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I would like to see more people posting
Old 07-04-2003, 09:18 AM   #1
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I would like to see more people posting

I was curious as to how many ACTIVE members there are on this site. It seems that the same few post. I find it very difficult to believe that there is only a handfull of people in our position. Of course those with a gazillion bucks would not care what we thought about investng and living on our nestegs, but I am just a sponge to understand how other people in the ER club live on a <=$1-2m retirment fund.

Ian
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Re: I would like to see more people posting
Old 07-04-2003, 06:44 PM   #2
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Re: I would like to see more people posting

A few years ago, Intercst posted a chart supposedly from Boeing about age of retirement and lifespan. Bottom line was that the earlier you retired, the longer you lived. Average of 30 years after retirement for those retiring as soon as possible, and closer to 2-3 years for those who had to be kicked out the door.

Relatijg this to the conversation: Assuming the chart and underlying data are real, I would have to assume that those who have non-work activities that compete mightily for time against work activities will retire early, and have a great retirement. Those whose life pretty much consists of their work will likely retire late, and miss the activities and people from work. Their retirement won't be as enjoyable, I suspect. And if the Boeing chart is for real, their misery in retirement will end soon.

So, those who love their work more than their non-work activities will stay at work longer. Well duh! But when they have to stop, well, there is nothing left for them.

Personally, the only thing I missed after retiring early was lunch with some work friends -- but 4 out of 6 of the regular lunch group had retired early before me, so there was only one left when I departed. He's eligible in about 3 weeks... we'll see what he does!


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Re: I would like to see more people posting
Old 07-05-2003, 05:46 AM   #3
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Re: I would like to see more people posting

I am a new reader of these forums and the "concept" of retiring early. I'm 52, a custom homebuilder, had my own company since I was 24, and really burned out. I've some really good years of money making (recently), some really bad years (filed bankruptcy in the mid 80's), and mostly very average years.

I ran across this web site by accident and have become obsessed with how much you can withdraw from your assets without running out of money. What I have learned here has been a real eye opener, and I must tip my hat to all that have contributed. I've read just about every post on this site and others in order to glean a tidbit here and there. I believe education is the key. I am now amazed when I see or read in some fluff publication how you can withdraw 8% of your savings annually to live on.

As I said, I'm a homebuilder and as you might suspect asset protection is an important issue for me. I have given it a lot of attention. What good does it do if you have a business, build up your nest egg, retire, then lose some or most of it in a big lawsuit?

I am focused on the financial arena, but also on the emotional aspect of a type A person like myself giving up working cold turkey. I am trying to develop other interests, and "prep" myself on making the big move. Any advice?
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Re: I would like to see more people posting
Old 07-05-2003, 06:47 AM   #4
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Re: I would like to see more people posting

On lack of posts I agree it would be good to see more. I have been trying to post more of late. In general I have found that the lurkers far out number the posters on most sites. I visit a few golf sites and only lurk.

I am still working and enjoy it (hopefully this will not shorten my life!) but do the see the day when I retire. Having a son in college and the problems with insurance I expect to still be at it a bit longer. Given the calls I get from people looking for work I find it hard to complain. I am able to have a good balance between family, work and outside intrests.

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Re: I would like to see more people posting
Old 07-05-2003, 09:46 AM   #5
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Re: I would like to see more people posting

Hola,
I’m not sure if I qualify as an “Early Retiree” I first retired at age 46, now 65. It’s been great and my only regret is I didn’t hang it up sooner. I enjoy the postings on this site. Although I’ve worked through many of the problems people discuss in these postings, I’m still looking for useful insights regarding retirement with limited resources.

I was originally motivated by Paul Terhorst’s book. His ideas really “talked” to me. Concepts like not working to support your “assets” made sense. At that time my wife and I had about $350K in our stash (kids out of school and on their own). We spent our first year traveling in Mexico, Europe and parts of Asia testing Terhorst’s $50 per day rule. It worked and we had a great time.

Back at home we were beginning to spend down the “nut” supporting all our assets (house with pool, 2 cars, boat and RV). I didn’t want to give up all the toys and was fortunate to find lucrative part time work that allowed us to travel and do lots of fun things for 250+ days every year. That all continued for about 10 years. We saved like crazy, invested conservatively and grew the “nut”, while downsizing the assets. We would take off several months every summer exploring the US and Canada in our RV. Then during the winter we’d head for Mexico where we’d hang out on warm sunny beaches for 3 months or so. We really were traveling on the cheap and the “nut” was growing. By selling the house, boat, extra car etc. we got the nut up to $600K and I quit the part time work altogether. We lived and traveled full time in our motorhome and had a great time.

