I completely agree with your assessment. I started my initial question with a disclaimer that I wasn't talking about people at or near retirement, but people further out. Yes, I plan to have my primary paid off before I retire just for piece of mind

IMO there are many things to consider.

If you are just paying early $1K extra a month but you are not paying off the mortgage in full that is different from the guy who has a small bit left and wants to pay it off completely. Because paying a bit each month is effectively trapping that money so if you needed to get more than you have on hand you might have to take another loan like a HELOC since you paid the money it's not a free agent and you still have the full mortgage every month, it's not like other loans where the payment decreases when you pay extra or you can skip payments if you paid extra. But if you are close to the end and you want to throw $50K at it to be done then you will have the previous monthly payment free.

Also paying off at the beginning of a long mortgage gets more bang for the buck every dollar you pay can save you $2 over time.

I just got a big mortgage and paid 20% down and then another 10% right off the bat because I had sold another house. I was paying a bit extra every month but just stopped so that I would have extra money to invest and we are also doing a new kitchen, maybe after the big renovations are over I will throw a bit on each month because I plan to retire soon and would like to be closer to done with it.

Some people say if you can't decide to pay early or invest you can split the difference and do a little of both.

The extra money you send beyond your normal monthly mortgage payment reduces your principal.
The required monthly payment you are required to make assumes that you aren't paying down additional principal. So, when you have reduced the principal with your extra payment, your subsequent monthly payments apply more to principal reduction than would otherwise be the case.

It's like a snowball and gets bigger and bigger (your ownership that is). Each month the principal gets smaller and smaller.
I used this technique to pay off my house in 11 years. During that time there was one year where I just payed the required payments.
Saved a ton of money!

Of course, make sure you have an emergency fund so that you can always make your required payments.

I gotta tell you, there is nothing like receiving $500-2K checks from utility companies every couple of weeks. I still like getting the printed checks..... I usually do mobile deposits though.

Dividends from stock shares?

When a player lands on a utility, the player must roll the dice and pay the owner 4x the value shown on the dice. If both utilities are owned by the same player, then the player who landed on the utility must pay the owner 10x the value shown on the dice.

Simple, bought the stock in the good old days when you received a certificate. Then you get a dividend check every quarter. Along with it a form to buy additional shares. I do not choose to reinvest dividends automatically. Thus, I get checks every quarter.

Your last sentence reminded me of this scene from Ghostbusters lol. 17% wow, couldn't imagine.

Here’s another retirement calculator that you can plug in your numbers as well as Social Security etc.

This one is interesting that it also shows you your likelihood (or not) of living to an old age.

https://engaging-data.com/will-money-last-retire-early/#comment-13928

BTDT starting in 1982. Fortunately a variable rate mortgage. Interest rate dropped a couple/few % every year for several years.

Back in the 80s the tax bracket could be as high as 70% so if you were able to deduct mortgage interest that could have been a 70% deduction.

Now it’s almost impossible to deduct mortgage interest but the top tax bracket is just 37%

Stop buying pins would be my first habit to work on!

Just retired January 28th. I’m 43. Happily married. Own 9 pins as of now. Trick is to live within your means and pay cash for cars and any toys you want. Never finance anything more than your house.

Congrats, but I don’t understand how paying cash for things gets you closer to retirement. I generally do pay cash and have no debt except a small mortgage, but I financed two new Honda pilots over three years and my interest expense was less than $1000 for both cars combined at 0.9%. The cash I didn’t put into the cars earned me more than the interest expense.

People must have very high income to retire so young, and no kids? Retiring in your 30s or 40s, they could have 40-50 years of life left. Let’s say you need $50000 a year to live, which seems kind of low, you’ll need at least $2 mil saved. To save $2mil by age 43 suggests you have very high income. Let’s say you started saving 20 years ago, you either saved roughly $100k a year, again requiring very high income, or you had very large gains on your investments (which suggests you took higher risk). At the same time, people have paid off mortgages?? no kids, college could set you back $200-$400k if you have 1 or 2. I wonder how many people had help from parents or were left inheritances.

