I have a question for the board.
Why do most retirement counselors suggest that you have enough money so that you can withdraw 4% per year during retirement?
If you RE, let's say at 50 - wouldn't you be able to, for example, live off the interest alone of $1 million (possibly 50-100k per year), and use all of the left over interest to add back to your retirement money?
I'm trying to figure out how much I need to invest to retire early, and can't really understand why I would possibly need more than $1 million to have a comfortable lifestyle - and not only comfortable, but have plenty left over to be reinvested. I can understand that as you get older, you would want to move the money into safer investments that might only return around 5%, but still don't see how the principal would ever be touched.
Which really leads me to the BIG question - is anything near $1 million even necessary? Now - I'm not talking about bare bones retirement. I want to have during retirement, what I make now - about 50K - which would really be a raise, since I wouldn't have a mortgage. I still want to take vacations and have some of the extras that I have now. 500K is a realistic number for me to achieve in the next 10-15 years, but $1 million is going to take about 20, and I'll be 54 by then. I want to be at least free to make the decision to semi-retire by 50. I wouldn't really call it retirement though - I just want to start working on the other things that I want to do - not necessarily the things that get me paid a good salary.
Also - I'm in the military, so in 10 years I'll have a nice retirement.
I'm just really afraid that I'm oversaving right now. I save about 30% of my after tax salary - but I make a good salary - I could save more. Before this past year, my salary was ok, but I was saving at least the same percentage of a lot less money - so when I was promoted, I decided to let the purse strings loose and live a little more.
Thanks for your comments in advance.
Why do most retirement counselors suggest that you have enough money so that you can withdraw 4% per year during retirement?
If you RE, let's say at 50 - wouldn't you be able to, for example, live off the interest alone of $1 million (possibly 50-100k per year), and use all of the left over interest to add back to your retirement money?
I'm trying to figure out how much I need to invest to retire early, and can't really understand why I would possibly need more than $1 million to have a comfortable lifestyle - and not only comfortable, but have plenty left over to be reinvested. I can understand that as you get older, you would want to move the money into safer investments that might only return around 5%, but still don't see how the principal would ever be touched.
Which really leads me to the BIG question - is anything near $1 million even necessary? Now - I'm not talking about bare bones retirement. I want to have during retirement, what I make now - about 50K - which would really be a raise, since I wouldn't have a mortgage. I still want to take vacations and have some of the extras that I have now. 500K is a realistic number for me to achieve in the next 10-15 years, but $1 million is going to take about 20, and I'll be 54 by then. I want to be at least free to make the decision to semi-retire by 50. I wouldn't really call it retirement though - I just want to start working on the other things that I want to do - not necessarily the things that get me paid a good salary.
Also - I'm in the military, so in 10 years I'll have a nice retirement.
I'm just really afraid that I'm oversaving right now. I save about 30% of my after tax salary - but I make a good salary - I could save more. Before this past year, my salary was ok, but I was saving at least the same percentage of a lot less money - so when I was promoted, I decided to let the purse strings loose and live a little more.
Thanks for your comments in advance.