(Topic ID: 286379)

Retirement! Hacks, tips and insights to get there faster.

By DadofTwins

3 years ago


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  • Latest reply 86 days ago by Zambonilli
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Topic poll

“At what age do you plan on retiring?”

  • 45-55 96 votes
    30%
  • 56-65 169 votes
    53%
  • 65 and over..... 53 votes
    17%

(318 votes)

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#51 3 years ago
Quoted from rotordave:

I think this is a common misconception...
I don’t think you need a certain amount of cash in the bank, you need a constant stream of income.
If you say “right, I got $300 grand in the bank, I’m good to go!”, you’ll soon burn though that cash in no time, if it’s not being constantly replenished.
Property provides a constant stream. Even if the stock market crashes and gold is trading at an all time low, people always need somewhere to live.
rd

Without the set of cash in the bank, you won’t have a constant steam of income, at least those of us without pensions. Pensions are almost non existent anymore, except for government workers and unions.

#52 3 years ago
Quoted from pin2d:

Is there a specific FIRE book you all would recommend?

"Your Money Or Your Life" by Vicki Robin and Joe Dominguez. I've read a LOT of books about money and I've found this to be the best one on how to think about money. There are better books regarding investing, but this one was an eye opener for me.

Quoted from Methos:

I am spending some of my wealth now and enjoying it while I can. Those that live below their means... I get the theory and you definitely need to plan but it only takes one MRI or blood test for it to all go down the drain.

I think finding the balance is the key. Planning for the likely "financial catastrophe" of living long makes a lot more sense for me than planning for an untimely death. It's not about pinching pennies, it's about finding joy in the things in life that are all around you. I don't need $15/lb coffee, my $4/lb I'm sipping now is quite good. When you live way below your means you're still appreciating life, but are no longer in the rat race of "one more dollar".

And for anyone who says they never want to retire, I ask: If they stopped paying you tomorrow and you didn't need the money, would you still want to do that job? Or is there perhaps something else you'd rather be doing?

#53 3 years ago
Quoted from wamonkey:

If your young enough join the National Guard serve long enough and you can get healthcare at 60 as a restatement package (it’s not VA).

Concur - probably one of the best benefits of service. It's practically free at age 60 till 65, then becomes a wrap around with Medicare part A and B. There is the pension too, less for the reserves as it is as a percentage of active duty time. Most reservists who make 20 years have several years of active service through prior service and deployments though and that really boosts the pension. While the excellent health care starts at 60, the pension can be drawn earlier based on deployments after 2006(?).

While the pension and health care benefit isn't enough (for me) to live on, I figure it replaces at least $1,000,000 of 401K.

Quoted from Methos:

I’ve seen too many people save and save, retire, then die of cancer.

I am spending some of my wealth now and enjoying it while I can. Those that live below their means... I get the theory and you definitely need to plan but it only takes one MRI or blood test for it to all go down the drain.

Quoted from DBLM:

I don't aspire to retire early. Instead, I look to live a great and fulfilling life. My wife and I have great career positions and do all of the typical things (no credit card debit, no loans, max 401ks, invest smartly and aggressively, etc). However, we wanted to up level our lifestyle and move towards the water.

Agree with both of these statements, if you spend your life just prepping for retirement, you lose out on so much that life has to offer. We left the city, bought a house on a lake while our kids were young so they could grow up in this environment. That traded some retirement prep but our home costs are less now (rural, lower taxes, more house for $$) and its our "forever" home and paid for. The tradeoff with Active Duty vs the Guard let us set up one homestead vs moving every 3-4 years, let me establish a good civilian career that will carry on beyond military service, and frankly Guard service has given me a lifetime of experiences (good and bad) I would not trade for anything.

Retirement for the Guard is coming up soon, and I will take that time and pour it into the hobby, but no plans to retire from my full time job so I can buy a NIB pin or whatever when I want

#54 3 years ago
Quoted from Methos:

What is the magic # people need in their 401/savings to pull the trigger?

20-25 times spending in a year. After taxes and less social security and pension income.

15
#55 3 years ago

My father's saying (he's long passed) was "it takes money to make money."

