The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: oldtoyota on November 01, 2016, 04:27:04 PM
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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.
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Definitely not. The younger someone is the more foolish this would be in my opinion.
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I would say that depends on how old you are when you retire with 750K and possibly whether you have mortgage/rent?
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In an area with a very low cost of living, I can see how that might work, but it doesn't leave much of a buffer for health insurance, catastrophic events, and housing.
I can't live comfortably on $30,000 in this area (HCOL) and I do like a few creature comforts, so I wouldn't retire on that little, but to each his own.
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I'd do it in an instant. Well, not an instant because it takes some time to get the mindset right. Financially, I'd be fine on 30K, I know I'd likely end up with some type of paid work again. Are you in the US? will you get SS?
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I will be able to retire comfortably on 24k a year including a mortgage in an HCOL area. I can't relate to needing 750k+.
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I probably good if I had a paid off house. Granted, I'm single and in a LCOL area so my expenses are lower than others. If I had a family it would be harder for sure.
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In a heartbeat, if your expenses were low enough. A single dude who wants to run his sailboat around the world with whatever beautiful women want to accompany him? Totally. A child-free paralegal who wants to quit her big law job and volunteer for her local food bank? Why not?
Remember that retirement isn't a one way street, you're not committing to never working again. You're just committing to not continuing your current job in the immediate future. That's a bigger commitment to make, the older you get and the less control you keep over your growing expenses.
If you're a 40 something middle class suburbanite with three cars and an overwhelming sense of guilt about not being able to send you kids to college for free? Then early retirement probably isn't for you, at any level of assets. There will always be SOMETHING you could work towards, if you only had a little more money.
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I previously asserted (http://forum.mrmoneymustache.com/real-estate-and-landlording/the-great-'pay-off-mortage'-vs-'invest-in-stocks'-debate-possible-solution/msg747609/#msg747609) that "it [is] child's play to retire on US$250,000". It is even easier still to retire on US$750,000.
If I had a family it would be harder for sure.
It's far easier (http://forum.mrmoneymustache.com/welcome-to-the-forum/the-massive-incomewealth-gap-of-married-vs-non-married/msg1245729/#msg1245729) to retire with a family than without one. (It might be harder to retire on a given amount, but it takes considerably less time to save that amount in the first place, so the person with a family still comes out ahead by a large margin.)
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Worked for me. It may have been foolish to do so at such a young age, but I feel it would have been more foolish to keep working when I clearly have enough.
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My annual expenses, in a high COL area. . . With a mortgage (including PITI), a student loan, a car, and a very healthy drinking at the bar habit. . . Plus an international vacation and a bunch of domestic travel are at it under $30k . . . So yes. Absolutely.
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I previously asserted (http://forum.mrmoneymustache.com/real-estate-and-landlording/the-great-'pay-off-mortage'-vs-'invest-in-stocks'-debate-possible-solution/msg747609/#msg747609) that "it [is] child's play to retire on US$250,000". It is even easier still to retire on US$750,000.
If I had a family it would be harder for sure.
It's far easier (http://forum.mrmoneymustache.com/welcome-to-the-forum/the-massive-incomewealth-gap-of-married-vs-non-married/msg1245729/#msg1245729) to retire with a family than without one. (It might be harder to retire on a given amount, but it takes considerably less time to save that amount in the first place, so the person with a family still comes out ahead by a large margin.)
Cathy, I am assuming your point is not about a single income family of four.... or is it?
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Like about 99% of all the questions asked here: it depends. It's such an arbitrary question.
A couple living off $30k/yr? Easy. Especially if you're willing to be mobile and relocate to a low-medium cost of living area. Of course, the waters get a little murkier if you start adding expensive travel and hobbies into the mix.
I mean if your risk tolerance is so low that you're unwilling to commit to the idea of living off of 4% indefinitely, that's one thing; but either way, $750k is more than enough to pull the tricker for two people. I think most single people here could easily do it on much less, more like $400-500k.
And, look, I don't see any point in calling it "retirement". You'll be "working" in your retirement anyway, it will just be work that you enjoy. You can always go back to "actual" work for money.
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I previously asserted (http://forum.mrmoneymustache.com/real-estate-and-landlording/the-great-'pay-off-mortage'-vs-'invest-in-stocks'-debate-possible-solution/msg747609/#msg747609) that "it [is] child's play to retire on US$250,000". It is even easier still to retire on US$750,000.
If I had a family it would be harder for sure.
It's far easier (http://forum.mrmoneymustache.com/welcome-to-the-forum/the-massive-incomewealth-gap-of-married-vs-non-married/msg1245729/#msg1245729) to retire with a family than without one. (It might be harder to retire on a given amount, but it takes considerably less time to save that amount in the first place, so the person with a family still comes out ahead by a large margin.)
