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Should I pull the plug and RE?
- Today my investments are 0.5% away from 3% withdrawal rate to equal expected spending
- Am invested ~50% in growth funds, 43% in S&P, 7% in bonds and money market
- If I work, I'll earn ~7% of my NW per year
Have you factored in old age costs? Lawn care or household help when it gets to be too much for you to handle on your own. I didn't factor that and am now thinking I will regret that as I'm currently watching my mom start to decline and need more help.
Also increasing medical costs is part of the equation I guess. Aging is a pain. Hence I'm trying to balance retirement with some life left vs earning some more to make things smoother. Having said that, I sort of did take that into account.
As important as your current expenses, where are you in life? By which I mean, is there a likelihood of radical life changes still (marriage, kids, etc) that might completely upend your calculations?
What's the reason for your hesitation?
7% return is rather good, it will double my market return and moreover with much less risk. Mainly the uncertainty of the economy is what makes me worry.
It sounds like you are fully afflicted by One More Year Syndrome. I'd recommend googling that term and reading a bunch of the blogs that come up about the topic.
My favorite was the one at the top of my Google search, so I'll just share it here.
At the end of the day, the least financially risky option would be to never stop working. The economy will always be uncertain. It's up to you to determine when the risk is an acceptable level, since by the numbers you are there.
It could help to play through some worst case scenarios and make a plan for what you could do in the event they happened if you were retired. If the market crashes by 50% or more the year after you retired what would you do? Cut back on discretionary spending? Spend down a cash savings buffer? Get a part time job to cover spending? Go back to your current career? What do each of these options look like for you?
The alternative risk of continuing to work is that you reduce the number of healthy years you have to enjoy your retirement. There are so many stories of people who dream of their retirement and then die or become incapacitated in some way shortly after the retire, so they don't get to enjoy the retirement they planned. Do you want to risk being that person?