Author Topic: 45 yr old retires, living on 20k annually for family of four  (Read 21936 times)

Curious Cricket

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45 yr old retires, living on 20k annually for family of four
« on: April 25, 2016, 11:22:28 AM »
How I Retired At 45

http://seekingalpha.com/article/3958725-retired-45

I don't know if many of you have seen this Seeking Alpha article about a guy who left his job at 45 and intends to live off 20k annually with a family of four.  I think the interesting thing about his article are the hundreds of comments he's received and how so many people are convinced that his plan will fail. I've always assumed that those who are investment savy would also be personal finance savy, but seeing some of the comments really surprised me that so many people really think you need 100k+ annually to survive.  Lots of people from NE and California chiming in that it can't be done due to HCOL, equating well to do neighborhoods with superior schooling, etc.

Edit: 20k, not 40k
« Last Edit: April 25, 2016, 11:29:47 AM by Curious Cricket »

AZDude

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #1 on: April 25, 2016, 11:57:47 AM »
Only think I would take issue with is his definition of a modest salary. The guy was making $120K a year, which is more than double the median US household income(~$51K). Other than that, bravo to him.

bobechs

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #2 on: April 25, 2016, 12:42:45 PM »
I think it is entirely possible for a family to  live on 20K monetary units (as long as it's not some crazy-ass light-your-cigar monetary unit like Japanese Yen or Afghani Leks) as long as you feel free to a) exclude some significant portion of your actual expenses from your budget and b)make up the resulting shortfall by c) prepaying some ongoing expense plus d)shift a goodly portion of your household economy to an f)off-the-books business, g)religious outfit (tax free!) or e)subsistence farm, fishery or hunter-gatherer tribe.

Our guru does about half of that, Rube Goldberg could illustrate the whole show, but I'm no guru, nor Goldberg.  Sorry.
« Last Edit: April 25, 2016, 12:47:19 PM by bobechs »

Mr. Green

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #3 on: April 25, 2016, 03:25:58 PM »
I think it is entirely possible for a family to  live on 20K monetary units (as long as it's not some crazy-ass light-your-cigar monetary unit like Japanese Yen or Afghani Leks) as long as you feel free to a) exclude some significant portion of your actual expenses from your budget and b)make up the resulting shortfall by c) prepaying some ongoing expense plus d)shift a goodly portion of your household economy to an f)off-the-books business, g)religious outfit (tax free!) or e)subsistence farm, fishery or hunter-gatherer tribe.

Our guru does about half of that, Rube Goldberg could illustrate the whole show, but I'm no guru, nor Goldberg.  Sorry.

bacchi

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #4 on: April 25, 2016, 04:15:28 PM »
His dividend chasing and "diversification" scare me. That's a lot of real estate. (They never cut their distributions, right?)

Curious Cricket

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #5 on: April 25, 2016, 05:21:11 PM »
(They never cut their distributions, right?)

That's how I read it also. I think the more fascinating thing is not the actual article, but all the different comments he received.

APowers

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #6 on: April 25, 2016, 09:44:11 PM »
I think it is entirely possible for a family to  live on 20K monetary units (as long as it's not some crazy-ass light-your-cigar monetary unit like Japanese Yen or Afghani Leks) as long as you feel free to a) exclude some significant portion of your actual expenses from your budget and b)make up the resulting shortfall by c) prepaying some ongoing expense plus d)shift a goodly portion of your household economy to an f)off-the-books business, g)religious outfit (tax free!) or e)subsistence farm, fishery or hunter-gatherer tribe.

Our guru does about half of that, Rube Goldberg could illustrate the whole show, but I'm no guru, nor Goldberg.  Sorry.

Our family of four lives on way less than $20k. $12k to be more accurate, and less than that, if you want to be more accurate. If you want to add in some imputed rent (considering we paid our house off entirely), we'd still be at under $18k. No guru or Goldberg needed.

