I have a somewhat different retirement situation than most people do. My wife and I are both eligible to start drawing a pension at age 50. I plan to retire at 50 (7 1/2 years) but my wife will be only 46. Since she will only be 46, she wont receive anything for 4 years.
We have other investments that we will draw from during that 4 year period to bridge the gap until her pension kicks in.
Since Im anonymous here, i dont mind posting actual numbers.
Heres the dilemma.....
Our pensions will be about $4750 / month (hers starts 4 years later of course)
My projections show we will have about $1.4 Milllion in investments. 457k, Roths and taxable investments.
Since we save such a high percentage of our incomes, this is enough money to significantly raise our standard of living so I want to withdraw the highest amount that i safely can. I also want to withdraw enough that our income is higher in the 1st 15 years or so since I expect we will travel alot more in the earlier years.
Right now, Im thinking of withdrawing $9000 / month from the $1.4 million for the 1st 4 years. Thats a withdrawal rate of about 7.7%
That would make our monthly income $13750 for those 4 years.
If our investments return 6% during those 4 years, we will still have $1.25 Mil or so at the end of the 4 years.
At that point, our pensions will be $9500 / month and we would need a little over $4000 month from investments to get to the same $13750 monthly income.
That would put our withdrawal rate at slightly under 4% from that point on.
To get a slightly higher income for the 1st 15 years or so, I would have to withdraw more than the listed 7.7% the 1st 4 years which would leave less money at the end of the 4 years and would probably put my withdrawal rate for the rest of the time at closer to 5.5% which i think is still OK since our pensions are guaranteed and will never run out. They are also inflation adjusted.
Most people retire when they have enough money to sustain a lifestyle that they are used to or that they are willing to compromise to if they downsize. We will retire at a set time period and want to figure out what lifestyle our investments / pension willl sustain so we're kind of doing it in reverse. We will be moving to an area with a higher cost of living
Thoughts?
We have other investments that we will draw from during that 4 year period to bridge the gap until her pension kicks in.
Since Im anonymous here, i dont mind posting actual numbers.
Heres the dilemma.....
Our pensions will be about $4750 / month (hers starts 4 years later of course)
My projections show we will have about $1.4 Milllion in investments. 457k, Roths and taxable investments.
Since we save such a high percentage of our incomes, this is enough money to significantly raise our standard of living so I want to withdraw the highest amount that i safely can. I also want to withdraw enough that our income is higher in the 1st 15 years or so since I expect we will travel alot more in the earlier years.
Right now, Im thinking of withdrawing $9000 / month from the $1.4 million for the 1st 4 years. Thats a withdrawal rate of about 7.7%
That would make our monthly income $13750 for those 4 years.
If our investments return 6% during those 4 years, we will still have $1.25 Mil or so at the end of the 4 years.
At that point, our pensions will be $9500 / month and we would need a little over $4000 month from investments to get to the same $13750 monthly income.
That would put our withdrawal rate at slightly under 4% from that point on.
To get a slightly higher income for the 1st 15 years or so, I would have to withdraw more than the listed 7.7% the 1st 4 years which would leave less money at the end of the 4 years and would probably put my withdrawal rate for the rest of the time at closer to 5.5% which i think is still OK since our pensions are guaranteed and will never run out. They are also inflation adjusted.
Most people retire when they have enough money to sustain a lifestyle that they are used to or that they are willing to compromise to if they downsize. We will retire at a set time period and want to figure out what lifestyle our investments / pension willl sustain so we're kind of doing it in reverse. We will be moving to an area with a higher cost of living
Thoughts?