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12-18-2013, 11:29 AM
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#1
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Confused about dryer sheets
Join Date: Dec 2013
Location: Lexington
Posts: 7
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Aiming for early 30s
Hi, all. I’ve lurked on this site for a while – and been planning for early retirement much longer – and feel it’s finally time to come out and chat. My situation boils down to this: I’m 29, can live comfortably on very little, and hope to retire by 34 at the absolute latest.
My current asset vs. debt situation isn’t all that impressive . . . . I have $135k in my private investment account, $80k in home equity, $20k in my IRA, and $3k in my 401(k) vs. $107k left on my mortgage. But I remain optimistic about retirement because my savings/investments tend to grow by about $4k per month, and, setting aside my mortgage payments, my expenses tend not to exceed $10k per year.
Before I retire, I intend to build (and fully pay for) a smaller house on some land I already own, essentially trading one home for the next. Then, I’m allowing $20k per year for expenses, and assuming that in 20 years, I’ll get $100k for timber on the land (a forester actually gave me an estimate closer to $150k).
All this leads me to believe that, with an annual rate of return of 6.777 percent (10 percent worse than the Nasdaq Composite), I would need only $260k if I were to retire now and die at 82. (Men in my family tend not to last so long, either.)
So what am I missing, good or bad? I know I haven’t yet accounted for inflation, but I’m also ignoring Social Security, Medicare, the possibility of a reverse mortgage, and one or two other potential helpers. I’m especially interested in how a negligible income level will work with Obamacare and perhaps even federal aid guidelines.
Your input would be appreciated. I’m single and may eventually marry, but will definitely remain child-free. Also, my land’s in a small Washington community called Humptulips with a low cost of living. So here's an even more specific "hi" to any other Washington folks.
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12-18-2013, 11:47 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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Quote:
Originally Posted by Dauglos
So what am I missing, good or bad?
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Spending only $10K a year, I'd say you were missing out on much of what someone should enjoy in their youth. Loosen up and live a little...
__________________
Numbers is hard
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12-18-2013, 11:51 AM
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#3
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,474
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Welcome to the Early Retirement Forum.
Since you have a few years before you retire, and since 2013 is nearly over, you are in a great position to start recording everything you spend, thoroughly, starting with 1/1/2014. Some choose to record every dollar, and personally I record every cent because it is more satisfying to me than dealing with rounded numbers. Recording everything we spend can be a real eye opener for some, and at any rate gives us a much better idea of where the money goes. So, it would be very consistent with your desire to keep expenses down.
Good luck to you in your preparations for early retirement!
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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12-18-2013, 11:55 AM
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#4
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Confused about dryer sheets
Join Date: Dec 2013
Location: Lexington
Posts: 7
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REWahoo: Thanks, but I’m good. In terms of entertainment, I’m mostly set with a library card, the Internet, and a dog. About the only thing I want but don’t have is the ability to not work every day.
W2R: Thanks, and good tip. I've already got Quicken giving me a breakdown of sorts, but could do better in that respect.
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12-18-2013, 11:56 AM
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#5
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,199
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Quote:
Originally Posted by REWahoo
Spending only $10K a year, I'd say you were missing out on much of what someone should enjoy in their youth. Loosen up and live a little...
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+1
With all due respect, at your age I would consider your plan closer to "dropping out" than "retiring early".
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12-18-2013, 12:11 PM
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#6
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Confused about dryer sheets
Join Date: Dec 2013
Location: Lexington
Posts: 7
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No worries, I’m not the type to ask for advice then explode when a couple people volunteer their opinions. But I like my lifestyle, even though it’s not for everyone.
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12-18-2013, 01:22 PM
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#7
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Recycles dryer sheets
Join Date: Jul 2012
Posts: 103
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Welcome.
The biggest flaw I see in your plan is that it is conditioned upon an extraordinary, almost unreal, level of frugality. My guess is you're missing some pieces.
Even if it's accurate today, life has a way of tossing in the occasional gotcha that needs to be accounted for.
__________________
Jeff
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12-18-2013, 01:39 PM
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#8
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Confused about dryer sheets
Join Date: Dec 2013
Location: Lexington
Posts: 7
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Fair point. Part of me thinks I’ll be able to spend even less in retirement, given that I’ll have a smaller house, live in a milder climate, and have all the time in the world to clip coupons. But I know a furnace can go out (had that happen this year), a car can start to break down (two years ago), and on and on.
