I am pretty burnt out on my current corporate America office job and I've been trying to figure out if it's realistic to think I might be able to retire from corporate America in the next 10 years. It's worth noting that when I say retire, in this context I really mean get out of the corporate world. I would still intend on working at least part time to try to cover some of my basic expenses until I got a bit older.
I'll try to detail my current financial situation:
- I'm 45 years old
- married with no children
- paid off mortgage, student loans, auto loans etc.
- annual salary of $225k
- $380k in investments spread between S&P 500 (60%), Schwab International Equity ETF (20%), and Schwab Aggregate Bond ETF (20%)
- $280k in a company managed 401k
- $100k in cash savings
Obviously this question is largely contingent on cost of living and desired lifestyle in retirement. Healthcare is also a big question mark. My cost of living is relatively high, I live in the Northeast US. However, my lifestyle is relatively inexpensive.
In my situation do you all think it's possible to mostly retire 10 years from now?
Edit: I think I could likely live on $60k a year in retirement
Is it realistic I might be able to retire by 55, 10 years from now?
byu/Pavonaceus inpersonalfinance
Posted by Pavonaceus
17 Comments
It all depends on the life you want to live and how much you want to work after retirement. We need to know what you think you could live off of per year for starters.
Can you easily save/invest 50% of your income over the next 10 years? That’s your answer.
If you keep your expenses down and invest much of your salary – I see no reason why not. I am not even going to run the numbers, your income is significant and your net worth is already ahead of most people your age.
Open a pizza place then retire.
Spin za till the end of your days.
How much income would you need/want on retirement? How much are you currently contributing towards retirement each month/year?
This is pretty much impossible to say without knowing what you want to spend in retirement. If you only need $40k a year in spending then yes it’s very possible. If you want $225k a year then probably not.
In US? Might be tight. Some cheaper parts of EU or SEA Might work. You’ll need to figure your budget and expenses when stop receiving income. Also health is a big if.
What’s your spouses role in this? Eg will you essentially be living off of one salary when you stop working? Can you get on your spouse’s health insurance?
We look at our retirement savings and household income as one pool. I’m 57 and I have stopped working. My spouse will continue working for at least another five years and carries our health insurance, which makes it much easier. Our goal is to live pretty close to on one salary until then.
Probably, yes.
It really depends on how the markets do. If we have an average market (7-9% return over historic returns), you’ll more than double your investments over time. However, you should probably take a look at your investments. I’d lower the international fund and increase the S&P or put that into a total market fund. The bond fund is too conservative in my opinion. You’re losing money by keeping that $100K in savings, way too much to leave on the table. Put that into a bond fund at least. And invest as much as you can until it hurts.
Your wife will need to be on board with this. If you retire at the same time you could have a low enough household income to take advantage of ACA subsidies and possibly pay nothing for health insurance.
I would suggest taking care of any high cost items before you retire so you can enter retirement with a bit more confidence: new roof, new septic, new car, etc., if needed.
I retired from corporate at age 55 as well. I spent my last 15 years aggressively investing, heavy on tech. I have two paid off homes in the NE both in fairly HCOL areas but I’m not married, no debt, one dog, I live pretty frugally but I always had – I spend on what I need or want, travel a bit, etc. You can do this as well.
Big question would also be where would you get health insurance from? You dont want to be in your 50s without insurance, and it is going to be pricey and/or shitty if you get bottom tier market stuff. Once you make it to 65, that is not too bad; but the 10 year stretch before then is a big one.
Might be worth having a retirement consultation so they can lay it out for you and answer this question directly. Do you pay Schwab for management? If so, ask them. Hell, I’m sure their WM team will sit down with you and do a free planning session, but don’t let them onboard you 😉
Does your $60k a year include healthcare? If not, add $2k/month growing at 5% annually to that number until you are Medicare eligible. Also you’ll be tapping non retirement accounts first so if most of your investments are in retirement accounts you’ll pay penalties. I think it’ll be tight for you
Have Schwab run a Monte Carlo analysis for you after you fill out their retirement questionnaire.
Make sure you have plenty of non retirement investments and perhaps when you “retire” switch them over to high income/dividend funds. If you can put another $400k into an income fund, that will yield you $15-20k a year in dividends to live off of when your taxable income drops significantly.
Yes, its entirely possible depending on what lifestyle you are envisioning and how aggressively you continue to save. Being willing to live somewhere with a truely low COL would make a huge difference too.
r/fire is the sub for you.
You’ve said nothing about how much want/need to have available for spending in retirement. The <800k you have now is nowhere close to enough, most likely. If it were 100% invested, you could hope that will double once in 10 years. 1.6 million would make annual drawdown of 64k/year the recommended safe amount. If you can sock away another 50k/year for the next ten years, that would get you to about 2.3m. Now you’re looking at 90k+. That’s the basics of the math.
I totally understand this “light at the end of the tunnel” mindset. At the same time, I really encourage you to do everything you can to enjoy your life right now. Therapy, hobbies, exercise, always having some PTO to look forward to – whatever you can do to alleviate the stress and find happiness in the day to day is so important.
Also finding the little things that feel like huge annoyances in your job and seeing how you can make adjustments to mitigate their impact can also really help. They aren’t a big deal in isolation but they can add up fast. Basically giving yourself some margin and protecting it fiercely so it can provide returns for your mental health – just like your investments.