Ottoford

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #7 on: April 26, 2016, 06:46:27 AM »
Impressive article.  I just started a test year to see if me and my SO can live on $36,000 per year, so $20k per year for a family of 4 makes me feel like a slacker! 

If we can then we are set to retire.  SO is already semi-retired.  I'm still working for now since I work from home and make good $ doing so.  I figure another year or two of shoring up our investments can't hurt. 

jim555

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #8 on: April 26, 2016, 09:14:15 AM »
I am in a HCOL area and base expenses are 14k.  Paid off car and condo helps a lot.

soupcxan

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #9 on: April 26, 2016, 09:35:43 AM »
RE at $1M plus a paid off house is plausible in LCOL. $20k is below the federal poverty line so personally that's not what I would want for my family.

I'd worry more about this guy blowing up his portfolio with his ideas on active management ("I'm going to sell my oil stocks once they go up!").

Curious Cricket

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #10 on: April 26, 2016, 10:13:37 AM »
RE at $1M plus a paid off house is plausible in LCOL. $20k is below the federal poverty line so personally that's not what I would want for my family.

I'd worry more about this guy blowing up his portfolio with his ideas on active management ("I'm going to sell my oil stocks once they go up!").

Definitely with a paid off house, it's doable. Active management in portfolio and small margin for any expensive emergencies, is what I would worry about. Definitely don't think he deserves all the vitriol in the comments, though.

RoseRelish

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #11 on: April 26, 2016, 10:54:50 AM »
His portfolio might be riskier than many would like - but his withdrawal rate is about on-target. And he's working through unrealized capital gains to shift his portfolio to more DGI-focused and high-grade the income.

Cassie

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #12 on: April 26, 2016, 02:24:11 PM »
That 20k per year is going to buy less every year at a time his kids are getting older and incur more expenses.  Kids can be cheap when little but as teenagers not so much.

Curious Cricket

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #13 on: April 26, 2016, 04:32:04 PM »
That 20k per year is going to buy less every year at a time his kids are getting older and incur more expenses.  Kids can be cheap when little but as teenagers not so much.

Yeah somebody in the comments brought up that very point. What if your kids excel at a certain sport, instrument, art and it takes a private coach/tutor/teacher to really get to the next level? Also, I know in general kids eat more when they get bigger, more clothes, proms, dances, friend's birthday parties, etc.

Cassie

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #14 on: April 26, 2016, 04:38:32 PM »
My 3 boys are long adults but the teen years were expensive (food, clothes, haircuts, sports, activities, proms) etc. They were not spoiled by any stretch of the imagination but things got expensive.  Each one also had a p.t. job and contributed some to the things they wanted.

SwordGuy

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #15 on: April 26, 2016, 06:06:44 PM »
That 20k per year is going to buy less every year at a time his kids are getting older and incur more expenses.  Kids can be cheap when little but as teenagers not so much.

Yeah somebody in the comments brought up that very point. What if your kids excel at a certain sport, instrument, art and it takes a private coach/tutor/teacher to really get to the next level? Also, I know in general kids eat more when they get bigger, more clothes, proms, dances, friend's birthday parties, etc.

Then he gets a job at Hooters, pockets some change and gets paid to hang out with pretty waitresses for a few hours a week for a few years.   

There are worse ways to spend one's life.

There's no Internet Police to make sure he never, ever, makes a dime any other way...

daverobev

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #16 on: April 26, 2016, 08:01:25 PM »
RE at $1M plus a paid off house is plausible in LCOL. $20k is below the federal poverty line so personally that's not what I would want for my family.

I'd worry more about this guy blowing up his portfolio with his ideas on active management ("I'm going to sell my oil stocks once they go up!").

Thing is, the poverty line is for people who are poor and need to earn money. It costs a lot of money to earn money - commuting, commuting time, work clothes, having to travel at the same time everyone else is, etc. If you have some form of passive income life can be very cheap. You have the time to fix things, hunt for bargains.

