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Retiring at 50 with $2MM in savings
Posted on 5/11/26 at 11:28 am
Posted on 5/11/26 at 11:28 am
So here is a video from Erin Talks Money going over the 3-bucket method and how retiring at age 50 with $2MM in savings is doable:
I will be in this situation very soon and I think I'd be really happy with $100k/yr of spending. I dont really know much about managing money in retirement. This video makes it seem very simple and realistic. What are the biggest flaws with this analysis from Erin?
I will be in this situation very soon and I think I'd be really happy with $100k/yr of spending. I dont really know much about managing money in retirement. This video makes it seem very simple and realistic. What are the biggest flaws with this analysis from Erin?
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Posted on 5/11/26 at 11:34 am to notsince98
I watched that video this morning as well. I really like the strategy outlined here.
Posted on 5/11/26 at 11:44 am to notsince98
I love Erin Talks Money. Her strategies are so much common sense. I am planning to work till at least 58 (that's when company will pay majority of our health insurance in retirement) but I'm going to watch this for sure. I don't anticipate we will need a large monthly income in retirement, more just a bucket to draw on for large expenses, travel, gifting, etc.
Posted on 5/11/26 at 12:00 pm to notsince98
quote:Length of retirement, inflation, and market downturns.
What are the biggest flaws with this analysis from Erin?
Posted on 5/11/26 at 12:06 pm to NC_Tigah
that seems like a crapton of money to have in cash/equivalents at age 50.
how does avg guy get that much in cash? sell equities? it would take a pretty long time to save that much in cash while also putting some into stocks, bonds etc., I think.
how does avg guy get that much in cash? sell equities? it would take a pretty long time to save that much in cash while also putting some into stocks, bonds etc., I think.
Posted on 5/11/26 at 12:34 pm to NC_Tigah
quote:
Length of retirement, inflation, and market downturns.
She addressed all of those. Did she make some specific assumptions that were unreasonable?
Posted on 5/11/26 at 12:36 pm to Jmcc64
quote:
how does avg guy get that much in cash?
It probably isnt for the average person. It would have to be an above average pay career and probably be putting back 15% of their own paycheck from the day they left college.
Posted on 5/11/26 at 12:37 pm to notsince98
I’ll watch tonight, but is she talking about $2MM outside of retirement accounts? As in, retire accounts are lagniappe and the $2MM is just to get one to 59.5 or 62 or 67, etc ?
Posted on 5/11/26 at 12:41 pm to turkish
quote:
I’ll watch tonight, but is she talking about $2MM outside of retirement accounts? As in, retire accounts are lagniappe and the $2MM is just to get one to 59.5 or 62 or 67, etc ?
It is $2MM total for everything to cover retirement (plus some SS at 67) with a starting spending rate of $120k/yr. She doesn't really touch the vehicles aspect. So brokerage, traditional retirement and Roth aspects are not covered. I would assume her strategy is based on a LOT of brokerage and Roth savings but no idea how much would be the minimum.
This post was edited on 5/11/26 at 12:43 pm
Posted on 5/11/26 at 12:58 pm to notsince98
quote:
What are the biggest flaws with this analysis from Erin?
I'm not even 40 yet. I don't expect to get social security.
Posted on 5/11/26 at 1:04 pm to notsince98
quote:
think I'd be really happy with $100k/yr of spending. I dont really know much about managing money in retirement.
With Trumpflation? I guess if you’re debt free it wouldn’t be too bad it’ll pay the bills but won’t have much in the way of travel/vacations that people do when retired
Posted on 5/11/26 at 1:11 pm to turkish
It includes retirement accounts. She doesnt get into it but there are tactics to access retirement accounts early penalty free. She also doesnt cover methods to rebalance.portfolio along way or shift to cash and establishing 5-8 yr safe bucket approaching retirement. This video is meant to demonstrate it is doable not the details for each individual.
Posted on 5/11/26 at 1:17 pm to notsince98
quote:
What are the biggest flaws with this analysis from Erin?
No tax treatment. No consideration of the source of withdrawals: taxable accounts or tax sheltered or Roth. She talks about real return but not after tax return.
$950K in a short term bucket that is taxable has to beat inflation and taxes.
When Social Security hits, you can get a higher after tax income with a lower draw down rate because not all SS is taxed. State income taxes also are also a factor, because most states don't tax SS, some don't tax IRA's, some do.
