Can I retire at age 40?

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LiterallyIronic
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Re: Can I retire at age 40?

Post by LiterallyIronic » Wed Apr 18, 2018 10:13 am

willthrill81 wrote:
Wed Apr 18, 2018 9:21 am
LiterallyIronic wrote:
Wed Apr 18, 2018 9:09 am
Tamalak wrote:
Wed Apr 18, 2018 7:57 am
What I would do in your shoes is retire, but use the *current* price of my portfolio for the withdrawal rate. So if the market drops 20%, so does your budget. If you can be flexible and perhaps pare down your budget in harsh times, that will increase your success rate by a lot. In fact, by definition you CAN'T run out of money if you do this.

And as said, start with a WR of 5%, then when kids leave, 3%.

You might need to skimp a bit if you get unlucky, but people with 4 kids live successfully on far, far less than 120k
Indeed. My sister and her husband have five kids and they live on his income of $44k. Of course, they're also on WIC and Medicaid.
Justin at www.rootofgood.com has three kids and has lived very well spending about $30k annually. Their home is paid off, but it's still a pretty amazing feat. Many here who've heard that automatically think that it must be close to child abuse to spend so little, but they travel the world and lead comfortable lives.
That is pretty good. A paid off house really does wonders for dropping the annual expenses. My sister with five kids does not have a paid off house. Instead they have a 30-year mortgage that they just started this past January. A more expensive house than ours that we bought last September ($225,000 vs $209,000), with a smaller down payment (20% vs 29%), a higher interest rate (3.99% vs 3.875%), and higher property tax ($3,000/year vs $900/year), with a lower income ($44,000 vs $63,500) and more kids (five vs one). And yet given that I feel squeezed by the mortgage, I'm guessing they feel crushed by theirs. :confused

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kenyan
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Re: Can I retire at age 40?

Post by kenyan » Wed Apr 18, 2018 2:18 pm

Didn't read all of the replies, but the first page didn't mention this - if you have $120k of expenses, that isn't a $120k / $2.5M = 4.8% withdrawal rate. It's a ($120k + taxes) / $2.5M ~ 5.5-6% withdrawal rate. Much too high to sustain over a long retirement.

Cut down on your expenses or increase your nest egg, then revisit.

Make sure you're looking at what your future expenses will be, not your current expenses. Will you have health insurance covered in that $120k? College? Additional leisure activities?
Retirement investing is a marathon.

Johnretirement
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Re: Can I retire at age 40?

Post by Johnretirement » Wed Apr 18, 2018 11:44 pm

For clarity... I don't have 120,000 of expenses after taxes.
I have 120,000 BEFORE taxes. Out of that money I pay $25,000 for health insurance for my family of 6 and have been making a mortgage payment and 2 car payments of roughly $2500 a month. That is all paid off so realistically my other expenses are $30,000 less.

So, could pull off without changing lifestyle living off $90,000 before taxes with $25,000 of that paying for my own health insurance. So that means our expenses are $65,000... and we've been giving to church & charity around $9000 so our actual expenses more like $56,000 so we aren't huge spenders.

But... I want to be able to do more travel. I want to give more. I want to live more. And vehicles don't last for ever. So I wanted to keep the pay the same and let the extra money go towards the travel/giving/fun fund but wouldn't *have* to do that if it was a bad market.

But this has been good... perhaps I am too overconfident in ability to be profitable day trading/swing trading etc. Maybe I need some humbling there. I guess I'm not knowledgeable enough on the bond market, and other ways to make money outside of stocks. Any tips on where to learn more about that kind of stuff is greatly appreciated. I'm definitely not going to make a quick decision. I am determined to come through for my family so not going to do anything unless I'm confident it is the best thing for my crew.

smitcat
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Re: Can I retire at age 40?

Post by smitcat » Thu Apr 19, 2018 7:44 am

Johnretirement wrote:
Wed Apr 18, 2018 11:44 pm
For clarity... I don't have 120,000 of expenses after taxes.
I have 120,000 BEFORE taxes. Out of that money I pay $25,000 for health insurance for my family of 6 and have been making a mortgage payment and 2 car payments of roughly $2500 a month. That is all paid off so realistically my other expenses are $30,000 less.

So, could pull off without changing lifestyle living off $90,000 before taxes with $25,000 of that paying for my own health insurance. So that means our expenses are $65,000... and we've been giving to church & charity around $9000 so our actual expenses more like $56,000 so we aren't huge spenders.

But... I want to be able to do more travel. I want to give more. I want to live more. And vehicles don't last for ever. So I wanted to keep the pay the same and let the extra money go towards the travel/giving/fun fund but wouldn't *have* to do that if it was a bad market.

But this has been good... perhaps I am too overconfident in ability to be profitable day trading/swing trading etc. Maybe I need some humbling there. I guess I'm not knowledgeable enough on the bond market, and other ways to make money outside of stocks. Any tips on where to learn more about that kind of stuff is greatly appreciated. I'm definitely not going to make a quick decision. I am determined to come through for my family so not going to do anything unless I'm confident it is the best thing for my crew.
"But... I want to be able to do more travel. I want to give more. I want to live more. And vehicles don't last for ever. So I wanted to keep the pay the same and let the extra money go towards the travel/giving/fun fund but wouldn't *have* to do that if it was a bad market."

FWIW - all of these posts you made sound reasonably doable until I read that fact that you have 4 kids that are still very young. Your thoughts and budgets on how you will interact with them and for how long (until what age) is what will decide how long you will need to accumalate funds.
If you are of the type that intends to support their activities, partially or wholly carry them thorugh collge and most of their needs untill the early 20's you have a ways to go.
Even if you intend to travel with 6 people it is a budget to consider. Your kids expenses have not nearly peaked yet so you may have no baseline for which to budget.

As for day trading etc - sounds like the fasater you get this out of your system the better. Set aside what you are willing to lose and commit no further dollars and get started on that ASAP. The faster you do this the better you will have a handle on how much you can count on it - but IMHO commit no further dollars to this task no matter if you are up or down in the future.
I have a number of very well educated friends who went through this process - so far it the results have all been the same.

Ninnie
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Re: Can I retire at age 40?

Post by Ninnie » Thu Apr 19, 2018 8:10 am

This thread is hilarious.

Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.

Find a different job. The beauty of your position is that it can pay less, so you have options.

Tamalak
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Re: Can I retire at age 40?

Post by Tamalak » Thu Apr 19, 2018 8:29 am

Johnretirement wrote:
Wed Apr 18, 2018 11:44 pm
For clarity... I don't have 120,000 of expenses after taxes.
I have 120,000 BEFORE taxes. Out of that money I pay $25,000 for health insurance for my family of 6 and have been making a mortgage payment and 2 car payments of roughly $2500 a month. That is all paid off so realistically my other expenses are $30,000 less.

So, could pull off without changing lifestyle living off $90,000 before taxes with $25,000 of that paying for my own health insurance. So that means our expenses are $65,000... and we've been giving to church & charity around $9000 so our actual expenses more like $56,000 so we aren't huge spenders.

