Is it just me, or are people here *overly* cautious about FIREing?

[daverobev]

I've been here a while, and while I no longer read every thread, the ones I skim often have something along the lines of:

I need $x a year, I have enough to give me $x, then I'll get a pension in a few years, plus will downsize, plus...

Commonly called One More Year syndrome, but it just struck me today - how many people here seem afflicted with it (myself included).

I mean, you do the maths or read the studies, they say that with NO lifestyle adjustment in down years, 4% SWR is most likely ok. But people don't believe it. Going from 4% to 3% is a HUGE HUGE difference - a 1/3 increase in the amount of money you need! AND suggesting that there will be NO government income at all when there is currently some (country irrelevant, I've seen it mentioned for the US, Canada, and UK).

For people who *want* to work of course it doesn't matter (though of course I wonder how much is denial?), but for most.. it's baffling.

So what do you think? Have we, collectively, gone too far the other way - and are not doing the thing we say we're here to do, even though we could?

[Jon_Snow]

With me, I wanted to COMPLETELY eliminate the chance that I might have to go back to work...I'm telling you, now that I've had an extended taste of FIRE...this would be extremely tough to swallow. I likely "oversaved"...but I hardly regret this fact. Truthfully, it is a comfort.

[Paul der Krake]

Yeah, it's weird. People seriously believing that social security is at risk of going away is the most bizarre thing.

Then there is the whole "what if I can't get another job" fear. Buddy, you were driven enough to retire 20-30 years before everyone else and you fear that with all the free time on your hands you somehow would fail to:

1) see it coming from miles away, and
2) start acting on this well before all your assets are drained to 0, and
3) pick up some skill, any skill, that would make you employable again?

Who are you, Homer Simpson? Give yourself some credit. Any Mustachian who made it this far should be able to start an income-generating venture, whether W-2 or otherwise, in just a few weeks.

FIRE already.

[Moustachienne]

I've had the same thought re posters here.  Many are reaching for *very* comfortable retirements by any measure.  As a newish lurker/poster, I was surprised by how much money people had or were aiming for.   I expected more badass FIRE'ers :) and I really appreciate those who post.  Actually, I appreciate everyone who posts and comments.

I'm one of the more comfortable ones, married, aiming to retire at 60 with a frugalish life style, paid off house and 1 million in savings, but before finding MMM and other "early retirement" blogs, I was truly worried that this wasn't enough.  (!!!)   The media message and general societal handwringing is VERY strong.

The warnings/thoughts re OMY have been really useful for me.

[doubled85]

I think there's a lot of causes for the oversaving that you've pointed out. One is that, I believe, it's easier to keep doing what you're doing for just a bit longer than it is to FIRE and then be forced back to work later on. Better to work 6-12 months more for peace of mind, perhaps. The second, which I think is much more challenging, is the societal ramifications. Quitting your day job and "retiring early" (we all know that retirement has a lot of different definitions) come with a lot of raised eyebrows from well meaning friends and family. And then what if something happens and it doesn't work out and then you have to go back to work? Sure, just go back and redo it as MMM posted about but there's the psychological failure piece.

I also believe that this becomes less of an issue the older you are. Retiring at 50 is fantastic and you just bought yourself 15+ extra years of extra retirement but you also have a lot of big expenses (e.g. kids and everything that comes with them) out of the way. Assuming you had some sense of financial acumen prior to that, you probably have some decent home equity and a decent nest egg. At 30, you still have a lot of time and a lot of life events in front of you.

[WildJager]

I think there is a lot that can happen during the rest of your life that the models we use from the last 100 years of data just can't predict.  People have been around for a long time.  Many systems that seemed solid in the past have suddenly crumbled.  The earlier you retire planning the live off of investment returns, the more you open yourself up to the whims of fate.

Did 4% provide over the last 50 years?  Yes.  Will it over the next 50 years?  No one truely knows.  Hence the delay for more assurance.  The problem with going back to work is that you'll likely be starting back at a lower paycheck, which means you'll have to work more in the long run. 

Though, life is a risk.  That's what we're doing here, risk mitigation.  Everyone's level of "enough is enough" varies, and I wouldn't look down on anyone for deciding they'd like.more padding.  (Retiring at 40 instead of 30 for example).  At the same time, I think someone looking at retiring at 60 instead of 50 with a solid stache might be acting a bit too conservatively.  And those who never retire even though they could, well, they're just missing out on opportunity.

[jim555]

The whole "living under a bridge" thing is enough to err on the side of being to cautious.

[Left]

I'm thinking the people who do the 1 more year (myself included)... still like their jobs...

I'd be just as happy to keep working part time if I had to, which I might. I get average pay so working just 1 day a week would net me around $10k a year.

I could see myself just working a Monday or something each week, PRN work so they can't "hold" me to a set schedule so I can still take time whenever I want. My half way plan is contract work where I pick a location and work a few months while they provide housing. Then I live on own money for a bit, until I get bored, then pack up and move to a new city and work another contract to get housing for duration until I find out if I want to stay a bit longer. But once I find a place I like, I'd just stay there and work 1 day a week or something. To me, working that 1 day would be like MMM doing woodwork for a day... I couldn't care less about woodwork, I enjoy working with people and to get paid as well? Why not?

