The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: helloyou on August 04, 2020, 07:30:24 AM
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I've seen this:
https://www.youtube.com/watch?v=OGoZyz5QwCc&
Are most of us doomed? I can't imagine saving $2M. It's such an enormous amount!
I'd need to work like 10-15 more years for that!
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Obviously not.
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$2,000,000 is better than estimates others put out there: I've seen a lot of people in the $7 mm + range.
If you put $2 million entirely into US treasury bonds, you may struggle at today's rates.
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Most people retire just fine on much less.
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The vast majority retire on nothing even close to that amount.
Having said that, we are aiming for the equivalent of 2 million (equivalent b/c about $500,000 of that will be represented by a pension). That seems a very safe amount, given the many unknowns related to healthcare and where we will be living in retirement.
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I've seen this:
https://www.youtube.com/watch?v=OGoZyz5QwCc&
Are most of us doomed? I can't imagine saving $2M. It's such an enormous amount!
I'd need to work like 10-15 more years for that!
If one saves $25K for 25 years they will accumulate only $625K if they put the money under their mattress.
The average annualized total return for the S&P 500 index over the past 90 years is 9.8 percent.
If one invests $25K for 25 years and the investments return 9% per year, and the returns are reinvested, the total accumulation at the end of 25 years is $2,117,522 and $1,827,648 @ 8%, which is not a great deal less than $2 million.
N (Number of Periods) 25.000
I/Y (Interest Rate) 9.000
PMT (Periodic Deposit) $25,000.00
Starting Amount $0.00
Total Periodic Deposits $625,000.00
Total Interest $1,492,522.41
Future Value
$2,117,522.41
Bank of America analyzed the total return of the S&P 500 since 1930.
It is 14,962%.
If an investor missed the S&P's 10 best days of each decade their total return would be an unimaginably paltry 91%.
Compounding is the investor's best friend.
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It's certainly possible with less, but $2 million is pretty close to what I am aiming for. However, that's $2 million in 10-15 years from now dollars.
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That was a poll of savers, they think you need 2 million. Obviously absurd.
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Survey says...
Seems that the last survey here on MMM had the most responses in this range, as well. Maybe the Schwab survey was using mode, rather than mean?
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$2M would be reasonable for most people to retire early. It seems like overkill for a traditional retiree who will be getting social security and/or pension.
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I suppose, depending on rate of return, it wouldn't take thaaaaaat long to go from $1 million to $2 million.
For me, $1 million, my paid off house, and my VA pension should do the trick for me. But as long as I'm living in Connecticut (not my preferred location), I might as well work keep on working/saving.
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Savers Spenders Need $2m to Retire
fixed that for you
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One should be mindful of how early retirement impacts the size of the social security benefit too...
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$2 million for the average millenial is probably not so far off from a reasonable number, if they plan to retire within the normal retirement age bracket. It is a number of years in the future. In today's dollars it's (without doing the math) somewhere in the low 1 million range.
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Savers Spenders Need $2m to Retire
fixed that for you
Exactly.
If you're not upgrading your phone to the flagship every other year, and if you're not getting a new Subey every 6 years, you can do better.
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$2 million for the average millenial is probably not so far off from a reasonable number, if they plan to retire within the normal retirement age bracket. It is a number of years in the future. In today's dollars it's (without doing the math) somewhere in the low 1 million range.
I highly doubt that the survey respondents are doing that math in their heads. They are giving their answer in today's dollars.
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One should be mindful of how early retirement impacts the size of the social security benefit too...
Not as much as you might think. The social security formula has a couple of "bend points" where, past that point, any further earnings contribute less to your future benefits than previous earnings did. The formula is explained here (https://www.ssa.gov/oact/cola/piaformula.html).
In a nutshell, you take the amount you earned and paid social security tax on each year, scale them up to current year dollars, pick the top 35 years (using zeroes for some years if you worked less than 35), and add it up. The formula then divides by 420 (the number of months in 35 years) to get a monthly earnings figure. For this purpose I find it more useful to look at your lifetime earnings.
The first bend point is at $960/month ($403,200 lifetime). Up to this point, your average monthly dollar earned will be replaced 90% by social security.
Once you hit that first bend point the returns really start to diminish.
The second bend point is at $5,785/month ($2.43 million lifetime). Between the bend points your monthly income will be replaced 32%, and above the top bend point the figure is just 15%.
Someone who earns right up to the top bend point ($403,200) will get $864/month if collecting benefits at their full retirement age. Someone who earns twice as much ($806,400) will get $1,171/month. That's a 35% benefit increase in exchange for a 100% earnings increase.
To get twice the social security benefit of someone who earned $403,200, you need to earn a total of $1,537,200. Doubling the benefits again isn't even possible; someone who earned the social security wage cap every year from ages 22-66 would get $3,011/month (https://www.ssa.gov/oact/cola/examplemax.html).
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I can't imagine spending 80k/year. If I was able to spend that, I wouldn't be able to save much at all. I remember when I thought I needed $2M to retire though, about 2 years ago before discovering MMM. A lot of financial sites just pegged that as what you needed, and all the "see how much you need to retire in your state" articles were all in the $1.6-2.5M range, so I assumed $2M was the number and probably what I would have answered too. That was back when I thought I'd only ever see that from the powerball and working to 65, and when my 401k administrator's calculator said to shoot for 80% income replacement. I now know better, but I don't think most people do the math, see "you need $2M" headlines and move on.
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$2 million for the average millenial is probably not so far off from a reasonable number, if they plan to retire within the normal retirement age bracket. It is a number of years in the future. In today's dollars it's (without doing the math) somewhere in the low 1 million range.
I highly doubt that the survey respondents are doing that math in their heads. They are giving their answer in today's dollars.
They might not be doing the "math", but I would think most respondents are aware that a dollar today is not worth the same as a dollar 30 years from now. IMO $2M is not a bad target for millenials who are looking to retire with a similar lifestyle as during their working years. Obviously, I know better, and I plan on retiring with about half that... but we are generally the outliers here at the MMM forum, not the average population.
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I can't imagine spending 80k/year. If I was able to spend that, I wouldn't be able to save much at all. I remember when I thought I needed $2M to retire though, about 2 years ago before discovering MMM. A lot of financial sites just pegged that as what you needed, and all the "see how much you need to retire in your state" articles were all in the $1.6-2.5M range, so I assumed $2M was the number and probably what I would have answered too. That was back when I thought I'd only ever see that from the powerball and working to 65, and when my 401k administrator's calculator said to shoot for 80% income replacement. I now know better, but I don't think most people do the math, see "you need $2M" headlines and move on.
I spend $80k a year and my lifestyle is by no means extravagant by normal standards. Unless you count having a 10 year mortgage extravagant. I do have two cars and three kids, so maybe I don't belong here though.
There's no reason to be judgey about people's expenses/retirement numbers. My FI number is $1.5-$2mil and I should have no problem hitting that by 45. It's about income/expenses. I'm not sure why OP is so worried about what other people spend or think they need for retirement. As another poster said, it's much better than Suze Orman's $10 mil.
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I can't imagine spending 80k/year. If I was able to spend that, I wouldn't be able to save much at all. I remember when I thought I needed $2M to retire though, about 2 years ago before discovering MMM. A lot of financial sites just pegged that as what you needed, and all the "see how much you need to retire in your state" articles were all in the $1.6-2.5M range, so I assumed $2M was the number and probably what I would have answered too. That was back when I thought I'd only ever see that from the powerball and working to 65, and when my 401k administrator's calculator said to shoot for 80% income replacement. I now know better, but I don't think most people do the math, see "you need $2M" headlines and move on.
I spend $80k a year and my lifestyle is by no means extravagant by normal standards. Unless you count having a 10 year mortgage extravagant. I do have two cars and three kids, so maybe I don't belong here though.
There's no reason to be judgey about people's expenses/retirement numbers. My FI number is $1.5-$2mil and I should have no problem hitting that by 45. It's about income/expenses. I'm not sure why OP is so worried about what other people spend or think they need for retirement. As another poster said, it's much better than Suze Orman's $10 mil.
Yeah, I'm always really impressed by people's low expenses, but I honestly have trouble envisioning doing that. We spend about 70k/year as two adults with no kids, and we have the most boring non-extravagant lifestyle imaginable. The main reason it's that high is b/c we have two houses and partly support two of our parents. If we didn't have to support others (one of the others being in the second house, which we otherwise would not own), we could definitely shave about 15K off that.
But honestly, we hope to retire somewhere else, and almost anywhere else will have much higher cost of living, so I doubt our expenses will drop that much in retirement. I don't really understand the whole "you'll spend less in retirement" concept. Between actually recreating (which we don't do much of now) and increased health care and housing costs, I expect we will spend 20-30K MORE per year in retirement. Thus, $2 million seems totally reasonable to aim for (55K/year base expenses + another 20K/year for health care + maybe 5K/year fun money for lavish stuff').
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Some expenses went down like car gas and clothes. Travel, entertainment, eating out went up. Our HC took a major jump up in price.
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My target is $2.5MM, plus whatever's in my HSA at that point (should be $150k+).
I don't think we'll need that much to live on, but I would like to have the option of living in a HCOL area that we really like if that's something my wife and I can agree on (she's more of a tropical-weather person).
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In a broad poll, I'm sure it skews toward a higher number and big round number. A significant percentage of respondents no doubt just arrived at that number by thinking, "hmmm, $1 million probably isn't enough, so double that." Not many would take the effort to come up with 1.8 million, for example.
Now, that doesn't mean I think $2 mil is an outrageous number. I'm looking at 1.5-1.7 for myself, I think before I would be comfortable retiring. I'm sure that as I get closer to that target, I will start moving the goalpost farther out as I begin to think that it isn't enough. Because there's lot of reasons to believe it won't be...
Clearly the vast majority of people 'retire' (stop working either by choice or not) long long long before they have any where close to 2 million dollars saved up. Most of them don't starve and most of them are probably fairly content with what they have.
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The number itself isn't out of line, but the timeframe might be. For an early retirement, yeah, $2M is probably a decent target number (if not high for several of us).
For a traditional retirement though? That's exorbitant. Most people can get by with a few hundred thousand easily.
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I’m aiming for $2m, even though that’s far more than I think I’ll need but it will give me the cushion to never work again if I don’t have to or want to and that is gold. For many though, that number is unachievable, which is fine because if you control your expenses, you won’t need it. What would be a shame is if people think they need that amount and give up if it looks impossible.
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Aiming for $2MM liquid by 50. I am figuring $20K a year in HC costs. I have no health issues now beyond one that doesn’t really require medication and doesn’t progress but I figure aging gets most of us at some point. And I will have to pay for my own health insurance.
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$2m (US) is in line with what I'd want to retire on, to make sure that I never had to worry about money again. It's basically enough money that, invested, you'd never have to touch the principal.
You could retire on far less but you'd be dependent on government largesse/social security, or frugal budgeting, or a decent sequence of returns, all of which may be more or less likely. Some people love that and are comfortable with those risks, which in some cases may be small. Some people want to never worry about money again. To each her own.
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https://forum.mrmoneymustache.com/welcome-to-the-forum/what-is-your-target-amount-august-2020-efition/
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One should be mindful of how early retirement impacts the size of the social security benefit too...
Not as much as you might think. The social security formula has a couple of "bend points" where, past that point, any further earnings contribute less to your future benefits than previous earnings did. The formula is explained here (https://www.ssa.gov/oact/cola/piaformula.html).
In a nutshell, you take the amount you earned and paid social security tax on each year, scale them up to current year dollars, pick the top 35 years (using zeroes for some years if you worked less than 35), and add it up. The formula then divides by 420 (the number of months in 35 years) to get a monthly earnings figure. For this purpose I find it more useful to look at your lifetime earnings.
The first bend point is at $960/month ($403,200 lifetime). Up to this point, your average monthly dollar earned will be replaced 90% by social security.
Once you hit that first bend point the returns really start to diminish.
The second bend point is at $5,785/month ($2.43 million lifetime). Between the bend points your monthly income will be replaced 32%, and above the top bend point the figure is just 15%.
Someone who earns right up to the top bend point ($403,200) will get $864/month if collecting benefits at their full retirement age. Someone who earns twice as much ($806,400) will get $1,171/month. That's a 35% benefit increase in exchange for a 100% earnings increase.
To get twice the social security benefit of someone who earned $403,200, you need to earn a total of $1,537,200. Doubling the benefits again isn't even possible; someone who earned the social security wage cap every year from ages 22-66 would get $3,011/month (https://www.ssa.gov/oact/cola/examplemax.html).
Thanks to the SSA mySocialSecurity set-up in the US its pretty easy to see the difference early retirement makes at different ages. Given I had just passed over the second bend point (which I learned about later when trying to understand the results), I was shocked at how little difference there was between me retiring at 48 as opposed to 62, so it basically became a non-factor in my FIRE decisions as just a few years here and there made too little difference to even notice.
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One should be mindful of how early retirement impacts the size of the social security benefit too...
Not as much as you might think. The social security formula has a couple of "bend points" where, past that point, any further earnings contribute less to your future benefits than previous earnings did. The formula is explained here (https://www.ssa.gov/oact/cola/piaformula.html).
In a nutshell, you take the amount you earned and paid social security tax on each year, scale them up to current year dollars, pick the top 35 years (using zeroes for some years if you worked less than 35), and add it up. The formula then divides by 420 (the number of months in 35 years) to get a monthly earnings figure. For this purpose I find it more useful to look at your lifetime earnings.
The first bend point is at $960/month ($403,200 lifetime). Up to this point, your average monthly dollar earned will be replaced 90% by social security.
Once you hit that first bend point the returns really start to diminish.
The second bend point is at $5,785/month ($2.43 million lifetime). Between the bend points your monthly income will be replaced 32%, and above the top bend point the figure is just 15%.
Someone who earns right up to the top bend point ($403,200) will get $864/month if collecting benefits at their full retirement age. Someone who earns twice as much ($806,400) will get $1,171/month. That's a 35% benefit increase in exchange for a 100% earnings increase.
To get twice the social security benefit of someone who earned $403,200, you need to earn a total of $1,537,200. Doubling the benefits again isn't even possible; someone who earned the social security wage cap every year from ages 22-66 would get $3,011/month (https://www.ssa.gov/oact/cola/examplemax.html).
Thanks to the SSA mySocialSecurity set-up in the US its pretty easy to see the difference early retirement makes at different ages. Given I had just passed over the second bend point (which I learned about later when trying to understand the results), I was shocked at how little difference there was between me retiring at 48 as opposed to 62, so it basically became a non-factor in my FIRE decisions as just a few years here and there made too little difference to even notice.
I have not been able to figure this out. I thought it was something you had to call SS for.
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Thanks to the SSA mySocialSecurity set-up in the US its pretty easy to see the difference early retirement makes at different ages. Given I had just passed over the second bend point (which I learned about later when trying to understand the results), I was shocked at how little difference there was between me retiring at 48 as opposed to 62, so it basically became a non-factor in my FIRE decisions as just a few years here and there made too little difference to even notice.
I have not been able to figure this out. I thought it was something you had to call SS for.
Try this link (https://secure.ssa.gov/myssa/mybec-ui/myBecHome). You may need to be logged into your online account first.
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Thanks to the SSA mySocialSecurity set-up in the US its pretty easy to see the difference early retirement makes at different ages. Given I had just passed over the second bend point (which I learned about later when trying to understand the results), I was shocked at how little difference there was between me retiring at 48 as opposed to 62, so it basically became a non-factor in my FIRE decisions as just a few years here and there made too little difference to even notice.
I have not been able to figure this out. I thought it was something you had to call SS for.
Wow, very interesting. My benefits would be cut in half if I stopped working now. Good thing I'm ten years out from FIRE!
Try this link (https://secure.ssa.gov/myssa/mybec-ui/myBecHome). You may need to be logged into your online account first.
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What's concerning about a bunch of people believing they need 2M to retire??
What bearing does that have on anyone?
Everyone needs to do their own math and determine their own needs and capacity to earn. It doesn't matter what anyone else is doing.
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What's concerning about a bunch of people believing they need 2M to retire??
What bearing does that have on anyone?
Everyone needs to do their own math and determine their own needs and capacity to earn. It doesn't matter what anyone else is doing.
I'm surprised the average is so high. I think most people don't save up $1M in their lifetime, let alone $2M.
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What's concerning about a bunch of people believing they need 2M to retire??
What bearing does that have on anyone?
Everyone needs to do their own math and determine their own needs and capacity to earn. It doesn't matter what anyone else is doing.
I'm surprised the average is so high. I think most people don't save up $1M in their lifetime, let alone $2M.
It's an average of what people "think" they need to retire. It comes out to 80K/year, which for non-frugal folks seems like a pretty understandable annual spend for a lot of families.
Whether they can or will save 2M is a whole different question. However, if someone or both adults in a family work good jobs until 65, it's actually not that hard to save 2M by saving, like, 15K/yr from the age 30-65.
It's just really hard to save 1-2M in a short period of time, like for retiring very early, or for people who don't even start saving until late in their career. Just because most people don't do it doesn't mean it's ridiculously hard.
Besides, if everyone was actually on track to save 2M, that would indicate that it's easy, not hard.
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I really have no idea what my number should be. Have I worked too much already? Probably. I have 1.5M in invested assets plus paid off home.
