Retiring at 50
- Thread starter Cervelo
- Start date
Its kind of a hard one to answer, as no one knows what the future holds
We are couple in our late 40s with no kids
Have a house with no mortgage worth around 500k
We have about 700k invested in several ETFs and 450k in banks and Prize Bonds
I took redundancy in 2011 after working for over 30 years and now work for 3/4 months bringing in around 15k
I reckon we can cover all our living expenses, food, utility bills, med ins and the running of two cars for 20kpa
We will add another 15/20k a year to cover other expenses like holidays and personal spending
We are couple in our late 40s with no kids
Have a house with no mortgage worth around 500k
We have about 700k invested in several ETFs and 450k in banks and Prize Bonds
I took redundancy in 2011 after working for over 30 years and now work for 3/4 months bringing in around 15k
I reckon we can cover all our living expenses, food, utility bills, med ins and the running of two cars for 20kpa
We will add another 15/20k a year to cover other expenses like holidays and personal spending
I wish I had a million euro when I was 50. I would have retired. But, I have a more frugal lifestyle and if I were due to die at 90 there would be plenty of change left from the €1M. Looking through Cervelo's posts I don't think he/she is ready for full retirement. For a start there is the income for 3/4 months work. This gives options too. The personal spending is fairly heavy too (at least from where I sit).
All-in-all Cervelo with €1M has enough to retire comfortably (unless Las Vegas is on the cards). If things go a bit pear-shape he has the option to spend the winter/spring in southern Spain for €600 per month apartment rental where he can live cheaper than here.
If I were Cervelo I would be more concerned with how to fill in the extra time available than how to survive on a Cool Million.
All-in-all Cervelo with €1M has enough to retire comfortably (unless Las Vegas is on the cards). If things go a bit pear-shape he has the option to spend the winter/spring in southern Spain for €600 per month apartment rental where he can live cheaper than here.
If I were Cervelo I would be more concerned with how to fill in the extra time available than how to survive on a Cool Million.
1 excellent point i
2 This is key or have you even defined contribution or other pension fund ?
Will you be eligible for sate pension at 68 ? will you/ can you make voluntary contributions after retiring
? Look at citizen's info for rules
3 what about spouse : any pension fund?
Strangely enough there is no problem fill extra time, I have been involuntarily retired (can't get a job) since 52ish and to be honest at this stage I wonder how I found time to work. There are so many hobbies/things to do etc that the only bit of time I find drags is the depths of winter like now. Now if I could afford to fly south for the winter I'd be on a roll.
I had a lot less than 1m (more like quarter of it) that has to get me to retirement and beyond, I will get a state pension but the deferred work pension is iffy. I do a small bit of extra work that brings in no more than 5k or so per year. I live a very frugal lifestyle though, I am very good at budgeting but at the same time have no problem spending on things I really want, seriously contemplating spending €350 on a garden ornament that I love so I'm not mean, just careful
I haven't had many holidays since the enforced retirement, I would like more of those but can't really afford them, I drive an old car by choice. The thing I really miss is the lack of opportunity to help family more, there are so many things I would for them if I had a decent income.
I had a lot less than 1m (more like quarter of it) that has to get me to retirement and beyond, I will get a state pension but the deferred work pension is iffy. I do a small bit of extra work that brings in no more than 5k or so per year. I live a very frugal lifestyle though, I am very good at budgeting but at the same time have no problem spending on things I really want, seriously contemplating spending €350 on a garden ornament that I love so I'm not mean, just careful
I haven't had many holidays since the enforced retirement, I would like more of those but can't really afford them, I drive an old car by choice. The thing I really miss is the lack of opportunity to help family more, there are so many things I would for them if I had a decent income.
Hi Cervelo
If you make the conservative assumption that your investments will do no more than simply match inflation, after taxes and investment costs, then you could afford to spend €28,700 per annum, adjusted for inflation, for 40 years before exhausting your pot of €1,150,000. That equates to a withdrawal rate of 2.5%.