[daverobev]

I think there is a lot that can happen during the rest of your life that the models we use from the last 100 years of data just can't predict.  People have been around for a long time.  Many systems that seemed solid in the past have suddenly crumbled.  The earlier you retire planning the live off of investment returns, the more you open yourself up to the whims of fate.

Did 4% provide over the last 50 years?  Yes.  Will it over the next 50 years?  No one truely knows.  Hence the delay for more assurance.  The problem with going back to work is that you'll likely be starting back at a lower paycheck, which means you'll have to work more in the long run.

The counter argument to this is that, is the stock market - the global financial system - collapses in such a way that, as a smart frugal early retiree, you're fucked at 3% or 4%, you're probably still fucked at 2%. And following on, that a fire-proof safe containing a significant amount of gold and silver, plus lots of canned food, hunting equipment and so on are sensible things to have.

[sol]

As therebelspy has recently pointed out elsewhere on the forum, the tenor of this place has changed considerably as it has grown.  The early audience was a little more serious about retiring early, and the new larger audience wants generic financial guidance but they're not really interested in leaving their jobs with less than $2million at age 55.

But that's the price you pay for growth of the community, I think.  The message is necessarily diluted by bringing in folks beyond your core target audience.

Part of is just that people see frugality as a virtue, even when they are extravagantly wasteful, so they want to feel like part of this movement without actually participating.  People like londonbanker and mrpercentage should have retired a decade ago, yet continue to tell us how risky it is to retire on only $4 million.  Meanwhile our host and his predecessor both retired with well under a million dollars, and seem much happier about it than those wealthy forum participants who continue to fret about never having enough.  For some people, security will never come.

[Goldielocks]

I definitely consider decreased spending as I age, risks strategy, and government income when I think of the 4% rule.  I also consider 4% as the rule if you want your money to only last 30 years, 40 years with income fluctuation..

I break down my FIRE like this; 

Phase 1 -- kids living at home  (maybe until the youngest is 20) -- 4% rule does not apply,  need to save up cash to fully fund this phase, on-going temporary contract / work part time is likely needed to ensure ramping up employment on 6 month notice is possible..  Expect cost surprises x 4 persons risk factors.

Phase 2 -- Age 50ish to 60 ish...  No gov't pension.   -- Again, savings strategy does not comply to 4% rule, rather a combo of anticipating DH's modest income and living off savings.    Ability to sell nearly paid for home and downsize in a tremendous down market if choose not to re-income ourselves.  OR - rent out rooms, etc.

Phase 3 -- Age 60 ish to 75is-- gov't income, home paid off, less costs.  SWR of 4% rule applies.
More travel in good years, less spend in bad years.    Need to asset allocate to have at least 3 years in fixed income or cash like accounts to smooth out downfall, especially at start.

Phase 4 - Age 75ish up -- 4% SWR applies.  less spending overall.  Gov't pension sufficient to carry us through if market totally tanks....extra money, if any, spent lavishly on family vacations with grandkids.


Each phase has a different spend / savings number...  I have accomplished my savings needed for phase 2. 3. 4. and working on 1 right now.

The one more year challenge, for me, is DH who sees us finally entering our "Golden Years of Spending"...  (don't get me started.....)

[steveo]

I intend to retire at about a 5% WR so I don't think that I am overly cautious. I don't though include my paid off home in my net worth and I figure I could easily downsize and gain some money there. I also believe that I will have paid leave for a year at half pay which should cover 2 years expenses. I then intend to work part time for another 3 years or have this as additional savings so that I don't draw down for the first 5 years.

Those points are my buffer for why I intend to retire at a 5% WR.

[AllieVaulter]

I'm considering aiming for a 3% withdrawal.  I would definitely consider that cautious, but I'm not sure that I think it's overly cautious.  We just started our journey towards FIRE about a year ago, so we're pretty early in our accumulation phase.  I like that I have a range of acceptable numbers $500k-700k.  This gives me some flexibility, but it also has defined enough edges that I know when I pass $700k, that's more than enough and it's time to pull the cord. 

One of the biggest reasons I feel the need to hedge is that we don't have kids yet, but they're in the plans.  I've heard they aren't nearly as expensive as everyone says, but just how expensive they'll be definitely creates some fuzziness in our budget. 

That extra padding may end up being an extra two years working, but we'll still FIRE before we're 40, so at this point I don't find it super concerning.  Now, if we get to our $500k mark and we're both sick of working, then we'll probably FIRE then. 

[Syonyk]

The whole "living under a bridge" thing is enough to err on the side of being to cautious.

So pay your house off first. :)

If things go badly, you can sell your house, and buy a van/RV/trailer/etc, and move wherever you want.

==========

I'm never really planning to "retire" fully.  But, in my lower 30s, I am making concrete plans to configure our life (me, wife, daughter, possibly more kids) for freedom.  I intend to work less, and do it remotely.  20h/wk would be perfect.  That leaves a lot of other time for raising kids, homeschooling, other hobbies, gardens, fish, etc.

