Hello, new member who would love to retire early

[s76l42]

Hello, I am new to the forum. Have been reading a bit and it seems like a great community.
I am 54 years old. Single, my house is paid for and so is my car. I have no debt and an excellent credit score. I have a 401K with around 200,000 currently in it. I have an emergency savings account fully funded and another savings account that I add to monthly.
I am very frugal and live a simple life but would love to retire right now.

My living expenses are just my utility bills, groceries, gas, etc.

I have no idea how I can retire with just that amount in my 401K.

Would love to hear from others how you did it, how much money you did it with, what age you retired and so on.
Thank you.

[pacergal]

How much others have is irrelevant.
What matters is your all in spending--including taxes, healthcare, home repair, car replacement, travel. How much have you spent annually each year for the past 5 years? That could be a guide.

We worked until 60 for retiree health care benefits. We also both had jobs with pensions.

[s76l42]

Thank you for the reply. If I could retire at 60 at least I would have that to look forward to. I just cannot imagine working until 65 or 67. Life is too short and I am tired already. But I have been working since I was 16.

[MBAustin]

Welcome! If you haven't found them already, we have a helpful list of things to think about as you plan for ER:

Some Important Questions to Answer

As pacergal stated, the key is your spending (normal everyday stuff plus the "lumpy" stuff like medical deductibles, replacement vehicle, etc.).

At 54, medical insurance is obviously a concern for you, but the ACA should provide you with some affordable options.

Spend some time working on your spending numbers, projected social security and any pensions, and play around with FIREcalc (link on every page here), then when you have more specific questions we'll be able to be more helpful.

Glad to have you!

[Time2]

Are you earning enough that you could save more over the next few years.
With either a yes or no answer something is wrong.
If yes, than are you sure you can actually live on the lesser amount that your savings would generate when retired? If yes, why aren't you?

If no, Than you will need to figure out how much you can add to the $200,000 over the next 6 years and figure out if that amount will get you to SS with enough to pay your bills and have some fun.

[s76l42]

Thank you both. I will defiantly check out the link you posted and the FIREcalc.
And yes medical insurance is a big concern. Right now I am pretty health. Almost never go to the doctor and take no medication but I know what can change at any time.
Thank you Time2 and your questions are great. I just received a small raise and will put that toward my 401K which I have done with most of the raises I have received over the years.
Not sure at this point I could live on less. I am very conservative already but I can trim a bit more and will.

[Time2]

Quote:

Originally Posted by s76l42 Thank you both. I will defiantly check out the link you posted and the FIREcalc. And yes medical insurance is a big concern. Right now I am pretty health. Almost never go to the doctor and take no medication but I know what can change at any time. Thank you Time2 and your questions are great. I just received a small raise and will put that toward my 401K which I have done with most of the raises I have received over the years. Not sure at this point I could live on less. I am very conservative already but I can trim a bit more and will.

How much do you think you can save per year from your income?

[s76l42]

Quote:

Originally Posted by Time2 How much do you think you can save per year from your income?

Hi Time2, currently I am putting 20% of my income in my 401k, I save $40.00 a month in a savings account. Since paying off my house I put $800.00 a month into a savings account that I otherwise would spend on my house payment. I also put money in my savings to use to pay my home insurance and property tax each year. Other than that I do a few jobs on the side and the money I get from that I stash away. Not a lot.

[pb4uski]

Until you tell us what you spend, what you have coming for SS then we can't help you very much. Have you run your situation through FIRECalc?

If SS will cover your expenses then you may be close but it is hard to tell without more info. One way to get an idea of your spending is your take-home pay for the last 12 months less how much of that you have saved over the last 12 months... presumably the rest was spent, but then adjust for periodic car replacements, periodic major home repairs (new roof, furnace, HVAC or whatever). health insurance, etc.

You may qualify for substantial ACA subsidies to help with health insurance costs, deductible and co-pays, etc. Check our healthsherpa.com.

[EastWest Gal]

If you are just putting money into a savings account, you are losing money against inflation. Consider opening a Roth IRA. Also, how is your 401K invested? You probably have some control over that. Asset allocation is important.

[s76l42]

Quote:

Originally Posted by pb4uski Until you tell us what you spend, what you have coming for SS then we can't help you very much. Have you run your situation through FIRECalc? If SS will cover your expenses then you may be close but it is hard to tell without more info. One way to get an idea of your spending is your take-home pay for the last 12 months less how much of that you have saved over the last 12 months... presumably the rest was spent, but then adjust for periodic car replacements, periodic major home repairs (new roof, furnace, HVAC or whatever). health insurance, etc. You may qualify for substantial ACA subsidies to help with health insurance costs, deductible and co-pays, etc. Check our healthsherpa.com.

Thank you. I have not used the FIRECalc yet but I will.
And thank you for the advice on how to get an idea of how much I am spending. I will definitely look into that.
And thank you for the link to check out the health care options.

[s76l42]

Quote:

Originally Posted by EastWest Gal If you are just putting money into a savings account, you are losing money against inflation. Consider opening a Roth IRA. Also, how is your 401K invested? You probably have some control over that. Asset allocation is important.