But... I want to be able to do more travel. I want to give more. I want to live more. And vehicles don't last for ever. So I wanted to keep the pay the same and let the extra money go towards the travel/giving/fun fund but wouldn't *have* to do that if it was a bad market.

But this has been good... perhaps I am too overconfident in ability to be profitable day trading/swing trading etc. Maybe I need some humbling there. I guess I'm not knowledgeable enough on the bond market, and other ways to make money outside of stocks. Any tips on where to learn more about that kind of stuff is greatly appreciated. I'm definitely not going to make a quick decision. I am determined to come through for my family so not going to do anything unless I'm confident it is the best thing for my crew.
It sounds like you're in good shape to do the adjustable 5% withdrawal rate I mentioned, then. As long as you're willing to:

1) Have a defensive asset allocation like 50/50 stocks/bonds. The adjustable plan can't endure a 50% drop in the market.
2) Actually hold thru drops of 25%+ (as well as rebalance into stocks during this time - this will be SCARY!)
3) Actually reduce your budget by 25% after drops of 25%
4) Consider reducing WR to 4% after the kids leave
5) Stop day trading. There are HUGE psychological dangers related to gambling there.

And finally..
Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.
6) Ignore the widespread sentiment on this thread and elsewhere that REAL men work themselves into the grave :sharebeer
Last edited by Tamalak on Thu Apr 19, 2018 10:03 am, edited 4 times in total.

smitcat
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Re: Can I retire at age 40?

Post by smitcat » Thu Apr 19, 2018 8:44 am

Ninnie wrote:
Thu Apr 19, 2018 8:10 am
This thread is hilarious.

Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.

Find a different job. The beauty of your position is that it can pay less, so you have options.
The OP's wife is not a teacher.

mnnice
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Re: Can I retire at age 40?

Post by mnnice » Thu Apr 19, 2018 8:59 am

[quote=Tamalak
6) Ignore the widespread sentiment on this thread and elsewhere that REAL men work themselves into the grave :sharebeer
[/quote]

+1000

My only other comment as a semi-retired human with children still at home is that unless you homeschool, school schedules can severely limit travel even if your schedule is flexible and you are not cash constrained :annoyed.

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12345
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Re: Can I retire at age 40?

Post by 12345 » Thu Apr 19, 2018 9:05 am

My advice - find new work, which would not take a long time. It's hard to say how much will be enough, because you can't predict all expenses in future.

FoolMeOnce
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Re: Can I retire at age 40?

Post by FoolMeOnce » Thu Apr 19, 2018 9:32 am

Johnretirement wrote:
Tue Apr 17, 2018 9:22 pm

Since the consensus is avoid day trading. I think I’ll try it on a small scale. Just to see how it goes. But more for fun. I am competitive and like to find the way to win. So my pride tells me I need to try it but I’ll limit it to $30,000 and see if I can grow it or lose it. So I don’t become another number and example many have stated on his thread
This is dangerous. If you mean use $30k of fun money and not add more, that's one thing. But I read this as starting with $30k to "see how it goes" as a test to see if you are good at trading and start doing more. (Correct me if I misread that)

What would you do if you are successful for six months? A year? Two years? Would you start trading a significant amount of your net worth? You need your portfolio to sustain you for several decades. Professionals can't keep up their wins over that time period (and even often give back all the prior gains). Don't delude yourself into thinking you can through a short test period.

Also, maybe I missed your response, but it sounds like the spouse/partner/sixth household member does not work. Is this correct? If this person has an income and would continue to have an income, the calculation gets more favorable.

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lthenderson
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Re: Can I retire at age 40?

Post by lthenderson » Thu Apr 19, 2018 9:48 am

Ninnie wrote:
Thu Apr 19, 2018 8:10 am
This thread is hilarious.

Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.

Find a different job. The beauty of your position is that it can pay less, so you have options.
Why do you assume someone who retires only sits at home? I don't work a 9 to 5 job anymore but I am rarely at home sitting. I probably sit less than when I had a 9 to 5 job because I have more energy to keep doing things all day long whereas when I worked, I came home and did crash because I was worn out.

Why do you assume someone who retires instills bad traits in their children by being so? When people retire at a more traditional age of 65, do their adult children start becoming lazy at that point? How does having the time to do the things that you love instill bad things to your children? If anything, I think it would make them want to work hard so they can retire earlier to do the things they love full time.

I don't think the OP is in a position to retire but I do have an issue with your comments. You are painting anyone who retires younger than 65 as a lazy person sitting at home watching television all day and I have found this to be completely opposite. People who retire early are extremely motivated people which is probably why they were able to retire so early.

LiterallyIronic
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Re: Can I retire at age 40?

Post by LiterallyIronic » Thu Apr 19, 2018 10:08 am

lthenderson wrote:
Thu Apr 19, 2018 9:48 am
Ninnie wrote:
Thu Apr 19, 2018 8:10 am
This thread is hilarious.

Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.

Find a different job. The beauty of your position is that it can pay less, so you have options.
Why do you assume someone who retires only sits at home? I don't work a 9 to 5 job anymore but I am rarely at home sitting. I probably sit less than when I had a 9 to 5 job because I have more energy to keep doing things all day long whereas when I worked, I came home and did crash because I was worn out.

Why do you assume someone who retires instills bad traits in their children by being so? When people retire at a more traditional age of 65, do their adult children start becoming lazy at that point? How does having the time to do the things that you love instill bad things to your children? If anything, I think it would make them want to work hard so they can retire earlier to do the things they love full time.

I don't think the OP is in a position to retire but I do have an issue with your comments. You are painting anyone who retires younger than 65 as a lazy person sitting at home watching television all day and I have found this to be completely opposite. People who retire early are extremely motivated people which is probably why they were able to retire so early.
I have an issue with those comments, too, but to be fair, that's exactly what I'm shooting for. I want to retire at 50 and then do a lot of nothing. Sleep in late, watch The Price Is Right, take an afternoon nap, play video games all evening, and go to sleep when I get tired. I have a list of nearly 500 movies that I want to see and a couple hundred video games that I want to play through. Having a to-do list with nothing on it is the best. :beer

cusetownusa
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Re: Can I retire at age 40?

Post by cusetownusa » Thu Apr 19, 2018 10:47 am

lthenderson wrote:
Thu Apr 19, 2018 9:48 am
Ninnie wrote:
Thu Apr 19, 2018 8:10 am
This thread is hilarious.

Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.

Find a different job. The beauty of your position is that it can pay less, so you have options.
Why do you assume someone who retires only sits at home? I don't work a 9 to 5 job anymore but I am rarely at home sitting. I probably sit less than when I had a 9 to 5 job because I have more energy to keep doing things all day long whereas when I worked, I came home and did crash because I was worn out.

Why do you assume someone who retires instills bad traits in their children by being so? When people retire at a more traditional age of 65, do their adult children start becoming lazy at that point? How does having the time to do the things that you love instill bad things to your children? If anything, I think it would make them want to work hard so they can retire earlier to do the things they love full time.

