new member 5 yrs to go

[makemakeyourfuture]

50 married
retire at 55
1.4 in 401k adding 64.5k per year
725k in non retirement. adding 125k per year bridge to withdraw age
spend 130k year. current
100k owed on house at retirement
500k current house equity. may stay/ may downsize
3 kids- potential college all ready in separate accts

looking good?

 

[Dtail]

What is the expected SS pymts for both?
Just to confirm, are you expecting to add ~950k by retirement?

 

[omni550]

Welcome aboard, MMYF!

omni

 

[makemakeyourfuture]

What is the expected SS pymts for both?
Just to confirm, are you expecting to add ~950k by retirement?

no ss expected
yes add 950k then set sail

 

[HI Bill]

Welcome! Well, it depends on your budget in ER. How much will health care cost then? This might push your current budget up to $20K or more, depending on what happens to the ACA. I'd suggest you run FIRECALC. Also, think about what you want to do in 5 years when you RE. Will your $130K cover your wants, needs, and some contingencies? I wanted to ER at 50, but added the desire for the travel budget to equal the non-discretionary budget. Then COVID hit, and my wife decided a house with a pool was more important. So I ended up working until 55. Financially, glad I did. Otherwise, not. I missed out on two years of travel due to COVID, and likely two of the healthiest remaining years of my life. Ended up with a nice house, nice furniture, partial ocean view, and live in Hawaii, so I think the sacrifice was worth it.

 

[Nick Striker]

Isn't 1.4 enough?

 

[HI Bill]

Isn't 1.4 enough?

Not at the OP's planned spending rate and age.

 

[pb4uski]

50 married
retire at 55
1.4 in 401k adding 64.5k per year
725k in non retirement. adding 125k per year bridge to withdraw age
spend 130k year. current
100k owed on house at retirement
500k current house equity. may stay/ may downsize
3 kids- potential college all ready in separate accts

looking good?

FIRECalc seems to say ok at 95% success if you're really adding that much in the next 5 years.

 

[street]

I know you aren't asking if you are good to go but it wouldn't hurt if you run your numbers carefully.

At an estimated 35 years in retirement and a spend rate at 130K a year, I see there could be trouble.

Of course a lot of things factor into what happens 30 to 35 years from now but I would be concerned with that high of expenses.

Just my 2¢.

 

[Scout]

Will much of the 130k spend be discretionary?

 

[Dtail]

FIRECalc seems to say ok at 95% success if you're really adding that much in the next 5 years.

At the expected 130k spending with a 3m retirement portfolio, he is already over a 4%WR which would typically translate to a 95% success rate.
Not to mention, that at a 30 year retirement, which is probably a low estimate when retiring at age 55.

Am I missing something?

 

[Golden sunsets]

I think a lot depends on how much growth your portfolio plus the $950,000 appreciates during the 5 years. Using $130,000 in spending with little to no growth looks tight at best. With the kind of growth we've experienced over the past few years, you could be in great shape. Does the 130k include taxes? What will 5 years of inflation do to that 130? How about weddings and other big ticket items? Travel? A 4% SWR works for a normal retirement period, but you should prepare for a longer retirement of 40 years, which generally means planning on a lower SWR.

 

[makemakeyourfuture]

yes taxes are in the 130 and 45k is for fun. I assumed constant inflation and no pullback on spending as I age to be conservative. I also assume no SS in my models. firecalcl serms to agree with my models. thanks for looking at my details.

 

[Scout]

Since that much is discretionary then you could do a variable withdrawal first several years after pulling trigger to prevent sequence of returns risk. As market drops you can reduce spending so that you’re only taking 3-4% of your reduced portfolio value (from your discretionary allocation). If market continues as it has you can comfortably continue the 130k spend.

 

[citrine]

Awesome! Welcome to the group
You will be fine...things that matter change so drastically when you retire. It's good that you have built in quite a large cushion in your calculations so there is ample breathing room in the budget.