My wife and I want to retire early someday. Here is where we are at...1. $60,000 save in non-retirement accounts. ($20,000 or that in E-trade.2. $120,000 in retirement accounts.3. No mortgage, house paid off.4. Can't have kids5. Currently saving about $26,000 a year.6. Both 40 years old.What would be the best strategy at this point to retire early? When could we retire early?Thanks
When could we retire early?You can retire early when your annual expenses (including taxes) are about 4% of your investable net worth. Some say more, but few say less. So for your $180K, that means you could retire now if you can live on $7.2K/year.Assuming this isn't acceptable, your first question comes into play.What would be the best strategy at this point to retire early?Forgive me for first stating the obvious, but the best strategy is whatever strategy suitably maximizes your salary or wage income and your investment returns and minimizes your expenses. These are the three factors that get you to the magic number. First choose the one you have the most control over and exercise that control. Then move to the second and then the third in order of control. If you can tolerate a little risk and a lot of volatility, I recommend that you look into Mechanical Investing to maximize your investment returns. The Foolish Workshop board is the best place to start.1HappyFool
for danscene:I second 1HappyFool's comments. Also, I recommend you make use of the free site for the Optimal Retirement Planner at http://www.dp-net.com/orp/index.html. You didn't tell us what your pension or social security benefits may be, or what standard of living you want in retirement, or how much you plan to contribute to an IRA, or a Roth IRA, or a 401k, or a taxable account. Taking both your ages at 40, a $60,000 tax deferred account for each of you, and a $60,000 taxable account for the two of you, I made these guesses: $2,000 for each of you in Roth IRA's, $24,000 a year invested into the after tax account, no social security, no pension, 4% inflation, 8% return in your accounts. Here's the summary of ORP's results if you retire at 55:ORP SUMMARY Annual After-tax Withdrawal(in today's dollars): $33,000 Account Balances at Retirement: $1,219,900 Total Plan Value: $4,590,000 Retiring at age 60, and changing nothing else:ORP SUMMARY Annual After-tax Withdrawal(in today's dollars): $46,000 Account Balances at Retirement: $1,947,700 Total Plan Value: $5,984,400 Retiring at age 65, and changing nothing else:ORP SUMMARY Annual After-tax Withdrawal(in today's dollars): $64,000 Account Balances at Retirement: $3,011,100 Total Plan Value: $7,614,400 Please try ORP for yourself, or write your own spreadsheet to do your retirement planning. Tinker with the input assumptions -- rate of return, inflation, presence of pensions -- to see what happens. Then, if you like, let us know here what you learned or tell the ORP people.Chips, who is big on crunching the numbers to answer questions like yours
First, Congratulations on where you are already! I've come across this site www.zroundtable.com that has a RETIREMENT CALC which might be of interest to you.It makes some simplifying assumptions but is very easy to use. Try it out -- also, the people at the website are pretty receptive to suggestions, etc. -davide47
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