So I started maxing out my 401k when I began working after college. You don't miss that 10% savings if you never see it. Retired a few years ago. No financial worries. Gave the same advice to my daughter when she graduated college. Told her if she maxed out her 401K she'll never miss it, and when she is about 41 she'll be a millionaire. So she turned 40 last year and it came to be....It's that easy.

I believe in saving for the future. Always saved, never planned on Social Security. Hoped I would live to enjoy my savings. Thank God I made it to retirement and living the dream!

Could I buy a million dollar mansion? Yes, but I don't want to.
Could I buy a Ferrari or Rolls Royce? Yes, but I don't want to.
Could I buy a NIB pinball machine? Yes, but I don't want to.

My advice....start early, save, invest, automatically if your employer has a plan.

#56 3 years ago
Quoted from arcyallen:

"And for anyone who says they never want to retire, I ask: If they stopped paying you tomorrow and you didn't need the money, would you still want to do that job? Or is there perhaps something else you'd rather be doing?

Yes. I am doing what I am great at and love to do. It is very fulfilling to me and is doing great good for so many, especially right now.

#57 3 years ago
Quoted from Methos:

Without the set of cash in the bank, you won’t have a constant steam of income, at least those of us without pensions. Pensions are almost non existent anymore, except for government workers and unions.

Rotordave was making the point about owning property as an alternative to a huge 401k (cash in the bank) or pension as a stream of income, not just in retirement but well before, too.

We bought a new house 6 years ago. Our mortgage is totally covered by our rental income. It doesn't matter if I'm 60 or 80 when it's paid off, that's not the goal. Our tenants are working 40 hours a week to pay for it, not me.

Stock market crashes and your fund loses 50% of its value? Your income just went down 50%. Housing market crashes and my houses are worth 50% less? I'm still renting them out for the same amount. When our 2nd one is paid off, our income will go up another thousand a month or so. We can borrow against them whenever we want with no penallty, and use rental income to pay it back.

I will admit it's not for everyone. And it's a totally different mindset. There are the concerns about terrible tenants and all that, and there are management companies for the weak of heart that will deal with that for you. We have only had a couple hiccups - you learn from them and move forward. I can handle repainting and touch up repairs every few years between vacancies, and bigger jobs get hired out. They are also tax deductions, and rental income is taxed at 15%, not the usual 30% or so as earned income. That's because the same wealthy people who own property created the laws. If you can't beat 'em, join 'em.

Regardless, you sound like you are well on your way, and I wish you a happy retirement, whenever it appears! That goes for everyone!

#58 3 years ago
Quoted from JethroP:So I started maxing out my 401k when I began working after college. You don't miss that 10% savings if you never see it. Retired a few years ago. No financial worries. Gave the same advice to my daughter when she graduated college. Told her if she maxed out her 401K she'll never miss it, and when she is about 41 she'll be a millionaire. So she turned 40 last year and it came to be....It's that easy.

This is spot on. I recommend to all new engineers starting at my company to put 15% of their pay in a 401k before the first pay check so they never miss it and learn to live what remains. The first few years are slow, but when the exponential growth starts to kick in, it really is amazing. I wish high schools/colleges would take some time to go over these concepts as most people have pretty limited exposure to basic financial competence.

#59 3 years ago

Poll may have identified 65 as retirement choice but full retirement age will creep to 66 and then 67. As such, when you were born helps a little.

1) live within your means. Whatever you earn, do not take out a personal loan or carry a balance on your credit card. If you are unhappy with your standard of living - take action and get another job.

2) always be saving for retirement. Beginning with First day of your First job, save 10%. You won’t be saving much at first but it is the disciple to stay within your budget that helps you succeed.

3) as you enjoy your 30’s, begin ratcheting up your % saved by a few percent per year to reach 15%.

4) diversify your investments. Hire a financial advisor who can make specific choices based on your profile and goals.

5) as you enjoy your 50%, ratchet up your savings each year to reach 20%, by rolling in your cost of living increases.

6) As you enjoy your 60’s, sprint towards retirement by ratcheting up savings to 25%.

I offer no investment advice and have never invested in property, but my Mom scored her biggest lifetime gain from one transaction. She and my Dad bought a primo lot on a developing golf course community in Jackson Hole, WY. She also bought a primo lot in two other states, hoping to develop and move there one day. Because these were empty lots, the price was actually for the land and there was no penalty for not building right away. 50 years later and she has sold them. One sold for a small loss, one broke even and one made a 2000% profit. She literally hit the jackpot.

