into what that will/could cost you.

staythecourse
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Re: Can I Retire at 38?

Post by staythecourse » Mon Mar 19, 2018 4:52 pm

assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
Good afternoon,
Me and my wife are 38 years old. We have a net worth of 2.7 million comprised of real estate and retirement accounts. We live in Southern California and have two small children. Currently, we work for CA state government and have a combined annual salary of 215,000 a year. We got three rental properties purchased around 2011 which net approximately 3,000 a month. We will be receiving a pension starting at 55 and full medical coverage for life. However, if we retire earlier, we will not be entitled to medical coverage until medicare kicks in. Our pensions will kick in at 55 but a reduced amount since we are considering retiring much earlier. If we stay till 55, our pensions would be approximately be $150,000 a year. If we retire at 38 and start collecting our pensions at 55, then the pension will be approximately be $55,000 a year. We have no consumer debt except for the mortgages on the primary and rental properties. We also stand to inherit about 2 million from our parents in the next 10 years. Our kids go to a really good public school and we are planning for them to attend public universities. Our expenses are minimal. Our jobs are pretty stressful and are not that flexible in taking time off. Do you think we are able to retire at age 38?
Bravo. You look to be in GREAT shape, but not sure of a few things.

1. Do both of you have a yearning to retire and not work for 40+ years?
2. What would you do with your time for the next 40+years?
3. What would you do for medical coverage until 65 (almost 30 years from now)?
4. What are you goals in retirement that you are so eager to do ASAP?

I would not be too aggressive about retiring so early mainly due to no. 3 on that list. Healthcare will NOT be whatever it is today for the next 30 years. That is a guarantee. Could one or both of you go part time to just make enough for healthcare coverage? Agree also, with the poster above that it will take 50+x expenses before even thinking about it.

Another thing to consider is as a parent of 2 kids is how will you not working instill work ethic in them when they get to be teenagers/ young adults?

Good luck.
Last edited by staythecourse on Mon Mar 19, 2018 6:00 pm, edited 1 time in total.
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cfs
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Re: Can I Retire at 38?

Post by cfs » Mon Mar 19, 2018 4:55 pm

No you can't.

After 38 you will have at least 22 productive years ahead of you.

Continue working and paying taxes, those retired in California, and receiving government pensions need your support.

Good luck in your working career, y gracias por leer ~cfs~

p.s. This is a serious post.
~ Member of the Active Retired Force since 2014 ~

fourkids
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Re: Can I Retire at 38?

Post by fourkids » Mon Mar 19, 2018 4:56 pm

not both of you. how about 1 of you?
or 1 take an extended leave of absence and then switch.

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FiveK
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Re: Can I Retire at 38?

Post by FiveK » Mon Mar 19, 2018 5:01 pm

assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
Me and my wife are 38 years old. We have a net worth of 2.7 million comprised of real estate and retirement accounts.
...
Our expenses are minimal. ... Do you think we are able to retire at age 38?
Probably.

Using 4%, 3.5%, and 3% respectively, you could handle annual expenses of $108K, $94.5K, or $81K. All those are above what most would consider "minimal".

How do those compare with your expected expenses, including taxes, health care, and annualized "big ticket" (e.g., car, new roof, etc.) items?

bubbadog
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Re: Can I Retire at 38?

Post by bubbadog » Mon Mar 19, 2018 5:03 pm

DesertDiva wrote:
Mon Mar 19, 2018 4:23 pm
assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
We also stand to inherit about 2 million from our parents in the next 10 years.
Please don't make this a factor in your retirement planning. It may not work out as you expect.
Dilly Dilly! :sharebeer

MindBogler
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Re: Can I Retire at 38?

Post by MindBogler » Mon Mar 19, 2018 5:06 pm

Forget all the naysayers, they are all wrong IMO... with one exception. You cannot retire in California, at least not SoCal. You can move too a lower COL area and easily retire or do what interests you.

PopMegaphone
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Re: Can I Retire at 38?

Post by PopMegaphone » Mon Mar 19, 2018 5:37 pm

Sandtrap wrote:
Mon Mar 19, 2018 4:40 pm
Welcome.
1. You would need roughly 52 X your annual expected income/expenses.
If retiring at 65 a starting point rule of thumb is 25 X annual expenses.
2. Never count on an inheritance or future "windfall".
3. Health expenses are a major concern once leaving employee provided health care.

