On Bogleheads.org, an article titled “Let Me Retire! Please?” sparked a discussion about the viability of early retirement.
A couple from Pennsylvania, aged 56 and 54, is considering leaving his well-paid job to pursue volunteer activities. With a 14-year-old child, the couple seeks advice on whether their financial situation can allow them to live a sustainable retirement in a high-living area (HCOL).
Don’t miss:
The couple has a combined income of $450,000 in 2024 and plans to spend $180,000 per year after 2025. They have an effective federal tax rate of 24% and a state tax rate of 3.07%. Their total portfolio is $5.1 million, and they have allocated 55% to stocks (20% international), 30% to bonds, and 15% to cash. They are primarily invested in Vanguard and Schwab funds with an expense ratio of 0.10%. They have no debt or mortgage, and their projected Social Security benefits are $35,000 for him at age 70 and $19,000 for her at age 62.
Several forum members gave their views on the couple’s retirement plan. The consensus is optimistic, with some differences of opinion on portfolio risk and spending flexibility.
One user noted: “As long as your expenses are accurate, you should be fine. You’re a little conservative with your investments, but you’d probably be fine even without Social Security, which provides a buffer. » Applying the 4% rule, which suggests a safe withdrawal rate of 4% from the portfolio, the couple could potentially withdraw $204,000 per year. This fits well with their planned spending of $180,000, leaving some room for unexpected expenses or market downturns.
Another user asked, “What is your portfolio allocation (401(k), brokerage, Roth, etc.)? How do you plan to help your 14-year-old child through college and beyond?” Clarification was requested regarding their portfolio allocation and their child’s education funding plans.
Tendency: This startup supported by Jeff Bezos will allow you to become a homeowner in just 10 minutes and you only need $100.
Some forum members noted that the couple’s current asset allocation of 55/45 is somewhat conservative but within a safe range. One member suggested, “So I would also suggest you increase your stocks from 55% to 60%. Move that money from bonds to stocks, not from cash to stocks.”
The 4% rule, while a good guideline, may need adjustment given the couple’s early retirement age and long-term retirement horizon. Another member commented, “A 3.5% withdrawal rate is almost guaranteed to last 30 years with this asset allocation.”
The couple must remain flexible in their spending, particularly depending on market fluctuations. One user advised: “Make a “retirement expenses” list. This can be very different from “expenses during working life”. »
Health care costs could increase dramatically before Medicare kicks in. Another user asked, “Have you researched what the costs will be when you both have Medicare?”
Tendency: Elon Musk and Jeff Bezos are optimistic about creating a city that could dethrone New York and become the new financial capital of the United States. Investing in its booming real estate market has never been more accessible.
It is important to understand these expenses and factor them into your retirement budget. Your child’s college expenses should also be planned for, to ensure they don’t derail your retirement plans. Discover Roth Conversions and understanding ACA subsidies up to Medicare eligibility could provide additional tax benefits and cost savings.
The couple appears well-positioned for early retirement, provided they maintain some flexibility in their spending and remain vigilant about potential market changes. Their financial situation allows them to live a comfortable retirement, but ongoing assessment and potential adjustments to their portfolio and spending will be crucial to their long-term success.
If you were in their shoes, would you be confident about retiring now?
If you’re unsure about your early retirement plans or think you may need to meet specific financial goals, consider consult a financial advisor. They can help you create a personalized plan tailored to your unique situation.
Read more :
“ACTIVE INVESTORS’ SECRET WEAPON” Boost your stock market game with the #1 trading tool for “news and everything else”: Benzinga Pro – Click here to start your 14-day trial now!
Get the latest stock analysis from Benzinga?
This item We’re 56 and 54 with an income of $450,000 and a portfolio of $5.1 million, but we live in an expensive neighborhood with our 14 year old: can we retire now? originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
