I am a 43 year old divorced father. I have $580k in my 401(k) and have contributed the maximum. Can I retire in 10 years?

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You can put more money in your 401(k).

Each year, the IRS allows what is known as a maximum contribution to any retirement account before taxes. For an employer-sponsored account like a 401(k), you can have up to $70,000 in joint employee/employer contributions by 2025. If you’re under 50 — $23,500 can come from your own paychecks.

This is a huge amount of money to invest every year. An employee who can maximize these contribution limits can build a well-funded retirement account in no time. If you already have good savings, early retirement may even be in the cards.

Take, for example, a 43-year-old spouse. You have $580,000 in your 401(k) and make the maximum contribution each year. Can you retire at 53?

Maybe: This is probably enough to generate a reasonable comfortable income depending on where you live, but the issue here may be household expenses. For most people, meeting the needs of the child and the expenses of the ex-spouse (if any) will be tight in this budget. You may be able to retire early, but depending on your situation, it may not be until 53.

Here’s how to think. You can also use this free tool. Get in touch with a financial advisor Get professional guidance to reach your financial goals.

There are three ways to measure the maximum 401(k) contribution.

First, there is your personal contribution. This is the maximum amount you can contribute from your own income in a year. This money is tax-free, meaning it doesn’t contribute to your taxable income. Your personal contribution limit in 2025 is $23,500. This means that the maximum amount you can contribute to a 401(k) from your income and receive a tax deduction in 2025 is $23,500.

Second, there’s your total contribution limit.

As part of a retirement program, your employer may contribute to your 401(k). Typically, this means they will match your contribution up to a certain amount. For example, under a matching plan, you may contribute $10,000 in a year and your employer may contribute a matching $10,000. But this is not always the case. Your employer is free to contribute more to your 401(k) if you choose.

All of your and your employer’s contributions must be within the annual gross contribution limit. This is the most anyone can contribute to your 401(k) in one year from any source. The total contribution limit for 2025 is $70,000. So, for example, say you contribute a personal maximum of $23,500 to your 401(k) by 2025. However, most employers who offer a match will contribute based on your personal contribution.

Third, and finally, there are reserved contributions. This is the extra amount you can contribute to your 401(k) each year after you turn 50. This is above the contribution limits from all sources. In the year In 2025, catch-up contributions allow you to contribute an additional $7,500 per year in addition to any individual and general contribution limits. So, for example, say you are 50 years old in 2025. If you contribute $23,500 in standard contributions, your employer can contribute $46,500 in additional contributions, and you can contribute another $7,500 in dependent contributions.

So the question here is what do you mean by “high contribution”. In 2025, that could mean anywhere from $23,500 in personal contributions to $70,000 from all sources ($77,500 if you’re 50 or older). For ease of use, we assume you’re making the highest personal contribution: $23,500 per year for ages 43 to 50, and $31,000 per year for ages 50 to 53. The analysis below is subject to change, however, as they add up to $70,000 each. Year in your 401(k).

A Financial advisor It can help you navigate the rules of retirement plans and build a tax-efficient retirement strategy.

Next, we need to estimate what your portfolio might be worth in 10 years and what income it will generate. You are starting from a strong position. With $580,000 at age 43, you’re in a great position to retire at age 67. But what about your 53 year old?

Let’s assume your portfolio generates an 8% mixed-asset return. This is the average for a portfolio that holds equal amounts of bonds and stocks. At age 53, between growth and contribution, you may have. Around $1.61 million in your 401(k). This is a pretty solid retirement portfolio. (If you continue to save and invest the same amount, you can have it by age 67. Around 4.28 million dollars in this portfolio.)

There are many ways to estimate the income your portfolio will generate in retirement, but a common approach is the 4% rule. With this approach, you assume that a combination of conservative investments and inflation-adjustment will allow you to consistently withdraw 4% from your retirement portfolio each year. At $1.61 million, at 4%, you can expect to withdraw $64,400 per year from this portfolio. ($1.61 million * 0.04)

Now, this is just a rule of thumb, but it’s a good place to start. At age 53, that gives us about $64,400 a year.Then, between ages 62 and 70, you can supplement this income with Social Security benefits. Average Social Security benefits are around $1,900 per month ($22,800 per year). This can give you an average range of $15,960 per year starting at age 62 up to $28,272 per year at age 70, with an average combined income of between $80,360 and $92,672 per year in retirement.

Think about it Talk to a financial advisor Able to run numbers for evaluations based on your personal situation.

Depending on where you live, you have a comfortable income level. At $64,400, you’ll be below the national median, but that’s enough to afford a modest-but-comfortable lifestyle. The biggest issue here is your potential cost.

Early retirement comes with its own risks and challenges. In particular, your retirement portfolio should last longer than usual. At age 53, you’re more likely to lead a busier and more active life than you were in your late 60s and 70s, which is more expensive.

Then there are your family expenses. Here you are a divorced father. This means you probably have at least four major expenses: living expenses, family contributions, child support, and college savings. (You may have other expenses, but these are particularly common.) Alimony is the most flexible of these, as most states allow you to renegotiate based on changed circumstances. This may continue to some extent if you pay spousal support.

Then there are the housing costs. Will you continue to help pay for the house your ex and child live in? Do you pay for miscellaneous living expenses? What are your overall contributions?

Although family expenses are irregular. It’s not child support, and it’s rare to renegotiate it. If you have child support payments, they will continue until your child turns 18, and they may be adjusted.

Finally, there is the college fund. If you’re saving for college, you should keep doing so.

This is all on top of your existing personal expenses. What will you spend on rent or mortgage? What are your monthly bills? What hobbies, travel and entertainment do you enjoy? Then, put together, what does all this mean for your monthly needs?

This is where the uncertainty comes in. Chances are, you’ll need more than $64,400 a year to comfortably meet these needs. That’s not a sure thing, especially since it’s not far off the national median income of $75,000. But if you can afford $23,500 a year to contribute to a 401(k), you can earn more than the median. So if you retire at 53 and withdraw only $64,400 a year, there’s a good chance you’ll be stuck on a fixed income that isn’t enough to meet your and your family’s needs.

But don’t worry! If you wait a few more years, you’re on your way to a very comfortable retirement. Consider meeting a Financial advisor If you have additional questions or need personal guidance.

If you want to take early retirement, you need to plan for several moving parts for your money. Perhaps the best way to look at this is as a revenue-versus-cost analysis. Specifically, how much income does your portfolio generate? And will that be enough to cover middle-aged adults’ typically high, especially fixed, expenses?

Get your FIRE number. No, we are not talking about personal security. By financial freedom we mean, retire early. It’s a movement built on getting out of the rat race so you can have fun in front of you while you’re still beautiful. Of course we joke. You will always be beautiful. And here’s how to find your pre-retirement number.
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