Can I retire at 50?
Can I retire at 50?
I'm wanting to retire from the corporate grind when I turn 50 next year (June)? Can I do it?
Summary Statistics:
Single
No kids
Expenses: $2,200-$2,800 per month.
Debt: $0
401k: $553k ($509k in S&P500 Index fund, $44k in Cash)
Taxable Accounts: $165k ($99k in Cash, $37K VFIAX, $19k VNQ, $10k I-Bond)
House: $175k
Car: $14k
Social Security: $2,200/month @67 in today's dollars.
I plan to do 72t distributions if needed to access 401k without penalty. Likely will work part time side gigs just to keep busy, no more than $10k per year. Planning to stay in 12% tax bracket at most. Will either do medicaid or obamacare for health insurance whichever i can qualify for in Illinois.
If you want more info, I can provide. Thanks in advance for any feedback!
Summary Statistics:
Single
No kids
Expenses: $2,200-$2,800 per month.
Debt: $0
401k: $553k ($509k in S&P500 Index fund, $44k in Cash)
Taxable Accounts: $165k ($99k in Cash, $37K VFIAX, $19k VNQ, $10k I-Bond)
House: $175k
Car: $14k
Social Security: $2,200/month @67 in today's dollars.
I plan to do 72t distributions if needed to access 401k without penalty. Likely will work part time side gigs just to keep busy, no more than $10k per year. Planning to stay in 12% tax bracket at most. Will either do medicaid or obamacare for health insurance whichever i can qualify for in Illinois.
If you want more info, I can provide. Thanks in advance for any feedback!
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Re: Can I retire at 50?
I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
Re: Can I retire at 50?
Yes.
That's a good idea. You might want to consider earning a bit more.Expenses: $2,200-$2,800 per month.
401k: $553k ($509k in S&P500 Index fund, $44k in Cash)
Taxable Accounts: $165k ($99k in Cash, $37K VFIAX, $19k VNQ, $10k I-Bond)
Social Security: $2,200/month @67 in today's dollars.
Likely will work part time side gigs just to keep busy, no more than $10k per year.
Also, consider delaying Social Security until 70. See: https://opensocialsecurity.com/
Other than not work (much) what do you plan to do for the next 40-50 years?If you want more info, I can provide.
Do you have (or plan to purchase) Long Term Care Insurance?
Last edited by JoeRetire on Sun Jun 12, 2022 8:35 am, edited 2 times in total.
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Re: Can I retire at 50?
Will add: doing part time work does not equal retirement....just a career change. Can you switch careers? Absolutely! Make sure the "new career" is stable or live in stressful times you might.
Re: Can I retire at 50?
You total pile is $718K. Let's round your expenses to $3K/month or $36K/year. That's a withdrawal rate of 5%. To me, that is too high and may not be sustainable. Also, if the market continues to drop, your withdrawal rate will go up.
If you can make $10K year, your withdrawal rate would fall to about 3.6%. That would be more reasonable, but still high for someone retiring at 50, in my view.
Also, is the house paid for?
My advice would be to work a bit longer.
If you can make $10K year, your withdrawal rate would fall to about 3.6%. That would be more reasonable, but still high for someone retiring at 50, in my view.
Also, is the house paid for?
My advice would be to work a bit longer.
No matter how long the hill, if you keep pedaling you'll eventually get up to the top.
Re: Can I retire at 50?
The withdrawal rate drops significantly once social security kicks in.Raybo wrote: ↑Sun Jun 12, 2022 8:36 am You total pile is $718K. Let's round your expenses to $3K/month or $36K/year. That's a withdrawal rate of 5%. To me, that is too high and may not be sustainable. Also, if the market continues to drop, your withdrawal rate will go up.
If you can make $10K year, your withdrawal rate would fall to about 3.6%. That would be more reasonable, but still high for someone retiring at 50, in my view.
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Re: Can I retire at 50?
Those numbers look very thin to me. I would not pull the rip cord. Another few years in the corporate grind would make a big difference in the level of security and quality of retirement. To maximize your SSI benefits, plan to start drawing at 70 vs. 67. The 8% increase per year from deferral in those last three years can't be beat for financial security and longevity insurance.
Re: Can I retire at 50?