I think people are making it sound too easy to retire in their 30s or 40s. Living within your means of course helps, but you need very high income or fabulous returns on investment (i.e. you took big risk) to do it.

I enjoyed reading this thread and admit I haven’t read the self help materials cited, but unless you have very high income, took big risk, or were gifted/inherited funds, the math doesn’t add up to me to retire so young.

Some people can retire early with pension like military or fire or police department.

A lot of people I’ve seen ‘retire’ from the 9-5 job but might have a side hustle like real estate, consulting or hobbies that can earn money or just take a part time job.

I have family with military pensions, it’s not much, but it’s good if you can get another job and collect it.

I guess id be interested to understand what retiring means. Is it freedom from a 9-5 job to do whatever you want, is it working for yourself and earning side money? Does it mean you have no income from a job and have enough saved to live on?

Lost me at ‘new’

Buy lightly used. Depreciating assets suck. I do 5 by 5. Buy a roughly 5 year old good deal and drive at least 5 years. Saved me 10s of thousands of dollars in depreciation.

I am allergic to interest expense - it raises the cost of anything even if it is a low rate. Granted low car loan rates are good deals but still raise the ultimate cash outlay for the car. If you can get to the position where you only buy something if you have the cash it will curtail your spending and give you the lowest price. On the flip side I try to string out cash outlays with no interest - 6 month same as cash, paying a medical deductible over 12 months, etc.

Spending cash also puts you in a different mentality when you purchase large items
Writing a check for a $50,000 car will make you pause and consider what you are doing more then signing up for $700 monthly payments will

This is the "saving to retire" vs "creating income to retire" argument that's been well documented in this thread already.

My brother bought his first rental property at 19, flipped it, bought another - by the time he was 25 he had a dozen of them. At 43, he had been in real estate 24 years already. By that time he had expanded into residential development as well as commercial properties, including a storage unit facility and a golf course. He did this while working full time at a lumberyard w 3 kids. He's the only child in the family that didn't go to college - he's also the only one with a custom built house on a lake, and the only one that's retired.

If you need 50k a year to retire and have 25 rental units each clearing 2k a year, you're there. Not only that, most likely those houses have appreciated, and best of all, your tenants have paid them off for you.

Agreed, "paying cash for cars" to me doesn't mean buying a brand new $50k truck like the people I work with. I'm well known within my circle of family and friends for buying everyone's used cars so they all call me first before they sell or trade in. I have 5 cars that are older that I spread the 65 miles a day commute to work over. 3 BMW's an F150 and a Pathfinder. All years ranging from 2002 to 2016. They are older so they are cheap to register and since I don't have to worry about full coverage, cheap to insure. This allows my carrying costs to be very low for all 5.

Whenever I find another good deal for a used car in good condition, I just cycle out the oldest one and net most of my money back on it often times. Plus the kiddo is about to turn 18 and head off to college so we'll be letting her use one as well.

Military pensions can be quite large for officers. Like any other pension, depends on time in service and highest salary.

i usually keep cars for a long time, 10-15 years so I am ok buying a new car over that interval, that's not going to break the bank for me. One of the pilots replaced a 16 year old car with 140k+ miles that was going to need work. these pilots, one is a 16 and one is a 19, were around $30-35k and were the previous model year. I think I financed half the total, both are now paid off. I won't need to replace the first one until 2030, maybe longer as we take good care of them.

this makes a lot of sense to me and I could see this working well. But being a landlord is not for everyone, definitely not for me.

one of the members of my family retired as a lt colonel, vietnam vet. I think his pension is maybe $2k a month, maybe less. that's around the poverty line. He's been retired for probably 25 years. His wife still works and I think he does some part time teaching. I'm assuming he collects SS too, but I don't know his finances in detail.

this is a very interesting discussion and I appreciate all the responses, makes me think a bit more about it, but I'm not convinced retiring in your 30s and 40s is that easy by just living within your means.

