Assuming these sort of "benchmark" parameters, at what age would you retire (or semi-retire)?
Same-age one-earner couple
$100K job income
$1M financial assets
Paid-off house
SS/Medicare only - no other retirement benefits or potential sources of income such as inheritance
So if this was your situation at age 50, would you ER or SR? At 55? At 60?
CC -- hypothetical or not, this question is unanswerable if you don't know your expenses! Some couples live on 20k a year, some on 10 times that amount or more, all of them in ER. If you could put a figure to the spending (including your depreciation on you cars, amortized house repair/major maintenance, costs of all taxes, insurances and asset management/brokerage fees), then we could run with it.
Next you have the issue of getting to Social Security. If the SS makes up a big percentage of your annual spending, then the analysis needs to get full attention. If the SS will be only a small percentage of total spending, you can almost ignore it as 'safety margin" and do your calculations based on a 4% SWR from your financial assets only.
In the former case, though, roughly speaking, I would look at your ER analysis as a bridge to Social Security (15 -17years) then a second period from SS onwards (say age 65 or 67 for argument's sake). Work backwards. What assets do you need at 67, combined with your SS, to live on? Then you can withdraw (probably an an 'unsafe withdrawal rate') for the next 17 years to draw your assets down near that level. We don't have a lot of info on where your assets will end up over 17 years if you draw them down at an unsafe rate, (lots of variation in the possible outcomes!) so most people would not sail this close to the rocks and would just stick with a 4% max withdrawal and whatever extra you end up with, if any, is just gravy for your 67+ years.
That's how I'd think about it, anyway...
To put numbers to it: If your fully loaded expenses were 50k a year, then you'd be in that middle ground. Do you withdraw 5% or 50k for the next 15-17 years from your 1M of assets, hoping that you don't fall down? If you are going to get an inflation adjusted 15k of SS, then you'd need to make a 35k withdrawal from the remaining principal for possibly very many years. What would that require in assets at a safe rate? (35 x 25 - reciprocal of 4% = 875k in today's dollars). The bet then becomes that you can go 17 years and not have your 1m fall to 875k in inflation-adjusted dollars, taking out 50k a year (adjusting it for inflation, too).
And that assumes you have a static lifestyle/standard of living. Most people say yes to that when they are making their models, but don't really expect to live that way. It's pretty much ingrained in us that things get a little better every year. Cutting fat can only get you so far.
Selling the house and downgrading that is probably the one ace in the hole for a couple like this. The other, of course, is to have lousy genes and die inside of 15 eyars or so following SS. I think that is a lousy bet -- with the advances in medical care and health consciousness, most of us in ER now, under age 60, should plan to live to at least a hundred or risk going on the Purina diet This is not just scaremongering; I have seen plenty of elderly become 'financially embarrassed' as they start outliving their assets and it isn't pretty.
ESRBob
