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I currently have $ 680,000 in $ 401 (K), $ 150,000 savings and a pension of $ 1600 a month. Can I retire at the age of 62?
“Hieu
This is a good question and the answer depends primarily on what your costs are and how much you will collect Social securityS What we can do here is to start the numbers of several different scenarios to give you an idea of how much income you can expect to have and the level of monthly expenses your income can support. (And if you have more retirement questions, consider Speaking with a financial advisor.)
First, let’s look at what your retirement income may be before you look at social security benefits.
Your pension It’s simple. This is $ 1600 a month is a steady income that provides a strong base to support your needs. On an annual basis, your retirement income will be $ 19,200 a year.
You also have $ 830,000 between your 401 (K) and your savings. Use the rule of 4%You should be able to withdraw around $ 33,200 from these sources during your first year of retirement before adjusting subsequent inflation withdrawals.
Between the pension and the withdrawals of the bills you start with $ 52,400 annual income. Depending on where you live, you will probably have about $ 48,000 a year to spend after tax removal.
This comes to about $ 4,000 a monthly expense that you are able to support before heading for social security. (And if you need assistance in building sources of retirement income or evaluating how much you will have, Consider matching a financial advisor.)
A person who is approaching his retirement calculates how much his social security benefits will be.
Of course, social security can add significant income to the equation. Use of Fast Social Security Administration CalculatorI have done several different scenarios to see how they will affect your situation.
First, I assumed that you turned 62 on October 1, 2024 and made $ 40,000 in your last year of work. In this scenario, this is your estimated annual social security income, depending on when you retire:
Age 62: $ 11 340 a year
Age 67: 17 064 dollars per year
Age 70: $ 21,816 a year
When added to your retirement income and savings, you look at a total annual income before taxes between $ 63,740 and $ 74,216.
I then conducted the same scenario, but I assumed that your employment income was $ 70,000. Using the same calculator, here’s your estimated social security benefit at any retirement age:
Age 62: $ 15,744 a year
Age 67: 24 036 dollars per year
Age 70: $ 30,972 a year
In this scenario, we are now looking at a total annual income before taxes, ranging from approximately $ 68,44 to $ 83,372.
To answer your question specifically, your total income under 62 years of taxes may fall between approximately $ 63,740 and $ 68,144 a year, depending on whether your employment income was closer to $ 40,000 or $ 70,000.
With taxes removed, you probably watch between $ 57,000 and $ 61,000 annual retirement income, which means you can support between $ 4,750 and $ 5,083 per month. (Think coincidence with a financial adviser If you need help planning social security.)
A 62-year-old woman smiles after officially submitting an application for social security benefits.
If these social security estimates are quite close to your actual benefits and if your monthly retirement costs will be $ 4750 or less, then you seem to be in a good position to retire at the age of 62.
If your costs are more than this, you may want to think about working a little longer. This would Increase your social security benefitIncrease your retirement savings and decrease the number of retirement years you need to support. Or you could find ways to reduce your monthly expenses until your current assets, pension income and social security benefits will cover them.
Of course, I have made some assumptions here and it is also worth noting that the 4% rule is just a good rule. Your real situation may be different from what I have exposed.
However, my hope is that to see how I have managed the numbers will help you understand how to make this type of analysis so you can make the best decision for yourself. (And if you need further assistance with your retirement plan, This tool can help you compare yourself with potential advisers.)
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Consider a few advisers before you settle for one. It is important to make sure that you will find someone you trust to manage your money. As long as you consider your options, these are Questions you need to ask an advisor To make sure you make the right choice.
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Matt Becker, CFP®, is a Smartasset financial planning colonist and answers readers’ questions on personal finance and tax topics. You have a question you want to answer? Send email askanadvisor@smartasset.com and your question can be answered in a future column.
Please note that Matt is not a participant in the Smartasset Amp platform, nor is he an employee of Smartasset and he is compensated for this article.
