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Old 11-16-2016, 11:59 AM
 
11 posts, read 9,947 times
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...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
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Old 11-16-2016, 12:10 PM
 
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Certainly you could. Whether or not you will be content in another area living on a reduced income, only you can say.

For example, if you paid 300k for a home and lived on 40k per year for the next 5 years, you would still have 500k in taxable, 1.5m in retirement, + or - market movements in the next 5 years. (Assuming you took all withdrawals from taxable). At that point, you could evaluate whether it made sense to take early SS and reduce nest egg withdrawals, or continue on and allow SS benefits to grow.

40k per year and a paid for home in a LCOLA is more than most Americans live on.
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Old 11-16-2016, 12:32 PM
 
Location: RVA
2,165 posts, read 1,266,382 times
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Perfect answer^^^^ IMHO! MOST people retire satisfactorily at 62 with far less. There are times where I wish I would get laid off, because any kind of severance would be enough to push me in to retirement. That dam work ethic, sense of responsibility, and high pay keep me plugging away for 3 more years.
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Old 11-16-2016, 01:05 PM
 
Location: Colorado Springs
4,840 posts, read 4,954,521 times
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At age 57 you have to wait 8 years for Medicare.

Now that it appears that ACA will be repealed, what's your plan for health insurance?
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Old 11-16-2016, 01:21 PM
 
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Quote:
Originally Posted by Vision67 View Post
At age 57 you have to wait 8 years for Medicare.

Now that it appears that ACA will be repealed, what's your plan for health insurance?
Well repeal is not certain but changes certainly are. This is a big area of uncertainty for you.
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Old 11-16-2016, 01:22 PM
 
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I think you could do it, but you would be wise to leave the Bay Area, as you suggested in your post. You might have to cut back on lifestyle somewhat though.
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Old 11-16-2016, 01:31 PM
 
29,779 posts, read 34,867,277 times
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Quote:
Originally Posted by Perryinva View Post
Perfect answer^^^^ IMHO! MOST people retire satisfactorily at 62 with far less. There are times where I wish I would get laid off, because any kind of severance would be enough to push me in to retirement. That dam work ethic, sense of responsibility, and high pay keep me plugging away for 3 more years.
Most of those people who retired on that or far less probably didn't have the income to have saved that much and so it wasn't much of a adjustment for them. The OP probably had a far higher income than 40K and their adjustment would be much greater. It is easier to retire on 40K if your working income was 50k. Not so easy if it was 150K or even 100K which means you are retiring on 40% of working income.
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Old 11-16-2016, 01:36 PM
 
29,779 posts, read 34,867,277 times
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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
Considering where you live and how much you have saved your income must have been a few multiples of 40k. The greater the spread the more misery you might endure in the adjustment. I would suggest you let events play out and keep looking for new work and when found use it to explore you future options more. You like Arizona and New Mexico, would you like them on 40k and not your current income? This isn't about what others live on but what your standards are and how to best maintain them in retirement.
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Old 11-16-2016, 02:03 PM
 
11 posts, read 9,947 times
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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)
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Old 11-16-2016, 02:30 PM
 
Location: Colorado Springs
4,840 posts, read 4,954,521 times
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I was prematurely retired at 55 but I had to return to work at 61 primarily to afford health insurance.

My wife and I were both in the high risk pool and our premiums combined with deductible exceeded $24K per year by age 61. Those premiums really soar between 60 and 65.

Now with the repeal of ACA likely, nobody knows what will happen next.

I have advised my friends to wait until age 65 to retire.
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