Sorry for lake of details, I don’t post on reddit much. I usually just lurk starting this year because I’m trying to retire. I am 51 male and spend about $2800 a month. Calculator is showing I will get $1700/mo SS at 62. My body is failing me for my line of work and I just won’t be Able to do it at 61 and that’s the only line of work I’ve ever had. Please review my numbers as it looks like I may be ok. I make about $78,000.
401k: $158,000 contributing 18% + 2% match. I was contributing 6% until my son talked to me 2 Christmas ago and taught me a lot. He has me invested in Fidelity 500, and Fidelity total international fund. should I be doing different? He just said that’s what he does and helped me set it there as I was paying the advisors to pick.
IRA: $4700 and contributing my side income when I can. My son set up this for me and taught Me how to trade, but i have to call FaceTime him every once in a while because I forget how. In this fund he wanted me to invest VTIU and VXUS tickers.
I have no debt except my mortgage $1400/mo and I also own land, that is $600/mo. My mortgage will be paid off in 2041, i Want to pay it off faster but my son is telling me not too because of the interest rate. it is 2.6%.
I will probably need A “new“ truck or suv within the next 10 years, but just new to me. I am a mechanic so I usually buy cars that need work and fix them up.
according to my numbers do you think it’s realistic I could maybe retire at 61-62? I’d really like to be done at 60 but he’s thinking maybe 61 but most likely 62.
sorry everyone the land is actually $600 a year not month
Can I retire at 61? Please review my plan and advise
byu/Willing_Mammoth454 inpersonalfinance
Posted by Willing_Mammoth454
13 Comments
Your son sounds like he’s got a good head on his shoulders – that investment advice is solid and he’s right about not rushing to pay off that 2.6% mortgage
The math might be tight at 61 but doable at 62 especially if you can bridge that gap before SS kicks in, just make sure you’re accounting for healthcare costs since that’s usually the biggest wildcard
Your son has been giving you some great advice. Retiring at 61 might be a stretch until your mortgage is paid off, but he’s right in that you shouldn’t be in too big of a hurry to pay it off with that interest rate.
Being a mechanic, could you transition into more of a service writer role or something to get in a couple more years of income?
I think the math seems tight and isn’t accounting for inflation. Remember that you can still work and collect some social security. You can right now you can earn up to 24,000 a year on top of your Social Security without it affecting your benefit. Remember you don’t have to do your job forever. You can work part-time easily doing something that’s not strenuous and earn that extra money. And at 62 or 61 you’re going to need something to do anyway so working part-time to give yourself some spending money and breathing room is a good idea. All of this is predicated on you being completely debt free by the time you retire.
Does your 2800 spend a month include the mortgage and land you own?
Why do you need to own that land land costing you 600 a month? Would you be willing to sell it?
If you retire at 61, due to health reasons, whats your plan for health care until you are eligible for Medicare at 65? Thats usually a pretty big expense for people after they retire since most people get health insurance from their employer who is at least subsidizes some of the cost.
I think things will be tight for you, especially with paying off a house, needing a new car and general inflation. Using these next 10 years to aggressively save and invest is going to be important to get you there to make retiring early an option. Remember, retirement in the US is more of a financial status than an age.
One note on your 401k investments. They carry some risk that may become uncomfortable as you get closer to retirement. I would say they are excellent growth options for your son who likely has decades left to work and can weather a potential market downturn. You on the other hand may want to move to something with a bit less risk the closer you get to retirement age to protect your nest egg. Don’t fall into the trap of emotionally investing either.
I ran the numbers with a 7% return and 2% annual salary increase for the next 10 years. That will give you roughly $750k.
At a 4% withdrawal rate, that’s $2500/month before taxes. With your SS, you’d be roughly $4200/month before taxes. It makes me just a hair concerned because you’d need to cover your own healthcare until 65 (and even then, it’s not 100% free), and we’re never sure about your property taxes, insurance, home repairs, etc. Plus, you have no mention of emergency fund or any other assets.
With that, I think your best bet is going to be to minimize expenses in retirement (do you really need this land?) or find some way to supplement income to provide as much cushion as possible as your funds are going to have to last longer than most. If you’re in good health at 61, your odds of living into your 90s are actually pretty solid.
You could potentially qualify for social security disability. Are you enrolled in a health care plan that is available to you once you stop working?
Possibly you could pick up some car mechanics work to supplement your income.
Think about what retirement will look like for you? What will a day in retirement look like?
Is there anything you want to do in retirement specifically?
