How early can I retire-50 years old?

[vicmost]

I want to retire as early as possible but it looks like the government wants me to work until I have one foot in the grave! How can I retire at 50 without going broke at 65.
Here is my stats.
39 years old
110000 in 401k-I am currently saving about $1240 a month (15% of 86k income plus 3% comp match)
I have about $100k in home equity.

I live in California and wouldn't mind relocating at retirement.
Any suggestion are greatly appreciated!

 

[Cut-Throat]

We need some more info. Living expenses per year for sure!

Otherwise there are places in Africa that you could retire today - If you went native and learned to hunt real good with a blowgun

 

[kjpliny]

You're in the same boat as me. You need to marry someone 5 years older than you who will get a public pension at 55 and try to live off that until social security kicks in or your 401k grows large enough to provide decent withdrawal rates over 30-40 years in retirement.

 

[vicmost]

Downsizing and moving out to a more reasonable area other than Southern California I feel I could live comfterably live with 50k a year.

 

[Brat]

The only way you can consider the option of retiring in you 50s is to keep funding your 401k, explore all savings options, invest wisely and pay down your mortgage.  Between now and your 50th birthday much can change.  At that time run the numbers, look at your living expenses and options.  Health care insurance is a big problem for many.

 

[Cut-Throat]

Vic,

Why don't you play around the FireCalc Calculator on this site. You will learn a lot by playing around with the numbers. Also try to save at least twice as much as you are saving now.

 

[mickeyd]

Vic,

$110k sounds like pile of money and $1240/month sounds stout also, but if you are going to be retired for 40 yers+ (age 90) you are probably going to need some more $ to "geterdone".

I agree that CA should not be in your plans. Try South/Central TX as your $ will last longer.

 

[eridanus]

I agree that CA should not be in your plans. Try South/Central TX as your $ will last longer.

I'd suggest Phoenix or Las Vegas.

 

[retire@40]

I want to retire as early as possible but it looks like the government wants me to work until I have one foot in the grave! How can I retire at 50 without going broke at 65.
Here is my stats.
39 years old
110000 in 401k-I am currently saving about $1240 a month (15% of 86k income plus 3% comp match)
I have about $100k in home equity.

Sounds like you're on the road to retirement, but not early retirement.  Save more, spend less if you are shooting for 50.  I would guess you need to triple your savings amount.

If you REALLY want to ER, but don't think you can at your current job, either get a second job, find a better paying job, or start your own business if you are so inclined.

 

[maddythebeagle]

I want to retire as early as possible but it looks like the government wants me to work until I have one foot in the grave!

yes, by offering you all of these incentives like iras, 401ks, and lower taxes on capital gains/dividends, I would say the government has a real conspiracy against you.

 

[kaudrey]

Hi Vic,

The first way to work toward early retirement is: SAVE MORE!

Probably easier said than done, I know, but here are my thoughts:

You contribute $12,900 to your 401(K). The max is $15,000. Hit that maximum.

Then you should open a ROTH IRA (look at income requirements, I can't contribute to a ROTH and I'n not sure where the income restrictions start). If not a ROTH, than a traditional IRA. Fund to the maximum of $4000 a year.

Then: SAVE MORE! Save money in your taxable accounts. You'll need this to live on at first so that you don't drain your retirement accounts too early.

If you need ways to save, read the threads on "living below your means". They give some good ideas.

For perspective/disclosure, I am almost 37, and am trying to retire at 52. I'll have a gov't pension, but I also max out my 401(K), fully fund an IRA, and save an additional $15000 a year. I have about $270K in my retirement plans and another $90000 in a brokerage account.

You don't talk about what you are invested in, but you should be mostly invested in stock mutual funds at this point - a diversified portfolio that includes large caps, small caps, international, etc.

Hope this helps a little.
Karen

 

[Rustic23]

If you save $1,250 a month for 11 years and add that to the $110,000 you will have $524,281 assuming an 8% return, $623,709 with a 10% return. Taking a SWR of 4% this will generate between $20,971 - $24,948. Taking your $50,000 and inflating it for 11 years you will need $89,294 to live on.

Save, marry a rich widow, spill hot coffee on yourself at McDonalds.

 

[HobbyDave]

Ok, I'm a bit confused by your post. You seemed to be blaming the government for this situation. Perhaps there is some other information I don't know about.

