Next you will pay tax on the sale of investments in any taxable accounts so if you have $500,000 in stocks, which cost you $100,000, then you will be paying tax on the gains, so consider that in your calculation; also YOU WILL PAY TAX on 401k money taken out, and taxed as ordinary income, UNLESS you roll that 401k over to an IRA and convert to a ROTH IRA
It sounds like you haven't converted that 401k to an IRA to a ROTH IRA and paid tax yet, so count that in too. Good luck.
You have omitted the effect of inflation and price rises from your planning.
With inflation, your $500,000 ,ten years from now, will have the purchasing power of $400,000 today ,while cost rises mean that an apparently adequate $500,000 today will , in ten years time , need to be $650,000.
What seems a fortune when you are young is an inadequate pittance when you are old.
A realistic calculation is to work out what you would need today as a retiree and multiply by 30 or 40.
Assuming a generous return of 7% on the $500k, for 15 years you'd receive $54,897.31 not accounting for taxes. With a current average tax rate of 12.85% on that income,that gives you $47,828 per year. You did not tell us your age, so we can't account for inflation to determine what amount that equates to today. Let's say that's 20 years from today. 47,828 / 1.035^20 = $24,037 in today's purchasing power. Who can say what health insurance will cost by the time you're 60.
If instead of retiring at 45, you kept that $500k working for you for those 15 years, again, assuming a 7% return, that money would be worth $500k(1.07^15) = $1,379.516 by the time you retire at 59.5, giving you a total of around $2,679,516. If you live another 25 years (85 years old), and keep the 7% return assumption, that gives you about $229,930 to live off of. Assuming that's 35 years from today, that's worth: 229,930/1.035^35 = $68,974 in today's purchasing power (assuming 3.5% annual inflation).
In order to have $500k 20 years from now, assuming 7%, you need to invest $12,196 per year. Add to that what you have to invest to have $1.3m 35 years from now: $9,404 per year. So you invest $21,600 per year for 20 years, then $9,404 for another 15 years.
Plan to work until at least age 60 and save, save, save!
Dont plan on assumptions. Especially when it comes to money. My advice is to play it save and keep saving for retirement at 65
Is it possible? By age 45 I'd expect to have $500,000 in after tax and inflation dollars (with my own small business for some side money), and I could use that for 15 years until I'm 59 1/2 and could finally use both my Roth IRA and 401k, which would be about 1.3MM in after taxes and inflation dollars (assuming 3.5% annual inflation).
In this case, could retirement by 45 be done?
And how much would private health insurance cost for a healthy, single individual? I've been quoted for only $500/month.