Why "round" up to what OP stated as 2200-2800/mo? I went with an avg of 2500/mo. We can round up til the OP is stuck in their "corp grind"job for 10 more years. I assume the OP knows their expensesRaybo wrote: ↑Sun Jun 12, 2022 8:36 am You total pile is $718K. Let's round your expenses to $3K/month or $36K/year. That's a withdrawal rate of 5%. To me, that is too high and may not be sustainable. Also, if the market continues to drop, your withdrawal rate will go up.
If you can make $10K year, your withdrawal rate would fall to about 3.6%. That would be more reasonable, but still high for someone retiring at 50, in my view.
Also, is the house paid for?
My advice would be to work a bit longer.
Re: Can I retire at 50?
You are a bit on the lean side and would definitely need the part time job I think. Make sure your social security estimate is not based on the assumption that you continue working until full retirement age at your current rate of pay. That is the number social security quotes as your benefit on the web portal.
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Re: Can I retire at 50?
If Medicaid, there won't be many expenses. On ACA, will likely have no premiums, but will have to pay up to the OOP max, if use is heavy.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
RE: Ready or not... I think he could do it, but I wouldn't feel comfortable. We have similar spending levels and more money saved and I am still not comfortable enough to pull the trigger at this point. Give it 5-more years and he will be in a good spot, assuming the trajectory stays the same. That would still be early and eliminate most of the chance that he would have to go back to work.
Re: Can I retire at 50?
Health insurance is a big issue. Sure there is ACA but I don't know how complicated it is to enroll. Perhaps do some research before making a decision. Personally I would prefer a withdrawal rate of 3% or less. So I would likely not do it unless I really hate the job.
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Re: Can I retire at 50?
It isn't really retiring if you plan on still working part time. You're just planning on working less.
Re: Can I retire at 50?
It would worry me constantly to retire at 50 with that nest-egg. It's a long way to SS and economic conditions aren't great. If you hop off the corporate treadmill it might be wise to find some way to generate income.
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Re: Can I retire at 50?
Welcome to BH, where retirement, 100% equities, net worth, etc. all take on creative meanings.Californiastate wrote: ↑Sun Jun 12, 2022 9:42 am It isn't really retiring if you plan on still working part time. You're just planning on working less.
When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’
’The question is,’ said Alice, ‘whether you can make words mean so many different things.’
I get the FI part but not the RE part of FIRE.
Re: Can I retire at 50?
Yes “what else will you be doing “ is a good question. If you have serious plans (some people are essentially full time care for grandchildren, for example (of course not you)) then I think with caution and discipline you can make it work. If your big idea is just “I am sick of working so hard” or something similar, then you can ramp up the part time stuff and still get most of your time back, while being very much ok financially to do it now.
Re: Can I retire at 50?
I think work 5 more years,and max out savings during that time.
One thing I keep thinking, is the likelihood of repeal of the ACA should political control of the WH and congress flip in 2 years. I would work 5 more years and build your nest egg just for that alone.
One thing I keep thinking, is the likelihood of repeal of the ACA should political control of the WH and congress flip in 2 years. I would work 5 more years and build your nest egg just for that alone.
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Re: Can I retire at 50?
I agree 5 more years would be ideal, and I'd personally be targeting 55. But, that may be unpalatable to OP if he's really "had it." Doing just 2 more years would make a big difference, maxing out savings instead of drawing down the portfolio during that time.fly66guy wrote: ↑Sun Jun 12, 2022 10:19 am I think work 5 more years,and max out savings during that time.
One thing I keep thinking, is the likelihood of repeal of the ACA should political control of the WH and congress flip in 2 years. I would work 5 more years and build your nest egg just for that alone.
Re: Can I retire at 50?
I think it's doable with that stash you have.
One call-out is asset allocation in your 401k- why hold cash in the 401k, you might as well sell taxable equity and buy the same in the 401k with cash you have there, and have more in your taxable account.
Perhaps you could just start rolling over partial of your 401k -> Roth each year instead of the 72t - of course you need a 5 year off ramp for that, but it's less complicated and you control the annual recognized "income" from the conversions. (that's my plan vs a 72t - so I'm biased because of that). You have just enough in your taxable currently, for a five year lead, especially with the plan to work one more year. Once you start the 72T - can't go back so that's my call-out #2.
