Want to retire by 60 (maybe 55)

[LeavingOhio]

My retirement goal isn't as amazing as many of yours, but today, I still think of 60 as early retirement (before Social Security kicks in and before most people retire today).

I'm about to turn 46, so 14 more years doesn't seem that long. We currently have no debt other than about $100,000 remaining on our home and two kids still living at home (15 and almost 12). My wife works half time, and other than the amount that goes into my 401k from my income, we are able to save about 90% of what she makes; this built up our emergency fund over the last couple years, and now it's time to invest more of that money or pay the house off more quickly. This is a recent situation though as she was a stay-at-home mom for 15 years and has been working now for just 2 years.

She likes working half time and may continue that level of working until we retire in about 14 more years.

I don't want to give too many specifics just yet (just found this site today after all), but the very realistic plan is to have a minimum of $1 million in retirement accounts by age 60, continue to stay debt free and own the house outright. The house today is worth about $160,000. We would like to move from Ohio to somewhere southern, so that would involve selling the house and paying for another one that is of equal or lesser value.

If we get to $1 million and we do the 4% rule, then that's just $40,000 to withdraw that first year. That seems a bit scary, but if we are 100% debt free including owning our home outright with no kids living at home anymore and hopefully Social Security to come along just 2 more years later, then that seems doable to me.

The variables for me are:

If my wife continues working half time or decides to work full-time for a while

The performance of the market. Most of my stuff is in stock mutual funds with some bonds in there. I'm well diversified and weathered the big drop in 2008 pretty well. I don't move in and out of stocks. Mostly a let it ride kind of guy.

Those are the two big ones. Job loss or medical emergency could derail the plans too of course.

We have no pensions, so all of our income in retirement will be from Social Security and our own investments. Based on the SS retirement calculator, we should get about $47,000 in future dollars a year between us in ~16 more years when we are 62. I figure that may end up being less than that, but we'll see.

I will be reading this site for ideas and information on: where to retire, how to have our money invested leading up to retirement and in retirement, opinions on solvency of Social Security and if we should take money from it beginning at 62 or wait until later and all other things related to retirement.

That's it for now!

LeavingOhio

 

[grasshopper]

Welcome a board, you have a plan, so you are already ahead of most people.

 

[Midpack]

Welcome aboard.

4% WR at age 60 is more aggressive than I'd plan on, but it's certainly possible. Using 4% at age 65 (the classic SWR assumption) with a 30 year plan yields as 95% success rate, where 4% at 60 yields a 92.5% success rate all else being equal. FIRECalc: A different kind of retirement calculator is a good tool to play with, I'd encourage you to try it if you haven't. You can easily model/compare as many scenarios as you'd like.

Worthington is a very nice area from my experience. We lived in another Columbus suburb from 1980-1990. We liked the area a lot (other than winter), felt it was one of the best kept secrets in the Midwest as far as cities go. Much nicer than Cleveland or Cincinnati which seemed to get more press. I still dream about the pastrami sandwiches at Katzinger's in German Village occasionally...

 

[PaddyMac]

I would consider doing a split with SS where your wife signs on at 62, you get half of her amount at your full retirement age and postpone yours, and then you claim the highest amount possible at 70. The reason is that it's highly likely that one of you will die first, so the survivor will have to survive on one benefit, which is the highest amount possible.

If your wife has not earned much, she might want to claim half of yours. But the key is that the highest earner postpones until as late as possible.

 

[LeavingOhio]

I would consider doing a split with SS where your wife signs on at 62, you get half of her amount at your full retirement age and postpone yours, and then you claim the highest amount possible at 70. The reason is that it's highly likely that one of you will die first, so the survivor will have to survive on one benefit, which is the highest amount possible.

If your wife has not earned much, she might want to claim half of yours. But the key is that the highest earner postpones until as late as possible.

This is a good idea. Thanks!

 

[pb4uski]

While I agree with Midpack that a 4% WR at age 60 is a bit aggressive, I don't see it as overly so if you have some flexibility in how much you need to live to dial the 4% down a bit if market returns are poor. If you absolutely would need 4% then it would be at the edge of comfort for me, but YMMV.

You may also want to begin diversifying your investments between tax-deferred (401k, tIRA and the like), tax-free (Roth IRAs, HSAs) and taxable (other investment accounts) so you can live on taxable investments from 60 to when you take SS and convert tax-deferred funds over that same period to minimize RMDs from tax deferred accounts once you turn 70 1/2.