54 and planning ER in.....1,2,3 years?

[karel]

Hello, I just stumbled across this great website and it looks like a great resource. I'm 54, married, 4 kids....and am considering options to ER in next 1-3 years.

Have cushy corporate job, am probably overpaid making $300k+. Company is distressed, so not sure how long this will last -- company could go out of business in 3 months or 2 years. Even though I've kind of lost the enthusiasm for this job and its not too difficult or stressful, I'm a bit bored with it. However, its a unique situation and if I lost this job, the next job would likely make significantly less. At this point I feel like i'm just milking this job, which may be the best strategy until the proverbial poop hits the fan.

Of 4 kids, one just graduated college and is fully off the payroll. Others are freshman, sophomore, and junior in college. So a big part of the reason to stay employed for a few more years is to get over the hump on the college spending which I am fully funding. Have plenty of funds in 529 and other accounts for college, but would like to continue to retain/grow NW while funding these college educations.

Net worth roughly $4.2 million, maybe $3.9 excluding primary residence.

Primary Residence $0.3 mm (net of 2.5% mortgage)
IRAs $1.0 mm
Taxable brokerage accounts $2.1 mm
Rental property $0.4 mm (net of mortgage)
College funding accounts $0.3 mm
TreasuryDirect $0.1 mm
High Yield Savings $0.1 mm (emergency cash / working capital)

If I can stay working for another 2 years, I'm hoping to get NW up to $4.5 mm+ (while paying full boat college tuition for 12 semesters of college -- 3 kids times 2 years). With that big spending mostly done by then, I will feel much more confident. (But, even at that point in 2 years, I will have several more years of college to fund for several kids.) In an ideal world, I would retire from the corporate world but continue to generate some income as a consultant, in board roles, etc. mostly because I can't really imagine what else I would do with the time at this point.

In the meantime, I feel like I have to really get educated on retirement stuff -- I am very knowledgeable about saving, investments, etc. during the accumulation phase but have given very little thought on what comes next, so am quite ignorant regarding SS, post corporate health plans, etc.

Looking forwarded to getting to know you all and learning more from all of you!

 

[pb4uski]

Welcome.

A key data point that is missing is how much you think that you will need annually in retirement to maintain the standard of living that you desire in retirement, travel and leisure plans, etc.

If it is $100k a year then you have plenty... if it is $400k a year then you don't have near enough... I think you get my drift.

Also, plug your situation into FIRECalc (a link on the ribbon towards the bottom of this page) and let us know what it says. Also, within FIRECalc, check out the last part of the Investigate tab that will tell you your maximum safe spending given a specified success rate (usually 95%).

 

[karel]

Thanks. Yes I need to figure the spending part out. Currently probably $180k but have too many dependents on the payroll and all the expenses that go with that (example paying insurance on 7 cars with 6 drivers). Realistically we should be at $120k. Part of my multi-year plan is to track spending closely to really understand needs.

 

[pb4uski]

^^^ You're probably in good shape. FIRECalc indicates that if one had a $4m retirement portfolio in a 60/40 mix of stocks/bonds that over a 45 year time horizon (100-55) that it would support inflation adjusted annual spending of $141,074 at a 95.4% success rate.

A little less than a 4% WR because of the long time horizon.

And you would have SS on top of that.

 

[pacergal]

Welcome to the forum!
As pb4uski suggests, run firecalc.
Also, in the forums section, Early retirement FAQ, there is a section:
" Some Important Questions to Answer Before Asking - Can I Retire?"

Answer those also.
Feel free to come back here and ask any other questions.
We are a friendly bunch.

 

[Greenblue]

> I can't really imagine what else I would do with the time at this point.

> Part of my multi-year plan is to track spending closely to really understand needs.

The concern about how you'll spend your time might be worth worrying about, though it might not. While I'm not work-centric person, many of my friends are and they get anxious and their self-worth seems to suffer if they aren't doing something. Can you transition to part-time to test the waters? Or perhaps a side-hobby you're already doing that you could see yourself ramping up? You mentioned consulting, and that sounds like it might work. On the flip-side, I think some people suddenly discover that there were other things deeper down that they wanted to do but were just too used to not doing them because of the j.o.b.

You're case is yours, but the author of this Business Insider article retired at 52 with $3 mm, and found he didn't have trouble with busyness. He says, "I expected things would calm down dramatically when I retired, but I now seem to have more to do than ever. The difference is that I went from doing things I HAD to do, though, to doing things I WANT to do."

Tracking spending scrupulously for the last 4 years has been very useful for me personally. It's helping me feel a lot better, numerically, as I look forward to E.R. It's easy to input expenses too. I was using an app with a widget on my phone that I could quickly add each expense as it was spent, and that was great. Most recently though, my wife made a Google Form that took the same data and put it in a spreadsheet automatically.