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How much is enough
Old 10-14-2017, 08:58 AM   #1
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How much is enough

Canít wait to retire, 58 now. I have only one rental property and 401k and owe about 20% of the value of my 2 homes as a Mortgage. Hoping to retire at 62 and payoff both homes by then, but often think I should buy another property instead. My 401k is over 1.2 Million but you have to pay taxes on that money. The more I look into things the worst I feel about the position Iím in...1. Buy another property 2. Call it a day and try and move 401k higher in the next 4 years..
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Old 10-14-2017, 09:10 AM   #2
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Tough call to predict which is a better bet. Plenty of folks do well with real estate, I prefer stocks.

What are your expenses? Many retire on much less than $1.2M. A popular and safe rule of thumb is to withdraw each year the greater of 4% of your funds or your original withdrawal after adjusting for inflation. But like all plans, you should monitor it and adjust income or expenses as circumstances require.
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Old 10-14-2017, 09:23 AM   #3
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Also pretty hard to comment when you don't state the values of your home and rental property and the monthly net income from the rental property along with SS and any other expected income.
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Old 10-14-2017, 10:34 AM   #4
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Simple numbers to consider as a starting point:

At age 58, life expectancy is 24 years.
$1.2Million Divided by 24 = $50K/yr.
Avg SS = $17K/yr
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Old 10-14-2017, 10:56 AM   #5
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Originally Posted by maybesomeday View Post
Canít wait to retire, 58 now. I have only one rental property and 401k and owe about 20% of the value of my 2 homes as a Mortgage. Hoping to retire at 62 and payoff both homes by then, but often think I should buy another property instead. My 401k is over 1.2 Million but you have to pay taxes on that money. The more I look into things the worst I feel about the position Iím in...1. Buy another property 2. Call it a day and try and move 401k higher in the next 4 years..
Here's a helpful list of questions to answer before asking if you can afford to retire or not:

Some Important Questions to Answer Before Asking - Can I Retire?
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Old 10-14-2017, 10:59 AM   #6
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Do you like being a landlord? It is a version of 'work'
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Old 10-14-2017, 11:56 PM   #7
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Quote:
Originally Posted by imoldernu View Post
Simple numbers to consider as a starting point:

At age 58, life expectancy is 24 years.
$1.2Million Divided by 24 = $50K/yr.
Avg SS = $17K/yr
Simple is always better than complicated!
I would add: Any portfolio appreciation will offset inflation.

As an engineer, I would add:
"Close enough now is better than 3 figure accuracy in a year!"
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Old 10-15-2017, 08:18 AM   #8
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How much do you think you can increase the value of your 401k by the time you hit 62?
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Old 10-23-2017, 11:07 PM   #9
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How much do you think you can increase the value of your 401k by the time you hit 62?


Thatís a good question, I am up only 70K + this year...6.2% gain, which is low for market trends, Iím early on most of my plays this year. Additionally I have about 298k in Home Mortgage and both propertyís are valued at 875K and 620K respectfully... itís clear I need to stay employed and save more..
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Old 10-24-2017, 07:07 AM   #10
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Originally Posted by maybesomeday View Post
Thatís a good question, I am up only 70K + this year...6.2% gain, which is low for market trends, Iím early on most of my plays this year. Additionally I have about 298k in Home Mortgage and both propertyís are valued at 875K and 620K respectfully... itís clear I need to stay employed and save more..
I think it really depends on your spending and your future plans. For instance, if you sold both houses you'd net about $1.2mln. If you moved to a low cost of living area and bought a $300k house, you could add $900k to your nestegg. Add that to your 401k and now you're at $2.1mln. At a 4% withdrawal rate that's $84k per year, plus your SS. Many people live on far less.
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Old 10-24-2017, 07:09 AM   #11
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Originally Posted by maybesomeday View Post
Thatís a good question, I am up only 70K + this year...6.2% gain, which is low for market trends, Iím early on most of my plays this year. Additionally I have about 298k in Home Mortgage and both propertyís are valued at 875K and 620K respectfully... itís clear I need to stay employed and save more..
Hmm... so you basically have:

$1.2M 401k
$875K RE Equity
$620K RE Equity
$298K RE Debt
Total Net Worth if you liquidated: ~$2.4M

Are your annual expenses over $100K (4% WR off that nut)? Do you have any other cash/investments? Have you calculated your expected SS? What's your monthly take from the rental? If it's worth $620K, I'd imagine it's pulling in a couple grand a month.

I must be missing something. Unless you're a big spender, this doesn't strike me as a "clear I need to stay employed" situation.
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