For a more comprehensive evaluation, it would be wise to request a portfolio review in this format. Otherwise, there's not much but generalized input based on the information provided.

Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212

aloha
j :D
Where are you getting 52x?

I've read 3.5% is needed if the timeframe is over 30 years.

All that said, these rules aren't really designed for real estate heavy portfolios.

PhilosophyAndrew
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Re: Can I Retire at 38?

Post by PhilosophyAndrew » Mon Mar 19, 2018 6:09 pm

OP, can you quantify your expected expenses and be more precise about the level of stress you are experiencing?

Also, how much of your net worth is tied up in your primary residence and what is your mortgage like on that property?

About he stress you are experiencing: What have you done to manage your stress? What is your level of knowledge, interest, and proficiency in various stress management techniques? It might be wise to see how far you can go with those before making the huge decision to retire.

Finally, what are your prospects for working with your superiors to make your current job less stressful? Are there opportunities to transfer to a less stressful role in state government? How feasible would it be for to change careers to a (hopefully) less stressful career? These are also questions to pursue carefully before deciding to retire.

I agree with others that you should not consider the inheritance as certain, and certainly not within any specific timeframe. If your financial plans couldn’t work out without receiving a $2M windfall, that would suggest that you need to wait to retire.

For the best financial advice, please present more complete information following the standardized format others have linked to. many here can provide excellent advice using that specific information.

Loik098
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Re: Can I Retire at 38?

Post by Loik098 » Mon Mar 19, 2018 6:14 pm

assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
If we retire at 38 and start collecting our pensions at 55, then the pension will be approximately be $55,000 a year. We also stand to inherit about 2 million from our parents in the next 10 years. Our kids go to a really good public school and we are planning for them to attend public universities. Our expenses are minimal.
You've made 4 assumptions here which aren't 100% guaranteed. What if the state changes your pension plan? What if you don't inherit $2 million? What if your kids are geniuses and want to go to an elite university? What if your family suffers a crisis (injury, loss, etc) and your long-term expenses aren't minimal?

You also didn't address health insurance.

In order to answer your question, you'll need to see if you can retire without making any of the assumptions you have. Re-run the numbers assuming the worst in each case. If you still think you can retire, then do so.

Goal33
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Re: Can I Retire at 38?

Post by Goal33 » Mon Mar 19, 2018 6:27 pm

This is too easy. Get another job
A man with one watch always knows what time it is; a man with two watches is never sure.

rob65
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Re: Can I Retire at 38?

Post by rob65 » Mon Mar 19, 2018 6:29 pm

OP,

Consider also posting your question on the Mr. Money Mustache forum. Average the responses there with what you get here. This is a great forum, but it is overly skeptical about early retirement in my opinion. MMM is probably a little too optimistic about early retirement.

You might also check out rootofgood.com and gocurrycracker.com

Hillview
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Re: Can I Retire at 38?

Post by Hillview » Mon Mar 19, 2018 6:32 pm

Sorry but I didn't see mention of college? Is that fully funded?

Helo80
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Re: Can I Retire at 38?

Post by Helo80 » Mon Mar 19, 2018 6:35 pm

assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
Our jobs are pretty stressful and are not that flexible in taking time off. Do you think we are able to retire at age 38?
I would recommend considering the fiscal solvency of CalPERS as I assume that is what you would be retiring under. It's unlikely the benefit(s) will go away completely, but one may not receive the promised benefit come retirement age. The same goes for Social Security with the under-30 crowd today.

I am not trying to go OT and political, but if you're seriously asking about retiring at age 38, it's something to consider.

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Sandtrap
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Re: Can I Retire at 38?

Post by Sandtrap » Mon Mar 19, 2018 6:36 pm

PopMegaphone wrote:
Mon Mar 19, 2018 5:37 pm
Sandtrap wrote:
Mon Mar 19, 2018 4:40 pm
Welcome.
1. You would need roughly 25-30 X your annual expected income/expenses.
If retiring at 65 a starting point rule of thumb is 25 X annual expenses.
2. Never count on an inheritance or future "windfall".
3. Health expenses are a major concern once leaving employee provided health care.

For a more comprehensive evaluation, it would be wise to request a portfolio review in this format. Otherwise, there's not much but generalized input based on the information provided.

Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212

aloha
j :D
Where are you getting 52x?

I've read 3.5% is needed if the timeframe is over 30 years.

