Possible To Retire On $600,000?

[ecsat]

Hi, would like very much your thoughts. I'm 50, single, no kids, no debt except $14K on mortgage. Have $600,000 in savings in the form of my 401(k). Wondering if it's feasible to retire and live off these funds.My overhead is low, just need around $2,000 month,which takes care of apartment maintenance, utilities, healthcare insurance. Thanks for your advice.

If you are a really good salesman, maybe you could find a product to sell that you really believe in. You could work at that part-time and probably make some good money and enjoy the work and the money.

If you invest the $600K well you ought to get at least 8 percent per year, so it ought to grow better than inflation even after you take out your currently planned $2,000 per month -- which will have to grow with inflation as well.

You didn't mention Social Security. I just learned this week that it's calculated on the highest 35 (thirty-five) years of earnings, including years with zero earnings if necessary! So one reason to work a few more years might be to increase potential Soc. Sec. income, although for you it would only be a supplement.

I'm 58, single, no dependents, no debts and have been living on less than $2K per month for years, so I know that's do-able -- if not luxurious.

Ed Cannon - Austin, Texas, USA

 

[teejayevans]

3) what happens if the market doesn't turn around and the next 3 or 4 years you don't see any appreciation (which the 4% withdrawal rate eventually relies upon to keep even/ahead of inflation), ... i.e. bad personal timing of retirement

You should read up on the concept of bucketizing your investments so
you can ride out market downturns.
TJ

 

[teejayevans]

You didn't mention Social Security. I just learned this week that it's calculated on the highest 35 (thirty-five) years of earnings, including years with zero earnings if necessary! So one reason to work a few more years might be to increase potential Soc. Sec. income, although for you it would only be a supplement.

remember that the amount of SS you get falls off quickly:
calculate you avg monthly income over the 35 years, including
the 0 years;
you get 90% of the first $700
35% of the next $4300
and only 15% on anything above that...so if you already average
$5000/month (older earnings are inflation adjusted),
there is little to be gained by working more.
TJ

 

[2B]

remember that the amount of SS you get falls off quickly:
calculate you avg monthly income over the 35 years, including
the 0 years;
you get 90% of the first $700
35% of the next $4300
and only 15% on anything above that...so if you already average
$5000/month (older earnings are inflation adjusted),
there is little to be gained by working more.
TJ

You can get a pretty good estimate of your future SS benefit (unadjusted for inflation before beginning to take the payments) on the SS website. This would require you to enter your actual SS income off the statement all of us US workers get every year. Of course, you put in "0" for the years after you plan to FIRE. It's actually amazing how little it costs in monthly benefits to drop out of the SS system a few years early. You'll need to run your own numbers to see.

 

[megacorp-firee]

You should read up on the concept of bucketizing your investments so
you can ride out market downturns.
TJ

I suspect you were skimming my post. I was suggesting that OP ask himself these questions. I am a 'bucketeer'.

 

[FIREd]

My plan B retirement calls for a nest egg of 600,000 euros for a 2,000 euro monthly budget. I have done a lot of research on this and I am absolutely certain I could live pretty well on that amount in some of the more rural parts of Western Europe. It would require a number of things however, including 1) living in a new 600-800 sq. ft., low maintenance, paid for condo. 2) Drive a small, gas efficient car(or use public transportation when available) and 3) The biggie, nationalized healthcare with low monthly premiums and equally low co-pays.

I would hesitate to apply such a plan in the US for one reason and one reason only: Healthcare costs. Even when covered with Medicare the costs can be staggering. My MIL spends more than $400 a month on Medicare part B and D premiums, Medicare supplemental insurance, and drug co-pays. Add another $150 for LTC. And she is very healthy for a 65 years old!!!