"Child's play" is an apt description, considering the described lifestyle includes living on Kraft macaroni and cheese.
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I wouldn't be comfortable. I'd worry too much - but I'm inclined that way.
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Depends how I calculate that with currency exchange and different COL between US and Australia. The currency exchange rate does fluctuate quite a bit between USD and AUD independently of COL, so its hard to be precise.
That being said, I worked out core basic day to day living expenses for myself not working would be $AUD25k ( with a better diet that Kraft mac cheese). This doesn't account for large extra expenses like extra home maintenance, car replacement etc. Thus $AUD30k a year would be the bare minimum and a bit close for my liking with regards to unexpected expenses. On the other hand in Australia worse case scenario there is the Old Age Pension and nearly free healthcare.
A while back we Aussies had a bit of discussion on relative COL between US and Down Under and pulled some stats and worked out its about 1.5-1.6 x more expensive basic in Australia compared with US - i.e. for MMMs US25k a year US, for Australians its more like AUD40k. So if we converted US750k into Aussie dollars in terms of somewhere in the regional of AUD 1-1.1m, I would be comfortable to retire with this with a paid off house, no pension.
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this is all circumstantial based on spending ... it doesnt matter what your savings is if it covers your spending at a 4% SWR. a better question would be how many people are actually comfortable retiring on a bare bones 4% SWR around here.
i also dont think MOST FIREers FIRE on a simple 750k. we're shooting for 750k each however. plus the mortgage balance.
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If I retire I may be able to get my general expenses down to 18,000 per year. But that doesn't include healthcare expenses, and ACA premiums are quite high in my state (around 5,000 just for premiums). To that, add out of pocket health expenses.
All of that put together doesn't leave much room for any bad events such as long term care, etc.
I wouldn't FIRE with 750k.
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Why not? There are PLENTY of people living on less than 30K a year in the United States. Plus if you are living off 30K a year from investments, you are in a low enough tax bracket that you will pay 0% on the qualified dividends, 0% on the capital gains, and obviously no FICA taxes... 30K and paying no income or FICA tax? ... totally doable.
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Nope, too risky for my blood. But I have medical conditions.
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I'd do it in an instant. Well, not an instant because it takes some time to get the mindset right. Financially, I'd be fine on 30K, I know I'd likely end up with some type of paid work again. Are you in the US? will you get SS?
Yes. I am in the US and will get SS.
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I will be able to retire comfortably on 24k a year including a mortgage in an HCOL area. I can't relate to needing 750k+.
That's wonderful you can do it in a HCOL area! I assume you are in the US??
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My annual expenses, in a high COL area. . . With a mortgage (including PITI), a student loan, a car, and a very healthy drinking at the bar habit. . . Plus an international vacation and a bunch of domestic travel are at it under $30k . . . So yes. Absolutely.
Impressive! I would love to see that budget of yours!
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Like about 99% of all the questions asked here: it depends. It's such an arbitrary question.
A couple living off $30k/yr? Easy. Especially if you're willing to be mobile and relocate to a low-medium cost of living area. Of course, the waters get a little murkier if you start adding expensive travel and hobbies into the mix.
I mean if your risk tolerance is so low that you're unwilling to commit to the idea of living off of 4% indefinitely, that's one thing; but either way, $750k is more than enough to pull the tricker for two people. I think most single people here could easily do it on much less, more like $400-500k.
And, look, I don't see any point in calling it "retirement". You'll be "working" in your retirement anyway, it will just be work that you enjoy. You can always go back to "actual" work for money.
Yes. The answers to many questions depend upon circumstances. That's what makes reading the answers so interesting to me. =-)
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We don't feel comfortable doing it that low but I can see where it is totally doable in some parts of the country, or if you are in a HCOL with a tiny mortgage. Our 15 year mortgage on our teeny townhome is more then 30k a year. We are aiming for around 2-3x that plus DH's pension/healthcare. I think we can get by with a lot less then DH does needless to say.
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this is all circumstantial based on spending ... it doesnt matter what your savings is if it covers your spending at a 4% SWR. a better question would be how many people are actually comfortable retiring on a bare bones 4% SWR around here.
i also dont think MOST FIREers FIRE on a simple 750k. we're shooting for 750k each however. plus the mortgage balance.
Yes. In reference to what I bolded in your statement above, the health issue concerns me most.
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I am in Australia (a HCOL country, but we also have universal healthcare, which helps), don't own any property, no dependents, and have typically spent well under AUD$25k per year and this includes travel. So - with $750k, doesn't matter if it's USD or AUD - I can retire with that, and living on $30k would actually be a luxurious step up. Heck, I'm earning less than $30k/year at the moment, and I'm doing fine.