All that said, these rules aren't really designed for real estate heavy portfolios.
OP quotes $3,000/mo in rental income from 3 SFH and they are leveraged.
That is not "real estate heavy".
A 30-50 unit apartment building is R/E heavy.
mahalo,
j
Last edited by Sandtrap on Tue Mar 20, 2018 10:23 am, edited 2 times in total.

BanquetBeer
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Re: Can I Retire at 38?

Post by BanquetBeer » Mon Mar 19, 2018 7:14 pm

assistca1 wrote:
Mon Mar 19, 2018 4:34 pm
Approximately $400,000 in taxable accounts. The rest of my new worth is in primary residence, rental properties, and retirement accounts such as 401k, 457, and ROTH IRA. If full retirement is not an option, I have also considered working consultant gigs for approximately $50,000 a year.

I feel like this was overlooked. What is the split exactly? First your primairy residence is not included in this our investible be work used to calculate SWR. Second you have rental properties that toss off 3k/mo so worth about 1.2 million? Add in your primiry residence and you look to have maybe 1-1.5mil investible. That can give you 40+36k yr total.

Possible if you don’t need any house repairs or have any natural disasters.

It’s possible but you will need to change your lifestyle a lot. Going from 200k+ income to 65-75k income including health insurance is a stretch. Up to you to consider

alter
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Re: Can I Retire at 38?

Post by alter » Mon Mar 19, 2018 7:20 pm

Being able to retire at 38 an get a 55k/year pension starting at 55 makes me wonder less about why the pension system in California is going bankrupt.

Slacker
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Re: Can I Retire at 38?

Post by Slacker » Mon Mar 19, 2018 7:51 pm

What is your non-real estate networth? Multiply this by 3.5% to get your 50 year horizon SWR estimate.
Over how many years did you calculate your $3000/month net from real estate? Have you already experienced large capital expenditures such as a new roof or appliances failing at multiple properties at the same time - to average these costs in against the net monthly income.

The picture looks as if you can easily find a more enjoyable job and not stress the pay. Without knowing your expenses (excluding taxes) it is hard to determine if you can "retire".

In your situation, depending on expenses and non-real estate networth, I'd strongly consider "retiring" to be a stay at home parent (for both if desired) and just spend my time doing volunteer work and hobbies while the kids are in school. No reason to slave away at a job you hate when your networth is this high...besides, you have a part time job already: managing real estate (for the naysayers who suggest you will suddenly stop doing any activities at all for the rest of your life).

sad2
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Re: Can I Retire at 38?

Post by sad2 » Mon Mar 19, 2018 8:22 pm

alter wrote:
Mon Mar 19, 2018 7:20 pm
Being able to retire at 38 an get a 55k/year pension starting at 55 makes me wonder less about why the pension system in California is going bankrupt.
+1. Unsustainable. Federal and state government pensions cannot support future payouts.

BoulderTrojan
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Re: Can I Retire at 38?

Post by BoulderTrojan » Mon Mar 19, 2018 10:32 pm

Retiring early is less about the size of your nest egg and more about understanding your expenses. My wife and I sat down to counsel with Mr Money Mustache to ask him if he thought we had enough to retire early. He asked what are your monthly expenses? I was embarrassed to admit that I didn't really know. My advice is for you and your wife to write down every penny or every dollar you spend for 3 straight months. If you haven't done this already it is the first place to start. Any family in the world could easily retire at any age with your $2.7 million if their monthly expenses were a few thousand a month.

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Re: Can I Retire at 38?

Post by AlohaJoe » Mon Mar 19, 2018 10:36 pm

BoulderTrojan wrote:
Mon Mar 19, 2018 10:32 pm
Retiring early is less about the size of your nest egg and more about understanding your expenses.
Exactly. Saying your expenses are "minimal" is meaningless. That's not a number. To me, minimal is $1,000 a month. And if your expenses are $1,000 but you're netting $3,000 a month from real estate....why the heck do you even have to ask someone else whether you have enough money to retire?

Starper
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Re: Can I Retire at 38?

Post by Starper » Mon Mar 19, 2018 10:37 pm

Yes, you can retire. Don't listen to naysayers.

123
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Re: Can I Retire at 38?

Post by 123 » Mon Mar 19, 2018 10:43 pm

assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
...and have two small children...
Children learn a lot from the example set by their parents. Things like how parents deal with work issues, work schedules, and how parents go to work day after day. If you're not working (even if you have assets high enough to be financially independent) they may very well expect that they too can do the same thing. Parents teach by example. An example of not working can sow the seeds of laziness in them. Teenagers don't really appreciate the past efforts parents may have made to become financially independent, they just see that mom and dad don't work so why should they.
The closest helping hand is at the end of your own arm.

