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Old 11-16-2016, 04:24 PM
 
8,870 posts, read 5,149,988 times
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Quote:
Originally Posted by aquatone View Post
Thanks for the responses all! Yes my income in the Bay Area is (was) high but my expenses are high also. My property taxes are $15K/year alone and the mortgage on my 4 bedroom house is several thousand/month. (Though thats less than it would cost to rent a small apartment around here) I realize though that I am at or have just passed peak earning power and did not realistically expect to have a very high level of income for the rest of my life. I saved a lot of what I earned into retirement savings, and with a lower or non-existent mortgage and lower property taxes that would save a great deal. I have also already purchased (and paid off) the most expensive entertainment items I might use in retirement such as a new RV and other expensive hobby items. Most of the things I enjoy like music, reading, outdoors travel etc, are not expensive.

Medical is definitely an issue. Besides the ACA I am not sure how people who retire this early handle this. I suspect that some insurance will always be available. It increasingly seems that the only reason to keep on working is for medical insurance, but it would be great if I was not constrained by this.

I am not sure if $40K is enough.. probably more like $60K.
However if I do not have heavy household expenses then that amount might be quite comfortable. I am increasingly feeling that I am at a tipping point, when now or in the next few years I could make the transition to retirement. (And of course I could still do part-time work for some income. It does not have to be the high-powered tech type work I have been doing)
Age 57 to age 70 would be 780k in total withdrawals from your nest egg. Then at age 70, maximum SS benefits kick in and you only need 20k per year from your nest egg from that point on. Your nest egg will likely still be 7 digits, so 20k per year should not represent a problem.

Even withdrawing 300k or so for a house, your numbers work. You can buy a pretty nice house for 300k in the locations you have mentioned.

You should make certain your money is saved/invested sensibly. Minimize costs and invest for modest growth. Do not take aggressive chances; you have already won the game.
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Old 11-16-2016, 05:33 PM
 
52,031 posts, read 41,862,229 times
Reputation: 32464
Quote:
Originally Posted by aquatone View Post
...the answer is dependent on what level of income I need of course. My question is really to start getting a sense if other have made it work for them.

I was recently laid off my job in the tech industry at age 57 and though I am looking for new opportunities, a big part of me would really welcome a complete life change, more time for my own interests, and a reduction in expenses, and I have started wondering if I could retire early now.

I currently have just over $1.5M in retirement savings in diversified investments. (Including my 401K) I also own a desirable large house in the hyper-expensive SF Bay Area with around $1M in equity left if I were to sell and completely pay off the mortgage. So combined around $2.5M, though I would need to find a new place to live. I know the Bay Area is so expensive that moving to somewhere cheaper and more tex efficient almost certainly makes sense if I were to retire early - perhaps Arizona or New Mexico which I quite like.

All the retirement calculators I play with assume a retirement at age 66 and/or the same high salary I have been earning to date. If I did retire early I would need to bridge 8-years or so to when I can claim social security and medicare. I am not expecting $100K+ a year for the next 40 years. However, assuming a simpler and revised lifestyle in a cheaper area, have others made early retirement possible with this level of investment at my age?

Chris
You're roughly in the boat I'm hoping to be in about 10 years from now.

Move somewhere inexpensive, get a modest condo and you can easily just coast off 100k/year.
100k/year in SF ain't too much but in many other parts of the country with no other debt you're doing great.

When SS kicks in that's gravy.

My personal opinion is that if you're living below your means you can keep more\most of your retirement funds in higher return\riskier investments because you can deal with the setbacks. With that said, you could pull 100k a year out at 4% return while still growing capital enough to cover inflation. (ie. get a 7% average annual return)
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Old 11-16-2016, 06:09 PM
 
Location: Near San Francisco, CA
184 posts, read 115,617 times
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One exercise I have found useful is to make a spreadsheet of all estimated costs in retirement. It's a detailed list with everything I could think of, from the big items, such as mortgage, property taxes, healthcare costs, travel expenses, food, etc., all the way down to the little stuff, such as haircuts, hobby costs, miscellaneous, etc. I included a cushion for unexpected expenses that might arise with respect to housing, cars, etc. I found it to provide what I think is a realistic view of what my expenses would be in retirement, much better than simply using a percentage of pre-retirement income. This in turn provided a good starting point for evaluating how much income I might actually need in retirement.
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Old 11-16-2016, 06:15 PM
 
Location: Eastern Washington
14,272 posts, read 44,972,066 times
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You might get a job in your "retirement" home, more to get the health benefits and to have something to do, than for the money. Starbucks comes to mind, IIRC they offer health benefits pretty readily even to part-time employees.

Just a thought.

In general it seems like your finances are do-able so long as you ditch San Fran. Retiring so young, though, probably there will be unforeseen changes, stuff none of us can predict.
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Old 11-16-2016, 07:17 PM
 
Location: Close to an earthquake
890 posts, read 679,057 times
Reputation: 2390
One thing I've discovered in my retire early retirement planning scenarios is the powerful impact that a legacy job has on stretching out your retirement nest-egg until SS kicks in. Play with your numbers to understand what I'm talking about.

I've used examples of being a bagger at Trader Joe's making as little as $12,000 a year (never seen a Trader Joe's employee who didn't seem happy and liking the work they do) and was surprised of the impact this pocket change job earnings had on the retirement planning math. Substitute your favorite version of that legacy job and do your own math.

To answer your question, you can absolutely do it at your age but take some time reading about those who have done it only to jump back on the work pony a few years later when they discovered that they still had more "umpf fire" in their belly and wanted a little more action familiar to them like their careers provided.

