Personal Finance

Can I really retire? Seems too good to be true to pull the plug at 55 and live my dream life

Marc Guberti

Published: January 13, 2025 9:50 am

Retiring is a big step in anyone’s financial journey, but not everyone feels ready. Even people with 7-figure portfolios don’t feel ready, but some people overestimate how much cash they need to retire.

A Redditor finds himself in a good financial position but is wondering if it’s too early to retire. A 54-year-old husband in Michigan recently posted in the Personal Finance subreddit. He’s married and has two children. The son is two years through college while the daughter has graduated. The couple is debt-free and has $3 million in combined savings.

Is the couple ready to retire? I’ll share my thoughts, but it’s good to speak with a financial advisor if you can.

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Retirement Portfolio and Pension Income

If the couple uses the 4% withdrawal rule for their $3 million portfolio, they can take out $120,000 per year in pre-tax funds. That’s $10,000 per month, which is a little short of the couple’s $12,000 monthly budget. The couple also wants to give their children a good inheritance.

The portfolio isn’t quite enough to retire, but they will also receive $85,000 each year in teacher’s pensions. Those pensions are significant and make it much more doable for the couple to retire. The husband expects to retire at 55, while his wife will likely work for an additional 1-2 years. 

The husband is eager to get out of the office and enjoy his healthiest remaining years. The couple has put themselves in a good position to retire early.

The Couple Has Some Noteworthy Expenses Coming Up

One obstacle the couple may face on the path to an early retirement is that they have several big purchases on the horizon:

• New house (upgrading from a $400k house to a $700k house)
• Two new cars within the next five years
• Two weddings for their children within a few years
• More frequent vacations

All of those purchases are going to trim the nest egg. However, the husband mentioned in a comment that $12,000/mo represents the highest possible amount they will spend. They will likely spend a lot less each month since they live in an area that has a lower cost of living than average.

Even if all of these purchases brought the couple down to $2.5 million, they still have enough funds between their pensions and savings. Plus, they’ll eventually be eligible for Social Security payouts.

The Family Is Frugal

The couple is unlikely to spend more than $12,000 per month or get anywhere close to that number. The husband’s wife came from a family of savers, which means they are more likely to be financially disciplined. 

It’s also worth repeating that the couple is debt-free. Few people in their 50s can say that they have paid off their mortgages, auto loans, and other financial obligations.

One person commented on the husband’s post explaining how someone they knew had worked at the same company for 35 years, had big retirement plans, got cancer two months after retiring, and then passed away after six months.

The pensions may be enough for the family to cover their living expenses, with their retirement plans as viable options for bigger purchases. However, life is short, and if the couple has big plans for retirement, they may want to get started on some of those plans soon.