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Anyone retire with less than $500k?
Old 06-10-2013, 04:53 PM   #1
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Anyone retire with less than $500k?

I see people on here retiring with $3 million and still worried about "not having enough."

I'm 40 years old and I'm thinking of retiring early with $500k. My annual expense is $25k so the money should last unless there's a crash that never recover like in Japan. I will also receive a small pension of $900 at age 55.

Anyone else crazy to retire at 40 with just $500k or am I just crazy like most people will tell me?

"RETIRE AT 40 with only $500k!!! YOU'RE WASTING YOUR LIFE." That's what I expect to hear.
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Old 06-10-2013, 05:00 PM   #2
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5% withdrawal on say 45 years in retirement. Hate to tell you but I don't think you'll make it even with the 900 at age 55. Don't know that you'd be wasting your life just because you retire at 40 but think the money will run out.
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Old 06-10-2013, 05:02 PM   #3
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Not from us, at least not the "wasting your life" part. What you will hear is that a 5% SWR rate at age 40 is questionable, though once you start collecting SS it will be a lot better. Have you run it through Firecalc to see what it tells you?

How realistic is that $25K? Does it include health insurance? If you own a home does it include repairs? How about replacing your car every few years?
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Old 06-10-2013, 05:15 PM   #4
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Quote:
Originally Posted by comicbookgujy View Post
I see people on here retiring with $3 million and still worried about "not having enough."

I'm 40 years old and I'm thinking of retiring early with $500k. My annual expense is $25k so the money should last unless there's a crash that never recover like in Japan. I will also receive a small pension of $900 at age 55.

Anyone else crazy to retire at 40 with just $500k or am I just crazy like most people will tell me?

"RETIRE AT 40 with only $500k!!! YOU'RE WASTING YOUR LIFE." That's what I expect to hear.

You didn't mention if you get Social Security? do you?
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Old 06-10-2013, 05:28 PM   #5
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$500K is awesome and will keep growing. I think I'd keep working for a few more years (and each year you're working and adding to the nest egg is one less year to need funding for), though.
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Old 06-10-2013, 05:31 PM   #6
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Is your pension $900 a month in today's dollars? Does it have a COLA? What will your SS be if you don't work again until you collect SS? Have you run the numbers?

I don't think you are crazy. If you can really live on 25K with health insurance, car replacements and everything else included that is great. If you ran short of money a minimum wage job would cover a large portion of your expenses.

Another option is to not fully retire but get a job you might enjoy even if it didn't pay a lot. 500K / 25 = 20 years living expenses saved up. If you could bring in 10K a year then you would boost that number to 33 years of living expenses, plus pension and Social Security payments.

At a 25K income (MAGI) your health insurance premiums under ACA would be nominal but you'd still need enough to cover deductibles and potentially your out of pocket max.
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Old 06-10-2013, 06:19 PM   #7
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Quote:
Originally Posted by comicbookgujy View Post
I see people on here retiring with $3 million and still worried about "not having enough."

I'm 40 years old and I'm thinking of retiring early with $500k. My annual expense is $25k so the money should last unless there's a crash that never recover like in Japan. I will also receive a small pension of $900 at age 55.

Anyone else crazy to retire at 40 with just $500k or am I just crazy like most people will tell me?

"RETIRE AT 40 with only $500k!!! YOU'RE WASTING YOUR LIFE." That's what I expect to hear.
When I retired in 2008 at age 45, I developed an ER plan in two parts. The first part was using only my taxable accounts to get me to age ~60, the tougher part of my plan. When I began my ER, I had about $311k but took about $300k from cashing out my company stock, leaving about $235 in my 401k (which became a rollover IRA). This gave me about $600k (the markets were still dropping in late 2008 but this was actually a good thing at the time) in my taxable accounts to generate about $21k every year for me to live off. It has since risen to about $800k and the IRA has risen to $410k.

The rollover IRA, my frozen company pension, and SS make up what I call my "reinforcements" whch I can begin tapping into when I turn ~60. So, once I hit 60 my financial picture improves greatly, as Fidelity's Retirement Income Planner software (I am a Fido client) indicates. Without any one of my reinforcements I'd still be in decent shape but without 2 of them it would be tough.

It looks like you are already creating a two-tiered ER plan by separating your pension from your current portfolio. I suggest you continue doing that - split your ER plan more fully into two sections.
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Old 06-10-2013, 06:56 PM   #8
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From what I've been able to glean, you really hate your job. Could you possibly find another job in the same/similar field and continue to work for a few more years in a happier setting, stashing away money so you could retire with a little more security?

At age 40, that's what I'd do. I am a fairly cheap person with low expenses, but I am also not much of a risk taker, so I would want to squirrel away a little more money before pulling the plug.
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Old 06-10-2013, 06:58 PM   #9
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I am 48 years old but would not retire with $500k only.
Quote:
Originally Posted by comicbookgujy View Post
Anyone else crazy to retire at 40 with just $500k or am I just crazy like most people will tell me?