How is this calculated? rates and terms? If there is a online calculator I would love to see it and use it. I am right about 7k per month if I retire now and get free Healthcare.

Until Covid hits and 40% of your rentals stop paying and you can't evict them

I only have one rental. My tenant did move to California for a new job, but I was able to find renters who were friends of a friend and not have to show it to the public during the height of the pandemic. I rented it without even losing a month's rent.

Obviously anyone can buy what they want and choose whichever way they want to rationalize it to themselves (I've definitely been there myself). Just from another perspective, I've already gotten 6 years out of my 2002 330I and I guarantee you I can get at least 4 more to hit 10 and it only cost me $3200. I've only had to put in about $800 worth of repairs on it in 6 years outside of normal routine maintenance.

I'm on my way to retire between 50 and 55 depending on what the market does and I definitely started late (35 in earnest). I absolutely could have retired in my early 40's if I would have started at 21 and been aggressive. While my wife and I make a nice income, we could easily be spending it all on a house twice the price of ours that we could afford, new cars that we could afford, etc.. We just don't need all that. We have fun, go on cruises and vacations, enjoy living in our paid off house which is large but further out of town to reduce costs. And all the rest goes into maxing out every tax advantaged savings vehicle we have access to and what's left goes into taxed investment vehicles chipping away at that magic number where we can pull the trigger at.

I bought a 2005 Pilot about two years ago that amazingly had only 19,000 miles on it. Some old people had it at their vacation home for towing a small boat to a lake. I figure it's going to last me 10+ years and it's been great for pin hauling, snow driving, offroad camping and road trips. I'm all about finding the older car with super low miles--they generally cost well over blue book because of the low miles, but you avoid new car prices and you don't have much in maintenance costs.

This is the sweet spot if you want to get a really nice car and save money at the same time. You just have to find those somehow. I drive through a senior community quite often, and I’m always checking out the cars parked there. The place is just jam packed with older cars that are in excellent to pristine condition. And I can easily guess that most of them are hardly being driven at all (they are always in the same spot) so the mileage is probably very low. Plus, they most likely have been properly maintained and easily driven. Also, if you can find a senior’s tow car that was used behind a big RV. Those almost always have super low miles, and most of the miles are just tow miles.

There are tons of online calculators, the key is understanding what they are and how to use them. The easy way out is to go by the 4% rule which you can easily research. But it is not foolproof and has limitations, as well as some assumptions that don’t apply to everybody. Beyond that, a good grasp of the present value (PV) and future value (FV) of money along with how annuities work is helpful. Then you can start using those various calculators.

All of these calculations are always limited as far as the accuracy by 2 major fuzzy factors. First, you don’t know how long will you live, and second, you don’t know the exact rate of return your investments will make over time. Guesses have to be made for these.

Have you guys looked at life expectancy calculators? It’s very fuzzy I just did one said my life expectancy was 92 means 50% chance I’ll live past 92. Another one has my life expectancy at 87 that’s a big difference.

It’s very dependent on the calculator inputs for example the US government calculator just asked my age and sex gave me 83 life expectancy. I’m lumped in with all people my age who may have severe health issues etc..

Other calculators asking health, weight, smoking history, medical history, race education history, come up with vastly different results.

All that stuff by necessity has to be based on mass statistics. In the end we are all individuals and everyone is different. The closest best guess is probably your own. You know your health, your habits, and also the health and longevity of close relatives, your parents and grandparents being key indicators.

Heart attacks, cancer, and all that sort of bad shit, well, sometimes that’s just the luck of the draw. Probably impossible to predict in any meaningful way.

Since diet and foot is the greatest indicator of lifespan, one should take that into consideration. If you live on fast food and you drink like a fish, you probably want to take that SS option at 62.

Not Smoking probably as important as diet.

I’m a physician and see many people who don’t do regular medical checkups and screening tests or physical activity, don’t wear seat belts etc.

Foot?
This is the first of heard of that one.

Well, that's just stupidity, which isn't in short supply.

