Can I afford it?

[chadv]

Ive debated posting this question for sometime and finally decided what can it hurt. I'm 54 in Oct and want to retire before season 2028 at age 60. I work at UPS and will have a pension of 49k. My wife will be 62 at the time and eligible for about 1200 SS. We have approx 750k in retirement and will continue to contribute 36k a year to 401 and Roth combined. Will be debt free before this and can buy company insurance for 400 Mo until 65 when Medicare begins. My question is will I be able to maintain my current lifestyle or even increase out of state hunting? We currently gross around 155 but will no longer be contributing to retirement and will not have any debt barring possible vehicle upgrades.

 

[Nick87]

Does the state you live in tax your pension. Probably a big factor. Illinois surprisingly doesn't which is the only reason anyone stays after retirement.

 

[Pucky Freak]

Depends where you live. Sounds like you are in great financial shape and have made great decisions. Would highly encourage you to seek out an investment/retirement professional to work out the finer details. You should be very confident your financial plan will work before pulling the retirement trigger.

 

[ccc23454]

May consider stop contributions to roth, establish a traditional and maximize contributions/growth in later years. Might want to speak to actual professional, they can review YOUR situation, taxes and map out a plan that will provide true guidance. Internet financial advice

 

[MarvB]

Looks doable to me, don’t know your lifestyle but it would work for ours (and it is)

 

[Wildabeest]

Inflation is the big unknown right now. It’s definitely taking any fantasies about retirement off the table for me in the near term.

 

[Nick87]

Inflation is the big unknown right now. It’s definitely taking any fantasies about retirement off the table for me in the near term.

F#ckin putin!

 

[stealthy_bowman]

F#ckin putin!

As much as I detest Putin, the inflation problem would be raging regardless and was the most pressing issue in our country long before Russia started to amass troops on the Ukrainian border.
Can’t pump trillions into an economy by way of handouts and not expect to create epic inflation. I mean this is economics at its most basic form. Where the F did our lawmakers go to B school is what I’d like to know.

 

[Nick87]

As much as I detest Putin, the inflation problem would be raging regardless and was the most pressing issue in our country long before Russia started to amass troops on the Ukrainian border.
Can’t pump trillions into an economy by way of handouts and not expect to create epic inflation. I mean this is economics at its most basic form. Where the F did our lawmakers go to B school is what I’d like to know.

That was total sarcasm, putin doesn't have anything to do with inflation. I 100% agree with you.

 

[OntarioHunter]

I suggest hitting the bucket list now rather than later. I presume you own your own home? That's a huge asset that you might want to consider downgrading when you retire. It's harder to be tied to a lot of home maintenance when retired and trying to do the bucket list. Simplify and use the money for adventures.

 

[shrapnel]

Be careful what you do. Retirement draws the line in the sand that you will have to live with for the rest of your life.

Of course, we all want to retire early and start having fun, but the reality is, prices have not stopped increasing. The decisions that are made in Washington are beyond your control and will continue to cost you more every year. If the past year hasn’t alerted you to the depth of bad decisions, you are dead.

Once retirement became an American way of life, 65 was the baseline according to projected life expectancy. Americans are living longer, planning for that is more critical today than back then.

Don’t retire early at the expense of your future. I never heard anyone say they had too much money in retirement, but plenty have been relegated to a boring life that was underfunded due to poor planning.

 

[npaden]

I'll play.

Just running some rough guesses. $155K gross less payroll tax ($12k) less income tax (estimated $23k) = $120Kish take home. Less $36k retirement = $84k starting apples to apples number.

Sounds like you will be paying $5k per year for health ins. that you aren't now so take that out of your $49K pension so that drops that to $44K. I assume you meant $1,200 per month on your wife's SS so add that $14K to get you to $58K.

A general rule of thumb is to assume you can take 4% out of your retirement annually. That's $30K per year. Add that to your $58K and that gets you to $88k. You will have to pay tax on your pension and possibly some of your retirement withdrawals, let's assume 15% tax on your pension and assume that your standard deduction will offset your taxable retirement withdrawals that will be around $7K tax. Final number would be $81K.

