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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75376  
Subject: Re: Retiring @ 55 Date: 10/14/2013 6:55 PM
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You've got more going for you than Bruce accounted for in his quick and dirty analysis.

So far, I think everyone has overlooked your investment in a rental property. That will provide some part of your retirement income.

There's also the pension you mentioned that will help with retirement. And social security. While there are very reasonable considerations about how much social security might be available when you retire, I don't think it's wise to ignore it completely.

I also question the assumption of needing 75% of your pre-retirement income. Depending on your lifestyle, 50% to 60% may be a more reasonable goal. From that subtract off the pension, social security, and the net rental income. What remains is what you would need to provide for in your own savings.

That's probably going to be far less than the $4 million mentioned up thread. Dropping the retirement income from 75% to 60% of pre-retirement income would reduce the nest egg down to $3.2 million. And if the combination of Social security, your pension and the net rents provided 1/2 of your needs, that would drop the needed nest egg down to $1.6 million.

Just as an example, 75% of your current earnings is $120k. At your earning level, planning on social security benefits of $24k is not unreasonable. Add in $20k a year for a pension and $15k a year from the rents and you've got $59k of the needed $120k accounted for. That's close enough to 1/2 for planning purposes. The remaining $60k could come from a $1.5 million investment portfolio.

Drop the needed income to 2/3 of your current earnings, and the retirement income becomes $107k. Keeping the other income the same, you'd need about $48k a year, which translates into a nest egg of $1.2 million.

Now you would need a bit more to cover the gap from early retirement until you can collect social security. That's about 8 years times $24k a year - let's call it another $200k. But I think early retirement is more of a possibility than some posts up-thread might suggest.

--Peter
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