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Realistic to retire before 45 given my info
Old 08-28-2010, 06:39 PM   #1
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Realistic to retire before 45 given my info

I've run over my numbers a million times while at work and I think retiring before 45 is realistic. I would like feedback from you guys as to whether it is or not.

-Home paid for. Very possible that I'll downsize to a condo and pocket 50Kish
Home value about 375K conservatively but this is irrelevant as not interested in living in apartment
-Save 70K a year which includes dividends but not market return. I assume another 4% return from the market over time with my investments.
-I assume my salary will grow by 2% a year. Basically just inflationary increases if any as I don't have any interest in promotions, increased stress.
-Have 275K saved - 25% bonds and cash (mainly cash waiting to be invested) and 75% equity. Will be fully invested by end of year hopefully
-Base expenses 20 - 23K per year
-Another 10K a year for vacations, home repair and car replacement assumed
-Not married, no kids. Might get married but very likely not to have kids

So, can I do it at 45? I feel I am doing alot better than others at saving so I think this is realistic. I am aiming for around 1M to 1.5M in assets. Really not sure how much I need. Ideally I would feel safe with a SWR UNDER 3.
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Old 08-28-2010, 06:57 PM   #2
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What is your age and salary. Did you have student loans or other debt that you've paid off recently. This will tell us how good a saver you have been at this point in your life.
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Old 08-28-2010, 06:59 PM   #3
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What is your age and salary. Did you have student loans or other debt that you've paid off recently. This will tell us how good a saver you have been at this point in your life.
I'm going to turn 35 next week. I have no debt. Car or any large purchase always paid in cash (well, on credit card and then paid off right away)
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Old 08-28-2010, 07:38 PM   #4
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I retired in 2008 at age 45 and I can tell you we have several similarities (and some differences) in our situations.

When I was 35 in 1998, my total investment holdings were $275k at year's end. My salary was growing at about 3% a year and I was done getting any more promotions. I was still working full-time but switched to part-time at the same company in 2001 and stayed that way for the next 7 years until I left.

I was not living in a house but a co-op apartment instead, perhaps what you are considering downsizing into. I am single and have no kids. I have no debts once I paid off my mortgage in 1998.

My investments at the time were more stocks than bonds/cash but not to the degree of your holdings. Some of my holdings were of company stock (ESOP) which grew quickly after 1998 which is what I cashed out in 2008 and am living off the dividends.

My SWR is well under 3% and my base expenses are about the same as yours, in the low $20Ks. I don't spend a lot on entertainment and I bought a new car back in 2007 before I retired so I am set there for a while.

I did not save $70k per year but if you counted the explosive growth in the ESOP I did save about that much from 1998-2008.

My investments are worth just under $1M with about 2/3 of them in taxable accounts and 1/3 in an IRA waiting for me to turn 60.

So.......you seem to have enough similarities to me so you can retire at 45. You don't have my ESOP but you seem to have enough assets to offset that.
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Old 08-28-2010, 09:19 PM   #5
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Short answer is yes. If you plan on saving 700K in the next 10 years not assuming any capital gains and your expenses are in the 33K a year range. You'll certainly have more than 1 million and low expenses.

Clearly there is market risk, although I'd hate to try and retire early in this bond environment with anything under 60/40 so I think 75/25 is fine.

The only other yellow flag for me is that you are predicting that you will be saving more than twice as much in the next 10 year, as you did in previous 12 or 13 years (assuming you started work right out of college). Is this impossible? certainly not, a bit overly aggressive? possibly
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Old 08-28-2010, 10:26 PM   #6
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You know from all the info on this site what it takes to make it happen.

I can tell you that at 35 if you do not plan and work toward that goal it definitely will not happen. It is possible.

DW and I did it by 43. While the price was really high it was worth it.
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Old 08-29-2010, 04:26 AM   #7
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Under your worst scenario, you will easily reach it before 45, under you best scenario, spending 33k and just below 3% SWR, it is really borderline, my calculator says 46-47. This is because in inflated dollars (10-12 years from now), you actually need $2-2.3M.
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Old 08-29-2010, 12:17 PM   #8
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Make sure you take into account Health Insurance & Health Care in your expenses going forward (after ER).
While you are young, have company paid health insurance and few health problems, it might seem like a small expense but as you grow older, the costs will go up (until you become eligible for Medicare).
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Old 08-29-2010, 12:23 PM   #9
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Make sure you take into account Health Insurance & Health Care in your expenses going forward (after ER).
While you are young, have company paid health insurance and few health problems, it might seem like a small expense but as you grow older, the costs will go up (until you become eligible for Medicare).
I live in Canada so only out of pocket medical would be optical, prescriptions and dental
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Old 08-29-2010, 12:25 PM   #10
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Under your worst scenario, you will easily reach it before 45, under you best scenario, spending 33k and just below 3% SWR, it is really borderline, my calculator says 46-47. This is because in inflated dollars (10-12 years from now), you actually need $2-2.3M.
Assuming 3% inflation, 12 year timeframe and 33K expenses today, I get 48K in 2022 required. 3% SWR translates to $1.6M in assets needed. What inflation rate are you forecasting over the next decade?
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Old 08-31-2010, 11:23 PM   #11
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Originally Posted by accountingsucks View Post
I've run over my numbers a million times while at work and I think retiring before 45 is realistic. I would like feedback from you guys as to whether it is or not.
Well it seems you are mentally ready, anyway.
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Old 09-20-2010, 05:26 AM   #12
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yes
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Old 09-22-2010, 01:57 AM   #13
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Hello - Have you run FIRECalc: A different kind of retirement calculator ?

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Originally Posted by accountingsucks View Post
So, can I do it at 45? I feel I am doing alot better than others at saving so I think this is realistic. I am aiming for around 1M to 1.5M in assets. Really not sure how much I need. Ideally I would feel safe with a SWR UNDER 3.
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Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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