They have planned to draw on the money in that order — cash first, then after-tax investments, and lastly, retirement savings accounts.For many early retirees, the biggest challenge is finding a way to keep savings intact through decades of spending and very little earning.
"My target number for retirement was $1,500,000. I figured a 30-year retirement needing $50,000 from our investments per year," said the retiree, who owned and operated a residential cleaning service. "The balance of our income would then come from, about $34,000 for the two of us." The couple lived on one salary for several years and saved at least $35,000 annually to meet their goal, he said.
," or the time between leaving work and having access to Social Security benefits and retirement accounts without penalty. They needed enough cash on hand and didn't want to spend down their investments too quickly."I figured we needed three buckets of money for retirement," the retiree said. "The first bucket would be a bridge from day one of retirement until we were eligible for. It would also be a cash account to hold our monthly/yearly expense allowance.
"As we were saving over the years I always made it a point to beef up our after-tax accounts," the retiree said. "I didn't want all of our money tied up until we were 59.5. I didn't have any specific plans in mind for that money, I just wanted to have it available. I am really glad I did that.