"RETIRE AT 40 with only $500k!!! YOU'RE WASTING YOUR LIFE." That's what I expect to hear.
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Old 06-10-2013, 07:49 PM   #10
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I think you're close but at great risk of running out of money if you retired now.
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Old 06-10-2013, 08:02 PM   #11
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Run it through Firecalc.

Is your pension $900 a year or $900 a month? COLA or not?

Will be you be eligible for SS? If so, how much do yo estimate?

How would feel about doing some part-time work after retiring?

Do you have a spouse? Kids? If a spouse, does your spouse work? Does your spouse have any pension or SS eligibility?
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Old 06-10-2013, 08:03 PM   #12
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Quote:
Originally Posted by comicbookgujy View Post
I see people on here retiring with $3 million and still worried about "not having enough."

I'm 40 years old and I'm thinking of retiring early with $500k. My annual expense is $25k so the money should last unless there's a crash that never recover like in Japan. I will also receive a small pension of $900 at age 55.

Anyone else crazy to retire at 40 with just $500k or am I just crazy like most people will tell me?

"RETIRE AT 40 with only $500k!!! YOU'RE WASTING YOUR LIFE." That's what I expect to hear.
Well I am one of those who did retire at 40 with 3 million. In Jan 2009 near the depths of the financial crisis, I was worried if I would run out of money. I also realized that my skills were too rusty and the job situation so miserable that there was a little chance of me finding one. It was only the realization that most everybody was in much worse shape than myself that made me not panic. Since my spending is roughly 2x of your, I'm quite sure I would have scrambled to find a job, and slashed my spending to the bone if I had retired at 40, with million while spending 50K a year.

$500K at 40 is a great, you are well on your way to retiring early 50 or 55.
If you are seriously considering retiring on 500K @40 after hanging around the forum for 6 months,than you know this is a a risky proposition. So you probably need to fix the job situation. If that means finding a new job, or telling your boss, I need to take a leave of absence for 3-12 months I'm not sure. But the good news is 500K gives you plenty of cushion to take a time out from working, just not 50 years worth of time out.
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Old 06-10-2013, 08:34 PM   #13
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RETIRE AT 40 with only $500k!!! YOU'RE WASTING YOUR LIFE.

Seriously, not enough dough.... bro.
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Old 06-10-2013, 09:21 PM   #14
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"Maybe" if you move to Thailand or the Philippines. I know someone who did it at 45 by living in a lower cost of living region but lower means 1/3 the cost of living in the U.S.

U can live on $2K a month in Thailand but that is pushing it actually. You might have 50 yrs to live even with that pension at 55 of $900.
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Old 06-10-2013, 10:06 PM   #15
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It depends. Do you already own a tent?
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Old 06-10-2013, 10:17 PM   #16
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We will have less than that, but my husband will have a good pension plus we will both have good social security payments, even if they are cut. So we won't need to withdraw from our savings until we have to take the minimum distributions. Plus we have no debt.
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Old 06-10-2013, 11:16 PM   #17
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I agree that it sound like you may be cutting it a little too close at this time. Congrats though on still being in a great situation. Maybe there are intermediate steps you could consider (??)
I retired last year right before turning 42. We had saved closer to $2.1MM and spent about $50k per year. Even at that, DW and I decided to supplement our "semi-retirement" for a few more years. She wants to work a couple of days a week anyway and I really do enjoy doing about 5 to 12 weeks of 1099 contract work for old megacorp. This small amount of part-time/temporary work easily covers our annual expenses. This greatly adds to the comfort level of our ER assumptions since we are not actually drawing off of savings yet. Some might say I am not really retired but 40 weeks off a year feels close enough to me.
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Old 06-11-2013, 01:04 AM   #18
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40-50 years of retirement with 500K capital, I wouldn't do it even in a low cost place like India (where you can visit doctor for < $10, buy antibiotic for $2-3, get heart surgery done for $2-3K, hire a fulltime maid for $200, driver for $300 etc.) even though our burn rate is very close to 20-25K and we do have a spare rental property worth 250K+ which would possibly start throwing 6K+ rent in next 2 years.
But we are a couple and we want to have some fun in Life, not just bare basic existence.
Only negative factor in India is high inflation compared to USA but then cash return is 8-9% easy.

-DesiGirl
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Old 06-11-2013, 02:24 AM   #19
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I wouldn't. Plus I think that is too young to retire. I thought about it at 50, but now at 55 I am so much better off and I am certain, rather than just thinking about it.
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Old 06-11-2013, 01:18 PM   #20
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DW and I retired with less than 500K in investments. However, we also retired with very good pensions that more than cover our expenses. In fact, we are still saving, and our investments are still growing at this point. We will not take any distributions, until we have to. When SS comes along, we will invest that as well.

I don't think there is one cookbook solution to ER. It seems that everyone here has found a different road. That is what makes life interesting.
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