Can I retire early before age 60?

[Dtail]

I spoke to a scheduled appointment Fidelity rep today and he said that I should be 70/30 portfolio 12 years from retirement.

In Fidelity's retirement calculator, they reference that one who is 9-12 years from retirement should be in a "Growth" strategy, which translates to a 70% exposure in stocks.
Ask your rep if his/her advice was following a standard protocol, or specifically analyzed for you.

 

[F.I.R.E User]

Horizontal axis is annual spending. Vertical axis is odds of success. Blue line shows odds of success at that level of spending, based on the input data you provided. For example, in that sample graph, 30,286 annual spending (horizontal axis) is predicted to have 95% success rate of lasting the retirement period. 33,314 annual spending will have 85% chance of success, etc.

Makes sense.

 

[F.I.R.E User]

In Fidelity's retirement calculator, they reference that one who is 9-12 years from retirement should be in a "Growth" strategy, which translates to a 70% exposure in stocks.
Ask your rep if his/her advice was following a standard protocol, or specifically analyzed for you.

Not sure if it was tailored to my needs but I told him I want to retire between 55-60. He said if market dips near retirement I will have to work more before I can retire.

 

[teetee]

Don't look for investment return on your emergency fund. It needs to be liquid . Its purpose is if you need it you have it right away.

With consistent investment (avoid timing the market) and annual salary raise, the only thing that can prevent you from reaching $2M net worth by age of 50 is the decrease of your saving rate.

 

[Dtail]

In Fidelity's retirement calculator, they reference that one who is 9-12 years from retirement should be in a "Growth" strategy, which translates to a 70% exposure in stocks.
Ask your rep if his/her advice was following a standard protocol, or specifically analyzed for you.

Well that depends on where your investment assets are worth at that time.
Ask the rep to input your numbers into their retirement calculator and go through the results with you.
This will assist with developing your knowledge on retirement financial needs, plus provide another perspective.

 

[F.I.R.E User]

What did your Edward Jones rep say?

I am not with them anymore.

 

[F.I.R.E User]

Don't look for investment return on your emergency fund. It needs to be liquid . Its purpose is if you need it you have it right away.

With consistent investment (avoid timing the market) and annual salary raise, the only thing that can prevent you from reaching $2M net worth by age of 50 is the decrease of your saving rate.

I am not looking at ROI on EF.

50 or 60?

 

[F.I.R.E User]

Well that depends on where your investment assets are worth at that time.
Ask the rep to input your numbers into their retirement calculator and go through the results with you.
This will assist with developing your knowledge on retirement financial needs, plus provide another perspective.

It was a general 20 minute call.

 

[dheb]

There are multiple FireCalc on the internet. Which one is recommended?

Use the one in the green bar near the bottom of this page.

 

[F.I.R.E User]

Use the one in the green bar near the bottom of this page.

I am.

 

[RunningBum]

I am.

Then why did you ask? If you even spent a minute looking into the other ones, they are just links back to this.

This is why people are impatient with you. You don't seem to do any research on your own. Before asking a question, think about if you can figure it out by yourself.

 

[piccolopat]

I agree with others that you really need to run your own numbers through one of many great calculators out there. I use the ones that Schwab and Fidelity have as well as a few others. You say you plan on retirement expenses of between $50-75K. That's a big range. Have you done an evaluation of your current expenses and projected those out to retirement when they will likely be significantly higher?

If you retire before 59.5 you will not have access to your retirement savings without paying a tax penalty. If you retire from the company where you have your 401k, there is a rule that allows you to withdraw if you retire after you turn 55 but there are restrictions on how you do this and it might require the option within your plan. You might want to check with your plan administrator and financial advisor on this.

I would strongly recommend that you have enough saved in cash or cash equivalents so that you can weather a down market without having to withdraw from your investments.

