Can I retire?

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Topic Author
mdbravelion
Posts: 8
Joined: Fri May 14, 2021 12:02 pm

Can I retire?

Post by mdbravelion »

Hi BH community,

Age - 38
Spouse age - 37

Income - Flucutates between 200-300k annually
Spouse income - fluctuates between 40-100k annually

Annual spending - ~ 60k to 75k for household; do not expect this to go up higher than $75k.

Debts - mortgage - 420k @ 1.96 for 15 years - home value 600k


Assets -
Cash - 300k between both spouse/myself
Rental property - 400k - fully paid, 8% cap annually
Taxable - 1.1 M - mix of 3 fund portfolio (90%), and some FAANG stocks
solo 401k - $650k - sp500 index fund 100%
spouse 401k - $500k - sp500 index fund 100%


Question - 1. Can I retire if I wanted to? I do not plan on retiring just yet, but wanted to know if I'm on track. I plan on selling the rental property and adding to the taxable with the 400k later this year to bring the taxable account to ~1.5M.
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Watty
Posts: 22630
Joined: Wed Oct 10, 2007 3:55 pm

Re: Can I retire?

Post by Watty »

mdbravelion wrote: Wed Jun 09, 2021 12:30 am Annual spending - ~ 60k to 75k for household; do not expect this to go up higher than $75k.

Debts - mortgage - 420k @ 1.96 for 15 years - home value 600k
You might want to double check your spending numbers. I would guess that between the mortgage payment, property taxes, and maintenance that the house would take up around half your budget.

Add in buying your own health insurance and income taxes and that would push your budget up higher too.
flyingaway
Posts: 3411
Joined: Fri Jan 17, 2014 10:19 am

Re: Can I retire?

Post by flyingaway »

If your expenses of $75,000 include everything. Yes, you can retire now and easily.

But, you make too much money. Why retire?
carolinaman
Posts: 4640
Joined: Wed Dec 28, 2011 9:56 am
Location: North Carolina

Re: Can I retire?

Post by carolinaman »

Yes, you can retire. Personally, I would work longer to build a cushion for contingencies. Retiring now would give you a long retirement and more time for stuff to happen, hence the cushion.

Once you retire, what will you do after breakfast each day? (A serious question)
sailaway
Posts: 3249
Joined: Fri May 12, 2017 1:11 pm

Re: Can I retire?

Post by sailaway »

You have plenty, including buffers, if your spending target is accurate. Does that include taxes, healthcare and one offs such as major house repairs or replacing a car?
EnjoyIt
Posts: 5688
Joined: Sun Dec 29, 2013 8:06 pm

Re: Can I retire?

Post by EnjoyIt »

sailaway wrote: Wed Jun 09, 2021 10:08 am You have plenty, including buffers, if your spending target is accurate. Does that include taxes, healthcare and one offs such as major house repairs or replacing a car?
^ This ^

Although you can retire today, can I convince you to cut back instead if your work allows. Try going part time and slowly transition yourself into retirement. The funny thing about money and expenses. Just as you thought you have your expenses figured out, its really easy to find oneself spending more and more, especially if you have the income and savings to back it up.

Good luck.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
chassis
Posts: 424
Joined: Tue Mar 24, 2020 4:28 pm

Re: Can I retire?

Post by chassis »

Yes you are good to go, congratulations.

Watch the spending for a few years, invest aggressively and you will be able to spend more dollars and a larger percentage of your portfolio. In other words, give yourself a standard of living increase.
redmaw
Posts: 278
Joined: Mon Apr 22, 2019 7:20 am

Re: Can I retire?

Post by redmaw »

Check your numbers, by my rough estimation your mortgage principal (420k/15 = 28k/yr) and income taxes (@ 10% effective= 24k-40k, likely higher) alone are larger than your reported expenses. Your expenses need to account for taxes and health insurance, and everything else. Of course taxes will go down if you were to retire.

