Retiring at 51

[NitroZ7]

I was planning to work until 55 but the drama and insanity at work have caused me to think about moving up my plans and maybe retire June 1. I'm going to do some investing to generate more income over the next month and see where the numbers are as I would like to essentially live off of passive income. I will utilize JEPI and NUSI as well as my individual stock holding, option selling and mutual funds.

I have to be honest it is a bit scary to make this decision. Anyone here retire around 50? Any tips on what you use to generate income? How much do you rely on capital appreciation? I looked at some insurance rates on the exchange and it looks like I can get a decent plan for about $850.00 a month. My wife may decide to go back to work part time also for insurance if that works better.

[motomania]

Interesting topic........I’m still a few years out from that myself; but have kicked around similar thoughts quite a few times.

[Hydrasport80]

The earlier the better if you're able. Wish you the best.

[Bsktball55]

I will be retiring at 52, but that is with a pension plan. If I didn't have that, I would have to have a very significant stockpile of money.

[Matt D]

I surely don’t have all the answers but the current plan right now is 2022 at age 51. My wife will be 49. We currently have a variety of income sources to draw from and to me having a couple of years worth of income basically in cash or other very secure holding is key to not be forced to sell out n a market correction or longer term drop. I do use a financial guy for advice in this area to make sure we have the correct allocations in our various accounts(401k, brokerage acct, land etc). Running the different models show a 98% likely hood of hitting our goals from retirement to age 100. I am comfortable with those odds. I agree it is very scary to think about even when people you trust and your own numbers say you will be fine. I have a friend retiring the end of this month and he is having many of those same concerns even though knows he is in good shape.

I look forward to others thoughts on this.

[TexomaDan]

Just make sure you understand medical expenses as you get older. It costs wife and I $1500/month to continue insurance from work. Also spent $8,000 on dentist last year that was not insurance covered. Hopefully, that decreases.

Cost Might drop with Obamacare, but that costs more with higher income.

[digthemup]

Nitro,
I was a manager at a GM subsidiary that was sold and outsourced back in 2000, so in my mid 40, I was offered a very lucrative retirement package. I jumped all over it, since I had my site development/ custom home construction, which I sold the site development in 2017 due to health issues. My company still does land deals and high end home in collaboration with another company owned by a friend, but I would have been very bored if I did not have my company to keep me occupied.
You know I everyone says I am going to fish every day or whatever they enjoy doing, it get old really fast. I would go up to the lake house and fish for a few days, depending on how I had things scheduled, but even with taking care of my home acreage and 2 houses, I expended the company to feel in my time.
Financially, the Lord GOD has greatly blessed me, and the retirement package included a sizable pension, so you need to evaluate everything before making this very big decision.

[BoilermakerZ519]

First day of retirement started today for me. Will turn 53 this year. Original plan was around 55 but early out plan offered at work made it dumb not to take given my plan to leave in a year or two anyways.

Nitro, I have been preparing for this change for the past 5 years as I have been building an appropriate cash allocation. I will be taking a % from that, get a % from my dividend paying stocks and funds, % cashing out of taxable accounts.

This will be executed for the next 7 or so years until I will be able to access tax advantages assets...then things change again once SS will be taken etc.

[NitroZ7]

First day of retirement started today for me. Will turn 53 this year. Original plan was around 55 but early out plan offered at work made it dumb not to take given my plan to leave in a year or two anyways.

Nitro, I have been preparing for this change for the past 5 years as I have been building an appropriate cash allocation. I will be taking a % from that, get a % from my dividend paying stocks and funds, % cashing out of taxable accounts.

This will be executed for the next 7 or so years until I will be able to access tax advantages assets...then things change again once SS will be taken etc.

Congratulations on making it to retirement. I have been building a portfolio as well for the past few years but still have about 1/2 of it in cash since I was planning on having a few more years to invest. I have about 38 dividend paying stocks, some index funds and some ETFs. Some of these are more geared towards growth. Now that you are retired are you trimming some growth and moving more into higher dividend paying stocks?