Hate to be a downer, but I don’t think you’d be able to retire at 61. The best thing to do is to layout a budget of your monthly expenses (including maintenance on your house, and alloting for a car payment) and see where you’d be and use that as a guide.
But even as stated, 2041 is 15 years. You plan to retire in 10. Thats 5 years of $1400/month mortgage with an income of $1700/mo SS. (when you get it at 62) Add utilities, food, insurance, etc – even if you took 4% out of your retirement accounts for income (call it 8k-10k a year) that’s not covering your bills.
That doesn’t include THE biggest problem I see is covering your medical insurance until you are eligible for medicare at 65. You’ll have to cover it for 4 years if you retire at 61, and if you are in poor health it will be very pricey – wouldnt surprise me if it was at least $1000/month for anything with decent coverage. You can’t afford it.
I will also caution – your son has some great advice, but his investing timeline is much longer than yours. I know everyone thinks the stock market will always go up, but we’re overdue for a correction like we got in 2008. (When will it be? I don’t know. You can’t time it.) Corrections aren’t bad – they are a buying opportunity, and there’s usually great growth afterward – but you have to be able to weather that storm. Your retirement timeline is short enough that that’s a notable risk for you.
If retired you need to supply health insurance, etc. Your monthly expenses should include emergencies, insurance, etc. If you retire you need 25 years worth of expenses. I would use $4000/mnth to account other items that you will need $1.2Million to retire with a $4000/mnth.
With that said, this amount should GAP to be able to take higher SS at 71. If you take SS at 62, and your SS is $1700 a month, then the amount need to retire uses $2300 of retirement savings worth expenses is $690K needed to retire.
There are advantages to waiting to take social security because it gives you freedom especially later in life. However, if you don’t have enough money to keep your retiring savings from dropping more than 3.5% per year, take social security early to save your retirement savings, to keep it growing.
Others have already made a lot of good comments, and this might be another thing to start to consider. OP should start laying the foundation at work that he would like to move into a position that may not be so physically demanding. Sometimes people in their mind are open to doing that, but they don’t actually verbalize to their superiors that this is something they would like to work towards.
Several people in my immediate family are professional, welders, and many of them have since moved onto doing welding inspection instead. It took a bit of time and some new training, but now they’re able to use their years of experience to oversee other people’s work and it’s also much better for their health. OP might want to consider getting some more training, even on his own dime now, if that allows him to still stay in his field, but move into a position that uses his mind rather than his back. This would allow working throughout his 60s.
This seems very difficult to pull off. Your mortgage should ideally be paid off before you retire.
>according to my numbers do you think it’s realistic I could maybe retire at 61-62? I’d really like to be done at 60 but he’s thinking maybe 61 but most likely 62.
Have you estimated your expenses in retirement? You indicate that you spend only $2800/month now. Do you expect the same in retirement?
Since you appear to want to start your reduced social security benefits at 62 and thus get $1700/month for the rest of your life, that leaves $1100/month to be funded from your portfolio, assuming the same level of expenses.
A portfolio of around $350,000 should be able to spin off that $1100/month. And you appear to be on track to have around that much when you reach 61 or 62.
So, if you continue to keep your expenses this low and continue to save this much, you should be able to retire when you wish. It could be tight, but doable. Be careful.
Will your employer continue to pay for your health insurance after you retire? Do you have long term care insurance? What do you plan to do in retirement, other than not work?
Good luck.
Does the 2800/mo include the mortgage? If so, something doesn’t add up. That’s $34000/yr in spend. If it does not then it makes more sense.
Let’s assume for a second that your spend is 2800+1400, which will continue at least 5 years into retirement if you retire in 10 years. You only need to bridge a couple years until you can pull SS so for two years you would need 64K/yr to cover your expenses at the same rate you are doing now. After that SS picks up part of the tab, and you only need 44K to round out expenses. Don’t forget that you will probably need to spend something on health care. You’re well inside subsidy category so let’s just assume 6K/yr. Subsidies will change by the time you retire but hopefully some form will remain.
At 50K/yr you could need roughly 1M to sustain a 4.7% SWR. At 6% growth after inflation and retaining your 20K/yr contribution I show 500K in your 401K. That’s a $23500/yr income level, add 20K in SS and you’re at 43500. Now if your 2800/mo spend DOES include your mortgage of 1400 then you’re there.
That said, you should only have your mortgage 5 years into retirement and if that goes away things get a lot easier.
Your boy is smart as far as investments go. Index funds offer the best chance at growth. I wouldn’t really change a thing there.