Author Topic: Another "you're too young to retire" comment  (Read 17527 times)

Mr Mark

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Re: Another "you're too young to retire" comment
« Reply #100 on: March 14, 2017, 12:04:31 PM »
Good question - I never got into real estate because I never had any money saved before reading MMM about 2 years ago.  Wouldn't even know where to begin. 

I also just realized that if I got the house paid off, I wouldn't need $50k per year.  We pay about $30k per year right now for our mortgage, so if we got rid of that, we'd be only around $25k per year spending.  Bump it up to $30k because we'll maybe do more stuff out and about like travel.  So $30k per year.  Hmmm.....

$30,000 x 25 = $750,000
Mortgage = $355,000
Total = 1,105,000

Oh that's much better.  Glad I stopped by this thread!
The "don't pay your house off" crowd here at MMM would probably encourage you to keep the mortgage and invest that money instead. You'll need a higher income but will have higher assets. I'm personally in the "no debt or mortgage in ER"   club myself but ymmv.  Lots of threads around about both.

I think many of us keep a mortgage crowd are generally referring to those in solid accumulation mode. As you get close to fire a moderate paid off house lowers your need for taxable income which may aid other subsidies and reduce taxes and a need to sell equity in a market dip. YMMV
Mr. Mark

tyort1

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Re: Another "you're too young to retire" comment
« Reply #101 on: March 14, 2017, 12:26:02 PM »
I think many of us keep a mortgage crowd are generally referring to those in solid accumulation mode. As you get close to fire a moderate paid off house lowers your need for taxable income which may aid other subsidies and reduce taxes and a need to sell equity in a market dip. YMMV
Oh, I intend to pay the minimum on the mortgage until I accumulate $1.2 million.  Then I can pay off the mortgage in full, but between now and then it's all going Vanguard index stock and index bonds.  I've had job instability in the past and I've learned in my situation it's far, far better to have $$ invested than sunk into extra payments on the mortgage. 

But at some point I'd like to be mortgage free, looks like another 14 year or so.  Maybe even sooner now that my wife got her real estate license and is heading back into the work force.
Frugalite in training.

tyort1

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Re: Another "you're too young to retire" comment
« Reply #102 on: March 14, 2017, 12:35:39 PM »
The "don't pay your house off" crowd here at MMM would probably encourage you to keep the mortgage and invest that money instead. You'll need a higher income but will have higher assets. I'm personally in the "no debt or mortgage in ER"   club myself but ymmv.  Lots of threads around about both.

Debt sucks, IMO.  I'll pay the minimum for the next 15 years, but once I'm at FI I'll probably take out some $$ and pay off the mortgage.  Hell, I might even time the market by doing that on an upswing rather than a dip.  Shocking, I know :-)

Don't forget that while you must live SOMEWHERE, you do not need to retire where you are. If you have $125,000 equity in your home now, for example, you could sell your current home and retire to a very nice home, paid in cash, in about 30-40% of the US. Keep running the numbers. You might be over half way there already.

Isn't that interesting, you just went from hopeless to half way there in just a couple of posts :)

Oh man you have no idea how much of a life saver MMM was for me.  Not just money either.  A complete re-alignment of my perceptions of this world and my place in it, and what's important.  I used to want to have a "nice life" because my parents were poor during the early parts of my life and it set me to separate myself from "poor people" by spending money and showing I had made it. 

Small example - recently I was eating some oatmeal for breakfast and I was scraping the poot to et the last bit out.  I would have never have done that in the past because "poor people scrape".  Now my mentality is "non-wasteful rich people DO scrape".  Haha, that's quite a shift!

I also notice more recently, as we've gotten to around $300k invested, that my desire to buy shiny things is dropping almost in directly inverse proportion to the amount of money I actually have.  It was like, when I was not wealthy (no savings), I wanted to give the impression of wealth by having new/shiny things.  Now that I have ACTUAL wealth, the desire to show it off just drops like a rock.

Anyway, I owe a HUGE thanks to MMM and especially to the people on this forum.  MMM got my mindset turned around with his blog posts, but it was the members here that help people methodically work out the real-world applications that was the final piece of the puzzle.  So... THANK YOU ALL! 
Frugalite in training.

