[USER]

Hello, I am 38 years old, married, and have no plans to have children. Currently, we earn around $250K/year pretax combined and have about $600K in retirement accounts with another $300K in index funds and no debt.

We have a pretty low cost of living in S. Korea and spend less than $50K (high estimate and probably closer to $45K) on all expenses. We want to retire by 45 in South Korea – What would you do if in this situation to comfortably get there?

TIA!

[Mike]

I would keep maxing out 401k’s, Roths, HSA’s, etc but since you can’t touch retirement accounts until 60, keep maxing brokerage investing as best as you can for the 15 years in between as well.

I’d want at least $1.5M in brokerage before I retire, with the retirement money being gravy for when I hit 60.

Don’t miss: What are your thoughts on using a 401k of $350,000 to purchase a property?

[Sean]

Literally I’d do nothing. Keep your 900k invested in low cost index funds. In 7 years on average it will double, nominally NOT inflation adjusted.

But that will still be enough for 50k per year in today’s dollars.

[KC Kline]

If you can live on $50k, your inflation adjusted amount 7 years from now at 45 will be (assume historical 3% inflation) $61,500. If you apply the 4% rule for sustainable withdrawal rate that means you need $61,500x 25= $1.54M.

Bill Bengen has released some great studies on these withdrawal rates. I want to say it’s recommended that early retirees go to a 3.5% withdrawal rate. If that’s the case you may need closer to $1.8M. Two other potential hurdles I see are that 2/3 of your investments are in retirement accounts.

What’s the plan if the taxable account depleats before you can access retirement funds without paying the penalty? Also, if your taxable account is all index funds, what are you planning to do to combat sequence of returns risk in the event of a market crash at 45 when you retire so you are not selling assets at depressed values? May want to look into constructing a “bond tent” in the next year or two to prepare.

I’m guessing after paying income tax and using retirement deferrals you’re socking away close to $125k/year. That times 7 to age 45 gets you close to the $1.8M. You will need more money in your taxable accounts though to sustain.

[Author]

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