And if you want to just take a break for a while you could always supplant your expenses with part-time work or less "corporate" work. Couple that with signs of recession, maybe corporate layoff w/ severance is in the upcoming. Especially since you are in process of winding down, maybe you could share with your line manager that you'll put your head on chopping block if layoffs should come around near the end of your unannounced jump date next year post age 50. And start to train up replacement /download experience to someone else. Severance checks and unemployment checks is a nice jump into early retirement. See what's out there and take the time to review your options. You might find a better fit and culture and enjoy that. If not - you could always just hang it up.
Age discrimination would likely weed you out of some corporate jobs unless it's a very niche experience you bring - so if you take the leap, just know that you might not be able to get back to the same peak. At your asset/expense structure you don't really need the grind, "just enough" will do.
You've got options. Congrats to being calculated to have this opportunity!
One call-out is asset allocation in your 401k- why hold cash in the 401k, you might as well sell taxable equity and buy the same in the 401k with cash you have there, and have more in your taxable account.
Perhaps you could just start rolling over partial of your 401k -> Roth each year instead of the 72t - of course you need a 5 year off ramp for that, but it's less complicated and you control the annual recognized "income" from the conversions. (that's my plan vs a 72t - so I'm biased because of that). You have just enough in your taxable currently, for a five year lead, especially with the plan to work one more year. Once you start the 72T - can't go back so that's my call-out #2.
And if you want to just take a break for a while you could always supplant your expenses with part-time work or less "corporate" work. Couple that with signs of recession, maybe corporate layoff w/ severance is in the upcoming. Especially since you are in process of winding down, maybe you could share with your line manager that you'll put your head on chopping block if layoffs should come around near the end of your unannounced jump date next year post age 50. And start to train up replacement /download experience to someone else. Severance checks and unemployment checks is a nice jump into early retirement. See what's out there and take the time to review your options. You might find a better fit and culture and enjoy that. If not - you could always just hang it up.
Age discrimination would likely weed you out of some corporate jobs unless it's a very niche experience you bring - so if you take the leap, just know that you might not be able to get back to the same peak. At your asset/expense structure you don't really need the grind, "just enough" will do.
You've got options. Congrats to being calculated to have this opportunity!
Re: Can I retire at 50?
Yes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
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Re: Can I retire at 50?
I see the issue differently - too many people needing gray areas to have absolute black and white definitions. A retired lawyer who makes a few thousand bucks umpiring little league because he enjoys it isn’t really retired? That’s language policing to an unhelpful degree. Same for OP’s situation. OP is retiring from a corporate career. Perhaps in retirement he does some small simple work to keep busy, social, and bolster his income a little bit. Perfectly fine to call that retired - we all understand the meaning of his situation.TomatoTomahto wrote: ↑Sun Jun 12, 2022 9:55 amWelcome to BH, where retirement, 100% equities, net worth, etc. all take on creative meanings.Californiastate wrote: ↑Sun Jun 12, 2022 9:42 am It isn't really retiring if you plan on still working part time. You're just planning on working less.
When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’
’The question is,’ said Alice, ‘whether you can make words mean so many different things.’
I would definitely encourage the small jobs in this case, as the numbers support a retirement but one that carries some amount of risk since it’s marginal.
Re: Can I retire at 50?
What would you do if the stock portion of your portfolio allocation fell by 50%, which would reduce your nest egg by almost $300K? And no, you can't assume the recovery will be relatively rapid like in 2020.
Re: Can I retire at 50?
"I figure" and "should" are not a plan, those words suggest you haven't actually done the research and math. Do it and price out ACA premiums for a 50-year-old in your area, and also see how they rise as you age.UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
Re: Can I retire at 50?
I am not sure about medicaid although I don't know much about it. https://www.kiplinger.com/personal-fina ... r-medicaid "Your assets must be $2,000 or less, with a spouse allowed to keep up to $130,380. Cash, bank accounts, real estate other than a primary residence, and investments, including those in an IRA or 401(k), all count as assets."UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
Re: Can I retire at 50?
Your entire plan seems very optimistic to me. You don’t have a lot of room on the expense side go cut back if things don’t go well. Your WR will be a tad on the high side for at least 12 years until you could get something out of SS if you needed it.UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
It might all work out great. But for me, I wouldn’t do it with these numbers.
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Re: Can I retire at 50?
