Can I really retire at 55 yrs old

[PaPa-T]

$450 on lake norman,nc

 

[RetiredHappy]

When I run the ss numbers on government site it says I have the 40 credits. Taking it 62 gives me 2024 a month. How do you change it for retiring at 55? Thought once you have the credits the number is good.

40 quarters of credit merely qualifies you for SS payment and eligible for Medicare. The number you see on your statement for the amount at 62 is only if you continue to work and get paid the same amount up until 62. Your SS payment will be much less if you do stop working now at 55.

Go to SS website and download anypia software application to your computer. After you get it installed, you will need to enter each past year's earnings and then leaving the rest of the years as zeroes. Somewhere on the app you will also indicate that you have stopped working. It will give you actual SS income numbers.
https://www.ssa.gov/oact/anypia/download.html

This software is updated on the SS website every year for COLA adjustment and you will need to download the software again each year to get accurate COLA adjustment SS numbers.

 

[kgtest]

Go for it. YOLO!

 

[PaPa-T]

Thank you

 

[DireWolf]

Your SS payment will be much less if you do stop working now at 55.

It might well not be that much less because of how the bend points work. I retired at 50, but with 35 years of earnings. I think 27 of those years were maxed out contributions. If I’d kept working, replacing lower income years with maxed out years, it only moved the needle maybe $150/mo at 62.

But definitely the OP should use a SS calculator that uses actual earnings and doesn’t assume he works till 62

 

[Markola]

I’m also 55 and FIREd. think you’re on the right track with renting, in my experience. We rented for a spell a few years ago and I loved the financial predictability and ease. One never knows what a purchased home is going to cost month-to-month.

 

[purplesky]

I am having a hard time understanding why a car payment is a red flag. Can you explain a little more? We are a little concerned about renting from our kids but we have had extensive talks about and believe it will work out great for bot of us.

I personally would clean up any consumer debt including car debt before you stop working.
Because yes you do have enough wealth accumulated if the markets continue to go to the moon.
But if we get a real 25% permanent market correction will your portfolio deliver the income you need without burning through your 200k of cash?

 

[purplesky]

If your kids can easily afford a 450k lake house that needs work you should be fine renting from them.
But if they are stretching financially to buy a vacation house and you end up stretching in FIRE. Drama might happen.

Your money situation is not a home run at age 55 with the big wild card being healthcare.
Hopefully the ACA will survive another 10 years to help your gap to medicare.

 

[Koolau]

I personally would clean up any consumer debt including car debt before you stop working.
Because yes you do have enough wealth accumulated if the markets continue to go to the moon.
But if we get a real 25% permanent market correction will your portfolio deliver the income you need without burning through your 200k of cash?

I agree and here's my specific thinking on debt at retirement: If the market corrects, you can invoke what I call "back ups" to your plan (for instance: stop eating out and switch from steak to hamburger, delay vacations and other travel, stop paying your life insurance premiums if possible, ditch one phone plan, lower the temp in winter/raise the temp in summer, etc. etc.) But if you have debt, it's difficult to not pay on it. The consequences of failing to pay your debts can be dire.

 

[pb4uski]

The car payment issue is a red flag. Because they do not have substantial 401k wealth. Not even close when retiring at age 55 with healthcare costs unknown.

I assume you have much more wealth accumulated so yes a car payment for you is no big deal. Writing a 39k check for them is real money.

Renting from your kids to FIRE is also part of the same red flag.

I am having a hard time understanding why a car payment is a red flag. Can you explain a little more? We are a little concerned about renting from our kids but we have had extensive talks about and believe it will work out great for bot of us.

I personally would clean up any consumer debt including car debt before you stop working.
Because yes you do have enough wealth accumulated if the markets continue to go to the moon.
But if we get a real 25% permanent market correction will your portfolio deliver the income you need without burning through your 200k of cash?

PaPa-T, don't sweat the car payments. Some of our members are myopically opposed to debt of any kind... it's their problem, not yours. We had a car payment for 4 years because the rate was only 1.9% and I have numerous retired friends who... are your ready for it... lease their cars! Can you imagine!

