Author Topic: Retiring with $750K?  (Read 23499 times)

Metric Mouse

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Re: Retiring with $750K?
« Reply #50 on: November 04, 2016, 07:49:44 PM »
Give me one fine day of plain sailing weather and I can mess up anything.

I love finding random Frank Turner lyrics in a signature.

Does this happen often? I'd love to stumble upon those kinds of people. :D

nereo

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Re: Retiring with $750K?
« Reply #51 on: November 05, 2016, 09:01:05 AM »
If we are talking about retiring with $750k and our house paid off we could do this very easily; that would represent a WR of < 3% for us.  If we include our current mortgage payments we'd be hovering around 4%, so still easily doable with some flexibility.

Over 90% of  the world exists on < $35,000/year.

ETA: we're actually planning on starting out "coast-into-retirement' plan with far less - $400-500k.  Short version; we'll switch from full time to part time and stay that way for a decade or so. Part time work will more than pay our bills and our total number of non-work days will roughly double.
It's not a plan for everyone but it seems like the best one for us.
« Last Edit: November 05, 2016, 11:04:45 AM by nereo »

limeandpepper

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Re: Retiring with $750K?
« Reply #52 on: November 05, 2016, 10:20:02 AM »
I know a few people that retired in early 40's and fast forward 20 years later they are sorry. They are penny pinching as costs have gone up and both were professionals but not able to find work now in their fields. Also with the free time you find yourself wanting to spend more $ on activities, hobbies, etc as you have the time and aren't tired all the time from working. WE semi-retired 4 years ago at 53 & 58 and are doing a lot more traveling and going to various festivals, events, etc so are spending more $ then when working f.t. Also our health care costs have gone up. The insurance premiums plus the need to see docs, have tests, etc even though we take good care of ourselves.  You are not in 100% control of your health.  I do worry about some of the younger people on this board sometimes.

I do, too. I've dealt with older sick people for most of my life, so I become familiar at a young age with the associated costs.
The thought of potential age related illness and disability later in life has been the biggest motivator for me to RE asap. I would rather have an extra 25 years of freedom and good health and full ability compared to retiring at a more traditional retirement age even if it meant my stash would be smaller. I'll risk potential boredom (which will never happen.due to having lower income anyways) in my old age for a couple of decades of early retirement and full ability to do all the things I want. Yes its a trade off but one I'm finding has been well worth it.

I agree with spartana. Sure there are stories of people who retired too early with not enough money. But there are plenty of stories too about people who retired too late and weren't able to enjoy their retirement due to health issues. Anyway, a couple years ago I did a mini-retirement and spent 6 months of the year travelling. My expenditure for that year was still less than $20k. This is the MMM board - some of us here are capable of doing a lot and having heaps of fun with what some may see as very little money. :)

James

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Re: Retiring with $750K?
« Reply #53 on: November 05, 2016, 10:45:44 AM »
I think a lot of good points have been made here.


For myself, I would want more, but I don't think retiring with $750k is something low or crazy. They key in my mind is to not "live off" the initial $750k. You retire and plan to live off the investment profits, and then if the investment profits aren't maintaining the total around the $750k (or whatever number you chose), then you either cut spending or make a little money. You can work in retirement, it's just "working in retirement", not working to fund the bulk of your expenses and build your retirement.


Retiring with intent to spend down the $750k to fund retirement expenses is crazy in my mind, but retiring with $750k with the intent to live off the profits over time and maintain the initial amount with low COL and possible work as needed is an excellent plan.

MVal

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Re: Retiring with $750K?
« Reply #54 on: November 05, 2016, 11:11:20 AM »
Man, I feel kind of bare bones with my goals after reading all these posts. My FIRE goal right now is $400K, but like some have mentioned, I probably won't quit working completely. $400K would give me enough to cover all basic expenses, but I would like to do part time work that I find more rewarding to help supplement and help me leave the majority of my stash to grow until I'm old and broke down and need it for medical or other issues.

BuffaloStache

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Re: Retiring with $750K?
« Reply #55 on: November 05, 2016, 12:24:19 PM »
I think a lot of good points have been made here.


For myself, I would want more, but I don't think retiring with $750k is something low or crazy. They key in my mind is to not "live off" the initial $750k. You retire and plan to live off the investment profits, and then if the investment profits aren't maintaining the total around the $750k (or whatever number you chose), then you either cut spending or make a little money.

Agreed- great points and good discussion. MMM has spoken on this concept with the 4% rule often. That's what I plan on relying on when I go for FIRE.

soupcxan

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Re: Retiring with $750K?
« Reply #56 on: November 05, 2016, 12:41:29 PM »
I know a few people that retired in early 40's and fast forward 20 years later they are sorry. They are penny pinching as costs have gone up and both were professionals but not able to find work now in their fields. Also with the free time you find yourself wanting to spend more $ on activities, hobbies, etc as you have the time and aren't tired all the time from working. WE semi-retired 4 years ago at 53 & 58 and are doing a lot more traveling and going to various festivals, events, etc so are spending more $ then when working f.t. Also our health care costs have gone up. The insurance premiums plus the need to see docs, have tests, etc even though we take good care of ourselves.  You are not in 100% control of your health.  I do worry about some of the younger people on this board sometimes.

I do, too. I've dealt with older sick people for most of my life, so I become familiar at a young age with the associated costs.

+2. A 30 year old in the US that thinks $750k is going to last +50 years is fooling themselves.

And if you're working part time to supplement your $750k then you're not really retired.