I don't think the OP is in a position to retire but I do have an issue with your comments. You are painting anyone who retires younger than 65 as a lazy person sitting at home watching television all day and I have found this to be completely opposite. People who retire early are extremely motivated people which is probably why they were able to retire so early.
I agree...as a side note, I just learned over the weekend at the Ben Franklin Museum that he retired at 42. This allowed him the time to accomplish so much and give back to society. What a horrible role model he was.

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Meg77
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Re: Can I retire at age 40?

Post by Meg77 » Thu Apr 19, 2018 11:35 am

Johnretirement wrote:
Wed Apr 18, 2018 11:44 pm
For clarity... I don't have 120,000 of expenses after taxes.
I have 120,000 BEFORE taxes. Out of that money I pay $25,000 for health insurance for my family of 6 and have been making a mortgage payment and 2 car payments of roughly $2500 a month. That is all paid off so realistically my other expenses are $30,000 less.

So, could pull off without changing lifestyle living off $90,000 before taxes with $25,000 of that paying for my own health insurance. So that means our expenses are $65,000... and we've been giving to church & charity around $9000 so our actual expenses more like $56,000 so we aren't huge spenders.
Spend some time on some FIRE blogs. Lots of 30 and 40-somethings are retiring early and writing all about it. One thing you may not realize is that your income taxes will plummet, possibly all the way to $0, especially with 4 dependents. So there goes that bill. Also you'll qualify for all kinds of Obamacare subsidies (for now). So there goes that bill too. Early retirees, even those with millions in the bank, are poor on paper. As such, their kids often get full rides to college, they get almost free healthcare, and they pay almost no taxes. Whether this is fair is beside the point. My point is that your expenses will drop much more than you even realize when you're no longer earning active income.

Also, many folks travel the world specifically to save even more money. You can live like a king in many parts of the world on less than $2k a month. Medical tourism and geo-arbitrage are things you should google. Flexibility adds a ton of options. Traveling for longer periods versus lots of short trips saves money. Not traveling on holidays or weekends saves money. Having time to cook from scratch and shop sales saves money. Going to where the MRI is the cheapest and having time to find out where that is saves money. You have no idea how expensive working can be until you aren't doing it any more.
Johnretirement wrote:
Wed Apr 18, 2018 11:44 pm
But... I want to be able to do more travel. I want to give more. I want to live more. And vehicles don't last for ever. So I wanted to keep the pay the same and let the extra money go towards the travel/giving/fun fund but wouldn't *have* to do that if it was a bad market.
You're doing great. The good news is, you've reached baseline financial independence. If you never earn another dollar you will still never have to worry about the basic necessities (unless the whole world falls to pieces in WWIII and the economy implodes, but then we are all up a creek together anyway). You don't HAVE to work any particular job, or earn any particular income. You don't HAVE to do anything you don't want to do. You're financially free. This is no small feat!

As others have stated though - and as you state above - that doesn't mean you can or will stop working in any capacity. You may want a nice, bigger cushion for all the "what ifs." What if a kid or spouse gets a chronic illness or disability? What if you get divorced? What if the market drops 50% and stays there for years? What if you decide you want a second home or a boat or any other large item? Then there are the weddings/educations and other giving needs. Lots of reasons to find a reason to keep working! But the point is you can - and should! - do it on your own terms. You've earned it.

:beer
"An investment in knowledge pays the best interest." - Benjamin Franklin

Tamalak
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Re: Can I retire at age 40?

Post by Tamalak » Thu Apr 19, 2018 12:49 pm

Meg77 wrote:
Thu Apr 19, 2018 11:35 am
Spend some time on some FIRE blogs. Lots of 30 and 40-somethings are retiring early and writing all about it. One thing you may not realize is that your income taxes will plummet, possibly all the way to $0, especially with 4 dependents. So there goes that bill. Also you'll qualify for all kinds of Obamacare subsidies (for now). So there goes that bill too. Early retirees, even those with millions in the bank, are poor on paper. As such, their kids often get full rides to college, they get almost free healthcare, and they pay almost no taxes. Whether this is fair is beside the point. My point is that your expenses will drop much more than you even realize when you're no longer earning active income.
Great points. On top of this, the usual INCREASE in expenses when you early retire is health care, but it looks like OP is already paying for that.

I think OP is more than ready for retirement.

hale2
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Re: Can I retire at age 40?

Post by hale2 » Thu Apr 19, 2018 2:49 pm

Ninnie wrote:
Thu Apr 19, 2018 8:10 am
This thread is hilarious.

Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.

Find a different job. The beauty of your position is that it can pay less, so you have options.
Would you say the same thing if his wife posted that she wanted to retire to be a SAHM but her husband would keep working?

James1
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Re: Can I retire at age 40?

Post by James1 » Thu Apr 19, 2018 4:32 pm

hale2 wrote:
Thu Apr 19, 2018 2:49 pm
Ninnie wrote:
Thu Apr 19, 2018 8:10 am
This thread is hilarious.

Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.

Find a different job. The beauty of your position is that it can pay less, so you have options.
Would you say the same thing if his wife posted that she wanted to retire to be a SAHM but her husband would keep working?
How funny. I read Ninnie's post completely different. My understanding was: "This thread is rediculous/hilarious. Here are some summarized hilarious comments from other posters." I wonder what the actual meaning was.

OP, I think you have a lot more reading/learning to do from this site and the other sites mentioned in this thread. As you learn, you can create a plan based on a more accurate budget. Figure out what your actual taxes and health insurance will be and what your plans are for helping the kids in the future (college, weddings...). Then you'll know when you can retire or if you're ready now.

Some things to research include:
1. Taxes with early retirement
2. Roth conversions with early retirement
3. Medicaid (we took 2 months off between jobs and tried to buy insurance through the exchange - ended up on Medicaid because they only cared about our monthly income for those months :oops: )
4. How much you can realistically expect to withdraw per year and why day trading is terrible.

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DanMahowny
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Re: Can I retire at age 40?

Post by DanMahowny » Thu Apr 19, 2018 6:36 pm

I retired at 42. "Sit at home" does not describe my lifestyle at all.
Funding secured

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wander
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Re: Can I retire at age 40?

Post by wander » Thu Apr 19, 2018 7:23 pm

Op, I would not retire if I were you considering you will have to cash out your retirement money and pay penalty for early withdrawal. However, you can build up more your taxable account. With your income, it shouldn't take long to build an taxable amount that can take you to retirement age. Or you can always look for another job with less stress.

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Re: Can I retire at age 40?