One of the big things I'm aiming for is a productive micro-farm (or fancy gardens, whatever you want to call it).  I'd like to be able to grow a good bit of our own food, and preferably have a surplus.  I figure this will take 3-4 years to bootstrap in terms of raised beds, soil, compost, etc, but will then be reasonably low effort and high yield.  I want to play with aquaponics as well - growing fish & plants, together, in a fairly closed loop.  High yield of home grown fish in a greenhouse, year round.

I get to mostly eliminate commute costs, largely eliminate food costs over time, and have a tradeable surplus (if all goes well) that I can use to barter with other people.  I get to raise my daughter outside, and we can do a lot of camping/traveling - I'd rather tour the country to homeschool than have her read books, because things are so much more interesting being there!

This isn't a thing I'd really thought was possible until spending a bunch of time on this forum and realizing that, no, I really don't need a new motorcycle every few years.  Even though most of my peers are buying luxury cars and Teslas, I don't need one, because it doesn't help my quality of life.

And, really, I'm not planning to have a million dollars.  Not even half that.  I want some buffer in the bank, and then I can reduce my work hours to match my needs.  I'll probably still have plenty of money coming in for our needs, since we just don't like doing things that cost a lot of money.

Were I planning to have a hard and fast "I retire on XX/YY/ZZZZ" plan, I'd probably be a lot more cautious.  But since I'm planning to just taper back and have one foot still in the professional world, I'm just not that worried about it.

[regulator]

I have pretty much decided that absent a pretty huge amount of money in a portfolio or a gold pated, inflation adjusted pension it is pretty much impossible for me to fully retire before I am in my 50s.  I have two kids that will go to college.  The world is an uncertain place.  The availability and affordability of health insurance are in question.  Interest rates are low enough to be potentially distorting things.  Global growth is tepid.  I still have a (modestly sized) mortgage.  And so on.

Since I burned out on the cube farm treadmill a couple years ago I am hedging all these risks by working.  The difference is that I am very selective in what I am willing to do, I don't need to do more than offset living expenses, more or less, and I am fine with months at a time in between gigs so long as I average enough income over time.  Once the kids are launched, DW and I will re-evaluate.

[sol]

I have two kids that will go to college.  The world is an uncertain place.  The availability and affordability of health insurance are in question.  Interest rates are low enough to be potentially distorting things.  Global growth is tepid.  I still have a (modestly sized) mortgage. 

These are all either positives, or at least very controllable risks.  You don't need to pay for your childrens' education.  Health insurance is now free if you're low income.  The fed has been holding down interest rates and will continue to do so for the foreseeable future.  Global growth is slow but steady, which is perfect for growing your portfolio without volatility.  Your mortgage is a fixed long term debt at a rate lower than your investments.   You're golden! 

[Syonyk]

I have two kids that will go to college.  The world is an uncertain place.  The availability and affordability of health insurance are in question.  Interest rates are low enough to be potentially distorting things.  Global growth is tepid.  I still have a (modestly sized) mortgage.  And so on.

From an early age, let them know that you're not a free ride to whatever school they want to go to.  And, quite honestly, if college rates continue to increase at their current trend and nothing breaks, I'm going to actively encourage my daughter *not* to go to college when she's 18.  It'll be $300k in student loans for a basic education, and that's a crippling debt for the next few decades, at best.

Health insurance, at least in the US, is nicely solved if you live on very little.  BarryCare Subsidies to the rescue.  And not being stressed/having the time to exercise/garden/eat healthy/etc goes a long ways as well.

Since I burned out on the cube farm treadmill a couple years ago I am hedging all these risks by working.  The difference is that I am very selective in what I am willing to do, I don't need to do more than offset living expenses, more or less, and I am fine with months at a time in between gigs so long as I average enough income over time.  Once the kids are launched, DW and I will re-evaluate.

Ah, so you only work on projects you want, and basically pay living costs?  You're halfway retired already. :p

[regulator]

I have two kids that will go to college.  The world is an uncertain place.  The availability and affordability of health insurance are in question.  Interest rates are low enough to be potentially distorting things.  Global growth is tepid.  I still have a (modestly sized) mortgage.  And so on.

From an early age, let them know that you're not a free ride to whatever school they want to go to.  And, quite honestly, if college rates continue to increase at their current trend and nothing breaks, I'm going to actively encourage my daughter *not* to go to college when she's 18.  It'll be $300k in student loans for a basic education, and that's a crippling debt for the next few decades, at best.

Health insurance, at least in the US, is nicely solved if you live on very little.  BarryCare Subsidies to the rescue.  And not being stressed/having the time to exercise/garden/eat healthy/etc goes a long ways as well.

Since I burned out on the cube farm treadmill a couple years ago I am hedging all these risks by working.  The difference is that I am very selective in what I am willing to do, I don't need to do more than offset living expenses, more or less, and I am fine with months at a time in between gigs so long as I average enough income over time.  Once the kids are launched, DW and I will re-evaluate.