Classical_Liberal

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Re: Retiring with $750K?
« Reply #57 on: November 05, 2016, 12:55:55 PM »
Man, I feel kind of bare bones with my goals after reading all these posts. My FIRE goal right now is $400K, but like some have mentioned, I probably won't quit working completely. $400K would give me enough to cover all basic expenses, but I would like to do part time work that I find more rewarding to help supplement and help me leave the majority of my stash to grow until I'm old and broke down and need it for medical or other issues.

Don't feel that way. I was curious and just checked, my YTD spending is just over 19K.  I buy and do anything I want (within reason).  When your "enough" threshold is low enough and are lucky enough to live in a rich nation, you can earn enough to live by accident. The 400K is just icing on the cake in case one of your future hobbies doesn't accidently earn income. Then, in your mid 60's, medicare and SS are the icecream for your cake.  Dammit, i'm getting fat just thinking about all the extra you'll have.

For those concerned with health care, if your income is below 400% of poverty (yes, that's 4X the poverty level in one of the richest countries in the world, in the richest era of history humans have seen to date), the max your premiums can cost under ACA law is 9.5% of MAGI.  To put that in perspective; for a single person you have to earn less than about 47K and family of four about 96K.  If you need more than that to live comfortably after FIRE (super HCOL area), pay off your house and reduce your income... need more than that with a paid off house?  I think you're missing the point.

Edit: more perspective, median US household income (average houshold size 2.5) is 55K
« Last Edit: November 05, 2016, 01:01:46 PM by Classical_Liberal »

Classical_Liberal

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Re: Retiring with $750K?
« Reply #58 on: November 05, 2016, 12:58:27 PM »
And if you're working part time to supplement your $750k then you're not really retired.

I hear the sirens

sol

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Re: Retiring with $750K?
« Reply #59 on: November 05, 2016, 01:06:09 PM »
+2. A 30 year old in the US that thinks $750k is going to last +50 years is fooling themselves.

Have you read ANYTHING written on this site?  What if that person with $750k is a single dude who spends $14k/year?  We have a bunch of people like that here, some of whom have contributed to this very thread. 

$14k/year on 750k of assets would be a 1.8% SWR.  Historically, in the United States, no SWR under 3% has ever failed, for any length of time.  You could have retired on the highest day of every bubble, right before every worst crash in US history, withdrawn an inflation-adjusted 3% of $22k/year, and ended up with a larger nest egg than you started with.  Every single time. 

Let me repeat that.  A 3% SWR of US stocks and bonds has never failed a retirement of any duration.

Why all the fear, people?  What does the amount of money matter, when it's the SWR that determines whether or not the money lasts?  You could retire with $100 in assets, if you could live on $3 per year, and still have that same 100% chance of success. 

Maybe all of the haters and naysayers are suggesting that an inflation-adjusted $22,500 per year is an impossibly small sum of money that nobody can live on?  That seems patently ridiculous to me, since approximately 97.4% of all humans alive today live on less than that.
« Last Edit: November 05, 2016, 01:28:45 PM by sol »

jim555

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Re: Retiring with $750K?
« Reply #60 on: November 05, 2016, 01:58:17 PM »
My expenses are about 14k a year.  That would be for basic survival.  And I live in a HCOL area. 
If I moved I could get it down lower.  Paid off house and car helps a lot.  It is very doable.

Cassie

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Re: Retiring with $750K?
« Reply #61 on: November 05, 2016, 02:06:26 PM »
SOL< the problem I see is that you are locking yourself into a certain income level unless you go back to work, did your skills get outdated, etc.  As you age you want more comfort. You also may want to travel more and have more experiences because it becomes very clear that your time could be short. You can feel very different about things at 60 then you did at 30. For example I used to tent camp but now use an old RV.  Tent camping has become too much work, etc.  we also enjoy cruises which is something we never did before. It would be sad if we could not afford to take them.  People can do what they want but they need to realize that their desires, etc may change as they age.

sol

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Re: Retiring with $750K?
« Reply #62 on: November 05, 2016, 02:08:24 PM »
As you age you want more comfort.

Yes, lifestyle inflation can ruin everyone. 

That's entirely within your control, though.  There is no rule that says you have to spend more as you age.  The research suggests the exact opposite is true, for most retirees.

Cassie

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Re: Retiring with $750K?
« Reply #63 on: November 05, 2016, 02:22:43 PM »
When people are in their 50's and 60's they want to travel more. Then after age 70 people travel less and their expenses go down.  You only have 1 life and it would be a shame not to get to do the things you desire within reason.  Most of my friends were frugal through out their lives and now this is the time to do the things you have always wanted too. It is not buying new cars/houses but having the experiences that one wants.

happy

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Re: Retiring with $750K?
« Reply #64 on: November 05, 2016, 02:30:38 PM »
I'm not trying to pick a fight here, but I'm in my late 50s and I find I want to travel less. In fact I lost interest in travel about a decade ago. I did do a lot of travel when I was younger.  I find I want to stay at home, grow vege, make my own soap, bread etc and enjoy all that my local area has to offer.

So I'd say some ( you and your friends) might want to travel more, but some don't. The stats in Australia are also that people spend less in retirement.

