This ER Group and Bell Curve

[bradaz2488]

We're pretty similar in terms of the parameters you laid out. I have a SWR of around 2.5% and have about 56x expenses for a (hopefully) 40+ year plan (I am 54 now).

But one thing those of use ERs need to include in the equation, and I'm not sure if there is a good formula for it, is how to include future expected payouts I often describe as my "reinforcements." My IRA (which I can't access in an unfettered manner) is already part of my SWR because I have included its value in my NW (if I exclude my IRA, the SWR rises to about 3.7%). But I have a frozen company pension and SS available to me in 8-13 years from now, both of which will put downward pressure on my SWR.

Good point.. I will get no pension and I assume no SS because it is just too far out in time. When SS benefits become more clear (age 62?) I will probably add it into my plan which will lower my WR if I do not spend more money. We need an Eisenstein in the ER group to develop a unified ER equation that tell us were we sit on the curve

 

[HFWR]

Somewhere on the forum is a net worth poll, which would describe the distribution of wealth as it pertains to "us". Not sure if anyone has created a bell curve from that data, but if the mean is $100k, I'm safely on the left...

I figure the wealthy, and super-wealthy, did something I was unable or unwilling to do to get that rich, so god bless them! Having said that, I recall an episode on Travel Channel, describing yachts of the rich and maybe famous, wherein one yacht could have more aptly been called a "ship", since there was boat most would consider a yacht on the stern, next to the jet skis and the helicopter. Perhaps that guy had too much... [emoji12]

As for possessions owning you, certainly we've all heard tales of the Nuevo Riche, often entertainers or sports stars, who take their newfound wealth, buy multiple mansions, Rolls or Bentleys, etc., then end up in bankruptcy or tax court, because they hadn't considered the ongoing expense of maintaining all that stuff. Makes for good headlines, I suppose, but that's likely only a relatively small minority. I'd guess the middle-class, or maybe upper-middle, is more likely to be mortgaged to the hilt trying to impress the Joneses...

 

[Gumby]

I'd guess the middle-class, or maybe upper-middle, is more likely to be mortgaged to the hilt trying to impress the Joneses...

That is precisely who I had in mind originally - the people who live rich before they are rich and as a consequence never really become rich. Danmar is right, however, that there are enough real rich people in this country to account for a substantial number of those waterfront mansions.

 

[exnavynuke]

Not sure why you would think this, other than the fact that many(maybe most) people have mortgages(as do many/most less wealthy people). I think the real test would be can they afford it?

I certainly agree that affluent people can have complicated lives. But to suggest that most or many? are "owned by their possessions" seems like a generalization to me that is designed to make the generalizer feel better.

I can even see how some affluent people might suggest this. Maybe they (like other less wealthy people) are getting on and want to simplify their lives. I can see being in this position eventually. But at this point, I'm very content with the ways things are.

"Can they afford it" is subjective as what constitutes "affording it" isn't the same from one person to the next. I have a friend who has a huge house, a 6-figure boat, jet skis, motorcycles, just got his pilot's license (I'd bet money buying a plane is on his to-do list). Yet, when his car got in a wreck the other day and he mentioned he wasn't planning on a "monthly payment for another car" right now I suggested paying cash instead and his response was "like I can afford to do that". The car that was wrecked was a Nissan btw, so not like replacing a Ferrari or anything. All those possessions and he can't come up with ~$20k to buy a car without needing to take out a loan.

Yet, he pays his bills on time I presume (him and his wife each make very good money) so to many that means he can "afford" his current lifestyle.

 

[Blue Collar Guy]

Im not even in the lower potion of your bell curve. Im in the 50-60k spending range. That being said, when I worked in a very high crime area for the majority of my career, when my day was done, I would go home to my rented apt, all 440 sq feet. It was like I was living in the penthouse of a Park avenue doorman building compared to the filth , roaches, and smell I was surrounded by during my work hours. They were times when I was in Manhattan Mansions, and real Penthouses that I couldnt even hazard a guess at how much they were worth. I would come home and tell my wife of the magnificent home or apt I saw , I would apologize that I made a wrong turn in life somewhere to not be able to give her that life. But we were grateful we didnt live with the roaches,crime, smell of the other areas I visited. So i second the sentiment of its all relative. BTW we only recently graduated to the 50-60k level.It was much less for the 25 years before retirement. I also have an insanely(my view) wealthy sister, bocce court, tennis, pool, mansion in long island on several acres etc. I dont get invited much maybe 1 time every few years. Im a bit depressed when I leave her fabulous surroundings, my house feels like the size a shoe box when we return. It wears off by the time I go to bed.

