44 and want to retire

[mstrlucky74]

My wife has 125k and I have 500k in 401k. We have about 30k liquid. No kids. We have 280k left on our mortgage and house is worth about 320k. It's a legal two family so renting it out is always and option. No debt except two leased cars that are due to be up within the year.
When leave workforce I will be able to consult partime from home and make about 40k year.

Think we could leave workforce in next 5 years with what we have saved. But don't you get penalized touching 401k kidney? So we couldn't withdraw from that in our 40's or 50's?

My wife is 40. Thanks

 

[Ready2Go]

https://www.investopedia.com/terms/r/rule72t.asp

 

[candrew]

http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

 

[CaliKid]

I would guess no. If you are leasing two cars you are probably not extremely frugal. Additionally you have made very little headway toward paying off your mortgage. With not a lot of money I don't think you have a chance of surviving unless you change your spending/savings habits. Just a guess on my part.

 

[HawkeyeNFO]

How much do you spend annually?

No one can answer your question until your spending level is known.

 

[Aerides]

Part-time-from-home consulting gigs making $40k per year are particularly rare, and you would need a highly desirable specialized skill to have a shot, especially as a then-50 year old.

Your expenses (real, based on actual spending) and savings rate, are key to the timeframe. Traditionally, you cannot withdraw from your 401k until 59.5, though there is the rule-of-55 for some situations.

That said, you have a good start, and should begin on a plan to boost both your taxable and tax-deferred savings, and get some real firm estimates of future needs.

 

[UnrealizedPotential]

My first thought is how would you get access to the 401K in a way that makes sense? That alone is tough. My gut tells me that you will probably be better off working until you reach age 55 , assuming you can tap the 401K then. I would check with employer to make sure you can get access at 55, if that is something you might want to do. At that point in time I would run the numbers.


My feeling is that it is extremely hard to retire or even go part time unless one is old enough to have access to the money or they have ample after tax money that one can get to without any age restriction. I could be wrong, but it appears to me you are stuck. Just my thoughts.

 

[mstrlucky74]

Part-time-from-home consulting gigs making $40k per year are particularly rare, and you would need a highly desirable specialized skill to have a shot, especially as a then-50 year old.

Your expenses (real, based on actual spending) and savings rate, are key to the timeframe. Traditionally, you cannot withdraw from your 401k until 59.5, though there is the rule-of-55 for some situations.

That said, you have a good start, and should begin on a plan to boost both your taxable and tax-deferred savings, and get some real firm estimates of future needs.

Yes easy to make 40k with what I do.

 

[mstrlucky74]

How much do you spend annually?

No one can answer your question until your spending level is known.

Without mortgage and car leases about 12k year that includes property tax
Not including mortgage or leases as we would make sure those don't exist when we stop working.

 

[joeea]

My wife has 125k and I have 500k in 401k. We have about 30k liquid. No kids.

We have 280k left on our mortgage and house is worth about 320k. It's a legal two family so renting it out is always and option.

Why isn't it rented out now?

No debt except two leased cars that are due to be up within the year.
When leave workforce I will be able to consult partime from home and make about 40k year.

Think we could leave workforce in next 5 years with what we have saved.

What will your expenses be?
How much are you both making now? How much of that are you saving each year?

You will be funding a lot of years in retirement.

 

[Lukeee]

Depends on your expected annual savings rate and ROI for 401K and investments over the next 5 years.

I would run a firecalc estimate based on current assets and expenses based on today’s numbers. Be honest with yourself.
1). Get a realistic retirement budget. Monitor and adjust expenses easing into the retirement lifestyle
2). re-evaluate cost of retirement/nest egg size periodically
3). Adjust lifestyle and/or adjust goal date if necessary.
4). Don’t forget rainy day funds for when the economy goes bad and/or if there is a potential expense emergency

 

[Aerides]

Without mortgage and car leases about 12k year that includes property tax
Not including mortgage or leases as we would make sure those don't exist when we stop working.

12k per year - 1k per month for two adults? Food, Clothing, Electric, Fuel, Internet, Phone, Cable? That's hella frugal.

But assuming that's accurate, add HI premiums, to double it.

 

[ivinsfan]

Yes easy to make 40k with what I do.