Cassie

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Re: Retiring with $750K?
« Reply #65 on: November 05, 2016, 02:37:49 PM »
None of us traveled much when younger at all because we had jobs, kids, saving $ for retirement, etc.  WE have also lost a few friends in their 50's and 60's so it has become clear that the time could be short for us to be healthy and do what we want. When we were young it always felt like we had lots of time. I have a few friends that traveled while in the military so now don't want to travel at all and some people just don't like to travel. There is nothing wrong with not wanting to travel but sad if you want to and can't afford to in old age.

nereo

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Re: Retiring with $750K?
« Reply #66 on: November 05, 2016, 02:40:18 PM »
When people are in their 50's and 60's they want to travel more. Then after age 70 people travel less and their expenses go down.  You only have 1 life and it would be a shame not to get to do the things you desire within reason.  Most of my friends were frugal through out their lives and now this is the time to do the things you have always wanted too. It is not buying new cars/houses but having the experiences that one wants.

"Having experiences" and "living a fulfilling life" don't require large sums of cash.  Neither does travel, within reason.  A couple can spend <$20k/year traveling the world, visiting a dozen or more countries over several months, or they can blow through that in a single week on airfare and fancy resort hotels.  Heck, it's not too difficult to spend a year abroad and have a net spending of <$0 if you're willing to rent out your home for income or hitch yourself to an NGO.

If you know you're the sort that wants luxury cruises on mega-boats, you'll need to save more.  But those of us that prefer to spend less are not less happy.

I'm not trying to pick a fight here, but I'm in my late 50s and I find I want to travel less. In fact I lost interest in travel about a decade ago. I did do a lot of travel when I was younger.  I find I want to stay at home, grow vege, make my own soap, bread etc and enjoy all that my local area has to offer.
Yeah, this also explains my parents, and goes a long way towards explaining why many people in their 60s do not have a passport.

Cassie

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Re: Retiring with $750K?
« Reply #67 on: November 05, 2016, 02:48:53 PM »
Neuro: my point was that at 30 you don't know what you will want to do at 60. We also work p.t. because we enjoy it and do volunteer work. We don't have a fancy lifestyle at all. When we semi-retired we downsized our home. etc.  When we cruise we stay in the cheapest rooms, etc. The point I was trying to make is that it might not be a good idea to lock yourself into a certain spending level at 30 that may not please you at 60. I have seen this happen to people and they were not happy about it. It is advice and people can take it or leave it.  I thought i would throw it out there for people to think about.

nereo

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Re: Retiring with $750K?
« Reply #68 on: November 05, 2016, 04:04:52 PM »
Neuro: my point was that at 30 you don't know what you will want to do at 60. We also work p.t. because we enjoy it and do volunteer work. We don't have a fancy lifestyle at all. When we semi-retired we downsized our home. etc.  When we cruise we stay in the cheapest rooms, etc. The point I was trying to make is that it might not be a good idea to lock yourself into a certain spending level at 30 that may not please you at 60. I have seen this happen to people and they were not happy about it. It is advice and people can take it or leave it.  I thought i would throw it out there for people to think about.
Understood and it's a fair point to make.  One never knows what their life will be like 30 years down the road.
That said one counterpoint I am trying to make is that want can be the enemy of happiness.  This can be expressed in many ways; the hedonistic treadmill, lifestyle creep, or in the deadly sin of envy. As pointed out above, with $750k you're ahead of >95% of humanity, and considering taxes you can eclipse the annual spending of the majority of American households. Not to sound too pity, but with that you can choose to be happy, or not.  For people who have high spending expectations there are two ways of meeting that; i) having a lot of money or ii) finding happiness with less.

I'm sure you've met people who retired early and became envious of their peers who had more money a few decades down the road. As a gentle retort I'll add that I now see many of my parents friend lament that they worked so long and 'wasted/missed' their chance to spend time with their kids/parents. A common refrain seems to be "if I could do it all over again I wouldn't have worked so much" or "I would have quit years ago - I have too much damn money and not enough time left." To be fair most of them were hard charging working professionals (doctors, lawyers, career military officers, etc.)

...and a relevant story: I've got a buddy that's an architect who designs custom homes.  Most of his work is for families that can spend $500k+ just building the house.  We were talking one day about our plans for our next home and I mentioned that he probably wouldn't like me as a client because insist on building something smaller, cheaper and above all prioritizing that every square foot is functional. He just laughed and told me that he's noticed that the more money and fewer restrictions a client begins with the less joy they seem to get out of the finished house.  They feel they need it and they say they love it but it doesn't bring happiness. Its clients like us that insist on building functional gems on tight budgets that wind up cherishing the final product.

full disclosure: I am in my mid-30s; its entirely possible I'll see things differently in 30 years.

sol

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Re: Retiring with $750K?
« Reply #69 on: November 05, 2016, 04:15:42 PM »
want can be the enemy of happiness.

Desire is the root of all suffering?  I'm pretty sure some bald guy said that.

Classical_Liberal

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Re: Retiring with $750K?
« Reply #70 on: November 05, 2016, 04:46:34 PM »
This whole idea of retire at 30 frugally, you'll regret it at 60 is a false dichotomy.

The idea that you can never make good money again after switching professions is generally not true.  That's only the case for folks in very top end pay, those with specialized work and long training periods, or those who have been at the same speciality for decades.  Most people fitting in those categories are not 30 with half a mil or more in net worth. Believing that one will never be able to make good income again is a scarcity mindset.  It's simply not the case.

I'm 40 and already in my 3rd distinct career.  I'm only four years in and already make mid-high end pay.  If I were to FIRE and choose to go back to work 10 years later, yes my skills would be out of date.  However, if I retire from my current career, its because I dont want to do it anymore.  It's highly doubtful I'd go back to it after any time frame.  If one chooses lifestyle inflation after "X" number of years FIRE'd, one can just start something new that is actually interesting. 

