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Another “can I retire comfortably” question
Posted on 11/14/23 at 2:32 pm
Posted on 11/14/23 at 2:32 pm
3 million in 401k, house and vehicles paid off (debt free), $1500 a month pension, $300,000 in savings/liquid accounts, 50% employer paid to health insurance.
Wife doesn’t work, child starting college (separate account “should” cover most of this cost). Living in an “average” cost of living area nationally. Nice but not “luxurious” lifestyle. 3 nice vacations (1 international) every year is desired.
Retirement age 53, starting 8 years from now.
My calculations say very doable. Am I missing something? (Outside of something like some crazy runaway hyperinflation at that time)
Wife doesn’t work, child starting college (separate account “should” cover most of this cost). Living in an “average” cost of living area nationally. Nice but not “luxurious” lifestyle. 3 nice vacations (1 international) every year is desired.
Retirement age 53, starting 8 years from now.
My calculations say very doable. Am I missing something? (Outside of something like some crazy runaway hyperinflation at that time)
35
Posted on 11/14/23 at 2:35 pm to Lgrnwd
quote:
Nice but not “luxurious” lifestyle. 3 nice vacations (1 international) every year is desired.
Is international europe/africa/asia or more like cancun and vancouver?
Posted on 11/14/23 at 2:40 pm to Lgrnwd
Well at 53 you can’t touch the 401k without penalty. IMO, to do this you need more after tax assets.
Posted on 11/14/23 at 2:40 pm to Lgrnwd
Subtle brag
Posted on 11/14/23 at 2:41 pm to JohnnyKilroy
quote:
Is international europe/africa/asia or more like cancun and vancouver?
Europe, Asia, Africa
Posted on 11/14/23 at 2:43 pm to SloaneRanger
quote:
Well at 53 you can’t touch the 401k without penalty. IMO, to do this you need more after tax assets.
yeah you didn't plan for this. You could do 55.
Posted on 11/14/23 at 2:45 pm to whiskey over ice
quote:
Subtle brag
Really not, I see some really high “retirement goal” numbers on here for early retirements. That’s why I am asking, wondering if there is something I am not thinking about.
I am aware there is a penalty for 401k withdrawals at that age, but I think I can absorb that with those numbers.
Posted on 11/14/23 at 2:49 pm to Lgrnwd
quote:
but I think I can absorb that with those numbers.
Absorb the early withdrawal penalties? No, you don’t want to go down that road.
Posted on 11/14/23 at 2:51 pm to Lgrnwd
quote:Why would you? I would hate to pay a penalty to use my own money. Spend the next 8 years building up an after tax nest egg to carry you over until you can withdraw penalty free.
I am aware there is a penalty for 401k withdrawals at that age, but I think I can absorb that with those numbers.
Posted on 11/14/23 at 2:54 pm to SloaneRanger
quote:
Absorb the early withdrawal penalties? No, you don’t want to go down that road.
Fair enough. That’s why I am asking.
Also forgot to mention at least another $1000 a month income from “work from home” I can do.
Posted on 11/14/23 at 3:03 pm to Lgrnwd
Look up 72T calculator to see how to avoid the penalty.
Posted on 11/14/23 at 3:17 pm to Lgrnwd
Just when I was thinking I was in good shape…….
Posted on 11/14/23 at 3:17 pm to SloaneRanger
quote:
Absorb the early withdrawal penalties? No, you don’t want to go down that road.
There’s been plenty of analysis on this subject. There are situations where the early withdrawal penalty is worth it.
It’s not an “under no circumstances” decision.
Posted on 11/14/23 at 3:29 pm to Lgrnwd
I'd say you've got a good shot, but why not *really* make sure by working a few more years? Every year you work is one more you don't have to fund and another year of compounding interest. You don't want to be a situation where things went south, you incurred some cost due to unforeseen circumstances, and you wish you could go back to work but can't.
Posted on 11/14/23 at 3:30 pm to Lgrnwd
quote:
3 million in 401k, house and vehicles paid off (debt free), $1500 a month pension, $300,000 in savings/liquid accounts, 50% employer paid to health insurance.
You have this currently at age 45 or this is your target by age 53?
Posted on 11/14/23 at 3:30 pm to Lgrnwd
The $300k may not be enough to bridge you to 59.5. Even if it doubles in 8 years you're looking at maybe just enough to get you to 59.5 but maybe not at your desired lifestyle. You'll likely want/need to use 72t SEPP or Roth conversion ladder to access 401k early penalty free. It would probably help with tax optimization anyway and to minimize RMDs later. Or, you could work until 55 and use Rule of 55 instead.
You dont have a Roth IRA? Look into a backdoor Roth if you are over income limit. Building a larger taxable brokerage as a bridge account and to take advantage of zero LTCG rate in low taxable income years of early retirement would also help.
You dont have a Roth IRA? Look into a backdoor Roth if you are over income limit. Building a larger taxable brokerage as a bridge account and to take advantage of zero LTCG rate in low taxable income years of early retirement would also help.
Posted on 11/14/23 at 3:34 pm to Lgrnwd
No need to absorb early withdrawal penalties if you use 72(t) SEPP, Roth Conversion Ladder, or Rule of 55.
Posted on 11/14/23 at 4:06 pm to Lgrnwd
quote:
3 million in 401k
How do people get these sums in 401K when there is a max of ~$23K a year? Two HHs contributing maxing for like 20 years....does that get there?
That big of a 401K and then such a relatively small taxable brokerage balance is a head scratcher to me.
Posted on 11/14/23 at 4:10 pm to Lgrnwd
quote:
3 million in 401k, house and vehicles paid off (debt free), $1500 a month pension, $300,000 in savings/liquid accounts, 50% employer paid to health insurance.
Wife doesn’t work, child starting college (separate account “should” cover most of this cost). Living in an “average” cost of living area nationally. Nice but not “luxurious” lifestyle. 3 nice vacations (1 international) every year is desired.
Retirement age 53, starting 8 years from now.
My calculations say very doable. Am I missing something? (Outside of something like some crazy runaway hyperinflation at that time)
What are you monthly expenses? Pension likely covers insurance and property tax. Your monthly living expenses are the most important variable to be able to provide any real analysis of the situation.
Posted on 11/14/23 at 4:12 pm to lynxcat
quote:
How do people get these sums in 401K when there is a max of ~$23K a year? Two HHs contributing maxing for like 20 years....does that get there?
Don’t forget company match, plus some “after tax” contributions. Which means some of that 401k total will be able to be withdrawn early penalty free.
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