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I may be coming into 500k free and clear. Can I retire with this much....lol. I am 31 years old.

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If you can live on an income of $15K to $20K per year...then yes you can retire.
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No, but if you don't blow it, you are well on your way to financial independence.

My only suggestion would be to meet with a fee-only financial planner.

www.NAPFA.org or GarrettPlanningNetwork.com

Financial planning involves more than investments.

buzman

Member, NAPFA/GPN

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Take your total retirement savings, and multiply by 4%. If you can live on that, then you can retire.

http://www.retireearlyhomepage.com/novtips.html
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>>No, but if you don't blow it, you are well on your way to financial independence.

My only suggestion would be to meet with a fee-only financial planner.
<<

I second this opinion. The biggest risk you face with a windfall like this is blowing it. Most people apparently do just that with such windfalls, even ones bigger than this. A sit-down with a fee-only financial planner will help you realistically assess what this kind of money can do for you and help keep your emotions (wheeeEEeeeeeeEE!!!!) in check when you most need it.


Soooz


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*I may be coming into 500k free and clear. Can I retire with this much....lol. I am 31 years old.*

That seems a bit on the short side to retire at 31 years old. If you have a wife and kids (or plan to acquire same) then it's practically impossible.

The bigger question is what this money will do to you. If you can manage to see this money as being just another asset, then there's a very good chance that you will be able to manage it to your advantage. However, if you see it as a windfall, as a pot of gold, then there's a very good chance that you will blow through it, and rack up a massive debt, as well.

The good news is the fact that you came to the Fool board and asked your question. That kind of indicates that you won't be buying a new Ferrari for yourself and new houses for your relatives. If you can manage to survive the first 6 months without making any frivolous purchases with it, there's a good chance that you'll be able to hang onto it and have an early retirement down the road. Believe it or not, there's a great risk that you will squander it all just to make it go away. Money, especially this amount of money, can be a burden, because it will change your life.

Good luck, if you come into it! Avoid all the get-rich schemes. Avoid all your relatives and friends who have a hard-luck story or a sure-fire way to make "even more money". Resist the urge to buy the hot stocks. Invest in a diversified portfolio of funds comprised of 4 or 5 asset classes. Do all this, and maybe you can retire at 50.

Hedge
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I may be coming into 500k free and clear. Can I retire with this much....lol. I am 31 years old.

Sure you can! Wait until the powerball gets to about 100million or more then buy 500K tickets, you are sure to win!


This message brought to by the VP of lotto ticket marketing
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I may be coming into 500k free and clear. Can I retire with this much....lol. I am 31 years old.

Nice. Well you can get 5% safe. That's $25,000 a year. Or you can get 10% risky. You do the math.

And inflation is still the name of the game. Soooo...I suggest splurging a little...invest the rest in stocks or funds....but keep working.
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Nice. Well you can get 5% safe. That's $25,000 a year.

Yes, its $25K per year now. But if you spend that money, heres the problem, its also $25k per year 30 years from now (ignoring rate fluctuations, which is also a big issue). 30 years from now, even with low 3% inflation, the value of a dollar will have decreased nearly 2.5 times, so we'd be looking at $10K per year in today's dollars just as he starts to enter senior citizenship.
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30 years from now, even with low 3% inflation, the value of a dollar will have decreased nearly 2.5 times, so we'd be looking at $10K per year in today's dollars just as he starts to enter senior citizenship.

And that rate of withdrawal is "safe" in that it is highly unlikely (statistically speaking) to completely deplete the principal over 30 years. In the worst case, the $25k a year works for 30 years. And then the money is gone. There's no guarantee how much past 30 years it would go.

I think the windfall makes a nice addition to the retirement plans. And it certainly helps make FIRE an easier goal.

But it doesn't set you up for life at 31. Unless you've already socked away another $500k (or preferably more) on your own.

--Peter
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I may be coming into 500k free and clear. Can I retire with this much....lol. I am 31 years old.