Seems like you would be in about the same spot financially at retirement as you are now. Maybe a little better with some of your bills paid off, maybe a little worse with inflation rearing it's ugly head.

Sounds like you've done a good job and are right on target to me.

 

[longbow51]

You need to have some sort of hedge against inflation. Right now, through 2024, it would likely be energy stocks (and unfortunately, maybe "defense" stocks), but in 2028, who knows? As to professional advice, I recommend your accountant. He/she has seen so many investments go wrong as to be a valuable resource. Additionally, they charge by the hour, so don't make money regardless of what you invest in, unlike some others who offer advice. And I'm talking local CPA, well established in the community.

 

[Deleted member 28227]

As much as I detest Putin, the inflation problem would be raging regardless and was the most pressing issue in our country long before Russia started to amass troops on the Ukrainian border.
Can’t pump trillions into an economy by way of handouts and not expect to create epic inflation. I mean this is economics at its most basic form. Where the F did our lawmakers go to B school is what I’d like to know.

Wharton…

 

[chadv]

Be careful what you do. Retirement draws the line in the sand that you will have to live with for the rest of your life.

Of course, we all want to retire early and start having fun, but the reality is, prices have not stopped increasing. The decisions that are made in Washington are beyond your control and will continue to cost you more every year. If the past year hasn’t alerted you to the depth of bad decisions, you are dead.

Once retirement became an American way of life, 65 was the baseline according to projected life expectancy. Americans are living longer, planning for that is more critical today than back then.

Don’t retire early at the expense of your future. I never heard anyone say they had too much money in retirement, but plenty have been relegated to a boring life that was underfunded due to poor planning.

I hear you. If I worked two additional years my pension would increase by $800 per month plus the additional years of 401 increases would be huge. I also dont want to be the guy who keeps saying just two more years and I'll be making X more until their to old to hunt, In the end Ill just have to see where the investments are at and act accordingly.

 

[shrapnel]

I hear you. If I worked two additional years my pension would increase by $800 per month plus the additional years of 401 increases would be huge. I also dont want to be the guy who keeps saying just two more years and I'll be making X more until their to old to hunt, In the end Ill just have to see where the investments are at and act accordingly.

I would say the simplest answer is to retire with more than enough finances because “enough” will leave you lacking.

 

[chadv]

Thanks for the break down! I should've been clearer as to what I was looking for and you nailed it. I didn't mention that the debt I have left now is a home equity LOC at about 90k which I throw an ave of 2500 a month at so should be done in about three years. Also will be able to draw my SS at 62 which will be 24k so if economy does take a total crap it should be possible. If not age 62 at the latest. Thanks again for your breakdown npaden

 

[longbow51]

One thing to look at for sure is your maximum out of pocket for health care until Medicare age. With today's costs, doesn't take much to reach it.

 

[Steiny]

I'll play.

Just running some rough guesses. $155K gross less payroll tax ($12k) less income tax (estimated $23k) = $120Kish take home. Less $36k retirement = $84k starting apples to apples number.

Sounds like you will be paying $5k per year for health ins. that you aren't now so take that out of your $49K pension so that drops that to $44K. I assume you meant $1,200 per month on your wife's SS so add that $14K to get you to $58K.

A general rule of thumb is to assume you can take 4% out of your retirement annually. That's $30K per year. Add that to your $58K and that gets you to $88k. You will have to pay tax on your pension and possibly some of your retirement withdrawals, let's assume 15% tax on your pension and assume that your standard deduction will offset your taxable retirement withdrawals that will be around $7K tax. Final number would be $81K.

Seems like you would be in about the same spot financially at retirement as you are now. Maybe a little better with some of your bills paid off, maybe a little worse with inflation rearing it's ugly head.

Sounds like you've done a good job and are right on target to me.

Great explanation above.
It's really just about math. Run the numbers yourself.