Dicey

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Re: Another "you're too young to retire" comment
« Reply #103 on: March 14, 2017, 01:17:56 PM »
I think many of us keep a mortgage crowd are generally referring to those in solid accumulation mode. As you get close to fire a moderate paid off house lowers your need for taxable income which may aid other subsidies and reduce taxes and a need to sell equity in a market dip. YMMV
Oh, I intend to pay the minimum on the mortgage until I accumulate $1.2 million.  Then I can pay off the mortgage in full, but between now and then it's all going Vanguard index stock and index bonds.  I've had job instability in the past and I've learned in my situation it's far, far better to have $$ invested than sunk into extra payments on the mortgage. 

But at some point I'd like to be mortgage free, looks like another 14 year or so.  Maybe even sooner now that my wife got her real estate license and is heading back into the work force.
I'd quote the post below this one, but this one's shorter.

You're rocking it, ty! I am so glad you asked, listened and learned about the upsides of letting a cheap, affordable mortgage play out naturally while your marshall your green soldiers into a mighty early retirement army. You're going to be amazed at how fast that 300k grows! Woot!
I did it! I have a journal!
A Lot Like This
And hell yes, I am still moving confidently in the direction of my dreams...

radram

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Re: Another "you're too young to retire" comment
« Reply #104 on: March 14, 2017, 04:18:40 PM »
Good question - I never got into real estate because I never had any money saved before reading MMM about 2 years ago.  Wouldn't even know where to begin. 

I also just realized that if I got the house paid off, I wouldn't need $50k per year.  We pay about $30k per year right now for our mortgage, so if we got rid of that, we'd be only around $25k per year spending.  Bump it up to $30k because we'll maybe do more stuff out and about like travel.  So $30k per year.  Hmmm.....

$30,000 x 25 = $750,000
Mortgage = $355,000
Total = 1,105,000

Oh that's much better.  Glad I stopped by this thread!

Don't forget that while you must live SOMEWHERE, you do not need to retire where you are. If you have $125,000 equity in your home now, for example, you could sell your current home and retire to a very nice home, paid in cash, in about 30-40% of the US. Keep running the numbers. You might be over half way there already.

Isn't that interesting, you just went from hopeless to half way there in just a couple of posts :)
This is what I did and it put me solidly into FI (wasn't there yet) and able to retire. Sold the paid off house in a HCOL area and moved to a nicer LCOL area and bought a place with cash for about 1/3 the cost. Eventually moved back to HCOL area again during housing crash/great recession, bought a foreclosure with cash very cheap and now deciding if I should sell for big bucks, rent it out for big bucks or stay as it doesn't cost me much. Lots of paths to FIRE.

This is FANTASTIC.

California right? How about another option? Sell it at cost to a fellow FIRE family to allow us to afford the California sun :) I would even consider an even swap for a 3BR ranch on 1 1/2 acre in WI.

PM me if interested (ha ha).


jim555

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Re: Another "you're too young to retire" comment
« Reply #105 on: March 14, 2017, 05:24:24 PM »
I purchased a condo for cash prior to FIREing.  It allows me to live on very little income since only taxes, maintenance, electric and internet are required.  The money tied up earns no taxable return and keeps my MAGI low which helps with the ACA.  Now that the ACA will likely change I will probably sell and go nomad/slow travel until 65.  Other advantages to owning are the nice 250k capital gains exclusion, 150k asset protection due to homestead laws.  Being in control of when I move is important to me.

Cassie

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Re: Another "you're too young to retire" comment
« Reply #106 on: March 14, 2017, 05:59:20 PM »
We have actually changed our minds about having a paid off house. Ours was but we decided with interest rates so low to take some of the $ out to boast our reserves while still only having a payment of 500/month. We took a 30 year but likely won't live that long.  Rents for this house are 1500/month.

Frugal_is_Fab

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Re: Another "you're too young to retire" comment
« Reply #107 on: March 14, 2017, 07:24:53 PM »
Problem with society thinking retirement is an age instead of being a number. Everyone just assumes you have to work to the traditional "retirement age".