Of course, it's highly likely that your investments will do better than simply match inflation over a 40-year period but you do have to take account of the risk that the sequence of returns on your investments will not be favourable. If a high proportion of negative returns occur in the early years of your retirement, it will have a lasting negative effect and reduce the amount of income you can withdraw over your lifetimes. As such, it would be prudent to make conservative withdrawals - and to maintain a conservative asset allocation - in the early years of your retirement.
It's probably prudent to assume that at least one of you lives to 90, although, again, that's obviously quite conservative. You will probably qualify for a State pension at some point but I would be inclined ignore that for the purposes of your calculations and to simply treat it as an additional safety buffer. You could also probably trade down to a less expensive house, if necessary, again giving you a further layer of comfort.
If you take a marginally more optimistic (but still wholly realistic) view of your anticipated investment returns and assume a consistent return of just 0.5% above inflation (after investment costs and taxes), then you could afford to spend €34,500 per annum for 40 years before exhausting your pot. That equates to a withdrawal rate of 3%.
So, putting it all together, I would have thought that you could afford to retire on the basis of your current net worth with a reasonable degree of confidence that you won't run out of money during your lifetimes.
If you make the conservative assumption that your investments will do no more than simply match inflation, after taxes and investment costs, then you could afford to spend €28,700 per annum, adjusted for inflation, for 40 years before exhausting your pot of €1,150,000. That equates to a withdrawal rate of 2.5%.
Of course, it's highly likely that your investments will do better than simply match inflation over a 40-year period but you do have to take account of the risk that the sequence of returns on your investments will not be favourable. If a high proportion of negative returns occur in the early years of your retirement, it will have a lasting negative effect and reduce the amount of income you can withdraw over your lifetimes. As such, it would be prudent to make conservative withdrawals - and to maintain a conservative asset allocation - in the early years of your retirement.
It's probably prudent to assume that at least one of you lives to 90, although, again, that's obviously quite conservative. You will probably qualify for a State pension at some point but I would be inclined ignore that for the purposes of your calculations and to simply treat it as an additional safety buffer. You could also probably trade down to a less expensive house, if necessary, again giving you a further layer of comfort.
If you take a marginally more optimistic (but still wholly realistic) view of your anticipated investment returns and assume a consistent return of just 0.5% above inflation (after investment costs and taxes), then you could afford to spend €34,500 per annum for 40 years before exhausting your pot. That equates to a withdrawal rate of 3%.
So, putting it all together, I would have thought that you could afford to retire on the basis of your current net worth with a reasonable degree of confidence that you won't run out of money during your lifetimes.
I'm suprised at some answers my initial reaction was 1million at 50 is plenty and you won't have to live that frugally IMO .
I think the main thing is if you had the skills to make save 1 million by 50 your not losing them skills and if you needed to earn again I'm sure you could go back to working 3/4 months a year but I doubt you would need to.
I would guess most people over save for retirement and die with cash left over than vice versa, my aim is 1 million at 40 and I'll probably pack it in or work seriously less hours , by my calculations I'll never go poor and if I did I can deal with it , I'll go back to what made me the money in first place , whatever your working at for 3/4 months you may decide if possible to do it for 1 month every year if your bored and need the cash .
I think the main thing is if you had the skills to make save 1 million by 50 your not losing them skills and if you needed to earn again I'm sure you could go back to working 3/4 months a year but I doubt you would need to.
I would guess most people over save for retirement and die with cash left over than vice versa, my aim is 1 million at 40 and I'll probably pack it in or work seriously less hours , by my calculations I'll never go poor and if I did I can deal with it , I'll go back to what made me the money in first place , whatever your working at for 3/4 months you may decide if possible to do it for 1 month every year if your bored and need the cash .
Unfortunately, all available data would suggest that the opposite is the case.
