Am I too Early?

[topdawg4ever]

Hello all!! I'm John. I'll turn 56 in September.

Sitting with the following:
Married
Grown Children 25 & 27
Taxable: $2,500,000
Non Taxable:$1,700,000
House: $450,000
Life insurance policies
Zero Debt
No Pension
I will get SS
Wife, no SS


Really in a good position at work, with what I am making yearly, but after doing this for 38 years, I really struggle with mustering anymore effort with this job. I'm in the glory years of earnings, but I feel like I have already sacrificed too much, especially over the last 13 years, working 60 and 70 hour weeks.

Obviously retirement at 56 will require insurance, and that is inlcuded in my estimated needs below.

I think my biggest questions are, I know I can generate $165k per year (Inlcudes tax), or more, which continues my current no worry lifestyle, but am I foolish to even think that, and begin to settle down the spending, and buckle up, and live a more realistic lifestyle to allow the earning's from investments control my yearly spending and not have a fixed amount yearly?

The other question, if I went to a fixed withdraw, how insane is it to try for a withdraw rate of close to 5% vs 4%?

Obviously, with no debt, and in control of my spending, I'm comfortable. I think the fear of the unknown for me is real, and don't want to regret goign down this path. As much success as I have had in my life, at 56 I wouldn't be a super hire, being "old" I am sure I could work anywhere, but when you work in the same industry and have only had 2 jobs in 38 years, there is always goign to be doubt.

Appreciate the help in advance!!

 

[flintnational]

Welcome to the forum and congrats on your financial accomplishments. The group probably needs a little more info. Are you married? Will you/spouse receive SS and if so how much? Will you have any pension income? Does the $165k spending include taxes?

 

[bloom2708]

Does $165k include health coverage? Lumpy spending? Taxes?

You need to path out to 62, 65 and when you expect to claim SS.

You don't mention if you are married or single. If married, your spouse could claim at 62 and you at 70. Medicare at 65.

3.5% of your investments is $147,000

Easiest is to just spend less and make it fit. Plot out each year where the funds will come from.

Is your portfolio asset mix in a "retirement is coming" mode? Will a 50% market drop alter your plans? Get your SS estimates at mySS. Use iORP or similar to start plotting it out.

 

[topdawg4ever]

Edited my post. Appreciate your info.

Does $165k include health coverage? Lumpy spending? Taxes?

You need to path out to 62, 65 and when you expect to claim SS.

You don't mention if you are married or single. If married, your spouse could claim at 62 and you at 70. Medicare at 65.

3.5% of your investments is $147,000

Easiest is to just spend less and make it fit. Plot out each year where the funds will come from.

Is your portfolio asset mix in a "retirement is coming" mode? Will a 50% market drop alter your plans? Get your SS estimates at mySS. Use iORP or similar to start plotting it out.

 

[Dtail]

4%WR provides you with 168k, which covers your 165k needs, so why go to 5%WR?

 

[flintnational]

I entered the following into Firecalc.

Savings $4.2M
SS you @ 67 $24k (todays dollars)
SS spouse @ 67 $12k (todays dollars assumes also 56)
35 year plan time horizon

Firecalc says you can withdraw $178k per year, 4.24%, with a 95% chance of success. (Please read up on Firecalc. It is based on historical data and the results assume the future is no worse than the past.)

While your spouse may not be eligible for SS on her own earnings, in many cases, she will be eligible for an amount equal to half of yours.

 

[Unpaintedhuffhines]

I think your question is "are you ready to pull the plug?" You have enough cheddar in the bank.

 

[JDARNELL]

You need to be retiring to something not from something IMO. I think you will find the money piece was much easier than the other things of ER.

 

[Exchme]

OP said $1.7M in non-taxable - is that a Roth, or do you mean tax deferred like a 401K/traditional IRA?

For tax deferred, remember you have to pay the government their share of that when you withdraw it. If it's tax deferred, you will want to do some Roth conversions in the years prior to SS and RMDs or you will end up with punishing tax rates later in life. Something you can maybe do today to help is optimize your asset allocations so you are putting your bonds in tax deferred to minimize the tax deferred growth and stocks in Roth to maximize after tax growth.

Because you likely have a healthy SS benefit coming to you, you can probably get away with the 5% withdrawal, especially if have have some flexibility to cut back if the markets dive. To get an optimized plan for when to claim SS, get your Primary insurance Amount from SSA.gov (make sure you tell it your not going to work anymore) and then put those amounts and your ages into opensocialsecurity.com, which will tell you when you and your spouse should claim. Firecalc can help you more accurately once you have that optimized.

 

[Ready]

At 56 I personally would not feel comfortable with a 4% withdrawal rate. You could live for another 40+ years. That’s a long time to be retired. I would want to be a little more conservative. Either cut back your spending or you may need to keep working a little longer. But you are definitely very close.

 

[RetMD21]

I think you are working too damn many hours.You can retire if you want. It is a matter IMO of balancing quality of life vs increased financial security. As usual it is a judgment call. As you know even 4% isn't guaranteed. If you are willing to do some bel tightening if required you can make it work if you want.