I think the Social Security Administration has really brainwashed people on their retirement age.  Now that people know I'm retiring.  I get "I wish I would but I have to work to... fill in SSN FRA"     Well I guess I should be offended they think I'm that old but hopefully once I get off the stress treadmill I can look younger.  I'm 56 , My Social Security FRA is 66 1/2 , I don't give two shakes of a rat's rear about that age because I did the math and working till that age and then collecting Social Security gets me an amazing additional $100 per month as opposed to quiting now and then collecting Social Security at FRA.   It has to do with the Social Security formula that returns very little for incomes over 60k per year but ofcourse taxes you right up to 130k per year in 2017.   They look at 35 years and inflation adjust so if you worked at your professional job 35 years and then quit really makes a very minor difference in Social Security vs staying on the job to FRA.
« Last Edit: March 14, 2017, 07:28:51 PM by Frugal_is_Fab »

Mr Mark

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Re: Another "you're too young to retire" comment
« Reply #108 on: March 15, 2017, 08:36:15 AM »
The "don't pay your house off" crowd here at MMM would probably encourage you to keep the mortgage and invest that money instead. You'll need a higher income but will have higher assets. I'm personally in the "no debt or mortgage in ER"   club myself but ymmv.  Lots of threads around about both.

Debt sucks, IMO.  I'll pay the minimum for the next 15 years, but once I'm at FI I'll probably take out some $$ and pay off the mortgage.  Hell, I might even time the market by doing that on an upswing rather than a dip.  Shocking, I know :-)

Don't forget that while you must live SOMEWHERE, you do not need to retire where you are. If you have $125,000 equity in your home now, for example, you could sell your current home and retire to a very nice home, paid in cash, in about 30-40% of the US. Keep running the numbers. You might be over half way there already.

Isn't that interesting, you just went from hopeless to half way there in just a couple of posts :)

Oh man you have no idea how much of a life saver MMM was for me.  Not just money either.  A complete re-alignment of my perceptions of this world and my place in it, and what's important.  I used to want to have a "nice life" because my parents were poor during the early parts of my life and it set me to separate myself from "poor people" by spending money and showing I had made it. 

Small example - recently I was eating some oatmeal for breakfast and I was scraping the poot to et the last bit out.  I would have never have done that in the past because "poor people scrape".  Now my mentality is "non-wasteful rich people DO scrape".  Haha, that's quite a shift!

I also notice more recently, as we've gotten to around $300k invested, that my desire to buy shiny things is dropping almost in directly inverse proportion to the amount of money I actually have.  It was like, when I was not wealthy (no savings), I wanted to give the impression of wealth by having new/shiny things.  Now that I have ACTUAL wealth, the desire to show it off just drops like a rock.

Anyway, I owe a HUGE thanks to MMM and especially to the people on this forum.  MMM got my mindset turned around with his blog posts, but it was the members here that help people methodically work out the real-world applications that was the final piece of the puzzle.  So... THANK YOU ALL!

Well done tyort ! !

That's an interesting effect you've found. I agree, once you really get those little green soldiers (and even better, the ones they created) working for you the previously theoretical but now observable power of compounding interest is a siren call to keep adding more when you can see the earning taking off.

The more you save the more addictive saving gets.
Mr. Mark

BlueHouse

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Re: Another "you're too young to retire" comment
« Reply #109 on: March 15, 2017, 10:02:32 AM »
Isn't that interesting, you just went from hopeless to half way there in just a couple of posts :)

I think if most people took the time to do the math and start thinking about what it really takes, more would have a better feeling about retirement.  I know that was true for me.  Before I actually ran my numbers, I firmly believed that I wouldn't be able to retire before age 74 (when mortgage was set to finish).  Over time, and with the help of many great MMMers, I've discovered many alternate paths to get me there sooner.  And in fact "there" has changed too.  I've shaved roughly 20 years off of my original date, and I'm still playing around with how much I'll need, so that can keep changing. 

But to point, yes, it is interesting that when you put some time into a proper analysis, and see other options available, many many different outcomes are possible. 
Sometimes nothing can be a real cool hand