Retiring at 55: Is $4.6 Million Enough?
After a recent job loss, I’m feeling unfulfilled in my new role and considering retiring in January 2025 at age 55. My wife, 56, works part-time, and we’ll switch to her health insurance next summer until she retires in two to three years. We’ll stay on my COBRA until May 2025. I’m struggling to determine whether we have enough saved for our desired lifestyle in retirement.
Our Retirement Goals
We have big plans for our golden years, including buying an RV to travel the country, taking two to three cruises per year, and scuba diving. To make these dreams a reality, we’ll need to ensure we have sufficient funds to cover our estimated annual expenses of $130,000.
Our Financial Situation
We’ve worked hard to build a substantial nest egg, with combined assets totaling almost $4.6 million. This includes $519,000 in savings, $1.85 million in taxable joint investments, and a home worth $950,000 with a mortgage of approximately $70,000. I have $120,000 in traditional IRAs, $134,000 in Roth IRAs, and around $1.72 million in multiple 401(k)s. My wife has $51,000 in a traditional IRA and $205,000 in a 403(b), plus a monthly pension of $433 starting at age 62.
Can We Afford to Retire at 55?
The good news is that, based on our financial situation and projected expenses, it seems likely that we can afford to retire at 55. However, it’s essential to consider various factors, including our health, inflation, and investment returns, to ensure we’re prepared for the long haul.
Planning for the Future
To make the most of our retirement savings, we should aim to contribute as much as possible to our respective retirement plans. My wife should consider maxing out her 403(b) contributions, and I can cover living expenses with our joint investment account. We should also prioritize tax-efficient withdrawals in retirement, taking from taxable accounts first and saving Roth accounts for last.
Additional Considerations
Before making the leap to retirement, we should evaluate our healthcare costs, life insurance options, and long-term care insurance. We should also think about our estate planning and charitable giving goals, as these can impact our annual budget and tax situation.
Seeking Professional Guidance
While we’ve made significant progress in saving for retirement, it’s crucial to consult with a financial advisor to ensure we’re on the right track. A professional can help us navigate the complexities of retirement planning, including Social Security, withdrawals, and tax strategies.
Taking Control of Our Financial Future
By carefully planning and preparing for retirement, we can turn our dreams into a reality. With a solid financial foundation, we can enjoy our golden years with confidence and peace of mind.
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