You say that you are 100% with FIRECalc... now if you rerun FIRECalc reducing your portfolio for the amount of your remaining lease payments and the buyout and reducing your spending for your car payments and are still 100%, then it doesn't matter does it?

Ignore the foolishness.

 

[cyber888]

Hello, running through the numbers and think we are going to pull the trigger in Dec. 2021. We are both 55 yes old. We have 1.2m in 401k and 200k cash from sale of our lake house. Our kids bought a investment property on lake norman NC. We will become renters for the first time in our lives. Thought this would stabilize our costs of home repair...we are planning on doing a72t which amounts to 44k and supplement with cash from house for the 5 years required. This will give us a total of 76k to live on. Rent is 1800 and we have two car payment of 650 combined. Concerned about if this is enough especially with the healthcare wildcard. Can't get price until we are retired. Estimating 1000 a month.

==================
If it was me in your situation, I would be worried about the $1,800/mo rent + $650/mo car payments. I'm trying to retire next year with at least $1.3 mil, and I only pay $280/mo for my house (Heloc), and $0 car debt. If you could pay off your cars and find a home rental for $1600/mo, that would help, so the $200 goes to utilities instead (electric, water, gas).

 

[Koolau]

PaPa-T, don't sweat the car payments. Some of our members are myopically opposed to debt of any kind... it's their problem, not yours. We had a car payment for 4 years because the rate was only 1.9% and I have numerous retired friends who... are your ready for it... lease their cars! Can you imagine!

You say that you are 100% with FIRECalc... now if you rerun FIRECalc reducing your portfolio for the amount of your remaining lease payments and the buyout and reducing your spending for your car payments and are still 100%, then it doesn't matter does it?

Ignore the foolishness.

I guess we can close the thread.

 

[purplesky]

PaPa-T, don't sweat the car payments. Some of our members are myopically opposed to debt of any kind... it's their problem, not yours. We had a car payment for 4 years because the rate was only 1.9% and I have numerous retired friends who... are your ready for it... lease their cars! Can you imagine!

You say that you are 100% with FIRECalc... now if you rerun FIRECalc reducing your portfolio for the amount of your remaining lease payments and the buyout and reducing your spending for your car payments and are still 100%, then it doesn't matter does it?

Ignore the foolishness.

Everyone agrees that PaPa-T can retire early at age 55. That has been established. It's totally his call.

But PaPa-T has no room for error at age 55 with his current wealth accumulated.
The car payments aren't really the issue.
If PaPa-T had $2 million in his retirement portfolio plus 200k in cash he hits a home run and FIRE at age 55 comes with much less risk.

I am sure a good CFP acting as a fiduciary would have the same concerns as several other people in this thread.

There are so many people now in their mid 50s all in the same boat.
With about the same assets as PaPa-T and they are retiring by choice or because they are being forced into retirement.

So this thread could be helpful to other people with concerns about consumer debt and healthcare.

 

[Dalmore]

Is your $76K including taxes? $1.4M seems a little light. Do you have pensions kicking in later or just SS?

 

[PaPa-T]

Thank you now that makes sense to me . It provides more cushion and a safety factor. We were considering 1 car for a while or 1 car and an older used if we need it.

 

[pb4uski]

....I am sure a good CFP acting as a fiduciary would have the same concerns as several other people in this thread. ...

And just why are you so sure? Are you a CFP? A CPA?

Money is fungible. When you input $x of your spending need into FIRECalc, FIRECalc doesn't know if that $x includes mortgage payments, car payments, coccaine, hookers or whatever. So if OP says that they are 100% success on FIRECalc then it doesn't matter.

You rail against car payment or any debt in retirement carte blanche... context matters and it is situational.

 

[pb4uski]

Hello, running through the numbers and think we are going to pull the trigger in Dec. 2021. We are both 55 yes old. We have 1.2m in 401k and 200k cash from sale of our lake house. Our kids bought a investment property on lake norman NC. We will become renters for the first time in our lives. Thought this would stabilize our costs of home repair...we are planning on doing a72t which amounts to 44k and supplement with cash from house for the 5 years required. This will give us a total of 76k to live on. Rent is 1800 and we have two car payment of 650 combined. Concerned about if this is enough especially with the healthcare wildcard. Can't get price until we are retired. Estimating 1000 a month.