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If I am retiring... I would want to fill that time with lots of activities, vacations, trips, dates, gadgets... It would stress me out to no end if they only thing I could do was stay home and play a video game all day or watch TV.
30k isn't enough to live on COMFORTABLY in a HCOL area but still doable in my opinion. For me, I live in the HCOL Washington DC area. Small studio apt that was 1.35k/month last year (raised to 1.47k). This includes all the fees that are charged on top of the rent base (parking, utilities, billing fee, trash, renter's insurance). 10 years ago this property was around $800 per month. I am living albeit not comfortably... Even expecting my rent to go up in about 4-5 more months. So yeah it maybe doable but what kind of life would you have for the next 20 years? increasing prices, inflation, hidden costs, etc. If/when minimum wages go up I would expect the rental prices/mortgage expenses to go up as well.
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this is all circumstantial based on spending ... it doesnt matter what your savings is if it covers your spending at a 4% SWR. a better question would be how many people are actually comfortable retiring on a bare bones 4% SWR around here.
i also dont think MOST FIREers FIRE on a simple 750k. we're shooting for 750k each however. plus the mortgage balance.
Yes. In reference to what I bolded in your statement above, the health issue concerns me most.
yeah you're about 2-3 years out ... we're closer to 7 years away. so hopefully the dust will have settled around healthcare by the time we FIRE. anytime in the next 4 years i feel like is a state of constant flux for the healthcare and insurance industries in america.
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I certain hope I am comfortable since I just gave notice a couple weeks back. We (the family - parents plus 3 kids) lived on the Post-FIRE budget for the better part of the past year with only some limited first world 'hardships'. Technically we have closer to 650k in the retirement stache plus a paid off house (~175k) which we expect after the kids are out of the house to downsize and pull out another 100k or so (which gets me to that magical 750k number you asked about).
We have 5 years of taxable accounts to work from while we build our Roth pipeline. No pension other than SS when we turn 62 - 75 (depending on what happens with the program over the next 20 years!)
Retiring too soon is a recoverable error, retiring too late is not! :-)
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Not sure if I'd first go with comfortable, since I'm a pessimistic game-out-the-worst-case-scenarios type person (as an engineer, it's a positive personality trait!), but I could definitely do it.
My current annual spending is ~24k/yr, but that number doesn't include taxes and health care premiums. Of course, being retired I'd have the time to look over the situation and minimize those costs, making 750k quite plausible. But... see pessimism, above.
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Could definitely do it. Very comfortably as a single person, and pretty damn well as a couple too. But we'll probably pull the FIRE trigger when we have somewhere between 30-40k passive income from whatever source (Depending on what changes in our lives in the next few years), plus my GF will probably keep working part-time at least in some capacity (self-employed), and I might stumble on some more income post-FIRE too.
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Yes, Maryland.
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750k per adult, sure.
750k total: maybe if we had a paid off house. But not yet as with two young kids and uncertainty about ACA costs, I don't feel confident that we can predict our expenses out 10+ years.
Well probably have 750k when are kids are younger teens, and don't plan to actually retire until the kids graduate HS. By then hopefully medical costs will have stabilised and we'll have a good idea about how well our kids will launch (we have a special needs child).
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We could definitely retire on $750k. We only spend $20k-$25k per year and live a very luxurious lifestyle(quarter cow in the freezer, tasty cheese and wine, traveling to Canadian Rockies, hot-springing, season ski pass, etc.). That includes a mortgage as well.
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Nope, don't want to do it.FIRE on 2-3 times that? Done. I need to point out that a common belief is that one must "save" X amount to retire. Nope, nope, nope. The earlier you start investing, the fewer actual dollars you will need to save. The main reason I have so much more than 750k is because my investments grew. I never saved anywhere close to that amount. Early investing did the heavy lifting for me.
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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.
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I'm uncomfortable with the idea, but I've never spent $30k a year in my life! Current spending is a little less than half that so I should theoretically be fine it.
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I would be okay with $750K + house for a family of 4. My target is $600k + house. I also have about $1,000 in passive income.
I figure I can always go back to work if needed. I know I may not be able to go back and jump right back into a 6 figure job. I'm sure that if the both of us went back to work, it would be very easy to make 50k - 100k+ combined.
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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.
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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.
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It's seems there is already a pretty exhaustive discussion on the 4% rule:
http://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/
Though I hear the point on more or less being can you really be comfortable with the expense side going up more than can be absorbed through asset growth (personal inflation rate not some arbitrary national number). Asset allocation is a big part of it for me and there is a ton out there on it. OP refers to FIRE on 'just savings'... if the question was just 750k of just cash no way; but a sensible asset allocation... for me - fa'sure!