Hold on a second here this implies you have a pretty good paying job and your spouse works...yet you don't own a car, have low equity in your home and only 30k in non retirement savings where is your money going?

 

[UnrealizedPotential]

12k per year - 1k per month for two adults? Food, Clothing, Electric, Fuel, Internet, Phone, Cable? That's hella frugal.

But assuming that's accurate, add HI premiums, to double it.

If that amount is true, that has me beat. I'm spending 15K annually right now. It was 14K, but knowing I can get something from my pension in a year has me a little more bold.

 

[ivinsfan]

Without mortgage and car leases about 12k year that includes property tax
Not including mortgage or leases as we would make sure those don't exist when we stop working.

OK where is your money then, at 44 you have less then 15% equity in your home, a small house payment....how are you going to pay off your house since you can't pull deferred money without paying taxes and penalties ..are you going to buy a car and with what money?

I'm not calling troll here but I'm getting close...….

 

[Conundrum]

If your job is tolerable work to age 55 if you can manage it. You can do a 72t or a Roth conversion ladder (if you can come up with a way to pay for the first 5 years living expenses). Call your plan administrator about the rule of 55 if that’s an angle that you are willing to consider)

Can you do your work from home job till 55? Perhaps incorporate, be a employee of the corporation and use a solo 401k to get you to 55. A hour with a attorney would probably be worthy investment. Perhaps somebody else could comment on this

https://www.mysolo401k.net/exceptions-to-early-solo-401k-ira-distribution-tax-penalties/


I would encourage you to get a qualified CPA involved instead of going it alone. I am going to do a 72t but I ran it by my long time CPA and hired a hourly financial advisor for a few hours to have that conversation as well.

Just make sure you do your due diligence.

 

[Lukeee]

If that amount is true, that has me beat. I'm spending 15K annually right now. It was 14K, but knowing I can get something from my pension in a year has me a little more bold.

Your post makes me feel that I have LOTS of unrealized potential when it comes to living more frugally.

Let me see....
property tax $7K
Health insurance $2K
Phone, internet, gas, utilities $6K..
Food.... wait. I just ran out of money.

 

[joeea]

Without mortgage and car leases about 12k year that includes property tax
Not including mortgage or leases as we would make sure those don't exist when we stop working.

Your expenses are 12k per year, and you can easily make 40k per year working part-time from home once retired.

So what is your question again? Retire today and live the rest of your live easily.

 

[Katiek]

I would suggest tracking expenses carefully for at least a year and using a budget form that may help you identify expense categories that aren't obvious (such as reserves for new cars, medical expenses, reserves for housing repairs such as water heaters, new roof etc. , expenses related to travel or new hobbies that you'll start in your free time).

But welcome to the forum and congrats on your savings so far. Only you can determine if it's "enough" but make sure you have a good handle on future expenses.

 

[Ready2Save]

Hi and welcome! You have done a nice job saving up $625K in your retirement accounts (you are ahead of where I was at your age - I am 47). Trying to connect a few dots on how you are doing a decent job with saving for retirement, but not even having 20% equity in your home...are you paying PMI? Also, are you really planning on living on $12K/year Also, you are planning on paying off your mortgage in 5 years - did your income just jump up recently? Not trying to be difficult, but just trying to get a little more info...thx!

 

[mstrlucky74]

Hi and welcome! You have done a nice job saving up $625K in your retirement accounts (you are ahead of where I was at your age - I am 47). Trying to connect a few dots on how you are doing a decent job with saving for retirement, but not even having 20% equity in your home...are you paying PMI? Also, are you really planning on living on $12K/year Also, you are planning on paying off your mortgage in 5 years - did your income just jump up recently? Not trying to be difficult, but just trying to get a little more info...thx!

No problem. Not paying PMI. Yes pan on paying it off. My has jumped.

 

[mstrlucky74]

Hold on a second here this implies you have a pretty good paying job and your spouse works...yet you don't own a car, have low equity in your home and only 30k in non retirement savings where is your money going?

lol...out the window.

 

[ivinsfan]

lol...out the window.

Better close the window and get back to us ….your non-answers are typical of a troll...

 

[mstrlucky74]

Better close the window and get back to us ….your non-answers are typical of a troll...

I've answered. No troll idiot.

 

[Gumby]

How about if we all dial things down a notch? Thanks.