Rule of thumb says you can take 4% indefinitely - obviously you might have to scale back on a particularly poor year and let it build up in particularly good years, but that's about right. But, even being cautious, you can take $60k a year for 5 years then re-evaluate. Then, you're 60 and only a couple of years from early SS eligibility (assuming that's in play).

If the market does well those first 5 years, you can probably up it (because you've got fewer years left). to $70k or $75k. And, at that point, you're nearly full SS retirement age and that's going be anywhere from $15k to $25k additional (perhaps more) in today's dollars and you should be fine to 85.

So, while it's not for me, it isn't crazy if you have the $1.5 million in hand and your mortgage is either $0 or very manageable. I would say no if you have a big mortgage - you either need the $2 million or the house paid down.

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Posted by lynxcat

Member since Jan 2008

24478 posts

Posted on 2/8/19 at 9:57 am to Ace Midnight

quote:
Rule of thumb says you can take 4% indefinitely - obviously you might have to scale back on a particularly poor year and let it build up in particularly good years, but that's about right. But, even being cautious, you can take $60k a year for 5 years then re-evaluate. Then, you're 60 and only a couple of years from early SS eligibility (assuming that's in play).

If the market does well those first 5 years, you can probably up it (because you've got fewer years left). to $70k or $75k. And, at that point, you're nearly full SS retirement age and that's going be anywhere from $15k to $25k additional (perhaps more) in today's dollars and you should be fine to 85.

So, while it's not for me, it isn't crazy if you have the $1.5 million in hand and your mortgage is either $0 or very manageable. I would say no if you have a big mortgage - you either need the $2 million or the house paid down.

In the simplest of terms, is your view on "can I retire":

(Retirement savings x 4%) * (1-expected tax rate) = Annual take home dollars available for use
Less: Annual retirement spending
-----------------------------------------------------------------------------
If this number is >0, then ready to retire?

Forecasting retirement spending seems less straightforward. Home being paid off is a big chunk. Auto bills will fluctuate across time. Things like travel are highly flexible depending on interests [but can also be expensive].

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