Hoping to retire at 56

[Roanna]

Hi everyone...
Here are my stats:
I just turned 48 and am single with no dependents. I hope to be retire by the end of the year that I turn 56. Sooner is always better, but my guesstimate is that I'll have enough money by then to be able to have a $4000/mo income, increasing by 2% every year after that.

As a birthday present to myself (and because I was worried about investing that money in the market right now, and wanted a "safe" return), I paid off my mortgage at the end of last month, and now I'm debt free.

My net worth is currently about 506,000.00 including my condo equity and subtracting the 20k I've put aside for some home renovations.

I'm currently maxing out my 401k and Roth and plan to continue to do so, increasing to the catchup max when I hit 50.

I'm planning on putting $3840 a month into savings/brokerage acct investments on top of that.

I've been basing my calculations on 6% earnings on my investments... though I wonder if that's too high or too low... considering the market climate. When I retire I plan to live on my brokerage account until I hit 70 and draw the largest amount of social security that I can. SS estimate says I should get like 3875/mo at 70 but I know that's going to go down based on not working from 56.5 to 67.

As you can probably tell I've done a lot of estimating on all this, using https://www.calculator.net/investment-calculator.html and https://www.calcxml.com/calculators/how-long-will-my-money-last

So... I'm Hoping I'm estimating correctly but if anyone else sees a pitfall I'm missing, please let me know!

 

[pb4uski]

You should try FIRECalc. Fill out the tabs along the top. Since you're saving so much now you have a decent shot.

 

[Aerides]

Welcome, looks like you have a great start. A couple of tips:

Most of us do not county home equity in our net worth for calculations...you gotta live somewhere.

The other major factor in your planning of course is expenses. The good news is it's pretty easy to just track your actuals while you save, to get a good idea of how much you'll want to spend each year going forward.

 

[cat4ever]

welcome

Looks like you have the right attitude and the passion and the start to make it happen. I'm a newbie here as well so others will be able to give you much more informed advice. However, I do want to warn you not to do what I did and forget the extra expense of having to pay income tax (state and local) on what you have to withdraw out of your 401K/Traditional IRAs each year. This is an expense that is easy to overlook since when you are working it's taken out of your paycheck for you before you even see it. Depending on what state you live in, the current tax brackets and the amount you withdraw, that could add 15%-20% to your total estimated expenses (again, this is a newbie guess so take with a grain of salt).

I also greatly recommend using Fire Calc, and when you do add the tax expense as part of your estimated expenses.

 

[Roanna]

Welcome, looks like you have a great start. A couple of tips:

Most of us do not county home equity in our net worth for calculations...you gotta live somewhere.

The other major factor in your planning of course is expenses. The good news is it's pretty easy to just track your actuals while you save, to get a good idea of how much you'll want to spend each year going forward.

True, I expect to sell and move but I suppose I might not find someplace cheaper when I do. Staying where I am I'll still have my condo fee to deal with. My savings/investments are at 346,449.25 without the home equity in there.

Without my mortgage I estimate my current expenses at about $2210/mo. That's including the 500 I put into my Roth though.

 

[DrRoy]

Be sure you have included medical, insurance, and tax costs.

 

[Dtail]

As stated, try out Firecalc and we can assist you with any questions on the results.

 

[Golden sunsets]

Go to the social security website to get a better estimate of what your SS would be based on your presumed retirement at 57 vs FRA. There is an online calculator on the site where you input zero's after the retirement date along with your existing salary record plus estimates for the years between now and your retirement date.

 

[Roanna]

As stated, try out Firecalc and we can assist you with any questions on the results.

Firecalc looks good, 100% but I think it assumes that I'm going to do the "total market" portfolio up until I retire and throughout retirement. That's not very realistic. I think I'd go more conservative as I got older.

 

[Dtail]

Firecalc looks good, 100% but I think it assumes that I'm going to do the "total market" portfolio up until I retire and throughout retirement. That's not very realistic. I think I'd go more conservative as I got older.

Well you can play around with the % of equities in your AA and the effect on your results, including what is the minimum % of equities needed to achieve 100% success.

 

[MBAustin]

If you haven't found them already, we have a helpful list of things to think about:

Some Important Questions to Answer