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12-18-2013, 03:31 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Posts: 1,934
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You know yourself better than we do, so if it feels right, I say go for it. Plenty of people have lived happy lives on $10k/yr, though you will definitely need to be frugal.
One problem I see is ...
Quote:
Originally Posted by Dauglos
I’m single and may eventually marry, but will definitely remain child-free.
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I see in you profile you are male. Unfortunately, if you marry, the child thing is not your decision.
__________________
And if I claim to be a wise man, it surely means that I don't know.
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12-18-2013, 03:38 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Not working ever again seems like a stretch at your age and savings, but certainly if your expenses are low you could look for some low paid but enjoyable work with a flexible schedule or a hobby business that could bring in extra money. The timber plan sound like a good idea but a fire could wipe out your trees or timber prices in the future might not be what you had hoped, so that isn't like money in the bank.
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12-18-2013, 03:49 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Moscow
Posts: 1,569
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What about healthcare costs? I would want ACA to be fire tested for a few years before relying on any numbers you may find there.
You are also assuming you will always want to be frugal (and maintain the same ultra frugalness). Life does have a way of messing up such straight forward plans.
__________________
You can't enlighten the unconscious.
But you can hit'em upside the head a few times to make sure they are really out...
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12-18-2013, 04:04 PM
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#12
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,171
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Does the 10-20k/year include taxes? How about healthcare insurance?
My budget is a lot lower when I ignore those two pieces.
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12-18-2013, 04:47 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Posts: 5,342
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Sure it is. Snip, snip
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12-18-2013, 04:48 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,204
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Quote:
Originally Posted by braumeister
+1
With all due respect, at your age I would consider your plan closer to "dropping out" than "retiring early".
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At 29 I might have thought I knew how my life would play out, but I didn't have a clue I retrospect. I suspect most people can't know that early in life, and it's unlikely IME but you may be the exception. Unlike most of us, you will still be young enough that you can start over again if you decide retirement isn't all you'd hope a few years in. Best of luck, work toward FI by all means, but keep an open mind and keep your options open for now...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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12-18-2013, 04:50 PM
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#15
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Recycles dryer sheets
Join Date: Sep 2012
Posts: 62
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What if you won't get 6.777% annual rate of return that you seem to be planning for?
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12-18-2013, 04:56 PM
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#16
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Dryer sheet aficionado
Join Date: Jul 2013
Posts: 46
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WOW I think you are doing great....
I am 28 and me and my wife have the same net worth but with most of our money on the house. How are you living on 10K? Me and my wife spend around 20-24K but we are shooting for 28-30K for retirement. Hoping for 700K to retire when I am 35-36.
GL
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12-18-2013, 05:30 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2013
Location: Limerick
Posts: 5,638
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Don't forget you will have to pay taxes on the sale of the lumber. You'll also want homeowners insurance, possibly with an added umbrella policy to protect your home and land from lawsuits. Assume your property taxes and insurance (all kinds) will increase faster than the rate of inflation. Health insurance under Obamacare has pretty stiff deductibles and copays, so you'll need to have funds for that annually, which could be quite an expense if you develop a chronic illness or injury. IMO you have a ways to go before you'll be ready, but what do I know?
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12-18-2013, 05:49 PM
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#19
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Full time employment: Posting here.
Join Date: Dec 2012
Posts: 656
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Dauglos, I like it. You sound like a smart guy, I'd definitely do it.
I'd be curious, how many on this board have retired and have their net worth grow. I'd bet it'd be over 1/2.
Another thing, once you retire, it doesn't mean you won't work to make money. My wife and I can put in a few hours a week and make an extra $1K.
Have you ever heard of Early Retirement Extreme? I don't think it's liked on this forum, but take a look at Jacob's posts, I think you'll like it.
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12-18-2013, 06:01 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Moscow
Posts: 1,569
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Quote:
Originally Posted by mikefixac
Dauglos, I like it. You sound like a smart guy, I'd definitely do it.
I'd be curious, how many on this board have retired and have their net worth grow. I'd bet it'd be over 1/2.
Another thing, once you retire, it doesn't mean you won't work to make money. My wife and I can put in a few hours a week and make an extra $1K.
Have you ever heard of Early Retirement Extreme? I don't think it's liked on this forum, but take a look at Jacob's posts, I think you'll like it.
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Lots of good stuff on ER Extreme. I'll point out that Jacob went back to work...
__________________
You can't enlighten the unconscious.
But you can hit'em upside the head a few times to make sure they are really out...
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