Ah, so you only work on projects you want, and basically pay living costs?  You're halfway retired already. :p

I want to give my kids the gift of a debt free college education if possible.  We will see if it IS possible.  One kid tests off the charts and will need the education.

I don't believe Hussein-care is sustainable for the long term and I do not want to be one of the casualties along the way.  Health insurance is the one thing that might send me back to a real job.

Theoretically I would work only as much as I need for living expenses.  In practice, it is lumpy.  My 15 month contract has paid way more than living expenses (coming to an end 12/31).  Knowing it was coming to an end I had my eyes open when a great opportunity wandered by.  I could not pass it up.  Unfortunately, it matured into work faster than I expected, so now I am juggling 2 contracts at once, working 70 to 80 hour weeks and earning the equivalent of 300k/annually.  Happily, I expect this to ease up by the end of the month.  If the second contract goes dormant for a while and the first just goes away, I will be happy to take a few months off in the new year.  But then I will be hungry for more work...

[RetiredAt63]

Yup.  I am a Stage 3'er.  I found this forum in May of the year I was scheduled to retire in anyway, in August.  So I was never aiming for early retirement like so many here. But I did want to have a solid retirement plan, and this place has given me a lot of help (information, moral support) in being in much better financial shape than I had expected.  I was always frugal, but all that meant was that DH could spend more (now Ex-DH, once I got the divorce paid for that has definitely helped the finances.  That wasn't why we split, so Goldielocks, don't think "Golden Years of Spending" -> divorce).

But looking at some stashes reported on here, in US dollars even - wow, I would be retired already.

I definitely consider decreased spending as I age, risks strategy, and government income when I think of the 4% rule.  I also consider 4% as the rule if you want your money to only last 30 years, 40 years with income fluctuation..

I break down my FIRE like this; 



Phase 3 -- Age 60 ish to 75is-- gov't income, home paid off, less costs.  SWR of 4% rule applies.
More travel in good years, less spend in bad years.    Need to asset allocate to have at least 3 years in fixed income or cash like accounts to smooth out downfall, especially at start.

The one more year challenge, for me, is DH who sees us finally entering our "Golden Years of Spending"...  (don't get me started.....)

[Vilgan]

OMY also comes into play imo because as we get closer to FIRE we are less willing to put up with nonsense and more willing and free to make adjustments to increase happiness. I'm a ways from FIRE but have gone through significant improvements that have increased how much I enjoy my life and decrease how much of a rush I'm in to FIRE as soon as conceivably possible. If I was still doing what I did 4 years ago I would be counting the days to FIRE, these days I see it as when I can comfortably drop down to occasional contracts with long periods of time off.

[daverobev]

I don't believe Hussein-care is sustainable for the long term...

While I can accept misgivings due to the increasing number of retirees, universal healthcare is a given in much or most of the developed world. If other countries can manage it, I'm pretty sure the US could, too... *if* Fox News doesn't convince the country that universal healthcare is actually worse than no healthcare, and other such nonsense.

[regulator]

I don't believe Hussein-care is sustainable for the long term...

While I can accept misgivings due to the increasing number of retirees, universal healthcare is a given in much or most of the developed world. If other countries can manage it, I'm pretty sure the US could, too... *if* Fox News doesn't convince the country that universal healthcare is actually worse than no healthcare, and other such nonsense.

Somehow the Canuckistani perspective manages to get close, but oh so far away sometimes.  I envy you guys in many respects, since you don't have to deal with the massive uncertainty around health insurance and the insane US cost of care.

Here is the problem: Hussein-care as enacted is probably going to eventually implode.  It is jury-rigged enough that something will eventually give and when that happens it is likely that we of the hoi polloi will be hung out to dry.  At the very least, this could go on for some years, and it could be a permanent state of affairs.  The US most closely resembles Rome at the time it descended into imperium, IMO.  That means the moneyed interests jockey among themselves for advantage and the rest of us can go hang.  Just because your premium is $5k a month does not mean they will give any fucks.  The wealthy can handle it and the poor get fat subsidies, so the important constituencies are taken care of and the rest of us can sit & spin.  That is the way things are in the US of A these days.  There is certainly no inevitability to universal healthcare.

[reader2580]

Yeah, it's weird. People seriously believing that social security is at risk of going away is the most bizarre thing.

The experts on Social Security say that if Social Security is left on auto pilot with no changes that it should be able pay out around 75% of promised benefits after the trust fund runs dry for many years to come.  Social Security is unlikely to totally go away in any of our lifetimes.

Between Social Security and my small pension I could probably meet my living expenses if I have no mortgage by then.

[Syonyk]

Social Security is unlikely to totally go away in any of our lifetimes.

Totally go away?  I agree, this is unlikely.

Get adjusted, seasonally adjusted, modified, CPI indexed, reduced, tweaked, and changed so it'll buy me a McDonalds Hamburger a few times a month by the time I retire?  That's a lot more possible.

[regulator]

Social Security is unlikely to totally go away in any of our lifetimes.

Totally go away?  I agree, this is unlikely.

Get adjusted, seasonally adjusted, modified, CPI indexed, reduced, tweaked, and changed so it'll buy me a McDonalds Hamburger a few times a month by the time I retire?  That's a lot more possible.