The big thing in the USA is healthcare. In many other countries, that isn't a thing.

I mean, paid for shelter or massive. Even moreso if you can grow food. Generally reduce your outgoings.

ender

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #17 on: April 27, 2016, 06:27:23 AM »
Thing is, the poverty line is for people who are poor and need to earn money. It costs a lot of money to earn money - commuting, commuting time, work clothes, having to travel at the same time everyone else is, etc. If you have some form of passive income life can be very cheap. You have the time to fix things, hunt for bargains.

The big thing in the USA is healthcare. In many other countries, that isn't a thing.

I mean, paid for shelter or massive. Even moreso if you can grow food. Generally reduce your outgoings.

A paid for home makes comparisons to the poverty line a bit pointless, too.

bobechs

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #18 on: April 27, 2016, 07:41:57 AM »
Thing is, the poverty line is for people who are poor and need to earn money. It costs a lot of money to earn money - commuting, commuting time, work clothes, having to travel at the same time everyone else is, etc. If you have some form of passive income life can be very cheap. You have the time to fix things, hunt for bargains.

The big thing in the USA is healthcare. In many other countries, that isn't a thing.

I mean, paid for shelter or massive. Even moreso if you can grow food. Generally reduce your outgoings.



A paid for home makes comparisons to the poverty line a bit pointless, too.

Remove housing (except property tax, utilities and (non-)maintenance); remove transportation (by only walking or biking within a couple miles of home); remove food (by various urban scavenger and public assistance techniques suggested here); remove healthcare (by public assistance, etc.) and shift all other expenses for miscellaneous stuff to some off-budget home-based business dodge and what's left?

Cigarettes and pron, I suppose...

daverobev

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #19 on: April 27, 2016, 12:33:50 PM »
Cigarettes and pron, I suppose...

You pay for pron??

Actually, I have a friend that grows his own baccy, too. Life can be pretty inexpensive!

bobechs

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #20 on: April 27, 2016, 06:07:51 PM »
Cigarettes and pron, I suppose...

You pay for pron??

Actually, I have a friend that grows his own baccy, too. Life can be pretty inexpensive!

I'll go you two better...

1. Make your own pron and get paid for it (it's totally mustaschian):

http://forum.mrmoneymustache.com/share-your-badassity/easy-money-in-your-spare-time-from-the-comfort-of-home/

2. Roll that leaf  up and sell onesies at your own Convenients store (not so mustaschian, but totally Canadian)

https://www.youtube.com/watch?v=7RF-oQ-jzyo

steveo

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #21 on: April 27, 2016, 10:15:30 PM »
His portfolio reiterates why to me it's so much easier to just buy the index. His withdrawal rate though is fine.

obstinate

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #22 on: April 27, 2016, 11:38:09 PM »
What if your kids excel at a certain sport, instrument, art and it takes a private coach/tutor/teacher to really get to the next level?
Tough luck, maybe? Chagall didn't have a private tutor. It's not necessary to become one of the greats.

bobechs

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #23 on: April 29, 2016, 12:28:30 PM »
What if your kids excel at a certain sport, instrument, art and it takes a private coach/tutor/teacher to really get to the next level?
Tough luck, maybe? Chagall didn't have a private tutor. It's not necessary to become one of the greats.

Hell's Bells, Chingis Kahn didn't even graduate high school.

Look how many skulls he took.

chaskavitch

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Re: 45 yr old retires, living on 20k annually for family of four
« Reply #24 on: May 09, 2016, 02:21:50 PM »
What if your kids excel at a certain sport, instrument, art and it takes a private coach/tutor/teacher to really get to the next level?
Tough luck, maybe? Chagall didn't have a private tutor. It's not necessary to become one of the greats.

Hell's Bells, Chingis Kahn didn't even graduate high school.

Look how many skulls he took.

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