Now if I assume your rental sale this year pays for your mortgage, you are still left with about 2.2M. this will conservatively allow 75k withdraws (3.4% withdraw rate). If you were to go that route, you could live off the taxable account, and have a long time to convert your retirement account over to roth, and pay little in taxes. So if you can get the healthcare figured out and nail down a complete budget in the 75k/yr range, sure looks like you would be fine retiring. Without the mortgage to pay for, or much in the way of income taxes, there is likely plenty of room to cover the insurance, and a decent vacation too.
GT99
Posts: 473
Joined: Wed Jun 20, 2018 5:26 pm

Re: Can I retire?

Post by GT99 »

To retire in your late 30s, I personally would not include retirement accounts in the calculation. You obviously don't want to be in a position where you have to use them in the next 20 years (i.e. penalty withdrawal). So I would base the decision right now on Cash + taxable + rental property - $1.8M. That gives you a 4% withdrawal rate of 72k. Pretty borderline, IMO.

You're in great shape and very close, but I would not feel comfortable retiring with these numbers (if you were 50, I would say absolutely, go for it).
fire_2030
Posts: 26
Joined: Sun May 17, 2020 5:53 pm

Re: Can I retire?

Post by fire_2030 »

GT99 wrote: Wed Jun 09, 2021 10:37 am To retire in your late 30s, I personally would not include retirement accounts in the calculation. You obviously don't want to be in a position where you have to use them in the next 20 years (i.e. penalty withdrawal). So I would base the decision right now on Cash + taxable + rental property - $1.8M. That gives you a 4% withdrawal rate of 72k. Pretty borderline, IMO.

You're in great shape and very close, but I would not feel comfortable retiring with these numbers (if you were 50, I would say absolutely, go for it).
With most funding coming from taxable, income reported will be very low. Would be a great chance to convert 401k to roth during this time period to make sure your using your deduction and credits to the fullest. That conversion then is available to you 5 years later so I would not 100% exclude counting the 401K size in your pre 60 calculations.
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BolderBoy
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Location: Colorado

Re: Can I retire?

Post by BolderBoy »

mdbravelion wrote: Wed Jun 09, 2021 12:30 am Question - 1. Can I retire if I wanted to? I do not plan on retiring just yet, but wanted to know if I'm on track.
Most definitely you are on-track. No question about that. But to retire right now I think is a borderline probability. Like another poster said, if you were 50 y/o now then I'd feel confident in saying you could retire right now.

You might put your numbers into firecalc.com and see what comes out. Anything less than 100% outcome with pessimistic numbers would tell me, "No go."
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
poker27
Posts: 884
Joined: Mon Apr 01, 2013 2:48 pm

Re: Can I retire?

Post by poker27 »

today you have $2.6M in 'investments'.

What do folks consider a safe 'forever' withdrawal rate? 3-3.5%? So you can take out somewhere in the ballpark of 80-85k annually?

Will your expenses go down after paying off your house? Will you be eligible for social security?
Topic Author
mdbravelion
Posts: 8
Joined: Fri May 14, 2021 12:02 pm

Re: Can I retire?

Post by mdbravelion »

poker27 wrote: Wed Jun 09, 2021 11:31 am today you have $2.6M in 'investments'.

What do folks consider a safe 'forever' withdrawal rate? 3-3.5%? So you can take out somewhere in the ballpark of 80-85k annually?

Will your expenses go down after paying off your house? Will you be eligible for social security?


Yes expenses should go down after paying off property. I would be eligible for SS. Thank you all for the responses.
esteen
Posts: 258
Joined: Thu May 23, 2019 12:31 am

Re: Can I retire?

