Hi,
As the title says I am nervous about early retirement with approximately $5.5 million. We are in our early 50s and have two children that we put through college. I am concerned about starting retirement with the market at an all-time high and what a drastic drop could do to our long-term retirement prospects. During the 2008 meltdown we did panic and sold thereby locking in our losses. I know we can't do that if the market goes down again.
Of the $5 million approximately $1 million is in IRA/401(k) the rest is after tax accounts. Currently we are shooting for 50/30/20 asset allocation. The 20% is because we would probably put a good five years plus worth of living expenses into CDs so we wouldn't have to touch the money in the market if there is a correction. Most of the stock is in S&P 500 index funds and individual blue chip dividend stocks. We still need to ramp up the bond portion but what we do have is in bond funds. Right now we are still a little heavy in cash but with the rates increasing I'm not comfortable putting too much in bonds right now.
After looking through the other posts of what people spend post retirement I am kind of shocked at how low it is. We figured about $13,500 - $14,000 per month but this includes a lot of extras that we could reign in if necessary. For example, we budgeted $1000 a month for travel for the rest of our lives. Also about $1500 a month is budgeted for charity. Our home is worth about $900,000 and it's paid off but the property taxes run about $20,000 a year. We are not interested in downsizing at this point but may in the future if necessary. Also I have heard from family members that health insurance costs can run $30,000 a year until Medicare kicks in. We have zero debt but with the property taxes and health insurance that alone could be $50,000 a year.
DH has a pension from a previous job. At 55 the lump sum would be around $450,000, at 65 about $750,000. If we take the annuity it would be approximately $4100 per month at 65 for 100% survivor. We are leaning towards the lump sum but haven't decided yet. Any suggestions on which is a better option? SS would be approximately $4k a month total but I'm not confident it will be there for us so I don't like including it in calculations.
DH's job is very stressful so I completely understand why he's ready to pack it in. We had a financial plan run last year and we targeted retiring in 2019 and it showed we were on track. He would like to retire now.
Am I nuts to be so concerned? Any thoughts would be appreciated.
As the title says I am nervous about early retirement with approximately $5.5 million. We are in our early 50s and have two children that we put through college. I am concerned about starting retirement with the market at an all-time high and what a drastic drop could do to our long-term retirement prospects. During the 2008 meltdown we did panic and sold thereby locking in our losses. I know we can't do that if the market goes down again.
Of the $5 million approximately $1 million is in IRA/401(k) the rest is after tax accounts. Currently we are shooting for 50/30/20 asset allocation. The 20% is because we would probably put a good five years plus worth of living expenses into CDs so we wouldn't have to touch the money in the market if there is a correction. Most of the stock is in S&P 500 index funds and individual blue chip dividend stocks. We still need to ramp up the bond portion but what we do have is in bond funds. Right now we are still a little heavy in cash but with the rates increasing I'm not comfortable putting too much in bonds right now.
After looking through the other posts of what people spend post retirement I am kind of shocked at how low it is. We figured about $13,500 - $14,000 per month but this includes a lot of extras that we could reign in if necessary. For example, we budgeted $1000 a month for travel for the rest of our lives. Also about $1500 a month is budgeted for charity. Our home is worth about $900,000 and it's paid off but the property taxes run about $20,000 a year. We are not interested in downsizing at this point but may in the future if necessary. Also I have heard from family members that health insurance costs can run $30,000 a year until Medicare kicks in. We have zero debt but with the property taxes and health insurance that alone could be $50,000 a year.
DH has a pension from a previous job. At 55 the lump sum would be around $450,000, at 65 about $750,000. If we take the annuity it would be approximately $4100 per month at 65 for 100% survivor. We are leaning towards the lump sum but haven't decided yet. Any suggestions on which is a better option? SS would be approximately $4k a month total but I'm not confident it will be there for us so I don't like including it in calculations.
DH's job is very stressful so I completely understand why he's ready to pack it in. We had a financial plan run last year and we targeted retiring in 2019 and it showed we were on track. He would like to retire now.
Am I nuts to be so concerned? Any thoughts would be appreciated.