You indicated that you are renting with your mom (is she splitting the rent?) and that you get an additional $900 in monthly income from her and your two brothers. You might want to make sure to model your retirement numbers without these amounts as it is possible they won't always be there. For example, if the $900 a month is to cover your mother's living expense while she lives with you, what will happen if she needs to move to another facility like assisted living or eventually passes away? Will that income go away, affecting how much you have to live on now as well as in retirement?

Even if you opt to continue to rent, the amount will continue to go up. If you retire before 65, what will you do about health insurance until you qualify? You're happy with your car today, but you'll need to plan on replacing it over time. You need to include all of these things in your planning.

Good luck!

 

[F.I.R.E User]

Then why did you ask? If you even spent a minute looking into the other ones, they are just links back to this.

This is why people are impatient with you. You don't seem to do any research on your own. Before asking a question, think about if you can figure it out by yourself.

I had questions on results.

 

[RunningBum]

I had questions on results.

Do you really not comprehend that you are asking a bazillion questions, many of which you should be able to figure out for yourself?

I'm back to ignoring this user. It almost seems to be a bot which automatically asks more questions based on any possible response to a question.

 

[F.I.R.E User]

I agree with others that you really need to run your own numbers through one of many great calculators out there. I use the ones that Schwab and Fidelity have as well as a few others. You say you plan on retirement expenses of between $50-75K. That's a big range. Have you done an evaluation of your current expenses and projected those out to retirement when they will likely be significantly higher?

If you retire before 59.5 you will not have access to your retirement savings without paying a tax penalty. If you retire from the company where you have your 401k, there is a rule that allows you to withdraw if you retire after you turn 55 but there are restrictions on how you do this and it might require the option within your plan. You might want to check with your plan administrator and financial advisor on this.

I would strongly recommend that you have enough saved in cash or cash equivalents so that you can weather a down market without having to withdraw from your investments.

You indicated that you are renting with your mom (is she splitting the rent?) and that you get an additional $900 in monthly income from her and your two brothers. You might want to make sure to model your retirement numbers without these amounts as it is possible they won't always be there. For example, if the $900 a month is to cover your mother's living expense while she lives with you, what will happen if she needs to move to another facility like assisted living or eventually passes away? Will that income go away, affecting how much you have to live on now as well as in retirement?

Even if you opt to continue to rent, the amount will continue to go up. If you retire before 65, what will you do about health insurance until you qualify? You're happy with your car today, but you'll need to plan on replacing it over time. You need to include all of these things in your planning.

Good luck!

It’s hard to say what the expenses will be. One being HC and that’s a big question mark.

I do have Rule of 55 in my plan without penalty.

How much in cash do I need to gather?

I pay $410 portion of rent.

$1,310 rent comes out from my checking account.

Mother gets monthly check from SSI of $796 and SNAP $124.

$900 a month is not guaranteed in future but if she passes away and/or we are forced to put her in long term care home.

Also, I don’t know when to tap into SS. 70 has the highest payouts.

 

[Aerides]

You should probably work until you can take SS, and take it as late as possible.

 

[bigriver]

In 2005 I had 285K and had been divorced for 6 years, no kids. I just turned 55 in June and got fed up and resigned last week with a little over 25% more than you are shooting for. It can be done, some is timing, market and picking the right funds or stocks at the right time. I've lived a good simple life and have nice things. I paid my house off early, cars paid off early. No debt. It can be done but I did some side work and don't pay for contractors unless I have too. Read, listen and think....

 

[F.I.R.E User]

You should probably work until you can take SS, and take it as late as possible.

Work till 62?

 

[F.I.R.E User]

In 2005 I had 285K and had been divorced for 6 years, no kids. I just turned 55 in June and got fed up and resigned last week with a little over 25% more than you are shooting for. It can be done, some is timing, market and picking the right funds or stocks at the right time. I've lived a good simple life and have nice things. I paid my house off early, cars paid off early. No debt. It can be done but I did some side work and don't pay for contractors unless I have too. Read, listen and think....

