Retiring young. How much money do you need to live good and enjoy life without financial worry?

I am 56 with one child left in college. I am in good health and have quite a few interests. I would like to semi retire now with the idea of being completely out of the work force in 2 years. I like boating, cycle riding, would like to travel a lot more (my family is all over the place from Portland to Minnesota). My wife will retire as well, so we will lose both incomes, but we have no debt so I think we will be fine. I just want to be sure we have thought of everything.

Public Comments

1. You should realisticly contact a good financial investment firm, but I can give you a good base line. If you are age 56 and would like to retire at age 58 then you will not get social security until age 65. So you need to figure your yearly living expenses, and then take that figure time 22(the average life span) then take that number time .095% this is the ajusted cost of living expected over you retirement before social security. Then Multiply that total by .20% and this would be you total approx. base needed to retire at your age. without working any longer. You should also consider that you need to either have 10 times your yearly wages put away or a life insurance policy that size in the event that you or your wife should pass.
2. It sounds to me like you would do just fine to retire now. If your house, vehicles, and everything else are fully paid off, then really, what are your expenses? Food, hydro, insurance, the basics, really. A good way to determine if you can afford to retire is to do some quick calculations. What are your monthly expenses? How much do you spend in a year for these? How much money do you have left over to travel, go boating, etc.?
3. You can't touch any of your 401k until you are 59 1/2. Social Security won't roll in for several years after that. So you will need to have a decent amount of cash to live on, and it needs to be invested in a way to grow and stay above the inflation rate. I retired at 52 (wish I hadn't) and put my money into a guarantee annuity. I found a sweet retirement job in the meantime. You need to follow the previous advice and find a financial person who can give you advice on how to invest your cash.
4. Just do the math: Once you have retired, your money should primarily be in safe, stable instruments like bonds. Long-term, you can reasonably expect to earn 3.5-4.5% annually from such investments, on average. So "enough" money is the sum that at a 4.0% return generates enough to meet ALL your expenses (incuding the cost of long-term healthcare). Say you figured $60,000 a year would do this, you'll need to have a nest-egg of ($60,000/4) x 100, which is $1.5M... If you draw $60K a year from $1.5M earning 4%, you will never run out of money... But 56 is not that old. You could live another 40 years, and 40 years from now $60K won't be diddly-squat!
5. In addition to all the advise you've gotten here, what are you going to do about health care? Private insurance is very expensive.