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Re: Can I Retire at 38?

Post by AlohaJoe » Mon Mar 19, 2018 10:45 pm

123 wrote:
Mon Mar 19, 2018 10:43 pm
assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
...and have two small children...
Things like how parents deal with work issues, work schedules, and how parents go to work day after day.
And yet Stay At Home Moms have been able to teach values for thousands of years without doing any of that....

Hulu
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Re: Can I Retire at 38?

Post by Hulu » Mon Mar 19, 2018 10:47 pm

Yes. I am trying something similar. From what I read it's impossible not to eventually make more money. Even if it's just for fun. The time with your kids is invaluable...you will thank yourself many times over.

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Re: Can I Retire at 38?

Post by tfb » Mon Mar 19, 2018 10:58 pm

Yes you can retire. The only question is what kind of lifestyle you want after you retire. Anybody can retire if they are willing to match their lifestyle to the amount of money that supports it.
Harry Sit, taking a break from the forums.

Nate79
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Re: Can I Retire at 38?

Post by Nate79 » Mon Mar 19, 2018 11:10 pm

Yes, very easy. Sell everything and move to a very low cost of living area and your sustainable income off your portfolio will be 2x the average household income of the area.

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Re: Can I Retire at 38?

Post by Shikoku » Mon Mar 19, 2018 11:25 pm

Even if it is OK moneywise, please do not retire at 38. You might get bored because a long life is ahead of you. If you do not like your work, find something that you enjoy even if you receive less money.
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

moneywise3
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Re: Can I Retire at 38?

Post by moneywise3 » Mon Mar 19, 2018 11:35 pm

Why do you want to retire early? Glad you've overcome the financial obstacle to allow retirement. Perhaps find a career where you can contribute to humanity? People go crazy if they are not doing something meaningful in life.

HIinvestor
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Re: Can I Retire at 38?

Post by HIinvestor » Mon Mar 19, 2018 11:44 pm

Life is about trade offs. What will you get vs what will you give up by retiring now at 38.

You do need to calculate what you spend each year + how much your medical insurance and costs will be annually.

Do you plan to stay in CA, with its HCOL or relocating and where?

Funding for your kids educations and their college and beyond? Agree your folks may exhaust all their funds and even need some of yours as they age (elder care can get VERY expensive, especially 24/7).

If you and spouse want to re-enter job market, how hard or easy and at what salary? Where you live? Where you relocate? Other job skills for a preferred, less stressful job?

It’s tough to count on 2 pensions 17 years in the future being what is currently promised. Lots of unknowns, especially with many unfounded liabilities in pensions of govts.

What are the 2 of you planning to do over the next 40+ years of your lives? No need to tell us, as long as you are both content with your answers.

JDot
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Re: Can I Retire at 38?

Post by JDot » Tue Mar 20, 2018 12:53 am

123 wrote:
Mon Mar 19, 2018 10:43 pm
assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
...and have two small children...
Children learn a lot from the example set by their parents. Things like how parents deal with work issues, work schedules, and how parents go to work day after day. If you're not working (even if you have assets high enough to be financially independent) they may very well expect that they too can do the same thing. Parents teach by example. An example of not working can sow the seeds of laziness in them. Teenagers don't really appreciate the past efforts parents may have made to become financially independent, they just see that mom and dad don't work so why should they.
Err- seriously I think this would be a great lesson for him to teach his children. Start early and design a life where his children can be free of the artificially designed world where both parents work 8-10 hours a day until 65. This may be the norm, but it's not natural.

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randomizer
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Re: Can I Retire at 38?

Post by randomizer » Tue Mar 20, 2018 1:36 am

I would.
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gotester2000
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Re: Can I Retire at 38?

Post by gotester2000 » Tue Mar 20, 2018 1:59 am

OP,

Financially you can retire.

I would advise against it - it is one thing to early retire after 50/55 vs 38. Money is not the only aspect - going from being under extreme stress to doing nothing feels great for a few months - but can you handle all the time doing nothing after that? - pls dont tell me about hobbies and voluntary help etc - they are good for 55 not for 38.

Take a long break - come back and if it doesnt work try changing job. Early retirement is good in fifties not in thirties.

