Retirement IQ

brij2006

We're all always talking about retirement, and wondering how we're doing or what that magic number is.  Here's a tool that is really great to see where you're at and how that's projecting out for what you need in retirement.  

I played around with it a bit, and we realized that we could feasibly retire at 50.  That's something other random calculators we've found, didn't give you a good projection on or were complex to fill in.

Here's the link.
https://www.chrishogan360.com/

Also, for those who like podcasts, this guy has some great information.  And his voice is nice to listen to. ;-)  Just saying.

maple2

I just read an article about planning for early retirement. I hadn't thought about it very much before, but they pointed out that the age at which you can withdraw from most retirement savings investments penalty free is relatively old (IRA = 59.5 and 401K = 55 with restrictions), so people who want to retire early need to make sure they have other investments to live off of during the time between retirement and penalty free withdrawal. Just another perspective since this board often focuses on 401k and IRA options for retirement.

hoffse

That's interesting.  The number he gave me felt kind of low.  We invest more than twice what he said to invest in order to retire by 50.  But right now most of that is being sent to tax-advantaged accounts that we can't touch until we are older.  If we want to retire early, we need to invest more in regular brokerage accounts so we have a source of income to carry us through those 10 years or whatever before we can access the tax-advantaged retirement accounts.  We already invest a little bit, but we will ramp it up once our debt is paid off and our emergency fund is at 6-8 months.... Or one of us partners.  I'm up for equity partner in 4 more years, so that could really be a game changer.  I honestly don't know how to plan for it, so I just don't.  If that happens we'll have to reassess quickly once we see what the actual reality of it is.

General rule of thumb is you need either passive income generators like rental property or you need 25x your annual expenses invested.  Or some blend of both.  So if you want $100K/year in retirement that comes entirely from dividend stocks or bonds or whatever, you need about $2.5M invested.

That assumes a 4%/year withdrawal rate, adjusted annually for inflation.  In theory, you should be able to withdraw that much into perpituity and never run out, so you can start it whenever you have the amount of replacement income you need. 

I've been looking at this kind of thing a lot recently, because H and I really could retire pretty early if we set it up right.  We make good incomes and don't live on very much once you exclude debt.  We would want to travel more, so in my head I triple our current, annual expenses outside of debt to account for things like travel and increased healthcare costs as we age.  But even then we aren't at $100K/year in spending.

I think to provide a really good safety net I would probably want $3M invested with our mortgage paid off and kids' college accounts funded.  And at that point we could both retire or go part-time, and I wouldn't worry about money again.  That would throw off enough income for us to live well, engage in charitable giving, and spoil our kids/grandkids a little bit.

brij2006

Yeah, we know that we will have to set up some mutual funds that aren't retirement age driven.  We sat down with a financial planner on Monday, and we can set up a fund outside of a Roth IRA and H's 401k and use that to live off of starting at 50.  We also wouldn't retire fully.  It would just be retiring from our "career" jobs.  We will both still work some, but it will be doing things we enjoy and aren't doing because we need to make X amount of money.  Even if it's given our current situation, we only need about $2,000/month to live.  So we wouldn't need to be pulling 100% from our retirement accounts in order to do so.