I have no doubt that we will make trade-offs (up, down, and sideways) over time. I know I found the posts from go curry cracker helpful:
http://www.gocurrycracker.com/the-worst-retirement-ever/
http://www.gocurrycracker.com/the-best-retirement-ever/
@undercover - I dig the comment regarding 'retirement' being a modern facade... it definitely is a loaded term. I also like slowlysippingscoffee's take on it calling it a 'fully funded lifestyle change' instead.
http://www.slowlysippingcoffee.com/goodbye-fire-hello-fflc/
*Note I have no affiliation with either blog, just thought the links were useful in this discussion.
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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.
Meaty reply. Thank you.
I love the compromise, the figuring out, and the adjustments in creating this life.
I'm comfortable with how the word retirement is used on this board, yet I can see your issues with that usage. MMM has stated more than once that retirement didn't mean 0 work for him. I think it boils down, similar to what you said, to doing the work you really love.
After speaking with a woman in her seventh decade, I learned that some consider that a time of giving back. They don't need to strive or make huge incomes any longer, so they focus on giving back and what matters most to them and their values. It strikes me that a lot of people here do the same, but they are able to start their seventh decade a little sooner due to the financial freedom they've created.
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I agree with others here that it can be done, especially with a paid of house. This is our plan. But there are a lot of variables. Being Canadian we do not need to worry as much as others about the healthcare issue. We have also traveled extensively in our 20s and 30s and are really looking to settle down for the next decade or so.
I also like the concept that you can always go back to work while you are an early retiree (and not at your former high paying job ... fine by me), but if you have a heart attack or get dementia at 60 (as so many of my parents friends) it is a bit harder to undue that miscalculation.
And I really do not think of FIRE as sitting by the fire and doing crosswords, it can absolutely involve other income generating activity ...but at our own discretion.
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My personal goal is 600k with a house that has a roommate or two.
Even without roommates i could manage with with the 600k.
My yearly out cashflow is only around 14,000$
edit: i guess my COL is kinda cheap, Austin, TX
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Yes. My family could absolutely make that work.
... Especially because the suddenly liberated spare time would give us the ability to make money on our hobbies, which would totally provide extra income. Significantly less than corporate jobs, but definitely enough to round out corners.
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Absolutely! That's our target amount. We spend around 27K/year now, living in expensive Vancouver, with a VERY comfortable lifestyle that includes extensive international travel - so far this year we've been to Singapore, Taiwan, Malaysia, Ireland, Northern Ireland, and Las Vegas, and we've booked and paid for a trip to Thailand and China leaving at the end of December. 30K/year of retirement income would be totally fine for living in Vancouver forever, but an absolute breeze pretty much anywhere else.
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Our spending is at $33k/year right now, so if you use 4% SWR that's $825k. This is with a paid-off house in a LCOL area (for the US) without counting medical paid through work, but on the other hand that's for two people not trying all that hard to cut back. If we were comfortable with 4% and were serious about cutting back, $750 + paid off house would not even be a stretch for us.
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Assuming: a paid off house, reasonable cost of living, and no dependent children; yes, I would retire with $750k invested. As I'm in a position with a defined benefit pension and my actual savings rate is low (by MMM standards), I'll likely retire with 20 career working years and about $500k invested.
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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 became familiar at a young age with the associated costs.
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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
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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.
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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. :)
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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.
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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.
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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 (http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/) often. That's what I plan on relying on when I go for FIRE.
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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.
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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
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And if you're working part time to supplement your $750k then you're not really retired.
I hear the sirens
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+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% (http://www.globalrichlist.com/) of all humans alive today live on less than that.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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want can be the enemy of happiness.
Desire is the root of all suffering? I'm pretty sure some bald guy said that.
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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.
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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:))
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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?
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@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.
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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.
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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.
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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 (http://www.gocurrycracker.com/about/). Heck, these two are even raising a child while traveling (http://www.gocurrycracker.com/expenses/children/)the world.
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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.
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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".
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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.
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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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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?
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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.
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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/ (http://www.mrmoneymustache.com/2011/04/06/meet-mr-money-mustache/)
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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!
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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.
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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.
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What is the true goal here?
I don’t think my goal has ever been “I want to be FI”. 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 can’t be FI at $X, that doesn’t mean they haven’t 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 “old age retirement” 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 it’s because you hate your job, have you already reached a point you don’t have to keep that job anymore? If it’s to be home with your kids, how old will they be when you finally reach FI? If it’s to travel, do you know you will still have that wanderlust in ten years?
Please don’t waste life trying to reach a goal of “FI” if that really wasn’t what originally drew you to the concept.
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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.
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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.
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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.
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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!
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I don’t think my goal has ever been “I want to be FI”. 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 can’t be FI at $X, that doesn’t mean they haven’t 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.
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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.
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@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.
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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.
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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.
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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.
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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.
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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.