The "unknowns" for a 50 year future are just enormous, and it's paralyzing to me to think about hanging it up now. My salary is ridiculously high, and I would feel like a total dunce/idiot if I walked away now, and then later needed to re-enter the work-force at a much later age, hustling for a shitty wage.
Health care. Will the ACA survive? Will it continue to remain affordable? What if they chose to look at assets when determining subsidies? Will there even be plans on the ACA exchange available that give you access to in-network docs at the "good" hospitals? Currently in my area, this isn't the case.
Social Security. Will they asset-test this? Will they make more of it taxable? Will they reduce benefits?
Covid. What the hell will the economy look like in 6 months, 1 year, 5 years? Is this a new-normal? If things don't "return to pre-covid normal" eventually, this latest stock market ramp-back-up may vanish.
Stock market. I don't understand why it has rebounded (unless it is on inflation fears, with nowhere-else for money to flow?) The economy is not back to normal. The value of the market is seemingly highly concentrated in just a small handful of extremely large tech companies. The ultra-big-companies are big winners, with a LOT of small losers.
Inflation. This last decade of near 0% interest rates is a new experiment. There's also a ton of spending by congress on stimulus. Will the inflation chickens eventually come home to roost?
Taxes. What if we eventually end up having to pay for all of this stimulus? Or to pay to fix the "public sector pension crisis." Will we have a VAT eventually? Extraordinarily higher rates? Will investment income lose favorable tax treatment? Will there be an asset tax?
I just feel paralyzed to pull the trigger.
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I suppose, depending on rate of return, it wouldn't take thaaaaaat long to go from $1 million to $2 million.
Took us 7 yrs 9 months. Jan, 2012 to Sept, 2019.
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People who can't possibly empathize with other situations and making universal statements like "you need $2M to retire?"
Say it ain't so! I've never once experienced clickbaity titles and conclusions in the personal finance world where someone makes absolute statements and naively ignores all context that might suggest something different for people in a different situation... /s
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I really have no idea what my number should be. Have I worked too much already? Probably. I have 1.5M in invested assets plus paid off home.
The "unknowns" for a 50 year future are just enormous, and it's paralyzing to me to think about hanging it up now. My salary is ridiculously high, and I would feel like a total dunce/idiot if I walked away now, and then later needed to re-enter the work-force at a much later age, hustling for a shitty wage.
Health care. Will the ACA survive? Will it continue to remain affordable? What if they chose to look at assets when determining subsidies? Will there even be plans on the ACA exchange available that give you access to in-network docs at the "good" hospitals? Currently in my area, this isn't the case.
Social Security. Will they asset-test this? Will they make more of it taxable? Will they reduce benefits?
Covid. What the hell will the economy look like in 6 months, 1 year, 5 years? Is this a new-normal? If things don't "return to pre-covid normal" eventually, this latest stock market ramp-back-up may vanish.
Stock market. I don't understand why it has rebounded (unless it is on inflation fears, with nowhere-else for money to flow?) The economy is not back to normal. The value of the market is seemingly highly concentrated in just a small handful of extremely large tech companies. The ultra-big-companies are big winners, with a LOT of small losers.
Inflation. This last decade of near 0% interest rates is a new experiment. There's also a ton of spending by congress on stimulus. Will the inflation chickens eventually come home to roost?
Taxes. What if we eventually end up having to pay for all of this stimulus? Or to pay to fix the "public sector pension crisis." Will we have a VAT eventually? Extraordinarily higher rates? Will investment income lose favorable tax treatment? Will there be an asset tax?
I just feel paralyzed to pull the trigger.
This. I just retired, and our assets are right in the ballpark. We're both 62, with no health issues. The plan is to defer SS until 67, which isn't that far away at all. Those of us more "mature" can attest to the old saying about time passing quickly as we age.
As I've aged, my tolerance for doing certain things has diminished. I still cut the grass, but I don't work on my cars any more. They're too complicated, I don't have the electronic analyzers, and I just can't be bothered. Chores and repairs that you do now might not be appealing, or even possible. Old folks shouldn't be on ladders! Now that I'm done working, my SO wants to travel more. As you get older, camping or staying in hostels may not seem like so much fun. My parents are still alive, and I may need to supplement their income at some point (although they are VERY frugal). In other words, there are tons of variables, and without killing myself, I've gotten to where we SHOULD be o.k.
Please don't think that I'm raining on anyone's FIRE parade. If you go really early, it either works out, or you adjust. It's called life. To me, the FI is MUCH more important, because it reduces the day to day stress, and you have FU money.
Lastly, in retirement, or should I say non-monetarily compensated years, studies have shown that if you have reasonable expectations of what retirement looks like, that match your actual income, satisfaction increases. If you retire on $30k, libraries ROCK. Travel to Tahiti, probably not so much.
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I suppose, depending on rate of return, it wouldn't take thaaaaaat long to go from $1 million to $2 million.
Took us 7 yrs 9 months. Jan, 2012 to Sept, 2019.
It took us 3 years almost exactly (2016 to 2019 sometime, but I'm not at the computer that has our pretty chart). So yeah, 3 or 7 years isn't actually all that long. Compounding is scary powerful.
$2MM is what we retired on this spring. It includes $12K each on property taxes, health insurance/care, and travel (which we're not spending this year, obvs.), as well as an annualized $7K in major capital expenses. There's a lot of fat to trim if needed, and I willingly admit we're piss-poor Mustachians. We definitely aren't eating out every meal, but it's a very comfortable living in a MCOL area in the U.S.
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As an aside, does anyone calculate a more conservative investment portfolio as you age, and risk tolerance drops? DOES your risk tolerance drop? How do you adjust future income for a more conservative investment?
I haven't specifically checked to see if the 4% rule addresses this issue.
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I still have about 75% in stocks.
I don't like the volitillity of late and think daily about pulling some money out.
Then the market has a good day and I put it off. :-)
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As an aside, does anyone calculate a more conservative investment portfolio as you age, and risk tolerance drops? DOES your risk tolerance drop? How do you adjust future income for a more conservative investment?
I haven't specifically checked to see if the 4% rule addresses this issue.
Well, your highest risk is in early retirement, so it actually makes no sense for your risk tolerance to drop over time.
There are tons and tons of threads discussing the 4% rule and risk over time. They're very informative.
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As an aside, does anyone calculate a more conservative investment portfolio as you age, and risk tolerance drops? DOES your risk tolerance drop? How do you adjust future income for a more conservative investment?
I haven't specifically checked to see if the 4% rule addresses this issue.
Well, your highest risk is in early retirement, so it actually makes no sense for your risk tolerance to drop over time.
There are tons and tons of threads discussing the 4% rule and risk over time. They're very informative.
Thanks, Malcat,
I'll look for them. I do think that, if this turns out to be an L shaped recovery, it is reasonable to invest more conservatively. While in my 60's, I can afford to lose quite a bit, and still recover for my later years, yet once I reach my 80's, I'll probably feel more comfortable maintaining what I have, even if I have to tap into the principle.
You're implying that most are on a FIRE and forget investment strategy, with perhaps periodic rebalancing.
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This actually seems fairly reasonable for the mainstream but responsible person in a M to H COL area. That's $80,000 year. If one rents or the house isn't paid off, that's not an obscene amount of spending. This article seems far more responsible than most of these types of "calculations" with offer much higher numbers.
To be clear, my household personally won't have that much (though with a paid off house in a high COLA, our net worth--not stache--may actually be somewhat close. But it doesn't seem unreasonable to me that people want to spend $80,000 year. That's not a new $70k car every year kind of money. Or an eat out every night and buy $600 shoes money. It's certainly more than necessary (whatever that even means), but if someone retires on $2m/$80kper year, I don't consider them to be a massive spendypants.
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As an aside, does anyone calculate a more conservative investment portfolio as you age, and risk tolerance drops? DOES your risk tolerance drop? How do you adjust future income for a more conservative investment?
I haven't specifically checked to see if the 4% rule addresses this issue.
Well, your highest risk is in early retirement, so it actually makes no sense for your risk tolerance to drop over time.
There are tons and tons of threads discussing the 4% rule and risk over time. They're very informative.
Thanks, Malcat,
I'll look for them. I do think that, if this turns out to be an L shaped recovery, it is reasonable to invest more conservatively. While in my 60's, I can afford to lose quite a bit, and still recover for my later years, yet once I reach my 80's, I'll probably feel more comfortable maintaining what I have, even if I have to tap into the principle.
You're implying that most are on a FIRE and forget investment strategy, with perhaps periodic rebalancing.
I don't know if that's what I'm implying, because I don't really know what you mean.
We are saying two different things though. You are talking about risk related to losing your ability to generate more income as needed; whereas I'm talking about risk to your principal once you stop working, based on how the markets behave, meaning Sequence Of Returns Risk (SORR).
Perhaps I'm not understanding exactly what you mean by conservative and what risk you are trying to hedge.
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To be clear, my household personally won't have that much (though with a paid off house in a high COLA, our net worth--not stache--may actually be somewhat close. But it doesn't seem unreasonable to me that people want to spend $80,000 year. That's not a new $70k car every year kind of money. Or an eat out every night and buy $600 shoes money. It's certainly more than necessary (whatever that even means), but if someone retires on $2m/$80kper year, I don't consider them to be a massive spendypants.
Really?
Spending $80k/year would actually allow me and SO to eat out for dinner every night of the year, in a HCOL city, with a mortgage, and not at a burger joint either. And maybe a few $600 shoes, too. But we don't have expensive hobbies and my formerly expensive car can now vote.
Now, if we had elderly dependents, then we might need $2M. Thankfully, most of the parents are savers and can pay their own way.
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As an aside, does anyone calculate a more conservative investment portfolio as you age, and risk tolerance drops? DOES your risk tolerance drop? How do you adjust future income for a more conservative investment?
I haven't specifically checked to see if the 4% rule addresses this issue.
Well, your highest risk is in early retirement, so it actually makes no sense for your risk tolerance to drop over time.
There are tons and tons of threads discussing the 4% rule and risk over time. They're very informative.
Thanks, Malcat,
I'll look for them. I do think that, if this turns out to be an L shaped recovery, it is reasonable to invest more conservatively. While in my 60's, I can afford to lose quite a bit, and still recover for my later years, yet once I reach my 80's, I'll probably feel more comfortable maintaining what I have, even if I have to tap into the principle.
You're implying that most are on a FIRE and forget investment strategy, with perhaps periodic rebalancing.
I don't know if that's what I'm implying, because I don't really know what you mean.
We are saying two different things though. You are talking about risk related to losing your ability to generate more income as needed; whereas I'm talking about risk to your principal once you stop working, based on how the markets behave, meaning Sequence Of Returns Risk (SORR).
Perhaps I'm not understanding exactly what you mean by conservative and what risk you are trying to hedge.
I'm sorry for being obtuse. I'm trying to address something independent of SORR. The Safe Withdrawal Rate (let's say 4%) rule is basically a long term withdrawal strategy assuming the market is going to increase over an extended period of time. SWR is excellent for a younger investor who can forego using principle during down markets. Now, let's say an investor has made it to their 60's. I suppose you could say that a NEW SORR is in effect, as an extended downturn could force you to dip into the principle. By the 80's, though, I'd imagine most people, like me, would be less concerned with using the principle for living expenses, since the odds of outliving your money is greatly reduced. During these later years, however, if one shifts investments to,say, bonds or an annuity (gasp!), the rate of return will be reduced, and the SWR calculated 40 years earlier will no longer be valid. But you would then be protected from significant downturns in the market. Does that make any sense?
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As an aside, does anyone calculate a more conservative investment portfolio as you age, and risk tolerance drops? DOES your risk tolerance drop? How do you adjust future income for a more conservative investment?
I haven't specifically checked to see if the 4% rule addresses this issue.
Well, your highest risk is in early retirement, so it actually makes no sense for your risk tolerance to drop over time.
There are tons and tons of threads discussing the 4% rule and risk over time. They're very informative.
Thanks, Malcat,
I'll look for them. I do think that, if this turns out to be an L shaped recovery, it is reasonable to invest more conservatively. While in my 60's, I can afford to lose quite a bit, and still recover for my later years, yet once I reach my 80's, I'll probably feel more comfortable maintaining what I have, even if I have to tap into the principle.
You're implying that most are on a FIRE and forget investment strategy, with perhaps periodic rebalancing.
I don't know if that's what I'm implying, because I don't really know what you mean.
We are saying two different things though. You are talking about risk related to losing your ability to generate more income as needed; whereas I'm talking about risk to your principal once you stop working, based on how the markets behave, meaning Sequence Of Returns Risk (SORR).
Perhaps I'm not understanding exactly what you mean by conservative and what risk you are trying to hedge.
I'm sorry for being obtuse. I'm trying to address something independent of SORR. The Safe Withdrawal Rate (let's say 4%) rule is basically a long term withdrawal strategy assuming the market is going to increase over an extended period of time. SWR is excellent for a younger investor who can forego using principle during down markets. Now, let's say an investor has made it to their 60's. I suppose you could say that a NEW SORR is in effect, as an extended downturn could force you to dip into the principle. By the 80's, though, I'd imagine most people, like me, would be less concerned with using the principle for living expenses, since the odds of outliving your money is greatly reduced. During these later years, however, if one shifts investments to,say, bonds or an annuity (gasp!), the rate of return will be reduced, and the SWR calculated 40 years earlier will no longer be valid. But you would then be protected from significant downturns in the market. Does that make any sense?
But...that's not independent of SORR, that's exactly what SORR is. You're talking about the risk of a market downturn after the age of 80 and what that might do to the viability of your savings over your remaining years. That's precisely a sequence of returns risk.
Early SORR will dramatically impact how much money you have at 80, and late SORR will impact what happens to that sum.
At 80, you may have a few days or a few decades left. You would really have to reassess at the time what kind of long term planning you want to make and where your finances are at the time, and what your health is like. Then you would have to realistically examine the risk of an extended market downturn vs the risk of not enough gains over time.
Either way, the risk of either approach is in dipping into your principal, so it's not on the face of it obvious which plan is better. Which approach dips into your principal more, and which is more likely to leave you without enough money if you live another 2 decades?
It will really come down to what your actual, particular risks are, and not so much a function of age. There are A LOT of different strategies for addressing risk, and there really isn't a one-size-fits-all approach.
My favourite example is when you have much more money than you need. At that point, it makes equal sense to invest in 100% equities as it does to invest in 100% bonds, because the risk in either case is negligible when the buffer is so big that neither market downturn nor keeping up with inflation is an issue over the long term. "High risk" vs "Low risk" are really misnomers when it comes to investing. One isn't necessarily riskier than the other, they just represent different *kinds* of risk.
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I'm sorry for being obtuse. I'm trying to address something independent of SORR. The Safe Withdrawal Rate (let's say 4%) rule is basically a long term withdrawal strategy assuming the market is going to increase over an extended period of time. SWR is excellent for a younger investor who can forego using principle during down markets. Now, let's say an investor has made it to their 60's. I suppose you could say that a NEW SORR is in effect, as an extended downturn could force you to dip into the principle. By the 80's, though, I'd imagine most people, like me, would be less concerned with using the principle for living expenses, since the odds of outliving your money is greatly reduced. During these later years, however, if one shifts investments to,say, bonds or an annuity (gasp!), the rate of return will be reduced, and the SWR calculated 40 years earlier will no longer be valid. But you would then be protected from significant downturns in the market. Does that make any sense?
I think you have a misunderstanding about what the SWR research is all about. There's no assumption that the market will always go up, or that a person will avoid touching principal during a down market: quite the opposite! The idea is to look at how much you can consistently withdraw (even if the market is down, even if you have to sell investments), and still have a very high probability of ending your retirement with a positive account balance.
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I'm sorry for being obtuse. I'm trying to address something independent of SORR. The Safe Withdrawal Rate (let's say 4%) rule is basically a long term withdrawal strategy assuming the market is going to increase over an extended period of time. SWR is excellent for a younger investor who can forego using principle during down markets. Now, let's say an investor has made it to their 60's. I suppose you could say that a NEW SORR is in effect, as an extended downturn could force you to dip into the principle. By the 80's, though, I'd imagine most people, like me, would be less concerned with using the principle for living expenses, since the odds of outliving your money is greatly reduced. During these later years, however, if one shifts investments to,say, bonds or an annuity (gasp!), the rate of return will be reduced, and the SWR calculated 40 years earlier will no longer be valid. But you would then be protected from significant downturns in the market. Does that make any sense?
I think you have a misunderstanding about what the SWR research is all about. There's no assumption that the market will always go up, or that a person will avoid touching principal during a down market: quite the opposite! The idea is to look at how much you can consistently withdraw (even if the market is down, even if you have to sell investments), and still have a very high probability of ending your retirement with a positive account balance.
I don't want to bog down the thread, and obviously I need to do more reading. BUT my interpretation of SWR, and the Trinity Study, was that OVER TIME, and allowing for the data in all past years, the SWR will, in most cases, mean YOU time out before your money does. To me, it implies that, over time, the market WILL go up, as indeed it has. So yes, I agree that the SWR is designed to allow withdrawals during downturns.
Malcat, Once again, I apologize. I think of SORR as more of an issue at the beginning,especially for planning purposes, rather than a sliding, revising construct. Looking at it your way, I now understand what you're saying. Thank you.