Also what are you doing for health insurance? I was looking at some policies on the exchange but my wife is mad at me for doing this because she likes my current insurance.

[BoilermakerZ519]

Congratulations on making it to retirement. I have been building a portfolio as well for the past few years but still have about 1/2 of it in cash since I was planning on having a few more years to invest. I have about 38 dividend paying stocks, some index funds and some ETFs. Some of these are more geared towards growth. Now that you are retired are you trimming some growth and moving more into higher dividend paying stocks?

Also what are you doing for health insurance? I was looking at some policies on the exchange but my wife is mad at me for doing this because she likes my current insurance.

Nitro, my risk allocation won’t change much as I want to maintain my wealth generation stance. My base fund portfolio is built around index funds. My stock fund is more growth oriented. Everyone has their own situation and risk tolerance however.

i will head to the exchange for my insurance. Ours here is called MNSure. I am used to a high deductible plan anyways...have been maximizing my HSA the first year it was offered and it’s been growing as it’s been invested during that time too.

[Charles Prestridge]

Nitro, have you looked at the IRS “Rule of 55” and how it might help you?

If you keep working until age 55, you can withdraw (penalty free) from 401k funds contributed while working from the same employer you are with at age 55. If you stay with your current employer until you reach 55, no 10% penalty on your work 401k.

Might be worth putting up with work headaches and even kicking back more at work, until 55. Worst-case they fire you before 55 and you may get some severance pay and/or unemployment benefits.

Good luck.

[NitroZ7]

Nitro, have you looked at the IRS “Rule of 55” and how it might help you?

If you keep working until age 55, you can withdraw (penalty free) from 401k funds contributed while working from the same employer you are with at age 55. If you stay with your current employer until you reach 55, no 10% penalty on your work 401k.

Might be worth putting up with work headaches and even kicking back more at work, until 55. Worst-case they fire you before 55 and you may get some severance pay and/or unemployment benefits.

Good luck.

Thanks for the information. My plan is to keep the 401 k and not withdraw from it until I have to so it can grow tax deferred. I will need to use my taxable account for about 8 years which will work. The biggest obstacle is I am trying to cover it with all income and interest rates are not helping. Right now I think I have a majority coming from income but I need to sit down with my financial advisor so he can run a projected income amount on a rolling 12 month period.

[The Noid]

Interesting reading here. My wife and I both retired October 23, 2020 at age 62 and are loving it so far. We've found that we indeed miss the people we worked with but don't miss the BS that went with our jobs. Also, it'll take more to keep you busy than you think (but that's a different issue). We visited with several "financial advisors" and found that their fees can really get into your pocket with a range from 1% to near 1.5% of the total portfolio. We settled on simply using Vanguard to invest our money. We filled out a simple form on their website, they gave us a call with a few more questions then a gentleman from their "Retirement Group" set up an appointment with us and we talked by phone. He sends us information via their website and email, talks with our CPA about tax considerations and answers our calls when we need him. Our experiences with Vanguard have been just super. There are several reasons we decided on this route but I'll list just a few... Many of the financial advisors trade Vanguard funds anyway. The smaller advisors manage your money, my money and everybody's money no matter the age or requirements but Vanguard has folks that ONLY deal with retirees. I can buy/sell stocks and ETF's with no fees. Everything I do with Vanguard can be done online no matter where I am. Instead of paying the 1% fee, I pay a fee of three tenths of a percent. Do your own math and see just exactly how much more a smaller office will have to make you in order to make up the difference. I'm tickled with the decision we made to go with them but whatever your decide, I wish you the very best in your retirement!