+1.  The rest will be subject to an 85% tax rate if you are above the federal poverty level.

[marty998]

Overly cautious?

I might be, but thats because my local stockmarket has been going down for 7 years. Can't see it getting back above the nominal peak of 6800 points anytime soon, could be at least another 3 years away.

[Goldielocks]

Yup.  I am a Stage 3'er.  I found this forum in May of the year I was scheduled to retire in anyway, in August.  So I was never aiming for early retirement like so many here. But I did want to have a solid retirement plan, and this place has given me a lot of help (information, moral support) in being in much better financial shape than I had expected.  I was always frugal, but all that meant was that DH could spend more (now Ex-DH, once I got the divorce paid for that has definitely helped the finances.  That wasn't why we split, so Goldielocks, don't think "Golden Years of Spending" -> divorce).

But looking at some stashes reported on here, in US dollars even - wow, I would be retired already.

I definitely consider decreased spending as I age, risks strategy, and government income when I think of the 4% rule.  I also consider 4% as the rule if you want your money to only last 30 years, 40 years with income fluctuation..

I break down my FIRE like this; 



Phase 3 -- Age 60 ish to 75is-- gov't income, home paid off, less costs.  SWR of 4% rule applies.
More travel in good years, less spend in bad years.    Need to asset allocate to have at least 3 years in fixed income or cash like accounts to smooth out downfall, especially at start.

The one more year challenge, for me, is DH who sees us finally entering our "Golden Years of Spending"...  (don't get me started.....)

Nah,  if we were to split up, it would have happened years ago, when everything was so stressful...   the mis-cue on "golden age of spending" will at worst, lead me to 3 more years FT.   I am getting ready to quit now, though, and start contract work in a new field.   A good trend is that he is very excited about building a custom electric bike, which takes pressure off of the new (to us) car desires.   It should be done in about 1 month!

[Monkey Uncle]

I'm probably building in a lot less buffer than most here.  I'm planning to go with around $700k-ish, and I'm factoring in expected SS benefits and a small pension.  Of course, I'll be around 50 when I pull the plug; if I were in my 30s I'd probably be a lot more cautious.

[WildJager]

I think there is a lot that can happen during the rest of your life that the models we use from the last 100 years of data just can't predict.  People have been around for a long time.  Many systems that seemed solid in the past have suddenly crumbled.  The earlier you retire planning the live off of investment returns, the more you open yourself up to the whims of fate.

Did 4% provide over the last 50 years?  Yes.  Will it over the next 50 years?  No one truely knows.  Hence the delay for more assurance.  The problem with going back to work is that you'll likely be starting back at a lower paycheck, which means you'll have to work more in the long run.

The counter argument to this is that, is the stock market - the global financial system - collapses in such a way that, as a smart frugal early retiree, you're fucked at 3% or 4%, you're probably still fucked at 2%. And following on, that a fire-proof safe containing a significant amount of gold and silver, plus lots of canned food, hunting equipment and so on are sensible things to have.

I agree.  As I've mentioned to friends why have ask "What if the economy crumbles and your savings aren't worth anything anymore?". Well, we're all screwed then and I have bigger problems than what's in my bank account.

[arebelspy]

As therebelspy has recently pointed out elsewhere on the forum, the tenor of this place has changed considerably as it has grown.  The early audience was a little more serious about retiring early, and the new larger audience wants generic financial guidance but they're not really interested in leaving their jobs with less than $2million at age 55.

But that's the price you pay for growth of the community, I think.  The message is necessarily diluted by bringing in folks beyond your core target audience.

Part of is just that people see frugality as a virtue, even when they are extravagantly wasteful, so they want to feel like part of this movement without actually participating.  People like londonbanker and mrpercentage should have retired a decade ago, yet continue to tell us how risky it is to retire on only $4 million.  Meanwhile our host and his predecessor both retired with well under a million dollars, and seem much happier about it than those wealthy forum participants who continue to fret about never having enough.  For some people, security will never come.

Well said.

It does strike me how few people take the plunge before the absolute security blanket of the 4% rule, or more.  Historically the average WR is much higher, along with all the extra safety margins of SS, side gigs, going back to work if necessary, etc.

So why aren't more of us taking advantage of that?  The wife and I decided to jump early, but your post made me realize that we're among the few, even here on the MMM forums itself.

Even you, sol, may be working too long.  :)

[kite]

I fit the "overly cautious" description, undoubtedly.  I had a sudden & unexpected trial run in the 2008 financial implosion.  If our health maintained, we could certainly manage.
But it didn't.  My spouse is disabled.  I have relatives in their 90's needing care for dementia.  That stuff is expensive. Incredibly expensive and enough to blow a SWR to smithereens.  (Yeah, the ACA was supposed fix all that, but it didn't.  And plenty of meds are simply dis-allowed.  You want them, you pay for them.)
Depending on your family history and life expectation, this may seem ridiculous or pragmatic.  I expect to live 50 more years.
Fortunately for me, I enjoy my work.  It is socially and psychologically fulfilling, allows me to keep learning and make a significant contribution to the world, while also padding my HSA and other savings accounts.  My father retired from 9-5 fnance work but had launched a music career by then that carried into his 80s, simply for the love of it.  I'd like to do the same, because with music, it's not work.  It's play.