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$2M for a single person in a LCOL area who has a generous government pension and a paid off house? LOL. Pure comedy. And they are talking typical retirement age, which is 67 years old, so pure comedy gold.
My barebones retirement expenses are expected to be $22K/yr. $2M stash? LOL.
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It took us 3 years almost exactly (2016 to 2019 sometime, but I'm not at the computer that has our pretty chart). So yeah, 3 or 7 years isn't actually all that long. Compounding is scary powerful.
$2MM is what we retired on this spring. It includes $12K each on property taxes, health insurance/care, and travel (which we're not spending this year, obvs.), as well as an annualized $7K in major capital expenses. There's a lot of fat to trim if needed, and I willingly admit we're piss-poor Mustachians. We definitely aren't eating out every meal, but it's a very comfortable living in a MCOL area in the U.S.
Nice job! I first hit 1M in mid-2016 too! However, I haven't yet eclipsed 2M in total net worth. I'm still around 1.8M. Expenses have increased for me in the past 3 years. I'm still on the W2 hamster-wheel, at least for the time being.
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It took us 3 years almost exactly (2016 to 2019 sometime, but I'm not at the computer that has our pretty chart). So yeah, 3 or 7 years isn't actually all that long. Compounding is scary powerful.
$2M is what we retired on this spring. It includes $12K each on property taxes, health insurance/care, and travel (which we're not spending this year, obvs.), as well as an annualized $7K in major capital expenses. There's a lot of fat to trim if needed, and I willingly admit we're piss-poor Mustachians. We definitely aren't eating out every meal, but it's a very comfortable living in a MCOL area in the U.S.
Nice job! I first hit 1M in mid-2016 too! However, I haven't yet eclipsed 2M in total net worth. I'm still around 1.8M. Expenses have increased for me in the past 3 years. I'm still on the W2 hamster-wheel, at least for the time being.
It looks like that person is referring to a multi person household since they said, "we". If you're just a single person, you shouldn't need as much. Be careful using net worth in your drawdown calculations unless you are planning on selling the house, assuming you have one. I always just use the stash figure for my calculations since I plan to keep the home. I'm not quite to $2M, either, but I really don't need to be. That's a ridiculous figure. I could live comfortably on half that. Heck, if I waited until FRA of age 67, I should be able to get by without any stash. lol Not planning to wait - 50's is long enough.
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Yeah, circumstances dictate a lot. Dw and I will each get big.pensions in 11 years when we r 48. By age 44 our index funds will probably be to 1.4 million, we could certainty retire, but.pretty much forfeit the pension...or work 4 more years, and have about 2 million net worth plus two pensions that pays out 45kk per year each plus health benefits. We certainly don't need that, but for 4 extra years at a job that benefits society, why not. That will allow us to up our philanthropic game in retirement significantly, which would likely greatly improve our happiness.
Also, I'm a bit of a futurist. I think we may be entering a sort of bend point in the next 30 to 50 years where there will be life changing shit getting invented that could drastically extend life or improve the quality of the life we do have. I've no idea what those things will be, or what they might.cost. can't really hurt to have a stache of unneeded cash, and as long as teaching and coaching tennis is still super fun, 4 more years would seem like a cheap price I think.
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Savers need $2M to retire is what the average Joe/Jill thinks is the brass ring/unobtainium/ the final goal.
Please tell the whiners at:
https://forum.mrmoneymustache.com/throw-down-the-gauntlet/race-from-$2m-to-$3m/3600/
that your average Everyperson thinks that they have reached the goal.
Disclosure: In that group but FIRED 2 years ago.
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It looks like that person is referring to a multi person household since they said, "we". If you're just a single person, you shouldn't need as much. Be careful using net worth in your drawdown calculations unless you are planning on selling the house, assuming you have one. I always just use the stash figure for my calculations since I plan to keep the home. I'm not quite to $2M, either, but I really don't need to be. That's a ridiculous figure. I could live comfortably on half that. Heck, if I waited until FRA of age 67, I should be able to get by without any stash. lol Not planning to wait - 50's is long enough.
Well, for my part, that time span started out as an "I" and turned into a "we".
I exclude the value of a (paid off) primary residence for the purpose of SWR calculations.
$2M might be ridiculous for you... But we have special considerations that make it not-quite-so-ridiculous for our case.
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I used to think $2M is enough, but I was wrong. I like travel, visit casinos, sleep well, and probably leave something to my children, so I need at least $4M to have an enjoyable lifestyle. I know people here want to retire with $0.5M, that is their choices.
Hey, if you want to be a monk to pursue purity, you need $0M and can live on donations in an Asian temple. Never worry about money and never worry about anything.
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I used to think $2M is enough, but I was wrong. I like travel, visit casinos, sleep well, and probably leave something to my children, so I need at least $4M to have an enjoyable lifestyle. I know people here want to retire with $0.5M, that is their choices.
Hey, if you want to be a monk to pursue purity, you need $0M and can live on donations in an Asian temple. Never worry about money and never worry about anything.
What is your projected/desired annual spending? Because with the exception of casinos (and with wanting to leave money to my favorite charitable causes), what you listed is what I want, too. You think you can't do that on anything close to $100k/yr? You need at least $160k year to do that? How???? Will you not have a paid off or mostly paid off house?
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If you assume no SS, I bet $2M is probably a decent approximation of what lots of upper middle class people who aren't that frugal would want to maintain their lifestyle*.
Under a 4% rule with zero management fees, that's $80k / year. Most people aren't very frugal and I'm sure lots of people in the upper middle class were spending this much / year.
Many people who don't DIY their finances probably pay management fees ~ 1%, which means they only have 3% left to spend on other things. That's $60k / year. For "typical" (read: non mustacian) people in the upper middle class that think about saving for retirement, that's probably not a super unreasonable annual spend.
I know lots of people here are advocates of skinny FIRE, but I think there's a lot of risk in a strategy like that given that I'm not convinced in the argument that it's always easy to find a job. I believe it would be difficult to find employment in large downturns so you'd eat away at your principle when the value is low. But, maybe I'm wrong.
My number is probably something more like $1.5M. But I could see someone going for $2M at that point. With a very high savings rate and a few good years of returns, I don't think it would take all that long to get the 33% increase from $1.5M $2.0M. Depending on age / health / enjoyment / freedom at work, I could see making a decision to wait a few extra years.
* I didn't read the article and I assume they mean $2M in today's dollars. If you include inflation, this number is even more reasonable. This is one of the reason's I don't have a firm "number". That number will always be changing and if you're talking about something more than a decade in the future, I think fixating on a number will have you retiring too early because it's easy to forget that you were thinking about 2010 dollars or something.
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@NorthernBlitz it depends on what you mean by "skinny fire", lean FIRE usually refers to having just enough to cover your bare bones expenses, it's not exactly an amount.
For someone whose bare bones expenses are only 17K/yr, 600K may be quite a generous FI number, but it might be extremely lean for someone else.
No one advocates trying to live forever with thin margins. What people here do advocate is questioning how much you really need to live on, if your goal is to retire early.
It's really, really, really hard to save multiple millions in a short period of time. That's why so many people aim for lower numbers because the alternative is to continue working, and being a FIRE forum, a lot of people don't want to do that.
It's simple math, in order to accomplish the truly extraordinary feat of retiring very young, you must be willing to do the extraordinary.
Also, your argument about difficulty finding work in downtimes isn't valid because people who are FIREd don't need to find great lucrative jobs in downtimes, they often only need a little bit of supplemental money or they can often even just wait until the worst of it is over.
Having a large cash amount available makes that pretty easy. In addition, they're ideally positioned to retrain/respond to changing markets, because again, they don't depend on uninterrupted large income.
Now, that said, I'm not someone to scoff at a 2M number, that's the bare minimum of what I plan to save, probably more in the 3-5 range depending on what kind of work I feel like doing. But I'm not aiming to permanently leave the workforce early, and that's the big difference.
The early retiree people here tend to really know what they're doing, we don't need to worry about them. They're at a hell of a lot less risk than the really high spenders who lock in a lot of very high fixed expenses and don't have a lot of room to pivot if shit really hits the fan.
Someone who can be very comfortable spending under 20K/year may actually be far more resilient in the face of major economic disruption than someone who has a few million invested.
What I find is that people tend to look at others through their own lense. So someone who lives very comfortably on 60K/yr might not even be able to fathom how some of my colleagues are stressed out of their minds because despite saving over 300K/yr and working into their 60s, they worry they won't be able to support their lifestyles.
Likewise, that same 60K person may look at someone with a sub 20K budget and think that their level of risk and sacrifice is unsustainable.
Personally, I am infinitely more comforted by my ability to keep my fixed costs low and my capacity to generate paid work in such a broad range of markets and under almost any circumstance, It would take a lot for me to ever be at real risk, even if I only had a small stache. That reassures me in a changing world far more than the millions I'll have in the bank.
Luckily for me, I can have both, but again, that's only because I'm not actually aiming for FIRE.
Also, to address your asterisk, I don't believe anyone in this community gets fixated on an old number and then retires early on too little because they forgot to continue caring about the math. The overwhelming majority of people who actually accomplish FIRE are far more financially informed than Gen Pop.
I think that's an infinitely higher risk for people working to full retirement who never gave their savings much thought and closing in on a million think "wow, that sounds like plenty" and don't realize how constrained their retirement will be because they've never ever tracked their expenses.
ETA: this is my parents, my mom thinks her sister has a modestly comfortable retirement, and she does, she has a pension that provides her 40K/yr. What shocked my mom is that that pension was worth a million, she assumed it was about 300K because that's what she learned would provide a modestly comfortable retirement when she last looked into planning her retirement...back in the 80s.
I easily believe those people exist. I have a hard time believing many FIREes pull the trigger without thinking it to death. At least, that's what the bajillion OMY threads on here would suggest.
*Edited for grammar and clarity
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As someone who is 46, married to a 51 YO, and NW of $2.4m, we are borderline close to retirement. I’ve run the projections, and the riskiest part is the next three years, depending on how markets do and how much more we can sock away.
But I’m pretty conservative, I am assuming only a 5% return going forward and 1.25% inflation. I also have a fat pad in my projected expenses of 10% as well as a nice vacation allowance. If I assumed 6.5% return and cut the expense pad and reduce the vacation, we could retire today.
So 2m seems roughly right maybe for an early retiree with a “reasonable” budget, but probably overkill for someone retiring at a more normal age.
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As someone who is 46, married to a 51 YO, and NW of $2.4m, we are borderline close to retirement. I’ve run the projections, and the riskiest part is the next three years, depending on how markets do and how much more we can sock away.
But I’m pretty conservative, I am assuming only a 5% return going forward and 1.25% inflation. I also have a fat pad in my projected expenses of 10% as well as a nice vacation allowance. If I assumed 6.5% return and cut the expense pad and reduce the vacation, we could retire today.
So 2m seems roughly right maybe for an early retiree with a “reasonable” budget, but probably overkill for someone retiring at a more normal age.
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I cannot believe that you consider future inflation of 1.25% as conservative. Didn't notice that gold is at all time high?
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As someone who is 46, married to a 51 YO, and NW of $2.4m, we are borderline close to retirement. I’ve run the projections, and the riskiest part is the next three years, depending on how markets do and how much more we can sock away.
But I’m pretty conservative, I am assuming only a 5% return going forward and 1.25% inflation. I also have a fat pad in my projected expenses of 10% as well as a nice vacation allowance. If I assumed 6.5% return and cut the expense pad and reduce the vacation, we could retire today.
So 2m seems roughly right maybe for an early retiree with a “reasonable” budget, but probably overkill for someone retiring at a more normal age.
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I cannot believe that you consider future inflation of 1.25% as conservative. Didn't notice that gold is at all time high?
Inflation varies significantly by expense category. Healthcare and college cost have experienced high inflation. Food is flat to moderate, and electronics, cars, and clothes have been flat. Spending also decreases as you age esp past 80. So inflating expenses in retirement projections is actually very tricky. Another hedge I have I assume we don’t touch our Roth’s and pass them to our heirs. That’s for the break in case of emergency like a health event, high inflation, etc. But like all of us I’m not going to be able to retire early and have 100 percent of all possible scenarios hedged. Worse case scenario pension and Social security will let us at least eat cat food.
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As someone who is 46, married to a 51 YO, and NW of $2.4m, we are borderline close to retirement. I’ve run the projections, and the riskiest part is the next three years, depending on how markets do and how much more we can sock away.
But I’m pretty conservative, I am assuming only a 5% return going forward and 1.25% inflation. I also have a fat pad in my projected expenses of 10% as well as a nice vacation allowance. If I assumed 6.5% return and cut the expense pad and reduce the vacation, we could retire today.
So 2m seems roughly right maybe for an early retiree with a “reasonable” budget, but probably overkill for someone retiring at a more normal age.
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I wonder if part of the disagreement about this is "net worth" vs. "Stache". One's net worth matter surprisingly little. If one plans to live in their $1m house, then suddenly they've cut a $2m networth down to a $1m stache on which to live.
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As someone who is 46, married to a 51 YO, and NW of $2.4m, we are borderline close to retirement. I’ve run the projections, and the riskiest part is the next three years, depending on how markets do and how much more we can sock away.
But I’m pretty conservative, I am assuming only a 5% return going forward and 1.25% inflation. I also have a fat pad in my projected expenses of 10% as well as a nice vacation allowance. If I assumed 6.5% return and cut the expense pad and reduce the vacation, we could retire today.
So 2m seems roughly right maybe for an early retiree with a “reasonable” budget, but probably overkill for someone retiring at a more normal age.
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I wonder if part of the disagreement about this is "net worth" vs. "Stache". One's net worth matter surprisingly little. If one plans to live in their $1m house, then suddenly they've cut a $2m networth down to a $1m stache on which to live.
Completely agree. I am not using my NW to determine when we can retire. I project out cash coming into the house and cash leaving the house over the next 45 years, and see how that difference each year impacts cash savings. As long as cash savings stays above a certain level, say 50k, I feel comfortable.
Coincidentally our NW is 100 percent financial assets at the moment since we are renting until our house is done being built and we have no debt :-)
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It looks like that person is referring to a multi person household since they said, "we". If you're just a single person, you shouldn't need as much. Be careful using net worth in your drawdown calculations unless you are planning on selling the house, assuming you have one. I always just use the stash figure for my calculations since I plan to keep the home. I'm not quite to $2M, either, but I really don't need to be. That's a ridiculous figure. I could live comfortably on half that. Heck, if I waited until FRA of age 67, I should be able to get by without any stash. lol Not planning to wait - 50's is long enough.
Well, for my part, that time span started out as an "I" and turned into a "we".
I exclude the value of a (paid off) primary residence for the purpose of SWR calculations.
$2M might be ridiculous for you... But we have special considerations that make it not-quite-so-ridiculous for our case.
OK, but your earlier post said "I", not "we", which is why I suggested you may need less if you're single. And if you're excluding primary residence, that's your stash, not "net worth", as you had stated, which is why I pointed that part out in my previous reply.
But what I tried to make very clear in a previous comment was that $2M is ridiculous for "I", not a "we", in my case of living in a LCOL area with low expenses. As pointed out previously in the thread, this figure is going to be different for everyone, which is why it's ridiculous to say that any figure such as $2M is the magic number that everyone should shoot for to retire.
Reference:
$2M for a single person in a LCOL area who has a generous government pension and a paid off house? LOL. Pure comedy. And they are talking typical retirement age, which is 67 years old, so pure comedy gold.
My barebones retirement expenses are expected to be $22K/yr. $2M stash? LOL.
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I used to think $2M is enough, but I was wrong. I like travel, visit casinos, sleep well, and probably leave something to my children, so I need at least $4M to have an enjoyable lifestyle. I know people here want to retire with $0.5M, that is their choices.
Hey, if you want to be a monk to pursue purity, you need $0M and can live on donations in an Asian temple. Never worry about money and never worry about anything.
What is your projected/desired annual spending? Because with the exception of casinos (and with wanting to leave money to my favorite charitable causes), what you listed is what I want, too. You think you can't do that on anything close to $100k/yr? You need at least $160k year to do that? How???? Will you not have a paid off or mostly paid off house?
Things and tastes can change in a long retirement life. One can make money easily when they are 40~50s. It would be much more difficult to make good money if you want to come back after 10 years in retirement.
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I wonder if part of the disagreement about this is "net worth" vs. "Stache". One's net worth matter surprisingly little. If one plans to live in their $1m house, then suddenly they've cut a $2m networth down to a $1m stache on which to live.
Yeah, I pointed out the net worth vs. stash difference earlier in the thread as well. Then there's the single vs. married, cost of living, health care costs, and various other thing all kicking in.
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Things and tastes can change in a long retirement life. One can make money easily when they are 40~50s. It would be much more difficult to make good money if you want to come back after 10 years in retirement.
A lot of people in that age group who thought they would be making money "easily" for some time to come are now unemployed and can't find work. Never ASS-U-ME.
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If you assume no SS, I bet $2M is probably a decent approximation of what lots of upper middle class people who aren't that frugal would want to maintain their lifestyle*.
If you assume no SS for that person, it sounds like mostly a work of fiction, not a guideline to use for giving people advice as to how much stash they should have. And it wasn't just for upper middle class people that want to spend a lot of money, either.