It wasn’t long however, before I started to slip. I upgraded to a slightly larger motorhome and bought a new jeep to tow. Seems like I couldn’t bring myself to stick to the basics of Terhorstian Economics. We love Mexico, especially where it’s warm in the winter and we can be on the water. I ended up buying a little casita on the beach just outside Cabo San Lucas. It’s been our home base for the past few years although we continued to RV in the US during the summer months.

After Social Security kicked in, along with a modest inheritance we started feeling flush and purchased a mountain cabin in Arizona for a summer retreat. So here I am supporting "non performing assets" again …. casita in on the beach, mountain cabin and motorhome…… My only rationalization is we’re enjoying the “stuff” and having fun. I’m still financially OK , but am continually looking for ideas on how to make it all work even better.

This web site is great.
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Re: I would like to see more people posting
Old 07-05-2003, 10:04 AM   #6
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Re: I would like to see more people posting

I have a question about something I never see discussed, especially for those that are retied. How much money/assets (excluding home-auto etc) does one need? I know there several variables here depending on your lifestyle, but how about a range like 500K-700K or 1.5million-2 million. Is this an answerable question?

Allan
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Re: I would like to see more people posting
Old 07-05-2003, 10:09 AM   #7
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Re: I would like to see more people posting

By the way, more specific for me, I'm 52, so any educated guesses how much someone in their mid 50's needs in order to retire? I've done all the financial calculations, living expenses, SS, pensions, etc. I only have SS to look forward to and the assets I've accumulated.
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Re: I would like to see more people posting
Old 07-05-2003, 10:44 AM   #8
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Re: I would like to see more people posting

I also would like to see such numbers. When all said and done the real question is can one live on $1m or close to that once the house and car are paid off. Current conditions are also important and preservation of capital should be at the top of the list. (excluding any draw down of course) Like Alan I only have SS to look forward to in 15 years time and not a full one at that as I will not have worked for the 20 years prior.

Ian
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Re: I would like to see more people posting
Old 07-05-2003, 12:17 PM   #9
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Re: I would like to see more people posting

I too would like to see more people posting, rather than just lurking! I'll try to do more, I have a few topics here and there that I can post.

An oddity that I see only on this website is an apparent reluctance to start new discussion topics under their own heading. Instead, there is a tag-on to existing posts, that meanders here and there. Which tends to make just one or maybe two at the most, active threads on the site. The discussion is GREAT! Don't stop! Just start some new threads in the appropriate forums. Then we can have multiple topics going, which tends to draw more people in.

As an example, in this thread that Ian started (Thanks, Ian ), I see at least 3 posts that could be topics all on their own. Topics that certainly are at the heart of the whole ER concept!

Thanks all!
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Re: I would like to see more people posting
Old 07-05-2003, 12:58 PM   #10
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Re: I would like to see more people posting

Hello Allan, going by government numbers: Social Security estimates that people need $24,000 per year to be financially independent. At a 3 1/2 % withdrawal rate for younger retirees, this would lead to a rough estimate of a $685,714 minimum portfolio size. If someone had a defined benefit pension plus the portfolio, this would reduce the needed $24,000 per year by the amount of the pension (an inflation adjust factor would have to be made to account for a fixed pension gradually losing value). If you have health problems that make you uninsurable via normal underwriting, you will need an extra $1000/month for high risk health insurance. If you want to be a bit more conservative because of the historically unprecedented low dividend yield, you would need a minimum portfolio of $800,000 at a 3 % withdrawal rate.

This is all just ball park, since desired life styles can increase or decrease annual expenses dramatically. If you cannot afford health insurance for any reason, forget about retirement until you can. A single illness or accident can easily cost over $500,000.
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Re: I would like to see more people posting
Old 07-05-2003, 05:17 PM   #11
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Re: I would like to see more people posting

Quote:
By the way, more specific for me, I'm 52, so any educated guesses how much someone in their mid 50's needs in order to retire? I've done all the financial calculations, living expenses, SS, pensions, etc. I only have SS to look forward to and the assets I've accumulated.
I suppose many of us ask that very same question everyday. There obviously is no single correct answer. The current rule of thumb says to begin somewhere around 3-4% of some pile of assets; then adjust annually for inflation.

