Is it possible ?

[maset22]

Glad i found this site. I am 48 years old, and been wishing to retire at 56. My confusion is that I have military taxable retirement of $14,700 a year. I am currently earning right around $35.000 a year, in which I save 15% of that. with my employer match $1.00 on the first 3% and .50ct on the next 2%. With all the expertise and living knowledge out their. Is it possible for me to retire at my goal of 56. I owe right around $50.000 on my home and not too many more bills. Can someone paint me a realistic picture. Or should I make more dough Thanks. Oh, I have saved around $28.000 So far.

 

[Berkshire_Bull]

Just a rough, back of the envelope, calculation would put the amount you would need to maintain your lifestyle at $30,000 pretax since you can save 15% of your current income. Depending if your military retirement is COLA'd or not, you would need about another $15,000 per year to get to $30k. Using the (very controversial and debatable) 4% withdrawal rate, you would need a portfolio of $375,000 to be able to do it. You can play with either FIRE Calc. which is all-inclusive, or this more simple one to see how you could get to $375k http://www.dinkytown.net/java/Savings.html I ran your numbers and in order to get that $375,000 in 8 years earning 10% with inflation at 3.1% you would either need to save for 17 years, or save $25,000 per year. You're going to need more money if your goal is retire at 56 I'm afraid.

 

[maset22]

Woh, ER sure looks like hard work. I will crunch the numbers and maybe set a new goal. BUt not giving up as yet. Thanks

 

[Hyperborea]

Just a rough, back of the envelope, calculation would put the amount you would need to maintain your lifestyle at $30,000 pretax since you can save 15% of your current income.  Depending if your military retirement is COLA'd or not, you would need about another $15,000 per year to get to $30k.

It might be even tougher than your quick calculations.  If the OP is using the military pension now for current income then he doesn't only have to fund another $15K / annum out of his portfolio to keep the same income but instead needs $30K / annum.

How much will they get in SS?  The average SS payment is ~$1K / month or $12K / annum.  That and their military pension will bring in $27K.  That means that they will need to fund $18K / annum for the rest of their life PLUS an extra $12K / annum for 6 years (from retirement to SS eligibility date).  This will change some depending on what they will really collect from SS.

That means with a simple 4% withdrawal they will need $450K in their portfolio for the $18K / annum.  For the short term SS replacement they will need 6 x $12K = $72K.  That's a total of $522K in today's dollars.  If we inflate it at 3% for 8 years that's ~$660K.  Getting to that in only 8 years is going to be very, very difficult with the income and current savings given above.

What the OP needs to do is some budget crunching and decide how much they want ER and how much lifestyle change they are willing to accept.  If they can cut their spending then ER gets easier - they'll need less in retirement and they can save more now.

 

[comixfan]

Glad i found this site. I am 48 years old, and been wishing to retire at 56. My confusion is that I have military taxable retirement of $14,700 a year. I am currently earning right around $35.000 a year, in which I save 15% of that. with my employer match $1.00 on the first 3% and .50ct on the next 2%. With all the expertise and living knowledge out their. Is it possible for me to retire at my goal of 56. I owe right around $50.000 on my home and not too many more bills. Can someone paint me a realistic picture. Or should I make more dough Thanks. Oh, I have saved around $28.000 So far.

Question: When will your house be paid off? within 8 years?

 

[comixfan]

Question:  When will your house be paid off? within 8 years?

Doing some quick calculations, I assumed a $500/month house payment to be conservative. That means you only need 24K in pre-tax dollars to maintain the same lifestyle that you have now, assuming your house will be paid for. So you would need $250,000 which can be attainable in about 12 or 13 years. If house payment is $750 then you would only need 21K in pre-tax dollars or a $160,000 nest egg or so, in which case you could possibly retire at your goal of 56.

 

[comixfan]

Doing some quick calculations, I assumed a $500/month house payment to be conservative.  That means you only need 24K in pre-tax dollars to maintain the same lifestyle that you have now, assuming your house will be paid for.  So you would need $250,000 which can be attainable in about 12 or 13 years.  If house payment is $750 then you would only need 21K in pre-tax dollars or a $160,000 nest egg or so, in which case you could possibly retire at your goal of 56.

And that also assumes that your military pension doesn't count towards your current income of 35K.

 

[unclemick]

? Why do want to retire? Get a copy of Your Money or Your Life and play some games(on paper) with your intended lifestyle. Play both sides of the ball - offense(savings) and defense(budget).

In my heart of hearts, being a really cheap SOB gave me my jollies. Investment was ho hum DCA into index funds month after month.

? Can you sell the house at 56 and downsize? How cheap were you during your military years, etc., etc.

Have faith - you have some elements to work with.

 

[maset22]

My income from my part time job is $35.000 In addition to my $14.700 in retirement. I Also have a VA non taxable income of $4.900. The figures you guy's are giving blows my mind, and also deflates my ego. But I am glad for your expertise, My home mortgage is $520 monthly but: I add $100 to principle each month. Does this change the picture any?

 

[Hyperborea]

My income from my part time job is $35.000 In addition to my $14.700 in retirement. I Also have a VA non taxable income of $4.900.

The extra income stream doesn't change the portfolio amounts at all if you live on the amount now and also expect to live on it in retirement.  The amount of income that the portfolio has to replace is the same.

The figures you guy's are giving blows my mind, and also deflates my ego.

You're talking about replacing a significant stream of income for a very long time with a reasonably good chance of success.  That requires a large portfolio.  If you reduce one of the three requirements (income, duration, success probability) then you can reduce the portfolio amount.

I think the biggest thing you can do to improve your ability to retire early is to do some serious budget crunching.  Reduction in your required spending now will decrease the amount you need in retirement and increase the amount that you can save for retirement.

 

[comixfan]

My income from my part time job is $35.000 In addition to my $14.700 in retirement. I Also have a VA non taxable income of $4.900. The figures you guy's are giving blows my mind, and also deflates my ego. But I am glad for your expertise, My home mortgage is $520 monthly but: I add $100 to principle each month. Does this change the picture any?

So it looks like you've planned to pay off your house about the time that you retire. Great!

Question:
Will the VA income continue in retirement?

If not, it looks like $250,000 will provide you with what you need and will take 12 or 13 years based on your current rate of savings.

Once you have your house paid off, you could increase your rate of savings which means you could probably retire at age 59 or so.

 

[maset22]

thanks guy's for all your imputs. My VA benefits will continue due to disabilities encure in service. I am learning that being frugal in consuption now, will take me a long way in the future. One big advantage I might have is my VA medical care. You have giving me lots to work with. Still in the runnings for age 56

 

[Mr._johngalt]

Hello. I semiretired at 49 and began real planning the same year. I does indeed "depend on how bad you
want it".

JG