Build a family and still retire early

NEW YORK (Money) -- Question: I'm 37 years old and I'd like to switch out of my profession by my early 50's and get into a line of work that's less stressful, even if it's less lucrative. Within the next year or so, I also plan on relocating to Texas, buying a house and marrying my girlfriend, who wants to have three kids relatively quickly.

So far I've saved $355,000 in retirement funds and another $175,000 in taxable accounts. My girlfriend has saved a similar amount. Do I stand a chance of meeting my goal of becoming semi-retired by the time I reach my early 50's? -Paul, San Diego.

Answer: Normally, when I get a question like this the first thing I do is try to get a quick sense of whether, based on age, income, the amount saved and the planned retirement age, the person has even an outside shot at their early retirement goal.

You didn't mention how much you and your girlfriend earn, so it's tough to get any sort of estimate of how much income you might need in retirement. But if your $1 million or so in combined savings earns 8 percent a year - which is hardly guaranteed, but not an unreasonable assumption - that would give you about $3.2 million in 15 years.

At a 4 percent initial withdrawal rate, that sum has good odds of safely generating about $128,000 of inflation-adjusted income (the equivalent of just over $80,000 today, assuming 3 percent inflation). And that's not counting additional money you'll save between now and the time you retire, or the money you'll earn at whatever line of work you take up after leaving your current profession.

So unless you're planning a real blowout lifestyle once you make this transition, I'd say semi-retirement in your 50's seems well within reach, especially if you find work that provides health insurance until you qualify for Medicare at 65.

But in your case all these figures and assumptions have to be taken not with a grain, but a block of salt. You will be dealing with several life-changing events over the next few years. Relocating. Buying a house. Getting married. Having kids. Aside from the impact these changes will have on your lifestyle, they'll also have some major financial ramifications.

Yes, the value of your house will likely appreciate over the long-term providing you another asset you can eventually tap in retirement if necessary. But in the short-term houses can also eat up lots of cash flow with mortgage payments, real estate taxes and routine maintenance.

And kids? As lovable as they are, they're also major money sponges, what with clothes, food, school activities, video games, college tuition, etc. So one of the big questions for you is how well you can stick to your savings regimen over the next 15 years or so given these major changes.

The more you can continue to sock away the bucks - and avoid tapping your savings for current expenses - the better your chances of being able to ease into semi-retirement in your early 50's.

But there's one other issue that you didn't mention that could ultimately determine whether you can meet your goal - namely, whether your wife-to-be is on board with your semi-retirement dream.

Indeed, have you even discussed it with her? Maybe she has similar plans and you can work together as a team toward this goal. (If she has roughly the same savings as you, I wouldn't be surprised if this is the case.)

On the other hand, if she's not as motivated as you are to retire early, your diverging views could lead to friction, especially if she feels your family isn't living as well as it should in the present because of your focus on your future retirement.

Clearly, this is something you two will have to talk about because it involves a very central issue: how much of your income and resources do you consume now or put away for the future.

Assuming that after this talk, an early semi-retirement is still a viable goal for you, I suggest you read the Retire Early package in our April issue. You'll get lots of good information on how to lay the groundwork for early retirement at this stage of your life.

But you'll also find guidance on what you need to do as your exit from your current profession approaches, such as thinking about how you'll actually live once you make this transition, sizing up new work opportunities, evaluating the cost of health insurance if a former employer doesn't provide it.

You'll also find a handy calculator that will tell you how much money you ought to have socked away at various ages to have a realistic shot an early exit. And our more comprehensive Retirement Planner, a tool that let's you take a more customized and in-depth look at your retirement prospects, is only a click away.

The fact that you've saved so much and thought so hard about this dream suggests to me that you've got a very good shot at turning it into reality. Now the challenge is to continue your pursuit of this dream after your life changes big time when you marry and have kids.