#60 3 years ago

I’ve stuck 10-20% of my salary away into a 401k ever since I started working. Compound investment returns is an amazing thing. I’ll retire at 55 and easily live off the annual investment income with room to spare and social security will just be gravy on top.

#61 3 years ago

That is literally the text book definition of how to do things right.

Incidentally, the single biggest investment error you can make IMO, is to invest all your saving in your company stock. In some cases of quickly rising company value, the risk might be worth it, but not over the long term. I have known three people whom were planning to retire around 55 years of age and their respective companies went bankrupt and their savings were wiped out. That sucked the big one.

#62 3 years ago

So in reading this thread I’m realizing that investing heavily into a pinball collection probably isn’t the best way to generate sustainable income in retirement.

Fund that Roth 401k/IRA!
Good stories all - thx for sharing.

#63 3 years ago

Also as I switched jobs I would always roll my 401k’s into an IRA with a money manager. A good money manger is well worth the cost, they have always earned me good returns. Always pick a money manager where the fee structure is such that the better you do the better they do.

#64 3 years ago

The thing that I have to figure out yet are those dark years between retirement and 62. Plus the tax rules are going to change a lot, so that’s another unknown.

#65 3 years ago

Not to be two-faced, but I made my best return on a single transaction by investing in my company stock. When joining my current company, I brought over a 401k and some individual savings. I spent a big chunk of my individual saving to buy stock in my new company, which was privately held. 10 years later I sold ALL my shares and diversified. My investment had increased 1000%. So while I didn’t mind knowingly having too much invested in one company, I was closely watching its progress, and once the easy money was made, I got out.

20 years later and I am still working with the same company, stock is doing great and their future looks bright, but I don’t have any funds invested in them.

#66 3 years ago
Quoted from Vino:

So in reading this thread I’m realizing that investing heavily into a pinball collection isn’t probably the best way to generate sustainable income in retirement.
Fund that Roth 401k/IRA!
Good stories all - thx for sharing.

I don't know, a friend took a portion of his pay/profits from a music store in Martin guitars for 35 years. All have risen substantially in value and he is doing well.
Pinball machines are a tangible asset that so far is holding/rising in value.

#67 3 years ago
Quoted from Methos:

Not anymore. That’s old time serf thinking. My parents are spending their wealth, I told them I don’t want a dime from them.

Yes, this old advice is responsible for wealth in families that increases through Generations. No Grandchildren? Your Parents will have a hard time "Spending their wealth", at least all of it. Real Estate, furniture/possessions,vehicles will be left.
My Aunt and Uncle tried the same thing and died wealthier than before they started.

#68 3 years ago
Quoted from Methos:

Not anymore. That’s old time serf thinking. My parents are spending their wealth, I told them I don’t want a dime from them.

I think that means to skip you and any siblings of yours but leave an inheritance for their grandchildren.

#69 3 years ago

Honestly, the main thing you need to think about is health insurance and how you are going to handle that. Unless your nest egg is approaching 8 figures you need to have a plan for health insurance. It is literally an uncovered high-end risk.

I retired from the corporate world at age 39, and it is health insurance that could drive me back in. Our premium for a family of 3 is north of $20k/year... with a $5k deductible (each). The ACA is what keeps it that *low* (laugh if you want) but without some of the things in the ACA would could see our premiums triple. That is the crazy thing.... it's not what insurance costs now... but what will it look like in 20 years. There are scenarios where I could see our premium hit $100k/year.

What are we doing to cover the health cost risk? Other than moving to places with universal health insurance... I really don't know. As of now our only true *plan* is for one of us to go back to work until we qualify for medicare.

To the person who mentioned re-enlisting in the National Guard.... honestly, that sounds like a great idea for those who can do it.

#70 3 years ago

Don't have twins.

#71 3 years ago

Keep in mind that you must be 65 for non-disability Medicare. If you hit 65 and go on it but your spouse is younger; your spouse is not eligible for Medicare until they hit 65.