A second important point; people fail to realize what even a very small amount of income can do over long period of time.  Plug it into Cfiresim and see!  A 30 year retiree old decides to get a gig working as a bartender one weekend a month for social reasons and accidently makes $500 a month. If this 30 year old was at 4% on 750K, she just dropped to almost 3%. Here's a question... Has anyone here who is 40 or younger, been FIRE'd for more than a couple of years not bringing in some kind of money outside of passive investments?  I read the journals, the anecdotal evidence seems to indicate it's rare and they are not earning out of necessity.



Cassie

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Re: Retiring with $750K?
« Reply #71 on: November 05, 2016, 05:06:51 PM »
When I was 30 and my Mom 64 sometimes when she would share some personal insight I would not agree. She would just smile and say "Think of when I am gone."   I do think of her often:))

soupcxan

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Re: Retiring with $750K?
« Reply #72 on: November 05, 2016, 05:44:10 PM »
As you age you want more comfort.

Yes, lifestyle inflation can ruin everyone. 

That's entirely within your control, though.  There is no rule that says you have to spend more as you age.  The research suggests the exact opposite is true, for most retirees.

You're saying that healthcare expenses don't increase as you get older? Or that healthcare expenses are 100% controllable? Or that the ACA is guaranteed to remain unchanged for the next +30 years?
« Last Edit: November 05, 2016, 05:47:31 PM by soupcxan »

Classical_Liberal

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Re: Retiring with $750K?
« Reply #73 on: November 05, 2016, 05:50:52 PM »
@Cassie, your point is well taken.  My life, desires, tastes, expectations, etc are VERY different today than what I would have anticipated at 20 or 30 years old.  Hell, even two years ago I would have never guessed some of the things happening today.  Even my old bones are hurting after trying to learn to use one of these https://hoverboarder.com/classic-hoverboard/classic-self-balancing-electric-scooter-gold/ yesterday and taking a couple of spills.  Ten years ago my body wouldn't have noticed. 

My point is that change will always exist.  We can fear it or embrace it. The options are not only; retire at 30 with 750K or wait until 40 to save waaay more than I require now because I may need it at some future point, for some unknown future need.  There is an huge spectrum between those choices.  Embracing change and the challenges associated with it is what keeps me young.  A 30 year old who FIRE's with "enough" should not be afraid she will never again have the choice to garner a high salary for lifestyle changes or medical costs in the future.  I get it, to start a new career at 60 is a difficult feat.  Most at that age would rather teach than learn, opportunities are limited. However, there are 30 years between those two points which will provide many previously unconsidered opportunities to prepare and adjust for the changes she is experiencing.

oldtoyota

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Re: Retiring with $750K?
« Reply #74 on: November 05, 2016, 06:34:14 PM »
As you age you want more comfort.

Yes, lifestyle inflation can ruin everyone. 

That's entirely within your control, though.  There is no rule that says you have to spend more as you age.  The research suggests the exact opposite is true, for most retirees.

You're saying that healthcare expenses don't increase as you get older? Or that healthcare expenses are 100% controllable? Or that the ACA is guaranteed to remain unchanged for the next +30 years?

One of the things I think about is rehab (not a drug rehab). People can get sick and go into a rehab to get better after a hospital stay. Some of that is covered, but it's not all covered after a certain point. And it's expensive.

Alzheimer's is another costly situation. A relative of mine had it and one has it now. It costs $8K/mo to have someone with Alzheimer's care for. Why doesn't the family do it? They can and do even though it shortens their own lives, but they'll get to a point that it won't be possible. So then $8K/mo.

I bet the ACA doesn't cover ALZ care or other kinds of care like respite care for caregivers.


jim555

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Re: Retiring with $750K?
« Reply #75 on: November 05, 2016, 08:11:44 PM »
I bet the ACA doesn't cover ALZ care or other kinds of care like respite care for caregivers.
The would come under "old" Medicaid, meaning it requires a spend down of almost all assets before it kicks in.

BuffaloStache

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Re: Retiring with $750K?
« Reply #76 on: November 05, 2016, 09:41:51 PM »
A couple can spend <$20k/year traveling the world, visiting a dozen or more countries over several months, or they can blow through that in a single week on airfare and fancy resort hotels.  Heck, it's not too difficult to spend a year abroad and have a net spending of <$0 if you're willing to rent out your home for income or hitch yourself to an NGO.

This- I immediately thought of Jeremy and Winnie from Go Curry Cracker. Heck, these two are even raising a child while traveling the world.

a-scho

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Re: Retiring with $750K?
« Reply #77 on: November 05, 2016, 11:06:42 PM »
I know a few people that retired in early 40's and fast forward 20 years later they are sorry. They are penny pinching as costs have gone up and both were professionals but not able to find work now in their fields. Also with the free time you find yourself wanting to spend more $ on activities, hobbies, etc as you have the time and aren't tired all the time from working. WE semi-retired 4 years ago at 53 & 58 and are doing a lot more traveling and going to various festivals, events, etc so are spending more $ then when working f.t. Also our health care costs have gone up. The insurance premiums plus the need to see docs, have tests, etc even though we take good care of ourselves.  You are not in 100% control of your health.  I do worry about some of the younger people on this board sometimes.

1. Did they spend more than 4% of their stash and dwindle down to low numbers less than 25 years later?
2. You said they spent more during their retirement years than they did while working....So they did not figure out how much they would spend yearly in retirement, earn 25 times THAT amount, and then live off of 4%.
3. If they went into retirement in their 40's, then 20 years later, they would be getting social security. So, they are pinching pennies from the combination of their remaining stash and social security?? HMmmm, I bet there is some fat to trim in their lifestyle.