I think the difference lies in whether or not you need the supplemental income after "retirement". An extremely wealthy individual who is retired from his/her career and has a withdrawal rate from their portfolio of 0.1% and wants to take a small-paying umpiring gig because they love it is retired IMO. It could very well be a volunteer position vs a paying position for that person, and they wouldn't really care either way. There is a decent chance the OP might need that supplemental income, hence I would not call that person retired. To each their own though.9-5 Suited wrote: ↑Sun Jun 12, 2022 10:39 amI see the issue differently - too many people needing gray areas to have absolute black and white definitions. A retired lawyer who makes a few thousand bucks umpiring little league because he enjoys it isn’t really retired? That’s language policing to an unhelpful degree. Same for OP’s situation. OP is retiring from a corporate career. Perhaps in retirement he does some small simple work to keep busy, social, and bolster his income a little bit. Perfectly fine to call that retired - we all understand the meaning of his situation.TomatoTomahto wrote: ↑Sun Jun 12, 2022 9:55 amWelcome to BH, where retirement, 100% equities, net worth, etc. all take on creative meanings.Californiastate wrote: ↑Sun Jun 12, 2022 9:42 am It isn't really retiring if you plan on still working part time. You're just planning on working less.
When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’
’The question is,’ said Alice, ‘whether you can make words mean so many different things.’
I would definitely encourage the small jobs in this case, as the numbers support a retirement but one that carries some amount of risk since it’s marginal.
Re: Can I retire at 50?
Apparently they only know within a 28% range. So it might make sense to err on the high side.
Last edited by JoeRetire on Sun Jun 12, 2022 11:10 am, edited 1 time in total.
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Re: Can I retire at 50?
It might matter in which state you live. But in the two states where I lived, ACA enrollment was simple.
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Re: Can I retire at 50?
Have you actually checked the ACA website for your state? If not, you should in order to check your assumptions regarding cost.UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
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Re: Can I retire at 50?
Do we not backtest on this site anymore?
OP has 79% equities, 21% cash, total of $718k assets. At an annual spend of $33.6k ($2800/month), with Social Security starting at 67 in 17 years and paying $26.4k/year ($2200/month), this plan has a historical success rate of 93.6% for a 40-year retirement according to cFIREsim. This isn't very sensitive to the length of retirement, so making it 45 years gives a 93.3% success rate. (The success rates go to 100% at a $2200/month spend.)
The reason for this is because OP has expenses nearly or entirely covered by Social Security. All the savings need to do is bridge the gap until then, and there has rarely been a market in the US where 21x expenses hasn't lasted 17 years (98.5% success rate).
Now, this assumes the OP has estimated their expenses accurately, including rare but costly events like house repairs, vehicle purchases, and medical care (beyond just insurance premiums). But if they have... yeah, they're set, unless the future is worse than any time in the modern-ish past. (Which is possible, but then we may all be screwed, whether you have 21x or 50x.)
OP, make sure you know your expenses very well. At a $3500/month spend, the success rate drops to only 66% for a 40-year retirement, which most on this site would consider unacceptable.
OP has 79% equities, 21% cash, total of $718k assets. At an annual spend of $33.6k ($2800/month), with Social Security starting at 67 in 17 years and paying $26.4k/year ($2200/month), this plan has a historical success rate of 93.6% for a 40-year retirement according to cFIREsim. This isn't very sensitive to the length of retirement, so making it 45 years gives a 93.3% success rate. (The success rates go to 100% at a $2200/month spend.)
The reason for this is because OP has expenses nearly or entirely covered by Social Security. All the savings need to do is bridge the gap until then, and there has rarely been a market in the US where 21x expenses hasn't lasted 17 years (98.5% success rate).
Now, this assumes the OP has estimated their expenses accurately, including rare but costly events like house repairs, vehicle purchases, and medical care (beyond just insurance premiums). But if they have... yeah, they're set, unless the future is worse than any time in the modern-ish past. (Which is possible, but then we may all be screwed, whether you have 21x or 50x.)
OP, make sure you know your expenses very well. At a $3500/month spend, the success rate drops to only 66% for a 40-year retirement, which most on this site would consider unacceptable.
Last edited by Charon on Sun Jun 12, 2022 11:18 am, edited 1 time in total.
Re: Can I retire at 50?
Good to know.
Re: Can I retire at 50?
UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
With your numbers being tight, I would suggest you nail down the expenses more precisely and do the same for your medical expenses.
I'm not comfortable reading that much variance (over 20 %) in your expenses range and the statement "Health insurance premiums and medical expenses should be covered...."