This can be a problem for sugar daddies, however, most sugar babies make sure the daddy is well-off and health insurance is rather low on the list of necessities.

#72 3 years ago

I am loving this thread. Most of all, I’m loving seeing how we are all planning differently, and it is working out.

15
#73 3 years ago

Early retirement 3 tips: 1) Dont Marry
2) If you do marry dont divorce
3) If you do divorce dont remarry

#74 3 years ago

You beat me to it....the advice part not the marriage part.

#75 3 years ago
Quoted from jeffspinballpalace:

Incidentally, the single biggest investment error you can make IMO, is to invest all your saving in your company stock.

I’ve been purchasing my company’s shares at 15% discount for just under 3 years. From a dollar cost average perspective I’ve been rather flat before adjusting for discount so that’s free money out the gate.

Also helps this stock is one that pays dividends too. Like I say, if it doesn’t make dollars it doesn’t make sense.

Of course, this should be considered after you are taking advantage of retirement fund etc.

#76 3 years ago
Quoted from seshpilot:

I am loving this thread. Most of all, I’m loving seeing how we are all planning differently, and it is working out.

One thing that should have been taught in high school is basics of investing, savings, economics etc. this would be especially valuable at a young age to get a head start.

I won’t mention theories I have as to why it isn’t done.

#77 3 years ago
Quoted from JohnnyPinball007:

Personally I never trusted the markets, and I have 3 rental houses, and I have been self employed forever.

I plan to never retire, and I plan to never get a job working for anyone.

I enjoy the work I do, good exercise, make a few bucks, and get up at the crack of noon most of the time.

To add to this, my biggest expenses are insurance and taxes, but I have 0 debt, and the house's pay all the bills, while on average about 3 hours a month dealing with them.

I have worked one day so far with my biggest client this year, and I am fine if I do not get another call from him this year.

If my phone rings I will say ok, where, and when, and go do a job. (underground construction).

I like the goofing off money I make, cutting grass. I average 50.00 a hour, and this zero turn mower is like the go cart I had when I was a kid.

And this is not under the table or anything, they all write checks to my Inc.

Some clients I bill monthly, some quarterly, and some yearly.

(most I bill are around the time property taxes for 4 houses is due, to take care of that).

I know I am out there, I have never worked a 9-5 or been in any kind of system with a 401 or whatever.

One year I did very awesome, and I paid so much tax I said screw that, I need to work a tad less.

I have a damn good accounting firm, and I really recommend that.

I just roll my eyes at anyone that goes to h and r block, or does the turbo tax thing or any of that.

I good accountant is pricey, but well worth it.

Hell, first thing when I went into business for myself and hired a good accountant, he rolled his eyes when I said I had been using h and r block, and he went back and re-did the stuff and got me a ton of money back.

A lot of it I think is just the way you were born.

I stay pretty cool and laid back and never raise my voice, and that will get you a long ways also.

And I am not a "neat freak", but I do stay very organized.

My accountant has always loved the fact that I have everything ready for him on 2 sheets of paper, while others bring in grocery bags full of receipts that he has to go through and try to figure it all out.

My Dad used to be one of those taking all the bags to the accountant at the last minute.

I never got that at all. If you have a good accountant, help them, and they can help you more.

Several times my accountant told me that he wished I could give some motivational speeches to his other clients.

One time I got a small check from the IRS with a letter I did not understand. I took the 30 mile each way to see him in person(most everything is faxed or mailed between us), and he laughed and said the IRS had audited me, and that small check they sent me, cost them a whole lot more, like 50.00 for every 1.00 I just got back out of the blue.

One time my accountant did mess up, (death in the family or something), and I had a notice in the mail of taxes due with interest, and when I called, they said sorry, we messed up, fax that paper and we will pay that and you will never be bothered with it again.

I love my lawyer also, no need to go into that here.

But yeah, as far as this topic, retirement hacks, a damn good accountant goes a very long way.

If you are doing anything else, and are self employed, you may be missing a lot of deductions.

And the 9-5 people, maybe find a good accountant, just to look over what you did yourself on the turbo stuff, or the h and r stuff, or whatever you use, you may be surprised.

I am way out in left field, and no way I could have ever done the 9-5 thing, I started my Inc. when I was 23, and doing ok even at 16.

