I’m 45 with $1m in the bank – an expert told me why I can’t retire early

A 45-YEAR-OLD with over a million bucks in the bank has found out he’s still not able to retire soon.

However, a financial pro revealed three simple steps to achieve freedom in just a few years.

1

James Conole is a certified financial planner and founder of the retirement-planning tool, Root.

In a recent YouTube video, he gave some recommendations to a 45-year-old man named Juan.

Juan was hoping to retire in five years aged 50, and had managed to save $1.4 million so far on his $ 175,000-a-year salary.

He had calculated his post-retirement expenses and figured he needed around $100,000 a year to maintain his current lifestyle after he stopped working.

Under his current plans, he wanted to save another $40,000 a year for five more years before kicking back and enjoying an early retirement.

NOT SO FAST

But James warned Juan this “probably wouldn’t be realistic” under his current circumstances.

That’s because of the 4% rule – a guideline that suggests you can comfortably withdraw 4% of your portfolio a year without running out of cash.

But to maintain a $100,000 lifestyle, that would require a $4 million portfolio.

THREE STEPS

James had three steps for Juan instead.

First, he told him to reconsider whether he would actually need $100,000 a year to enjoy his retirement.

“What you might find is, ‘Hey, $100,000 is actually way more than I need,” James said.

Next, the money guru encouraged Juan to factor in how much Social Security payments would contribute to his yearly income.

At age 50, he would not be eligible to collect the benefit, but would be receiving checks by the time he reached 67.

The third step for Juan would be to consider a part-time income in retirement.

If Juan earned $75,000 a year from working, he would only need $25,000 a year from his portfolio to fund a $100,000-a-year lifestyle.

Although retirement can seem like a huge mountain to climb, financial experts are helping Americans realize their possibilities.

Dave Ramsey gave a 46-year-old a written game plan to “not go broke” despite having no retirement fund.

But another budget coach reckons many seniors will still have to work beyond the usual retirement age.