Would you retire at 55 with 1.4m?

[ut2sua]

How did you get your confidence to actually pull the plug?

You get the confidence when you understand your numbers (your total investable $, your yearly expenses, your other needs [child support, child college etc.], and how much of your yearly budget is trimmable when SHTF.)
From my view points, things that are in your favor:
1- Your budget is relatively on the lower side. This is good as the tax bite will be less (vs some of the bigger spenders here and elsewhere)
2- You got help on health insurance
3- If your confidence is high that you can cut down your budget when the market drops, then you are good to FIRE
Things that are less in your favor:
1- The stock market has had a good 3 year run. There may be some pull back going forward (FireCalc already took things into consideration for you, but your psychological strength could be tested when things drop)
2- You need to document your real past and current expenses (not calculating it). You are not good to go until this number is clearly understood.
My recommendation: It depends on how hard you have fallen out of love with your job, an extra year or two may build enough cushion that will make you more comfortable with your numbers and thus the decision to FIRE.
A good question to ask yourself rn: do you unlove your job enough to be willing to cut back on spending IF SHTF early in your FIRE?
If the answer is Yes, you can Fire rn.
Hope the above helps

 

[TheWizard]

You missed the point. youbet said $4 mil.

Indeed he did. But he's not the OP.
The OP said $1.4M...

 

[bluelight]

How did you get your confidence to actually pull the plug?

Firecalc is a wonderful tool, but I believe more in actual income / expenses. Starting in 2011 I tracked every dollar in and out. All these years later, I still track income/expenses. That knowledge of actual spending, along with Firecalc allowed me to feel comfortable enough to retire at age 62 (I could have retired at age 60, but management let me work at home full time so I could move closer to my grand children, so I stayed longer). If you are asking the question without solid numbers, you aren't ready yet.

 

[RunningBum]

Did you include that pension in FireCalc?
Did you include SS? Full or with a 23?% haircut?

More importantly IMO, how accurate are your expenses? Did you account for house repairs, car replacement, and other lumpy expenses? Possible LTC? This is where I spent the majority of my time while on the fence. It wasn't until I was confident with my expenses that I trusted FireCalc output. The market will waver up and down, hopefully trending up over time, but people can still fail in retirement if they have to spend too much.

I never answer YES or NO to these questions because I don't want any responsibility if I'm wrong, but I will point out things you may not have considered, especially if the info given is light.

 

[mrfeh]

Make sure:

• you know your expenses inside and out
• you use a conservative expected lifetime (ie. 40 years)

Then, all you can do is rely on what the tools tell you.

Personally, I would work at least a couple more years, then reassess.

 

[Mulligan]

Did you include that pension in FireCalc?
Did you include SS? Full or with a 23?% haircut?

More importantly IMO, how accurate are your expenses? Did you account for house repairs, car replacement, and other lumpy expenses? Possible LTC? This is where I spent the majority of my time while on the fence. It wasn't until I was confident with my expenses that I trusted FireCalc output. The market will waver up and down, hopefully trending up over time, but people can still fail in retirement if they have to spend too much.

I never answer YES or NO to these questions because I don't want any responsibility if I'm wrong, but I will point out things you may not have considered, especially if the info given is light.

For my first 10 years of retirement I was beginning to think those “lumpy expenses” were for worry warts and people with bad luck. The past couple years its been “my turn in the barrel”. Im definitely thankful I have the now comfortable position of being able to complain about it, but still easily able to cut the check. Having a “cushion” above the cushion definitely takes away the stress of finances in retirement.
Of course cash flow wise it was a lot easier for me having a pension with COLA that equaled my take home pay heading into retirement. That made my decisions a lot easier to make than for most.
OP I read the median net worth of a 55 year old household is $321,000. So no matter what you decide congratulations on getting to where you are now.

 

[Fishmasterdan]

Did you include that pension in FireCalc?
Did you include SS? Full or with a 23?% haircut?

More importantly IMO, how accurate are your expenses? Did you account for house repairs, car replacement, and other lumpy expenses? Possible LTC? This is where I spent the majority of my time while on the fence. It wasn't until I was confident with my expenses that I trusted FireCalc output. The market will waver up and down, hopefully trending up over time, but people can still fail in retirement if they have to spend too much.

I never answer YES or NO to these questions because I don't want any responsibility if I'm wrong, but I will point out things you may not have considered, especially if the info given is light.

I used 2800 a month at 62. I have not gotten into ss yet to run actual numbers. I have earnings since 1990. So the full 35 years. I am an electrician. Last 5 years have been 180k reported to irs. Then basically reduce that by 3% all the way back to 1990. Not enough skilled labor for the last 10 years so end up working lots of OT. Really burned out and body parts are not happy anymore.
I am mostly interested in what folks have done to get the confidence to pull the plug. I can get a part time job consulting any time. I get job offers at least 1 or 2 every 6 months.

Edit. Most of my retirement sparky friends get rehired for consulting. They can pay us retired guy less and work part time planning shutdowns gear changes ect.