Post by MikeG62 » Thu Apr 19, 2018 7:53 pm

lthenderson wrote:
Thu Apr 19, 2018 9:48 am
Ninnie wrote:
Thu Apr 19, 2018 8:10 am

...Not to mention the work ethic that you'll be instilling in your children.
...Why do you assume someone who retires instills bad traits in their children by being so? When people retire at a more traditional age of 65, do their adult children start becoming lazy at that point? How does having the time to do the things that you love instill bad things to your children? If anything, I think it would make them want to work hard so they can retire earlier to do the things they love full time.
^This

I fully retired three years ago at 53. It’s been very motivational to my twenty-something daughters. They hope they can do the same thing when in their early 50’s and understand that in order to pull it off they will have to work really hard. Demotivating is not the word I’d use to describe their reaction.
lthenderson wrote:
Thu Apr 19, 2018 9:48 am

People who retire early are extremely motivated people which is probably why they were able to retire so early.
And ^This
Real Knowledge Comes Only From Experience

EddyB
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Re: Can I retire at age 40?

Post by EddyB » Thu Apr 19, 2018 9:17 pm

wander wrote:
Thu Apr 19, 2018 7:23 pm
Op, I would not retire if I were you considering you will have to cash out your retirement money and pay penalty for early withdrawal. However, you can build up more your taxable account. With your income, it shouldn't take long to build an taxable amount that can take you to retirement age. Or you can always look for another job with less stress.
If your premise were untrue (it is), would that change your advice? This is a genuine question.

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wander
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Re: Can I retire at age 40?

Post by wander » Thu Apr 19, 2018 9:28 pm

EddyB wrote:
Thu Apr 19, 2018 9:17 pm
If your premise were untrue (it is), would that change your advice? This is a genuine question.
Yes, I would change. But what is untrue? The Op has $500k in taxable account, and expected expense is $120k a year. It is just math.

EddyB
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Re: Can I retire at age 40?

Post by EddyB » Thu Apr 19, 2018 9:32 pm

wander wrote:
Thu Apr 19, 2018 9:28 pm
EddyB wrote:
Thu Apr 19, 2018 9:17 pm
If your premise were untrue (it is), would that change your advice? This is a genuine question.
Yes, I would change. But what is untrue? The Op has $500k in taxable account, and expected expense is $120k a year. It is just math.
So he can take about $80,000/year from the 401(k) in a 72(t) distribution without penalty.

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wander
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Re: Can I retire at age 40?

Post by wander » Thu Apr 19, 2018 10:50 pm

EddyB wrote:
Thu Apr 19, 2018 9:32 pm
So he can take about $80,000/year from the 401(k) in a 72(t) distribution without penalty.
I am trying not to tap into the 401k fund at very early age. Remember, you are not invincible forever, you will need more money in your retirement age than in 40s or 50s for healthcare. Healthcare part is getting more and more expensive. When it happens, you do not have much option to earn money again in 60s as in 40s or 50s. Another the reason for not using 72(t) at young age is you are required to withdraw money every year, so you are forced to sell when the market is down. For this thread, you need expenses for 50 - 60 years; usually, the best chance would be using withdrawal rate of 3%. The Op is in a very good shape financially, but needs to wait for now.

EddyB
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Re: Can I retire at age 40?

Post by EddyB » Thu Apr 19, 2018 11:03 pm

wander wrote:
Thu Apr 19, 2018 10:50 pm
EddyB wrote:
Thu Apr 19, 2018 9:32 pm
So he can take about $80,000/year from the 401(k) in a 72(t) distribution without penalty.
I am trying not to tap into the 401k fund at very early age. Remember, you are not invincible forever, you will need more money in your retirement age than in 40s or 50s for healthcare. Healthcare part is getting more and more expensive. When it happens, you do not have much option to earn money again in 60s as in 40s or 50s. Another the reason for not using 72(t) at young age is you are required to withdraw money every year, so you are forced to sell when the market is down. For this thread, you need expenses for 50 - 60 years; usually, the best chance would be using withdrawal rate of 3%. The Op is in a very good shape, but needs to wait for now.
So the supposed penalties weren’t really relevant? I don’t think it’s a slam dunk either, but many of the specific objections raised just seem willfully wrong (e.g., these penalties, or someone else asserting a 25% tax rate).

The OP likely won’t be responsible for four children in his sixties, so while his health care costs may go up (although that’s not obvious to me), presumably some others go down.

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Re: Can I retire at age 40?

Post by Johnretirement » Fri Apr 20, 2018 12:49 am

Appreciate all the comments. I do have a lot to learn. Which is why I came here in the first place. I’m taking it slow because I don’t want to make a mistake.

The thread is awesome and gives me a lot to explore further.

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Re: Can I retire at age 40?

Post by SRenaeP » Fri Apr 20, 2018 9:50 am

DanMahowny wrote:
Thu Apr 19, 2018 6:36 pm
I retired at 42. "Sit at home" does not describe my lifestyle at all.
Out of curiosity, do you have children? I've noticed a lot (most?) of the very early retirees have children that largely occupy their time. Other than extensive travel, I'm wondering what childfree retirees do.

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Re: Can I retire at age 40?

Post by Clever_Username » Fri Apr 20, 2018 11:09 am

SRenaeP wrote:
Fri Apr 20, 2018 9:50 am
DanMahowny wrote:
Thu Apr 19, 2018 6:36 pm
I retired at 42. "Sit at home" does not describe my lifestyle at all.
Out of curiosity, do you have children? I've noticed a lot (most?) of the very early retirees have children that largely occupy their time. Other than extensive travel, I'm wondering what childfree retirees do.
I'm childless and if I were retired right now, I'd probably split my time between playing more golf and volunteering for a charity some of my friends are very involved with. One of my friends is semi-retired and works with one of those charities 20 hours a week.
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Re: Can I retire at age 40?

Post by Meg77 » Fri Apr 20, 2018 11:33 am

SRenaeP wrote:
Fri Apr 20, 2018 9:50 am
DanMahowny wrote:
Thu Apr 19, 2018 6:36 pm
I retired at 42. "Sit at home" does not describe my lifestyle at all.
Out of curiosity, do you have children? I've noticed a lot (most?) of the very early retirees have children that largely occupy their time. Other than extensive travel, I'm wondering what childfree retirees do.
I worry about this too, especially as a child-free person. The only part of me that is inclined toward having kids is the part of me that wonders how I'll otherwise fill the decades if I'm lucky enough to live past 50. Even if you have kids though, they may live far away once they are grown; it's not like that fills your days necessarily.

However many early retirees work, just in a different capacity. This is particularly true for those who were ambitious enough to save from scratch enough to retire very early; they are unlikely to have the propensity to simply relax for years, much less decades. Many retirees of all ages care for aging parents, volunteer, do consulting, start blogs (some of which make lots of money and require many hours a day to run), take part time jobs, start businesses, join boards of companies or nonprofits. My aunt bought a sandwich franchise; my mom spends 20 hours a week teaching online.

My dad is more of a traditional retiree though: he micro-manages his portfolio and follows the markets for a couple hours a day, reads a book a week, works on the house and garden, exercises daily, watches TV for a few hours a night, makes his meals from scratch, takes long road trips when he has somewhere to go, is very active at church. He has 4 kids and 6 grandkids he can visit and which add meaning to his life, but he's single and lives alone. Sounds like a bunch of nothing, but that's life at the end of the day. A series of moments and experiences that aren't necessarily productive or special in and of themselves. Having a job can keep you busy and distract you from that reality for a few decades, and for some people that's necessary to prevent mental/spiritual unraveling (myself included, I think). But not for everyone, especially those who are social and easily build/maintain relationships.
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Re: Can I retire at age 40?

