Hi all
I'm 46M, married to a 45F homemaker, with two kids 4 and 8. I work in big tech, making 320K-380K / year and getting burnt out and staring down at the possibility of getting replaced by AI, or laid off due to being "old" or whatever. I've been fairly diligent in saving, preparing for a worst case scenario. We live in MCOL city in the US.
Our yearly expenses are roughly 100K, and based on that I created a goal of 2.5 M on the low end (4% withdraw rate) and a high end goal of 2.8M (3.5% withdraw rate)
I have recently reached my low end goal, and while I'm not necessarily quitting today, I would like to have a plan for when I do switch from "saving" to "withdrawing" in my late 40s early 50s.
My goal would be to keep income in the first capital gains tax bracket (less than $96,700 for a couple, adjusted by inflation), so that I can avoid paying capital gains tax.
How does it work when I switch from saving to withdrawing?
How often should I withdraw? (Monthly? Quarterly?)
What's strategy should I use to choose where to withdraw from?
Breakdown of our situation:
Short term / Emergency
HYSA 31K
IBonds 43K
Brokerage (AOM super conservative ETF) 32K
Short term / Emergency Total 106K
Investments
Investments (Taxable) 911K
HSA (invested in ETFs) 122K
REIT 106K
Roth IRAs 176K
IRAs (pre-tax) 299K
Employee RSUs (vested) 111K
401K (pre-tax) 461K
401K (Roth) 344K
Investments Total 2530K
Home 500K
Mortgage 250K @ 2.875%
Other Assets that I exclude from my net worth
Kids 529 200K
No debts beyond mortgage
[46M] How does an exit/ early retirement look like?
byu/TheNextCat inpersonalfinance
Posted by TheNextCat
6 Comments
You’ll likely get better answers on r/FIRE or r/chubbyFIRE.
With such low spend, it sounds like you’re set at $2.5M in assets though. Congrats!
Have you accounted for healthcare expenses in that sub-$100K budget? Typical retirement scenarios generally presume Medicare will kick in early on in the retirement plan; you’re still looking at 10+ years of health plan expenses that includes two kids.
I’m actually curious – you don’t think it would be MORE stressful to live on essentially a fixed amount of money for hopefully decades to come? I think I’m still way too stuck in the immigrant family mentality that you can never have enough money to be safe and retirement is not a thing. I couldnt handle the stress of worrying about something happening to the nest egg and having to try to go back to work.
Health care and college are gonna mess with your numbers. Braces are expensive.
1. give “living off your money” a read
2. consider projectionlab for modeling roth conversions and different drawdown strategies
3. make sure you’ve accounted for healthcare as a part of your planned expenses!
I’d grow cash savings to cover 2-3 years of retirement expenses, then continually replenish via stock sales.