I do, too. I've dealt with older sick people for most of my life, so I became familiar at a young age with the associated costs.

limeandpepper

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Re: Retiring with $750K?
« Reply #78 on: November 06, 2016, 02:00:02 AM »
As you age you want more comfort. You also may want to travel more and have more experiences because it becomes very clear that your time could be short.

Most of my friends were frugal through out their lives and now this is the time to do the things you have always wanted too.

None of us traveled much when younger at all because we had jobs, kids, saving $ for retirement, etc.  WE have also lost a few friends in their 50's and 60's so it has become clear that the time could be short for us to be healthy and do what we want. When we were young it always felt like we had lots of time.

Well, I guess I am lucky to have enough foresight that I am already aware that time on this earth is not guaranteed at any age. If anything, your stories suggest that you shouldn't wait too late to retire. It sounds like you and your friends follow the path of waiting to do All The Things upon retirement. Not everyone follows this path. Some of us prefer to hedge our bets and do Some Of The Things while we're still saving for retirement, and as such we won't be going into some "Let the Floodgates Open!" lavish spending mode when we finally get there.

I'm willing to agree that I might want to spend more later. But at this time, if I suddenly miraculously have 750k invested, I can live off a 2 - 3% withdrawal rate. The stash will continue to grow in the background, so at some point when I wish to increase my spending, this can be accommodated within reason. It may not accommodate everything, but unless you have a seriously huge amount of money, nothing can. And for some people with low salaries and limited employment prospects, they can save 100% of their salary every year for their whole lives and still never reach the "ideal" figure that some people deem to be "enough".

wenchsenior

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Re: Retiring with $750K?
« Reply #79 on: November 06, 2016, 08:27:31 AM »
I personally would not be comfortable with 750K and no pension, UNLESS I had a lot of equity in a house that I could tap. The reason is primarily potential health care costs.

There are things you can do to stay healthy, but I think a fair number of young people on this board are going to be unpleasantly surprised in another 20 years, not by lifestyle inflation (which is controllable), but one-off and on-going medical costs that will crop up.

I was similarly optimistic when I was young, despite having a chronic health condition since my teens. I still felt kind of bulletproof and I really wasn't realistic about how much age would affect my health and that of a lot my friends.  The situation really changed between 40 and 50 for a lot of us. Several of my friends and relatives have in the past few years dealt with health issues that costs them upwards of 50K over the first year or two, and now mean they will have to plan for MUCH higher ongoing spending on health care for the rest of their lives.  Similarly, but tangentially related, young people don't tend to think much about potential long term care costs until they have to directly deal with it in regard to aging relatives.

Now, some things are probably too tough to realistically plan for. There's no way we're going to try to plan for something like early onset Alzheimer's because we simply can't without working until we drop. But both my grandmothers needed almost 10 years of long term care for regular age related conditions, so I'm not likely to dismiss those costs as I did when I was young, before I watched it happen.

I'm not saying we as mustachians can't plan for these costs. I'm just saying that the younger you are, the more likely you are to be underestimating these costs as part of your long term plan. We lived fairly contentedly on 25k/yr when we were in our 20s, too, but we don't view that as an attractive amount of spending for us now in middle age, and certainly not as we age further.  Our lives changed, and our needs definitely changed.  We help support family members, and likely will do so until right around the time my husband is full retirement age, so that adds costs. We live in a very inexpensive location that we hate, so we will surely be moving eventually and therefore our housing costs are unlikely to drop. We have no children to supplement our care as we age, so we need to plan for all the potential costs of aging on our own.   

Personally, I'm planning on base spending of 50K/year (approx what we spend now), plus at least 20K/year on top of that for health care and other unexpected needs. So we need the equivalent of 1.5 million in assets before I would feel comfortable.  Everyone situation is unique, though.


Cassie

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Re: Retiring with $750K?
« Reply #80 on: November 06, 2016, 01:09:36 PM »
A-scho: you are confusing us with some other people I know. No they did not spend more in retirement then before (we do though). But costs went up in 20 years and their income has not increased. Their medical care has greatly increased, etc.  We spend 65k (health care premiums alone are 10k before our out of pocket cost).  WE could not afford to travel when raising our kids. We camped and went to visit family, etc. We could not afford to take some nice trips until our late 40's.  We did not save all of our travel until retirement but know we may only have 8 years left (according to studies) until we may not want to travel or our health is not good enough.  My kids never had kids so yes they are doing a lot of travel. They have the ability to do so.  We are not doing lavish traveling. When we went to Europe the only meal we ate out was dinner and found places that were not expensive. When we cruise we watch for great prices and get the cheapest room, airfare, etc. The price still adds up. I always knew life can be short but we lived on 1 income for many years before I finished college and got a good job all while raising 3 kids.  We did not have the time or $ to take 5 people on a big vacation.   WE like to take 2 big trips a year of 2-3 weeks each.  Also our social life while raising the kids was having people to our house or going to their house. We still do that but also want to go out to dinner or festivals, events, etc. We never did any of that while young.  Yes people work in retirement for $. Both my husband and I have been working p.t. since retiring at things we love and the opportunities just presented themselves.

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Re: Retiring with $750K?
« Reply #81 on: November 06, 2016, 01:22:04 PM »
In another post here, someone said that a lot of FIRE-ers retire with about $750K.

I realize that's a generalization yet I'm curious if folks here would be comfortable retiring with $750K.

WITHOUT rental properties
and
WITHOUT a pension.

Would you feel comfortable retiring with just your savings?


