How much longer do we need?

[livingalmostlarge]

I was wondering I think we've incorrectly saved if that's the right thing to say our money for ER. Granted until this January it's something we've never talked about or considered. We always assumed we'd work until 60 and have a ton of money in the bank and everything we paid for home, kids college, wedding, etc.

So now i've started to change my mindset but my DH hasn't yet. We are looking at costs.

Spending $30k mortgage/year, $35k spending/year = $65k/year burn rate but really we want to spend $35-40k/year after ER.
-idea is to not have a mortgage and use current home equity to buy a home cash.

Retirement Savings - $475k
Cash $60k
Taxable Savings $126k

Debts $0, not counting my mortgage or home equity. Let's just say home equity is $200k conservatively.

What do I realistically need saved to retire? $1.32M at 33*40k. but what split of retirement and taxable savings? Does it matter? Would a 25*40 for $1M be too little to ER?

We are 34 and 36.

 

[hlfo718]

At what age do you plan to retire? Assuming 45 for both and live to 90 that's 45 X 40k = 1.8mm. That's assuming you can get health ins at a real low price and no real emergencies that require long term care that health insurance won't cover.

You should build in a big cushion in case you run out of money when you are 70 and can't work due to medical problems.

 

[rodi]

Will you have pension and/or SS coming online? That could make for a lower withdrawal rate once they start happening.

We had to model this 6 ways till Sunday to reassure ourselves that we wouldn't run out of money. Our draw is higher in the early years (kids still at home, pre-college), then drops dramatically when my (very small) pension and medium size SS come online. So the SWR of 4% (or 3%, or 2%) don't fit the early years... We're looking at a 5% withdrawal rate for the first few years, then it drops to 2.5%. My spreadsheet shows we're good.

Play around with firecalc - there's a tab for adding in SS, pensions, or off chart spending.