It's not so much a direct mathematical benefit as a behavioral one. If you have $20k cash invested and growing, you might be more likely to take $5k out to buy the next car and leave $15k to keep working for you. If you buy it on credit, you're waaay more likely to spend more.

I have no kids, but many people who retire early do. Justin at https://rootofgood.com/ lays out his monthly income and expenses, which is interesting to see. My married household income has ranged from $60k-$160k at its brief peak. But my wife and I have always spent about $60k/yr regardless of our income. Most people who retire early save 30-70% of their income, and living ridiculously decadent lives doing it. Here's a great example post: https://www.mrmoneymustache.com/2017/05/19/2016-spending/ And for what it's worth, this site changed my life. Not hyperbole. It literally changed my life.

Simple, but not easy. It means always spending way less than you make, which I've done since I was 15 making minimum wage. The marketers want you to own a bigger house and nicer car than you need or really want. The hard part for most is blocking out that noise and doing what's right for you, not them.
If you're invested in stock based investments and stay the course you historically will see about a 10% return. Plan on less, but that's been the last century or so. And the exact return of the markets during my working years.

No inheritance here. Just keep spending way less than you make, and "pay yourself" the difference by investing it. Here's a quick calculator: http://mustachecalc.com/#/calcs/time-to-fi

I Could not help myself, what a great scene. But not everybody feels this way but some of us do.

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwiVirnrmY3vAhWMiOAKHbZJAgYQwqsBMAF6BAgBEAY&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DaAo855cJbNo&usg=AOvVaw0CbswU7XNmtndB5E_xZz9u

Interesting calculator, guess I should have retired years ago as I met FI according to it.

Responding to the no kids part, we have two children. This area is a real wild card for those with families. Hard to know where Billy or Susie might want to go to school when they are still in their primary years. Sure, you can look at in-state schools as a good indicator of cost, but more than likely that estimate will be on the lower side. Also, who says that your children will even want to attend your in-state school? Mine were not as receptive to that option and they both raised good arguments against it.

Been retired now for nearly ten years and I can tell you that higher education costs for your children should be an important part of your planning process. I don't know any parents that would want to limit the future of their children just so they can shave some time off of their working life. Depending on the ability of your children to capture any grants or scholarships, you may well be looking at a big tuition bill. Just something to keep in mind. I am in the middle of paying for school costs for my youngest right now and this year those costs will easily exceed $30k, and she has a scholarship so we are paying about half of the true costs.

I have read through some of the blogs out there of the early retired and found them short on actual experience and long on guesstimate in this area. Certainly understand that because they just haven't lived through it yet.

A good starting point/rule of thumb is: Can you live off 3-4% of your spendable assets every year? That tool is great for estimating progress as long as the inputs are correct. And hopefully you are FI! If that seems wrong, feel free to PM me to help you with the specifics of that tool. Or just ask here!

Anyone have experience yieldstreet.com or fundrise.com?

-Rob
-visit https://www.kahr.us to get my daughterboard that helps fix WPC pinball resets or my Pinball 2000 H+V Video Sync Combiner kit

Been looking into fundrise for a while. Haven't pulled the trigger yet - still kicking the tires.

Are 40% of the people you know not making their mortgage or rental payments? Didn't think so.

If it did happen you'd just have to squeak by with 60% of your income undisturbed, a much better position to be in than losing a job and 100% of it.

Charitable donations!!

HSA max is 7.2k per year for family if you qualify. That's the largest expense for the retired more times than not. I max 401k, IRA, and HSA as well, definitely interested in other tricks to save more tax free if they're out there.

HSA is one but you have to be in high deductible plans.

Don’t neglect saving in a taxable account. Sure you pay taxes now but you only pay on capital gains when you sell and dividends. This can be lower tax rate than your retirement account when you are withdrawing.

When you retire you can live off the taxable account initially defer SS as long as possible while you backdoor Roth convert your tax shelter in lower tax bracket. Once you start taking SS and RMD your taxes can be close to what you are paying now.