[patrickza]

In my case I'm going for a 2% withdrawal. A couple of reasons for that, but mainly because our currency has devalued by nearly half to the US$ in the past year or so. We were at R8 to one dollar, now it's R14 to one dollar and climbing. I've spent the year watching as my $ net worth has slowly receded even though I'm saving huge amounts in my local currency.

It may swing back if the resources recover, but it may also get even worse thanks to our rather short sighted government.

As I don't plan to stay in South Africa post fire, I need a withdrawal rate that can handle currency knocks.

[Mr. Green]

Here I thought I was being super cautious and this thread is making be feel like I'm one of the first guys jumping out of the plane! I guess I'm not quite as conservative as I thought.

[Left]

We probably are a bit more conservative on this than it sounds now?

Like someone said above, when I first got here, I aimed to RE by 40... now I've pushed it back 5 years to 45 (and went from $1m to $1.5m as my target).
I mean yes I could probably still RE at 40, nothings changed except I want to feel more "secure". If I am going to RE, I want to make sure I never have to work again.... 5 years time to buy that? Sure I'll do that.

Heck, at 35, I'd be FI with $500k but I didn't plan to pull plug. I'm not even 30 yet and have half that, so I can hit FI/RE at 35, but then what? I'd be stuck at home with no reason to do anything? :D I have no kids/family like MMM... nothing to really pre-occupy my time with. Sure I could garden... but I don't want to be a farmer... I don't want to garden all day everyday. What I will end up doing is travelling, and that is not on a MMM budget really, so for that I need a few more years of work. And like I said, I enjoy my job, why quit until I didn't like it?

[RWD]

I intend to quit working around the 4% point of our target retirement expenses, but there are a ton of safety nets. My wife may continue working. Our target retirement expenses are a good bit higher than what I expect we'll actually spend and higher still than our base minimum spending.

[FrugalFan]

I definitely consider decreased spending as I age, risks strategy, and government income when I think of the 4% rule.  I also consider 4% as the rule if you want your money to only last 30 years, 40 years with income fluctuation..

I break down my FIRE like this; 

Phase 1 -- kids living at home  (maybe until the youngest is 20) -- 4% rule does not apply,  need to save up cash to fully fund this phase, on-going temporary contract / work part time is likely needed to ensure ramping up employment on 6 month notice is possible..  Expect cost surprises x 4 persons risk factors.

Phase 2 -- Age 50ish to 60 ish...  No gov't pension.   -- Again, savings strategy does not comply to 4% rule, rather a combo of anticipating DH's modest income and living off savings.    Ability to sell nearly paid for home and downsize in a tremendous down market if choose not to re-income ourselves.  OR - rent out rooms, etc.

Phase 3 -- Age 60 ish to 75is-- gov't income, home paid off, less costs.  SWR of 4% rule applies.
More travel in good years, less spend in bad years.    Need to asset allocate to have at least 3 years in fixed income or cash like accounts to smooth out downfall, especially at start.

Phase 4 - Age 75ish up -- 4% SWR applies.  less spending overall.  Gov't pension sufficient to carry us through if market totally tanks....extra money, if any, spent lavishly on family vacations with grandkids.


Each phase has a different spend / savings number...  I have accomplished my savings needed for phase 2. 3. 4. and working on 1 right now.

The one more year challenge, for me, is DH who sees us finally entering our "Golden Years of Spending"...  (don't get me started.....)

I am not near FI yet and my DH does not really want to FIRE; he wants to work until at least 55 (and maybe more). I like your phased approach Goldielocks. I think I need a plan like this because our situation is similarly complex (and we had kids late so by the time our youngest is 20, we will be 57 and 60, and hopefully long retired). Can you provide some examples of how you do the math for this? Even if it's with fake numbers, it would be super helpful for me.

[dude]

For me personally, I have to do 3.5 more years because there is a generous pension waiting for me at the end of the line, and I'll only be 54.  Not "early" retirement by this forum's standards, but for damn sure by society's it is.  But even with a fairly ironclad pension, high-earner SS benefits awaiting, and a strong 401k, I have some reservations.  Namely, health insurance costs and lower market returns going forward.  Those likely won't stop me from retiring in 3.5 years, but I do think about them a lot. And then there is the desire to live something more than a barebones FIRE existence.  I want to travel a lot, eat well, have plenty of money for emergencies, and not feel like I've got to pinch pennies all the time. Some of the reservation is probably just a culturally ingrained sense of the "worried well," and the seeming lunacy of giving up a lucrative 6-figure income.

[RetiredAt63]

Glad to hear it!  "Golden Years of Spending" was every year around our house, unfortunately.

A custom e-bike, cool.  Being involved in its design will most likely make him happier with it, since he will have a sense of "ownership" that we don't get with just paying for something.

It sounds like your work is going to be more enjoyable as well. 