Sarenco is an encyclopaedia of economic knowledge but he still won't tell me what his portfolio contains
Show us what someone of your knowledge invests in please !
Thanks for the answers guys, it seems the general feeling is it is doable but will take careful planning and a but of good old fashion luck
I made a mistake in my above post about my mortgage, I still have a tracker mortgage (1%) but the money is in Prize Bonds while I decide if I should pay it off.
The working came about by accident and provides me with a bit extra income but more importantly keeps my mental health in check
The 700k includes a PRSA of 200k which I personally control rather than PRSA provider, this I can fully access from the age of 50.
I am hoping for some where in the region of a 4% return from my ETFs, some years it's going to be lower (2015 for example) and others higher (pre 2015)
As regards my free time as Monbreita said "I wonder how I found time to work"
I made a mistake in my above post about my mortgage, I still have a tracker mortgage (1%) but the money is in Prize Bonds while I decide if I should pay it off.
The working came about by accident and provides me with a bit extra income but more importantly keeps my mental health in check
The 700k includes a PRSA of 200k which I personally control rather than PRSA provider, this I can fully access from the age of 50.
I am hoping for some where in the region of a 4% return from my ETFs, some years it's going to be lower (2015 for example) and others higher (pre 2015)
As regards my free time as Monbreita said "I wonder how I found time to work"
This is the great unknown, I don't expect that either of us would reach that age but then again stranger things have happened and is something that I cant discount.
Steven Barrett
Registered User
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What happens a lot is people who save a lot for retirement are prudent with their money in retirement and don't blow it in the "active retirement" stage of their life. None of us know when we are going to die, so we can't plan for that event. They want to make sure there's enough money to cover their cost of living and nursing home fees should they be required. Then there's the Irish obsession with leaving an inheritance, but that's another matter.
Back to the OP, it all depend on what you want to do as to whether you can afford to retire at 50. I have clients who are off to Thailand on Saturday for the month. They go every year for that long because they enjoy the warm weather there while it's freezing in Ireland. They go on another 3/4 holidays a year in addition to that.
Regular travel and helping out the kids (not relevant in your case) are the two biggest outlays that I come across when it comes to plotting out expenses for the rest of your life. You and your wife should have a chat about what do you want to do in retirement and do an analysis like Sarenco did for you.
Steven
www.bluewaterfp.ie
I retired at 50. I am now 63. Myself and my wife have lived on about €20k per annum to include a handful of holidays every year. No mortgage to pay. All funded from my savings. I still have good savings. At 65 I will get a very small deferred pension plus state pension.
I reckon there are two downsize stages that I can make if I need to raise cash by selling my home. Each stage will release a couple of hundred €000 to me.
I have had no problem filling my time. Gardening, DIY, Travel, Long lunches, Adult Education courses, Walking. etc
I am happy and that's what counts.
I reckon there are two downsize stages that I can make if I need to raise cash by selling my home. Each stage will release a couple of hundred €000 to me.
I have had no problem filling my time. Gardening, DIY, Travel, Long lunches, Adult Education courses, Walking. etc
I am happy and that's what counts.
I wonder would that still be true if you include their residence( as hinted at by sbarett
)
How many cash poor elderly live in 500k to 1m plus houses ? Rather than enjoying the equity end up leaving it to the ungrateful kids !
Steven Barrett
Registered User
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Many people simply don't want to move home, there is too much of an emotional attachment to it. By the time they realise that they should move, they feel they are too old to do so. A very experienced planner I deal with in the UK told me that if a couple don't downsize in their early 60's, it is very unlikely that they ever will.
I love the way that people refer to the recipients of their parents inheritance as kids. it makes it sound as if they are still running around in short pants when the reality is, most of them are in their 60/70's by the time both of their parents have died. Which would make you think that if you are determined to give something to your "kids", wouldn't it be better to do it when they are younger?
Steven
www.bluewaterfp.ie