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whodidntante
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Re: Can I Retire at 38?

Post by whodidntante » Tue Mar 20, 2018 2:23 am

Into a mirror darkly of rob65's comment, we don't like early retirement on this forum. It makes us look bad.

GCD
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Re: Can I Retire at 38?

Post by GCD » Tue Mar 20, 2018 2:31 am

123 wrote:
Mon Mar 19, 2018 10:43 pm
assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
...and have two small children...
Children learn a lot from the example set by their parents. Things like how parents deal with work issues, work schedules, and how parents go to work day after day. If you're not working (even if you have assets high enough to be financially independent) they may very well expect that they too can do the same thing. Parents teach by example. An example of not working can sow the seeds of laziness in them. Teenagers don't really appreciate the past efforts parents may have made to become financially independent, they just see that mom and dad don't work so why should they.
I wouldn't be too concerned about this. If OP is smart and disciplined enough to pull this off he is smart and disciplined enough to deal with this issue and flex as needed with his kids.

My wife and I retired at ages 50/51 with our kids both in middle school. They get it pounded into their heads that our situation didn't come from spending frivolously. I think the lesson they are learning is that it's possible to save enough that you don't have to work until you are 65. My example to them is the reality that early retirement can be achieved. Survey after survey show that a huge proportion of the population think their best chance of becoming a millionaire is to win the lottery. I'm leading by example and letting them wrap their head around what is possible.

However...
Loik098 wrote:
Mon Mar 19, 2018 6:14 pm
assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
If we retire at 38 and start collecting our pensions at 55, then the pension will be approximately be $55,000 a year. We also stand to inherit about 2 million from our parents in the next 10 years. Our kids go to a really good public school and we are planning for them to attend public universities. Our expenses are minimal.
You've made 4 assumptions here which aren't 100% guaranteed. What if the state changes your pension plan? What if you don't inherit $2 million? What if your kids are geniuses and want to go to an elite university? What if your family suffers a crisis (injury, loss, etc) and your long-term expenses aren't minimal?

You also didn't address health insurance.
It's not clear that OP has cracked this yet. I'll skip all the links, just Google "Calpers going broke."

denovo
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Re: Can I Retire at 38?

Post by denovo » Tue Mar 20, 2018 2:52 am

DesertDiva wrote:
Mon Mar 19, 2018 4:23 pm
assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
We also stand to inherit about 2 million from our parents in the next 10 years.
Please don't make this a factor in your retirement planning. It may not work out as you expect.
Yes, parents may end up being in long-term care, which will wipe away money quickly;decide to give to charity; re-marry, give more to to other children, etc etc.
"Don't trust everything you read on the Internet"- Abraham Lincoln

supersharpie
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Re: Can I Retire at 38?

Post by supersharpie » Tue Mar 20, 2018 3:34 am

sad2 wrote:
Mon Mar 19, 2018 8:22 pm
alter wrote:
Mon Mar 19, 2018 7:20 pm
Being able to retire at 38 an get a 55k/year pension starting at 55 makes me wonder less about why the pension system in California is going bankrupt.
+1. Unsustainable. Federal and state government pensions cannot support future payouts.
Don't confuse federal pensions, which are no longer generous, with bloated state pensions like the ones in California. The federal pension system is fully funded.

bltn
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Re: Can I Retire at 38?

Post by bltn » Tue Mar 20, 2018 5:37 am

tfb wrote:
Mon Mar 19, 2018 10:58 pm
Yes you can retire. The only question is what kind of lifestyle you want after you retire. Anybody can retire if they are willing to match their lifestyle to the amount of money that supports it.
This is an important point. Do you want to work until you re 55 and be prosperous or possibly retire now and just get by?

Youve done a great job so far with your saving. Unless the job is something you really hate and can t deal with, persevere. Look for other job opportunities while you work.

Early retirement is usually a trade off between free time and financial comfort.

In your position, with the uncertainties of your assumptions about the future, I would feel like I would need about twice as much as you have to take a chance on retirement.

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Watty
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Re: Can I Retire at 38?

Post by Watty » Tue Mar 20, 2018 6:18 am

One thing to double check how your pension numbers would be adjusted for inflation. Even if the pension is adjusted for inflation once it starts it might not be adjusted for inflation during the years between when you stop working and when when you start the pension.