[BoilermakerZ519]

@The Noid: That's awesome they fit for you. I too had Vanguard (V) take a swing at a plan for me. You are right they are less expensive than the traditional...and I have found that V is a very honest and straightforward firm. I have about 75%+ of my funds through them. Here were my main reasons for not going with them:

They use a formula and they require you to follow the formula or they will not take you on. As an example, their formula dictated that I take on much more international exposure than I was interested in. I was ok w some but not to the level they suggested. They said no dice...I had to follow their guidance 100%. I learned through personal experience and it is largely debated (just search for "how much international exposure should I have") within all investment communities. Many studies and theories have shown support for international investing to provide the best diversification etc. However no one talks about the COSTS you pay for this diversification...AND...also much of the nature of how things trade globally (in recent decades) has changed how markets correlate w each other.

As I followed my investments over time, I was seeking the root cause of why my "well diversified" investment strategy lagged the overall Total Market index funds (which are US based). I found that in each of my previous 10-12 years of "diversified" investing the international component was costing me 1-2% a year. Over this 10-12 year period, that was a lot of lost gains. As a result, I dumped them and have never looked back....thus my aversion to international "diversification".

Also, I have always felt if I was going to pay a set %, the analysis should help provide strategies and a roadmap on how I might manage my investments and accts to maximize my wealth accumulation as well as minimize taxes. I found their plan lacked this sophistication. Perhaps its not supposed to provide that level of detail but that's what I was looking for and expect from a firm if I am going pay an ongoing % of my assets.

I ended up finding a fee only planner who built a roadmap for me which I plan to execute.

I think the V approach may help those who are not adept or just want to hand over the keys so they don't have to worry about it. I do like it that it is far less than most if not all others. Enjoy the retirement!

[NitroZ7]

I always thought that Vanguard had too high of a requirement for international diversification as well. When I use their site for portfolio analysis on some of my accounts it always gave me the warning to consider adding more international equities and bonds. I would not feel comfortable owning the percentage they set either. I have their VWILX Vanguard International Growth Fund but it also includes American Companies. I have a few international dividend ETFs as well but my international exposure is no where close to what they reccomend.

[The Noid]

Thanks for the well wishes in my retirement and I sincerely hope things work out well for you. It came as a surprise to me that Vanguard required you to follow any formula. They indeed provided a plan for us but I made my own changes without issue. The original plan included a bit more international exposure (as you mentioned) but the plan they put together actually looks very little like what our investments are today. I also make changes if I want and the guy I deal with spends time with my CPA and I whenever I need him to. I wonder why the differences???? Anyway, it sounds like you've found your perfect fit and I'm sure you'll be happy. Again, thank you for the well wishes and I hope you enjoy your retirement even more that I am!!!

[BoilermakerZ519]

Noid, I too am glad you found something that will work for you. I do respect Vanguard very much and if there was one firm I would send people to it would be V.

I think it’s interesting that you are able to make changes when you want and to your liking. I wonder if it is a completely different program or team than what I was interfacing with. My fees associated w my plan were going to be 0.3% of assets. Many others have had the same experience as reported back on the bogleheads forums. I am glad however that they are allowing you such freedom. I think it only makes sense to allow that especially if you and the advisor have good communication...as at the end of the day it’s your money!

[CigarBasser]

Original plan was to retire at 58.. At 56, I will leave the full time employment I’ve been in for 38 years. Income will come from pension plan and investments till 59.5 then our varies IRA’s and 401K will contribute till SS kicks in.. Everything is paid for and all major projects completed.. Couldn’t think of a better time to pull the plug..

[Matt D]

Original plan was to retire at 58.. At 56, I will leave the full time employment I’ve been in for 38 years. Income will come from pension plan and investments till 59.5 then our varies IRA’s and 401K will contribute till SS kicks in.. Everything is paid for and all major projects completed.. Couldn’t think of a better time to pull the plug..

Congrats on your diligent planning and now you can reap the benefits of it! That is great.

[apenland01]

I hate all of you. Divorced nastily 6 years ago, started over from scratch, retiring at 106......