So you’ve made up your mind to take an early retirement. Good for you! Early retirement, before 62, means that you will not have any social security coming every month that you can count on. In a future article I’ll tell you how to get money out of your 401k or IRA before 59½, but let’s assume that you only have so much cash right now.
A frequent question I get is where do you put money so you can live off of it, now that banks are paying 1 – 3% interest? To keep the numbers easy, let’s say you have $100,000. If you have $250,000 then multiply this example by 2.5. If you only have $50,000 then multiply this example by .5.
$100,000 at 1% is only $1,000 per year. This is not enough to live on. Even if you get 3% it will only be $3000 a year or $250 a month. I don’t know about you but $250 will not go very far at my house every month. Never mind gas for the car, utilities, etc. So I need more. $3,000 just is not going to be enough to live on. You either need a higher percentage of earnings or a larger nest egg or both. This is where proper planning comes into the financial planning picture. Continue reading Starting With Only $100,000