Early retirement experiences?

SKJSS (formerly Klayfish) said:

In reply to OHSCrifle :

How do you determine that number?

Oversimplified answer:

Create a detailed budget, approximating your monthly spending in retirement

Multiply that x12 to get yearly spending (again, in retirement)

Multiply that x25.  1/25 = 4%  so multiplying by 25 gives you your nest egg needed to sustain 4% withdrawal rate

Now that you have a target "nest egg" number, you can use one of the many calculators online to determine if your current investments are likely to get you there. Essentially you're answering the following: With X years to retirement, assuming average market returns, will my current investment of Y get to my nest egg number if I contribute $0 going forward?

calteg said:

SKJSS (formerly Klayfish) said:

In reply to OHSCrifle :

How do you determine that number?

Oversimplified answer:

Create a detailed budget, approximating your monthly spending in retirement

Multiply that x12 to get yearly spending (again, in retirement)

Multiply that x25.  1/25 = 4%  so multiplying by 25 gives you your nest egg needed to sustain 4% withdrawal rate

Now that you have a target "nest egg" number, you can use one of the many calculators online to determine if your current investments are likely to get you there. Essentially you're answering the following: With X years to retirement, assuming average market returns, will my current investment of Y get to my nest egg number if I contribute $0 going forward?

The famous 4.0% Rule referenced above assumes that you begin retirement at age 65.  For an earlier retirement, you'll need to reduce the draw rate slightly.

Here's one 4.0% Rule chart for various timelines, draw rates, & allocation mixes:

If your objective is simply to avoid running out of money before you die, a start is to visit the Social Security Administration's Actuarial Table.

What isn't available is the standard deviation on life expectancy...for a 60 year old male, it's 9.1 years...I know that because I'm a 60 year old male statistician.  

If you take the life expectancy for your age and gender from the table and add 9.1 years, there's ~83.5% chance you won't live longer than that and if you add 18.2 years, there's ~97.5 chance you won't live longer than that.

Of course, the standard deviation varies as a function of age and gender and we're not considering the shape of the distribution.  But, if you start with this estimate and push the number up or down in consideration of family longevity, life style, and current health, you'll get the numbers almost as tight as they can get.   

I'm 52, turning 53 in the spring.  I no longer contribute to my retirement funds since I "retired" but I still earn enough money from my various fun jobs to pay the bills and not touch my nest egg.  I guess this is where I still get a bit confused.  My goal is to not run out of money before I die, skewed towards having more fun now and a financially comfortable and peaceful low spending life when/if I get to 70+. 

I've talked to several financial planners, including the one who actually runs my finances.  They all say I'm in a wonderful place.  Is there a good calculator I can play with to plug in all the variables...my current age, income, nest egg size, etc...and then play around with various withdrawal amounts year over year?  I guess another big challenge is calculating any penalties or fees for withdrawal before age 65.  Right now I'm not touching it, except for money I withdrew to purchase a primary residence, so it's not a factor.  However....

In reply to SKJSS (formerly Klayfish) :

Don't look now Steve - you're coasting. The new job covers present expenses and your nest egg keeps growing. 

SKJSS (formerly Klayfish) said:

I'm 52, turning 53 in the spring.  I no longer contribute to my retirement funds since I "retired" but I still earn enough money from my various fun jobs to pay the bills and not touch my nest egg.  I guess this is where I still get a bit confused.  My goal is to not run out of money before I die, skewed towards having more fun now and a financially comfortable and peaceful low spending life when/if I get to 70+. 

I've talked to several financial planners, including the one who actually runs my finances.  They all say I'm in a wonderful place.  Is there a good calculator I can play with to plug in all the variables...my current age, income, nest egg size, etc...and then play around with various withdrawal amounts year over year?  I guess another big challenge is calculating any penalties or fees for withdrawal before age 65.  Right now I'm not touching it, except for money I withdrew to purchase a primary residence, so it's not a factor.  However....

Wearymicrobe posted a calculator on the prior page that does exactly this:

FI Calc

In reply to calteg :

That sounds great!  If you can comfortably get out by 50, do it - you'll find plenty to do.

So FireCalc is a tool and like all tools their are limitations. The 4% rule is the same. It should keep you from burning through your capital until you die. Two things. Most people make significantly more on the market then that even with a very safe distribution. Two people spend a lot less then they retire as they age. Also you can spend down your capital if you need to as you get older if required in an emergency. 
 

FYI I have no intention of leaving anything to anyone beyond money for school for my nieces and nephews and some to charity if I don't burn though it. So the 4% rule does not exactly apply to me. I like the die with nothing calculators. But I also have a history of living past 100 for a large portion of my family and well I have seen 

There's also firecalc.com for projecting and looking at possible outcomes. I like that it allows you to have different retirement income "events" at different times (like pension and social security starting in different years or you & your SO starting social security at different times). Built in assumptions, but at least there is some explanation of them and you can easily look at different options for investment strategy, spending/withdrawl philosophy, etc.

Edit to add, make sure to look at each tab to see how much you can customize.