I am a 60-year-old male and I want to retire when I turn 63 and move to Colombia. My house will be paid off in one year and I plan on transferring the deed to my son. When I retire, I will have a $400-per-month pension, an estimated Social Security benefit of $2,700 per month, and as of now, my 401(k) balance is a little over $1 million. I am averaging a 7% return on my 401(k), but next year, I have plans on moving all of that money into more conservative choices, so my return will no longer be 7%. I also have $50,000 in a high yield savings account and $25,000 in gold bullion.
**How much do you think I could safely withdraw per month for a good retirement with occasional travel. No one in my family generally lives past 70. I still work full time and I am in good health. C…
I am a 60-year-old male and I want to retire when I turn 63 and move to Colombia. My house will be paid off in one year and I plan on transferring the deed to my son. When I retire, I will have a $400-per-month pension, an estimated Social Security benefit of $2,700 per month, and as of now, my 401(k) balance is a little over $1 million. I am averaging a 7% return on my 401(k), but next year, I have plans on moving all of that money into more conservative choices, so my return will no longer be 7%. I also have $50,000 in a high yield savings account and $25,000 in gold bullion.
How much do you think I could safely withdraw per month for a good retirement with occasional travel. No one in my family generally lives past 70. I still work full time and I am in good health. Could you also factor in a 25% drop in my monthly Social Security? I cannot believe Congress would let the trust funds go insolvent, but I want to be prepared. – Charlie D
Many people with similar income sources might be well positioned for retirement, but as with most financial decisions, the right answer depends on your individual circumstances. We can get a good idea of the income you can expect from your assets, but you’ll need to compare that estimate against your expected spending to know if you’re on track.
Do you have a financial question you want answered? Email AskAnAdvisor@smartasset.com or connect with a financial advisor for free using our matching tool.
Let’s separate your guaranteed income sources from what you might expect from your portfolio withdrawals.
You mentioned two guaranteed income sources: a $400 monthly pension and Social Security benefits of $2,7000 per month (I’m not sure what age you plan to claim, but I’ll assume that this is what your benefit will be at age 63). This provides you with a $3,100 floor, or about $2,425 if you include the 25% reduction.
Now, let’s look at withdrawals from your 401(k). There are many approaches you can take and I encourage you to explore them so you can choose a method that fits you best. The 4% rule1 is a good starting point to get a ballpark idea of what you might be able to withdraw.
This rule of thumb suggests you can withdraw about 4% of your portfolio in the first year of retirement with subsequent withdrawals adjusted for inflation each year. Doing so, the rule suggests, gives you a high probability of your portfolio lasting at least 30 years. That would mean withdrawing about $40,000 in your first year of retirement, or roughly $3,300 per month.