I’m 59 with a NW of $8M (excl house). I have two children, ages 17 and 15, and plan to retire next year. I’d like to set aside roughly $500K for each of them to cover their education. Our current household expenses are about $360K per year, and I expect this level of spending to continue in retirement. In addition, I’d like to leave an inheritance of $5M in today $$ for each child. Retirement calculators suggest that I’m financially prepared to retire, but I’d like to hear your perspectives

I retired last year at 60 with $9M net worth, excluding primary residence. I also have a pension and decent income from rental properties. Kid is already graduated from university and on her own.

First, your annual spend of $360K is really high for a 59 year old, especially in perpetuity through retirement. You should be close to paying off your primary home with no other debt. I made $1M+ annually just with W2 income, live in LA/OC with an ocean view and had ~$250K in expenses prior to retirement (which includes supporting my parents’ household). I’m down to about $180K in expenses and get to do all the traveling I want and still have ample funds to live as I did before retiring.

Second, $500K per child for college is pretty lofty. If they are smart enough to get into a top tier $$$$ university, you aren’t going to be paying full tuition.

When you retire, your investments will become more conservative. Your tolerance for downturns in the market will be less since you will rely solely on returns for income. Drops will cause a lot of angst, so place safe bets. Project a 5% return to be safe. At the rate you’re currently spending, you’re not going to have enough to leave each child $5M. $8M - $1M for college x 5% return = $350K annually. You’ll have $7M left using these variables and this doesn’t even count for inflation or time value of money.

The only way your plan works is if markets continue to go up up up for the next 10-15 years and you stay aggressively invested in stocks. I wouldn’t bet on the first and the second is poor advice for a retiree with large cash flow needs.

You need $10m today to pull $1m off the table for your kids education plus fund your current $360k/year lifestyle ($9m x 4% withdrawal rate). That doesn’t guarantee anything for your heirs but it’s more likely than not something will be left over for them.

You can offset some of your lifestyle costs by any pension or social security you expect to receive. For every $40k/ year reduce the amount you need saved by $1m (this is just working the 4% rule backwards).

$360k is your actual spend annually?

What’s your house worth?

Haven't crunched all the numbers but it doesn't seem to me like it would work, with an X factor that we don't know the value of the house. But ignoring the house value, it seems like you would be safe retiring, but can't count on leaving those amounts to the kids. I would be careful on your return assumption because (a) as you wind down your nest egg you probably should shift to more conservative investments (b) I don't think you can generalize the last 10 years of your performance. Would assume you earn less - market historical return, but prob less because won't you shift to a more conservative mix further down?

If you follow the 4% "safe" annual withdrawal rule, your $8M-$1M = $7M gives you an annual income of $280k without touching principle. BUT there are a lot of challengers to that rule and variables to factor in such as taxes (depending on investments you're sourcing this from), current market projections, etc so some say 3-3.5% is safer and probably necessary if you want that principle to also grow to your desired $10M.

Also, run this through chatgpt with some really specific details and ask it to ask you follow on questions and then advise you and run different scenarios for you. It will be more sophisticated than your standard retirement calculator.

Engaging Data also has some of the best retirement calculators I've found (more oriented toward FIRE, but still good for your situation).

How do you plan to fund $11M of inheritance + gifts with $8m of wealth?

You need to factor in there isn't going to be an election in 2028

If you put $1M in 529s today for kids,you are left with 7 million. You need $10 Million when you pass to your heirs. 3M gap. Assume 20 years from now? You can calculate your growth rate needed (in real terms), including the real spend you need. I dont have a calculator handy, but thats the right math, I think its tight.

I haven’t seen the calculator’s answer, but my reflective answer is no way this results in $5m today per child in today’s dollars. Unless your house is worth $5m+. My finger math says you may have enough if you stay fairly aggressive in you investment approach and you’re okay not leaving your children anything (other than the house).

Ypu would need a 2% return to grow the 7 Million in my above illustration to 1o million over 20 years. Assuming 3% inflation youd need roughly a 5% return. Now. If you also want to spend 360k in real dollars that about another 5%. So you need at least 10%. I'd say you need to rethink this.

Thank you PwC1

Use BoldIn to get comfortable with your situation if you aren’t hiring a financial advisor. 5% seems to be a high withdrawal rate if you want to build equity beyond what you have today for all the reasons stated above. BoldIn provides Monte Carlo scenarios and allows you to model the Go-go, Slow-go and No-go periods of retirement. The biggest risk for your heirs is long-term medical needs or lawsuit. Good luck!

Depending on where the funds are you also need to factor in taxes - assuming you need 360 cash you will need to withdraw quite a bit more

Personally I would not assume the same tax rate for the next 30-40 years either

I like how no one is suggesting moving out of the USA to make the current retirement savings work 3x better. 😃😃😃😃😃

You want to leave $10M inheritance but you're only worth $8M

What makes you think you will die at 75? I would calculate for 95. I think you are more likely to leave each kid around $3m plus the house with those spending patterns, but that is still a lot of money. Is there a spouse you will want to provide for after you’re gone? I would take that into consideration too.

Biggest Expense of 360K = Mortgage, Insurance and Property tax for Primary home in Seattle = 120K. 10 years still left. I assumed after home is paid off the mortgage portion would be adjusted towards additional Medical expenses for the last 5 years.

Geez. Just put it on a spreadsheet and play with the key inputs. I would do it yourself. These software tools are too black box for me. And, I sure wouldn't use any if us here for advice.

Ok 120k of mortgage is a lot….bit there must be a good bit of value in that house that can go to heirs?

Past few years returns isn’t good way to make estimates. I’d think you should use something conservative?

Also plan another year of college tuition to find weddings. And realize that five mil per kid may well go to caregivers/nursing home….we just saw basically the value of my childhood home go straight to caregivers in approx 4 years ….such is life.