As you may have read elsewhere on this message base, I see that pile of assets as my personal savings, plus the NPV of my pension + social security. So at this time, I budget for around 3.5% of $1.4M. Actually, I'm spending less because I don't require $42,000 to meet my lifestyle needs. Due to the uncertainties in life, I see this as a good thing at the moment.

I have prepared a 45 year plan to use as a benchmark against which I can measure my progress. Is this the best way to manage my retirement (now age 51 and been retired for 3 years)? Again, there is no right answer. But at the moment, I am comfortable with the way things are progressing. All I can say is I am happy with my life and have no desire to return to the rat race.

The challenge for you, Allan, is to figure out what makes you happy and find an honorable way to fulfill your dreams. I wish you luck.

Red
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Re: I would like to see more people posting
Old 07-06-2003, 10:08 AM   #12
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Re: I would like to see more people posting

Cut-Throat, thanks for pointing out my math error on the 3.5% of $1.4M asset pool. I mixed up my annual budget in Quicken (3.5%); against some cash flow calculations (based on 3%) I do quarterly. I meant to use the higher value in the post. Truth of the matter is we are spending far less then either of these figures.

Regarding your question if the pension and social security make up part of the $1.4M asset pool, yes it does. I decided to convert the pension and social security payments to a present value figure. A discount rate of 5.5% was used for the NPV calculation, and I assumed 2.5% annual adjustments for the social security payments. The income stream assumes payments through age 84.

These are only best guess assumptions meant to get me in the ballpark for a safe spending strategy. At least I hope they get me in the ballpark. I'll let you know in 35-40 years if it worked.

Red
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Re: I would like to see more people posting
Old 07-06-2003, 05:22 PM   #13
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Re: I would like to see more people posting

"About Schmidt' was a good movie but not one of Jack's best. Anyway, his retired life could not be more different than mine, which is loaded with activities, chores, errands, fun and loafing from morning until night.
Every day! What a life!
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Re: I would like to see more people posting
Old 07-06-2003, 07:09 PM   #14
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Re: I would like to see more people posting

Quote:
Thanks for the post. I am interested in exactly how you calculated SS into the 1.4M. I'm sure otehrs would be too. Could you give us an example using something like an annual amount of $15K in todays dollars?

Also - you mentioned Quicken. Have you used the retirement planner that is in Quicken? I think it is excellent and have convservatively planned for a 6.5% return over the life of my Portfolio. Have you found a better one than Quicken? - I think Firecalc is great because it shows you what happened based on actually figures. My Quicken plan is much more conservative.
Cut-Throat,

Regarding the $1.4M asset pool, only $500K of that comes from the pension + social security. One part is around $200K NPV and the other part is $300K NPV. I don't remember which is which, but the total is right at $500K. I just entered expected/estimated yearly cash flows into a spreadsheet for each year through age 84, used 5.5% for a discount rate and the NPV function to derive a present value for the income streams. Next January, the NPV will be different, but not by that much. The change is gradual.

Our current portfolio was worth $900K at the beginning of the year. Add to this the NPV of pension + social security, and I come up with the $1.4M asset pool. Sorry if I've confused you on this.

As far as the financial planner for Quicken, yes I am very familiar with it, and used it extensively to help me decide to take early retirement. Of course in all these studies, it is necessary to make assumptions regarding the future.....rate of return on assets, inflation, expenses, taxes, and so on. It's impossible to know if one has used the correct set of assumptions to come up with a viable plan. At least I have a plan, and some annual benchmarks to help me along the way, so that I have some expectation about the path we've taken.

We don't want a glamorous lifestyle. We just want to maintain our status quo without the drudgery of a 9-5 job. I still feel comfortable with how things are going, and that early retirement was a reasonable thing to do.

