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Hi all! The big change could happen in 2 years??!
Old 02-10-2011, 05:16 PM   #1
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Hi all! The big change could happen in 2 years??!

Hello all. This idea of quitting work before age 65 is all new to me......Is it reasonable for both my spouse and I to retire together 2 years from now? I'm 58, spouse is 54. Our current combined annual income from work is about $165K. I will be recieiving military pension of about $1K/month at age 60 and at that time we will also be eligable for medical thru tricare (approx $500/annual premium). I have $375K in retirement savings, spouse has $250K retirement savings. We have $100K in nonretirement savings. House is paid for, we have no debts. We are both extremely healthy. No children to support............I am having trouble figuring out how much we money we "need" to retire. The problem with the online retirement calculaters is they assume you will need 70-80% of current income. How do we figure out what % we will need I'm no sure I have thought out everything involved. Any advice appreciated. thanks

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Old 02-10-2011, 05:24 PM   #2
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I would start by looking at what you spend now. Then adjust that amount to reflect how your life will be different in retirement and any special expenses you may have at that time. Similarly drop any expenses that are work related or that you'll be giving up.

After doing that little calculaton, you'll see your expected expenses. From that amount subtract off any income from pensions and Social Security etc.

The nest-egg will have to make up the difference. Since it will have to last you maybe 25 years or more a withdrwal rate of around 4% of the nestegg would be prudent.

If the nestegg won't cover your expected expenses (plus a margin) you'd better keep working. If everything is covered then you are cleared to retire when you want to.

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Old 02-11-2011, 01:30 AM   #3
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Start by tracking your expenses in writing for several months. Then analyse.

When you believe you can make it in ER by reducing your expenses better do a reality test drive by living for several months on the reduced level while maintaining your jobs.
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Old 02-11-2011, 01:43 AM   #4
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Originally Posted by infoseeker View Post
The problem with the online retirement calculaters is they assume you will need 70-80% of current income. How do we figure out what % we will need
The amount you need is in no way related to your current income, other than that it will probably not be less than 30% or more than 150%. It will, however, be more closely related to your current expenditure.

You don't say how long you took to acquire your $725K in savings, nor how long your income has been as high as its currently level. If the answer to both is "not very long" then you're probably in better shape to ER because you have recently been saving a lot, which implies that you aren't spending a lot.

A quick way to see what you've been spending if you haven't been using Quicken (etc) to keep detailed track of expenditure, is to take your income last year, deduct taxes, and deduct the amount which you socked away in savings of all kinds. The rest... you spent. Let's say that's $80K, to pick a completely random figure. Think about the five biggest items you spent money on last year. Could you do without two of them? Three? Obviously, you can go into more detail later.

The good news is...
Originally Posted by infoseeker View Post
Hello all. This idea of quitting work before age 65 is all new to me......
... that you've made the first step. I am utterly amazed at the number of people who haven't considered the idea that they can decide, themselves, when to stop working. It's as if they think that there's a law that you have to be at work until 65 in the same was as there's one saying that you have to be in school until 16 (or whenever it is). In fact there are many ways in which people "never seem to leave school", in terms of control over their own lives, but that's another rant...
Age 55, retired July 1, 2012; DW is 59 and working for 4 more years. Current portfolio is 1950K split 50 stocks/20 bonds/30 cash. Renting house, no debts.
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