 

[haha]

(First of all, sorry for the title. I'm just not quite sure how I should title this post.)

Reading this forum, I'm going to assume many here have yearly spending between $100K-$200K. And in that Bell Curve, there will some with an even higher spending level, and those not far off on the other side of the curve.

What gets me, is I live in Southern CA, and I like to bike ride along So Cal's beaches. A few days ago, I was in Newport Beach biking along the peninsula. Those homes, the average homes along the water, and even inland, I'm assuming are all over $1MM minimum and the average ~$4MM.

So what gets me, is I see this incredible wealth, and though I may fall in the middle of the above Bell Curve, I do feel a sense a lacking when I'm in that environment. A friend owns a home down in Balboa and says he could get $5K/week if he wished to rent.

So you have those living in Newport Beach living that lifestyle, and many on this board living a very comfortable lifestyle, but not Newport Beachy. And yet, to me, this Bell Curve group, is living a life that is almost unimaginable in its luxury.

As an aside, I'm sure many of those people I saw in Newport Beach were tourists. And I'd love to know what percentage even bothered to get in the water. If I had my druthers, I'd be in a lake house with a boat, skis and doing a lot more fun stuff water activities.

Have you noticed that by your own admission this is all your fantasy? You have no idea whether any of it conforms to any reality. What motivates this sort of thing?

Ha

 

[Sojourner]

We lived in Monaco for a while...obscene affluence! But you can have a nice lunch dockside sitting next to a 200 foot yacht and be part of the scene for the price of a meal. The guy at the next table could be some Saudi prince--and probably is!

We winter in Fort Lauderdale and the perspective is the same. Something sort of cool about sitting on the beach and have a $7MM yacht go by or having a Bentley or Rolls stop to let you cross the street. I'd rather have dinner looking at a $40MM home across the Intracoastal than some abandoned warehouse!

If you lose the envy aspect, you can be (a small) part of the experience without the price!

+1 ... A very uplifting, positive way of looking at things.

 

[W2R]

Reading this forum, I'm going to assume many here have yearly spending between $100K-$200K. And in that Bell Curve, there will some with an even higher spending level, and those not far off on the other side of the curve.

We used to have regular threads started in December or January, on the topic of what we had spent that year. Many would break their spending down into categories, too. For some reason those threads have trailed off. Too bad, because I think that would give you a better idea of what we spend. If people don't want to say what they spent, maybe a poll would work out better. Anyway, my sense of it after years of reading those threads, is that very few of us spend as much as $100K. I think Scrabbler's estimate of $30K-$50K per capita is probably about right, or even a little high perhaps.

What gets me, is I live in Southern CA, and I like to bike ride along So Cal's beaches. A few days ago, I was in Newport Beach biking along the peninsula. Those homes, the average homes along the water, and even inland, I'm assuming are all over $1MM minimum and the average ~$4MM.

So what gets me, is I see this incredible wealth, and though I may fall in the middle of the above Bell Curve, I do feel a sense a lacking when I'm in that environment. A friend owns a home down in Balboa and says he could get $5K/week if he wished to rent.

So you have those living in Newport Beach living that lifestyle, and many on this board living a very comfortable lifestyle, but not Newport Beachy. And yet, to me, this Bell Curve group, is living a life that is almost unimaginable in its luxury.

(emphasis mine)
I lived in northern California for 6 years, and in southern California for 6 years. I could be wrong, but my sense of it is that many Californians do not fully realize how much they are spending every year just for location. Despite the location expense, it seemed to me like conspicuous consumption was part of the lifestyle in Southern California. Maybe that was just among those I knew at the time. Still, I feel that living in urban coastal California is very different than living in the rest of the country in these respects and personally, I am far happier living elsewhere, away from that madness. YMMV and I know it does for many, but then again maybe this is why you feel a sense of lacking.

