I had planned to retire in my 50's, the early the better, since my early days in mini-MegaTech. A few years ago, I suddenly realized that I hated my job and a combination of circumstances offered an opportunity to get out even earlier.
Similar to your situation, my DW was originally very skeptical from a financial perspective. We were walking away from solid $$. I offered a 2-3 year time horizon to plan and "think about it". Well, we both retired just a year later.
I spent most of this time calculating current expenses, projecting future expenses, looking at social security, and figuring out ACA health and ACA subsidies. This gave me decent expense projections to start modeling our scenario in simulators like Firecalc and others. After all the hand-wringing, I estimated a 90% chance of our money outlasting us. So we both agreed to retired within a year. We've been free for more than a year now and loving life
I love retirement, but like others I suggest you take some time to plan things out. I recommend a look at the FAQ page; there's a comprehensive list of considerations. Here are some of the key things for us:
- Know current expenses, averaged over a few years, accounting for big ticket stuff like cars, AC, roof, kids' college, etc.
- Get a grip on other (future) income like social security, pension, etc.
- Look at heath care!! If you don't have cheap retiree health, check out ACA and ACA subsidies. Don't forget that Medicare isn't "free" either, at least as most play the game.
- Develop model retirement budgets (dream, baseline, just survival)
- Decide if you must leave a legacy (obviously easier if not a "must")
- Figure out if you'll run out of money. Rules of thumb are a starting point. The 4% rule is common, but is geared toward a 30 yr retirement (ie you're in your 60's). I like the suggestion of 3.5% (or lower!) for younger folks, but running a simulator like Firecalc is even better. It gives you a better idea of how all expenses, savings, and style of investing all fit together.
- Look at the details of how to draw down money in retirement. If you are younger than 59.5, then this takes taxable investments (after tax) or other strategies (ROTH conversions, rule 72T) to avoid IRA early withdrawal penalties. This can take serious advance planning...
- Insure you are still comfortable with your investment asset allocation when no longer getting a paycheck. Also insure minimal investment expenses (expense ratio, advisor (!!), other nonsense), say well less than 0.5%, otherwise you may have to work longer
- Finally, and most importantly, what are you and DW going to do all day?? Will you still get along with all this time on your hands
I know this sounds like a lot; well it is. We ironed out the basics in the year before we retired, at least as a first pass plan. Now we have been retired for a year+ and are still fine-tuning and cost-cutting. No regrets, though. It has been the best year of my life
FB
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