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Figuring outwhen you can afford to retireoften comes down to determining whether your assets will produce enough annual income to support your lifestyle and spending needs.
With $500,000 in aRoth IRAand $2,000 in combined monthly Social Security and pension payments, you may be able to afford to retire at age 62.
However, that will mean living on approximately $44,000 per year.
Some retirees may be satisfied with this level of income, but it may not support you adequately if you plan to do a lot of traveling or live in a high-cost area.
Before making the decision to stop working at 62, you'll also need to develop a plan for paying for health insurance since you won't be eligible for Medicare until age 65.
If you need help deciding when to retire,connect with a financial advisorand have them build you an income plan based on your unique financial situation.
Deciding whether you canretire by a certain ageinvolves comparing your estimated sources of retirement income with your estimated expenses in retirement.
Here's a table showing what your hypothetical income sources would look like in your first year of retirement: Four percent is widely regarded as asafe withdrawal rate.
That means, according to long-term models using a conservatively invested portfolio, you can likely withdraw 4% of your Roth IRA balance in the first year of your retirement.
You could then adjust your subsequent withdrawals to account for inflation, and not run out of money for at least 30 years.
If you withdraw $20,000 the first year and inflation is running at 3% annually, you would withdraw $20,600 in the second year, $21,218 the following year and so on.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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