 

[Danmar]

I think we have a lot of common ground here. The OP has an issue. In order to be truly happy you have to be satisfied with your lot in life. There will always be someone who has more than you. Don't worry about it. You can get satisfied by looking at yourself and thanking your "lucky stars" or you can criticize those that have more than you as in debt to the hilt, shallow, possessed by their possessions, or whatever. My only point is the former is much more effective and gratifying than the latter.

 

[Sojourner]

I have a friend who has a huge house, a 6-figure boat, jet skis, motorcycles, just got his pilot's license (I'd bet money buying a plane is on his to-do list). Yet, when his car got in a wreck the other day and he mentioned he wasn't planning on a "monthly payment for another car" right now I suggested paying cash instead and his response was "like I can afford to do that". The car that was wrecked was a Nissan btw, so not like replacing a Ferrari or anything. All those possessions and he can't come up with ~$20k to buy a car without needing to take out a loan.

Yet, he pays his bills on time I presume (him and his wife each make very good money) so to many that means he can "afford" his current lifestyle.

Hmm... something about this doesn't add up for me. A six figure boat? As in, a boat worth over $100K? But he doesn't have enough liquidity to replace a $20K car? If that's really true, he seems to be an extreme example of "big hat, no cattle." What would you guess his net worth is, minus the house and boat?

 

[Bestwifeever]

There is tremendous wealth in the US but there are many places where wealth is much less visible. Every major city has expensive areas. We were in Glencoe (north shore suburb of Chicago ) recently to visit friends. Talk about beautiful, very expensive homes. Our friends' place was worth $6million and it was comparatively modest. He said his property taxes are $140,000per year. Quite possible these places were bought/built decades ago at a much lower amount.

There will always be someone with more than you. Best not to think too much about that if you want to be happy. Most people get "happy" with their means whatever it is.

Made me look--yes, that would be the taxes for a $6 million house in Glencoe.

Imagine what one could rent for $12,000 a month and not have maintenance costs.

 

[Koogie]

... But I have to think, based on my personal experience and circle of friends, that most people can afford their lifestyle...

One need only look at the high rates of consumer debt to know that this is not true for most people in most other strata of society.

 

[jollystomper]

So what gets me, is I see this incredible wealth, and though I may fall in the middle of the above Bell Curve, I do feel a sense a lacking when I'm in that environment. A friend owns a home down in Balboa and says he could get $5K/week if he wished to rent.

So you have those living in Newport Beach living that lifestyle, and many on this board living a very comfortable lifestyle, but not Newport Beachy. And yet, to me, this Bell Curve group, is living a life that is almost unimaginable in its luxury.

My parents taught me well to not worry about what others have and to focus on what I wanted and how I was going to achieve those goals. I graduated from an Ivy League college and my time there further taught me not to be envious of the materially rich. Some of my classmates have even beyond the "Newport Beach" lifestyle and are still not content because they perceive others they went to school with are doing better.

 

[imoldernu]

To: Elbata....

So what gets me, is I see this incredible wealth, and though I may fall in the middle of the above Bell Curve, I do feel a sense a lacking when I'm in that environment.

Away from statistics, we believe that life and happiness is what we make of it. In 28 years of retirement, the thought of missing out on anything, never crossed our minds.

Maybe we could call it "ignorance is bliss"

Can't think of anything we ever wanted to have, or to do... that we missed.

So... maybe a life of sacrifice...

http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251.html

 

[daylatedollarshort]

I lived in northern California for 6 years, and in southern California for 6 years. I could be wrong, but my sense of it is that many Californians do not fully realize how much they are spending every year just for location. Despite the location expense, it seemed to me like conspicuous consumption was part of the lifestyle in Southern California. Maybe that was just among those I knew at the time. Still, I feel that living in urban coastal California is very different than living in the rest of the country in these respects and personally, I am far happier living elsewhere, away from that madness. YMMV and I know it does for many, but then again maybe this is why you feel a sense of lacking.

Apparently some of our neighbors and former co-workers are the big hat no cattle types or they wouldn't have freaked out when we retired early. I think they felt a lot better about themselves when they thought we had less money than them and seemed sad to find out we were actually just frugal and not poor. It was interesting to us because two of the couples that seemed upset about us retiring early were ones that had bragged about their income or future pensions.

