[USER]

My husband and I are both 32 and we have $600,000 in investments. Mostly in the S&P 500 and total stock market index fund.

We’d like to stop aggressively investing and just invest $1,000 a month.

We are hoping to retire with $2.5M and live off the 4% rule.

Is it realistic that we can meet our goal in 18 years and retire at 50?

[Danny]

At a 7% rate you’ll have about 2.5 million. The real question is can you live off $100,000 per year in 18 years?

[Cody]

Retiring with $2.5 million at age 50 assumes a 6.9%~ annualized return (compounded monthly) in that scenario.

Yes, you’re generally on track.
1. Are you considering Social Security as part of this analysis?

2. Is $100,000/yr. how much you need in today’s dollars or future dollars?

[Elizabeth]

How much per month are you investing now? Is there a middle ground between having fun now and still saving more than 1000 per month?

[Frank]

Probably, although I would save a little more — at least maxing out both your IRAs every year.

BTW, nobody “lives off the 4% rule”, because nobody actually withdraws in a completely inflexible way like that.

It’s just a conservative target at which point you should be over-saved.

[Rick]

I would make sure to map out as a parallel path keeping at your current pace.

I expect the financial math will show not only that you will leave work to enjoy life much sooner (a mostly duh statement) but that you will also have more money to spend.

Retired you with more money will be very happy compared to working for many more years you to have less money.

That is the downside I feel you must compare when considering coastfi.

It is not simply dialing back on investing but also often having less to far less annual spend all for that pleasure of working longer.

[Brian]

In addition to what everyone else has said, be mindful that in 18 years, inflation between now and then will mean that $2.5 million will likely be far short of what you need to retire.

$1 million in 2007 had the same spending power as $1.58 million today.

If you use that same rate of inflation moving forward, you would need almost $4 million to have the same spending power in 18 years that $2.5 million does today.

[Tristan]

Depends somewhat on your inflationary factor. Will 100k be realistic for you in 18 years?

If you assume an average 7% return you can get to 2.5 yes, but I’d be more concerned about living off 100k in 18 years

[Bill]

You can use any online compound interest calculator to run your numbers. But yeah, that would be the ballpark.

The real question is on the spending side. If your plan is to just work a bit less and keep your spending flat and that flat number equates to 100k, that is reasonable.

If you plan to increase your spending vs saving and then reign it back in 18 years from now, that generally doesn’t work out for people.

[Chris]

The rule of 72 would say, yes! If you assume a 8% return, the money doubles every 9 years (72/8=9).

So, you would have around 2.4 million in 18 years (600000×2 = 1.2 million, 1.2 million × 2 = 2.4 million)

[Ben]

You are on the right track, but no one can answer this question. History could repeat itself (ie. be somewhat predictable) or we may end up in unprecedented times.

I think AI and the current geopolitical landscape will present some unique challenges over the next decade.

I would say work that plan, navigate through any challenges over the next 18 years, and see if you can actually retire.

If you end up on plan at 50, assess the situation and see if it makes sense to retire.

If not, you can work a few more years and retire in a better position.

My guess is it will be more difficult to retire early in the future than it has been over the past 2 decades.

Living off of 100k in 18 years would probably look like living on 45k today. Could you do that?

[Author]

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