Let’s talk retirement

According to an email I received from Dave Ramsey this morning, this is National Save For Retirement Week. Who knew? Retirement has been on my mind a LOT lately, as my paying job has stressed me out quite a bit over the last six months. I’m trying to figure out how to turn this fantasy for an early retirement into a realistic plan.

How much longer should I work? If you use the 4% rule (where you need to be able to survive by pulling out just 4% of your retirement assets each month), I’m certainly not close enough. Right now, my retirement assets total only $800k, and I cannot live on $32k/year. AND the funds are almost all held in 401(k) plans, so we can’t get to them without penalty for another 8 to 10 years. Bummer.

So, what can I do to change that? Well, my #500in5 savings challenge was definitely created with this goal in mind. Let’s say my current $800k grows to about a million dollars in the next five years. If I can add another $500k by then, my retirement assets will be approaching $1.6 million, that would allow me to pull $64k/year to live on. Not quite livable for me, as I think I’ll need more like $6k/month, but perhaps I can reduce my hours at work or do some consulting?

Another piece of this puzzle yet to be solved is where to put the $500k I’m accumulating so that it can, ideally, earn 5% or more and be low risk. I’m almost wondering if I should limit contributions to our 401(k)s just to get the company matches, and then invest the rest elsewhere?

And the biggest unknown for an early retirement?  Health insurance and medical costs!

Still so much to work out…but I’m actively thinking and learning and doing something about it!

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