I’m 43 With $315k in an IRA and $90k in a Roth. Can I Retire at 57?

I am a divorced father and am 43 years old. I have $315,000 in a traditional Individual Retirement Account (IRA), $90,000 in a Roth IRA, $22,000 in a Health Savings Account (HSA), $8,000 in a 529 college savings account, $30,000 in a traditional 401k, $25,000 in E-bonds, $40,000 invested in exchange-traded funds (ETFs), and $20,000 Dollar in cash. I max out my 401(k) and my family’s HSA every year. At age 57, I want to stop most of my full-time job and start transferring money from my traditional IRA to my Roth IRA, up to the standard deduction every year. I would try to live on non-taxable income during that period until at least age 62. I would then maintain that by living off my Roth accounts until age 67, at which point I would take Social Security, which would be about $3,500 a month which is very close to my actual monthly expenses. Am I exaggerating this?

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First, I want to compliment you on the savings you’ve already accumulated and the amount of thought you’ve put into this plan. All this work has put you in a great position to be able to retire on your own terms.

So, are you on track to retire at age 57? And are you exaggerating that? Let’s take a look. (And if you are looking for help with your financial question, This tool can help match you with potential advisors.)

Back of the envelope mathematics

Ask an Advisor: I am a 43-year-old divorced father with $315,000 in an IRA, $90,000 in a Roth and other accounts. I max out my 401(k) every year. Can I retire at age 57?

You can take a quick look at your investment and savings situation Use the 4% rule And make some assumptions about your investment returns to see if you’re on the right track.

The 4% rule states that when you retire, you can withdraw 4% of your total retirement savings each year, adjusting for inflation, with minimal risk of running out of money. You may not want to bet your entire financial plan on this rule, but there is a lot of research behind it. Using the 4% rule is a good way to know if you’re on the right track.

If you start at age 43 with $522,000 Retirement savings (I’m excluding your cash and 529 savings account since those are for other purposes), and assuming an inflation-adjusted annual rate of return of 4% with $29,700 in annual contributions, you reach age 57 with $1,468,936 across your various investment accounts.

Applying the 4% rule to the balance of $1,468,936, you would be able to withdraw $58,757 per year, which seems like it should be enough to cover your expenses.

Of course, this is a simplified calculation that doesn’t take into account Social Security or taxes, so let’s dig a little deeper. (Are you looking for help with a financial question? This tool can help match you with potential advisors.)

Using SmartAsset Retirement Calculator

For a more robust look, I used SmartAsset Retirement Calculator And you have entered all the details you provided in your question. You have estimated your annual expenses at $60,000.

According to this calculator, you’ll need $1,342,034 to retire at age 57, and you’re on track to have $1,516,049. Once again, it sounds like you are on the right track to achieving your goals. (Are you looking for help with a financial question? This tool can help match you with potential advisors.)

Additional considerations

Ask an Advisor: I am a 43-year-old divorced father with $315,000 in an IRA, $90,000 in a Roth and other accounts. I max out my 401(k) every year. Can I retire at age 57?

While all of the above indicates that you are in very good shape, there are some variables that we did not take into account above.

One big variable is Cost of college. There are a wide range of possibilities out there, from paying nothing to spending $70,000 or more a year at a private university. Even though you have some savings set aside for college, larger college expenses may force you to dip into retirement savings, which may require you to either work longer or reduce your retirement spending.

There are also a lot of things about your situation that can change over the years, from your job to your health to the investment returns you receive to your personal goals. No financial plan, no matter how good, is ever a finished product, and it’s important to reevaluate regularly to make sure you’re still on track.

When it comes to your plan for withdrawals, especially in the early years of retirement, I would also be cautious about making minimizing taxes too big of a priority. (Are you looking for help with a financial question? This tool can help match you with potential advisors.)

You certainly don’t want to pay more than you have to, and being tax-conscious in your approach is the right idea. But it might be smart to have some taxable income in those earlier years to fill those lower tax brackets, which could allow you to avoid higher tax brackets in the future and pay less in taxes in the long run.

I would also consider the possibility that living on cash and bonds during the first few years of retirement may cause your overall asset allocation to be more conservative than it needs to be to achieve your goals and objectives. Take risks. It certainly makes sense to keep ample cash reserves so as not to be vulnerable to short-term market movements. But being too conservative may sacrifice long-term growth and security. Remember, paying taxes means your money has increased, which is a good thing.

Of course, it’s also important to acknowledge that there are many details about your situation that I don’t know, so I’m certainly not in a position to give you specific advice on withdrawal and tax strategies. These are just things to keep in mind as you continue to fine-tune your plan.

Next steps

It sounds like you are on track to achieve your major goals with some wiggle room to overcome the unexpected, which is where you want to be. As long as you keep reviewing and saving your goals and making adjustments along the way, you should be in good shape.

Tips for investing and planning for retirement

If you have questions about your investment and retirement situation, a A financial advisor can help. Finding a financial advisor is not difficult. Free SmartAsset tool Matches you with up to three vetted financial advisors serving your area, and you can interview your advisors at no cost to determine which advisor is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, Start now.
When you plan for retirement, keep an eye on Social Security. is used SmartAsset’s Social Security Calculator To get an idea of what your benefits could look like in retirement.
Keep an emergency fund on hand in case you encounter unexpected expenses. An emergency fund should be liquid – in an account that is not at risk of significant fluctuations such as the stock market. The trade-off is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

Matt Baker, CFP®, is SmartAsset’s financial planning columnist and answers reader questions on personal finance and tax topics. Do you have a question you want answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Matt is not a participant in the SmartAsset AMP platform, nor is he an employee of SmartAsset, and was compensated for this article.

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