Nah,  if we were to split up, it would have happened years ago, when everything was so stressful...   the mis-cue on "golden age of spending" will at worst, lead me to 3 more years FT.   I am getting ready to quit now, though, and start contract work in a new field.   A good trend is that he is very excited about building a custom electric bike, which takes pressure off of the new (to us) car desires.   It should be done in about 1 month!

[honeybbq]

I have two kids that will go to college.  The world is an uncertain place.  The availability and affordability of health insurance are in question.  Interest rates are low enough to be potentially distorting things.  Global growth is tepid.  I still have a (modestly sized) mortgage.  And so on.

From an early age, let them know that you're not a free ride to whatever school they want to go to.  And, quite honestly, if college rates continue to increase at their current trend and nothing breaks, I'm going to actively encourage my daughter *not* to go to college when she's 18.  It'll be $300k in student loans for a basic education, and that's a crippling debt for the next few decades, at best.

Health insurance, at least in the US, is nicely solved if you live on very little.  BarryCare Subsidies to the rescue.  And not being stressed/having the time to exercise/garden/eat healthy/etc goes a long ways as well.

Since I burned out on the cube farm treadmill a couple years ago I am hedging all these risks by working.  The difference is that I am very selective in what I am willing to do, I don't need to do more than offset living expenses, more or less, and I am fine with months at a time in between gigs so long as I average enough income over time.  Once the kids are launched, DW and I will re-evaluate.

Ah, so you only work on projects you want, and basically pay living costs?  You're halfway retired already. :p

A lot of people do not have faith in the health insurance solution that is currently available. It is only a few years old; every republican on a podium wants to repeal it. Medical expenses are one of the top reasons for bankruptcy in the country. I don't see how anyone could roll the dice and depend on the ACA 30 yrs from now when it is in its infancy. I do not see the staying power of it; at least not yet.

SS: Again, many people that are "middle age" and probably should be FIRE'd (myself included) were brought up on the concept that SS "may not be there for us" and so we have always counted on NOT having it. Relying on the government for that sort of funding is a risk many are not willing to take.

If you're 25 - you maybe believe in SS and you may believe in the ACA and you may believe in the tiny house movement. Many of these things have changed in the recent years, so some of us older folks may be slower to come around than others we were grown on it.

I feel like the theory of MMM is to make due with less, but not necessarily under prepare... So my numbers will have paying for health care and not counting the use of SS. Being born and bread on those tenets; they are not so easily changed.

[JLee]

We probably are a bit more conservative on this than it sounds now?

Like someone said above, when I first got here, I aimed to RE by 40... now I've pushed it back 5 years to 45 (and went from $1m to $1.5m as my target).
I mean yes I could probably still RE at 40, nothings changed except I want to feel more "secure". If I am going to RE, I want to make sure I never have to work again.... 5 years time to buy that? Sure I'll do that.

Heck, at 35, I'd be FI with $500k but I didn't plan to pull plug. I'm not even 30 yet and have half that, so I can hit FI/RE at 35, but then what? I'd be stuck at home with no reason to do anything? :D I have no kids/family like MMM... nothing to really pre-occupy my time with. Sure I could garden... but I don't want to be a farmer... I don't want to garden all day everyday. What I will end up doing is travelling, and that is not on a MMM budget really, so for that I need a few more years of work. And like I said, I enjoy my job, why quit until I didn't like it?

http://theroadchoseme.com/the-price-of-adventure <-
That guy traveled the Pan American highway for $1200/mo ($360k @ 4% would cover that).

In my 20's, I was perfectly happy working. I'm 31...and while I still don't mind, I can see the writing on the wall. I will be ready to GTFO at some point, but I'm still 8-10 years out from FI.

[Paul der Krake]

A lot of people do not have faith in the health insurance solution that is currently available. It is only a few years old; every republican on a podium wants to repeal it. Medical expenses are one of the top reasons for bankruptcy in the country. I don't see how anyone could roll the dice and depend on the ACA 30 yrs from now when it is in its infancy. I do not see the staying power of it; at least not yet.

(emphasis mine) The interesting parts of the ACA for early retirees, namely the doing away with pre-existing conditions, and some level of premium assistance, are hugely popular. The GOP leadership brought a repeal to the house floor about 50 times before the 2014 midterms. There has been only one attempt since they took control of both chambers, just so that the new crop could say they voted to repeal it.

The cat is out of the bag, and they know it. The ACA might be tweaked, twisted, even replaced with something else that looks different on paper for entirely PR reasons. However, the odds of reverting entirely to the previous system are, in my humble opinion, non-existent.

Regarding Social security: the belief that the population of the United States, through its elected officials, is going to leave tens of millions of its elderly on the streets, is non-sensical and seriously understimates the unbounded creativity lawmakers can demonstrate when their back is against the wall against millions of furious voters.

[Syonyk]

A good trend is that he is very excited about building a custom electric bike, which takes pressure off of the new (to us) car desires.   It should be done in about 1 month!