Pretty rare that 100% of every medical expense, including dental, would be covered.
From a percentage wise, on the lower end of your expenses estimate, you're looking pretty good.
That said, one large unexpected expense, like a new roof for 15k lets say, would mean your spending would increase over 43% in that year. That's the flip side of only looking at percentages. Real costs need to be part of the calculous as well, which is why many successful budgeters pro rate predictable, and unpredictable, expenses monthly. Without taking that approach, you are not only dealing with sequence of return risk, but also one time, large expense risk as well. One, or a combo, could easily throw you off course over the 17 year bridge you need to built to get you to social security.
Is the above concept incorporated into your monthly budget?
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Re: Can I retire at 50?
Does this count the OP working part time and earning $10k per year?
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Re: Can I retire at 50?
I can almost guarantee you that you are not eligible for Medicaid, unless there is other pertinent info you haven’t shared.UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
Based on your numbers, you could probably retire and be fine with a part time job.
Re: Can I retire at 50?
Also agree with other poster who mentioned getting rid of the cash in 401K
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Re: Can I retire at 50?
With a part time job- yes. But please double check your eligibility, offerings and cost whether its medicaid or ACA in your state/city.UU37CN13 wrote: ↑Sun Jun 12, 2022 7:43 am I'm wanting to retire from the corporate grind when I turn 50 next year (June)? Can I do it?
Summary Statistics:
Single
No kids
Expenses: $2,200-$2,800 per month.
Debt: $0
401k: $553k ($509k in S&P500 Index fund, $44k in Cash)
Taxable Accounts: $165k ($99k in Cash, $37K VFIAX, $19k VNQ, $10k I-Bond)
House: $175k
Car: $14k
Social Security: $2,200/month @67 in today's dollars.
I plan to do 72t distributions if needed to access 401k without penalty. Likely will work part time side gigs just to keep busy, no more than $10k per year. Planning to stay in 12% tax bracket at most. Will either do medicaid or obamacare for health insurance whichever i can qualify for in Illinois.
If you want more info, I can provide. Thanks in advance for any feedback!
I'm working part time mostly for benefits. Bonus, the pay also allows me to continue to contribute into 401k. I will eventually retire early too but am not looking forward to researching and paying for health care.
Re: Can I retire at 50?
Thanks for this feedback! The cash in my 401k is there because I didn't want to put it in bonds because rates were low and I felt like bond prices were going to drop this year, which they have so far. I might do what you suggest and allocate more in taxable account to cash and move 401k cash to equity. Will have to think about tax implications of that.Figaro wrote: ↑Sun Jun 12, 2022 10:26 am I think it's doable with that stash you have.
One call-out is asset allocation in your 401k- why hold cash in the 401k, you might as well sell taxable equity and buy the same in the 401k with cash you have there, and have more in your taxable account.
Perhaps you could just start rolling over partial of your 401k -> Roth each year instead of the 72t - of course you need a 5 year off ramp for that, but it's less complicated and you control the annual recognized "income" from the conversions. (that's my plan vs a 72t - so I'm biased because of that). You have just enough in your taxable currently, for a five year lead, especially with the plan to work one more year. Once you start the 72T - can't go back so that's my call-out #2.
And if you want to just take a break for a while you could always supplant your expenses with part-time work or less "corporate" work. Couple that with signs of recession, maybe corporate layoff w/ severance is in the upcoming. Especially since you are in process of winding down, maybe you could share with your line manager that you'll put your head on chopping block if layoffs should come around near the end of your unannounced jump date next year post age 50. And start to train up replacement /download experience to someone else. Severance checks and unemployment checks is a nice jump into early retirement. See what's out there and take the time to review your options. You might find a better fit and culture and enjoy that. If not - you could always just hang it up.
Age discrimination would likely weed you out of some corporate jobs unless it's a very niche experience you bring - so if you take the leap, just know that you might not be able to get back to the same peak. At your asset/expense structure you don't really need the grind, "just enough" will do.
You've got options. Congrats to being calculated to have this opportunity!
Thanks for the suggestion on doing roth conversion instead of 72t. I will have to give that some thought. I do think it makes sense for me to start to withdraw from the 401k up to the 12% tax bracket rather than waiting.
I would love to get severed, but not holding my breath on that!
Re: Can I retire at 50?