Post by smitcat » Fri Apr 20, 2018 12:14 pm

Meg77 wrote:
Fri Apr 20, 2018 11:33 am
SRenaeP wrote:
Fri Apr 20, 2018 9:50 am
DanMahowny wrote:
Thu Apr 19, 2018 6:36 pm
I retired at 42. "Sit at home" does not describe my lifestyle at all.
Out of curiosity, do you have children? I've noticed a lot (most?) of the very early retirees have children that largely occupy their time. Other than extensive travel, I'm wondering what childfree retirees do.
I worry about this too, especially as a child-free person. The only part of me that is inclined toward having kids is the part of me that wonders how I'll otherwise fill the decades if I'm lucky enough to live past 50. Even if you have kids though, they may live far away once they are grown; it's not like that fills your days necessarily.

However many early retirees work, just in a different capacity. This is particularly true for those who were ambitious enough to save from scratch enough to retire very early; they are unlikely to have the propensity to simply relax for years, much less decades. Many retirees of all ages care for aging parents, volunteer, do consulting, start blogs (some of which make lots of money and require many hours a day to run), take part time jobs, start businesses, join boards of companies or nonprofits. My aunt bought a sandwich franchise; my mom spends 20 hours a week teaching online.

My dad is more of a traditional retiree though: he micro-manages his portfolio and follows the markets for a couple hours a day, reads a book a week, works on the house and garden, exercises daily, watches TV for a few hours a night, makes his meals from scratch, takes long road trips when he has somewhere to go, is very active at church. He has 4 kids and 6 grandkids he can visit and which add meaning to his life, but he's single and lives alone. Sounds like a bunch of nothing, but that's life at the end of the day. A series of moments and experiences that aren't necessarily productive or special in and of themselves. Having a job can keep you busy and distract you from that reality for a few decades, and for some people that's necessary to prevent mental/spiritual unraveling (myself included, I think). But not for everyone, especially those who are social and easily build/maintain relationships.
"take part time jobs, start businesses, join boards of companies or nonprofits. My aunt bought a sandwich franchise; my mom spends 20 hours a week teaching online."


OK - if we view the definition of retirement like described above then I change my vote to yes - he can retire at 40 and work PT and/or start a business.
Under that definition I retired almost 10 years ago and my wife retired 15 years back.

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Re: Can I retire at age 40?

Post by DanMahowny » Sat Apr 21, 2018 3:40 pm

SRenaeP wrote:
Fri Apr 20, 2018 9:50 am
DanMahowny wrote:
Thu Apr 19, 2018 6:36 pm
I retired at 42. "Sit at home" does not describe my lifestyle at all.
Out of curiosity, do you have children? I've noticed a lot (most?) of the very early retirees have children that largely occupy their time. Other than extensive travel, I'm wondering what childfree retirees do.
My "kids" are 18 and 21, and don't occupy much of my time.

For me, retirement is:

reading
diet and exercise
travel
managing money
shooting guns
playing golf
working my German Shepherds
photography
advantage gambling
fooling around with my wife

That's all I have time for. Wish there were more than 24 hours in a day.
Funding secured

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Re: Can I retire at age 40?

Post by HomerJ » Sun Apr 22, 2018 7:46 pm

DanMahowny wrote:
Sat Apr 21, 2018 3:40 pm
SRenaeP wrote:
Fri Apr 20, 2018 9:50 am
DanMahowny wrote:
Thu Apr 19, 2018 6:36 pm
I retired at 42. "Sit at home" does not describe my lifestyle at all.
Out of curiosity, do you have children? I've noticed a lot (most?) of the very early retirees have children that largely occupy their time. Other than extensive travel, I'm wondering what childfree retirees do.
My "kids" are 18 and 21, and don't occupy much of my time.

For me, retirement is:

reading
diet and exercise
travel
managing money
shooting guns
playing golf
working my German Shepherds
photography
advantage gambling
fooling around with my wife

That's all I have time for. Wish there were more than 24 hours in a day.
Heh, don't let your wife see how you ordered that list. :)

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Re: Can I retire at age 40?

Post by JGoneRiding » Sun Apr 22, 2018 10:18 pm

You can. You just need to spend a lot less.
With no mortgage 120k is a ton of money yo need to spend every year

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Re: Can I retire at age 40?

Post by jminv » Sun Apr 22, 2018 11:56 pm

A 4.8% withdrawal rate for your age seems a little high. Firecalc confirms it is possible that you go broke at that spending level and given your life expectancy. You should try to cut a little on the spending.

As a mid-30s professional who is trialing retirement and is so far enjoying it, I am happy for you, though. If you want to retire, you should, just make sure your spending matches a safe withdrawal rate. I probably wouldn't spend more than 80k/year given your assets. You can cut your spending or work for a few more years to accumulate additional savings.

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Re: Can I retire at age 40?

Post by jminv » Mon Apr 23, 2018 12:00 am

Johnretirement wrote:
Wed Apr 18, 2018 11:44 pm

But this has been good... perhaps I am too overconfident in ability to be profitable day trading/swing trading etc. Maybe I need some humbling there. I guess I'm not knowledgeable enough on the bond market, and other ways to make money outside of stocks. Any tips on where to learn more about that kind of stuff is greatly appreciated. I'm definitely not going to make a quick decision. I am determined to come through for my family so not going to do anything unless I'm confident it is the best thing for my crew.
I didn't see before I posted that you're day trading. You should migrate to index funds, work a couple more years and save the majority of your salary, and then retire. The average daytrader doesn't make a living from it, they make themselves broke. I feel a little hypocritical saying that because I am a long term individual stock investor - not a day trader though, but it is true and it is something I consider as well.

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Re: Can I retire at age 40?

Post by gotester2000 » Mon Apr 23, 2018 2:10 am

lthenderson wrote:
Thu Apr 19, 2018 9:48 am
Ninnie wrote:
Thu Apr 19, 2018 8:10 am
This thread is hilarious.

Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.

Find a different job. The beauty of your position is that it can pay less, so you have options.
Why do you assume someone who retires only sits at home? I don't work a 9 to 5 job anymore but I am rarely at home sitting. I probably sit less than when I had a 9 to 5 job because I have more energy to keep doing things all day long whereas when I worked, I came home and did crash because I was worn out.

Why do you assume someone who retires instills bad traits in their children by being so? When people retire at a more traditional age of 65, do their adult children start becoming lazy at that point? How does having the time to do the things that you love instill bad things to your children? If anything, I think it would make them want to work hard so they can retire earlier to do the things they love full time.

