Early retirement

I am 55, and earn about middle income. I can continue to work in the formal economy, nothing to stop me. But I am thinking of retiring next year.

I have certain trade skills and professional experience, to where I can still earn money on my terms, or not if I choose. I will do something, to do nothing is stupid at my age. Perhaps volunteer a little more as well.

Finances should work, but I would have to be on top of it. Extensive travel, caviar, new cars, and country clubs are not going to happen. I would do better financially if I worked a few more years, but I highly value freedom as well. No debt, we own the house I want to die in, and we have what appears to be sufficient investments.

So, those who have - what advice do you have to offer?

 

Uh, nope.
The ability to do what you want (if finances allow) makes it worth everything.
I quit "working" at 52. My freedom, I hold dear.....to quote Led Zeppelin.

 

I forgot to add, despite finances being a bit tough for a few minutes, I'm glad I took the opportunity to quit early. We aren't promised tomorrow, and nobody ever says on their death bed........"gosh, I wish I'd worked more and not spent as much time as possible with family and friends".
If you have the chance, just do it.
FWIW, that's my $.02

 

The one thing you must consider is health insurance. It will tear you up.After going off COBRA, the first year of Obama Care was not real hurtful $576/month.
Next year $879/month. This past year they wanted over $1100 per month. Mind you that is insurance for myself only. The only thing that is affordable about ACA is, after I pay the premium I can not afford to go to the doctor.
By not drawing from my IRA and living on our SS and my wife's pension, I got it down to $446. That doesn't allow for any extras and some belt tightening.
Thank God I will be old enough for Medicare next year.

 

Your biggest enemy is inflation. If you are comfortable now 30 years from now you might not be. Think about what you lived on 30 years ago. If you can do it I say go for it.

 

I have run many simulations, with not too optimistic assumptions about inflation, social security, returns, etc. and they mostly work out. So, I can hope ...

 

Excellent point!

 

Health insurance.
Health insurance.
Health insurance,

 

I would say that you should have at least a million dollars in investments to retire at 55. You should be able to make 40k$ on that and then get social security at 62 and get at least 25 between you and your wife.

 

I could have started this thread word for word. Will be following this closely.
I'm 49 and in the same position. Im shooting for 53-55.
Skills/experience in a lot of different fields also for part time income.

 

Give us a look into this area, Dale.
You talking 401k or stock market...?

 

Well your 401k should have some money in the stock market. If was retiring at age 55 I would want say 75% of my retirement funds in the stock market to keep up with inflation. Most financial experts agree that you should expect a 4% return on your retirement funds to have enough to last your retirement. That sounds low but that will allow your finances to grow to keep up with inflation. If possible it is nice to have a 1 year or more of living costs in your savings account if the stock market has a really bad year. You don’t want to be taking money out when it’s lost 30%. If the market has a great year you may want to take more than 4% to build up your savings. Please don’t just listen to me, do your homework. I believe that many investment experts make things sound complicated so it will scare you and you will pay them. There is so much info now out there that it’s pretty easy. I started a Roth IRA for KerryFarwood in the Vanguard 500 mutual fund years ago. It was very simple to do, it’s a low cost fund (around .25% a year) and it has averaged 11% a year since she’s had it. Now that’s easy. When she retires we’ll take 4% a year out of it.

 

The 4% is a drawdown rate, not exactly a planned return. Some say 5%, but that leaves less cushion for the unexpected.

I am 80% or so in stocks, and have always been that or more. I will remain much the same in retirement, I am used to bumps in the road and riding them out.

The million dollar number depends on the lifestyle you are looking for. I live on less than $40,000 today (though I earn more), so I can do the same in retirement. My wife and I also intend to keep earning most of our living expenses for a few years, as we both have skills that can be leveraged for self-employment or part-time work. The difference is that we will have more freedom, at the cost of less income and no benefits. (I have always found the "benefits" to have little benefit to me, I would have prefered to have the money.) So I anticipate little or no drawdown of my retirement funds for a few years.

I am looking down two paths - one is working another 8-12 years (at a job that is quite OK), and retiring fairly well off in the big scheme of things. The other is retiring in a year, living frugally, but living a more free life.

Right now, I think I will take door number two.

 

I would retire early. No one has ever called freedom overrated.

 

Last time I looked financial advisors were guaranteeing %4+
Imo 4 percent won't hedge against real inflation. But it's better than nothing.

We are on track to have a good retirement at 49-50 (15 years)and we don't even think about social, it will probobly be there, it might not it's like counting eggs. And the age for social will probably be 100 by then
But who knows what will happen in 20 years or the next 10 for that matter.

Weren't you the big Ford stock investor?
Have you switched to any long term stocks?
If so Imo it's definitely time to jump ship.
Building trucks with China steel(it's all Trump's fault), investing in China autonomous driving program, begging for tax breaks they are hurting.
Seriously why invest so much in China?
I know the Ford family lives off the dividends but it doesn't seem like good enough insurance anymore.
I myself have been looking for more stable stocks, no more fun stuff like Panera or Amazon.

 

I don't pick individual stocks. There's too much risk for me. Low cost mutual funds are where I park my pennies.

 

Sharing my fathers experience and his take on it! He went out at 55, he don't regret it one bit! Sure he said I could have worked longer got a better pension paycheck but am not guaranteed I'll be here when am 62 or 65 so he took what he could get and ran with it while he was still healthy and could enjoy it!! He picked up a part time job just for spending money doing things he liked to do. His pension has done well for him with his healthcare. Having his freedom meant everything to him, he is very active, bike rides and walks all the time!

 

Don't you have to pay penalty fees on any IRA distributions before 59? Or is it 59 1/2? Seems to me, yes.

Anyone who can retire early, yeah-why not? 99 lbs was so worried about her (barely) early retirement but has fared much better than she had imagined. So have I for that matter. Neither of us have touched our retirement funds, although this isn't necessarily a good thing (in the future).

Unfortunately for me, I am not in the house that I want to live in until I die, so there may be the largest purchase/investment of my life ahead of me.

I'm fine with that for a number of reasons.
I can leave it to my children.
I won't enjoy it, but am willing to pay mortgage.
I haven't ever seen or heard of any caskets with pockets for your unspent money on the inside of them .....

Good luck!

 

Usually withdrawal before 59.5 carries a 10% penalty. If it is a Roth you can withdraw your contributions early with no penalties. You can also do a 72t early distribution from a traditional 401k or IRA.

 

If your not still improving yourself your dying!
I like your outlook on the future. I know so many older people that just kinda give up after, good to see your still going for it!

I agree, my dad did the same, he still runs his business but after 12-15? Years of retirement he hasn't regretted not showing up for the man.
He's had some health scares and a brain bleed/stroke(smashed head on wood splitter cylinder) from not slowing down.
He's showed me two things, live frugality and save, and take the time to live out your years with your family while you can. The time and attention to the life you've built is it's own reward.