Thank you for all of the replies. Fire calc says 100% ,so looks like we are good to go! Can't wait for every day to be saturday!

When I run the ss numbers on government site it says I have the 40 credits. Taking it 62 gives me 2024 a month. How do you change it for retiring at 55? Thought once you have the credits the number is good.

FWIW... FIRECalc with $1.4m, 50 year time horizon, $23k SS starting in 2028 (2021+62-55), $11.5k spouse SS starting in 2028, all rest defaults.... 95.5% success for $76k of spending.

 

[PaPa-T]

Awesome thank you for running through that. Looks like we are good to go!

 

[RetiredHappy]

Awesome thank you for running through that. Looks like we are good to go!

Have you figured out what is the SS amount that you will get at age 62 using the precise calculator?

 

[pb4uski]

Awesome thank you for running through that. Looks like we are good to go!

You'll need to assess that for yourself by putting in your specific numbers and assessing if your spending is really only $76k, but it is looking favorable.

On SS, the number that they provide assumes that you continue working and making the same as you did last year until your FRA, but there are calculators where you can replace that assumption with zero earnings from now until FRA. For most people the difference is negligible... IIRC mine was $15/month (not worth it to work another 10 years!).

 

[fishfactory]

PaPa-T, regarding health insurance, if you are going to get the Obamacare ACA, you can target a low price policy and get it by controlling the amount you receive from the 72-t. If you cannot do the rule of 55 by leaving your 401k with your employer, and you roll the 401k to an IRA, you can split off as many IRAs as you want with whatever $ amount you want in each. Pick the $ amount you need in one IRA and do a 72t on that IRA only so that you stay below the ACA income threshold.

 

[purplesky]

And just why are you so sure? Are you a CFP? A CPA?

Money is fungible. When you input $x of your spending need into FIRECalc, FIRECalc doesn't know if that $x includes mortgage payments, car payments, coccaine, hookers or whatever. So if OP says that they are 100% success on FIRECalc then it doesn't matter.

You rail against car payment or any debt in retirement carte blanche... context matters and it is situational.

In retirement I will probably build a new home and have a very affordable mortgage payment if rates stay at around 3%.
I would finance a Tesla or a Rubicon 392 or a Rubicon 4xe if auto loan rates are super low. I have no problem with low cost debt in retirement.

Like many people in this community I will have a pension that covers my basics and healthcare until age 65. I am lucky.

PaPa-T like most Americans will not have the stability of a pension to cover basics until collecting SS.
A good CFP acting as a fiduciary is obligated to advise 55 year olds with
PaPa-Ts retirement portfolio size about the risk involved.
Without healthcare covered for 10 years.
The FIRECalc leaves out some of the overall equation.

Everyone kind of agrees PaPa-T can retire early at age 55 if he wants.
Car lease or not.

We all know the markets will keep going to the moon forever.

 

[sroby2020]

rent not going up?

We are renting from our daughter and so. In law so no worries of rent going up.

That is not a given and should not be expected. Occasional COL increases should be the norm. They just won't gouge you.

 

[fuelie60]

Just an FYI. I retired at 56 and have had my medical insurance through the marketplace. It is basically catastrophe insurance, so plan on paying for your medical expenses (excluding annual physicals). If you are able to control what your taxable income is (ie: how much you pull out of your 401K) and live on that plus some savings you can have your entire monthly medical insurance premiums subsidized.

 

[CyPlainsDrifter]

You'll need to assess that for yourself by putting in your specific numbers and assessing if your spending is really only $76k, but it is looking favorable.

On SS, the number that they provide assumes that you continue working and making the same as you did last year until your FRA, but there are calculators where you can replace that assumption with zero earnings from now until FRA. For most people the difference is negligible... IIRC mine was $15/month (not worth it to work another 10 years!).

SS averages the 35 highest earning years. If the OP has less than 35, then zeros will be averaged to get to 35 years. If the OP has 35 or more earning years, the zero years will not affect the SS amount.