I’m planning to retire next year and spend $250k per year – is my retirement nest egg and pension big enough to support my lifestyle?

A Reddit user is considering retiring soon, but he wants to make sure he’s in a good position to continue to spend the way he prefers once he stops working. He’s indicated that he has a pension that will provide $120,000 per year in income as well as investments of around $5 million and his hope is that he is going to be able to spend around $250,000 per year as a retiree total between his pension and investment income. 

So, is the Reddit user ready to stop working and start enjoying life as a retiree, or does he need to keep working for longer in order to be able to have the retirement he dreams of with the money he wants to spend?

A pension makes retiring with big spending needs easier

The Reddit user in this particular case is in a better position than many people because he has a pension that is going to provide guaranteed lifetime income. Pensions are very rare among private sector employees these days, but when they are available, they are very valuable because you don’t need to worry about being careful to prevent the money from running out. You can count on this income coming in and providing a steady stream of funds to rely on for the rest of your life.

Of course, the Redditor’s pension is not quite enough here to meet his entire spending needs. Since he hopes to spend $250K and his pension will only provide $120K, he is still going to need his investments to produce another $130k in annual income. Still, the fact that his pension covers almost half of the money he feels he needs to be comfortable and the fact that this money will always reliably be his, is a huge advantage. 

The big question, then, is whether his investments are going to be able to produce the remaining $130,000 that he needs for his desired lifestyle. Since he has $5 million invested, at a 3.7% withdrawal rate, which experts now believe is a safe withdrawal rate, he should be in a fine position. The $5 million nest egg he has saved should provide around $185k per year, when he needs another $130,000 so he should have a pretty good buffer in case he decides to spend more than planned — or faces unexpectedly high costs for things like healthcare until he reaches retirement age. 

Talking to a financial advisor is always a good idea before retiring

While the Reddit user appears to be in pretty good shape financially and he should be easily able to retire between the income from his pension and investments, it is still a good idea to confirm this with a visit to a financial advisor.

A financial advisor can offer valuable advice and insight into unforeseen spending issues in retirement and can also work with the poster to make sure his $5 million is invested appropriately and that he chooses a safe withdrawal rate that makes his money last.  

When you’re making a decision as important as leaving work for good and you are hoping your money will see you through as long as you need it, getting this professional insight can ensure you’re in the right place and are as prepared as possible for a financially secure future. 

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