If we're going to assume no SS, we could assume no investments, no pensions, no savings at all, that you're single and saddled with debt, and that you can never retire. So, it's best to be realistic and not apply any single dollar amount as a recommended goal for retirement. That is what is ridiculous.
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As someone who is 46, married to a 51 YO, and NW of $2.4m, we are borderline close to retirement. I’ve run the projections, and the riskiest part is the next three years, depending on how markets do and how much more we can sock away.
But I’m pretty conservative, I am assuming only a 5% return going forward and 1.25% inflation. I also have a fat pad in my projected expenses of 10% as well as a nice vacation allowance. If I assumed 6.5% return and cut the expense pad and reduce the vacation, we could retire today.
So 2m seems roughly right maybe for an early retiree with a “reasonable” budget, but probably overkill for someone retiring at a more normal age.
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I cannot believe that you consider future inflation of 1.25% as conservative. Didn't notice that gold is at all time high?
I thought that was good for a laugh also. The Fed appears set to bring inflation up to 2% and won't increase interest rates until it does. But in reality, inflation in terms of real costs seems to actually be much higher. My property taxes, homeowner's insurance, and food costs are some of my biggest bills, and they are all up 6% to 10% over the last year. This seems to be the norm with property taxes in my state with high property taxes. Food is really up there year, hopefully it will stabilize after the pandemic. Another is health care insurance, which is through my employer. My premium is up 62% this year and an increase in out of pocket costs as well. So, even 2% inflation sounds artificially way too low.
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If you assume no SS, I bet $2M is probably a decent approximation of what lots of upper middle class people who aren't that frugal would want to maintain their lifestyle*.
If you assume no SS for that person, it sounds like mostly a work of fiction, not a guideline to use for giving people advice as to how much stash they should have. And it wasn't just for upper middle class people that want to spend a lot of money, either.
If we're going to assume no SS, we could assume no investments, no pensions, no savings at all, that you're single and saddled with debt, and that you can never retire. So, it's best to be realistic and not apply any single dollar amount as a recommended goal for retirement. That is what is ridiculous.
I think SS will be around for me (currently early 40s). To much political cost to get rid of it.
But I think it will start later and be means tested. I also think my SS contributions will be increased sometime in the medium term. When these changes happen, I think they'll be dramatic because politicians keep kicking the problem down the road because they don't want to pay the political price to make the necessary changes.
I don't include SS in my own calculations because retirement is still a while off and I don't feel like running a bunch of different simulations with different SS options.
And given how healthcare in the US works, is rather oversave than undersave.
To each their own though.
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One should be mindful of how early retirement impacts the size of the social security benefit too...
Not as much as you might think. The social security formula has a couple of "bend points" where, past that point, any further earnings contribute less to your future benefits than previous earnings did. The formula is explained here (https://www.ssa.gov/oact/cola/piaformula.html).
In a nutshell, you take the amount you earned and paid social security tax on each year, scale them up to current year dollars, pick the top 35 years (using zeroes for some years if you worked less than 35), and add it up. The formula then divides by 420 (the number of months in 35 years) to get a monthly earnings figure. For this purpose I find it more useful to look at your lifetime earnings.
The first bend point is at $960/month ($403,200 lifetime). Up to this point, your average monthly dollar earned will be replaced 90% by social security.
Once you hit that first bend point the returns really start to diminish.
The second bend point is at $5,785/month ($2.43 million lifetime). Between the bend points your monthly income will be replaced 32%, and above the top bend point the figure is just 15%.
Someone who earns right up to the top bend point ($403,200) will get $864/month if collecting benefits at their full retirement age. Someone who earns twice as much ($806,400) will get $1,171/month. That's a 35% benefit increase in exchange for a 100% earnings increase.
To get twice the social security benefit of someone who earned $403,200, you need to earn a total of $1,537,200. Doubling the benefits again isn't even possible; someone who earned the social security wage cap every year from ages 22-66 would get $3,011/month (https://www.ssa.gov/oact/cola/examplemax.html).
Thanks to the SSA mySocialSecurity set-up in the US its pretty easy to see the difference early retirement makes at different ages. Given I had just passed over the second bend point (which I learned about later when trying to understand the results), I was shocked at how little difference there was between me retiring at 48 as opposed to 62, so it basically became a non-factor in my FIRE decisions as just a few years here and there made too little difference to even notice.
So this got me to look up my lifetime earnings - adding an estimate for year to date 2020, it looks like I am halfway to the second bend point (halfway from zero, not halfway from the first bend point). Hmmmn. Spent far too many years at low wages.
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It's a survey of 401k participants, so we're already talking about the universe of aggressive savers. Also, Schwab is probably motivated to release results that encourage getting more AUM for Schwab.
Encouraging savings is ultimately pro social though so whatever. The social security trust will run out in just 15 years. It's likely to be sooner if this payroll tax holiday happens. I'll still be decades out from SS age by that point.
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The social security trust will run out in just 15 years. It's likely to be sooner if this payroll tax holiday happens. I'll still be decades out from SS age by that point.
If you're talking about Trump's executive order, that is only a "delay" in payment of payroll taxes. They would still be due later. I don't see a permanent cut - more likely they will be increased in the coming years to make up for the shortfall.
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I don't include SS in my own calculations because retirement is still a while off and I don't feel like running a bunch of different simulations with different SS options.
And given how healthcare in the US works, is rather oversave than undersave.
To each their own though.
That is fair / reasonable at a younger age. I'm already into my 50's, so I'll be able to collect SS in 15 years if I want, and it makes a pretty big difference in my calculations
Saving extra is better than not saving enough, especially if you don't want to have to return to work or make further cutbacks in the budget down the road. I feel like I've already saved more than I needed, albeit less than the $2M amount suggested, so maybe I worked too long.
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The social security trust will run out in just 15 years. It's likely to be sooner if this payroll tax holiday happens. I'll still be decades out from SS age by that point.
If you're talking about Trump's executive order, that is only a "delay" in payment of payroll taxes. They would still be due later. I don't see a permanent cut - more likely they will be increased in the coming years to make up for the shortfall.
Gotcha. Didn't realize that.
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I used to think $2M is enough, but I was wrong. I like travel, visit casinos, sleep well, and probably leave something to my children, so I need at least $4M to have an enjoyable lifestyle. I know people here want to retire with $0.5M, that is their choices.
Hey, if you want to be a monk to pursue purity, you need $0M and can live on donations in an Asian temple. Never worry about money and never worry about anything.
What is your projected/desired annual spending? Because with the exception of casinos (and with wanting to leave money to my favorite charitable causes), what you listed is what I want, too. You think you can't do that on anything close to $100k/yr? You need at least $160k year to do that? How???? Will you not have a paid off or mostly paid off house?
Things and tastes can change in a long retirement life. One can make money easily when they are 40~50s. It would be much more difficult to make good money if you want to come back after 10 years in retirement.
Okay. So does that men you don't have a projected or desired annual spending and "at least $4m" is a number that just sounds good? Or do you plan so spend $$125k+ per year, adjusted for inflation and with a LOT of room for "changing tastes"?
And yes, it's harder to make more money when you are 60 and have been out of the workforce for 15 years than when you are 45 and have a good job. It's also hard to enjoy life and spend money on things that bring you happiness when you are dead. I'd wager that the latter is significantly more difficult than the former, in fact.
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I used to think $2M is enough, but I was wrong. I like travel, visit casinos, sleep well, and probably leave something to my children, so I need at least $4M to have an enjoyable lifestyle. I know people here want to retire with $0.5M, that is their choices.
Hey, if you want to be a monk to pursue purity, you need $0M and can live on donations in an Asian temple. Never worry about money and never worry about anything.
What is your projected/desired annual spending? Because with the exception of casinos (and with wanting to leave money to my favorite charitable causes), what you listed is what I want, too. You think you can't do that on anything close to $100k/yr? You need at least $160k year to do that? How???? Will you not have a paid off or mostly paid off house?
Things and tastes can change in a long retirement life. One can make money easily when they are 40~50s. It would be much more difficult to make good money if you want to come back after 10 years in retirement.
Knees and backs can change in a long working life. One can go on adventures easily when they are 40~50s. It would be much more difficult to get your health back if you want to get moving after yet another 10 years in a cubicle.
Life is full of trade-offs. We will all die. Nothing else in guaranteed. Would you rather die while still working an office job in your 60's like my mom did, or retire in your 40's and still get a decade or three of adventuring and living on your own terms before easing back and hopefully having some semi-healthy 70's and 80's thanks to your more active, lower stress, and healthier living while retired early? The choice is up to you, part of FIRE is shedding the security blanket that is a corporate job and trading that semi-secure salary for vastly more time and freedom.
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One can go on adventures easily when they are 40~50s.
That's not always true. There are people in their 40's or 50's that either have health problems, don't have the financial capability, or are too busy to easily go on adventuers.
It would be much more difficult to get your health back if you want to get moving after yet another 10 years in a cubicle.
Not everyone works in a cubicle. I have never worked in a cubicle, let alone "10 years". And not everyone works an office job. While I haven't FIREd yet, my job is low stress and enjoyable, and I get plenty of exercise, as I'm not working 24/7. And again, never in a cubicle.
The choice is up to you, part of FIRE is shedding the security blanket that is a corporate job and trading that semi-secure salary for vastly more time and freedom.
Not everyone works a corporate job. I never have. Some of us have jobs we actually enjoy and still have plenty of free time to be active.
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One can go on adventures easily when they are 40~50s.
That's not always true. There are people in their 40's or 50's that either have health problems, don't have the financial capability, or are too busy to easily go on adventuers.
It would be much more difficult to get your health back if you want to get moving after yet another 10 years in a cubicle.
Not everyone works in a cubicle. I have never worked in a cubicle, let alone "10 years". And not everyone works an office job. While I haven't FIREd yet, my job is low stress and enjoyable, and I get plenty of exercise, as I'm not working 24/7. And again, never in a cubicle.
The choice is up to you, part of FIRE is shedding the security blanket that is a corporate job and trading that semi-secure salary for vastly more time and freedom.
Not everyone works a corporate job. I never have. Some of us have jobs we actually enjoy and still have plenty of free time to be active.
I think this part is the key to where you fall on this issue.
If you like your job and feel like you have enough freedom to do the amount of "adventuring" you want to do, it's not much hardship to work a couple years to go from something like a 4% to a 3.5% withdrawal rate.
Not everyone dreams of extravagant trips or backpacking through Nepal or something. I'm fine going camping with my kids on the weekends. I can do that when I'm working. And since my job gives me great flexibility in the summer, it's not hard to do that on weekdays too.
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The social security trust will run out in just 15 years. It's likely to be sooner if this payroll tax holiday happens. I'll still be decades out from SS age by that point.
If you're talking about Trump's executive order, that is only a "delay" in payment of payroll taxes. They would still be due later. I don't see a permanent cut - more likely they will be increased in the coming years to make up for the shortfall.
Gotcha. Didn't realize that.
My understanding was the delay is for 6 months, so companies and individuals will get a big hit in 6 months. Nightmare.
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The social security trust will run out in just 15 years. It's likely to be sooner if this payroll tax holiday happens. I'll still be decades out from SS age by that point.
If you're talking about Trump's executive order, that is only a "delay" in payment of payroll taxes. They would still be due later. I don't see a permanent cut - more likely they will be increased in the coming years to make up for the shortfall.
Gotcha. Didn't realize that.
My understanding was the delay is for 6 months, so companies and individuals will get a big hit in 6 months. Nightmare.
Yes, they would be due next year unless additional action is taken by Congress. And to clarify my comment about increases in coming years, I was referring to SS not being funded enough to pay 100% of the promised benefits in another 12 years or so, not related to the delay here.
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I feel like $2M is a pretty good number. Allows you $60-$80k/yr income so you aren't dumpster diving in retirement and you can afford healthcare costs too. For the average American this seems legit.
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For us $2M seems reasonable as well. Our projected spending in our MCOL area is about $60k, and this doesn't include income taxes or healthcare. We are more frugal than almost anyone else we know IRL, don't have expensive hobbies, and don't travel much. But our planned spending includes some ongoing child-related (and eventually perhaps grandchild-related) expenses -- gifts, help with college, etc. And we feel more comfortable with a 3.5% SWR.
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I feel like $2M is a pretty good number. Allows you $60-$80k/yr income so you aren't dumpster diving in retirement and you can afford healthcare costs too. For the average American this seems legit.
Good for a select few, but way off for many, which is why these "one size fits all" recommendations are really bad advice.
e.g.:
$2M for a single person in a LCOL area who has a generous government pension and a paid off house? LOL. Pure comedy. And they are talking typical retirement age, which is 67 years old, so pure comedy gold.
My barebones retirement expenses are expected to be $22K/yr. $2M stash? LOL.
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I feel like $2M is a pretty good number. Allows you $60-$80k/yr income so you aren't dumpster diving in retirement and you can afford healthcare costs too. For the average American this seems legit.
Good for a select few, but way off for many, which is why these "one size fits all" recommendations are really bad advice.
e.g.:
$2M for a single person in a LCOL area who has a generous government pension and a paid off house? LOL. Pure comedy. And they are talking typical retirement age, which is 67 years old, so pure comedy gold.
My barebones retirement expenses are expected to be $22K/yr. $2M stash? LOL.
And it's not even advice, it's what people self reported that they *think* they will need.
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This is why I don’t use NW but household CF projections to see when I will be able to retire.
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This was a survey to ask what savers thought. https://www.businesswire.com/news/home/20200804005292/en/Schwab-401-Survey-Finds-Savings-Goals-Stress
It wasn't Schwab saying "Oh, you need $1.9MM in order to consider retiring".
It was also not stated....or I missed it....if they were talking about an individual or a couple. I mean....one spouse working and the other taking care of kids.....the working one, taking the survey is going to assume he has to have enough to take care of the family....right? A single 27 year old might just be looking for themselves. I looked at the actual questions and they are not clear what they assume here.
$1.9MM for a single person to retire? Well, duh. For a couple? Not quite as duh. Or maybe still duh. Depends on the percentage you're planning to take out and *for how many years*. Plenty of people don't understand the Trinity study and say that 4% can be taken out forever and ever. The study said no such thing. It took all 30 year periods and found that in nearly all cases, taking out 4% FOR 30 YEARS meant you would likely not run out of money. That does not mean that Mr. FIRE, calling it quits at 28 with a family history of living into their 90's is not going to run out of money, ever.
At least it's not Suze saying that nobody should retire without $10MM. ....then she went back to her private island....
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Really?
Spending $80k/year would actually allow me and SO to eat out for dinner every night of the year, in a HCOL city, with a mortgage, and not at a burger joint either. And maybe a few $600 shoes, too. But we don't have expensive hobbies and my formerly expensive car can now vote.
Sorry, then you don't live in a HCOL. The median house sold in CA is $525k. Assume:
- A 20% DP and
- A 15 year mortgage on the remaining $420k at 3% = P&I alone is $2800 per month
- 1.25% property tax = $546 per month
- Insurance ~ $100 per month.
That's $3446 x 12 = $41,352 on HOUSING ALONE.
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Really?
Spending $80k/year would actually allow me and SO to eat out for dinner every night of the year, in a HCOL city, with a mortgage, and not at a burger joint either. And maybe a few $600 shoes, too. But we don't have expensive hobbies and my formerly expensive car can now vote.
Sorry, then you don't live in a HCOL. The median house sold in CA is $525k. Assume:
- A 20% DP and
- A 15 year mortgage on the remaining $420k at 3% = P&I alone is $2800 per month
- 1.25% property tax = $546 per month
- Insurance ~ $100 per month.
That's $3446 x 12 = $41,352 on HOUSING ALONE.
Or they do live in an HCOL area and don't own average priced housing, or they already paid off their house, or rent, or...
I live in a city with that same average housing cost and our household expenses, including a housing costs, for two aren't anywhere near 80K.
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Sorry, then you don't live in a HCOL. The median house sold in CA is $525k. Assume:
- A 20% DP and
- A 15 year mortgage on the remaining $420k at 3% = P&I alone is $2800 per month
- 1.25% property tax = $546 per month
- Insurance ~ $100 per month.
That's $3446 x 12 = $41,352 on HOUSING ALONE.
By the time most people retire they will either have already paid off the house, or have built up significant equity and be close to paying it off. Or if you're moving / doing a cash-out refi you'd still have all that money somewhere, probably invested, so its the same difference. Here's an article warning that more people are retiring with mortgages (https://www.usatoday.com/story/money/personalfinance/retirement/2018/10/30/should-you-pay-off-mortgage-before-retirement-planning/38242907/), where "more people" is a whole 35% of 65-74 year-olds.
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....more people are retiring with mortgages[/url], where "more people" is a whole 35% of 65-74 year-olds.
Yes, that's a lot of people in that age group, more than a 1/3 of them. Not good. You would think they would be getting those mortgages paid off. I paid off a couple before I was 40.
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....more people are retiring with mortgages[/url], where "more people" is a whole 35% of 65-74 year-olds.
Yes, that's a lot of people in that age group, more than a 1/3 of them. Not good. You would think they would be getting those mortgages paid off. I paid off a couple before I was 40.
