Age 45 to 55 - 401K retirement goals and status (2 Viewers)

[inca911]

Here’s an interesting question in my mind. How much money would you want to retire early, say 45-50ish early?

If you want to explore this sometime, like @Poker Zombie , I too have a spreadsheet we can review.

 

[Mr Tree]

If you want to explore this sometime, like @Poker Zombie , I too have a spreadsheet we can review.

I have a definite number in my mind, just curious what others think. I’ve got a mathematical idea although I never actually rant it by my financial advisor. (At least partially because I’m not even close to it currently.)

 

[Mr Tree]

$15-20mm. Just to be safe.

That should be pretty damned safe unless you live the caviar lifestyle! Of course you do live in NY so that’s like $5M in other parts of the country.

 

[ovo]

I didn't add my wife's 401 k, I really want to get up to a million, 1.2, but time will tell

 

[gopherblue]

I have a definite number in my mind, just curious what others think. I’ve got a mathematical idea although I never actually rant it by my financial advisor. (At least partially because I’m not even close to it currently.)

curious to know what that is.

That should be pretty damned safe unless you live the caviar lifestyle! Of course you do live in NY so that’s like $5M in other parts of the country.

Well, I’m assuming 40 more years of life, I have a one-year-old, and health insurance without an employer wouldn’t be cheap (and getting more expensive if Trump and complicit Republicans achieve their goal of destroying our country). I think $8-10mm is doable, but also don’t forget about inflation.

 

[Poker Zombie]

Looking back at the spreadsheet, I estimate I will spend/have spent $2,191,313 from Jan 1 when I was 47 years old until Jan 1 at age 64. I calculate the need for another 2.1 million spent between my retirement and the time of my death.

The real tricks though become interest earned. If I had 4 million at 47, I would be earning more interest, and thus wouldn't need as much money. At the same time, I would still need health insurance, which would come out of pocket if I retired early - and that shit ain't cheap (unless I move to Canada, or anywhere else in the civilized industrialized world).

But I could ballpark it at around 4.2 million, and would do a more careful analysis before pulling the trigger.

 

[Forty4]

Here’s an interesting question in my mind. How much money would you want to retire early, say 45-50ish early?

Without being blatantly obvious depends on your lifestyle.

I was playing around with forecasting models two or three weeks ago and the magic number seems to be 2mm right now, but that could change in 5-10 years. Of course you could supplement your income by working at Wal-Mart as @Poker Zombie stated. Myself it will be Home Depot for my poker funds.

 

[Mr Tree]

curious to know what that is.
Well, I’m assuming 40 more years of life, I have a one-year-old, and health insurance without an employer wouldn’t be cheap (and getting more expensive if Trump and complicit Republicans achieve their goal of destroying our country). I think $8-10mm is doable, but also don’t forget about inflation.

Mine was based off of the idea that if I withdrew at a clip of 2.5% from the principal I could probably do it in perpetuity. (Which is what I never ran by my financial advisor.)

Assuming that to be true I came up with $6M. At that point you could theoretically take $150K a year indefinitely. Obviously everyone has different levels of financial need and comfort, but that’s the minimum I would want to start thinking about walking away from work.

 

[carlin]

bit of a tangent, but it's always surprised me that you can graduate from high school in the US w/o a class in personal finance.

the difference between always getting behind and always getting ahead is pretty small.

-gc

 

[Forty4]

I do know my inlaws were complaining about having to take the minimum requirements when they didn’t need to, I think they will be doing fine.

 

[Mr Tree]

bit of a tangent, but it's always surprised me that you can graduate from high school in the US w/o a class in personal finance.

the difference between always getting behind and always getting ahead is pretty small.

-gc

Especially in a country where your financial well being is hugely dependent on your ability to use money to make money.

 

[gopherblue]

Mine was based off of the idea that if I withdrew at a clip of 2.5% from the principal I could probably do it in perpetuity. (Which is what I never ran by my financial advisor.)

Assuming that to be true I came up with $6M. At that point you could theoretically take $150K a year indefinitely. Obviously everyone has different levels of financial need and comfort, but that’s the minimum I would want to start thinking about walking away from work.

Agreed. But I’d want to factor in at least 25% cushion to account for dramatic situational changes, including (a) inflation, (b) abrupt, ill-considered, intentionally harmful and irresponsible tax law changes, (c) catastrophic health issues, and (d) Murphy. Plus, I live in NYC and that shit’s spendy.

 

[Poker Zombie]

That should be pretty damned safe unless you live the caviar lifestyle! Of course you do live in NY so that’s like $5M in other parts of the country.

Mmmm Caviar...

 

[Mr Tree]

Agreed. But I’d want to factor in at least 25% cushion to account for dramatic situational changes, including (a) inflation, (b) abrupt, ill-considered, intentionally harmful and irresponsible tax law changes, (c) catastrophic health issues, and (d) Murphy. Plus, I live in NYC and that shit’s spendy.

Yeah that last part is particularly significant for you IMO. Not a particularly friendly place for early retirement unless you are doing it with surplus.

 

[Forty4]

At that point you could theoretically take $150K a year indefinitely. Obviously everyone has different levels of financial need and comfort, .

