Is it possible to live on $25k pre-tax/year when retired?
We would be 100% debt free by then. Our debt is a line of credit that we are whittling down. DD's education fund will be about $40k by the time I retire. My plan is to retire in 10 years at age 55.
I've recently started putting aside 50% of my aftertax income. I'm risk averse so the majority of it is in money market rather than mutual funds.
I don't have to worry too much about health care since I'm in Canada.
I hope I'm not being unrealistic.
Amount for retirement
December 22nd, 2009 at 09:59 am
December 22nd, 2009 at 03:16 pm 1261494971
It seems like with rent that would be a stretch, but if you had virtually no housing expenses it could be done pretty easily...
December 22nd, 2009 at 04:10 pm 1261498203
December 22nd, 2009 at 06:50 pm 1261507802
You also need to consider inflation. A 45-year-old putting all money into a money market has no chance at all of outpacing inflation, meaning your annual income in retirement would decrease a bit each year. If you really want to make early retirement a possibility, you need to invest for growth, not safety.
December 23rd, 2009 at 12:08 am 1261526890
Be sure to address inflation. Investing in a MMF, while safe, won't keep pace with inflation, so at least diversify your investments. Also, in retirement you may actually have MORE expenses (than your pre-retirement ones), especially if you plan to travel or take up hobbies.
December 23rd, 2009 at 09:32 am 1261560751
Excluding the payment to the line of credit and to savings, we are currently living on about $25k per year. Canada has the Canada Pension Plan plus Old Age Security. But they won't be very much.
I would also have a pretty big amount in emergency savings in 10 years. My husband also has retirement savings that we will try not to touch until age 65. He is just a year older than me. His work is seasonal right now. He is pretty good at fixing up cars so I'm not worried about having to waste money on vehicles.
I expect to be some type of part time work after retirement. The house is paid up so there won't be any rent.
I'm sure of the math, so I will have $25k from retirement savings and company pension coming in. I would have to supplement it with other income after retiring to cover inflation.
December 24th, 2009 at 02:18 pm 1261664287
Jerry