I don't think the OP is in a position to retire but I do have an issue with your comments. You are painting anyone who retires younger than 65 as a lazy person sitting at home watching television all day and I have found this to be completely opposite. People who retire early are extremely motivated people which is probably why they were able to retire so early.
Despite being extremely motivated and achieved FI early, my wife is giving me the crap like the poster who thinks the thread is hilarious. I am bringing in freelance income on top of that - she wants me to continue working in my IT position so that she doesnt feel out of the way with everybody else who will work till traditional retirement age - people who simply cannot afford to give up their job. I find there are many people who have this old line of thought and they do not want to see the light of freedom.

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Re: Can I retire at age 40?

Post by cherijoh » Mon Apr 23, 2018 6:11 am

Johnretirement wrote:
Wed Apr 18, 2018 11:44 pm
For clarity... I don't have 120,000 of expenses after taxes.
I have 120,000 BEFORE taxes. Out of that money I pay $25,000 for health insurance for my family of 6 and have been making a mortgage payment and 2 car payments of roughly $2500 a month. That is all paid off so realistically my other expenses are $30,000 less.
Your terminology of before/after taxes is confusing. Does the $120K of expenses INCLUDE the taxes or not?

EDITED to ADD: Never mind - I just found another post where you said it includes taxes.
Last edited by cherijoh on Mon Apr 23, 2018 6:20 am, edited 1 time in total.

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Re: Can I retire at age 40?

Post by cherijoh » Mon Apr 23, 2018 6:18 am

Ninnie wrote:
Thu Apr 19, 2018 8:10 am
This thread is hilarious.

Make sure to save enough for the divorce that will come when your wife works as a teacher while you sit at home.

Not to mention the work ethic that you'll be instilling in your children.

Find a different job. The beauty of your position is that it can pay less, so you have options.
You are conflating two different posters. Someone else posted about their wife working as a teacher. OP's wife dosn't work.

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Re: Can I retire at age 40?

Post by cherijoh » Mon Apr 23, 2018 6:31 am

Meg77 wrote:
Thu Apr 19, 2018 11:35 am
[Also, many folks travel the world specifically to save even more money. You can live like a king in many parts of the world on less than $2k a month. Medical tourism and geo-arbitrage are things you should google. Flexibility adds a ton of options. Traveling for longer periods versus lots of short trips saves money. Not traveling on holidays or weekends saves money. Having time to cook from scratch and shop sales saves money.
Johnretirement wrote:
Wed Apr 18, 2018 11:44 pm
Having 4 young kids would probably put a crimp in some of your otherwise valid travel suggestions. They may be stuck traveling in the summer unless they are willing to home school - a bit of a challenge with 4 kids.

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Re: Can I retire at age 40?

Post by cherijoh » Mon Apr 23, 2018 7:35 am

EddyB wrote:
Thu Apr 19, 2018 9:32 pm
wander wrote:
Thu Apr 19, 2018 9:28 pm
EddyB wrote:
Thu Apr 19, 2018 9:17 pm
If your premise were untrue (it is), would that change your advice? This is a genuine question.
Yes, I would change. But what is untrue? The Op has $500k in taxable account, and expected expense is $120k a year. It is just math.
So he can take about $80,000/year from the 401(k) in a 72(t) distribution without penalty.
I don't think you understand how 72(t) distributions work. You are required to use one of 3 methods to determine your withdrawal and maintain it for at least five years or until you turn 59.5 whichever is longer. In OP's case that would be almost 20 years. This exception was really meant to cover the gap for a much shorter time period.

A friend retired at 48 just before the tech bubble crash. She was using this type of distribution to finance her retirement, but the rigid schedule and the aggressive AA recommended by her financial advisor resulted in her running through her IRA in only a couple of years. (The ability to switch methods mentioned below had not yet been instituted). She has been working full time again since 2002 or 2003 and I'm not sure she'll ever be able to retire a second time :( .

See this article for details on how a 72(t) distribution (aka SEPP distribution) works.

The most conservative option (that best preserves your IRA balance) is the RMD method - the same one used when you hit 70.5 only with 72(t) exception you can NOT take more than the minimum. The IRS table shows a single life expectancy for a 40 yo of 43.6 years or a first year multiplier of 2.29%. With a $2MM retirement account that is just under $46K - far short of the desired 80K/year. In subsequent years, the multiplier will increase but your account balance and the amount you must withdrawal will fluctuate.

The other two methods will yield a higher and more stable withdrawal amount, but both have a non-trivial risk that you could deplete your IRA if the stock market tanks and your account balance shrinks - the above example of my friend. If you are using one of these other methods, you do now have a one-time option to switch to the RMD method so that you don't totally deplete your IRA. Of course that also means your distribution would be cut dramatically.

Im summary, a 729(t) distribution is not the panacea you appear to think it is.

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Re: Can I retire at age 40?

Post by cherijoh » Mon Apr 23, 2018 7:44 am

gotester2000 wrote:
Mon Apr 23, 2018 2:10 am
Despite being extremely motivated and achieved FI early, my wife is giving me the crap like the poster who thinks the thread is hilarious. I am bringing in freelance income on top of that - she wants me to continue working in my IT position so that she doesnt feel out of the way with everybody else who will work till traditional retirement age - people who simply cannot afford to give up their job. I find there are many people who have this old line of thought and they do not want to see the light of freedom.
So does your wife currently work and would she continue to work while you retire? Are you sure her reasoning relates to other peoples perceptions or is it a difference in the level of risk you are willing to take? A friend's husband quit his job (while she was pregnant with their second child no less :oops: ) to become an "entrepreneur" - despite not having an entrepreneurial bone in his body. She supported the family and they eventually got divorced when the kids were in high school.

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Re: Can I retire at age 40?

Post by aristotelian » Mon Apr 23, 2018 8:06 am

cherijoh wrote:
Mon Apr 23, 2018 7:35 am
I don't think you understand how 72(t) distributions work. You are required to use one of 3 methods to determine your withdrawal and maintain it for at least five years or until you turn 59.5 whichever is longer. In OP's case that would be almost 20 years. This exception was really meant to cover the gap for a much shorter time period.

A friend retired at 48 just before the tech bubble crash. She was using this type of distribution to finance her retirement, but the rigid schedule and the aggressive AA recommended by her financial advisor resulted in her running through her IRA in only a couple of years. (The ability to switch methods mentioned below had not yet been instituted). She has been working full time again since 2002 or 2003 and I'm not sure she'll ever be able to retire a second time :( .

See this article for details on how a 72(t) distribution (aka SEPP distribution) works.

The most conservative option (that best preserves your IRA balance) is the RMD method - the same one used when you hit 70.5 only with 72(t) exception you can NOT take more than the minimum. The IRS table shows a single life expectancy for a 40 yo of 43.6 years or a first year multiplier of 2.29%. With a $2MM retirement account that is just under $46K - far short of the desired 80K/year. In subsequent years, the multiplier will increase but your account balance and the amount you must withdrawal will fluctuate.

The other two methods will yield a higher and more stable withdrawal amount, but both have a non-trivial risk that you could deplete your IRA if the stock market tanks and your account balance shrinks - the above example of my friend. If you are using one of these other methods, you do now have a one-time option to switch to the RMD method so that you don't totally deplete your IRA. Of course that also means your distribution would be cut dramatically.