Red
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Re: I would like to see more people posting
Old 07-10-2003, 06:37 AM   #15
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Re: I would like to see more people posting

Quote:
*How much money/assets (excluding home-auto etc) does one need? *I know there several variables here depending on your lifestyle, but how about a range like 500K-700K or 1.5million-2 million. *Is this an answerable question?
Allan
I think that the best answer that you can get is by entering your own financial/lifestyle data into FIRECalc and experimenting with different scenarios. FIRECalc's output is a figure for a "safe" withdrawal rate, but it is possible by trial-and-error to translate this into a "safe" net worth at the start of retirement (subject to the qualification that no amount is 100% "safe" if invested in risky securities).
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Re: I would like to see more people posting
Old 07-10-2003, 08:36 AM   #16
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Re: I would like to see more people posting

I semiretired in 1993 with one child at home and a non-working spouse. I don't recall my net worth but I know
it was under $200,000. Now, 10 years later I am still
happily retired and don't feel a bit deprived. Lifestyle and motivation are far more important than the amount
of money you have.
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Re: I would like to see more people posting
Old 07-10-2003, 08:42 AM   #17
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Re: I would like to see more people posting

Hello -

I just stumbled across this board, but I thought I would read thru more of the posts here before I take the plunge and introduce myself. Until then, I'll just lurk, and learn. 8)

regards, - jo.
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Re: I would like to see more people posting
Old 07-10-2003, 09:32 AM   #18
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Re: I would like to see more people posting

I find this amusing. No offense meant here, but Red
speaks of his "45 year plan". I don't even have a 4 year
plan (although anticipating SS kicking in might qualify
as a 3 year plan). I just don't plan to be around long enough to see a 45 year plan come to fruition. Guess
if I live to 100 I may have a problem. Another thing is
Quicken, FIRECALC, and other methods of projecting
your withdrawal rate and finances into the future.
I have used them and they are interesting, but I
do not see why they are any better than my "back of the
'envelope" system. By the time all of the assumptions
are plugged in, and given all of the unknown variables........................Well, it's fun but not real
useful in my opinion. I would feel the same if I had
$100.000 or 10 million.
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Re: I would like to see more people posting
Old 07-10-2003, 12:36 PM   #19
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Re: I would like to see more people posting

[quote]"I am interested in exactly how you calculated SS into the 1.4M. I'm sure otehrs would be too. Could you give us an example using something like an annual amount of $15K in todays dollars?"


I am not sure how Red does it, but one way that is probably as good or bad as most others is to use the 3.5% as a cap rate. Thus using an expected beginning annual SS income of $15,000, you would have CapitalValueSS=%$15,000/.035= $428,571. You can check by reversing this calculation, and see that if you had $428,571, and were to withdraw at a beginning level of 3.5%, you would be able to take $15,000 per year.

To me this treatment obscures some of the unique advantages and disadvantages of SS income. First it is truly indexed, and unless a lot of your capital is in indexed instruments, you can only hope that it will keep up with inflation. SS will keep up with inflation, as defined by the govt. Second, the politicao-legal treatment of SS income will usually be different as to taxability, safety from judments, etc. A nursing home may be able to get your swag, but your SS income will continue till you die. Many people treat SS Income as lesser quality than capital generated income becaue of worries about payment. While these worries are real, I would expect many other things to be challenged first. But it is a judgment call, impossible to really predict.

So I prefer to keep SS and also pension income as income streams, and not capitalize them. The way to do this with SS income or an indexed pension from another source is to just subtract these amounts from your planned Year1 budget. The remeainder is the amount you have to finance with you capital generated income. So if (budget-(SS & pension income))=<.(035*capital assets), you are FIRE. If not, save more.

Non-indexed pensions are much more difficult to treat, either by capitalizing them or using the income stream. It is very sensitive to inflation actually experienced.

Mikey
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Re: I would like to see more people posting
Old 07-13-2003, 06:20 PM   #20
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Re: I would like to see more people posting

Quote:
I was curious as to how many ACTIVE members there are on this site. It seems that the same few post.
I've been lurking lately. I think there are many, many lurkers. I'm 33 and am more focused on debt elimination and career management (in early preparation for an early retirement, maybe in 10-20 years away), so I'm not always in sync topicwise with many of the regulars here.

I've also deduced that a lot of the people interested in this site aren't experienced with reading and posting to bulletin board systems. (Telly, I think this is why you see new topics started in existing threads. ER's are probably less likely to have BBS experience than my age and younger. They have a thought or question and hit the first post/reply button they find.) Some may be shy or intimidated, or perhaps the important topics--investment mix, SEPP's, health insurance, live below your means, own vs. rent--have been covered well, so lurkers feel they have nothing to add. (But these guys always seem to welcome new people and new angles--even when posted in an "improper" place--so don't be shy.)

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