[46M] How does an exit/ early retirement look like?
Hi all
I posted this in personal finance, and people recommended I also post this here.
I'm 46M, married to a 45F homemaker, with two kids 4 and 8. I work in big tech, making 320K-380K / year and getting burnt out and staring down at the possibility of getting replaced by AI, or laid off due to being "old" or whatever. I've been fairly diligent in saving, preparing for a worst case scenario. We live in MCOL city in the US.
Our yearly expenses are roughly 100K, and based on that I created a goal of 2.5 M on the low end (4% withdraw rate) and a high end goal of 2.8M (3.5% withdraw rate).
For HC I've budgeted $30K per year based on some rule of thumbs I've read, but haven't dug deep into the details.
For college my kids will get the money from their 529s and we'll help them use that money as best as possible, but they won't get a blank check from us.
I have recently reached my low end goal, and while I'm not necessarily quitting today, I would like to have a plan for when I do switch from "saving" to "withdrawing" in my late 40s early 50s.
My goal would be to keep income in the first capital gains tax bracket (less than $96,700 for a couple, adjusted by inflation), so that I can avoid paying capital gains tax.
How does it work when I switch from saving to withdrawing?
How often should I withdraw? (Monthly? Quarterly?)
What's strategy should I use to choose where to withdraw from?
Breakdown of our situation:
Short term / Emergency
HYSA 31K
IBonds 43K
Brokerage (AOM super conservative ETF) 32K
Short term / Emergency Total 106K
Investments
Investments (Taxable) 911K
HSA (invested in ETFs) 122K
REIT 106K
Roth IRAs 176K
IRAs (pre-tax) 299K
Employee RSUs (vested) 111K
401K (pre-tax) 461K
401K (Roth) 344K
Investments Total 2530K
Home 500K
Mortgage 250K @ 2.875%
Other Assets that I exclude from my net worth
Kids 529 200K (127K for the 8yo and 73K for the 4yo)
No debts beyond mortgage