Thank you, I have thought about putting money into a Roth IRA and really need to look into that to find out how much is required initially and how much I must contribute.
I have looked at my asset allocations in my Roth 401K. My Uncle helped me pick my stock options before he passed. He was very knowledgeable on that sort of thing and I have also talked to Fidelity and met with them and they agree that I have some very good stock options picked out. So I think I am ok there.

[Katiek]

Welcome. As I started to think about retirement planning, it was really helpful to have a good track of expenses - each dollar I spent in at least the prior year. It highlighted some one time annual expenses that I might forget about as well as made me focus on my "casual" spending.

[Bamaman]

They say that we retirees can look forward to paying $250K+ in future healthcare costs, deductibles and co-pays after Medicare kicks in at age 65. That doesn't include ACA payments either.

Continue to save as you have, but you really may need to work to age 62 when social security can be drawn.

[scrabbler1]

Besides doing my best to estimate what my expenses would be, I did one other big thing as I was putting together an early retirement plan back in 2007-2008. Because I was looking to retire at age 45, I split my ER plan into 2 parts. The first part, the much tougher one, was getting safely from age 45 to age ~60 intact by using only the non-retirement part of my overall portfolio. I wasn't aware at the time that there are some unusual ways to be able to tap into one's retirement accounts without penalty, so for me an ER would have to survive on a subset, albeit a large subset, of my overall portfolio.

The second part, after age ~60, would be the easy part, one I didn't really have to worry about. After age ~60, I would have, at various times, my "reinforcements" begin arriving - (1) unfettered access to my rollover IRA (from my old 401k), (2) my frozen company pension, and (3) Social Security. Eventually, I gained access to Fidelity's RIP program which confirmed how my overall financial situation would only improve greatly after age ~60.

Now reducing my ER plan to simply getting to age ~60 intact, I could now focus my efforts on this short-intermediate plan by trying to build up my non-retirement account balances so they could pay my expenses. Since 2014, when the ACA's exchanges and premium subsidies came out, I have been trying to manage my income well to maximize the premium subsidies. Some years, I was better at it, some year, I was not. But starting in 2020, I finally got this under better control and am receiving a large subsidy.

Other than medical costs and income taxes (which spiked when my income spiked, so it's not a big deal), the rest of my expenses have been rather stable and predictable.

[Time2]

Quote:

Originally Posted by s76l42 Hi Time2, currently I am putting 20% of my income in my 401k, I save $40.00 a month in a savings account. Since paying off my house I put $800.00 a month into a savings account that I otherwise would spend on my house payment. I also put money in my savings to use to pay my home insurance and property tax each year. Other than that I do a few jobs on the side and the money I get from that I stash away. Not a lot.

I was trying to figure out if you are still moving your net worth forward. It seems as though you are. You need to know a few things.

First, what is your yearly spending.
Multiply that by 25.

When you have that number with what you have now saved and investing your new money you have enough!

Here's a calculator I like. You are going to have kind of back into the answer. Let's say you need $30,000 a year, $30k x 25 = $750,000. Lets say you now have $200k and you are saving $20,000 per year, earning 9%. If I put that into the calculator,
http://www.moneychimp.com/calculato/...calculator.htm
I get $486k after 6 years and $777k after 10 years.
You can put your own numbers in and decide how to proceed. You can collect some SS in 8 years, Firecalc will help you integrate that into the plan.

[brucethebroker]

Quote:

Originally Posted by Bamaman They say that we retirees can look forward to paying $250K+ in future healthcare costs, deductibles and co-pays after Medicare kicks in at age 65. That doesn't include ACA payments either. Continue to save as you have, but you really may need to work to age 62 when social security can be drawn.

1+ on working until 62 for SS. At least plan on that and you can always work longer, or at something you enjoy if you wish. But SS, along with no debt, and your 401-k/savings might just be your ticket. Good luck, and welcome.

[cnocmmz]

Quote:

Originally Posted by s76l42 Hello, I am new to the forum. Have been reading a bit and it seems like a great community. I am 54 years old. Single, my house is paid for and so is my car. I have no debt and an excellent credit score. I have a 401K with around 200,000 currently in it. I have an emergency savings account fully funded and another savings account that I add to monthly. I am very frugal and live a simple life but would love to retire right now. My living expenses are just my utility bills, groceries, gas, etc. I have no idea how I can retire with just that amount in my 401K. Would love to hear from others how you did it, how much money you did it with, what age you retired and so on. Thank you.

Good day
Understand you are single, home and car are paid off, and 54.
It just may be me; although, I am just not convinced that 30K annually is going to do the trick in retirement? I guess theoretically one could; however, I guess I have a hard time grasping enjoying retirement if one must be so frugal, hence being in retirement? There is a lot of good reasoning folks on this site that could steer you in the right direction. Just don't see enough information to assess? You may have already mentioned if you have a pension or will it be just SS and your 200K in 401K to live off of? I did read that you do have a good amount in your emergency fund and that sort of thing. Well, I wish you the best and congrats for paying off the mortgage. It is just a matter of thought, and of course medical costs and what you consider enjoyment in retirement.....Everyone is different indeed.