Retiring at 55: A Feasible Dream?
As a 43-year-old woman with a partner and no kids, I’ve worked hard to build a diversified portfolio. With $500,000 in a 401(k), $50,000 in an IRA and bonds, $100,000 in stocks, and $100,000 in savings, I’m proud of my financial progress. My rental property, which will be paid off by the time I’m 55, adds another $550,000 in equity and generates $15,000 in annual profit. On top of that, I receive a tax-free VA disability pension of $2,000 per month and will receive a retirement pension of $2,000 per month when I turn 60, both with COLA adjustments.
Assessing My Retirement Readiness
To determine if I can retire at 55 without needing a part-time job, I need to conduct a gap analysis. This involves calculating my expenses, reliable income sources, and any potential shortfall. A financial advisor can help me build a comprehensive retirement plan, taking into account variables like inflation, taxes, and investment returns.
The Gap Analysis Equation
Expenses – Reliable Income Sources = Gap
My Retirement Projections
Based on my current situation and assumptions about life expectancy, inflation rate, Social Security benefits, investment returns, and expenses, here are some projections for my retirement:
- Age 55: Living expenses $100,000, estimated taxes $3,966, retirement income $55,605, withdrawals to cover gap -$48,361, projected savings at year-end $2,153,875
- Age 70: Living expenses $142,576, estimated taxes $21,981, retirement income $168,386, withdrawals to cover gap $0, projected savings at year-end $3,480,824
- Age 80: Living expenses $180,611, estimated taxes $98,644, retirement income $202,347, withdrawals to cover gap -$76,908, projected savings at year-end $5,461,461
- Age 90: Living expenses $326,204, estimated taxes $367,258, retirement income $327,653, withdrawals to cover gap -$365,809, projected savings at year-end $10,497,794
A Promising Outlook
Based on these projections, it seems likely that I can retire at 55 without needing a part-time job. My income sources, including my pensions and rental property, will provide a comfortable cushion. However, I should review my income streams with a professional to ensure they will be received as expected. With careful planning and management, my estate could even grow to over $10 million if I live into my mid-90s and my investments average a 6% annual return.
Seeking Professional Guidance
Finding a financial advisor who can help me achieve my retirement goals doesn’t have to be daunting. By working with a professional, I can get personalized advice and guidance to ensure a secure and comfortable retirement.
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