 

[Fishmasterdan]

For my first 10 years of retirement I was beginning to think those “lumpy expenses” were for worry warts and people with bad luck. The past couple years its been “my turn in the barrel”. Im definitely thankful I have the now comfortable position of being able to complain about it, but still easily able to cut the check. Having a “cushion” above the cushion definitely takes away the stress of finances in retirement.
Of course cash flow wise it was a lot easier for me having a pension with COLA that equaled my take home pay heading into retirement. That made my decisions a lot easier to make than for most.
OP I read the median net worth of a 55 year old household is $321,000. So no matter what you decide congratulations on getting to where you are now.

Thank you. Honestly the union has forced retirement hourly. It's currently about 12$ an hour. I give the credit to them. I have a separate personal tax account I invest in

 

[Mulligan]

Thank you. Honestly the union has forced retirement hourly. It's currently about 12$ an hour. I give the credit to them. I have a separate personal tax account I invest in

I hear ya loud and clear. I had 14.5% confiscated from my check monthly for my pension which allowed me very early retirement. Would I have saved and invested all that money if left to me over the years? Uhm, certainly not! I wasnt as disciplined as most were here.

 

[RetiredHappy]

Thank you. Honestly the union has forced retirement hourly. It's currently about 12$ an hour. I give the credit to them. I have a separate personal tax account I invest in

Does it mean that you had to pay $12 per hour into your retirement/pension fund?

 

[Al18]

You should create a login to SSA.gov, to see your benefit estimate. Even if you stop working tomorrow, your SS benefit will continue to increase due to inflation adjustment/COLA each year. To be conservative, you should probably figure a 25% benefit cut in 7 years.

 

[calmloki]

Nope, Wouldn't and didn't stop doing what I do for money. No pensions, just enough SS to cover my Medicare health and plunk almost $66 into my checking account each month. Really had focus on covering my own azz to the best of my ability. Which I did - then kept going, inventing inflation rates that were based on not comparable goods, but the same goods. Yes, I thought the government was spoofing us. Also figured we or at least my wife, would live well into the 100's, and that our standard of living would double or so.

Result is our standard of living is little changed, our desires are easily met with a very modest amount, and I keep doing what I've been doing, though less of it. The NW is pretty darn fat, so now I invent space monsters coming to crash the economy. Ehh. how I'm drawn, no re-invention for me. Didn't work for any boss but me so maybe not needing to run away from w**k is ok.

Do think that 60-72 are the sweet years for raising your nose from a grindstone and enjoying life a bit, but !.4M at 55 seems way riskier than I'd feel comfortable with.

 

[Onda]

No

 

[YellowSubmarine]

I set realistic NW numbers and my time line well in advance...my goal. Also be debt free by retirement and stay that way. My goal was reached in spite of bad economic times (2011); and fortunately I retired upon selling my business - three months ahead of my written goal of 59.5. Know your budget and income flow and maintain it. 1.4m should work well with SS. Medical related is the biggest risk factor.

 

[Hyper]

I walked away at 45yo and were times afterwards that I thought I could have left earlier.
Being mature enough doesn't sound quite right to define. My head not being in the right place sounds better when thinking I could have left earlier.
TBS, HI coverage rising to $54k this year didn't sit well as I see nothing being done about those rates.
Could it rise to $100k in 27'

 

[pb4uski]

I used 2800 a month at 62. I have not gotten into ss yet to run actual numbers. I have earnings since 1990. So the full 35 years. I am an electrician. Last 5 years have been 180k reported to irs. Then basically reduce that by 3% all the way back to 1990. Not enough skilled labor for the last 10 years so end up working lots of OT. Really burned out and body parts are not happy anymore.
I am mostly interested in what folks have done to get the confidence to pull the plug. I can get a part time job consulting any time. I get job offers at least 1 or 2 every 6 months.

Edit. Most of my retirement sparky friends get rehired for consulting. They can pay us retired guy less and work part time planning shutdowns gear changes ect.

I ran FIRECalc with $1.4m portfolio, 55 year time horizon, $15,600 non-COLA pension starting at 62 in 2033, $33,600 SS starting at 62 in 2033 and 60/40 AA.

Using the Investigate tab to solve for safe spending at 95% success, I get safe spending of $78,716 annually, comfortably above your ~$60k of expenses.

I think that you are close enough that it deserves further study.

 

[RetiredHappy]

I ran FIRECalc with $1.4m portfolio, 55 year time horizon, $15,600 non-COLA pension starting at 62 in 2033, $33,600 SS starting at 62 in 2033 and 60/40 AA.

Using the Investigate tab to solve for safe spending at 95% success, I get safe spending of $78,716 annually, comfortably above your ~$60k of expenses.

I think that you are close enough that it deserves further study.

I didn't run FIRECalc but I looked that the SS number plus pension, I concluded that retiring at 55 with $1.4M is doable, provided that OP reduce spending as necessary.

 

[Aerides]

I didn't run FIRECalc but I looked that the SS number plus pension, I concluded that retiring at 55 with $1.4M is doable, provided that OP reduce spending as necessary.

That's the thing though - how many of us can honestly say we reduced expenses consistently after retiring? And was that out of necessity or desire? Because, sure, if I HAD to I could but that's no fun. And we haven't.