Personally, I would not be comfortable with that amount of money.

Can you tell me how did you accumulate such capital?

nereo

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Re: Retiring with $750K?
« Reply #82 on: November 06, 2016, 02:41:56 PM »

Can you tell me how did you accumulate such capital?

Seriously?  You save most of your income over several years and let compound interest work for you.  That's a core premise of this entire forum.

For example, let's say you are single and earn $75k/year. If you max out your IRA, 401(k) (with match) and HSA you might squirrel away $30k per year.  On top of that you might invest another $18k in taxable accounts, giving you a total savings of ~$48k/year, a savings rate of 60% and federal tax burden of ~$4k and around $30k/year to live off of.

Under that scenario if you get 7% returns you'll have $750,000 in 10 years and four months.

BuffaloStache

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Re: Retiring with $750K?
« Reply #83 on: November 06, 2016, 06:18:10 PM »
Stahlmann, you may want to get started here if you aren't familiar with the main-portion of this forum site: http://www.mrmoneymustache.com/2011/04/06/meet-mr-money-mustache/

Metric Mouse

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Re: Retiring with $750K?
« Reply #84 on: November 06, 2016, 11:47:55 PM »

Can you tell me how did you accumulate such capital?

Seriously?  You save most of your income over several years and let compound interest work for you.  That's a core premise of this entire forum.

For example, let's say you are single and earn $75k/year. If you max out your IRA, 401(k) (with match) and HSA you might squirrel away $30k per year.  On top of that you might invest another $18k in taxable accounts, giving you a total savings of ~$48k/year, a savings rate of 60% and federal tax burden of ~$4k and around $30k/year to live off of.

Under that scenario if you get 7% returns you'll have $750,000 in 10 years and four months.

I love the math!

Libertea

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Re: Retiring with $750K?
« Reply #85 on: November 11, 2016, 04:53:15 AM »
In another post here, someone said that a lot of FIRE-ers retire with about $750K.

I realize that's a generalization yet I'm curious if folks here would be comfortable retiring with $750K.

WITHOUT rental properties
and
WITHOUT a pension.

Would you feel comfortable retiring with just your savings?


Personally, I would not be comfortable with that amount of money.
I'm 41 and expect to reach $750k in 2019.  The short answer is yes, I'd be comfortable retiring on $750k, since that's my target amount.  However, I am also self-insuring for LTC, so my goal is actually $800k, and I'm also adjusting for inflation, so that $800k is in 2015 dollars (which would be more like $900k in 2019).  That also would have to cover my housing, since I don't own any property.  However, I'm also more flexible than most and would have no issue with cutting back expenses, going back to work PT, or even leaving the country for a while if necessary to live somewhere cheaper. 

Happily for me, I've already been on a few cruises and know that I do not enjoy them.  I would consider going on a cruise if I got paid to take it (i.e., as an employee), but it wouldn't be my top choice of how to spend my post-retirement time.  I'm actually thinking I might choose to work abroad for a while after 2019, as this would allow me to do the kind of slow traveling that I do enjoy.

Ultimately I think we all need to be honest with ourselves and our families about what we truly want.  Some people are not meant to live a minimalist lifestyle and will be unhappy if forced to do so.  Others are fine with it or even prefer it.  I don't look down on people who want their creature comforts, but I'm simply not willing to keep working at my current job so that I can have those things.  To me, almost nothing else in life is more important than having as much control as possible over my time.  No doubt my view is colored by the fact that I'm at the point where I have to rally myself every day to get through yet anther day at work, and I can't readily imagine too many luxuries that would make me feel like continuing to work here was "worth it."  I might feel differently if I had a job I loved, or at least liked.

human

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Re: Retiring with $750K?
« Reply #86 on: November 11, 2016, 06:34:49 AM »
Lol at eating out every night on a trip to Europe being considered as "not lavish".

I get it I really do, I went to New Zealand this year and did a lot of expensive outings there, but I could have easily been just as happy snowshoeing in algonquin.

I don't have much to contribute because when I hit 750k in investments I will be elligible for a pension of close to 40k a year. However if right now I had a paid off cheap place with low real estate taxes and fees; and 750 stashed away I would retire in a second.
« Last Edit: November 11, 2016, 06:37:36 AM by human »

Classical_Liberal

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Re: Retiring with $750K?
« Reply #87 on: November 11, 2016, 09:44:31 AM »
What is the true goal here?
 
I donít think my goal has ever been ďI want to be FIĒ.  My goals have been; I want to live a happy life, do things that are meaningful to me at my own pace, slow travel, have time for friends and family, give back to the world, etc.  FI is just a means to the end.  Too often we forget this.  Even if someone thinks they canít be FI at $X, that doesnít mean they havenít saved enough to reach many or all of their underlying goals.
 
IMO this is a lifestyle forum, one that challenges us all to minimize our consumption while maximizing our personal happiness.  Sometimes spending money is the best way to do this, often it is not.  Those on this forum who have optimized, minimalized, or created reinforcing systems which bring them to a savings rate of more than 50% have more than just the binary decision of FI or bust.  This is a false dilemma.  Furthermore, many have reached the point of being debt free, a solid ďold age retirementĒ savings, and a few years of taxes paid expenses available.  Those of us in that situation have even more options!   Just like anything else, the closer one gets to reaching FI there are diminishing returns.  I would encourage the OP and anyone else to remember WHY you want to be FI.  If itís because you hate your job, have you already reached a point you donít have to keep that job anymore?  If itís to be home with your kids, how old will they be when you finally reach FI?  If itís to travel, do you know you will still have that wanderlust in ten years?