Given the low interest rates, I really question the wisdom of paying off the mortgage in time for retirement if it ties up investable cash. I'm certainly anticipating carrying a mortgage into retirement; there's no compelling reason I can see to pay one off as long as interest rates are so low (we could have paid our mortgage off a decade ago, but instead we have re-upped it twice at lower interest rates to leverage more cash flow).
We also may very well need a larger home in retirement than we live in now; our current houses are in a very LCOL location..when we (pleasepleaseplease) eventually get to move, we fully expect to pay a LOT more for housing. If I want the cash to cover that extra housing cost, I sure am not going to get it by building equity in the homes we own now, I'm much more likely to get it via investments.
And even once I buy another house, I'd rather carry a mortgage (at low interest rate) than lock up a fuck ton of cash, so we just build mortgage/rent into our retirement budget.
If interest rates take a big jump before the next time we buy a house, I'd reconsider, but not until then.
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....more people are retiring with mortgages[/url], where "more people" is a whole 35% of 65-74 year-olds.
Yes, that's a lot of people in that age group, more than a 1/3 of them. Not good. You would think they would be getting those mortgages paid off. I paid off a couple before I was 40.
Given the low interest rates, I really question the wisdom of paying off the mortgage in time for retirement if it ties up investable cash. I'm certainly anticipating carrying a mortgage into retirement; there's no compelling reason I can see to pay one off as long as interest rates are so low (we could have paid our mortgage off a decade ago, but instead we have re-upped it twice at lower interest rates to leverage more cash flow).
We also may very well need a larger home in retirement than we live in now; our current houses are in a very LCOL location..when we (pleasepleaseplease) eventually get to move, we fully expect to pay a LOT more for housing. If I want the cash to cover that extra housing cost, I sure am not going to get it by building equity in the homes we own now, I'm much more likely to get it via investments.
And even once I buy another house, I'd rather carry a mortgage (at low interest rate) than lock up a fuck ton of cash, so we just build mortgage/rent into our retirement budget.
If interest rates take a big jump before the next time we buy a house, I'd reconsider, but not until then.
This may be opening a can of worms, to be carrying on this sub-thread-topic :)
The way I look at it is, a paid-off primary residence kind of serves as a replacement for a "bond" position in a portfolio. It pays a 'fixed coupon' of providing me a place to live, free of cost (other than taxes and up-keep.) I'd much prefer this, instead of buying actual treasuries or even corporate bonds, which pay miserably these days.
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This may be opening a can of worms, to be carrying on this sub-thread-topic :)
The way I look at it is, a paid-off primary residence kind of serves as a replacement for a "bond" position in a portfolio. It pays a 'fixed coupon' of providing me a place to live, free of cost (other than taxes and up-keep.) I'd much prefer this, instead of buying actual treasuries or even corporate bonds, which pay miserably these days.
And you're welcome to that position. Neither carrying a low-interest long-term mortgage nor paying it off is inherently "wrong" - it depends on your scenario.
While not retired yet, I feel that I am in a better position* because I did a refi to a new low-interest 30 year mortgage last year. Cash flow is improved considerably - to the point where my property tax + interest is actually more than the mortgage.
Keeping the mortgage is a good tool to let me retire earlier - I can use the freed up cash as part of a "bridge" to get me to my pension.
*Still annoyed at Texas nanny-state laws which won't let me refi again until the prior refi is 1 year old. Would have already done it again - I can do a nearly-no-cost refi and still drop the rate further.
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....more people are retiring with mortgages[/url], where "more people" is a whole 35% of 65-74 year-olds.
Yes, that's a lot of people in that age group, more than a 1/3 of them. Not good. You would think they would be getting those mortgages paid off. I paid off a couple before I was 40.
Given the low interest rates, I really question the wisdom of paying off the mortgage in time for retirement if it ties up investable cash. I'm certainly anticipating carrying a mortgage into retirement; there's no compelling reason I can see to pay one off as long as interest rates are so low (we could have paid our mortgage off a decade ago, but instead we have re-upped it twice at lower interest rates to leverage more cash flow).
We also may very well need a larger home in retirement than we live in now; our current houses are in a very LCOL location..when we (pleasepleaseplease) eventually get to move, we fully expect to pay a LOT more for housing. If I want the cash to cover that extra housing cost, I sure am not going to get it by building equity in the homes we own now, I'm much more likely to get it via investments.
And even once I buy another house, I'd rather carry a mortgage (at low interest rate) than lock up a fuck ton of cash, so we just build mortgage/rent into our retirement budget.
If interest rates take a big jump before the next time we buy a house, I'd reconsider, but not until then.
This may be opening a can of worms, to be carrying on this sub-thread-topic :)
The way I look at it is, a paid-off primary residence kind of serves as a replacement for a "bond" position in a portfolio. It pays a 'fixed coupon' of providing me a place to live, free of cost (other than taxes and up-keep.) I'd much prefer this, instead of buying actual treasuries or even corporate bonds, which pay miserably these days.
Many other threads on this forum debate this ad-nauseam. At the end of the day it’s a very personal situation/decision.
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Pretty sure that is the first time I have seen Texas and nanny state in the same sentence.
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Pretty sure that is the first time I have seen Texas and nanny state in the same sentence.
Heh. I also did a double-take at that.
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Pretty sure that is the first time I have seen Texas and nanny state in the same sentence.
Heh. I also did a double-take at that.
Don't believe the bluster (and refusal to expand Medicaid) - Texas does all sorts of nanny state stuff.
Heavily fine a winery for donating wine to an alumni event instead of selling to a distributor, buying back from a distributor and then giving it to the event? Yep.
Banning direct sales of automobiles, forcing you to use a dealership network? Yep.
All sorts of PITA restrictions on mortgage refinancing, driving rates up 0.2-0.3% compared to reasonable states, plus limiting how often you can refi? Yep.
Ban ownership of multiple alcohol stores, except for strange family partnerships? Yep. I can't get Kirkland Vodka. Thanks, Texas!
Ban possession of more than 6 dildos?? Yep. Could be charged as a felony! (thrown out by the courts)
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Pretty sure that is the first time I have seen Texas and nanny state in the same sentence.
Heh. I also did a double-take at that.
Don't believe the bluster (and refusal to expand Medicaid) - Texas does all sorts of nanny state stuff.
Heavily fine a winery for donating wine to an alumni event instead of selling to a distributor, buying back from a distributor and then giving it to the event? Yep.
Banning direct sales of automobiles, forcing you to use a dealership network? Yep.
All sorts of PITA restrictions on mortgage refinancing, driving rates up 0.2-0.3% compared to reasonable states, plus limiting how often you can refi? Yep.
Ban ownership of multiple alcohol stores, except for strange family partnerships? Yep. I can't get Kirkland Vodka. Thanks, Texas!
Ban possession of more than 6 dildos?? Yep. Could be charged as a felony! (thrown out by the courts)
Yeah, I live in Texas. I find nearly everything about this state to be ludicrous, though, so I'm not a great judge. (When did the ban on direct sales of autos happen? We've sold a couple of cars to other people and never ran into any problem...might be a county thing...)
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Pretty sure that is the first time I have seen Texas and nanny state in the same sentence.
Heh. I also did a double-take at that.
Don't believe the bluster (and refusal to expand Medicaid) - Texas does all sorts of nanny state stuff.
Heavily fine a winery for donating wine to an alumni event instead of selling to a distributor, buying back from a distributor and then giving it to the event? Yep.
Banning direct sales of automobiles, forcing you to use a dealership network? Yep.
All sorts of PITA restrictions on mortgage refinancing, driving rates up 0.2-0.3% compared to reasonable states, plus limiting how often you can refi? Yep.
Ban ownership of multiple alcohol stores, except for strange family partnerships? Yep. I can't get Kirkland Vodka. Thanks, Texas!
Ban possession of more than 6 dildos?? Yep. Could be charged as a felony! (thrown out by the courts)
Yeah, I live in Texas. I find nearly everything about this state to be ludicrous, though, so I'm not a great judge. (When did the ban on direct sales of autos happen? We've sold a couple of cars to other people and never ran into any problem...might be a county thing...)
It is a ban on manufacturers making direct sales, not individuals.
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[/quote]
Ban possession of more than 6 dildos?? Yep. Could be charged as a felony! (thrown out by the courts)
[/quote]
Well, I'm sure you could make the argument they are assault weapons - problem solved!
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Pretty sure that is the first time I have seen Texas and nanny state in the same sentence.
Heh. I also did a double-take at that.
Don't believe the bluster (and refusal to expand Medicaid) - Texas does all sorts of nanny state stuff.
Heavily fine a winery for donating wine to an alumni event instead of selling to a distributor, buying back from a distributor and then giving it to the event? Yep.
Banning direct sales of automobiles, forcing you to use a dealership network? Yep.
All sorts of PITA restrictions on mortgage refinancing, driving rates up 0.2-0.3% compared to reasonable states, plus limiting how often you can refi? Yep.
Ban ownership of multiple alcohol stores, except for strange family partnerships? Yep. I can't get Kirkland Vodka. Thanks, Texas!
Ban possession of more than 6 dildos?? Yep. Could be charged as a felony! (thrown out by the courts)
Yeah, I live in Texas. I find nearly everything about this state to be ludicrous, though, so I'm not a great judge. (When did the ban on direct sales of autos happen? We've sold a couple of cars to other people and never ran into any problem...might be a county thing...)
It is a ban on manufacturers making direct sales, not individuals.
Thats quite common across the country. When you have multi-generational entrenched local businesses that have been donating to local politicians for decades, this is the kind of thing you get.
In some states, the sale contract also includes an arbitration clause that means you cant sue the dealership for anything but instead have to rely on arbitration. Thats written into state law. Think arbitrators will be fair minded when they rely on these businesses for all of their own income?
This is why regulations in general, while necessary to some degree, are largely just used for rent seeking and anti-competition leverage by entrenched powers.
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2 million? Now you need 8 million:
https://www.marketwatch.com/story/the-new-savings-target-for-a-modest-retirement-8-million-2020-08-17?mod=home-page
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2 million? Now you need 8 million:
https://www.marketwatch.com/story/the-new-savings-target-for-a-modest-retirement-8-million-2020-08-17?mod=home-page
That's a joke, right? A .5% SWR? Heck, you can get an annuity that pays 6%.
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2 million? Now you need 8 million:
https://www.marketwatch.com/story/the-new-savings-target-for-a-modest-retirement-8-million-2020-08-17?mod=home-page
That's a joke, right? A .5% SWR? Heck, you can get an annuity that pays 6%.
But the Financial Samurai said it was the new normal!!
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Ban possession of more than 6 dildos?? Yep. Could be charged as a felony! (thrown out by the courts)
[/quote]
Well, I'm sure you could make the argument they are assault weapons - problem solved!
[/quote]
I had this same thought, but you beat me to it. I guess I've been watching to much https://www.youtube.com/c/ForgottenWeapons/videos and similar.
Assault weapons: has bayonet attachment (sort of), a pistol grip (again, sort of).
other options include telescoping stock (-- dang, can't unthink that now), flash hider (eeek!), grenade launcher (--faints dead to ground)
https://en.wikipedia.org/wiki/Federal_Assault_Weapons_Ban
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2 million? Now you need 8 million:
https://www.marketwatch.com/story/the-new-savings-target-for-a-modest-retirement-8-million-2020-08-17?mod=home-page
That dude is batshit crazy but he’s in a smart way. He’s saying this outrageous stuff and guess what? People will go to his blog and comment and tell him he’s crazy but he’s getting the views and so the ad money will keep coming in. Everything about him is awful, but he’s still getting attention when someone else has a thread about other financial blogs going whisper quiet.
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2 million? Now you need 8 million:
https://www.marketwatch.com/story/the-new-savings-target-for-a-modest-retirement-8-million-2020-08-17?mod=home-page
That dude is batshit crazy but he’s in a smart way. He’s saying this outrageous stuff and guess what? People will go to his blog and comment and tell him he’s crazy but he’s getting the views and so the ad money will keep coming in. Everything about him is awful, but he’s still getting attention when someone else has a thread about other financial blogs going whisper quiet.
All about the clicks!
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2 million? Now you need 8 million:
https://www.marketwatch.com/story/the-new-savings-target-for-a-modest-retirement-8-million-2020-08-17?mod=home-page
Ugh, I read the click-bait. Anyway, queue the Golden Girls, lot's of people will be living like that if this article is true!! :-P Yes I love the Golden Girls.
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I've seen this:
https://www.youtube.com/watch?v=OGoZyz5QwCc&
Are most of us doomed? I can't imagine saving $2M. It's such an enormous amount!
I'd need to work like 10-15 more years for that!
We all know this is dumb, because, as Suze Orman pointed out, you can't even get groceries to your private island for that.
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Pretty sure that is the first time I have seen Texas and nanny state in the same sentence.
Heh. I also did a double-take at that.
...
Ban possession of more than 6 dildos?? Yep. Could be charged as a felony! (thrown out by the courts)
In their defense, does anyone really need more than 3?
/s in case it wasn't obvious
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Pretty sure that is the first time I have seen Texas and nanny state in the same sentence.
Heh. I also did a double-take at that.
...
Ban possession of more than 6 dildos?? Yep. Could be charged as a felony! (thrown out by the courts)
In their defense, does anyone really need more than 3?
/s in case it wasn't obvious
You do, because it's about FREEDOM, and we need freedom.
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$2M seems ridiculous to me, as far as "needs" for a single person living in LCOL area. But then, my stash is getting up near that amount, so I've already worked longer than I needed to. Note, I'm talking stash, not net worth, as net worth includes my home, and I won't be drawing down from my home for retirement spending.
Even $1M is more than I need. It looks like $350,000 stash would be enough to pay my bills through FIRE and still have several hundred dollars per month left over for discretionary spending.
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Even $1M is more than I need. It looks like $350,000 stash would be enough to pay my bills through FIRE and still have several hundred dollars per month left over for discretionary spending.
How are you planning to handle medical and dental expenses?
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Even $1M is more than I need. It looks like $350,000 stash would be enough to pay my bills through FIRE and still have several hundred dollars per month left over for discretionary spending.
How are you planning to handle medical and dental expenses?
That's part of my budget and already factored in to my numbers. I'll probably just self insure for dental unless I find a decent plan. I'll buy health insurance to reduce my out of pocket costs for medical expenses.
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I'll feel very lucky if I have $500,000 net worth when I plan on retiring at 55.
I was planning on living on just that until 70 and then taking full social security.
I was feeling somewhat ok with this plan until reading this thread. Now I feel a little nervous.
The whole point is that $2M is just a random number. How much YOU need depends on your circumstances.
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One million is a nice round number that sounds big. Most people consider what a house and couple vehicles cost and reckon maybe 1 million is not quite enough, so they round up to $2 million. Simple as that. They have no clue what they need, what they spend, what they have or how long they will work. It is all nonsense.
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I'll feel very lucky if I have $500,000 net worth when I plan on retiring at 55.
I was planning on living on just that until 70 and then taking full social security.
I was feeling somewhat ok with this plan until reading this thread. Now I feel a little nervous.
Why would anyone else's numbers make you feel nervous.
I don't get nervous talking to people who insist that they need a minimum of 5M to retire, I just know that their lifestyle is way more costly than mine.
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Like many have said it really is person to person/couple to couple and there are many many variables. You can find articles to support your ideas, numbers etc and ones that make you nervous. For most of the population I would gather 2M $ is way more than enough to fire on but again depending on your age, living situation etc.. Work the calculators there are plenty of good ones out there and use history as your guide. If you have more desires to for more expensive things you just need to include that. We fired slightly above that number 5.5 years ago and bought our dream house which was twice as much as we were living in prior but due to the market we still have liquid and NW more than we started with. Having said that as the market has risen I have more cash set aside as the market has rose for various reasons. That is my comfort zone and what helps me sleep at night though I am not a good sleeper regardless. I also spent 2 years before firing really checking my costs and using a budget tool and then added 10% to that for my withdrawal rate.
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How much you “need” to RE is very assumption driven, and what you assume is dependent on one’s risk appetite. My spouse and I are worth $2.4m, but if I assume only 3% real return (5% return less 2% inflation), and add a 5% cushion our expenses, and that we live to 90, and that we spend 10k a year for vacation, then only having 2.4m makes for a “nail biting” retirement.
But if I change real return to assume 4%, or take inexpensive vacations, I can retire today. Also, no one in my family has come even close to living to 90. I doubt I will to.
But I’ll still work another 2-3 years to strengthen our financial position while the job iron is still hot. Once I stop working for big salary at BigCorp USA that’s hard to come back from.
When I was younger I thought $2m I’ll retire for sure! Yet here I am still working.
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How much you “need” to RE is very assumption driven, and what you assume is dependent on one’s risk appetite. My spouse and I are worth $2.4m, but if I assume only 3% real return (5% return less 2% inflation), and add a 5% cushion our expenses, and that we live to 90, and that we spend 10k a year for vacation, then only having 2.4m makes for a “nail biting” retirement.
But if I change real return to assume 4%, or take inexpensive vacations, I can retire today. Also, no one in my family has come even close to living to 90. I doubt I will to.
But I’ll still work another 2-3 years to strengthen our financial position while the job iron is still hot. Once I stop working for big salary at BigCorp USA that’s hard to come back from.
When I was younger I thought $2m I’ll retire for sure! Yet here I am still working.
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If I had $2,000,000 by 55 or so, or any age whatsoever, I'd be so incredibly happy.