Would I rather work a year or two more in my 50's to not have to reduce travel or worry about gas prices or look at other ways to reduce expenses? Yes. Instead, we had a buffer enough that we are far more relaxed about those things, and don't really even much look at a budget anymore (10 years in almost).

It all comes down to expenses. A LOC area, a modest lifestyle that doesn't leave you feeling like you have to cut corners but can enjoy that retirement. A new roof or car that doesn't make you wince. If you can see all that with $1.4M, great. I couldn't and didn't but we retired a bit earlier as well.

 

[pb4uski]

How are you guys thinking that the OP needs to reduce expenses? He posted that he needs $60k for bills. It's unclear if that $60k includes the health insurance or not but from the $200 to $500/mo health insurance numbers that he posted it won't move the needle much.

Thought I would add. I get subsidized insurance thru my union. Its currently 500$ a month for 60 months. Then 200 a months after 65 for life for Humara I think its called. Supposedly gives me 100% coverage with medicare at 65. So I would be on the hook for 5 years of medical. I for sure wont make 65. I calculated I need less than 60k for bills and went to 100K for annual income in the calculator to cover the medical for 5 years. So I should be able to live well below my withdrawal rate..

 

[tulak]

I ran FIRECalc with $1.4m portfolio, 55 year time horizon, $15,600 non-COLA pension starting at 62 in 2033, $33,600 SS starting at 62 in 2033 and 60/40 AA.

This might be overall optimistic and conservative at the same time.

Optimistic: 33k/year at 62 seems high for SS. I would give that number a 25% haircut, in addition to figuring out the real number using opensocialsecurity(.com).

Conservative: 55 years brings OP to 100. I waffle between 90-100, but in the end, the difference isn’t that big: +/- a few k per year.

 

[Aggie1999]

How did you get your confidence to actually pull the plug?

Firecalc is a wonderful tool, but I believe more in actual income / expenses. Starting in 2011 I tracked every dollar in and out. All these years later, I still track income/expenses. That knowledge of actual spending, along with Firecalc allowed me to feel comfortable enough to retire at age 62 (I could have retired at age 60, but management let me work at home full time so I could move closer to my grand children, so I stayed longer). If you are asking the question without solid numbers, you aren't ready yet.

This. If someone is contemplating retirement, they should track their expenses down to the dollar for multiple years before retiring. Before getting serious about saving/investing, I just looked at credit card monthly amounts to get a vague idea what I was spending. Starting in 2016 through 2024 I tracked every dollar I spent. Every month I would review credit card charges, spreadsheet I used to track cash purchases, etc. I would enter all the amounts in GNUCash by category, so I knew what I spent on essentials, insurance, toys, etc each year.

I finally got lazy last year and didn't do it since I have been pretty consistent for 8 years on the spending. When I do retire, I'll probably start tracking again for at least a few years.

 

[Fishmasterdan]

Does it mean that you had to pay $12 per hour into your retirement/pension fund?

Yes that is part of the wage package. It gets auto removed from you wage package.

Also admittedly I have not run down the insurance numbers. I will be paying the higher cost union cobra premiums. I have saved 76000 in insurance costs that will be applied to the cobra payments. Its done in an HSA and medical savings program the union carries. The basics are you pay 2k a month into a basket for everyone. Any of your over payment goes into a savings account for medical. Also you pay .50 and hour into an HSA account that you can use for any medical expense. In addition to this I have been putting money into a taxable account that is dedicated to just medical expense (I do have some medical issues and the medication is 20k per month so I am VERY attentive to insurance). 2k x12 = 24k/76k = Is 3 years. I need to save another 24k to have the cash to cover 55 to 60 when the costs go down to 500 a month. I will easily have that in the next 6 months.
So I believe I had medical covered to 2k a month for the next 5 years in cash. It will go into a dividend ETF like OVL . Average 12% returns in the last 5 years and 20% in the last 3 years.

 

[SnowballCamper]

Knowing you're an electrician, and having tried to hire one for some residential work. I'll say to keep you license up to date for the first several years of early retirement and go for it. Electrical work isn't going away.

 

[Aerides]

How are you guys thinking that the OP needs to reduce expenses? He posted that he needs $60k for bills. It's unclear if that $60k includes the health insurance or not but from the $200 to $500/mo health insurance numbers that he posted it won't move the needle much.

60k for "bills" doesn't paint a full picture of expenses though. I'd don't know our number for sure but I'd guess it's half bills and half discretionary. If I just counted "needs" as expenses, I could live on 1.5. But I like to do more than I need. Want. If that need doesn't include travel, gifts, going out on dinner dates, splurging on a new xyz every now and then, it's not a great retirement.

If that 60k is all in whatever he normally spends for the past few years (including taxes and insurance), that's difference, and it may just be how it's being communicated. Bills vs. a normal years fully loaded expenses, is not the same number.

 

[Fishmasterdan]

Knowing you're an electrician, and having tried to hire one for some residential work. I'll say to keep you license up to date for the first several years of early retirement and go for it. Electrical work isn't going away.

I like to hunt and fish. If you have land access to either of these I will trade. No cash required. However my attic and crawlspace days or over. Not doing that.