5M in investible assets with $225k expenses works out to 4.5% withdrawal, but if I subtract the social security benefits and pension (which you obviously don't have access to immediately), it is a 3% withdrawal rateAges 55 (both in good health), living in VHCOL. May stay or move eventually to lower cost area
Net worth $6.7M, no debt.
Kids recently launched.
Real Estate:
$1.1M primary house
$0.6M vacation home
Investments:
$2.5M 401Ks
$2.5M taxable accounts
Retirement Income (todays dollars):
$24.8K Social Security (collect at age 62)
$50.0K Social Security (collect at age 70 - EDITED)
$26.6K Pension Annuity (non-cola, collect age 62)
Annual Expenses $225k
In order to model this, you would probably need to hire a fee only financial adviser and use proper software. I think if you are even a little bit flexible (i.e. willing to rent out the vacation home or cut down on traveling) in the event of a major market downturn, your probably of success retiring now is very high. The benefit of a variable withdrawal rate is significant. If you want an absolute floor of $225k in expenses, it is safer to work 1-2 more years.
I don't agree with the advice of using TIPS ladders or other fixed-income solutions to reduce risk. You or your spouse could easily live to 90, and the probability of equities outperforming fixed income over 35 years is high. Longevity risk is just as significant as market risk.
A SPIA is a better option if you if are extremely risk adverse. I put in a M/F couple age 55 in California into immediateannuities.com with a $5,000,000 investment, and it give $24,424 monthly income ($293,088 annually). Again, I don't think this is a good option due to inflation and longevity risk.
Statistics: Posted by blimp — Fri Apr 19, 2024 2:14 am — Replies 59 — Views 6655