[Biscman]

OK, I am 54 years old and I had to change jobs because old company went out of business. I can draw early retirement at age 55 for around 46,000 a year. I have roughly 1.1 million dollars saved and managed by Fidelity in 401k. I make 230,000 a year working in Manhattan. I contribute 15,000 to 401k (max I can contribute).
I can probably invest another 26,000 a year in another Fidelity account.

Modules say I need close to 3mill saved to retire. I can live comfortably on 6000.00 a month as I will be moving bact to North Carolina when I sell my house in Tinton Falls NJ for roughly 600,000.

Am I on track to retire at 62 or will I have to work to 65. I will have to get my own health insurance as current company has no retirement plans.

Help!! The commute and 14 hr days are killing me up here!!

[ebaines]

It sounds like you're pretty much set - you say you need $6K to live on in NC, but you don't mention whether that includes taxes. Do you already own a home in NC, or will you be purchasing one using the proceeds from the NJ sale? Does the $6K/month that you figured include cost of ownership in NC (real estate taxes)? Does this also realistically include costs of things like travel, hobbies, etc? Many people who retire at a relatively young age find that their expenses actually go up, as they spend time and money traveling, playing golf, etc. On the other and, once you retire you will not be paying SS tax or doing any more investing in a 401(K) or IRA. The fact that the planning module you're referring to suggests you need $3M in savings says that it thinks you need about $120K/year in living expenses above and beyond any pension or social security, so first thing is to resolve this discrepancy.

Since you can start pulling your $46K pension at age 55, and if you are "separated from service" at age 55 or later you can start withdrawing from the 401(k) without penalty. A general rule of thumb is you can plan on pulling about 4%/year from your 401(k), and the balance should continue to grow over time at a rate that would match inflation, so that this account will last for many years. So $46K for the pension plus $44K from the 401(k) gives you about $90K/year in income. Keep in mind that both your pension and 401(k) withdrawals are fully taxable. Once you reach full retirement age you can then plan on your social security - you should have received a report from the SS administraytion with estimates of your monthly payment.

[Biscman]

Yes, I will purchase a house for around 450k with proceeds from NJ house so I won't have a mortgage. Roughly 3500 in taxes or less a year. We are not travelers except for couple of weeks down South Carolina coast. College costs will be behind us as well. 1000 a year for Life Insurance and roughly 6000 a year in Health insurance.

[ebaines]

Again I would ask - why did the planning tool that you used suggest you need $3M in savings? Did it estimate you annual income needs as $120K, or higher, in addition to the $46K you'll be getting from your pension? That doesn't square at all with your thinking that you need only $80K or so per year to live on.

It will be impossible to provide any real detailed analysis here - you might want to consider a consultation with a certified financial planner to review your situation and run through scenarios of when to plan on starting social security. One other thing to consider is inflation - the 4% withdrawal rate that I suggested from the 401(k) should allow you to increase withdrawals over time to keep pace with inflation, but if the pension does not increase then that $46K per year will not go as far as you think. If you need $80K per year to live on if you were to retire now, then in 20 years you will need more like $160K/year, and that's assuming you have no substantial out of pocket medical costs. Again, these are scenarios a CFP can help you with.