I've researched and done the math. It all depends on how much income I decide to make/take and the amount of medical expenses which is a variable number. 2,200 is 100% of my actual monthly expenses for the last 12 months excluding the additional mortgage payments which I will no longer have after October when the house is paid off. The additional $600/month is my buffer for medical and other unexpected expenses.02nz wrote: ↑Sun Jun 12, 2022 10:43 am"I figure" and "should" are not a plan, those words suggest you haven't actually done the research and math. Do it and price out ACA premiums for a 50-year-old in your area, and also see how they rise as you age.UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
Re: Can I retire at 50?
My understanding is that illinois expanded medicaid and it's currently an income only requirement approximately $18k or less. More than that you have to go to obamacare which i think I would prefer anyways.student wrote: ↑Sun Jun 12, 2022 10:47 amI am not sure about medicaid although I don't know much about it. https://www.kiplinger.com/personal-fina ... r-medicaid "Your assets must be $2,000 or less, with a spouse allowed to keep up to $130,380. Cash, bank accounts, real estate other than a primary residence, and investments, including those in an IRA or 401(k), all count as assets."UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
Re: Can I retire at 50?
2,200 is my actual average expenses for the last 12 months excluding mortgage which will be paid off in October. The extra $600 is my buffer for any health insurance/medical expense increases and unplanned expenses.
Re: Can I retire at 50?
Yes I have.JoeRetire wrote: ↑Sun Jun 12, 2022 11:07 amHave you actually checked the ACA website for your state? If not, you should in order to check your assumptions regarding cost.UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
Re: Can I retire at 50?
Thanks for this feedback. $2,200 is my average monthly expenses for the last 12 months excluding mortgage which will be paid off in October. The extra $600 per month is my buffer for any health insurance/medical increases and unplanned expenses.Charon wrote: ↑Sun Jun 12, 2022 11:08 am Do we not backtest on this site anymore?
OP has 79% equities, 21% cash, total of $718k assets. At an annual spend of $33.6k ($2800/month), with Social Security starting at 67 in 17 years and paying $26.4k/year ($2200/month), this plan has a historical success rate of 93.6% for a 40-year retirement according to cFIREsim. This isn't very sensitive to the length of retirement, so making it 45 years gives a 93.3% success rate. (The success rates go to 100% at a $2200/month spend.)
The reason for this is because OP has expenses nearly or entirely covered by Social Security. All the savings need to do is bridge the gap until then, and there has rarely been a market in the US where 21x expenses hasn't lasted 17 years (98.5% success rate).
Now, this assumes the OP has estimated their expenses accurately, including rare but costly events like house repairs, vehicle purchases, and medical care (beyond just insurance premiums). But if they have... yeah, they're set, unless the future is worse than any time in the modern-ish past. (Which is possible, but then we may all be screwed, whether you have 21x or 50x.)
OP, make sure you know your expenses very well. At a $3500/month spend, the success rate drops to only 66% for a 40-year retirement, which most on this site would consider unacceptable.
I plugged my numbers into personal capital and it's currently showing 83% probability of success. I have not heard of cfiresim. I will have to check that out.
Re: Can I retire at 50?
Thanks for this feedback. 2,200 is my actual average monthly expense for the last 12 months excluding mortgage which I will have paid off in October. The additional $600 per month is my buffer for any health insurance/medical expense increases and unplanned expenses. Sequence of returns risk is definitely worrisome to me. That's why I'm actually glad the market is down almost 20% right now which i think decreases that risk somewhat in the near term.chipperd wrote: ↑Sun Jun 12, 2022 11:13 amUU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
With your numbers being tight, I would suggest you nail down the expenses more precisely and do the same for your medical expenses.
I'm not comfortable reading that much variance (over 20 %) in your expenses range and the statement "Health insurance premiums and medical expenses should be covered...."
Pretty rare that 100% of every medical expense, including dental, would be covered.
From a percentage wise, on the lower end of your expenses estimate, you're looking pretty good.
That said, one large unexpected expense, like a new roof for 15k lets say, would mean your spending would increase over 43% in that year. That's the flip side of only looking at percentages. Real costs need to be part of the calculous as well, which is why many successful budgeters pro rate predictable, and unpredictable, expenses monthly. Without taking that approach, you are not only dealing with sequence of return risk, but also one time, large expense risk as well. One, or a combo, could easily throw you off course over the 17 year bridge you need to built to get you to social security.