I would never even come close to having to work another day in my life with that amount.
Either I'm way off on what it takes to retire or I spend way less than others.
I usually spend about $20,000 per year. If I spent $25,000 I could have a blast.
I have no way to save more than $500,000 unless I come up with a brilliant money-making idea all of a sudden...which I've been trying to do for years....so not likely.
(or I can work my current job which I hate until I'm well into my 60's.)
Some of you should be very thankful for how much you have accumulated.......my stress would vanish instantly if I had what some of you have.
I feel like I'm close to living in a homeless camp after comparing my situation to most others posting here.
Can someone who plans on having a very small amount for retirement post here to make me feel better? :)
How old are you? Some of your feelings might be just lack of long term perspective. You likely could save a lot more than you believe you can.
And I am definitely thankful for how much we have saved, but I'm also proud b/c we worked diligently to do it for more than 20 years.
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How much you “need” to RE is very assumption driven, and what you assume is dependent on one’s risk appetite. My spouse and I are worth $2.4m, but if I assume only 3% real return (5% return less 2% inflation), and add a 5% cushion our expenses, and that we live to 90, and that we spend 10k a year for vacation, then only having 2.4m makes for a “nail biting” retirement.
But if I change real return to assume 4%, or take inexpensive vacations, I can retire today. Also, no one in my family has come even close to living to 90. I doubt I will to.
But I’ll still work another 2-3 years to strengthen our financial position while the job iron is still hot. Once I stop working for big salary at BigCorp USA that’s hard to come back from.
When I was younger I thought $2m I’ll retire for sure! Yet here I am still working.
Sent from my iPhone using Tapatalk
If I had $2,000,000 by 55 or so, or any age whatsoever, I'd be so incredibly happy.
I would never even come close to having to work another day in my life with that amount.
Either I'm way off on what it takes to retire or I spend way less than others.
I usually spend about $20,000 per year. If I spent $25,000 I could have a blast.
I have no way to save more than $500,000 unless I come up with a brilliant money-making idea all of a sudden...which I've been trying to do for years....so not likely.
(or I can work my current job which I hate until I'm well into my 60's.)
Some of you should be very thankful for how much you have accumulated.......my stress would vanish instantly if I had what some of you have.
I feel like I'm close to living in a homeless camp after comparing my situation to most others posting here.
Can someone who plans on having a very small amount for retirement post here to make me feel better? :)
I am in awe of you and others who say they live off 20k a year. Don’t be in awe of me. My spouse and I definitely have fat FIRE goals. If I was single, and no aging mom to worry about I could slash expenses in half for sure.
Our 2.4 is also mostly in tax deferred accounts, so that definitely isn’t the same if it was all in after tax accounts.
Sent from my iPhone using Tapatalk
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How much you “need” to RE is very assumption driven, and what you assume is dependent on one’s risk appetite. My spouse and I are worth $2.4m, but if I assume only 3% real return (5% return less 2% inflation), and add a 5% cushion our expenses, and that we live to 90, and that we spend 10k a year for vacation, then only having 2.4m makes for a “nail biting” retirement.
But if I change real return to assume 4%, or take inexpensive vacations, I can retire today. Also, no one in my family has come even close to living to 90. I doubt I will to.
But I’ll still work another 2-3 years to strengthen our financial position while the job iron is still hot. Once I stop working for big salary at BigCorp USA that’s hard to come back from.
When I was younger I thought $2m I’ll retire for sure! Yet here I am still working.
Sent from my iPhone using Tapatalk
If I had $2,000,000 by 55 or so, or any age whatsoever, I'd be so incredibly happy.
I would never even come close to having to work another day in my life with that amount.
Either I'm way off on what it takes to retire or I spend way less than others.
I usually spend about $20,000 per year. If I spent $25,000 I could have a blast.
I have no way to save more than $500,000 unless I come up with a brilliant money-making idea all of a sudden...which I've been trying to do for years....so not likely.
(or I can work my current job which I hate until I'm well into my 60's.)
Some of you should be very thankful for how much you have accumulated.......my stress would vanish instantly if I had what some of you have.
I feel like I'm close to living in a homeless camp after comparing my situation to most others posting here.
Can someone who plans on having a very small amount for retirement post here to make me feel better? :)
I am in awe of you and others who say they live off 20k a year. Don’t be in awe of me. My spouse and I definitely have fat FIRE goals. If I was single, and no aging mom to worry about I could slash expenses in half for sure.
Our 2.4 is also mostly in tax deferred accounts, so that definitely isn’t the same if it was all in after tax accounts.
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I agree with this. I'm also in awe of my much younger self, who did live for about a decade on 20-25K/year. But we got older, medical stuff happened, need to help support parents and continue to do so for the foreseeable future happened, etc. I certainly think that if it were just me living on my own with no obligations, I could probably cut annual spending by 30-50%, depending. That still wouldn't get me to 20-25K/year though, which is very impressive.
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Running my numbers, if I wanted to retire and have my current life with a nice budget for vacations a year ($10k), I’m going to need around $1.5m. If I work for 2 more years after that, I should hit around $2m. That’s my aim for a cushion. If though I moved to somewhere with a LCOL, I could probably retire with $875k and be fine. It’s nice to have the options. Currently security matters a bit more and I don’t hate my job enough (yet, although it’s testing me lately).
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How much you “need” to RE is very assumption driven, and what you assume is dependent on one’s risk appetite. My spouse and I are worth $2.4m, but if I assume only 3% real return (5% return less 2% inflation), and add a 5% cushion our expenses, and that we live to 90, and that we spend 10k a year for vacation, then only having 2.4m makes for a “nail biting” retirement.
But if I change real return to assume 4%, or take inexpensive vacations, I can retire today. Also, no one in my family has come even close to living to 90. I doubt I will to.
But I’ll still work another 2-3 years to strengthen our financial position while the job iron is still hot. Once I stop working for big salary at BigCorp USA that’s hard to come back from.
When I was younger I thought $2m I’ll retire for sure! Yet here I am still working.
Sent from my iPhone using Tapatalk
If I had $2,000,000 by 55 or so, or any age whatsoever, I'd be so incredibly happy.
I would never even come close to having to work another day in my life with that amount.
Either I'm way off on what it takes to retire or I spend way less than others.
I usually spend about $20,000 per year. If I spent $25,000 I could have a blast.
I have no way to save more than $500,000 unless I come up with a brilliant money-making idea all of a sudden...which I've been trying to do for years....so not likely.
(or I can work my current job which I hate until I'm well into my 60's.)
Some of you should be very thankful for how much you have accumulated.......my stress would vanish instantly if I had what some of you have.
I feel like I'm close to living in a homeless camp after comparing my situation to most others posting here.
Can someone who plans on having a very small amount for retirement post here to make me feel better? :)
You're going to have a rough time if you insist on comparing yourself to others this way.
If you had 2M, you might be incredibly happy or you might be miserable. It would really depend on what it took to get there and how you ended up there.
If you trained for years to become a surgeon and then only ended up making enough to save 2M while living on only 20K, you might not be too happy.
If you had actually saved 20M and then through some bad money moves had lost almost everything and ended up at only 2M, again, you would probably be pretty bummed about it.
For one family, 2M might buy every luxury they could possibly want and make them the richest of everyone they know, for another, it might be really, really difficult to fit in with their friends and colleagues with only 2M, which may or may not matter to them.
As for saving, can you explain why you can't make more money? I make a lot of money, but that's because I put in an astronomical amount of time and energy into developing the skills, education and network needed to get here.
Making money in and of itself is a skill that can be learned. So if you want to make more money, then perhaps put some of your resources towards that. Those of use who make good money typically set out to do so, for some (few) it's luck, but for a lot of us, it's pretty intentional and woven into the fabric of years of decision making.
In particular, if you hate your job, then that's probably your biggest issue. People tend to envy those with money more when what they most want is freedom from circumstances they feel trapped in.
There's a reason I don't envy the 5M, 10M, 25M, 50M, etc folks I know is because I'm not unhappy. My work is remarkably difficult and insanely high pressure, as a lot of well paid work is, but I really enjoy it. I could retire right now if I had a 20K spend, but I have no interest in not working, so I make a lot and can afford to spend more and save a lot.
2M might not fuel such envy in you if the job you had that could get you to 500K was something you really liked doing and you really enjoyed the life it provided.
If you aren't happy, then focus instead on changing something, not worrying about the trade offs other people choose to make in their lives.
Spend some time here, there's A LOT to learn here about career building, not just reducing spending. I've learned a lot of what I needed to be successful from being an active member here.
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I'm 49 years old. I think and think and think, but I can not figure out any way to make more than my current salary.
I don't have any highly-desirable skills in the marketplace. I work for a large manufacturing company and I feel that I pretty much maxed out my potential.
All I have is a business degree which doesn't impress anyone nowadays, and I don't think it should.
I do a great job working at my company, but I do a little bit of everything and don't have a specialty.
I guess the closest description with my current position would be project manager.
I'm not going to get promoted to an executive level because I don't have the personality for it........terrible at the boys-club conversational skills that seem so important where I work.
If I could figure out a way to make more money I would go after it like a madman. I get obsessive, super focused, & super persistent when I actually have a plan.
(You may ask where this has been all these years, and I am embarrassed to admit I went after a stupid idea for years and years, and failed miserably. I could easily retire today if I hadn't made so many disastrous financial mistakes....which makes me even more miserable when I think about it. Lesson learned, but it feels a little late now.)
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Then learn some highly desirable skills, learn better conversational skills, learn how to network, and learn what opportunities there are out in the world that you might enjoy.
So you have mistakes and regrets. My entire career went down in flames after I made virtually *zero* money at it because all I managed to do was pay off the enormous debt it took to get there.
I've tried and failed at so many things, but I learned from every single one of them. I had paths ahead of me that requires skills that I was not good at, so I dedicated energy to getting better at those skills, and I'm still doing that so that I don't keep failing.
If what you've tried hasn't worked, and you want something different than what you currently have, then there's only one option: do something different. Figure out your barriers and tackle them systematically.
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How much you “need” to RE is very assumption driven, and what you assume is dependent on one’s risk appetite. My spouse and I are worth $2.4m, but if I assume only 3% real return (5% return less 2% inflation), and add a 5% cushion our expenses, and that we live to 90, and that we spend 10k a year for vacation, then only having 2.4m makes for a “nail biting” retirement.
But if I change real return to assume 4%, or take inexpensive vacations, I can retire today. Also, no one in my family has come even close to living to 90. I doubt I will to.
But I’ll still work another 2-3 years to strengthen our financial position while the job iron is still hot. Once I stop working for big salary at BigCorp USA that’s hard to come back from.
When I was younger I thought $2m I’ll retire for sure! Yet here I am still working.
Sent from my iPhone using Tapatalk
If I had $2,000,000 by 55 or so, or any age whatsoever, I'd be so incredibly happy.
I would never even come close to having to work another day in my life with that amount.
Either I'm way off on what it takes to retire or I spend way less than others.
I usually spend about $20,000 per year. If I spent $25,000 I could have a blast.
I have no way to save more than $500,000 unless I come up with a brilliant money-making idea all of a sudden...which I've been trying to do for years....so not likely.
(or I can work my current job which I hate until I'm well into my 60's.)
Some of you should be very thankful for how much you have accumulated.......my stress would vanish instantly if I had what some of you have.
I feel like I'm close to living in a homeless camp after comparing my situation to most others posting here.
Can someone who plans on having a very small amount for retirement post here to make me feel better? :)
You're going to have a rough time if you insist on comparing yourself to others this way.
If you had 2M, you might be incredibly happy or you might be miserable. It would really depend on what it took to get there and how you ended up there.
If you trained for years to become a surgeon and then only ended up making enough to save 2M while living on only 20K, you might not be too happy.
If you had actually saved 20M and then through some bad money moves had lost almost everything and ended up at only 2M, again, you would probably be pretty bummed about it.
For one family, 2M might buy every luxury they could possibly want and make them the richest of everyone they know, for another, it might be really, really difficult to fit in with their friends and colleagues with only 2M, which may or may not matter to them.
As for saving, can you explain why you can't make more money? I make a lot of money, but that's because I put in an astronomical amount of time and energy into developing the skills, education and network needed to get here.
Making money in and of itself is a skill that can be learned. So if you want to make more money, then perhaps put some of your resources towards that. Those of use who make good money typically set out to do so, for some (few) it's luck, but for a lot of us, it's pretty intentional and woven into the fabric of years of decision making.
In particular, if you hate your job, then that's probably your biggest issue. People tend to envy those with money more when what they most want is freedom from circumstances they feel trapped in.
There's a reason I don't envy the 5M, 10M, 25M, 50M, etc folks I know is because I'm not unhappy. My work is remarkably difficult and insanely high pressure, as a lot of well paid work is, but I really enjoy it. I could retire right now if I had a 20K spend, but I have no interest in not working, so I make a lot and can afford to spend more and save a lot.
2M might not fuel such envy in you if the job you had that could get you to 500K was something you really liked doing and you really enjoyed the life it provided.
If you aren't happy, then focus instead on changing something, not worrying about the trade offs other people choose to make in their lives.
Spend some time here, there's A LOT to learn here about career building, not just reducing spending. I've learned a lot of what I needed to be successful from being an active member here.
I'm 49 years old. I think and think and think, but I can not figure out any way to make more than my current salary.
I don't have any highly-desirable skills in the marketplace. I work for a large manufacturing company and I feel that I pretty much maxed out my potential.
All I have is a business degree which doesn't impress anyone nowadays, and I don't think it should.
I do a great job working at my company, but I do a little bit of everything and don't have a specialty.
I guess the closest description with my current position would be project manager.
I'm not going to get promoted to an executive level because I don't have the personality for it........terrible at the boys-club conversational skills that seem so important where I work.
If I could figure out a way to make more money I would go after it like a madman. I get obsessive, super focused, & super persistent when I actually have a plan.
(You may ask where this has been all these years, and I am embarrassed to admit I went after a stupid idea for years and years, and failed miserably. I could easily retire today if I hadn't made so many disastrous financial mistakes....which makes me even more miserable when I think about it. Lesson learned, but it feels a little late now.)
Ah, a late bloomer. So were we. At age 40 (main wage earner) and age 30, we were about 150K in debt and had zero cash investments. We didn't hit your level of net worth from your old case study until only a couple years before you did. After that, it grew fast, but b/c of our projected cash flow needs noted in an earlier post, very early retirement wasn't in the cards really. :shrug: It is what it is.
Husband is aiming to retire around 62-65 maybe, but he really likes his job, so he's fortunate. I'm planning to keep working part-time until my late 50s, mainly to build up savings for possible Long Term Care needs for myself, but also to fund a couple of fun things for myself.
Not everyone here is retiring at 50 with 2 million, for sure. We'll be retiring with about that much, but more like only a couple years early in my case, and not early in my husband's.
Have you been able to save as much as you hoped/listed in your case study? B/C if so, that is phenomenal, and if you want a notable more amount of savings, working just a few additional years would boost you a lot. Or if you really can't take your job but are as frugal as you report, get a more desirable job, lower paying, and just let that nest egg grow for 2 or 3 more years without touching it.
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If I had $2,000,000 by 55 or so, or any age whatsoever, I'd be so incredibly happy.
I would never even come close to having to work another day in my life with that amount.
Either I'm way off on what it takes to retire or I spend way less than others.
I usually spend about $20,000 per year. If I spent $25,000 I could have a blast.
I've spent a very low amount in recent years from my take home pay (direct deposit), spending a little more or less than $15K/yr total out of my bank account in recent years with very low discretionary spending included in that - averaging less than $1K/yr for entertainment, eating out, etc. However, I was really spending about another $1K/yr that was coming out of my pay before direct deposit due to health care insurance and some misc expenses, so I probably averaged closer to $16K/yr real spending in recent years when factoring in those deductions that never made it to my bank account. Now, my property tax and homeowners insurance, increase in workplace health insurance costs, and other expenses are jacking that up quickly another $1K/yr going forward, plus I need to account for about $1.5K/yr for future long term home maintenance of big ticket items, and then another $2.4K/yr toward a future car replacement fund, because those expenses roll around eventually, so now I'm up to about $21K/yr spending that I need to account for on average, even if it's not all spent every year. Now, figure my health care costs will go up in retirement, but some expenses will go down by a smaller amount, so my estimate for FIRE is higher at $22,600/yr, although that's still with less than $1K/yr discretionary spending, which is a little tight for being FIREd with all the additional free time, and that doesn't give me much of an expense buffer, either.
That low spending combined with defined retirement income in another decade after FIRE would allow me to get by on well less than $500K of stash (not net worth). So you are certainly not the only one that has low expenses and able to get to get by on a much lower stash among all of the big spenders on MMM. However, I saved more than I needed, and I've delayed FIRE a few years longer due to health care coverage uncertainties (despite current good health) and because I like my job, so my stash is closer to $1.7M (that's stash as a single person, not net worth, but my home is paid for). The good news is that I've built up enough stash that I could potentially spend $40K/yr on discretionary spending once I FIRE. Crazy, huh? Going from about $1K/yr discretionary in recent years, usually less, and now jumping up to $40K/yr! It's hard for me to see myself spending that much on discretionary, and I probably won't because it's just not in my frugal nature, but I expect to open the purse strings some compared to recent years. I also have a separate account of inheritance money that I'm excluding from these calculations that I might use to buy a new house if I choose to relocate to a higher cost of living area, otherwise, I might do some major expansion and remodeling of my current home and still have a lot left over that I'll have to figure out what to spend it on.