At the same time no I do not have a mil in some 401, and I don't need that much anyway.

I am 52, semi-retired at 40, and I will never retire, but at the same time I never plan to work over 40 hours in any month.

I have a system that works for me, I keep all expenses as low as I can, you have to figure out what you can live ok with.

And I still do not trust that SS will be around when I am older, and if it is, it will just be like more free money coming in.

I do hope Medicare or something sticks around, yes docs are pricey as hell these days, but so far dentists are 10 times worse.

And it does help a whole lot to have never been married, or had any kids.

I wish all of you the BEST!

#78 3 years ago
Quoted from seshpilot:

I am loving this thread. Most of all, I’m loving seeing how we are all planning differently, and it is working out.

there is no guarantee
if your health suddenly takes a nosedive then all your plans are stuffed

#79 3 years ago
Quoted from wamonkey:

If your young enough join the National Guard serve long enough and you can get healthcare at 60 as a restatement package (it’s not VA).
Probably too late for this conversation...but it’s on deck for me (still serving)
It’s not without risks and the guard does get involved in conflicts these days but it’s one of the few jobs that promise you healthcare after you retire.

Thank you for serving in the military.

#80 3 years ago
Quoted from Eric_S:

This is spot on. I recommend to all new engineers starting at my company to put 15% of their pay in a 401k before the first pay check so they never miss it and learn to live what remains. The first few years are slow, but when the exponential growth starts to kick in, it really is amazing. I wish high schools/colleges would take some time to go over these concepts as most people have pretty limited exposure to basic financial competence.

“Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” - Albert Einstein

#81 3 years ago
Quoted from seshpilot:

I am loving this thread. Most of all, I’m loving seeing how we are all planning differently, and it is working out.

grain of salt here. You say it’s working out. That’s not proven, just that this is what people are planning on for retirement.

Someone who retires at 55 years old can live for another 30-40 years. We don’t know how it’s all working out yet.

My point that working is your best chance to make bags of money and once you stop you’re spending without income.

There are other income streams like Social Security, real estate, dividends and bond interest.

if you make $70k you’ll need around $3.5M in stocks to replace that income on dividends alone which means you’re spending some of your savings as well as the dividends. Once you start spending your dividends as well as some equity or bonds your savings may get smaller and so on.

Compounding interest is great but as you start spending it’s the reverse of compounding.

Fortunately social security and Medicare is available as we get older helps out.

#82 3 years ago
Quoted from rai:

grain of salt here. You say it’s working out. That’s not proven, just that this is what people are planning on for retirement.
Someone who retires at 55 years old can live for another 30-40 years. We don’t know how it’s all working out yet.
My point that working is your best chance to make bags of money and once you stop you’re spending without income.
There are other income streams like Social Security, real estate, dividends and bond interest.
if you make $70k you’ll need around $3.5M in stocks to replace that income on dividends alone which means you’re spending some of your savings as well as the dividends. Once you start spending your dividends as well as some equity or bonds your savings may get smaller and so on.
Compounding interest is great but as you start spending it’s the reverse of compounding.
Fortunately social security and Medicare is available as we get older helps out.

With 3.5M invested safely you can assume roughly a 5% annual return, Thats $175,000/year. I also suggest having 2-3 years in savings so you are only withdrawing on good years and not it touching it on bad years.

11
#83 3 years ago

Consider what you would do with your time if you retired early. Sure your current job might suck, but being bored for 30 or 40 years might suck too. Especially on a shoestring budget.

If you had to give up travel, eating out, expensive hobbies to retire early, what are you going to be doing all day? Might be better to switch careers and do something you enjoy for 10-15 years.

#84 3 years ago
Quoted from EricHadley:

With 3.5M invested safely you can assume roughly a 5% annual return, Thats $175,000/year.

That's a dangerous assumption, as some years will be far less. Planning on withdrawing anything more than 4% would have a high historical fail rate, and even 4% has issues.

Quoted from Dogford_Studios:

If you had to give up travel, eating out, expensive hobbies to retire early,

This is WHY you want to retire early - so you can do these things!

#85 3 years ago
Quoted from arcyallen:

That's a dangerous assumption, as some years will be far less. Planning on withdrawing anything more than 4% would have a high historical fail rate, and even 4% has issues.