Is the above concept incorporated into your monthly budget?
Re: Can I retire at 50?
Great that you have done the research.UU37CN13 wrote: ↑Sun Jun 12, 2022 12:25 pmMy understanding is that illinois expanded medicaid and it's currently an income only requirement approximately $18k or less. More than that you have to go to obamacare which i think I would prefer anyways.student wrote: ↑Sun Jun 12, 2022 10:47 amI am not sure about medicaid although I don't know much about it. https://www.kiplinger.com/personal-fina ... r-medicaid "Your assets must be $2,000 or less, with a spouse allowed to keep up to $130,380. Cash, bank accounts, real estate other than a primary residence, and investments, including those in an IRA or 401(k), all count as assets."UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
Re: Can I retire at 50?
IMHO, that's not much of a buffer. I'm not sure about you, but I expect things in the next 12 months to be more expensive than the last 12 months. If it were me, I'd plan on that.UU37CN13 wrote: ↑Sun Jun 12, 2022 12:29 pm2,200 is my actual average expenses for the last 12 months excluding mortgage which will be paid off in October. The extra $600 is my buffer for any health insurance/medical expense increases and unplanned expenses.
But you can clarify that fairly easily by looking through your state's ACA website. Then consider inflation. And also start thinking about other unplanned expenses you might incur down the road. Have you encountered any unplanned expenses the past few years? Or has everything always been planned?
Last edited by JoeRetire on Sun Jun 12, 2022 3:19 pm, edited 1 time in total.
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: Can I retire at 50?
And have you actually found plans that will cost less than $600/month and meet your needs?UU37CN13 wrote: ↑Sun Jun 12, 2022 12:30 pmYes I have.JoeRetire wrote: ↑Sun Jun 12, 2022 11:07 amHave you actually checked the ACA website for your state? If not, you should in order to check your assumptions regarding cost.UU37CN13 wrote: ↑Sun Jun 12, 2022 10:35 amYes I figure I will either qualify for medicaid or obamacare. Health insurance premiums and medical expenses should be covered in my 2,200 to 2,800 estimate.spottedtiles wrote: ↑Sun Jun 12, 2022 8:25 am I would not if I were in your shoes. Have you accounted for health care insurance in your expenses?
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: Can I retire at 50?
What corporate salary you would be retiring from?UU37CN13 wrote: ↑Sun Jun 12, 2022 7:43 am I'm wanting to retire from the corporate grind when I turn 50 next year (June)? Can I do it?
Summary Statistics:
Single
No kids
Expenses: $2,200-$2,800 per month.
Debt: $0
401k: $553k ($509k in S&P500 Index fund, $44k in Cash)
Taxable Accounts: $165k ($99k in Cash, $37K VFIAX, $19k VNQ, $10k I-Bond)
House: $175k
Car: $14k
Social Security: $2,200/month @67 in today's dollars.
I plan to do 72t distributions if needed to access 401k without penalty. Likely will work part time side gigs just to keep busy, no more than $10k per year. Planning to stay in 12% tax bracket at most. Will either do medicaid or obamacare for health insurance whichever i can qualify for in Illinois.
If you want more info, I can provide. Thanks in advance for any feedback!
AA: 38/43/19 - equities/positive return-zero volatility/bonds |
DW retired 2019, I retired 2022, "it'll be fine"
Re: Can I retire at 50?
No, but in a weak economy with a down market (when the OP might really need to work), there will be lots of competition for such jobs, and age discrimination can be real even at McDonald's. Counting on magically having an extra $10k for doing "something" - particularly when the need for this might strike a decade into retirement - is probably not a good idea.brian91480 wrote: ↑Sun Jun 12, 2022 11:50 amDoes this count the OP working part time and earning $10k per year?
Re: Can I retire at 50?
I'd suggest two things - do a budget and figure out exactly what your expenses are.
Do the work, and find out exactly what healthcare you'd qualify for, and what it would cost. What if you get sick and wind up paying the maximum out of pocket one year? What if it were two years?
If you don't know these answers, your a guessing, and a 30 - 50 year plan based on a guess might not be optimal.
Do the work, and find out exactly what healthcare you'd qualify for, and what it would cost. What if you get sick and wind up paying the maximum out of pocket one year? What if it were two years?
If you don't know these answers, your a guessing, and a 30 - 50 year plan based on a guess might not be optimal.