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My current FIRE income is $2500/month. Of that - due to covid - I've only been spending around $500 - $1000/month or less (this includes all taxes, insurances, food, utilities, etc). Once I can travel again I will spend a bit more.
You're my MMM hero. :) Is that $2500/mo your investment income or are you talking about your pension - not sure if you're getting that yet. And you have that windfall-reduced SS benefit to look forward to down the road. :)
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It's amazing to me how little some of your are living on. Are you all really counting everything?
We (couple in 61 and 63) have been spending in the low $80k area the past few years since DH retired at 59 (though some of that was for one-time purchases/expenses, like a new furnace - if I subtract those, it's a bit more modest). We have no kids, paid-off house, and are not extravagant by any means. Our stash is now up to about $2.5 million, so it seems the $2 million figure is about right. I would be nervous with less, given that we really are pretty careful about spending.
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It's amazing to me how little some of your are living on. Are you all really counting everything?
We (couple in 61 and 63) have been spending in the low $80k area the past few years since DH retired at 59 (though some of that was for one-time purchases/expenses, like a new furnace - if I subtract those, it's a bit more modest). We have no kids, paid-off house, and are not extravagant by any means. Our stash is now up to about $2.5 million, so it seems the $2 million figure is about right. I would be nervous with less, given that we really are pretty careful about spending.
There may be something extravagant that you are just so used to, you see it as normal.
We spend less than that and we both rent in a HCOL and own and maintain a large sailboat, which is clearly an extravagance. And I am including those one off expenses that bring the average up because something else will usually pop up.
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It's amazing to me how little some of your are living on. Are you all really counting everything?
I think it was pretty clear in my last post that I'm not only counting my real expenses in recent years, but I'm including expected expenses in FIRE (to be higher), and I'm including money that may not be spent for 5 to 10 years or longer (i.e. long term home maintenance and car sinking funds).
So, that horrible $2M figure is easily at least 4X as much as I would ever need to pay my bills and still have hundreds each month left over for buffer and discretionary spending, so my $1.7M is way more than enough, which means I saved too much and/or worked too long in some respects. I'll just have to try harder to spend money than I have been while working. And then, the inheritance is figured separately from budget spending.
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It's amazing to me how little some of your are living on. Are you all really counting everything?
We (couple in 61 and 63) have been spending in the low $80k area the past few years since DH retired at 59 (though some of that was for one-time purchases/expenses, like a new furnace - if I subtract those, it's a bit more modest). We have no kids, paid-off house, and are not extravagant by any means. Our stash is now up to about $2.5 million, so it seems the $2 million figure is about right. I would be nervous with less, given that we really are pretty careful about spending.
Few people think their own lifestyle is extravagant.
That's largely because it takes A LOT of money to break out of the "normal" middle class lifestyle, so even rather high spends don't feel extravagant, they just feel "comfortable".
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It's amazing to me how little some of your are living on. Are you all really counting everything?
We (couple in 61 and 63) have been spending in the low $80k area the past few years since DH retired at 59 (though some of that was for one-time purchases/expenses, like a new furnace - if I subtract those, it's a bit more modest). We have no kids, paid-off house, and are not extravagant by any means. Our stash is now up to about $2.5 million, so it seems the $2 million figure is about right. I would be nervous with less, given that we really are pretty careful about spending.
Few people think their own lifestyle is extravagant.
That's largely because it takes A LOT of money to break out of the "normal" middle class lifestyle, so even rather high spends don't feel extravagant, they just feel "comfortable".
I've been watching The Crown. Even the royal family thinks that their lifestyle is "normal," while living in a palace with servants.
If it's all you've ever known, it'll seem normal. I'm fortunate enough to have lived in relative poverty and my current middle-class lifestyle. I lived alone on under $800/month (expenses, not income) when I was fresh out of high school, and today I live on closer to $4,600/month.
While I wouldn't voluntarily go back to that lifestyle (much more difficult with a family), if shit hit the fan, I know that I could live on a lot less than I do right now.
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With paid off housing, car, and no medical costs, base expenses can be very low. Millions of people live on just Social Security, and that averages around $1,500 a month.
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With paid off housing, car, and no medical costs, base expenses can be very low. Millions of people live on just Social Security, and that averages around $1,500 a month.
And yet we have this same conversation like clockwork about expenses and how people can't possibly spend so much or so little money. It's almost like personal finance is...personal.
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With paid off housing, car, and no medical costs, base expenses can be very low. Millions of people live on just Social Security, and that averages around $1,500 a month.
And yet we have this same conversation like clockwork about expenses and how people can't possibly spend so much or so little money. It's almost like personal finance is...personal.
I know it can be done, my mother lives off of social security of 1000 a month. Eh but not really. The 1000 is gone after rent, electric, gas, meds and basic groceries are paid for. I pay her cable, internet and cell phone. My sister supplements her groceries and cat food. And my mom travels no where except to the doc. Just sits all day in her one bed with her cat :-)
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With paid off housing, car, and no medical costs, base expenses can be very low. Millions of people live on just Social Security, and that averages around $1,500 a month.
And yet we have this same conversation like clockwork about expenses and how people can't possibly spend so much or so little money. It's almost like personal finance is...personal.
I know it can be done, my mother lives off of social security of 1000 a month. Eh but not really. The 1000 is gone after rent, electric, gas, meds and basic groceries are paid for. I pay her cable, internet and cell phone. My sister supplements her groceries and cat food. And my mom travels no where except to the doc. Just sits all day in her one bed with her cat :-)
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As long as she is not supplementing cat food in lieu of groceries!
I do actually know people who do relatively well on SS though. Usually it's a LCOL area, paid off home, no debt, etc. Some posters on this thread have budgets that are not much higher than a $1500 SS payment.
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With paid off housing, car, and no medical costs, base expenses can be very low. Millions of people live on just Social Security, and that averages around $1,500 a month.
But ... “no medical costs”?
Our health insurance costs more than $1,000/month, plus copays.
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With paid off housing, car, and no medical costs, base expenses can be very low. Millions of people live on just Social Security, and that averages around $1,500 a month.
And yet we have this same conversation like clockwork about expenses and how people can't possibly spend so much or so little money. It's almost like personal finance is...personal.
I know it can be done, my mother lives off of social security of 1000 a month. Eh but not really. The 1000 is gone after rent, electric, gas, meds and basic groceries are paid for. I pay her cable, internet and cell phone. My sister supplements her groceries and cat food. And my mom travels no where except to the doc. Just sits all day in her one bed with her cat :-)
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I could have written that post, except my mother doesn't have internet or cable, and we pay for her housing and utilities as well. She has enough to cover groceries, Medicare supplement, meds (minimal), gasoline (not that she ever drives anywhere), her small gardening hobby, and occasional sporadic bills like vet bills, car repairs, furnace repair etc. But she is still dollar to dollar most months. $1,000/month is a tough way to live.
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
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With paid off housing, car, and no medical costs, base expenses can be very low. Millions of people live on just Social Security, and that averages around $1,500 a month.
But ... “no medical costs”?
Our health insurance costs more than $1,000/month, plus copays.
Some have VA or Medicaid coverage which has no substantial costs.
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
Preach!
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
What forum is this?
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
This.
I think it's possible and hope it works for everyone doing it.
But it seems to me that one big expense in retirement (especially early) stinks the plan.
And I think it's easier to guard against sequence of returns if you can ratchet down spending (vs looking for employment in a downturn).
But I'm pretty conservative with my future predictions, so I want cushion. Everyone's plan is their own.
Edited: "how" = "hope"
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With paid off housing, car, and no medical costs, base expenses can be very low. Millions of people live on just Social Security, and that averages around $1,500 a month.
That's why I was thinking I'd be ok if I saved $500,000 somehow, and then waited until 70 to take full social security.
Not sure how much I'd have then using the 4% rule, but maybe $3,500 to $4,000 per month. Not sure how much after taxes, but I don't think I would ever spend that much except for a medical disaster.
Wasn't really planning on paid-off housing, but rather a small cheap house somewhere.
Of course I'd prefer to be much richer which opens up all kinds of possibilities, but until my brilliant idea comes along I hope my $500,000 plan is ok.
Back to researching now......trying to figure out that brilliant idea I mentioned. Hopefully something clicks soon, because my job is so so horrible.
Perhaps spend some of that research time reading about entrepreneurship and how many people make the mistake of thinking that they need a brilliant idea to be successful?
It's a common illusion that holds a lot of people back.
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
What forum is this?
MMM himself retired in 2007 with around $800k (https://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/), which is right around $1MM in today's dollars.
Of course these numbers aren't really comparable because for MMM it was a very early retirement with a 60-year horizon, while the $500k is a stop-gap until Social Security kicks in in 15 years. But it's still a worthwhile caution. "Know what you're getting into" is never bad advice.
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
What forum is this?
MMM himself retired in 2007 with around $800k (https://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/), which is right around $1MM in today's dollars.
Of course these numbers aren't really comparable because for MMM it was a very early retirement with a 60-year horizon, while the $500k is a stop-gap until Social Security kicks in in 15 years. But it's still a worthwhile caution. "Know what you're getting into" is never bad advice.
Something else to keep in mind is that it's incredibly unlikely that someone will retire early and never earn income from work again. I assume that most people are eventually going to pursue some form of freelance work.
In a recent interview on her podcast, Paula Pant noted that she can only think of one early retiree who doesn't do some form of work after "retiring." Now, that may be selection bias, since I assume that most of the early retirees that she knows are fellow bloggers/podcasters. However, even if I don't plan to work when I retire, I imagine that I will earn some form of income over the following 40+ years.
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
What forum is this?
MMM himself retired in 2007 with around $800k (https://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/), which is right around $1MM in today's dollars.
Of course these numbers aren't really comparable because for MMM it was a very early retirement with a 60-year horizon, while the $500k is a stop-gap until Social Security kicks in in 15 years. But it's still a worthwhile caution. "Know what you're getting into" is never bad advice.
I'm quite familiar with MMM. (I say that because a lot of people here actually aren't. They just somehow found the forum.) Several posters have explained that they are currently or are planning to FIRE on "small" dollar amounts. I personally am planning for approx $2mill, but the implication that people who are planning for $500k (or MMM's $800k) haven't thought things through doesn't make a lot of sense, and it's something I see a lot around here. (Sorry for that crazy run on sentence!) I generally assume that people who are smart enough to FIRE, with any amount of money, have likely considered all aspects of that decision. There are always people here who live on very small amounts, and people who live on much more. I just find it strange that it's so hard for people to accept that other people's situations are so different. I've actually talked to a lot of people who live on SS with some to spare. (Yes, that does usually surprise me.) I've also talked to a lot people who "live on" SS with help from family, or who barely scrape by on SS. (I used to work in the financial industry.)
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
What forum is this?
MMM himself retired in 2007 with around $800k (https://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/), which is right around $1MM in today's dollars.
Of course these numbers aren't really comparable because for MMM it was a very early retirement with a 60-year horizon, while the $500k is a stop-gap until Social Security kicks in in 15 years. But it's still a worthwhile caution. "Know what you're getting into" is never bad advice.
I'm quite familiar with MMM. (I say that because a lot of people here actually aren't. They just somehow found the forum.) Several posters have explained that they are currently or are planning to FIRE on "small" dollar amounts. I personally am planning for approx $2mill, but the implication that people who are planning for $500k (or MMM's $800k) haven't thought things through doesn't make a lot of sense, and it's something I see a lot around here. (Sorry for that crazy run on sentence!) I generally assume that people who are smart enough to FIRE, with any amount of money, have likely considered all aspects of that decision. There are always people here who live on very small amounts, and people who live on much more. I just find it strange that it's so hard for people to accept that other people's situations are so different. I've actually talked to a lot of people who live on SS with some to spare. (Yes, that does usually surprise me.) I've also talked to a lot people who "live on" SS with help from family, or who barely scrape by on SS. (I used to work in the financial industry.)
To your point but a bit different, I often wonder why people never talk about where the market is as well when the want to Fire. If you are taking withdrawals at all on a market today worth 500 or 700k and the Market is lofty can you survive a 50% drop or more? Alot of people say they will fire at 2Mil but there is alot more to it than just hitting that and calling it a day. I understand most people here understand that but its an important thing to be thinking about.
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To your point but a bit different, I often wonder why people never talk about where the market is as well when the want to Fire. If you are taking withdrawals at all on a market today worth 500 or 700k and the Market is lofty can you survive a 50% drop or more? Alot of people say they will fire at 2Mil but there is alot more to it than just hitting that and calling it a day. I understand most people here understand that but its an important thing to be thinking about.
I suggest reading considerably more of this Forum. The topic has been discussed repeatedly at length.
Perhaps this would be a good start:
https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/
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It's amazing to me how little some of your are living on. Are you all really counting everything?
We (couple in 61 and 63) have been spending in the low $80k area the past few years since DH retired at 59 (though some of that was for one-time purchases/expenses, like a new furnace - if I subtract those, it's a bit more modest). We have no kids, paid-off house, and are not extravagant by any means. Our stash is now up to about $2.5 million, so it seems the $2 million figure is about right. I would be nervous with less, given that we really are pretty careful about spending.
Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
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It's amazing to me how little some of your are living on. Are you all really counting everything?
We (couple in 61 and 63) have been spending in the low $80k area the past few years since DH retired at 59 (though some of that was for one-time purchases/expenses, like a new furnace - if I subtract those, it's a bit more modest). We have no kids, paid-off house, and are not extravagant by any means. Our stash is now up to about $2.5 million, so it seems the $2 million figure is about right. I would be nervous with less, given that we really are pretty careful about spending.
Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
I think this is pretty dependent on where you live, if you have kids, and if yes do you intend to help them with things like tuition.
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It's amazing to me how little some of your are living on. Are you all really counting everything?
We (couple in 61 and 63) have been spending in the low $80k area the past few years since DH retired at 59 (though some of that was for one-time purchases/expenses, like a new furnace - if I subtract those, it's a bit more modest). We have no kids, paid-off house, and are not extravagant by any means. Our stash is now up to about $2.5 million, so it seems the $2 million figure is about right. I would be nervous with less, given that we really are pretty careful about spending.
Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Our budget is $80k with three kids and a fifteen year mortgage. It would be $60kish without the mortgage, but with keeping the $7k per year prop tax. It also includes line items for things like home maintenance. I may not actually spend $3k a year on home maintenance, but it needs to be considered in the overall budget and planning. I wonder if that is what PP means when they ask about including everything.
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
What forum is this?
MMM himself retired in 2007 with around $800k (https://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/), which is right around $1MM in today's dollars.
Of course these numbers aren't really comparable because for MMM it was a very early retirement with a 60-year horizon, while the $500k is a stop-gap until Social Security kicks in in 15 years. But it's still a worthwhile caution. "Know what you're getting into" is never bad advice.
I'm quite familiar with MMM. (I say that because a lot of people here actually aren't. They just somehow found the forum.) Several posters have explained that they are currently or are planning to FIRE on "small" dollar amounts. I personally am planning for approx $2mill, but the implication that people who are planning for $500k (or MMM's $800k) haven't thought things through doesn't make a lot of sense, and it's something I see a lot around here. (Sorry for that crazy run on sentence!) I generally assume that people who are smart enough to FIRE, with any amount of money, have likely considered all aspects of that decision. There are always people here who live on very small amounts, and people who live on much more. I just find it strange that it's so hard for people to accept that other people's situations are so different. I've actually talked to a lot of people who live on SS with some to spare. (Yes, that does usually surprise me.) I've also talked to a lot people who "live on" SS with help from family, or who barely scrape by on SS. (I used to work in the financial industry.)
To your point but a bit different, I often wonder why people never talk about where the market is as well when the want to Fire. If you are taking withdrawals at all on a market today worth 500 or 700k and the Market is lofty can you survive a 50% drop or more? Alot of people say they will fire at 2Mil but there is alot more to it than just hitting that and calling it a day. I understand most people here understand that but its an important thing to be thinking about.
Isn't that exactly what every single thread about the 4% rule/SORR talks about in excrutiating detail?
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SWR and SORR are discussed at length.
An important point, that has been discussed, but to a much lesser extent is: There's an inherent built-in selection-bias that our individual portfolios will more-often-than-not end up hitting "our number" while the market is high or frothy relative to recent history. I don't think the original Trinity study took that into account.
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SWR and SORR are discussed at length.
An important point, that has been discussed, but to a much lesser extent is: There's an inherent built-in selection-bias that our individual portfolios will more-often-than-not end up hitting "our number" while the market is high or frothy relative to recent history. I don't think the original Trinity study took that into account.
Good point. There is a lot out there on CAPE and SWR which kinda gets into this. The overall affect on this was quite noticeable to me, as I hit 103% FI earlier this year based on my acceptable SWR, but then found myself at more like 80% in the April lows, with the obvious irony being that instead of being happy I was still working I felt more like I should of hurried up and retired "back when I was FI" b/c now it may take years to 'become FI' again ;-) ... of course that turned into just months and I feel like I need to hurry up and retire again before we have another big drop... Obviously that's all nonsense but sets up the discussion of including CAPE within my definition of being FI.
