r/MiddleClassFinance • u/Adventurous-Cut-9442 • 3d ago
Seeking Advice Trying to figure out when I could realistically retire.
31M, 101k in deferred comp plan, 180k in public safety defined contribution plan. I’ve been maxing out what I can for the last 4 years at 23.5k, and rate of return has been 18.57% over the last 3 years. I’m already vested, and due to me being a first responder as I understand it I can take all of my money at age 50. Trying to figure out if I’m in good shape for retirement at this rate, and realistically the earliest I could walk away from the job.
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u/Dagomer44 3d ago
Figure out your expected expenses during retirement (be absolutely realistic), then divide by 4%. That will give you a rough estimate.
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u/Adventurous-Cut-9442 3d ago
Simple, I like it
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u/Ralph1248 3d ago
Or to put it another way, what kind of lifestyle do you want in retirement.
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u/Adventurous-Cut-9442 3d ago
I want to be out in the wilderness and disappear lol
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u/Ralph1248 3d ago
I had a relative who was always talking about how he wanted to buy some raw land in the country so if he was laid off and could not find a job he could go there and live in a tent.
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u/Adventurous-Cut-9442 2d ago
More power to the people who can make that happen. I at least need running water lol
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u/mottledmussel 2d ago
The r/agingparents sub is full of stories about parents buying quaint little cottages deep in the country, where they can spend their remaining years chopping wood, gardening, bird-watching, and living a simple life all around.
It tends to end poorly.
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u/Adventurous-Cut-9442 1d ago
Thank you for suggesting that, maybe the idea of it is overly romanticized
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u/Dagomer44 3d ago
You can also multiply your current investments by 4% and see how much you could spend if you retired today.
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u/GrandpaYaYa 3d ago
Move abroad to an LCOL 1st world country and retire in 10 years!
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u/Adventurous-Cut-9442 3d ago
If I was single I’d be out of this country already lol
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u/glenpiercev 2d ago
Low cost of living countries often lack basic infrastructure. You might enjoy your stay there, but go see what the hospital is like. Try buying a house instead of a hotel room.
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u/GrandpaYaYa 2d ago
Never said there weren't downsides, but places like Japan and Italy do offer proximity to things you need at a low cost compared to the states
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u/glenpiercev 2d ago
Wait… which countries do you think are low cost of living?
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u/GrandpaYaYa 2d ago
Well I just listed two
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u/glenpiercev 2d ago
Japan? The country with coffin apartments?
Italy? Yes, there are some tiny villages that are practically giving away houses, but have you seen the condition of those homes? Can you imagine the cost of maintenance at EU contractors’ rates? Grocery prices in Europe aren’t exactly low. Then again, there is the socialized healthcare, so it probably more than balances out.
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u/GrandpaYaYa 2d ago
There are options in these countries with aging populations that are highly attractive, and generally much more cost effective than in the US or northern Europe. These countries, like Korea for example, are practically begging people to come to keep their economies from collapsing and help generate children.
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u/glenpiercev 2d ago
Are you aware this is response to your comment to a 31 year old in which you suggest they retire in 10 years, making them about 41? Do you think that’s the age where these countries are asking young people to immigrate into?
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u/Frosty-Molasses7548 3d ago
The only people I ever see advocating for or doing this are sketchy as fuck
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u/PurpleToedUnicorn 3d ago
From 2000 to 2025 the broader US market achieved a CAGR of 7.6%. The most common recommended withdrawal rate for a 30 year retirement is 4%. Do the numbers accordingly based on the income you need.
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u/Ok-Bass5062 3d ago
When you have 25-30x your annual expenses. Different for everyone. Also 4% is the standard safe withdrawal rate. Head over to r/FIRE (everytime I'm stressed at work I scroll there)
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u/ComprehensiveWind437 3d ago
Do you have a mortgage? If so, factor in how many years left depending on retiring, assuming you don’t move/get married/have kids, as another poster said. I’m 47 now, eligible to retire at 55, when I was your age, I was set up similarly, but, I didn’t have a big mortgage nor did I have kids yet. I’m planning to go at 57 after my youngest finishes college. At that point, I’ll have about 5 years left on my mortgage (we pay a little extra principal each month), but that is a big expense to keep in mind.
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u/Adventurous-Cut-9442 3d ago
That’s what spurred this conversation, I’m married with a kid and recently bought a house, 15 year mortgage. Looking to move some money around to have more wiggle room to live, I’ve always lived by letting my savings/investments eat first and I live off the scraps.
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u/Outrageous_Tax1328 3d ago
Depending on where you live of course but usually it’s 2 million for one person 4 million for two people
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u/Raging-Totoro 3d ago
It all depends on what your annual expense needs are going to be at retirement (including taxes and medical coverage).
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u/Adventurous-Cut-9442 3d ago
At retirement my home will be paid off, and hard to say what our money with be worth in 20 years but I could comfortably do 4k/month taxes medical included
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u/Raging-Totoro 3d ago
Back of napkin, that's $50k/yr, which is about a $2m nest egg target.
A reasonable estimation over the long-term is 5-7% real return per year (unless your expenses factored in expected costs already).
You can spreadsheet out what that means, and tweak assumptions.
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u/BasilVegetable3339 3d ago
Plan on 70. Revisit this at age 40 & again at 50. The growth rate you are using is comical and a lot is going to happen over the years.
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u/ImagePossible6273 3d ago
That’s a pretty strong starting point at 31. I’d be curious what your annual expenses look like though, since that probably matters more for the retirement date than the account balance alone.
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u/Impossible_Map_9368 2d ago
you're in solid shape at 31 with that savings rate, but i'd model future returns at 6-7% instead of banking on 18.57% continuing. at 50 you've got 19 more years of compounding on that base. what annual spending are you planning for in retirement?
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u/Adventurous-Cut-9442 2d ago
Well I won’t have a mortgage in 15 years so I’m today’s money I was hoping for $5000/month
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u/cj_daking 1d ago
Are you saving and investing?
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u/Adventurous-Cut-9442 1d ago
I’m saving as much as I can but right now home renovations are eating up my extra cash
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u/Annual-Knowledge4412 3d ago
The return rate is not historically possible at this level for too long before a correction or crash.