Where do you guys have the money to expect these specific return rates?

#86 3 years ago
Quoted from arcyallen:

That's a dangerous assumption, as some years will be far less. Planning on withdrawing anything more than 4% would have a high historical fail rate, and even 4% has issues.

This is WHY you want to retire early - so you can do these things!

Especially *now* when stocks are at very high PE ratio and bonds are at very low interest rates. Combined these two factors and we can be expecting to gain less than historical averages. I mean the stocks have run up for 12 years now and so the 'high returns' are already backed into the pie. It's far likely that the next 12 years will net less than people have grown used to. Just think when interest rated rise the current bonds will lose value and companies won't have access to 'free money' the road is ahead you can't drive by looking in the rear view mirror.

#87 3 years ago

I say 5% on average is a safe assumption. Yes there will be better years and worse years. That's why I recommend having 2-3 years in savings so you only need to withdraw on good years and can ride out the bad years. It's a sound plan.

#88 3 years ago
Quoted from rai:

Especially *now* when stocks are at very high PE ratio and bonds are at very low interest rates. Combined these two factors and we can be expecting to gain less than historical averages. I mean the stocks have run up for 12 years now and so the 'high returns' are already backed into the pie. It's far likely that the next 12 years will net less than people have grown used to. Just think when interest rated rise the current bonds will lose value and companies won't have access to 'free money' the road is ahead you can't drive by looking in the rear view mirror.

In addition to the yet to come inflation.

#89 3 years ago
Quoted from EricHadley:

I say 5% on average is a safe assumption. Yes there will be better years and worse years. That's why I recommend having 2-3 years in savings so you only need to withdraw on good years and can ride out the bad years. It's a sound plan.

bear in mind that these types of threads tend to have more people who are saving money so we might have more saved than average but here is the US savings data

According to this survey by the Transamerica Center for Retirement Studies, the median retirement savings by age in the U.S. is:

Americans in their 20s: $16,000
Americans in their 30s: $45,000
Americans in their 40s: $63,000
Americans in their 50s: $117,000
Americans in their 60s: $172,000

What’s the Average Retirement Savings by Age?
2019-2020 Federal Reserve SCF data also shows us the average retirement savings by age in the U.S.:
• Ages 18-24: $4,745.25
• Ages 25-29: $9,408.51
• Ages 30-34: $21,731.92
• Ages 35-39: $48,710.27
• Ages 40-44: $101,899.22
• Ages 45-49: $148,950.14
• Ages 50-54: $146,068.38
• Ages 55-59: $223,493.56
• Ages 60-64: $221,451.67
• Ages 65-69: $206,819.35

So someone who has just $200K (at 65) would be looking at $10K withdrawal rate @5%

Bump that up to $1M and you are talking about $50K so IMO there should be no thought of early retirement until you have 7-figures (plus) in savings.

Obviously as you get older you might bump into retirement not by choice and might have to retire with what you have but the question of EARLY RETIREMENT is not a question of having to retire but the desire to quit working early. I read a lot of retirement forums and a lot of people say they are retired but really mean retired from a high stress job and might work part-time (like at a golf range etc.) that is not the same thing as full time retired where you have no income at all except for what you have saved (plus SS and real estate and pensions etc.)

#90 3 years ago
Quoted from rai:

bear in mind that these types of threads tend to have more people who are saving money so we might have more saved that average but here is the US savings data
According to this survey by the Transamerica Center for Retirement Studies, the median retirement savings by age in the U.S. is:
Americans in their 20s: $16,000
Americans in their 30s: $45,000
Americans in their 40s: $63,000
Americans in their 50s: $117,000
Americans in their 60s: $172,000
What’s the Average Retirement Savings by Age?
2019-2020 Federal Reserve SCF data also shows us the average retirement savings by age in the U.S.:
• Ages 18-24: $4,745.25
• Ages 25-29: $9,408.51
• Ages 30-34: $21,731.92
• Ages 35-39: $48,710.27
• Ages 40-44: $101,899.22
• Ages 45-49: $148,950.14
• Ages 50-54: $146,068.38
• Ages 55-59: $223,493.56
• Ages 60-64: $221,451.67
• Ages 65-69: $206,819.35
So someone who has just $200K (at 65) would be looking at $10K withdrawal rate @5%
Bump that up to $1M and you are talking about $50K so IMO there should be no thought of retirement until you have 7-figures (plus) in savings.

oh no doubt about it, most people have done a poor job of saving. Like I said, I started from day 1 in my first job contributing anywhere from 10-20% of my salary to a 401k every year no exceptions. After 25 years it's grown to a nice nest egg and by the time I am 55 it'll be 4M+ It's too bad there isn't more focus on teaching these basic life skills in school.

