#retirement #financialplanning #retirementgoals
Considering Early Retirement?
Assessing Your Finances
So, you’re contemplating early retirement in 2025, and it certainly sounds like you’ve got your ducks in a row financially. Here are some key points to consider to help you decide if early retirement is indeed a viable option for you:
– Are you debt-free? It’s great that you have no outstanding debts, as this can significantly impact your ability to retire comfortably.
– Do you have a solid pension plan in place? Your combined $85k annual teacher pensions provide a solid foundation for your retirement income.
– How much do you have saved up? With $3M in combined savings, you have a substantial nest egg to rely on during retirement.
– Have you factored in potential expenses? From travel plans to potential home upgrades and weddings, make sure to account for any extra costs that may arise in the next few years.
Weighing Your Options
It’s clear that you’ve put a lot of thought into your retirement plans, but it’s natural to have some doubts about whether it’s too good to be true. Here are some factors to consider:
– Lifestyle considerations: You mention wanting to travel more and upgrade your home. Make sure to factor in these costs when determining your retirement budget.
– Helping your children: Planning for inheritance and assisting your children through life is admirable, but ensure it aligns with your overall financial plan.
– Healthcare expenses: Your estimated healthcare costs seem reasonable, but always leave room for unexpected medical expenses in your budget.
Making the Decision
Ultimately, the decision to retire early comes down to a personal choice. If you feel financially secure and ready to enjoy your retirement years, why not take the leap? It’s essential to strike a balance between saving for the future and enjoying the present.
In conclusion, retiring at 55 may seem too good to be true, but with proper planning and financial discipline, it can be a reality. Consult with a financial advisor to review your retirement plan and address any concerns you may have. Remember, early retirement is a significant milestone, so make sure it aligns with your goals and aspirations. Happy retirement planning! 🌟🌴🏠
Obviously, you’re in good shape overall. The figure that jumped out at me was $12k/month in projected spending. With no debt, and presumably a medium to low COL area, that seems quite high. Are you projecting substantial costs surrounding the travel you mentioned?
This is somewhat unrelated but what kind of cars have you owned your whole life as a family? I feel a lot of young people are making bad car decisions and keeping themselves in debt.
You should run your numbers through Firecalc. Does a great job of giving you a Monte Carlo analysis of your income, savings and expenses.
Do you have access to those accounts without withdrawal penalties? There’s a lot of varied rules, but have you met the minimum retirement age for the pensions and such? If you have then it seems like you are in a reasonable spot, although I am confused by why you are upgrading house if your plan is to travel more. Most people downgrade going in to retirement.
A few general things to keep in mind. Inflation will continue and in 36 years the value of a dollar halves based on 2% inflation. You can still keep the money invested, but it’s something to keep in mind particularly with fixed distribution pensions. Read up/watch some videos on retirement and positioning yourself taxwise for best practices. Some things can only be done while you are employed, although not a ton.
Wondering why you are “upgrading” house with an empty nest? Shouldn’t you be downsizing/thinking about moving to a single-story home for retirement?
You ASSUME your current house would sell for 400k. You ASSUME your next house will be 700k. That’s a lot of variables for me.
You’re in a better financial spot than the majority of middle-class Americans. But, I’d wait until AFTER the house upgrade for retirement. That way, you’d have a more accurate picture of your monthly expenses. You’d also benefit by saving a little bit more cash.
Overall, congratulations on your situation! Consider yourself blessed, and don’t forget to be generous to others, too.
I think when you run a planning scenario, you should see what happens if you delay retirement to 60. So you won’t touch your existing funds and will live off of income from you and your spouse and let
your money grow a little longer.
I would do the house upgrades sooner than later if you can pay cash for the new house. I have a feeling prices on real estate will rise if interest rates go down.
How did you get $1.8M in a 403b as teachers and you’re only 54?
What’s your plan for health insurance?
So it sounds like you are being conservative and probably won’t spend 144,000 annually. But sure, let’s assume you do. And we’ll ignore taxes and social security for the time being to make it simple
And you have 85K in pensions coming your way. That means your shortfall is about 60,000.
60,000/3,000,000 = 2%
You are beyond fine, and we’re not even factoring in social security yet.
>When does continuing to work for simply saving more money become a foolish thing to do?
When you would rather not work, and already have enough money. Which seems like both things are true for you
This isn’t a math problem. Your math checks out and you can make basically whatever retirement you want work.
I think the bigger issue is just making sure you know what you want to retire to. You’re looking at a potential 35-40 year retirement (which is awesome!). From my experience, traveling generally only gets people through the first few years, and then people become bored of it. You also have the problem that your social group will likely be working for another 10+ years (if they are your same age). You’ll have less in common with them for the time being, and different obligations, potentially effecting relationships.
Can’t say what’s right or wrong for you, just pointing out some pitfalls I’ve seen from early retirements. Many people retire in their early 50s and love it! Many find some part time gig or consulting work to continue to give them an opportunity to add value.
No matter what though, you have financial independence. The choice is yours.
You have enough money. What are you going to do with your time? I retired at 51. Fortunately my wife kept working as 24/7 together drove me nuts. As someone earlier mentioned, all you social group will be working so you had better have a plan on how to spend your time. Hanging around other retired people in their late 60’s is depressing as hell.
Where’s that 1.8 sitting? Even @4% interest, it’ll give you close to 72k/year in interest. This money is only 20% taxed I believe so that’s close to 60k net + your pension, I’d say that’s probably more than your take home by a lot. Probably can retire tomorrow assuming you get the full pension if you retire today.
Add on ss @ 62 and you’ll be fine.
Good for you. Same age, we’re a mess comparatively.
Yes but instead of upsizing house I would downsize. Especially since kids are gone and you want to travel.
Thank you. The house issue makes sense.
As far as generosity, it will start with our kids and helping them through life before we leave them an inheritance. We will share our blessings with others as well, as we will have time and (hopefully) years of health on our side.
Oh, great idea about deducting those major planned expenses and then apply the 4% rule.
Yes, 3m + the pension should be good. The 3m without the pension would probably do it too in all honesty.
I’m not sure what your current salary is, but pension + savings should get you north of 200k annual savings.
However – budget what you’ll give for children’s weddings, take your remaining savings and budget 4% annual cash flow from it. If that’s enough with your pension, you’re probably good
Also – I would probably delay retirement until the house upgrade. You’d probably be fine but having steady employment is always better for any mortgage you may need
I say you are good to go. You have a pension and I assume health coverage.
$12K a month after tax? What withdrawal rate are you looking at? Because I’m estimating a 6% withdrawal rate to maintain that lifestyle and that is aggressive. Most people are doing 3%-4%. If you are a “die with zero” person it could be feasible, but you said you meant to leave an inheritance?
To me this is not feasible. You need to either lower your budget or save more money. Also the house upgrade low key doesn’t make sense, most people downgrade the house a bit in retirement.
If it were me I’d revisit the $12k/month, it doesn’t seem likely you really need that much with you all having no debt.
I feel like if you stay in your current home, you’ll be able to do almost anything you want until the day that you go.