RETIRE EARLY at 49 with $1,800,000 in Retirement Investing Accounts: How To Retire Early

[@yourfinancialekg]

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[@johnb1571]

i am in the dingy on the same boat, much smaller then the $1.8M. So many options to go with; example: set aside just 1 IRA for the 72t of $1M at 5% you draw ~$61k a yr until 59.5 and still have $824k left in this IRA, not to mention the other $700k in 401k's/IRA you have not touched for 10 yrs and still have the $300k (really $346k+) from the home sell to use as you want. Not to mention the "sunset end of 2025 tax break unless congress does something"So many options and a good place to be in 🤑

[@yourfinancialekg]

Same destination but many different paths to get arrive. Thanks for the comment John!

[@jasonedwards2571]

Why not do a Roth conversion ladder? If he just did the first five years of Roth conversion ladder then he could tap it at 55 and he would be good basically until he is 60.

[@yourfinancialekg]

It’s a viable option. Would have to understand the tax implications by doing the Roth conversion ladder. Great idea!

[@ariefraiser140]

I actually would use the $300,000+ post tax money to live off of and do the Roth conversion ladder for 6 years or so and then set up a 72t at 55 that will take me up to age 60. Having those Roth conversions will prove very valuable in his later retirement years when he runs into RMDs in his 70s.

[@yourfinancialekg]

@@ariefraiser140 Great idea!! So many options.

[@jdollar5852]

Question. How can a 49 year old live on $3600 a month in retirement? Most retired 49 year olds want to travel way more than $5k per year. With a salary of $72k he has poured a lot of money into retirement accounts. I guess he is accustomed to living on a small amount of money but that seems awfully low.

[@yourfinancialekg]

Awesome question! Yes, 3600 is a lower amount but where he lives is a lower cost of living state & he wants to retire now so he is making the needed sacrifices until over 59.5. Thanks for the comment!

[@rayanderson3164]

Having been there in what I've heard called "forced scarcity living" you do find you don't need what you earn. You need what you spend. I expect expenses will be sharply less than my take home as I am no longer investing a huge chunk of it every payday. Making well over 100K doesn't mean I need to have that level forever. We actually live on just over 1/3 of what we gross. We invest 1/3 and the rest goes to the feds. -Just my 2 cents.

[@yourfinancialekg]

@@rayanderson3164 great comment and insight!

[@ariefraiser140]

I'm living on about $4200/month after tax in the hcol DC metro area. That amount includes $1200/month child support so really I'm living on about $3000/month. My mortgage is about $1300/ month. I take 2 international trips per year mostly paid for by credit card points. It's not that hard actually. Now as far as this gentleman since he's so young he could withdraw 3.5% annually from his $1.8 million portfolio for an annual "salary" of $63,000. He is paying Social security or medicare and if he's in a a state like Florida/Texas likely isn't paying state taxes so federal taxes will leave hime with about $55,000 or $4583/month. He has a $1000/month wiggle room on an historically very safe withdrawal rate of 3.5%. he actually could withdraw 4% for $72,000 per year and lower his withdrawal when social security kicks in 13 - 21 years later whenever he decides to take it.

[@yourfinancialekg]

@@ariefraiser140 Arie, are you trying to take my job? 😂

[@phillipbryant9928]

Why are you only assuming a real rate of return of 1% on the $300K when the market has returned on average over 8% after inflation? I appreciate the conservatism but this is way below historical returns. Love your videos!

[@yourfinancialekg]

Great comment. The 6% rate of return is with inflation so 2% behind the overall market. Thanks for the comment!

[@leem6011]

Would you not want perform Ira->roth conversion during the low tax years vrs waiting? Understanding this would result in him needing more $ for the taxes but would reduce his overall tax burden in the future.

[@yourfinancialekg]

Depends on the current tax code and the end goal, but YES you are correct

[@rayanderson3164]

Great video. Foolish question as I have thought about doing this. Keep the 401K. After 6 years of carefree retirement find ANY part time job that has a 401K plan at about age 54. Transfer your old 401K to the NEW employer and then walk away in the year you turn 55. No 10% penalty, right? Wouldn't this work to bypass the penalty entirely? I mean one could literally get a job as a greeter at any big box store and still have access to their 401K. -Just my wandering thoughts. Thanks Drew.

[@yourfinancialekg]

Hey Ray! This thinking could certainly work. Just have to find a 401k that allows for the rule of 55 and meet the vesting period. Good idea!

[@rayanderson3164]

@@yourfinancialekg Does "vesting" apply to transferred monies? I thought that was only for new money as it relates to the new employer and any matching money?

[@yourfinancialekg]

@@rayanderson3164 Honestly not sure but that is a great question!

[@johnb1571]

@@rayanderson3164 you are correct your rollover is "vested" and not new employer money. I am doing the same thing, reverse rollover from IRA to current 401k and then pop smoke. plan retire in 7 months 🤞 or sooner

[@rayanderson3164]

@@johnb1571 Thanks I thought so.

[@mucusofwanderhome6945]

I always think of how flawlessly perfectly invested ones 401k account would have to have been invested to be at 1.8million at age 49. Hmmm

[@yourfinancialekg]

Or they have just contributed the max for many years and the market has been ridiculous the last 15 years