I have $540,000 saved, and my wife has $250,000 in retirement funds. We also have $60,000 in the bank. We decided to retire early (I’m 58, and she is 57). The only debt we have is my truck, which is $450 a month, and insurance, which is $1,300 a month. Our budget so far has been around $3,200 a month (since I retired at the end of June). This puts us around $38,400 for a year.
Next year when I reach 59 ½ (at the end of October), I plan on withdrawing $4,000 per month from my retirement funds. Did I jump the gun on retiring?
To be completely honest, it’s hard to tell if you retired too early. Even though you’ve shared how much you have in retirement assets and what your annual budget is, you may not have included every possible expense or are considering future expenses either. And the fact that you’re questioning this indicates you may actually think you retired too early.
Also — and not to be a downer since this is actually a good thing — people are living longer, which means you need to make your money last longer, too. You may live into your 90s or beyond, and you need your assets to stretch that far.
That being said, I do have some pointers for you to help you determine if you’ve “jumped the gun.” And also, I just want to note, even if you decide you did retire too early, there’s no need to panic — the fact that you’re being so mindful of your annual expenses and are still weighing your situation after already retiring is important.
Budgets aren’t very sexy, but you’ve already identified how crucial they are to knowing if your retirement will be secure. I’m sure the $3,200 a month figure includes your truck and insurance, but does it include any discretionary spending when you and your wife want to hit the town, or all of the groceries and utilities? Is it comparable to your pre-retirement budget? And what about taxes and inflation for everything under the sun, including healthcare? Is there any wiggle room should an emergency arise so that you don’t need to tap into your bank account or withdraw even more from your retirement accounts? You will likely also see home repairs, or need to replace your cars during your lifetimes.
See: I’ll have $5 million for retirement when I sell my dental practice next year — but my wife and kids don’t want me to retire
You didn’t specify if that $15,600 annual insurance covers car, home and health but make sure you have all three. Healthcare is extremely important, especially as you wait …….