Author Topic: Reader Case Study - Late Starter in Germany  (Read 1717 times)

screwit

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Reader Case Study - Late Starter in Germany
« on: July 09, 2015, 04:55:03 PM »

REMOVED DETAILS FOR NOW

This is my first post, having only found MMM a month ago. I'm not ready to go full mustachian right now, but I'm hoping the experience here can help me move in the right direction. I'm new to the concept of FIRE, but am excited to aim for it in 10 years (aged 50). I have no idea what scale of change I need to effect in order to make that happen and would like help with working out what my aims should be for yearly savings and spending cuts. I have tried the online calculators but can't work out how to account for my non-US structures and pensions that pay out later than the FIRE aim.

« Last Edit: June 18, 2016, 03:50:54 AM by wtw »

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Re: Reader Case Study - Late Starter in Germany
« Reply #1 on: July 09, 2015, 08:07:45 PM »
Quote
... Can you help give me an idea of what I would need to retire if we stay at this level of spending?

That's a relatively easy one.  Basic rule of thumb is to take your annual expenses and multiply them by 25.  That will give you the "magic number" you need to declare yourself financially independent and pull the retirement trigger.

So, note this.  Every 1000 euros you cut from your annual budget reduces your magic number by 25,000 euros.  Now, calculate how long it takes you to save 25,000 euros.  That's how much time you can cut from your wait to retire for every 1000 euros you cut from your annual expenses.

Good luck!

screwit

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Re: Reader Case Study - Late Starter in Germany
« Reply #2 on: July 10, 2015, 03:21:17 AM »
Quote
... Can you help give me an idea of what I would need to retire if we stay at this level of spending?

That's a relatively easy one.  Basic rule of thumb is to take your annual expenses and multiply them by 25.  That will give you the "magic number" you need to declare yourself financially independent and pull the retirement trigger.

Thanks for the response. I've read the MMM blog posts etc on this but I'm still having trouble working out what is spending and what is saving. And, yes, I feel like an idiot. I know that house value is added into net worth but this feels wrong - I'll always need somewhere to live and I can't buy food with my house value. So by that token, none of my mortgage payments are helping me gain the liquid assets I need to be able to live. By the same token none of the pensions which pay out only at age 60 or 65 help me live if I FIRE at 50.

So what am I aiming for? 25x my annual spending without accounting for those items (so that I'm good to retire at 50 but will get a windfall 15 years later)? Or with accounting for those items but have a very lean 15 years going over the SWR until the pensions come through?

Expenses (minus mortgage, pensions and savings and insurances which will be dropped with RE) ~50K/year *25 = 1.26 million
Net worth with house and all pensions except for government and DH work (which I can't work out how to add because all I have is the information on the expected monthly payout at age 65) = 471K
Net worth without house and late payout pensions ~ 90K

What's the right way to do this?

Gah, sorry for being such an idiot newbie!