Im summary, a 729(t) distribution is not the panacea you appear to think it is.
I just want to point out that you can withdraw from your IRA and reinvest the funds. If you "deplete the IRA" that is because you spent too much money, not (only) because of the SEPP's.

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Re: Can I retire at age 40?

Post by cherijoh » Mon Apr 23, 2018 8:56 am

aristotelian wrote:
Mon Apr 23, 2018 8:06 am
cherijoh wrote:
Mon Apr 23, 2018 7:35 am
I don't think you understand how 72(t) distributions work. You are required to use one of 3 methods to determine your withdrawal and maintain it for at least five years or until you turn 59.5 whichever is longer. In OP's case that would be almost 20 years. This exception was really meant to cover the gap for a much shorter time period.

A friend retired at 48 just before the tech bubble crash. She was using this type of distribution to finance her retirement, but the rigid schedule and the aggressive AA recommended by her financial advisor resulted in her running through her IRA in only a couple of years. (The ability to switch methods mentioned below had not yet been instituted). She has been working full time again since 2002 or 2003 and I'm not sure she'll ever be able to retire a second time :( .

See this article for details on how a 72(t) distribution (aka SEPP distribution) works.

The most conservative option (that best preserves your IRA balance) is the RMD method - the same one used when you hit 70.5 only with 72(t) exception you can NOT take more than the minimum. The IRS table shows a single life expectancy for a 40 yo of 43.6 years or a first year multiplier of 2.29%. With a $2MM retirement account that is just under $46K - far short of the desired 80K/year. In subsequent years, the multiplier will increase but your account balance and the amount you must withdrawal will fluctuate.

The other two methods will yield a higher and more stable withdrawal amount, but both have a non-trivial risk that you could deplete your IRA if the stock market tanks and your account balance shrinks - the above example of my friend. If you are using one of these other methods, you do now have a one-time option to switch to the RMD method so that you don't totally deplete your IRA. Of course that also means your distribution would be cut dramatically.

Im summary, a 729(t) distribution is not the panacea you appear to think it is.
I just want to point out that you can withdraw from your IRA and reinvest the funds. If you "deplete the IRA" that is because you spent too much money, not (only) because of the SEPP's.
True, but the whole point of doing an SEPP is that you don't have enough assets outside of your IRA to cover your spending needs. If you can reduce your spending then you wouldn't need the SEPP in the first place or you could split off just a portion of the IRA from which to take distributions. Even if you can switch to a bare-bones budget and can set aside a portion of the distribution in tough economic times, you are now stuck with the drag of a taxable account vs. it continuing to compound in the tax advantaged account. My point was that the very rigid rules of an SEPP plan can exacerbate sequence of return risk in ways that the early retiree likely does not anticipate.

Your viewpoint makes a lot more sense in the context of someone taking RMDs after hitting 70.5, especially in the later years when the multiplier gets large.

chicagoan23
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Re: Can I retire at age 40?

Post by chicagoan23 » Mon Apr 23, 2018 10:33 am

Johnretirement wrote:
Sun Apr 15, 2018 11:55 pm
I realize that is crazy talk but I think I can pull it off... that is only 14 months away.

I've been very fortunate in investing and business.

Negatives to early retirement: 4 children under age 10 and future expenses for them (college etc) healthcare for 6.


Positives: House and 2 newer vehicles paid off. 2 million in retirement account. Can live off $120,000 year. $500,000 in savings.
So basically 2.5 million available to create the $120,000 interest.

However... and reason for my post is... I'm sure I'm missing lots of things I'm not thinking about. So what do I need to consider and learn about before giving up my job. My job isn't terrible. I just spend way too much time there (and one thing I'll try to do is scale back but they may not allow).

Thoughts? advice?
Assuming you are 38/39, can you describe how you were able to get $2 million in retirement accounts that quickly? It would seem that you would run into annual contribution limits that would require spectacular returns to get to $2 million, unless you were getting very large employer contributions in your early and mid-20s. Have you been getting the maximum annual addition (averages $45k-50k or so for qualified plans) over the past 15 years? Or did you have an investment in an IRA that took off (i.e., the Mitt Romney method)?

Just curious because I've been maxing out my contributions for 18 years and have a little more than half of your number in my retirement accounts.

EddyB
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Re: Can I retire at age 40?

Post by EddyB » Mon Apr 23, 2018 1:40 pm

cherijoh wrote:
Mon Apr 23, 2018 7:35 am
EddyB wrote:
Thu Apr 19, 2018 9:32 pm
wander wrote:
Thu Apr 19, 2018 9:28 pm
EddyB wrote:
Thu Apr 19, 2018 9:17 pm
If your premise were untrue (it is), would that change your advice? This is a genuine question.
Yes, I would change. But what is untrue? The Op has $500k in taxable account, and expected expense is $120k a year. It is just math.
So he can take about $80,000/year from the 401(k) in a 72(t) distribution without penalty.
I don't think you understand how 72(t) distributions work. You are required to use one of 3 methods to determine your withdrawal and maintain it for at least five years or until you turn 59.5 whichever is longer. In OP's case that would be almost 20 years. This exception was really meant to cover the gap for a much shorter time period.

A friend retired at 48 just before the tech bubble crash. She was using this type of distribution to finance her retirement, but the rigid schedule and the aggressive AA recommended by her financial advisor resulted in her running through her IRA in only a couple of years. (The ability to switch methods mentioned below had not yet been instituted). She has been working full time again since 2002 or 2003 and I'm not sure she'll ever be able to retire a second time :( .

See this article for details on how a 72(t) distribution (aka SEPP distribution) works.

The most conservative option (that best preserves your IRA balance) is the RMD method - the same one used when you hit 70.5 only with 72(t) exception you can NOT take more than the minimum. The IRS table shows a single life expectancy for a 40 yo of 43.6 years or a first year multiplier of 2.29%. With a $2MM retirement account that is just under $46K - far short of the desired 80K/year. In subsequent years, the multiplier will increase but your account balance and the amount you must withdrawal will fluctuate.

The other two methods will yield a higher and more stable withdrawal amount, but both have a non-trivial risk that you could deplete your IRA if the stock market tanks and your account balance shrinks - the above example of my friend. If you are using one of these other methods, you do now have a one-time option to switch to the RMD method so that you don't totally deplete your IRA. Of course that also means your distribution would be cut dramatically.

Im summary, a 729(t) distribution is not the panacea you appear to think it is.
You seem to be attributing some meaning to my message that doesn't exist. Wander claimed the retirement balance was unavailable without penalty. That's clearly not true, and the maximum withdrawal rate (which isn't a requirement that the OP spend the money) is less than the OP's apparent overall hoped-for withdrawal rate, so your point (sequence-of-withdrawal issues could cause the OP to deplete the account) is really an expression of a criticism of the planned withdrawal rate. I said I don't think that's a slam dunk, and don't disagree with you. But if you take the premises given, I don't see a lot of significance to where the money is located in this situation. But thanks for telling me I don't understand 72(t) withdrawals.