Please donít waste life trying to reach a goal of ďFIĒ if that really wasnít what originally drew you to the concept.

Slee_stack

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Re: Retiring with $750K?
« Reply #88 on: November 11, 2016, 10:39:53 AM »
Is this the bizarro world MMM thread?


It seems the suggestion here is to sell more of one's life off in exchange for a gilded death bed.

Retire-Canada

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Re: Retiring with $750K?
« Reply #89 on: November 11, 2016, 11:21:52 AM »
If I had $750K USD in investments I would happily retire with no worries and that's with a substantial mortgage, living in a HCOL area, travelling extensively and a few moderately expensive hobbies. I would keep my spending at ~4% of my starting portfolio on average using some sort of variable withdrawal strategy that accounts for market performance. I would shift my non-immediate expenses around [roof replacement, car replacement, expensive travel, new sporting equipment, etc...] in line with market performance spending less in down years and more in up years.

I've got no work pension and no rental properties. I am invested 100% in equities. I hold no cash.  When FIRE I may shift to 1 or 2 years' expenses in bonds as a psychological crutch.

I fully expect that at some point I'll have so much money invested I won't be able to spend it in my lifetime at my current burn rate. Worst case I am not freaked out by taking on a PT job later on. I suspect I actually may want to do so and enjoy the social aspect when I am older even if I don't need the money.

Libertea

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Re: Retiring with $750K?
« Reply #90 on: November 11, 2016, 04:22:29 PM »
CL, I partly agree with you and partly disagree.  The disagreement is that I do think pursuing FI as an end in itself is of value, because divorcing the need to make money from whatever work you do allows you maximum freedom to pursue the work that is most meaningful to you.  In an ideal Star Trek world, money would be obsolete, and we'd all have that ability.  But short of Google succeeding in beating death in the next few decades, I'm not going to make it to the 23rd century, and therefore, I have to go with a second best option. 

Of course, I see your point too, in that there are other ways to accomplish the same goal.  I could, for example, try to marry a multi-millionaire, win the lotto, or just decide to be a vagabond and declare myself FI right now.  However, all of those options depend on the whims of others, just as being an employee (or even owning a business to a lesser extent) puts you at the whims of others in terms of you being unable to work completely on your own terms.  In the reality of the early 21st century economy, unless you are FI, making enough money to support yourself still has to be a consideration in anything you do.  So to me, achieving FI is therefore synonymous with maximizing my personal freedom, and I do view it as an end goal in itself.

LindseyC

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Re: Retiring with $750K?
« Reply #91 on: November 11, 2016, 06:44:46 PM »
I'm Canadian so healthcare is a bit different for me. I would definitely retire at 750k. I live on less than that now and have my entire adult life and that includes paying a mortgage now, which will be long gone by the time I retire.

I actually became quite sick about three years ago and that cut my income in half and I have learned to live a happy life very economically.  Being sick has really taught me time is way more valuable to me than leading an expensive life. I actually find living a simple life is a challenge I enjoy and derive pleasure from, it's not for everyone I understand, but it's a life I love. 

In retirement I really want to live in my current low key house, gardening, growing food and flowers, walking around town, visiting friends, enjoying my hobbies and just living the good life. I would much rather spend $40 on a great board game I can play for years than $100 on one fancy meal. The other side of that if I want a $100 meal I look forward to flipping some thrift store finds to earn a little extra money to splurge, after all I'm retired and time is my friend!

BuffaloStache

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Re: Retiring with $750K?
« Reply #92 on: November 11, 2016, 07:13:11 PM »
I donít think my goal has ever been ďI want to be FIĒ.  My goals have been; I want to live a happy life, do things that are meaningful to me at my own pace, slow travel, have time for friends and family, give back to the world, etc.  FI is just a means to the end.  Too often we forget this.  Even if someone thinks they canít be FI at $X, that doesnít mean they havenít saved enough to reach many or all of their underlying goals.

Completely agree. You must have something to retire, or be FI, to. Just becoming FI for the sake of being FI isn't a great long term strategy.

frugal_c

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Re: Retiring with $750K?
« Reply #93 on: November 12, 2016, 07:39:04 AM »
If we are talking about retiring with $750k and our house paid off we could do this very easily; that would represent a WR of < 3% for us.  If we include our current mortgage payments we'd be hovering around 4%, so still easily doable with some flexibility.

Over 90% of  the world exists on < $35,000/year.

ETA: we're actually planning on starting out "coast-into-retirement' plan with far less - $400-500k.  Short version; we'll switch from full time to part time and stay that way for a decade or so. Part time work will more than pay our bills and our total number of non-work days will roughly double.
It's not a plan for everyone but it seems like the best one for us.

I have been thinking on similar lines.  I will want a higher number than $500k before I switch but regardless, it is tempting to just find a job that I want to do rather than retiring.

Classical_Liberal

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Re: Retiring with $750K?
« Reply #94 on: November 12, 2016, 09:53:09 AM »
@Libertea

I understand you point.  However, your goal  isn't FI, it's (paraphrased from your statement) to maximize personal freedom and minimize the impact of others "whims" on your life. FI is a means to that end and as you pointed out it's not the only potential means. IOW (sci-fi analogies) becoming FI is like when Neo discovered he was in the matrix and began to manipulated this false world in ways that benefited him while in it.  He gained maximum personal freedom inside, but the true freedom came once Neo realized that the life worth leading isn't in the matrix at all, its in the real world.  No crazy skills were required out there.  Being FI and/or having extra money can be of great help, but isn't a requisite to most goals.  Even with the goal maximizing freedom, full FI may not be the most efficient path.  It's likely highly circumstantial at best.

oldtoyota

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Re: Retiring with $750K?
« Reply #95 on: November 12, 2016, 02:07:16 PM »
I bet the ACA doesn't cover ALZ care or other kinds of care like respite care for caregivers.
The would come under "old" Medicaid, meaning it requires a spend down of almost all assets before it kicks in.