While you would have a lot of time on your hands to spend the money a lot of your current bills should disappear (kids, mortgage) so you shouldn’t need that much in “retirement”

 

[Mr Tree]

While you would have a lot of time on your hands to spend the money a lot of your current bills should disappear (kids, mortgage) so you shouldn’t need that much in “retirement”

Have you seen my poker room sir? Don’t underestimate my ability to chew through cash. :

If I retired early it would be with enough money to do what I want for the rest of my life be it travel, fun, whatever. But someone who just wants freedom from work and lives more frugally could absolutely get it done at a different number, and I completely respect that as well.

 

[gopherblue]

While you would have a lot of time on your hands to spend the money a lot of your current bills should disappear (kids, mortgage) so you shouldn’t need that much in “retirement”

Lol. I’m in my late 40s and I’ve got 23 years on my mortgage and a one-year-old. I’ll be in my mid sixties when she graduates high school and gets a full ride to Harvard. (At least she’d better...I’ll have been retired since 55 living on @Mr Tree’s fantasy $6mm and ain’t nobody got money for Ivy League tuition.)

 

[Poker Zombie]

Mine was based off of the idea that if I withdrew at a clip of 2.5% from the principal I could probably do it in perpetuity. (Which is what I never ran by my financial advisor.)

As @DrStrange pointed out, we've recently been in a world of lower than normal inflation. Historically normal levels are 3%, and we could easily see a period of 4-6% in the next 40 years. Inflation would dwarf that 2.5%. Plus, as noted the rate of inflation does not account for the fact that as you age you draw more from the Medical Services basket of the GPI, which means your personal cost of living will actually go up more than the "normal" cost of living.

And quite frankly, I suspect that $150,000 a year will be jokingly small looking in 40 years.

 

[Mr Tree]

As @DrStrange pointed out, we've recently been in a world of lower than normal inflation. Historically normal levels are 3%, and we could easily see a period of 4-6% in the next 40 years. Inflation would dwarf that 2.5%. Plus, as noted the rate of inflation does not account for the fact that as you age you draw more from the Medical Services basket of the GPI, which means your personal cost of living will actually go up more than the "normal" cost of living.

And quite frankly, I suspect that $150,000 a year will be jokingly small looking in 40 years.

2.5% is a fairly low/conservative percentage for a perpetuity. The majority of the funds hopefully would be growing and if not pacing at least mitigating the effects of inflation. I do agree though that inflation is a non negligible consideration.

 

[carlin]

Here’s an interesting question in my mind. How much money would you want to retire early, say 45-50ish early?

i'd say between $3M and $15M, depending on lifestyle. on either side you've got to start worrying some.

-gc

 

[Trihonda]

Who needs to save for retirement... I’ve got social security

 

[Mr Tree]

i'd say between $3M and $15M, depending on lifestyle. on either side you've got to start worrying some.

-gc

I don’t know. I’m not worrying too much over $15M!

 

[Mr Tree]

Who needs to save for retirement... I’ve got social security

I’m laughing on the outside and crying on the inside.

 

[Poker Zombie]

Really, how much money would any of us have, if we could sit at home all day in out 40s, scouring eBay and Craigslist looking for chip deals, knowing we could take a 4 day roadtrip to pick them up wherever they were?

 

[Mr Tree]

Really, how much money would any of us have, if we could sit at home all day in out 40s, scouring eBay and Craigslist looking for chip deals, knowing we could take a 4 day roadtrip to pick them up wherever they were?

I joked with Paulo recently that I was going to buy a huge chunk of Paulsons or TRKs and hold them as an invested commodity as a hedge against inflation. Chipes are the new gold!

 

[carlin]

I don’t know. I’m not worrying too much over $15M!

if you have too much, you become a target. that's all..... not as easy to travel everywhere, etc....

-gc

 

[gopherblue]

if you have too much, you become a target. that's all..... not as easy to travel everywhere, etc....

-gc

That’s what K&R insurance is for.

All kidding aside, that is, to some degree, true. But it is also, to a larger degree, false. It depends on how conspicuous you are. I’ve worked for/with people who have more money than anyone would ever need in a dozen lifetimes and you’d never know it. I’ve also known members of very well-known old money families who totally fly under the radar since they live relatively non-ostentatiously or are otherwise discreet and not showy.

And then there are the short-fingered vulgarians.

 

[pedrofisk]

You have to also consider cost of living can rise faster than straight up inflation. We're moving, or moved, from a purchase economy to a subscription economy. When I was a kid my parents didn't have to pay for cable, cell phones, internet, this, that and the other thing. Major software is all moving to subscription for instance. Plus now there are fewer steady jobs and those jobs have fewer benefits. Fewer people own homes and for young people home ownership isn't even a possibility. With fewer people able to afford retirement the job market for older workers will get more competitive and so on and so forth.

My big game plan is sneaking my family into a country that actually wants to take care of its citizens. That or my kids somehow hitting it big.

 

[Trihonda]

My big game plan is sneaking my family into a STATE that actually wants to take care of its citizens. That or my kids somehow hitting it big.

FYP

The economics of NYC might be slightly different than other parts of the Country? Home ownership in NYC might not be feasible (I don’t know), but home ownership is a thing, and not unobtainable in many parts of the US.

 

[Hot Nuts]

Would like $2m, but I've got triplets that are Juniors in high school. College is going to crush me so I'll probably retire by the time I'm 80. Luckily only 1 wants to drive now. Insurance already doubled with just the 1 driving. May have to sell some chipes just to pay insurance.