Will i be able to retire at 80% at 56?

[silvia]

Hi everyone. I am 47 years old. When I retire at age 56, I will get 55% of my salary on a defined pension plan. I will continue contributing $18k to my 403b , $10k to my 457B and maximum amount to my Roth IRA until age 56.
Presently I have $280k in my retirement plan. The money is in Vanguard with a 75 to 80% stock to bond ratio.
Will the extra money I have and will continue to contribute to my retirement give me the other 25% I need to reach 80 %?

 

[Rich_by_the_Bay]

Welcome, silvia. You might want to check FIRECalc to answer your own question -- see the link at the bottom of the page. It will use historic stock returns and other details to help you get a handle on things.

 

[REWahoo]

Hi Silvia. I'd recommend you go to FIRECalc, read a little about how that program works, then plug in your numbers. That should give you a good indication whether your current nest egg plus planned savings will result in the amount you are seeking.

Cross-posted with Rich...what he said.

 

[Texarkandy]

Do the math - FireCalc helps - if there's just no way it can come up to enough, there is one number that you do have control over to make the ER calculation work - that is, you can always change your plan by adjusting your future lifestyle financial needs downward to make a happy comfortable ER possible. (provided you have medical needs covered) This results in a more modest ER than you might have hoped for, but ER nonetheless. Though I am not ER yet (another year or so) I believe there is an intrinsic value just in the fact of being ER that can't be put on a spreadsheet.

If I may wax philosophical for a moment:

I've realized that at age 49, we have to accept (& get past) the truth of what what we did or didn't do in our past (things that were both within & out of our control) has affected our financial situation now that we are hitting our 50's.

Some folks can be very happily retired on 30K (today's dollars) a year.

This is a very individual tradeoff decision some of us have to make - Do you want to retire at 56 with what you'll have accepting whatever more modest lifestyle that provides? Or continue being a wage slave (assuming you're not self-employed) until it reaches your ideal at whatever age that works out to be?

 

[walkinwood]

Don't assume you need 80% of your pre-ER income. Analyze your income over the next few years to come to a good understanding of your actual needs - only you can identify that. Then add things like healthcare - if you don't have retirement healthcare - etc.

Your tax rate in ER may be much lower than your current tax rate. You're putting money away each year - those are outflows that you will not have after ER.

I read Bob Clyatt's Work Less Live More when I started this journey and I found it helped me a lot. There are other books too on the subject which will be time well spent.

All the best.

 

[silvia]

additional information

Upon retirement, my house will be paid off. Presently, the house is worth about 900k in CA. I won't need to worry about paying enormous fees for healthcare as I will be moving back to Canada. I have dual citizenship.

Will this change the picture of 80% pre-retirement income?

 

[Spanky]

Hi everyone. I am 47 years old. When I retire at age 56, I will get 55% of my salary on a defined pension plan. I will continue contributing $18k to my 403b , $10k to my 457B and maximum amount to my Roth IRA until age 56.
Presently I have $280k in my retirement plan. The money is in Vanguard with a 75 to 80% stock to bond ratio.
Will the extra money I have and will continue to contribute to my retirement give me the other 25% I need to reach 80 %?

Assuming a return rate of 7%, your investment will grow to $964,743 by age 56. If we assume a safe withdrawal rate of 4%, you can determine whether you can reach 80% by the following calculation:

0.55x + 0.04*964,743 = 0.8x

x is salary at age 56.

If the left side is greater than the right side, that means that you will have enough funding to provide 80% of salary needed for living expenses.

 

[Coach]

Upon retirement, my house will be paid off. Presently, the house is worth about 900k in CA. I won't need to worry about paying enormous fees for healthcare as I will be moving back to Canada. I have dual citizenship.

Will this change the picture of 80% pre-retirement income?

Probably. Health insurance is about 15% of my retirement budget.

But rather than trying to find a "percentage of current income", you should develop a budget in retirement, based on your best estimate of actual expenses. I suspect if you polled the folks on here, that "percentage of current income" would vary between 50% or less (downsizing, moving to a low-cost area), and 150% or more (extensive travel, buying a sailboat). This is an area where one size does not fit all.

Coach