I have been struggling with the issue whether to early retire next year. Some background information: I am currently 45 and my spouse is 43. We have two kids 8 and 5.
My portfolio is mostly indexed with low-cost Vanguard and Schwab ETFs. The equity/bond ratio is approximately 55/45 and the portfolio value is $3.5m.
We currently owned a home in a high cost-of-living area (California). Recently, we had an extended visit to DFW in Texas and liked the place. We are thinking of selling the house in CA, and then relocate and early retire in TX. By selling the house in CA, and fully paying for a new house in TX, we will still have excess money to add on to the portfolio. By the middle of next year, with the addition of money from the home sale, as well as vested company shares, I estimate that the portfolio value will reach $4.5m.
My estimate of household annual expenses is $80k a year. This includes $8k for health insurance and $12k for property tax. I expect to be in the 10% or 15% federal income tax bracket after retirement, because I have structured the portfolio to be very tax efficient, holding tax-free municipal bond funds and tax-efficient equity ETFs. So the federal tax obligation should be very manageable. Currently, I have about $80k put aside in college 529 accounts.
Annual expenses of $80k is about 1.8% portfolio withdrawal rate. I think this is a sustainable perpetual withdrawal rate. Also, we are eligible for social security.
I would like to hear comments if I can take early retirement? Or if I had missed out some other considerations? Thank you for your comments.
My portfolio is mostly indexed with low-cost Vanguard and Schwab ETFs. The equity/bond ratio is approximately 55/45 and the portfolio value is $3.5m.
We currently owned a home in a high cost-of-living area (California). Recently, we had an extended visit to DFW in Texas and liked the place. We are thinking of selling the house in CA, and then relocate and early retire in TX. By selling the house in CA, and fully paying for a new house in TX, we will still have excess money to add on to the portfolio. By the middle of next year, with the addition of money from the home sale, as well as vested company shares, I estimate that the portfolio value will reach $4.5m.
My estimate of household annual expenses is $80k a year. This includes $8k for health insurance and $12k for property tax. I expect to be in the 10% or 15% federal income tax bracket after retirement, because I have structured the portfolio to be very tax efficient, holding tax-free municipal bond funds and tax-efficient equity ETFs. So the federal tax obligation should be very manageable. Currently, I have about $80k put aside in college 529 accounts.
Annual expenses of $80k is about 1.8% portfolio withdrawal rate. I think this is a sustainable perpetual withdrawal rate. Also, we are eligible for social security.
I would like to hear comments if I can take early retirement? Or if I had missed out some other considerations? Thank you for your comments.