"If you have managed to save $1.5 million by 55, you're ahead of most Americans, but that doesn't automatically mean you're ready to walk away from work. Whether $1.5 million is enough depends on factors that have nothing to do with your account balance, but more about where you live, how much you will spend, when you can claim Social Security, and what the market does over the next few decades."
"The traditional starting point for retirement planning is the 4% rule, which suggests you can withdraw 4% of your portfolio in the first year and adjust it for inflation annually without running out of money over a 30-year retirement period. At this rate, a $1.5 million nest egg would generate approximately $60,000 per year, or 3% would yield only $45,000 annually."
"On paper, $60,000 a year might sound reasonable, but it comes with the assumption that your spending will stay constant, especially around healthcare costs, emergencies, travel, etc. The 4% rule was designed for traditional retirement starting at 65, not earlier and certainly not between 50-55. When you're adding an extra decade to your timeline, the risk of depleting your portfolio before you die increases significantly, particularly if you hit poor market returns in early retirement."
Having $1.5 million at 55 would produce roughly $60,000 a year under the 4% rule, or about $45,000 at a 3% withdrawal rate. The 4% rule assumes a 30-year retirement beginning at 65 and may not be safe for retirements starting at 50–55 because an extra decade increases the chance of depleting assets. Sequence-of-returns risk and poor market returns early in retirement can rapidly erode the portfolio. Spending levels, cost-of-living location, healthcare expenses, and Social Security claiming age are decisive variables in determining whether $1.5 million is sufficient.
Read at 24/7 Wall St.
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