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Re: Can I retire at age 40?

Post by gotester2000 » Mon Apr 23, 2018 1:47 pm

cherijoh wrote:
Mon Apr 23, 2018 7:44 am
gotester2000 wrote:
Mon Apr 23, 2018 2:10 am
Despite being extremely motivated and achieved FI early, my wife is giving me the crap like the poster who thinks the thread is hilarious. I am bringing in freelance income on top of that - she wants me to continue working in my IT position so that she doesnt feel out of the way with everybody else who will work till traditional retirement age - people who simply cannot afford to give up their job. I find there are many people who have this old line of thought and they do not want to see the light of freedom.
So does your wife currently work and would she continue to work while you retire? Are you sure her reasoning relates to other peoples perceptions or is it a difference in the level of risk you are willing to take? A friend's husband quit his job (while she was pregnant with their second child no less :oops: ) to become an "entrepreneur" - despite not having an entrepreneurial bone in his body. She supported the family and they eventually got divorced when the kids were in high school.
She is not working currently. At 50x expenses, risk of running out of corpus is low. I am not retired and confident of working for next 18 years - the only issue is I want to work 40 hrs/week with less stress - she is not excited about FI - I have also met few people who pity me when I talk about FI and think I am from another planet.

Johnretirement
Posts: 19
Joined: Sun Apr 15, 2018 11:42 pm

Re: Can I retire at age 40?

Post by Johnretirement » Tue Apr 24, 2018 2:12 am

chicagoan23 wrote:
Mon Apr 23, 2018 10:33 am
Johnretirement wrote:
Sun Apr 15, 2018 11:55 pm
I realize that is crazy talk but I think I can pull it off... that is only 14 months away.

I've been very fortunate in investing and business.

Negatives to early retirement: 4 children under age 10 and future expenses for them (college etc) healthcare for 6.


Positives: House and 2 newer vehicles paid off. 2 million in retirement account. Can live off $120,000 year. $500,000 in savings.
So basically 2.5 million available to create the $120,000 interest.

However... and reason for my post is... I'm sure I'm missing lots of things I'm not thinking about. So what do I need to consider and learn about before giving up my job. My job isn't terrible. I just spend way too much time there (and one thing I'll try to do is scale back but they may not allow).

Thoughts? advice?
Assuming you are 38/39, can you describe how you were able to get $2 million in retirement accounts that quickly? It would seem that you would run into annual contribution limits that would require spectacular returns to get to $2 million, unless you were getting very large employer contributions in your early and mid-20s. Have you been getting the maximum annual addition (averages $45k-50k or so for qualified plans) over the past 15 years? Or did you have an investment in an IRA that took off (i.e., the Mitt Romney method)?

Just curious because I've been maxing out my contributions for 18 years and have a little more than half of your number in my retirement accounts.
Correct. I’ll be 39 this summer.

The finances came via business venture that pays well but is also
takes up too much time. Way too many hours spent but the payoff financially is great. Then having the money and did very well in stock market. Combo of both created the financial situation. Without the job wouldn’t have had the cash to invest. And without the investments it wouldn’t be near the total it is.

Johnretirement
Posts: 19
Joined: Sun Apr 15, 2018 11:42 pm

Re: Can I retire at age 40?

Post by Johnretirement » Tue Apr 24, 2018 2:15 am

Also for those that asked about travel and kids
My wife went to college to be a teacher but because of my financial situation with my job she has been able to stay at home and homeschool our children. So we wouldn’t be limited with travel and schooling. She does not work outside of the big job of homeschooling the kids and taking care of all that she does. So while the job doesn’t “pay” its hard work.

dogagility
Posts: 170
Joined: Fri Feb 24, 2017 6:41 am

Re: Can I retire at age 40?

Post by dogagility » Tue Apr 24, 2018 5:31 am

Johnretirement wrote:
Mon Apr 16, 2018 5:43 pm

Currently my job is heavy hours in the evening. So family conflicts are the issue. Kids are schooling during the day.
If I worked the market... I’d be working during the day (and exercising and other hobbies) and then evenings with the family

But it could be me just dreaming and less realistic than I was thinking.
If you really want to do this, go for it! Your kids will only be young once. You can always go back to work at a later age, even if it's in a different field.
Taking "risk" since 1995.

chicagoan23
Posts: 299
Joined: Thu Jan 29, 2015 4:34 pm

Re: Can I retire at age 40?

Post by chicagoan23 » Tue Apr 24, 2018 6:53 am

Johnretirement wrote:
Tue Apr 24, 2018 2:12 am
chicagoan23 wrote:
Mon Apr 23, 2018 10:33 am
Johnretirement wrote:
Sun Apr 15, 2018 11:55 pm
I realize that is crazy talk but I think I can pull it off... that is only 14 months away.

I've been very fortunate in investing and business.

Negatives to early retirement: 4 children under age 10 and future expenses for them (college etc) healthcare for 6.


Positives: House and 2 newer vehicles paid off. 2 million in retirement account. Can live off $120,000 year. $500,000 in savings.
So basically 2.5 million available to create the $120,000 interest.

However... and reason for my post is... I'm sure I'm missing lots of things I'm not thinking about. So what do I need to consider and learn about before giving up my job. My job isn't terrible. I just spend way too much time there (and one thing I'll try to do is scale back but they may not allow).

Thoughts? advice?
Assuming you are 38/39, can you describe how you were able to get $2 million in retirement accounts that quickly? It would seem that you would run into annual contribution limits that would require spectacular returns to get to $2 million, unless you were getting very large employer contributions in your early and mid-20s. Have you been getting the maximum annual addition (averages $45k-50k or so for qualified plans) over the past 15 years? Or did you have an investment in an IRA that took off (i.e., the Mitt Romney method)?

Just curious because I've been maxing out my contributions for 18 years and have a little more than half of your number in my retirement accounts.
Correct. I’ll be 39 this summer.

The finances came via business venture that pays well but is also
takes up too much time. Way too many hours spent but the payoff financially is great. Then having the money and did very well in stock market. Combo of both created the financial situation. Without the job wouldn’t have had the cash to invest. And without the investments it wouldn’t be near the total it is.
Thanks for the response, but my question was really about how you got that money into retirement accounts. $2 million at age 40 is awesome but doesn’t seem that unusual around here. It would make sense if you had the $2 million in outside investments and a lesser amount in retirement funds.

Usually you are limited as to how much you can contribute to a retirement account on an annual basis. In 2018 the maximum annual 401(k) deferral is $18,500, for example. If you were just maxing your annual deferrals, it would be very difficult to get to $2 million in 12-15 years. If you own a business there are some other options that could make more sense....the maximum annual addition to a retirement plan is $55k per year. You could also have defined benefit plans or cash balance plans, plus nonqualified plans. It sounds like that’s what you’re doIng?

Can you describe the types of retirement plans you have and the contributions you’ve been able to make to them over time to generate the $2 million? I’m wondering how you did it and if I’m missing anything. Thanks again.

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