Post FI Notes 006: Gone to Carolina With the Rule of 55

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As an educator, he never made a huge amount of money, but with the bangin’ stock market of the 1990s, he figured he could double his retirement savings every five years for a few decades and become a millionaire. Would you believe that he actually met that goal over each and every five-year period?

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He now finds himself at a crossroads as he plans to leave his career and move to a new area in his mid-fifties. His is not a fatFIRE story, but, as you’ll read, he’s got everything he needs to be happy, and he’s in a great position to enjoy a low-tax early retirement.

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Getting to Know You

You’re financially independent. About how much does your household spend in a typical year? How much could you spend while still abiding by the 4% rule?

My typical annual spending is currently about $36,000 per year. My mortgage payment is $1,350/month and I try to keep all other expenses to about $1200 per month. I haven’t retired yet (that’ll be next year, when the 403b ‘Rule of 55’ kicks in for me), but I’ve calculated that I could spend about $56,000 annually following a 4% withdraw rate.

I’m projecting spending about the same amount in retirement as I do now, and that gives me a $1,000/month cushion to go over budget, which still puts me under the 4% rate. I’m more comfortable (at least starting out, in the first few years of retirement) with a withdraw rate closer to 3.6%.

Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?

My household is just me (and a cat). I’m on the east coast, in the mid-Atlantic region, and I’ll be moving to western NC next year after I retire.

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