That basically means it doesn't cover ALZ. Spending down assets and forcing the healthy spouse to live with a car, a house, and very few dollars is no sort of life at all. They need a better system.


oldtoyota

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Re: Retiring with $750K?
« Reply #96 on: November 12, 2016, 02:09:31 PM »
In another post here, someone said that a lot of FIRE-ers retire with about $750K.

I realize that's a generalization yet I'm curious if folks here would be comfortable retiring with $750K.

WITHOUT rental properties
and
WITHOUT a pension.

Would you feel comfortable retiring with just your savings?


Personally, I would not be comfortable with that amount of money.

Can you tell me how did you accumulate such capital?

I never stated I accumulated such capital.

gerardc

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Re: Retiring with $750K?
« Reply #97 on: November 12, 2016, 10:22:23 PM »
I think your question in the OP is really less about the actual dollar amount and more about a "sure" retirement. Nothing in life is "sure". Live is all about compromise, adjustment, and ultimately, acclimation. I personally don't put all faith into the 4% rule. I'm about 90% confident with "2% rule", but also optimistic that 4% or better will actually be the norm. I definitely think it's wise to diversify. So, therefore, I think real estate and possibly another small business that's mostly passive are critical parts to "retirement". And even then, keeping your mind and options open are critical. Everything truly is temporary. So, with that, I'm optimistic.

Ultimately, if you find the right work that's enjoyable, it's the only thing that makes life worth living (the ability to dream and create). I guarantee you that there's no such thing as "true" retirement. You're looking for distractions, regardless of your financial situation. The only purpose of money is to make you more of who you already are. To allow you to explore and do what you want to do. The concept of "retirement" is a modern facade that I wish this blog/forum would quit alluding to. It's the ideal that society generally accepts as the norm, without any thought as to what "retiring" actually means. In reality, the only thing it means is being able to do less of what you don't care for and more of what you do. That doesn't necessarily mean you won't ever make money again even after you've given up what you perceived to be your source of sustainability - in reality, odds are you'll come out way better.

Good post. I think what this forum calls retirement, FI, FIRE, etc. is mostly escaping a typical 9-5 corporate job. Freelancers typically don't feel the need to "retire" early any further, as they mostly feel free already. Many people feel trapped in a prestigious career, like the typical lawyer, accountant, engineer, that they are not passionate about, but they're too "proud" to admit to their colleagues they'd rather just sell fruits at the market, and would be happier with a more menial occupation, so they claim "retirement" to finally go for what they want. A few people have the guts to switch careers, but after one or multiple degrees, it can be hard to admit defeat.

totoro

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Re: Retiring with $750K?
« Reply #98 on: November 13, 2016, 05:29:00 AM »
Good post. I think what this forum calls retirement, FI, FIRE, etc. is mostly escaping a typical 9-5 corporate job. Freelancers typically don't feel the need to "retire" early any further, as they mostly feel free already. Many people feel trapped in a prestigious career, like the typical lawyer, accountant, engineer, that they are not passionate about, but they're too "proud" to admit to their colleagues they'd rather just sell fruits at the market, and would be happier with a more menial occupation, so they claim "retirement" to finally go for what they want. A few people have the guts to switch careers, but after one or multiple degrees, it can be hard to admit defeat.

That is not how it works for me.  Just prefer to own my time and certainly would not prefer a "more menial occupation" to being a highly paid professional as it wouldn't have helped me own my own time as quickly as I have.  And I would not agree that I would feel mostly free as a "freelancer" as I was one.  Work is work even if you like what you do or are independent of a corporate environment.  Unless you would sell fruits in the market as a volunteer that is not time freedom either even if it is a lower level of job difficulty/intensity.  I guess the point is that I cannot picture a career switch that involves a salary that doesn't come with obligatory tasks I wouldn't choose as an unpaid volunteer.

happy

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Re: Retiring with $750K?
« Reply #99 on: November 14, 2016, 01:45:49 AM »
Good post. I think what this forum calls retirement, FI, FIRE, etc. is mostly escaping a typical 9-5 corporate job. Freelancers typically don't feel the need to "retire" early any further, as they mostly feel free already. Many people feel trapped in a prestigious career, like the typical lawyer, accountant, engineer, that they are not passionate about, but they're too "proud" to admit to their colleagues they'd rather just sell fruits at the market, and would be happier with a more menial occupation, so they claim "retirement" to finally go for what they want. A few people have the guts to switch careers, but after one or multiple degrees, it can be hard to admit defeat.

That is not how it works for me.  Just prefer to own my time and certainly would not prefer a "more menial occupation" to being a highly paid professional as it wouldn't have helped me own my own time as quickly as I have.  And I would not agree that I would feel mostly free as a "freelancer" as I was one.  Work is work even if you like what you do or are independent of a corporate environment.  Unless you would sell fruits in the market as a volunteer that is not time freedom either even if it is a lower level of job difficulty/intensity.  I guess the point is that I cannot picture a career switch that involves a salary that doesn't come with obligatory tasks I wouldn't choose as an unpaid volunteer.

+1
That's why I continue to work part-time in my high paid job, whilst padding the stash.