Post by esteen »

BolderBoy wrote: Wed Jun 09, 2021 11:24 am Most definitely you are on-track. No question about that. But to retire right now I think is a borderline probability. Like another poster said, if you were 50 y/o now then I'd feel confident in saying you could retire right now.
+1
There is a lot that can happen between 38-50. Also, people often live more expensive lifestyles when younger - people tend to be more active and want to buy more toys/travel more, healthcare isn't covered by Medicare yet, etc.
mdbravelion wrote: Wed Jun 09, 2021 11:56 am Yes expenses should go down after paying off property. I would be eligible for SS. Thank you all for the responses.
Your SS will be fairly low if you retire now given that you haven't nearly filled out the 35 eligible years. It is also a long way away from being realized and a lot can happen... I'd probably not count SS in my "retire now" forecasts if I were in your shoes.
aristotelian
Posts: 9208
Joined: Wed Jan 11, 2017 8:05 pm

Re: Can I retire?

Post by aristotelian »

Yes, your investment portfolio alone is 30X expenses. That does not count your rental income and eventually SS. Congrats, you are good to go if you wish.
NewOldGuy
Posts: 186
Joined: Mon Jul 30, 2018 12:37 am

Re: Can I retire?

Post by NewOldGuy »

Don't underestimate healthcare costs. They may not too horrible at 38, but wait until your 58, hopefully medicare will still be 65 when you get there.
Outer Marker
Posts: 1705
Joined: Sun Mar 08, 2009 8:01 am

Re: Can I retire?

Post by Outer Marker »

I would not retire on those numbers. On the one hand, if you retired tomorrow, your chances of being homeless and eating cat food are very small. On the other hand, if you work another 4-5 years you will be on much more solid footing and can likely enjoy a substantially better standard of living forever. Don't bail just as you're entering your peak earning years. You're leaving a lot of human capital on the table.
bradshaw1965
Posts: 800
Joined: Tue Jul 31, 2007 9:36 pm

Re: Can I retire?

Post by bradshaw1965 »

Can you take a sabbatical? Yes, as long as you want might be a better question to ask.

All of the scolding you'll hear with an open question like that doesn't amount to much. You've got the capability to make a lot of money but that can now be a secondary concern.
EnjoyIt
Posts: 5688
Joined: Sun Dec 29, 2013 8:06 pm

Re: Can I retire?

Post by EnjoyIt »

GT99 wrote: Wed Jun 09, 2021 10:37 am To retire in your late 30s, I personally would not include retirement accounts in the calculation. You obviously don't want to be in a position where you have to use them in the next 20 years (i.e. penalty withdrawal). So I would base the decision right now on Cash + taxable + rental property - $1.8M. That gives you a 4% withdrawal rate of 72k. Pretty borderline, IMO.

You're in great shape and very close, but I would not feel comfortable retiring with these numbers (if you were 50, I would say absolutely, go for it).
There are multiple ways of taking out pretax money such as from a traditional IRA before 59.5 penalty free.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
superbobbyg
Posts: 50
Joined: Sat Sep 28, 2019 1:20 pm

Re: Can I retire?

Post by superbobbyg »

Candidly, at your ages this is an unanswerable question by the masses. Only you and spouse know (or not) what the future will bring. Do you want to have children? Ka-ching!

Extraordinary vacations; new, bigger house; fancy car; other toys??? Ka-ching! Ka-ching!

I sometimes wonder if people post for amusement.

There is no one on this website that can provide an accurate answer.

Sorry to be blunt, but reality is a bitch.
DoctorWu
Posts: 25
Joined: Tue Oct 18, 2016 12:01 pm

Re: Can I retire?

Post by DoctorWu »

Congratulations on such a good job, so far, while being so young. To me it reads as though you have $1.4M not in retirement funds. You do not say how much per year the rental unit throws to you. Nor do you say if you have children who may go to college. Using 4% the 1.4 gives you $54K per year. And you have a substantial mortgage, will have to buy health insurance, pay federal, state and property taxes. Doesn't add up to me, that you're ready. I never count our $600K home, which is paid off, in my calculations because we need to live in it. So it is nice it may rise in value by 5% a year but it doesn't matter and won't for a long time. At your income level you must be able to save a tremendous amount of money each year. Why don't you both have substantial ROTH accounts? I think you should. Good luck!
solarcub
Posts: 49
Joined: Sat Feb 08, 2020 10:09 pm

Re: Can I retire?

