Thinking about retiring in your 40s… is it doable?

Retirement Discussions Forum
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i’m working out some retirement numbers and need some feedback to see if this is realistic. i originally thought i’d need at least $2.8 million to retire comfortably, but now i’m wondering if $1.8 million, all in the s&p 500 with a 7% average return, could work if i withdraw $10k monthly. if i assume a 10% return and 3% inflation, that should net 7%.

assuming a post-tax income of $100k (about $20k in taxes), things could be comfortable, especially if the house is paid off and i’m in the midwest. anyone else crunching similar numbers or have a target retirement goal?

2

sequence of returns risk could mess up your plan. if you’re in your 40s, aiming for 28.5 times your yearly spending is usually safer. some people hit their goal with different amounts since expenses vary.

3

@Genevieve
sequence of returns risk means there’s a chance they’d run out of money, depending on market cycles during retirement.

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Kavi said:
@Genevieve
sequence of returns risk means there’s a chance they’d run out of money, depending on market cycles during retirement.

true, but most likely they’d run out of money with a $100k yearly spend on $1.8 million if they live into their 90s. historically, the shortest time money lasts under these conditions is about 14 years.

5

@Genevieve
we can’t predict future returns, but there’s a significant risk with this plan. saying they’d run out of money isn’t completely accurate, but it’s a big chance.

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there’s a lot of info on this in the early retirement communities.

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Kavi said:
@Genevieve
we can’t predict future returns, but there’s a significant risk with this plan. saying they’d run out of money isn’t completely accurate, but it’s a big chance.

withdrawing $100k yearly on a $1.8 million portfolio also risks running out of money within 25 years. not having a sure future return makes a big withdrawal risky.

8

average returns work while saving, but in retirement, year-by-year fluctuations matter. try looking up historical s&p returns and model this out. starting in 2000, you might’ve managed, but beginning in 1970? out of money by 1988.

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@Genevieve
thanks for the info, glad i posted this here. it’s really helpful!

10

@Dar
my grandma retired well-off with around a million dollars in the early 80s, but currency inflation left her barely able to buy essentials by the 90s. hopefully, our financial systems stay stable enough for retirement plans.

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7% is just an average. what if you have to sell in a down market? don’t forget to include healthcare costs, they can really add up.

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Alexander said:
7% is just an average. what if you have to sell in a down market? don’t forget to include healthcare costs, they can really add up.

good point, healthcare is no joke.

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@Noor
the irony of it all… :slight_smile:

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Alexander said:
7% is just an average. what if you have to sell in a down market? don’t forget to include healthcare costs, they can really add up.

if healthcare isn’t budgeted, it can eat into your funds fast.

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Alexander said:
7% is just an average. what if you have to sell in a down market? don’t forget to include healthcare costs, they can really add up.

realistically, you might pick up some work if funds start running low.

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@Laurel
re-entering the workforce after years off can be challenging, especially during economic downturns.

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@Laurel
it’s better to save a larger nest egg upfront than rely on finding work later.

18

the general rule for a 30-year retirement is a safe withdrawal rate around 4%. sequence of returns can complicate things, so be cautious.

with no mortgage and a modest lifestyle, you may even manage on $50k.

19

@Aki
retiring at 40 with a $100k spend rate may mean cutting back or working longer to avoid running out of money.

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Happy said:
@Aki
retiring at 40 with a $100k spend rate may mean cutting back or working longer to avoid running out of money.

yeah, $100k/year sounds like a lot, especially if there’s no mortgage or kids to support.