Such example of increased costs of increased standards of living:

Look at the additional safety requirements put onto households, not only in the car, but also in the house, which cost extra money to pay for such things. While such things do help save lives and cuts down on injuries, it’s still an overall increased cost (especially initial start up costs).

Look at the additional things we about need to get, cell phones (put on by society), a computer at home with internet connection (put on by society for doing various things). Some people apply the argument that such items as these help save on total costs. If you get such items for business purposes, I can see such argument fitting, but for getting for within your personal home, in most cases, I don’t see such argument as being advantageous. That is, unless you have a substantial amount of money to manage which by managing such money, you either save or increase your investments by at least that amount of money as what it cost you to get the system and internet, then it won’t be of any real savings to you.

In my case, I do use the computer obviously, which I use Excel for my household’s finances, which in some respect did save me a lot of money early on. But then how I use Excel, most people wouldn’t even dare to attempt to set it up as most people only use computers like how they use a car where as I’m like the software mechanic with an Accounting education to the system as a mechanic is to a car at the shop. 90% to 95% of the software stuff including programming, databases, spreadsheets and what not, I learned on my own. Many say I’m gifted in that regards cause of how quick I pick up on the software side of computers. For me, I say it’s 50% gifted (me being think logically is the part gifted to me) and 50% earned. My learning disability primarily in language forced me to learn the art of memorization to conquer English, which how I ended up learning English via logics and memorization is how most people in programming end up learning programming languages. As a result of that, once I was introduced to computers in the 7th grade, I just took off like nothing.

Anyhow, just be sure you have your bases covered including covering for inflation and increased costs from increased standards of living over time.

Sounds like you are well on your way there. By the looks of it, you should be able to retire within the next 10 years. I would just alert you to be careful on the assumption of that $25,000 per year income from your business as residual income. While the odds looks good, also look at it from a worst case scenario and what’s the odd of that happening over time.

You mentioning that you want to retire with a minimal of $90,000 (today’s money) annually is similar to what I want to be doing when I retire as well.

Based on my self study, I came to a net amount of retirement funds of about $4.5 million (After Tax Based) to retire on. Now that is taking into account of a lot of different retirement risk factors, which the big ones I took into account to get to this amount are:

Market Risk Factors (Could lose half the value early on depending on where in the market cycle it currently is at when one retires)

Inflation and Taxation (the drag effect of such funds as funds has to be able to keep up with inflation net of taxes, thus one such reason why I still say 80% in equity with 20% in Bonds and Money Market. One caveat to this rule. While you move funds from the equity to the Bonds/MM to get the Bonds/MM back up to the 20% mark, don’t move funds from the Bonds/MM to equity to get equity back up to the 80% mark. During the market down times, you withdraw from this Bonds/MM part as that serves as your protection in most cases. 20% can be for up to 10 years if you think about it with the withdrawal rate at 2% annually.)

Longevity (what if both of you end up living a very long time, like into your hundreds)

Health Factor (what if you both or just one of you end up getting a major medical issue to the point both or one of you end up living in a nursing home for a period of 10 years like what happened with my grandmother with her having Alzheimer’s Disease prior to her passing away. As such, this will cause a jump in the retirement funds needed to cover such expense).

and to be able to withdraw just 2% of your retirement funds per year while meeting the RMD rules, I came to conclusion 60% of the funds needs to be in a ROTH IRA type fund at the time of retirement and only withdraw from tax deferred retirement funds. Of course if you have other ROTH accounts like ROTH 401(k) plan, then you have take those values into account in regards to the RMD rules while ROTH IRAs are exempt from RMD rules as far as the owner itself having to withdraw from the account. The only time when RMD rules come into play with ROTH IRAs is when it goes through inheritances.

Why do I say 2% instead of 4%? First, what if you end up retiring when the market is at it’s peak, then it goes into a major bear market? Yes, it could lose 90% of the value as it did with the onslaught of the great depression, but more likely the case, it could very well lose 50% of the value. Now think about how much harder it will for that set of funds to go back up when you are withdrawing money at the low values. When it’s at the low values, you may end up having to withdraw 4%, but hopefully, that would only be mid term at most (no more than 5 years, though in most cases, maybe more like 2 or 3 years such as Oct 2000 – Oct 2002 bear market). Otherwise, once it’s no longer at the low post, then go back to the 2% withdrawal. This will do 2 things. First, it allows the funds to build up faster than spending down in most cases, so as you can keep up with inflation and not get held back by the income tax effect (if the money is pre-tax based). However, there is that RMD rule that make this objective harder to meet, but there is a way around it for most people. However, due to the nature of the rules and everything, it’s important to start planning for it long before you get to the higher income ranges.

As a rule of thumb, you should count on a 4% to 5% withdrawal from your assets. So $1.8 million should generate $70k to $90k. That, plus the $25k and SSI looks good for “normal” retirement age. But is your goal to retire now? 56 is pretty young…lots of time for inflation to whack you pretty hard. What is your main goal?