Hello and help me decide if I can ER

[ExPatKiwi]

Started my career at the age of 16 and have finally had enough after 40 years of working! I can't stop thinking about early retirement.

I'm 56 and wife is 55 living in New England. I've been the only breadwinner for 20+years now. Both kids have flown the coop and have developed good investing habits . Wife and I downsized to a condo from the McMansion 6 years back. It's worked out well to allow us to have lots of free time to cruise and sail. Have considered moving to FL and looked at condo's there early last year before the price rises! Maybe do the snow bird thing or move there full-time in a house.

We are debt free. Have two late model cars and $ailboat. Annual expenses are $52k that includes annual cruise and $ailboat costs. May sell $ailboAt if I retire to free up time for other bucket list activities like hike the PCT AT and travel etc.

Assets are:

Condo $250k
Cash $50k
Taxable $100k
HSA (both) $17k
ROTH (both) $130k
401k $475k
Company pension option to take lump sum of $900k this year or $39k/yr now or defer to 65yo and $69k/yr

SS will claim at FRA it's worth $30k+$15K for spousal in 2021 dollars.

With interest rates so low the lump sum pension won't actually increase much more even if I defer claiming it as our life expectancy also decreases as we age. I'm tempted to take the lump sum now and roll it into an IRA with an AA of 60/40. Medical insurance is also covered by the company until age 65.

The last few years I've been maxing out 401k pre-tax and after-tax then rolling over after-tax to the ROTH as well as doing the backdoor ROTH for wife and I. If I retire I'll use the 401k rule of 55 to withdraw ~$100k year and convert $45k to ROTH each year and live on the rest.

Question is can I do it?

 

[REWahoo]

Question is can I do it?

Suggest you start here to look for an answer: https://www.early-retirement.org/fo...-answer-before-asking-can-i-retire-69999.html

 

[bloom2708]

Start a simple spreadsheet with each retired year.

Income line, expense line.

57-59.5
59.5 to 62 (Medicare)
62 to FRA or 70 (SS)

When can your pension start? When do you want to start? Lower or higher later? Is healthcare included in your $52k?

I take a rough 3% of $1,655,000 and get $49k. That tells me you are good if you can figure out the years before the pension. You can spend the $100k.. Nibble on Roth (but should let that grow)

Firecalc or iOrp are good tools. Use your mySS accounts to estimate and get a good SS estimate.

If your pension can start at 56/57 you should be good. Also factor in lumpy type spend that may be outside the $52k.

Good luck.

 

[38Chevy454]

Basic math (not getting into inflation, etc), $39K/$900K = 4.33%. So if you are confident about being able to get higher than that investment return on the lump sum, you can take the risk and go with it. Or can be conservative and take the safe $39K/year where you only need to supplement it with $13K. You seem to have plenty to cover that and then you are no withdrawal needed once SS kicks in.

The main benefit of taking the monthly pension now is you minimize your risk of getting to the SS income starting point. I assume you can tap your 401k at 55? Or even if you cant there is the 72t potential.

One issue is if you have confidence in the stability and long term paying ability of the pension if you take the traditional pension. Also if you have any plans for leaving something to kids inheritance, the lump sum may be better option to provide that flexibility. Pension stops when you die, or may have surviving spouse option, but the pension for sure is gone when both of you are gone. Having the retiree medical is a great bonus and can help avoid potential large medical expenses.

I guess overall you are good to go at 56, just depends on how you want to do your own financial mgmt and investing, vs the safe monthly pension route. Don't forget to add in some money for car replacement, major house repairs or upgrades, etc. Those would be outside your $52K/year budget.

 

[HI Bill]

59.5 to 62 (Medicare)

For most of us, shouldn't this be 59.5 to 65 (the age at which most of us are eligible for Medicare, unless disabled)?

 

[beernutzbob]

Is there any survivor benefit for your pension? If not I'd take the lump sum as what happens to your DW if you die one day after taking it?

You retirement plan looks a little thin to me but I'm pretty conservative.

 

[cyber888]

If you want to play safe, you can take the pension now as a monthly income or lumpsum.

 

[happyhere]

Started my career at the age of 16 and have finally had enough after 40 years of working! I can't stop thinking about early retirement.

I'm 56 and wife is 55 living in New England. I've been the only breadwinner for 20+years now. Both kids have flown the coop and have developed good investing habits . Wife and I downsized to a condo from the McMansion 6 years back. It's worked out well to allow us to have lots of free time to cruise and sail. Have considered moving to FL and looked at condo's there early last year before the price rises! Maybe do the snow bird thing or move there full-time in a house.

We are debt free. Have two late model cars and $ailboat. Annual expenses are $52k that includes annual cruise and $ailboat costs. May sell $ailboAt if I retire to free up time for other bucket list activities like hike the PCT AT and travel etc.

Assets are:

Condo $250k
Cash $50k
Taxable $100k
HSA (both) $17k
ROTH (both) $130k
401k $475k
Company pension option to take lump sum of $900k this year or $39k/yr now or defer to 65yo and $69k/yr

SS will claim at FRA it's worth $30k+$15K for spousal in 2021 dollars.

With interest rates so low the lump sum pension won't actually increase much more even if I defer claiming it as our life expectancy also decreases as we age. I'm tempted to take the lump sum now and roll it into an IRA with an AA of 60/40. Medical insurance is also covered by the company until age 65.

The last few years I've been maxing out 401k pre-tax and after-tax then rolling over after-tax to the ROTH as well as doing the backdoor ROTH for wife and I. If I retire I'll use the 401k rule of 55 to withdraw ~$100k year and convert $45k to ROTH each year and live on the rest.

Question is can I do it?

no... sir, the Question is: why not do it i'm not just saying that because i did (retired early to Costa Rica at 57)... but most importantly, you never know how long you'll be ABLE to... i've seen people work until they are 70 and die at 71. or younger. You quoted a lot of numbers and figures in your intro... but 'happiness' can be so much less than what you think it costs... Do you have any idea how many 'humans' on this planet have less than 100 dollars to their name and live a really enjoyable, meaningful life??
Did you ever grow anything besides wealth... like something you can eat?? Did you ever swim in a river with the 'locals' ... ? did you ever , ever , ever... ??
i say JUMP!! you have a safety net, so what's stopping you??
you can set up a very comfortable place to live, completely furnished, and even buy a car to park under the palm tree... for less than $150k in places like Costa Rica, Guatemala, Ecuador, or Colombia.
Be adventurous... Florida is not. Be free, get lost, eat something foreign, try to speak another tongue, skinny dip, hold a baby soth, watch a toucan eat a banana, walk thru a cloud forest. Sleep in a hammock. See you there!