FireCalc has me over $5M at 60 average with 100% success.

 

[piccolopat]

It’s hard to say what the expenses will be. One being HC and that’s a big question mark.

I do have Rule of 55 in my plan without penalty.

How much in cash do I need to gather?

I pay $410 portion of rent.

$1,310 rent comes out from my checking account.

Mother gets monthly check from SSI of $796 and SNAP $124.

$900 a month is not guaranteed in future but if she passes away and/or we are forced to put her in long term care home.

Also, I don’t know when to tap into SS. 70 has the highest payouts.

For expenses, you can start with itemizing everything that you currently pay for and include 100% of the rent, not just what you are paying now. I think that there are calculators that will help you project how those will grow over time. You should not plan on paying your small portion of the rent long term. Don't forget to include utilities and insurance as well as money for maintenance if you choose to buy.

At some point you will have to pay the entire amount of your living expenses when your mother is no longer covering the majority of your rent. You might need to help pay for your mother's long term care to get her into a nice place or to pay for her funeral if she doesn't have life insurance or funds set aside for that. Those can drain your assets if you choose to fund them.

As for cash, that is dependent on how comfortable you are with waiting out a down market. For many people, that can mean 2-3 years of expenses. If your estimate of expenses is accurate, that would mean $100-150K in cash or cash equivalents.

The decision on when to take SS can be influenced by how much income your investments are generating when you retire and what your health looks like. If you find that you need more income, taking SS earlier than 70 might be the answer. If you end up with health issues, taking SS is probably better than waiting if you don't think you will survive past the break even age.
Unless your situation changes, you don't have a spouse or dependent kids to worry about so that makes it simpler. I wouldn't take SS before your FRA but I also don't know if I would delay until 70. That's a decision DH and I are still discussing but our situation is a bit different than yours. We use opensocialsecurity.com to help with this decision.

 

[BlueberryPie]

So, if I can get from $800K to $2M in a bit under 7 years, I'd think getting from $547K to $2M in 12-17 years (if you're looking at between 55-60) should be reasonable.

You've benefited from a great decade of bull market, with just a blip in 2020. Future performance blah blah blah...

That why you should play with Firecalc and see in how many scenarios you come out OK to get a sense of how much it may vary, even though history will not repeat itself

Not to say that it can't happen, but are you ready for alternative?

 

[F.I.R.E User]

You've benefited from a great decade of bull market, with just a blip in 2020. Future performance blah blah blah...

That why you should play with Firecalc and see in how many scenarios you come out OK to get a sense of how much it may vary, even though history will not repeat itself

Not to say that it can't happen, but are you easy for alternative?

It always picks 121 scenarios from 1871.

 

[Exchme]

Let's make this thread easy - you can't retire now, you need to work a lot more years and hope that your health and job work out well. A lot of folks have to step back and start again when their company or their industry change and some just don't have good enough health to get there. When you close enough to make it a meaningful discussion, come on back and ask then.

People are getting short with you because of the incessant thoughtless, helpless posts asking worthless questions in multiple threads (and even multiple websites!). You have received hundreds of helpful, thoughtful, time consuming to compose posts with an encyclopedia of knowledge. I suggest a lot more reading and studying.

 

[teetee]

I am not looking at ROI on EF.



50 or 60?

>Emergency funds: $3,000 earning 0.57% APY at online VIO Bank. Should I have more? If yes, in I-Bonds which is paying 3.54% until maturity of 1 year?

I think most people read your original post will think that you think ROI is important for your EF.

 

[F.I.R.E User]

>Emergency funds: $3,000 earning 0.57% APY at online VIO Bank. Should I have more? If yes, in I-Bonds which is paying 3.54% until maturity of 1 year?

I think most people read your original post will think that you think ROI is important for your EF.

Also, you said age 50 to reach $2M. You meant 60 right?