Posted on 5/11/26 at 1:37 pm to Jmcc64
quote:
that seems like a crapton of money to have in cash/equivalents at age 50.
Yeah I said the same. Funny, as I just retired last year at 50. I guess I have a 2 bucket plan me and my FA worked out. Two years of cash in HYSAs and near the same in bonds. Certainly isn't $950k as I'm not planning to spend $120k/yr and I wouldn't have gone for more cash as I wanted to be aggressive with the way the market has been for the last few years.
With that said, I do like a good bit of what she said and got some value out of it. Especially the 17 year bucket so to speak. Although my 2nd bucket is the all years beyond two bucket haha. Hopefully I see a nice 11%+ avg return too for the next 17
Health care, taxes, and obviously a down market do make me worry sometimes but I could always do some consulting or other work if I really needed.
Posted on 5/11/26 at 1:52 pm to Sho Nuff
So a 2 year bear market has you selling equities in a down market just to make expenses? Sounds a bit risky unless you can cover expenses with other income sources.
Posted on 5/11/26 at 1:54 pm to notsince98
Bucket approach can and does work.
Buddy of mine retired early from Palo Alto at about 55 years of age and uses this approach. His net worth has actually increased
I am planning to hang it up at 50 Lord willing. But want more than $2m to feel comfortable
Medical insurance alone will be $1-1.5k a month for me and Mrs
Buddy of mine retired early from Palo Alto at about 55 years of age and uses this approach. His net worth has actually increased
I am planning to hang it up at 50 Lord willing. But want more than $2m to feel comfortable
Medical insurance alone will be $1-1.5k a month for me and Mrs
Posted on 5/11/26 at 1:55 pm to TorchtheFlyingTiger
I have other income sources as well as bonds if needed
Posted on 5/11/26 at 2:17 pm to TorchtheFlyingTiger
quote:
So a 2 year bear market has you selling equities in a down market just to make expenses?
There are going to be those 20%-30% growth years as well. We could easily come up with a scenario where $5 million is not enough.
Taking $2 million and using the last 30 years of S&P actual returns as example growth, and applying the 4% rule. You would have between $17 million to $19 million still invested. Factoring in inflation, it would be equal to $8-$9 million in today dollars.
With kids gone, house paid off and hopefully cars - you can easily retire on $2 million at 50. That much money at age 50, puts you in the top 5%-7% wealth bracket.
Posted on 5/11/26 at 2:24 pm to Sho Nuff
I prefer the Morningstar approach to buckets with a two year short term bucket that is all cash, an intermediate term bucket that is bonds and some stocks if you want, then long term that is all stocks. The way to present it is that you always keep all three buckets and keep refilling the short term bucket from the other two, so always keep two years of cash in the short term bucket.
Another huge thing that gets overlooked is asset allocation. If you buy one or two big index funds, you can't choose where you are getting your money from when you have to sell some of the fund, it is going to predominately come from mega cap stocks, whether they are up or down. If you invest in multiple funds of different market caps and stock styles, you at least have a choice.
Another huge thing that gets overlooked is asset allocation. If you buy one or two big index funds, you can't choose where you are getting your money from when you have to sell some of the fund, it is going to predominately come from mega cap stocks, whether they are up or down. If you invest in multiple funds of different market caps and stock styles, you at least have a choice.
Posted on 5/11/26 at 2:37 pm to CharlesUFarley
quote:
prefer the Morningstar approach to buckets with a two year short term bucket that is all cash, an intermediate term bucket that is bonds and some stocks if you want, then long term that is all stocks. The way to present it is that you always keep all three buckets and keep refilling the short term bucket from the other two, so always keep two years of cash in the short term bucket.
I'd say that's what I'm in then. The plan was always to refresh the cash bucket from equities when they're doing well. He wanted me to have more like 3 years in bonds but I'm a little less than 2 because I wanted to ride this wave. I will likely get to that point, but not yet haha
quote:
If you invest in multiple funds of different market caps and stock styles, you at least have a choice.
I pretty well diversified. Brokerages/Roth/401k wise I am heavy in Apple, VOO, SWPPX (which i know overlap with my AAPL), and SWISX on my own. Then I have an account with my FA where he has me heavy in US Equity large cap and International Developed Markets. He has me about 15% in Fixed Income.
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