They're awesome. :)

Feel free to point him my way if he has questions - I'm pretty familiar with that whole realm.  See my blog. \|/

[Left]

he also "camped" in his jeep/tent... I don't imagine that to be comfortable in my late 30s or 40s...

even in my 20s, I camp in a cabin... with a hot shower and bed :D

I do envision myself in an RV... and doing same. But it would be fairly expensive to just get the RV I wanted. Well around $60-100k... about $600-800/month just for RV payments? I don't want to be retired with that kind of "debt" looming over me. I looked at roadtrek vans, none of them seem to swing on the "cheap" side...

[howie29]

I'm who you are referring to.  47, 47 year old wife, 2 children high school age.  I have run the numbers hundreds of times.  $1.6mm including home that is paid off, no car payments and a wife that makes basically the national average income per year.  My job sucks, the industry has been decimated and I am killing myself sitting here making no money hoping for a turnaround. 
Thing is, when you have kids and they are still your responsibility (read: under 18), it is very difficult to take such a risk as saying "I can't take it anymore, I'm out!"  If life totally shits the bed after that, its tough to swallow just because "you couldn't take anymore."  That's my take on it.

[Left]

howie... not sure if you plan on paying their college tuition... but depending on where the money is, that amount might "hurt" their chances of financial need based scholarships/grants...

because they are setup in a way that assumes that parents will "take care of it" if they have money just "laying" around... on top of you working? That only adds more income that you can toss that way...

[howie29]

It definitely will.  I live in FL and prepaid their college tuition (tuition only all else room/board/etc not covered) and have about 60k in 529 plans total for the two of them.  All that should make a dent but not sure how much.

[2lazy2retire]

I don't believe Hussein-care is sustainable for the long term...

While I can accept misgivings due to the increasing number of retirees, universal healthcare is a given in much or most of the developed world. If other countries can manage it, I'm pretty sure the US could, too... *if* Fox News doesn't convince the country that universal healthcare is actually worse than no healthcare, and other such nonsense.

Somehow the Canuckistani perspective manages to get close, but oh so far away sometimes.  I envy you guys in many respects, since you don't have to deal with the massive uncertainty around health insurance and the insane US cost of care.

Here is the problem: Hussein-care as enacted is probably going to eventually implode.  It is jury-rigged enough that something will eventually give and when that happens it is likely that we of the hoi polloi will be hung out to dry.  At the very least, this could go on for some years, and it could be a permanent state of affairs.  The US most closely resembles Rome at the time it descended into imperium, IMO.  That means the moneyed interests jockey among themselves for advantage and the rest of us can go hang.  Just because your premium is $5k a month does not mean they will give any fucks.  The wealthy can handle it and the poor get fat subsidies, so the important constituencies are taken care of and the rest of us can sit & spin.  That is the way things are in the US of A these days.  There is certainly no inevitability to universal healthcare.

Anyone know why ACA is referred to here as Hussein-Care, have I missed something?

[Guesl982374]

Though, life is a risk.  That's what we're doing here, risk mitigation.  Everyone's level of "enough is enough" varies, and I wouldn't look down on anyone for deciding they'd like.more padding.  (Retiring at 40 instead of 30 for example).  At the same time, I think someone looking at retiring at 60 instead of 50 with a solid stache might be acting a bit too conservatively.  And those who never retire even though they could, well, they're just missing out on opportunity.

This. If someone is driven enough to achieve FI and are risk averse enough that they need financial security then they are also more likely to be overly conservative when it comes to the size of their stache.

I voted yes, most here will / did over save (including myself). But on the same note, If I am done needing to work for money by 39-40 yrs old vs. 35-37 yrs old then in my mind it's not the end of the world. Especially if it makes the wife more comfortable. Happy wife happy life.

[regulator]

I don't believe Hussein-care is sustainable for the long term...

While I can accept misgivings due to the increasing number of retirees, universal healthcare is a given in much or most of the developed world. If other countries can manage it, I'm pretty sure the US could, too... *if* Fox News doesn't convince the country that universal healthcare is actually worse than no healthcare, and other such nonsense.

Somehow the Canuckistani perspective manages to get close, but oh so far away sometimes.  I envy you guys in many respects, since you don't have to deal with the massive uncertainty around health insurance and the insane US cost of care.

Here is the problem: Hussein-care as enacted is probably going to eventually implode.  It is jury-rigged enough that something will eventually give and when that happens it is likely that we of the hoi polloi will be hung out to dry.  At the very least, this could go on for some years, and it could be a permanent state of affairs.  The US most closely resembles Rome at the time it descended into imperium, IMO.  That means the moneyed interests jockey among themselves for advantage and the rest of us can go hang.  Just because your premium is $5k a month does not mean they will give any fucks.  The wealthy can handle it and the poor get fat subsidies, so the important constituencies are taken care of and the rest of us can sit & spin.  That is the way things are in the US of A these days.  There is certainly no inevitability to universal healthcare.

Anyone know why ACA is referred to here as Hussein-Care, have I missed something?

I got tired of typing Obamacare.

[CowboyAndIndian]

Anyone know why ACA is referred to here as Hussein-Care, have I missed something?

ACA is also known as ObamaCare.

Obama's full name is Barak Hussein Obama.

So, if you hear Hussein-Care or Barry-Care, the poster most probably does not like Obama.