Retirement? How much is enough? Friend's question...?

45yrs old, $300K invested (~7%/yr rtn), $175K invested stocks, mid-high risk, (~12%/yr rtn), $100K in cash (~3%/yr rtn) + $50k assets... No housing or other loans...
Retire at 50 or grind to 55?

Thanks...
Additional Details
Thanks for everyone's answers...generally very thoughtful and helpful...

Kiker, thanks for all the detail! He did not fully understand, but I explained the finer points and he gets it now. Most helpful was the realization that while he is getting good returns now on his mutuals, the normal return is not 12% everyyear.
He says he is going to keep everything invested and just scale down his spending as much as possible to see what is really needed for a 3 month cash reserve. Also, he very much appreciated the advice on Medical expenses...had not considered this point. Thanks all...

When I was a Financial advisor the principle strategy to build around was making sure that once the person retired, the money would last until they died. Now with your friend's money, he could retire right now....and then exhaust his money...so, clearly the mindset needs to be on capital preservation once retirement occurs. For that, a simple number is needed: >5%. Now this is strongly dependant on what he is invested in when he is retired. If he is invested in 6% Municipal Bonds, than he would be receiving his interest income TAX-FREE (which is why i focused on them!!) and with the 5% take home, he still would be preserving his capital and experiencing a minor gain..which could be used as an emergency reserve.

Now, I would never ever go over 5%, in fact, I would strongly suggest 4%. With that, there are several things he needs to consider when retiring.
1) health care costs!!! Medical costs will triple, if not quadruple, for him and his spouse. That is the number one issue people never factor into their equations, so they need to keep that in mind when it comes time to retire.
a) do they have a heath insurance plan they can retire with.
b) do they have life/disability insurance
2) inflation! As they are pulling money out, they will be eating away at their principal, and inflation will be working with them. So you want to make sure that as you retire, you will have enough to pull money out, preserving the initial capital, and then having enough to stave off the effects of inflation.

500K is not a lot of money, especially when retiring. I would have people talk to me with 500K and no home mortgage and want to retire. At 55, that we not enough, and it meant they would have to hold back from retiring and changing their investment strategy.
To be safe, I would suggest a retirement nest egg of 2 Million to 4 million....and NO! Their house DOES NOT COUNT!
Never, ever get into a reverse mortgage for retirement! You rob your family your assets which could help them retire better off, and you rob yourself as the reverse mortgage valuation is between 45-55% of the home's actual value!!
Please, never ever do that!!!

The amount I mentioned may seem a huge sum, but think of it this way. Long term inflation is between 3-4% (this is actual inflation, not the CPI. This inflation figure takes into consideration food and enegy costs. In reality, it is anticipated to be between 8-10%) Just with 3-4%, a $50K retirement salary today would equate to $230-$250K per year 20-25 years from now. See how small that 500K looks.
See how 2 million is easier to work with, but even still is hard to work with.

The 100K in cash is a waste, they are losing money, as inflation is eating away at it. Save only 3 months worth of salary for emergency reserves in a money market account and invest the rest. I don't know where all of these different accounts are, or if they each have their own fees...which would make sense to consolidate them into one account, with differing investments (like a Roth IRA) in order to cut back on costs. Moreover, I have no idea where these investments are at. These returns could drop like a rock if the market changes.

Hope this helped. I am not longer a FA, so I just do this all for free, but I still have my licenses. Without specifics, you arent going to get specific answers. For what it worth, you can ask me directly through my 360 page.

your friend needs to build a lifetime financial plan and make some hard decisions about his future spending levels.

for example, it is quite common for healthy retirees to want to spend more money than they did while working -- among other reasons, they now have a lot more time in which to spend money.

for me personally, I do quit well on 5 million.

How much for retirement? The rule of thumb i have been given is an income at least three times your expenses.

Hope that helps.

Here's an article from the Wall Street Journal that may help:
http://finance.yahoo.com/focus-retirement/article/104129/Simple-Math-to-See-If-You-Have-an-Age-Appropriate-Nest-Egg?mod=retirement-preparation

Thats a question only the individual can answer. Lifestyle, family situation, retirement living goals are all factors.

Yep, Spock has the right answer. You give a fair amount of detail about assets and expected return, but none at all concerning spending levels in retirement. Without that information, it's impossible to tell if early retirement is even a possibility. Your friend might easily end up working well into his sixties.

Furthermore, the projected rates of return you give are, at best, just educated guesses. What is the plan if, for example, the $175k invested in stocks @12%/yr turns out to return closer to 8% over the next couple of decades? Those kinds of shortfalls in expected return can clobber any retirement plan that is based on optimistic assumptions that stocks will produce double-digit returns year after year.

I suggest your friend hire a fee-based financial planner to give an objective evaluation about whether he really is on track to retire early.

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