Will I have enough money to retire at 55?

Question

I'm 27 yrs old I make about $24 an hr. and I want to retire at 55. I have a pension plan through work Ihear afetr 30 yrs. ( in todays money) I can expect $ 3-4000 a month. I invest 7% pre taxed into a 401k and 1 % into an Ira. I currently have $7000 in 401 k and $1000 in Ira. Does any one think this is possible.

Answer 1

While it's good that you are putting this money into retirement, you won't be able to access the funds in these accounts till age 59-1/2 without paying a 10% early withdrawal penalty.

So you're going to need some other funds to live off between 55 and 59-1/2.

Answer 2

Let's break it down. You haven't provided a ton of information here, so I'm going to use some assumptions.

1. I'm going to assume that your employer is matching your 401k 1 to 1 for the first 5% of your contributions.

2. I'm assuming at your age, you are a bit more aggressive and your 401k is at the national average of 11%

3. Your IRA is growing at 9%

4. I'm going to assume that you'll be smart enough to quit contributing to your IRA and start contibuting to a stock fund such as the DJIA fund. It averages 11.71% growth since 1983. You won't pay as large of a tax penalty by drawing on it until you are of proper retirement age to take from your 401k.

Alright, you make about 50k a year right now. I'm going to assume you will be getting annual raises of 3% every year. I'm assuming that your pension will be an average of your 5 years previous to your retirement. 30 years from now, that will be about $122,000 a year. This is a good platform to start from. Theoretically, if you are really going to stay with your job, your pension alone should allow you to continue your current lifestyle and standard of living as it should keep up with inlfation. If you can continue to put away the 7% in a savings account, you can offset inflation as your pension will not increase.

Your 401k/IRA account with matching and 11% interest will be at about 1.4 million in 30 years. You could live off of the interest alone from these investments every year.

By having a pension AND a 401k, you'll actually be able to double your standard of living between now and then.

Answer 3

Yes, I think you probably will have enough money to retire at 55. The reason I say this is that you have the most important requirement: a goal! The fact that you are thinking about this now suggests that you won't be one of the majority who wake up to financial reality too late.
Some items you may want to consider are:

1. The fact that very few people get rich by savings alone. Once you accumulate a fair bit of cash, you need to make it "work" for you.
2. In additional to the traditional retirement pension type product, you should aim to build up your own portfolio of investments. Be very wary of committing to additional financial retirement policies and products. Rather invest an additional monies yourself.
3. Any windfall monies, inheritances, tax refund etc should be invested into your portfolio.
4. Invest some time and money learning about investing. It seems quite strange to me that although finance and money matters are so important to every one of us irrespective of what we do for a living, very few people outside the financial sector spend any time learning about making money.
5. Try and earn some extra money (over and above your work wages) to invest. Even little amounts add up if you constantly adding to your investment.
6. Make sure you don't forget to invest in your own home.
7. Tailor your investment strategy to fit your age, goals and risk profile. At your age you should be looking at capital growth rather than income return.

Answer 4

Yes, you can retire early if you want to as long as you keep saving. The one potential problem is that if we hit a long era of no growth in the stock market then your money may not grow enough. The real key is to make sure you save, but on the other side of the fence don't burden yourself with a lot of debt. The only debt you should have is house and MAYBE a car. Don't get into credit card, department store, furniture store kind of debt. Don't let your name get on other people buys such as co-signing for a cell phone or anything else.

Answer 5

The big thing you have to worry about is Healthcare insurance. It is SO expensive for the individual not covered by the workplace. The older you get the more expensive it gets to purchase, because the higher risk that you are likely to utilize it. My self-employed father paid up to $1200 per month for he and my mom, this included NO prescription coverage. The health Insurance Company jacked his premium up every year. As and individual he had no way to negotiate his price.

I think it is a great goal for you to plan on retiring early, a goal to have and to keep. I think it IS possible. I think, though, you could keep your options open...and learn as much as you can about what expenses that you might be responsible for. It looks like you are doing a GREAT job so far! KUDOS!

Answer 6

According to the national day rally speech, ppl are gonna retire at like 62, then 67, due to ppl dying older and more job talents being promoted. This is an ever-changing world, things might not be that constant.

Answer 7

Sounds to me like you are doing just the right thing. Will this be enough? Probably just continue to do you best. After all if you don't try it will be impossible

Answer 8

go to www.susieorman.com she specializes in this area and can help you figure out if you can retire at 55.

Answer 9

wow you can retire now and still earn enough for an excellent retired life. How did you do it?

Answer 10

With things are going and the rate of inflation are doing.. who the heck will???