#91 3 years ago
Quoted from EricHadley:

oh no doubt about it, most people have done a poor job of saving. Like I said, I started from day 1 in my first job contributing anywhere from 10-20% of my salary to a 401k every year no exceptions. After 25 years it's grown to a nice nest egg and by the time I am 55 it'll be 4M+ It's too bad there isn't more focus on teaching these basic life skills in school.

I understand.

I went to med school so was not really able to save much until I turned 32 that put me behind, but a lot of other people who did not go to medical school aren't saving at all in their 20's. the sooner you start the more it has time to grow.

My kids have some part time jobs and I was able to get them to contribute to ROTH IRAs when they were just 20 years old which can give it 40 years to grow and compound, plus even more because even when you retire you might have 30+ more years for some of the money to compound.

I watch some videos saying the average life expectancy is like 78 so you don't need to plan for a 20+ year retirement, but, if you reach 65 your life expectancy is 83 . Also just because the life expectancy does not mean you should plan to die at 83 because many people live into their 90s. Someone who retires at 50 years may need to live off their savings (and SS) for the next 45 years.

quote

Age 90 isn't some wild outlier. The SOA's data suggests that a 65-year-old male today, in average health, has a 35% chance of living to 90; for a woman the odds are 46%

#92 3 years ago

One additional thing a lot of people over-look is long term care insurance. Your nest egg can get burned up pretty quick if you need assisted living or nursing home care. The younger you get long term care insurance the cheaper it is. I recently got myself and my spouse 250k LTC policies each with a 3% annual inflation growth clause. The polices also allow the spouse to share theirs if their partner burns through their own. This can protect your nest egg when you get older when the risks of needing LTC go up. Many remaining partners are often left bankrupt without LTC insurance.

#93 3 years ago

Why does retiring early equate to living on a shoestring budget and being bored and staying home for 30 years?

Each individual knows what lifestyle they live and want to keep on living, so in turn they should be amassing enough wealth (or more) to carry on that lifestyle.

Also, most people as they get older do in fact run into health issues and may not be as mobile as before. So in reality, your annual costs should diminish if you are not doing as much as when you first retired.

There is no 1 plan that fits everyone's goals, but that is what's neat about threads like this. We can all contribute and we can all hopefully use something someone else has contributed and apply it to our own goal.

Quoted from Dogford_Studios:

Consider what you would do with your time if you retired early. Sure your current job might suck, but being bored for 30 or 40 years might suck too. Especially on a shoestring budget.
If you had to give up travel, eating out, expensive hobbies to retire early, what are you going to be doing all day? Might be better to switch careers and do something you enjoy for 10-15 years.

#94 3 years ago
Quoted from DadofTwins:

Why does retiring early equate to living on a shoestring budget and being bored and staying home for 30 years?.

Because a lot of the FIRE methodology advocates that. It is great for teaching you frugality and to really understand the intrinsic value of things. I have bigger aspirations and dreams than what FIRE will allow me to do. I refuse to compromise my dreams and my reality to just retire early. I think a lot of people equate retirement with happiness but I have not seen that to be the case. I am fortunate to have good friends and mentors that have 8 figures of wealth and they are still pushing everyday. It keeps them excited, it gives them purpose, and it allows them to live out their dreams. Its not for everybody, but it does suit me, and serves as a guide map for behaviors that I want to model.

#95 3 years ago
Quoted from EricHadley:

With 3.5M invested safely you can assume roughly a 5% annual return, Thats $175,000/year. I also suggest having 2-3 years in savings so you are only withdrawing on good years and not it touching it on bad years

This! Have two or three years worth of cash expenses!

