Author Topic: What kind of buffer do ER/FI people keep?  (Read 2587 times)

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What kind of buffer do ER/FI people keep?
« on: June 20, 2014, 11:59:26 AM »
I'm not sure if this is an emergency fund question or not but it isn't in my thinking... But how much of a buffer per month do people tend to keep once retired? I "could" live in a box out on the streets and call myself FI but I'd rather not... I live minimally for 1-1.5k/month but should I shoot for that as my FI goal?

Example being I'm single right now but if/when I decide to be otherwise, how do I even plan for that? I have no idea how much a couple spends, is it just double what I spend so $30k/year? Yes I know my partner would have her own income but I'd still like to plan ahead as if there isn't since I can't figure for it now. This is the kind of buffer I'm trying to decide for myself that would be more life changing than an "emergency fund" would provide. Or how about a Californian/New York/Taiwan mustachian would need more than a Kansas/Missouri mustachian but what if I want to move from the midwest to the coast when I am FI, but it wouldn't be possible if I set myself up by midwest FI standards.

So what kind of buffer is reasonable for FI if you wanted to make changes to your lifestyle? I'm not saying I'll suddenly go out and start buying things but small things that kind of last like getting a partner, kid, moving to a new area (yeah these aren't "small changes")? The part of FI planning that scares me is that if I shoot for the bare minimum than that means I can't do anything different out of fear that I'd upset something and not be FI anymore and it would give me a feeling of living "paycheck to paycheck" even if I'm FI. I want to be FI without needing to worry where my next meal is coming from essentially. If I shoot for bare minimum, I can be FI in about 8 years, but I'm shooting for 18 years because I'm looking to replace my entire income. I know 18 years is a long time but I'd be 45 which doesn't seem all that bad? Realistically, it'd be in between the two extremes but I've only "worked" for 3 years which means I'm not burned out yet nor do I hate my job. I could see myself doubling my working life and hitting the 8 year mark and still enjoying the job. But working for 18 years? I don't know.

Just trying map out my future FI plans and polling for how other people do this to put some perspective. Sorry if this has been addressed yet but I didn't see anything and searching for "buffer" didn't come up with anything since most of it is more of a emergency fund type thing and not for changing lifestyles or unplanned cost adjustments.

I'm not sure if I should plan FI with like a 2% safe withdrawal so it gives me a leeway to double my spending and still keep to the 4% rule. So I'd need 600k for my 12k/year current spending but I can double it and still not worry. This also lets the market fall by half and I'd still be within my FI amount or does the 4% rule already account for market crashes and how long do you have to be in the market for this to be accounted for? I know it'd be bad practice to withdraw the entire 4% because someone said that it was "safe" but how low can I drop the % without just having to keep working?
« Last Edit: June 20, 2014, 12:05:18 PM by eyem »

neo von retorch

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Re: What kind of buffer do ER/FI people keep?
« Reply #1 on: June 20, 2014, 12:05:19 PM »
When going into retirement at a young age, I would go with the safe 4% withdraw rate ... and plan to make SOME money after you leave the "corporate" job. If you make $1000 / month after you retire, and cover most of your expenses that way, you'll greatly extend your savings.

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Re: What kind of buffer do ER/FI people keep?
« Reply #2 on: June 20, 2014, 12:10:57 PM »
I don't have a "corporate" job right now, at least I don't think it is one but corporate means cubicle to me :S I'm a medical technologist, I don't know if that's corporate unless I get into management. I can pretty much make the $1k/month by working 1 day a week but I'm not about to quit working right now because of that. My mustache gives me about $350/month right now at a 4% rate I'm not sure if I want to just wait until my mustache gives me the $1k/month and have the option of working 1 day a week because then I can't travel like I want. I'm not sure I can even front load my work and worked 3 months a year then retired for 9 months because I'd get too rusty at my job :S
« Last Edit: June 20, 2014, 12:13:39 PM by eyem »

nordlead

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Re: What kind of buffer do ER/FI people keep?
« Reply #3 on: June 20, 2014, 12:29:20 PM »
Plan as if you are going to move, and plan as if you are going to get married.

8 years from now, when you could retire, re-evaluate if you want to move or get married. If the answer is no, then retire. If yes or maybe, keep socking away money.

At this point it is too early to decide.

Spartana

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Re: What kind of buffer do ER/FI people keep?
« Reply #4 on: June 20, 2014, 01:13:24 PM »
My pension is approx. $1400/month and I live on about half of that for my basic monthly expenses (paid for house, low taxes/insurance/utilities, no debt, single, no kids, frugal). The rest goes into savings to pay for budget travel, home or car maintenance or anything the crops up unexpectedly. I also keep a fairly large amount of cash (approx. $35K) in a very liquid money market account if something big comes up (like my current need for a new vehicle). If I don't spend all of my monthly "buffer" money, it gets put into this fund.

Daisy

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Re: What kind of buffer do ER/FI people keep?
« Reply #5 on: June 20, 2014, 08:55:59 PM »
The part of FI planning that scares me is that if I shoot for the bare minimum than that means I can't do anything different out of fear that I'd upset something and not be FI anymore and it would give me a feeling of living "paycheck to paycheck" even if I'm FI. I want to be FI without needing to worry where my next meal is coming from essentially. If I shoot for bare minimum, I can be FI in about 8 years, but I'm shooting for 18 years because I'm looking to replace my entire income. I know 18 years is a long time but I'd be 45 which doesn't seem all that bad? Realistically, it'd be in between the two extremes but I've only "worked" for 3 years which means I'm not burned out yet nor do I hate my job. I could see myself doubling my working life and hitting the 8 year mark and still enjoying the job. But working for 18 years? I don't know.

You are only 3 years into your working life...calm down. I'm not sure how you can estimate your true future expenses if you plan on getting married and having children. Maybe I'm going against the grain on this forum, but I don't understand the rush of people in their 20s obsessing over FI. Life is a journey and FI is just one of the destinations you will reach.

There are way too many unknowns for you right now to know exactly when you'll be FI. Save as much as you can while still enjoying life.

Plus, don't you want to build up some years of misery and frustration at the work place so that you'll actually have something to retire from? Maybe have some good FU-money stories for the FU thread? ;-) It will make ER so much sweeter...

And man...I am 45 and so ready emotionally for FIRE. I know what I've been through to get here and I have definite interests to keep me busy and engaged with life. I don't think I could have reached this emotional state obsessing over FIRE in my 20s.

EDIT: Oh, and I am a bit of a scaredy-pants when it comes to my finances. I probably plan on having a bigger buffer than others here for the very reasons you mention. I don't want to feel like I am just scraping by just for the joy of saying I am FIRE. I have cut down my un-needed expenses a lot the last year without it affecting my happiness at all.
« Last Edit: June 20, 2014, 08:58:30 PM by Daisy »

mozar

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Re: What kind of buffer do ER/FI people keep?
« Reply #6 on: June 20, 2014, 09:13:02 PM »
i could
« Last Edit: May 10, 2018, 11:49:18 AM by mozar »