I’m 54 with 26 years of service as a nurse. We go by the rule of 80 (your age plus years of service = 80) on our retirement plan. It should cover my medical medical health insurance. My pension might be around $7,000 per 30 days minus taxes. I even have a combined $750,000 in a 403(b) and Roth IRA. I even have $150,000 in stocks that aren’t doing well, $250,000 in real estate property earning $600 per 30 days and $100,000 in money. Can I retire now?

– Robin

Between your pension, your retirement accounts and your investment property, it looks such as you’ve got built a strong nest egg for yourself. Whether you’ll have the option to retire now will depend upon whether the after-tax income from those assets is sufficient to support your spending needs and desires, so let’s break down what that after-tax income might seem like.

Do you want help running your numbers for retirement? Consider working with a financial advisor today.

Initial Assumptions

I would really like to make a few assumptions to run the numbers and provide an answer. First, I even have assumed that the $750,000 in your 403(b) and Roth IRA is split as follows:

• $550,000 in your 403(b). All of this money is pre-tax.

• $200,000 in your Roth IRA. This account has been held for a minimum of 5 years.

Second, I’ve assumed that $100,000 of your stock account is from contributions, that the remaining $50,000 is long-term capital gains, and that your withdrawals from this account are two-thirds basis and one-third capital gains.

Third, for Social Security purposes I even have assumed your salary has been $84,000 per 12 months and that you just just start collecting your profit at age 62.

Finally, for tax purposes, I’ve assumed that you just just are single with no dependents. (Within the event you’d want to learn more about constructing a retirement plan, consider matching with a financial advisor.)

Estimated Income Before 59 ½

With those assumptions in hand, we are going to use the 4% rule to estimate the amount of money you’ll have the option to soundly withdraw from each account, on top of your pension, and run it through TurboTax’s tax estimator to ballpark the after-tax income you’ll need available in your spending needs.

Story continues

I’m going to begin out by ignoring your 403(b) because you’re only 54 and withdrawals from that account would likely be subject to a 10% early withdrawal penalty before age 59 ½. I’ll add that account in the next section.

I’ll, nonetheless, include your Roth IRA because you’re allowed to withdraw as much as the amount you’ve got contributed at any time and for any reason without penalty. (Take note that should you occur to’re under age 59 ½ and have had the account for lower than five years, you’d owe taxes and a ten% penalty when withdrawing investment earnings.)

Given all of that, here is your estimated annual pre-tax income from each source before age 59 ½:

• Pension: $84,000

• Roth IRA: $8,000 (untaxed)

• Stock account: $6,000 ($2,000 in long-term capital gains)

• Investment property: $7,200

That could be a complete pre-tax income of $105,200. Once I run those numbers through the tax estimator, I get an estimate of $13,138 in taxes owed, which leads to an after-tax income of $92,062 per 12 months or $7,672 per 30 days. (And should you occur to want more help estimating your income and taxes in retirement, consider speaking with a financial advisor.)

Estimated Income After Age 59 ½

If you reach age 59 ½, you’ll have the option to begin taking penalty-free withdrawals out of your 403(b). Using the 4% rule, that adds one other $22,000 in pre-tax income, bringing your total pre-tax income to $127,200.

Once I add that to the tax estimator, your estimated taxes owed are literally $18,196. That gives you an after-tax income of $109,004 per 12 months or $9,084 per 30 days.

Adding Social Security

If you reach age 62, you’ll have the option to begin collecting Social Security as well.

I ran your numbers through the Social Security Administration’s Quick Calculator assuming you retire at age 54 and make $84,000 per 12 months. Your estimated profit at age 62 is $1,564 per 30 days, which equates to $18,768 per 12 months.

Adding that into our tax estimator brings your total pre-tax income to $145,968 and your estimated tax owed to $22,024. That leaves you with an after-tax income of $123,944 per 12 months or $10,329 per 30 days. (Social Security is a crucial source of retirement income and a financial advisor will help you intend for it.)

So, Can You Retire?

One major consideration here is that I have no idea what state you reside in and on account of this fact haven’t factored in state income taxes. Depending on where you reside, which can reduce your after-tax income by a few percentage points.

With that said, if the after-tax numbers above could comfortably support your needs, you’re probably in high quality condition. If it’s close, you’ll probably want to dig deeper and possibly work with a financial planner to get a more personalized answer. And if that after-tax income is lower than what you want, it is likely to be an amazing idea to take care of working until the numbers work in your favor.

Retirement Planning Suggestions

• A financial advisor will help guide you thru the customarily complex retirement planning process. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with as much as 3 vetted financial advisors who serve your area, and also you’ll have the option to have a free introductory call together along with your advisor matches to make your mind up which one you’re feeling is true for you. Within the event you’re able to search out an advisor who can assist you achieve your financial goals, start now.

• The IRS has announced higher limits for 401(k) and IRA contributions for 2024. Savers with 401(k)s will discover a option to contribute as much as $23,000, while those which might be 50 and older might be permitted to avoid wasting an additional $7,500. The contribution limit for IRAs will also be set to increase, rising to $7,000 from 6,500. IRA owners who’re 50 and older can save a further $1,000.

Matt Becker, CFP®, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a matter you would like answered? Email AskAnAdvisor@smartasset.com and your query is also answered in a future column.

Please note that Matt is not going to be a participant inside the SmartAdvisor Match platform, and he has been compensated for this text.

Photo credit: ©iStock.com/adamkaz, ©iStock.com/eric1513

The post Ask an Advisor: I’m a 54-12 months-Old Nurse With $1 Million in Assets and a $7k Monthly Pension. Can I Retire Now? appeared first on SmartReads by SmartAsset.