Good luck>
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Old 11-16-2016, 08:38 PM
 
Location: Albuquerque NM
1,662 posts, read 1,530,329 times
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Try the FIRECALC retirement calculator. Entering $2.1M (after buying a home) at a conservative 60/40 asset allocation, $30K SS at age 66, and living another 35 years shows a retirement income of $90K a year or more. Of course, a good chunk of that could go to health insurance and income tax depending on how your investments are structured. And I agree with others about unpredictable, unforeseen changes and the benefits of a detailed estimate of retirement costs.
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Old 11-16-2016, 08:41 PM
 
1,041 posts, read 486,736 times
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You're 57 and have 2.5 million? Of course you can retire. and easily...Unless your annual spend is over 100K
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Old 11-16-2016, 11:40 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,652 posts, read 40,029,981 times
Reputation: 23810
Quote:
Originally Posted by aquatone View Post
Thanks for the responses all! ...My property taxes are $15K/year alone and the mortgage on my 4 bedroom house is several thousand/month.
... RV and other expensive hobby items. Most of the things I enjoy like music, reading, outdoors travel etc, are not expensive.

Medical is definitely an issue. Besides the ACA ...

I am not sure if $40K is enough.. probably more like $60K. ... I am at a tipping point, when now or in the next few years I could make the transition to retirement. (And of course I could still do part-time work for some income. It does not have to be the high-powered tech type work I have been doing)
Take the TIP(ing) point,

consider:
  1. Sell the home while low cost loans are still available to your buyers (you DO NOT want to be unemployed and STUCK with that expense)
  2. Consider investing in income property (to put your equity $ to work) should get 1% per $ of capital invested (do this in NEV / other income tax free state) $500k will get you $50k/yr FREE cash flow (in the proper investment) AND it is inflation protected and gets you a lot of write-offs, and your tenant is BUYING your investment for YOU.
  3. Get a USED RV $5k will work
  4. Keep SHARP on your high paying skillset. PT work can be a DREAM job (if you MUST work occasional)
  5. Use other LEGAL options to ACA (Healthcare expense sharing networks ($150/ month for single), stay healthy, use Medivacations as do 14m people / yr, live overseas (<$400/ month HC in France, Italy..., TRAVEL!!! $50/ month HC)

I left my GREAT HT employment at age 49, (many, many yrs ago, but not yet age 65)

You can do this!

Retire early, retire often... too fun to do just ONCE!
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Old 11-17-2016, 02:27 AM
 
Location: Western Asia
3,187 posts, read 1,448,435 times
Reputation: 2524
Quote:
Originally Posted by aquatone View Post
...the answer is dependent on what level of income I need of course. My question is really to start getting a sense if other have made it work for them.

I was recently laid off my job in the tech industry at age 57 and though I am looking for new opportunities, a big part of me would really welcome a complete life change, more time for my own interests, and a reduction in expenses, and I have started wondering if I could retire early now.

I currently have just over $1.5M in retirement savings in diversified investments. (Including my 401K) I also own a desirable large house in the hyper-expensive SF Bay Area with around $1M in equity left if I were to sell and completely pay off the mortgage. So combined around $2.5M, though I would need to find a new place to live. I know the Bay Area is so expensive that moving to somewhere cheaper and more tex efficient almost certainly makes sense if I were to retire early - perhaps Arizona or New Mexico which I quite like.

All the retirement calculators I play with assume a retirement at age 66 and/or the same high salary I have been earning to date. If I did retire early I would need to bridge 8-years or so to when I can claim social security and medicare. I am not expecting $100K+ a year for the next 40 years. However, assuming a simpler and revised lifestyle in a cheaper area, have others made early retirement possible with this level of investment at my age?

Chris
You should be fine. If you sell your house and end up with $800K after taxes and fees you can buy a nice house in a desirable area of Arizona for $400K or less. Even if you average 4% on your investment, that would average out to about $60K/yr plus you can draw from your 401K after 59.5. You can draw SS once you hit 62 or wait a bit and draw more. Given you didn't mention other income sources, I would probably wait until FRA if I were you.


I plan to retire in a year or less (Just hit 60) and wife retired a couple years ago and she is about your age. We sold our house to our daughter and financed it so we are getting that income, we have some rentals that give us a few thousand a month after all expenses, company pensions, plus we have our 401K's if we need to draw before SS age. We are trying to live on $10K/mo or less which should not be a problem even with Obamacare until ss age.
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Old 11-17-2016, 07:03 AM
 
625 posts, read 383,138 times
Reputation: 698
Quote:
Originally Posted by aquatone View Post
...the answer is dependent on what level of income I need of course. My question is really to start getting a sense if other have made it work for them.

I was recently laid off my job in the tech industry at age 57 and though I am looking for new opportunities, a big part of me would really welcome a complete life change, more time for my own interests, and a reduction in expenses, and I have started wondering if I could retire early now.

I currently have just over $1.5M in retirement savings in diversified investments. (Including my 401K) I also own a desirable large house in the hyper-expensive SF Bay Area with around $1M in equity left if I were to sell and completely pay off the mortgage. So combined around $2.5M, though I would need to find a new place to live. I know the Bay Area is so expensive that moving to somewhere cheaper and more tex efficient almost certainly makes sense if I were to retire early - perhaps Arizona or New Mexico which I quite like.

All the retirement calculators I play with assume a retirement at age 66 and/or the same high salary I have been earning to date. If I did retire early I would need to bridge 8-years or so to when I can claim social security and medicare. I am not expecting $100K+ a year for the next 40 years. However, assuming a simpler and revised lifestyle in a cheaper area, have others made early retirement possible with this level of investment at my age?

Chris
Art you single? if so you could do that in a heartbeat.

I have about that much money saved for retirement. But when I am 57 I will have one kid in college, a second kid a senior in HS, a third kid in middle school and a stay at home wife. So that would be impossible to retire at 57.
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