Post by solarcub »

mdbravelion wrote: Wed Jun 09, 2021 12:30 am Hi BH community,

Age - 38
Spouse age - 37

Income - Flucutates between 200-300k annually
Spouse income - fluctuates between 40-100k annually

Annual spending - ~ 60k to 75k for household; do not expect this to go up higher than $75k.

Debts - mortgage - 420k @ 1.96 for 15 years - home value 600k


Assets -
Cash - 300k between both spouse/myself
Rental property - 400k - fully paid, 8% cap annually
Taxable - 1.1 M - mix of 3 fund portfolio (90%), and some FAANG stocks
solo 401k - $650k - sp500 index fund 100%
spouse 401k - $500k - sp500 index fund 100%


Question - 1. Can I retire if I wanted to? I do not plan on retiring just yet, but wanted to know if I'm on track. I plan on selling the rental property and adding to the taxable with the 400k later this year to bring the taxable account to ~1.5M.
Can you retire? Probably. But you could be a lot more sure in 5 years. Also, it seems like a big waste of your medical training to retire now; do you really just want a different job situation?
finite_difference
Posts: 2581
Joined: Thu Jul 09, 2015 7:00 pm

Re: Can I retire?

Post by finite_difference »

With those numbers, I’d probably move to part time if I liked my job. Work like 2 days/week and earn enough to cover expenses and get 401k match. Working 2-3 days/week would be pretty perfect. It takes me a day or two to just spin-down from work and by that time the weekend’s over.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
Exchme
Posts: 447
Joined: Sun Sep 06, 2020 3:00 pm

Re: Can I retire?

Post by Exchme »

I don't understand what cash flow you counting on getting from the rental property. If we exclude that, then you don't have enough, if we count something for it, you might be sort of OK.

The 401Ks have some taxes due on them, so if we de-rate them to $1,050K, then you have $2,450K, less your mortgage, so say $2,000K. At $75K/year, that is 27X spending. Not really enough for such a long retirement. If we say that the property on average (after taxes, repairs & such), returns something like a 2-3% bond would, that moves the needle up near 30X, which would be the general minimum.

I would caution you that your friends are just entering their high earning years and it may be very disconcerting to see them getting cool stuff, going to the best places and generally jet-setting about while you putt along. I've forgotten the name but there was a well known FIRE blogger that ended up divorced and going back to work because his wife was initially excited to FIRE but soon found she was unhappy scrimping while her friend's lifestyles started to be luxurious.

Here on Bogleheads, you are going to find generally risk averse people, but there is more to this than a financial decision. Personally, I wouldn't even consider having to potentially budget my money closely for the rest of my life when a couple more years might vault me into a lot better spot.
poker27
Posts: 884
Joined: Mon Apr 01, 2013 2:48 pm

Re: Can I retire?

Post by poker27 »

I’m around your age, and have substantially less investments, as I’m not married.

I’m assuming you don’t care for your job, which is why your asking (neither do I). Personally, I have told myself that if I have $x money at 40, I can quit and find a new ‘job’. It might be working for a startup, different field, or checking receipts at Costco (likely after taking some time off).

It sounds like your at a point where you can pull the plug, and reevaluate. Given your savings and earnings, I have a feeling you will get back into something, which will make your retirement that much more secure.
Slacker
Posts: 937
Joined: Thu May 26, 2016 8:40 am

Re: Can I retire?

Post by Slacker »

Are you trying to sell the rental now to take advantage of the hot market?

If you really will retire in a year or two, consider waiting until after retiring to sell the rental for the purposes of reducing capital gains taxes (at least run the numbers).
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