Can you live on $15,000 per year? You might also be giving up the minimum contributions necessary for social security, depending on when you started. It will certainly be much less 36 years from now.
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I don't think $500k is enough to retire on, BUT is a great start on the road to financial independence.

There are several possibilities, but if you do nothing other than invest it in an index fund, you can expect somewhat more than 10% per year return esentially forever. If you can keep from spending any of it, you will reach financial independence in 15 years or so.

You will discover that working is a lot more fun when you have this kind of a nest egg.

Don't like your job, get a different one. Don't like your boss, get a different one.

I would never have retired on $500k, but if you can leave the money alone, it should approach $2M in 15 years. Now, this is enough to retire on, you will be all of 46, and will be completely independent.


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As most of the people said, it vastly depends on what your current expenses are. I spend about 21K per year right now, and could if I had to remove about 1K more out of the budget, so I could in fact retire on 500K. (500K = 20K per year in safe withdraw)

Would I? probably not, its a little tight, and you better hope nothing goes wrong. (health in particular). My recomendation is invest it, and wait another 3-7 years. During that time, start tracking your expenses. Every penny out of your hand should be counted. Know what you can trim and what you are required to spend. Then after you've done that for a year or so, start trimming until you are down to 4% of the current portfolio.

At that point, yes, you can retire. I'd rather have a withdraw rate of 2-3% to feel safe for being 30. My goal is 2% withdraw rate. If you retire in your 30s, you have a very long time to live on the money, on the other hand, if 10 years down the road you decide you aren't going to make it, you could get back into the work force at 40. Do that at 45, and you'll be trying to get back in at 55... Retire at 55 and decide in 10 years you aren't going to make it means you are trying to get back into the work force at 65...

ie. retiring at 30 has its benifits as well. (Painful as they may be :) It gives you a way to dip a toe in the water instead of diving fully in.

Laters,
-d.
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In order to properly answer your question, you need to supply more details ~ your goals, your marital situation, children, other income, savings, investments, whether you have health insurance, plans for major purchases etc. We need the whole picture in order to help you.
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Yeah, need more details on your situation. I am a bit older (44) and have the "problem" of trying to live on about $25K/year of investment (trust) income. The REHP website is a great starting source of info. Important:

Health insurance -- even if you're in perfect health.
How to invest the money -- some combo of bonds (or CDs) and stock index funds may be the best way.

Advice to talk to a fee only planner is very good, assuming you have a basic grounding in financial matters, at least have read the old "Fool" books, I hope???

My paranoia -- if you are young and free (e.g. no wife or kids yet), be very careful of future matings. A divorce or child support will take a huge chunk of your nest egg. I didn't say "avoid!" (that is probably my own prejudice), but to "be careful."

That advice ties in with the previously given advice to not go totally apes--t with the money, and buy a mansion, boat, sports car, racing horse, recreational drugs, etc. A huge inheritance should not be blown, but should be enjoyed gently, for the rest of your life, and perhaps even for lives of descendants.
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Advice to talk to a fee only planner is very good, assuming you have a basic grounding in financial matters, at least have read the old "Fool" books, I hope???

If you don't have a basic grounding in financial matters, a commission-based or fee-based (ie, fee plus commission) planner can really take advantage of you! (Been there, done that. Can't afford the T-shirt on what's left of that investment.)



Vickifool
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Retire on $500K. I wouldn't want to do it, but there are a whole lot of folks who live on less than $20K per year, particularly if their house is paid off. There are many others who work part-time, living off the cash flow from their investments and whatever else can be earned via part-time work. Again, my desires call for a lot more in the portfolio, but I think it's more than doable for someone who doesn't mind living on the low side of the economic curve.
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I would not broadcast to everyone that I was inheriting a large sum. Many will want to help you spend your inheritance while others will approach you for loans, donations etc. and some will befriend you solely for your money. Keep the "news" of your windfall to yourself. Educate yourself on financial matters & invest carefully. Build a solid future for yourself.
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