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SWR and SORR are discussed at length.
An important point, that has been discussed, but to a much lesser extent is: There's an inherent built-in selection-bias that our individual portfolios will more-often-than-not end up hitting "our number" while the market is high or frothy relative to recent history. I don't think the original Trinity study took that into account.
Lesser extent, but it's certainly been discussed. This thread always comes to mind when I think about that:
https://forum.mrmoneymustache.com/welcome-to-the-forum/cfiresim-severely-overestimates-success-rates-for-mustachians/
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It also includes line items for things like home maintenance. I may not actually spend $3k a year on home maintenance, but it needs to be considered in the overall budget and planning. I wonder if that is what PP means when they ask about including everything.
I mentioned that as well. Over the last 27 years of owning two homes (not at the same time), I always had an amount in my budget for home maintenance that I underspent, but I can see some big ticket items on the horizon (roof, heating/cooling, flooring, appliances), so I actually dedicate $30K of my stash to these approaching costs and increased my maintenance budget by 50% in the last year. That's all figured in to my FIRE budget along with a car sinking fund. $500K would still work out for me with plenty of extra, but I'm glad I saved a lot more than that so that I can have a healthy discretionary budget and buffer.
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
What forum is this?
MMM himself retired in 2007 with around $800k (https://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/), which is right around $1MM in today's dollars.
Of course these numbers aren't really comparable because for MMM it was a very early retirement with a 60-year horizon, while the $500k is a stop-gap until Social Security kicks in in 15 years. But it's still a worthwhile caution. "Know what you're getting into" is never bad advice.
Something else to keep in mind is that it's incredibly unlikely that someone will retire early and never earn income from work again. I assume that most people are eventually going to pursue some form of freelance work.
In a recent interview on her podcast, Paula Pant noted that she can only think of one early retiree who doesn't do some form of work after "retiring." Now, that may be selection bias, since I assume that most of the early retirees that she knows are fellow bloggers/podcasters. However, even if I don't plan to work when I retire, I imagine that I will earn some form of income over the following 40+ years.
....er....work after RE? Nah. Guess that makes two people who never plan to work for an income since FIRE. Sitting here on a sunny beach midday on a Thursday trying not to fall asleep after a long run is already too damn taxing for me ;-). Oh yeah...and it didn't cost me a dime.
Seriously I think you ( and Paula Pant) are right that many people will earn some income after RE. Whether they intend to, or need to, or it his just a by-product of doing the things they love and money comes from that. I'm not in that group myself.
I can't see myself working and making any job income to be of any significance after I FIRE. I have a fairly well paying job doing interesting work and am even working from home now, so when I FIRE in my mid 50's, I want to be free and truly retired, not work some low pay job or do any freelance work when I don't need to. That's why I've saved so much to this point so that I don't have to work when I'm older.
But I did just see something recently that said around 60% of those polled plan to work in retirement.
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While it is certainly possible to retire with a stash of 'only' $500,000, I would caution anyone who is thinking of doing it to be sure they have educated themselves about every aspect of early retirement funding. At that level it would be easy to find yourself painted into a corner due to unexpected taxes, an unexpected medical bill, a major household repair, etc. You had better have a really good handle on your spending and then be realistic about how satisfied you will be maintaining that level.
It can be done and it's possible to be very content at that level, but it isn't for early retirement dilettantes.
What forum is this?
MMM himself retired in 2007 with around $800k (https://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/), which is right around $1MM in today's dollars.
Of course these numbers aren't really comparable because for MMM it was a very early retirement with a 60-year horizon, while the $500k is a stop-gap until Social Security kicks in in 15 years. But it's still a worthwhile caution. "Know what you're getting into" is never bad advice.
Something else to keep in mind is that it's incredibly unlikely that someone will retire early and never earn income from work again. I assume that most people are eventually going to pursue some form of freelance work.
In a recent interview on her podcast, Paula Pant noted that she can only think of one early retiree who doesn't do some form of work after "retiring." Now, that may be selection bias, since I assume that most of the early retirees that she knows are fellow bloggers/podcasters. However, even if I don't plan to work when I retire, I imagine that I will earn some form of income over the following 40+ years.
....er....work after RE? Nah. Guess that makes two people who never plan to work for an income since FIRE. Sitting here on a sunny beach midday on a Thursday trying not to fall asleep after a long run is already too damn taxing for me ;-). Oh yeah...and it didn't cost me a dime.
Seriously I think you ( and Paula Pant) are right that many people will earn some income after RE. Whether they intend to, or need to, or it his just a by-product of doing the things they love and money comes from that. I'm not in that group myself.
I can't see myself working and making any job income to be of any significance after I FIRE. I have a fairly well paying job doing interesting work and am even working from home now, so when I FIRE in my mid 50's, I want to be free and truly retired, not work some low pay job or do any freelance work when I don't need to. That's why I've saved so much to this point so that I don't have to work when I'm older.
But I did just see something recently that said around 60% of those polled plan to work in retirement.
Yeah, to me this notion of working - excuse me, "earning some money" after RE - that is tossed out there by the FIRE bloggers just seems a little off. Sample issue, most likely that they are themselves surrounded by other people who have found some way of monetizing their FIRE experience online.
Depends on your professional field I suppose, but to me the idea of staying up-to-date on technical stuff just so I can work freelance jobs to make ends meet sort of defeats the purpose of RE. I'm tired of trying to stay up-to-date on that crap now.
Maybe it also depends greatly on how old you are when you retire. I don't know, maybe I'll be bored and want to go back to work but I'd like to think I can find unpaid activities that will make me happier. In any regard, I certainly don't want my retirement plan to rely on some further income from paid work.
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SWR and SORR are discussed at length.
An important point, that has been discussed, but to a much lesser extent is: There's an inherent built-in selection-bias that our individual portfolios will more-often-than-not end up hitting "our number" while the market is high or frothy relative to recent history. I don't think the original Trinity study took that into account.
Similarly though, I want to say there's a statistic out there that the market is within 5% of it's all time high something like 80% of the time.
It's all a function of the market constantly going up. Your statement makes it sound like "they retire at the peak of their portfolio value," where it's really "they retire when the market is going up, and they will likely end up with a higher balance as the market continues its climb."
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Most of us don't have hobbies that accidentally make money. I don't even want to monetize my blog, there are plenty of charities that will gladly use my skills and time for free...
My husband has skills that are more likely to get him an invitation to participate in a money making venture, but unless one of his game ideas solidifies beyond a week of rule of making, he probably won't strike out on his own.
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I will probably keep my CPA up-to-date for the first ~5 years just in case things go sideways, but I don't plan to earn additional income as an accountant.
However, the odds are that I'm going to end up doing something to earn an income at some point. 40 years is a long time. I haven't even lived that long yet, so I can't say with any degree of certainty what I'll do for the rest of my life.
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I consider it highly unlikely that I will make any money in FIRE. My job is pretty traditional 9-5 corporate stuff so there’s not a lot of consulting or freelance work available if I wanted it. Which I adamantly don’t...that’s why I’m trying to retire. I’ll do lots of things, but I don’t see any of them making me any money.
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I have absolutely no interest in working after retirement. Which is why I've pursued a higher income, and stash a lot in savings every year.
DH might choose to make some pocket money, but the likelihood is that he won't need to, either. Without any inheritance from parents who own CA real estate, we should be FatFI in another 5 years.
If the parents pass sooner, and we do get an inheritance, it will advance the RE date.
I'm tired of (some of) the people, I'm tired of work budget cuts, I'm tired of the politics, I'm tired of being always asked to do more, more, more, with less, less, less. I'm ready to get out.
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I think my number is 1.5 to 2 million, depending on inflation over the next 5-10 years.
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
That's the norm among my colleagues.
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Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
Sorry, I was being sarcastic. The typical view of retirement in the press is that you need to have a crazy consumerist lifestyle in retirement otherwise you're depriving yourself. And, of course, before retirement, too. So people spending 95% of their income before retirement are never going to retire because there's no way to save those millions that will allow them to retire and continue spending all that money. I don't subscribe to that view.
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
Sounds like my parents...
My Dad likes to talk about his "fixed income". His pension + social security is more than my husband and I make combined in excellent jobs. But he's right, it is "fixed".
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
That's the norm among my colleagues.
Putting aside the boat (in which I have no interest) I would expect that standard of living in my retirement.
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
That's the norm among my colleagues.
Putting aside the boat (in which I have no interest) I would expect that standard of living in my retirement.
I know some wealthy doctor retirees that aren't even living that in retirement. And the rich working ones don't have time to travel constantly.
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Yeah, to me this notion of working - excuse me, "earning some money" after RE - that is tossed out there by the FIRE bloggers just seems a little off. Sample issue, most likely that they are themselves surrounded by other people who have found some way of monetizing their FIRE experience online.
Depends on your professional field I suppose, but to me the idea of staying up-to-date on technical stuff just so I can work freelance jobs to make ends meet sort of defeats the purpose of RE. I'm tired of trying to stay up-to-date on that crap now.
Hmm, are you in software? There are an awful lot of software jobs out there that don't require staying anywhere near up-to-date on technical stuff. I worked in Java my entire career and mostly worked with in-house technologies without any need outside work hours to stay up-to-date and made big money. The trick is finding those places for short term remote contract or part-time.
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Hmm, are you in software? There are an awful lot of software jobs out there that don't require staying anywhere near up-to-date on technical stuff. I worked in Java my entire career and mostly worked with in-house technologies without any need outside work hours to stay up-to-date and made big money. The trick is finding those places for short term remote contract or part-time.
Hmmm most of the job postings I see are all asking for someone with experience with a dozen or more different frameworks. Yuck.
I’m a CPP dev, and I recently was hired aboard at a company that didn’t expect me to know their entire tech stack before considering me.... but in my experience, that is very much the exception, and not the rule.
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Hmm, are you in software? There are an awful lot of software jobs out there that don't require staying anywhere near up-to-date on technical stuff. I worked in Java my entire career and mostly worked with in-house technologies without any need outside work hours to stay up-to-date and made big money. The trick is finding those places for short term remote contract or part-time.
Hmmm most of the job postings I see are all asking for someone with experience with a dozen or more different frameworks. Yuck.
I’m a CPP dev, and I recently was hired aboard at a company that didn’t expect me to know their entire tech stack before considering me.... but in my experience, that is very much the exception, and not the rule.
Huh, interesting. I see we're in the same area of the country too. For an interview, if it's public technology listed in the posting that I'm not familiar with, I'd read up on it to be able to just show awareness of the basic function, but nothing past that. All of my jobs past the first I actually got from company-internal recruiters though. I wonder if CPP landscape is just that different - I'm only very recently FIRE so my knowledge/experience can't be that out of date.
Towards the thread topic, $2m is about right IMO for a family of 4 in Chicago and a 60+ year retirement horizon. A little fat, but far from crazy.
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Huh, interesting. I see we're in the same area of the country too. For an interview, if it's public technology listed in the posting that I'm not familiar with, I'd read up on it to be able to just show awareness of the basic function, but nothing past that. All of my jobs past the first I actually got from company-internal recruiters though. I wonder if CPP landscape is just that different - I'm only very recently FIRE so my knowledge/experience can't be that out of date.
Yeah, for my most recent hiring -- I was referred by an internal candidate. Actually, all 3 times I've been hired, post-college.... it's been through some connection. My first job out of college happened because the hiring manager was an alumni of the same college. The next two were both from referrals from employees who I had previously worked with. Just goes to show how important your "network" is!
Despite an uninterrupted and distinguished career using many different technologies -- I've never had any success with randomly applying at a company without having some prior-existing-connection to the company. Although, admittedly, I haven't applied to an enormous amount of companies either....
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
That's the norm among my colleagues.
Putting aside the boat (in which I have no interest) I would expect that standard of living in my retirement.
I know some wealthy doctor retirees that aren't even living that in retirement. And the rich working ones don't have time to travel constantly.
If you're a doctor and can't live that lifestyle in retirement you've fucked up big time along the way.
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Huh, interesting. I see we're in the same area of the country too. For an interview, if it's public technology listed in the posting that I'm not familiar with, I'd read up on it to be able to just show awareness of the basic function, but nothing past that. All of my jobs past the first I actually got from company-internal recruiters though. I wonder if CPP landscape is just that different - I'm only very recently FIRE so my knowledge/experience can't be that out of date.
Yeah, for my most recent hiring -- I was referred by an internal candidate. Actually, all 3 times I've been hired, post-college.... it's been through some connection. My first job out of college happened because the hiring manager was an alumni of the same college. The next two were both from referrals from employees who I had previously worked with. Just goes to show how important your "network" is!
Despite an uninterrupted and distinguished career using many different technologies -- I've never had any success with randomly applying at a company without having some prior-existing-connection to the company. Although, admittedly, I haven't applied to an enormous amount of companies either....
Ive done lots of freelance work over the years, always thanks to personal relationships with some of the principals and based on their knowledge of my talents, such as they are. These have all been low level embedded C and some hardware design.
In my experience at megacorp where i have spent the past couple of decades, i think there are forces in play that make it much less likely for any individual to be hired on a contract basis. The move to wholesale outsourcing to the big offshore companies means that for any combination of skilset you ask for, they will tell you they have it. I mean, most of the time they are lying, but then they just play musical chairs with people to try to get away with it. Even a highly skilled and experienced individual has no chance of being contracted because all of the corporate policies are focused on the big contract outfits.
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Someone wrote an article claiming that the homeless men are retired early. I actually agree.
https://thefinancebuff.com/the-homeless-retired-early.html
It is the choice of lifestyle. If you claim that $2MM is not needed, other people can claim nothing is actually needed to retire early.
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
That's the norm among my colleagues.
Putting aside the boat (in which I have no interest) I would expect that standard of living in my retirement.
I know some wealthy doctor retirees that aren't even living that in retirement. And the rich working ones don't have time to travel constantly.
If you're a doctor and can't live that lifestyle in retirement you've fucked up big time along the way.
To be fair, I know quite a few doctors and dentists who aren't that wealthy, but yeah, I would agree that most of them feel they messed up with their finances somewhere along the way.
Granted, owning a second house, luxury cars, a boat, and doing a lot of luxury travel is a pretty vague description, which could cover an astronomical range of spending.
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If someone thinks that homeless people are choosing that lifestyle, and is somehow conflating that with the FIRE lifestyle, I don't even know what to say...
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I suppose, depending on rate of return, it wouldn't take thaaaaaat long to go from $1 million to $2 million.
Took us 7 yrs 9 months. Jan, 2012 to Sept, 2019.
The first million took me a looooooong time. 20+ years. But I didn't know what I was doing and messed up A LOT.
I found MMM in late 2013. Liquid net worth was under $500K. I got to $1M 2.5 years later.
I went from $1M to $2M in under 4 years AND built up over $800K equity in my home.
My expenses are kind of high (supporting family members and HCOL), but I'll sell this house, move to a lower COLA and hopefully be able to live on under $80K. But the truth is, I don't really worry about my spending anymore.
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If someone thinks that homeless people are choosing that lifestyle, and is somehow conflating that with the FIRE lifestyle, I don't even know what to say...
I took it as tongue-in-cheek.
There's one homeless person in the small town my wife works in. The neighborhood gave her a house, and she ended up breaking all of the windows before leaving it to resume being homeless. Mental illness is something.
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
That's the norm among my colleagues.
Putting aside the boat (in which I have no interest) I would expect that standard of living in my retirement.
I know some wealthy doctor retirees that aren't even living that in retirement. And the rich working ones don't have time to travel constantly.
If you're a doctor and can't live that lifestyle in retirement you've fucked up big time along the way.
Who said they can't? I never said "can't" from any perspective that would mean they "fucked" up. I specifically stated that they are "wealthy". So, I'm not sure how you consider that to be "fucked up". If they aren't able to travel constantly, it's because they still have a job they have to take care of, not because they can't afford it. And I made that clear as well when I said "don't have time". So, I'm not sure what point you're trying to make relevant to what I had stated.
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Yes, $80k spend seems quite extravagant - even if you didn't have a paid off house. Our family of 3 is under $50k, including a mortgage, $6k+ in property tax and some fairly spendy habits, like high-end phones every couple of years.
Everyone knows you're not really retired unless you have 2 houses, a boat, new luxury cars every 3-5 years, constant world travel staying at 4 star hotels, etc. etc. etc /s
I can't think of anyone that meets your definition.
That's the norm among my colleagues.
Putting aside the boat (in which I have no interest) I would expect that standard of living in my retirement.
I know some wealthy doctor retirees that aren't even living that in retirement. And the rich working ones don't have time to travel constantly.
If you're a doctor and can't live that lifestyle in retirement you've fucked up big time along the way.
Who said they can't? I never said "can't" from any perspective that would mean they "fucked" up. I specifically stated that they are "wealthy". So, I'm not sure how you consider that to be "fucked up". If they aren't able to travel constantly, it's because they still have a job they have to take care of, not because they can't afford it. And I made that clear as well when I said "don't have time". So, I'm not sure what point you're trying to make relevant to what I had stated.
To be fair, in the context of the string of quotes, it really, really did sound like you were saying that even some wealthy doctors you know can't afford that lifestyle. Not that you happen to know wealthy doctors who don't choose that lifestyle.