Average return of stock market for the last 30 years is 11%. Average over last 100 years is 12%.

2000, 2001, 2002 were three losing years in a row. 2008 down 37 percent, 2009 up 27 percent.

#96 3 years ago
Quoted from DadofTwins:

people as they get older do in fact run into health issues and may not be as mobile as before. So in reality, your annual costs should diminish if you are not doing as much as when you first retired.

I agree with this point except that buying power goes down from inflation.

So if you start at retirement at age 60 with $60K spending per year (2021) by the time you are 80 that $60K would only buy you around $40K worth of goods and services.

Absolute spending most likely does lower as you get older but inflation goes up, and things like property taxes, home insurance, utilities will not go down as you get older (unless you move to a smaller house which is possible.)

#97 3 years ago
Quoted from rai:

So if you start at retirement at age 60 with $60K spending per year (2021) by the time you are 80 that $60K would only buy you around $40K worth of goods and services

Except your 1.5 mil should be 4.5 mil by the time you hit 80. Money doubles every 7 years.

#98 3 years ago
Quoted from Friengineer:

Except your 1.5 mil should be 4.5 mil by the time you hit 80. Money doubles every 7 years.

--

money doubles every 7 years only if you earn a constant 10% and only if you are not spending (drawing down) reverse compounding. Are you saying your money would grow to $4.5M even while taking out millions to live on?

So if you are drawing down 5% every year you would need to earn more than 15% double to in 7 years. Also investment income is not constant, some years you can earn -30% that doesn't jibe with you all who are looking at the last 12 years (Bull Market).

#99 3 years ago
Quoted from DBLM:

Because a lot of the FIRE methodology advocates that. It is great for teaching you frugality and to really understand the intrinsic value of things. I have bigger aspirations and dreams than what FIRE will allow me to do. I refuse to compromise my dreams and my reality to just retire early. I think a lot of people equate retirement with happiness but I have not seen that to be the case. I am fortunate to have good friends and mentors that have 8 figures of wealth and they are still pushing everyday. It keeps them excited, it gives them purpose, and it allows them to live out their dreams. Its not for everybody, but it does suit me, and serves as a guide map for behaviors that I want to model.

Totally agree with this. Especially when you enter a certain age and see that deaths occur much more in your age range than you are used to seeing. I was like....what the F$#k - might as well spend it now and do what you want to now. When you are young, you really don't know what medical issues feel like - when I started getting some health issues at 40, I realized I wouldn't be able to do what I wanted to when I was 65 due to old age.

#100 3 years ago
Quoted from rai:

bear in mind that these types of threads tend to have more people who are saving money so we might have more saved than average but here is the US savings data
According to this survey by the Transamerica Center for Retirement Studies, the median retirement savings by age in the U.S. is:
Americans in their 20s: $16,000
Americans in their 30s: $45,000
Americans in their 40s: $63,000
Americans in their 50s: $117,000
Americans in their 60s: $172,000
What’s the Average Retirement Savings by Age?
2019-2020 Federal Reserve SCF data also shows us the average retirement savings by age in the U.S.:
• Ages 18-24: $4,745.25
• Ages 25-29: $9,408.51
• Ages 30-34: $21,731.92
• Ages 35-39: $48,710.27
• Ages 40-44: $101,899.22
• Ages 45-49: $148,950.14
• Ages 50-54: $146,068.38
• Ages 55-59: $223,493.56
• Ages 60-64: $221,451.67
• Ages 65-69: $206,819.35
So someone who has just $200K (at 65) would be looking at $10K withdrawal rate @5%
Bump that up to $1M and you are talking about $50K so IMO there should be no thought of early retirement until you have 7-figures (plus) in savings.
Obviously as you get older you might bump into retirement not by choice and might have to retire with what you have but the question of EARLY RETIREMENT is not a question of having to retire but the desire to quit working early. I read a lot of retirement forums and a lot of people say they are retired but really mean retired from a high stress job and might work part-time (like at a golf range etc.) that is not the same thing as full time retired where you have no income at all except for what you have saved (plus SS and real estate and pensions etc.)

I would take anything that averages with a grain of salt. You are bringing in the ENTIRE population, many of them don't even know what a savings account is.

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