If you are not working under Social Security then your pension numbers are not as good as they might might look because part of that is instead of Social Security.
assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
Our jobs are pretty stressful and are not that flexible in taking time off.
Some jobs like law enforcement are inherently stressful because of the nature of the job but if the stress is because of things like your boss is a jerk then you might be able to find ways to improve the situation by getting professional counseling to help deal with the situation.

You mentioned possibly doing part time work but if you would be working in the same line of work then that could still still be pretty stressful and might not solve a lot.
assistca1 wrote:
Mon Mar 19, 2018 4:34 pm
We have a net worth of 2.7 million......

Approximately $400,000 in taxable accounts. The rest of my new worth is in primary residence, rental properties, and retirement accounts such as 401k, 457, and ROTH IRA. If full retirement is not an option, I have also considered working consultant gigs for approximately $50,000 a year.
You are really in an "in depends" situation. If something happened like you lost your jobs and could never work again then you could make things work without much trouble.

On the flip side there are lots of people with a lot more than that like professional athletes and lottery winners that end up in financial trouble.

Retiring at 38 sounds great but a big change like that would be stressful on your marriage not all marriages could survive that without even considering the financial issues. Be sure to consider what your financial "plan b" would be if your marriage does not survive a very early retirement. Couples counseling before you decide to retire could help with your expectations.

cherijoh
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Re: Can I Retire at 38?

Post by cherijoh » Tue Mar 20, 2018 7:17 am

assistca1 wrote:
Mon Mar 19, 2018 4:15 pm
Our pensions will kick in at 55 but a reduced amount since we are considering retiring much earlier. If we stay till 55, our pensions would be approximately be $150,000 a year. If we retire at 38 and start collecting our pensions at 55, then the pension will be approximately be $55,000 a year.
IMO, this is an inappropriate comparison. If you retire now, your employer will consider that you terminated your employment and your pension will be frozen. Therefore, you would be entitled to $55K/year in nominal dollars - i.e., it only gives you $55k in purchasing power if you were drawing it NOW. But you wouldn't see the money for another 17 years when it would be worth a lot less in "real" dollars. On the other hand, assuming the pension is maintained, your pension at 55 would continue to grow based on your future salary increases, so $150K is the best estimate of your purchasing power of your pension when you would start drawing it at age 55.

Some pensions include a cost of living adjustment after you start drawing it, which helps to maintain purchasing power. But if you have a no-COLA pension, the purchasing power of your pension will continue to deteriorate as you age.

If you assume an inflation rate of 3%/year, your pension (frozen in 2018) would be worth ~ $32,770 in 2035 in terms of purchasing power. The calculation is [PV *(1 - i) ^n] where PV is the present (frozen) value of your pension, i is the annual inflation rate (e.g., 0.03), and n is the number of years (e.g., 17). Of course no one knows inflation in advance, so your actual results may be very different. However, you should be thinking in terms of adjusting for reduced purchasing power when comparing a frozen pension at 38 to the pension you would get if you retire at 55.

NOTE: If your pension allows you to take a lump sum when you leave you might be able to keep up with inflation, but if your only option is to wait to collect then you would definitely take an inflation hit.

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jharkin
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Location: Boston suburbs

Re: Can I Retire at 38?

Post by jharkin » Tue Mar 20, 2018 8:22 am

WhiteMaxima wrote:
Mon Mar 19, 2018 4:33 pm
No you can't. Not because of financial reason. What are you going to do for the rest of life? if you don't care about money, at least doing things even it makes no money.
This ^

I have a friend who retired from the IT world at 45. He got very lucky that he was able to pay of his house at a young age (thank you stock options from the dot com boom days). + made out well playing the market in his 401k and retired into the current bull market, AND had worked IT jobs for insurance companies so he has a pension coming in addition to the 401k.

Biggest factor for him however is they where a dual high income couple with no kids. And they are extraordinarily frugal. Basically the investment money only has to last till he is 65 and then he lives off SS/pensions. No dependents to leave any inheritance to. And since his income now is technically very low he qualifies for heavily subsidized exchange health insurance.


Now the problem is - in his late 40s what do you do with all your free time? He will often chase after me and other acquaintances of ours to get together and do things during the week but the rest of us always have to decline because of work. When you retire that young weekdays can be rather lonely because nobody else in your age range is home except the SAHM crowd.


----------------------

Edit to add: Accumulating 2.7MM by age 38 on 215k income is simply OUTSTANDING. Seriously very few people can pull that off, especially in a VHCOL area. Well done. :beer

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