My wife and I are both 28, and we've both saved more than $110k into our 401k accounts. We also have some equity in our current house. Why exactly is your lack of savings the government's fault? Saving 10k per year under your mattress since you graduated from college (assuming you went if you're making > 80k) would have easily passed your current balance.

Not trying to be rude, but if it is your fault, I would hope you would take ownership of the situation.

 

[Spanky]

Save, marry a rich widow, spill hot coffee on yourself at McDonalds.

Mrs. Liebeck's attorney settled out of court for only $230,000 (the original suit was $3M).

 

[Mr._johngalt]

Mrs. Liebeck's attorney settled out of court for only $230,000 (the original suit was $3M).

Kramer used Jackie Chiles and all he got was free coffee
for life, so Mrs. Liebeck did significantly better.

JG

 

[cute fuzzy bunny]

Ok, I'm a bit confused by your post. You seemed to be blaming the government for this situation. Perhaps there is some other information I don't know about.

Not trying to be rude, but if it is your fault, I would hope you would take ownership of the situation.

I'm going to take a swing at the intent; looks to me like the odds of social security offering any significant income for people 40 and under (if it'll be there at all) probably means many people will have to work longer before retirement. The onerous taxation of income and property to support a lot of wasteful spending also places a bit of a burden.

But then we keep voting in the idiots who spend the money and cut the programs, so I suppose it IS our own fault

Vicmost...there may be some benefits to relocating after retirement, but california really isnt so bad for retirees. Prop 13 fixing the property taxes at 1% plus inflation is a pretty good deal. Sales tax sucks, but if you arent a big spender, its no biggie. I dont end up paying much income tax at all to the state. While there are some places where you can avoid income tax altogether or get a great overall deal, in some cases you need to spend a bazillion on a house or live in a real podunkland.

Considering my property taxes will remain low and a lot of people who live elsewhere save up all year to spend a week at places I can drive to in an hour or two...this isnt so bad

 

[FlogBlogger]

I'd suggest Phoenix or Las Vegas. 

Housing prices here in Phoenix continue to rise, while Vegas's have begun falling.

Without sufficient capital, a radical change in lifestyle is required to RE. RV boondocking in Mexico, and ex-patting to Thailand are two that come to mind. Or, like me, pursue the middle way, and find enjoyable part-time employment that bridges the gap between enslavement and freedom.

FlogBlog

 

[getoutearly]

Vic, you didn't say what your expected retirement living cost would be, or did I miss it. If you only need $20k / yr to live on in retirement, that's a different story than if you need $50k.

 

[Sisyphus]

Vicmost,

Why are you socking away 15% in 401K if your employer only matches the first 3%? Have you consider Roth IRAs or plain old funds?

I find it hard to believe that the choices and fees in your 401K are so outstanding that you don't have other investment choices. Especially if you're hoping to retire early, you'll need to stash away a lot more in accounts that you can get at earlier without penalty. I would adjust that 401K contribution rate.

Good luck.

 

[WRBT]

What if he believes his tax bracket will be lower when retired? Wouldn't it make sense to use a 401k (in addition to a Roth) then?

In my (granted limited) experience 401ks often have a cheapo broad equity index fund... there is almost alway a place in my diversification strategy to use the 401k for part of that.

Also - Can't he roll the 401k and SEPP to get it without penalty?

Also - Can't he get at his 401k at 55 if he retires?

 

[SteveR]

What if he believes his tax bracket will be lower when retired? Wouldn't it make sense to use a 401k (in addition to a Roth) then?

In my (granted limited) experience 401ks often have a cheapo broad equity index fund... there is almost alway a place in my diversification strategy to use the 401k for part of that.

Also - Can't he roll the 401k and SEPP to get it without penalty? Yes, he can roll over the 401k into an IRA but would have to do a 72(t) (SEPP) for 5 years at the calculated withdrawl.

Also - Can't he get at his 401k at 55 if he retires? Yes, this can be taken at 55 without penalty. If the investment mix is good in the 401k this might be the better option if one needs to regulate the amount you get each year. A 72(t) forces you to take one of three options to calculate your withdrawl.

Here is a link to a good IRA 72(t) site. http://www.72t.net/