 

[Danmar]

One need only look at the high rates of consumer debt to know that this is not true for most people in most other strata of society.

This may be true but we were, after all, talking about affluent people. Just trying to point out that based on my experience, not all (and probably not most) affluent people live above their means.

 

[Danmar]

Made me look--yes, that would be the taxes for a $6 million house in Glencoe.

Imagine what one could rent for $12,000 a month and not have maintenance costs.

Not in Glencoe, I don't think. At least with 250 ft of private Lake Michigan beach. However, they are chafing a bit at the taxes and are considering selling their house. It is beautiful though, perched on the edge of a 100ft bluff overlooking the lake. You should see some of their neighbours' homes. Put Versailles to shame.

 

[Sojourner]

I think we have a lot of common ground here. The OP has an issue. In order to be truly happy you have to be satisfied with your lot in life. There will always be someone who has more than you. Don't worry about it. You can get satisfied by looking at yourself and thanking your "lucky stars" or you can criticize those that have more than you as in debt to the hilt, shallow, possessed by their possessions, or whatever. My only point is the former is much more effective and gratifying than the latter.

Exactly. Virtually every one of us FIRE'd folks are easily in the top 0.5% of all people on Earth when it comes to net worth. Yet we may still feel a twinge of envy when we see people living in multi-million dollar mansions on the beach, or who own 70-foot yachts, etc. As stated above, no matter how much you have, or how incredibly fortunate and well-off you are compared to the vast, vast majority of your fellow humans, there will always be someone with "more". It helps to keep in mind that numerous studies have shown that ultra-high net worth individuals are generally not much happier than most upper middle-class people living comfortable (but not flashy or glamorous) lives.

 

[socca]

In order to be truly happy you have to be satisfied with your lot in life. There will always be someone who has more than you. Don't worry about it.

I often pity (rather than envy) the people who have more than me, if what they have consists of high-maintenance possessions or drama-filled relationships.

 

[exnavynuke]

Hmm... something about this doesn't add up for me. A six figure boat? As in, a boat worth over $100K? But he doesn't have enough liquidity to replace a $20K car? If that's really true, he seems to be an extreme example of "big
hat, no cattle." What would you guess his net worth is, minus the house and boat?

Yes, as in a boat worth over $100k. Here's an ad for a boat of the same model as his Used 2011 Sea Ray Sundancer, Lewisville, Tx - 75035 - BoatTrader.com

Minus the house and the boat, I'd wager that all but a small portion of their net-worth would be in whatever retirement accounts they have through their employers (which could be significant or could be nothing, I couldn't say as we've never discussed it).

They're far from the only people I've known that "look rich" but would have a hard time covering any 4-5 figure "emergency".

Of course, I also have another friend who has a job that pays 6-figures (with overtime) AND a military retirement check, but lives in a double-wide trailer (because he couldn't afford a more expensive place) and couldn't come up with a couple grand to replace his A/C unit when it broke.. that he's losing money "renting" his old house to his wife's family members probably has a lot to do with that etc.

 

[W2R]

[...]I graduated from an Ivy League college and my time there further taught me not to be envious of the materially rich. Some of my classmates have even beyond the "Newport Beach" lifestyle and are still not content because they perceive others they went to school with are doing better.

Also, so often their lives can be tragic in many other ways. Divorce, father working so hard they never see him, boarding schools, nannies... oh man, I have heard of so many heart-breaking situations casually mentioned by people like that, that I really do think that there is no way to get through life without troubles of one kind or another.

 

[Bestwifeever]

Not in Glencoe, I don't think. At least with 250 ft of private Lake Michigan beach. However, they are chafing a bit at the taxes and are considering selling their house. It is beautiful though, perched on the edge of a 100ft bluff overlooking the lake. You should see some of their neighbours' homes. Put Versailles to shame.

Well, not in Glencoe, I didn't mean that necessarily--don't think there is a very big stock of rentals there or in the other North Shore towns, like Winnetka, Lake Forest, and Kenilworth (which is small enough that it usually gets left off lists of well-to-do towns)--the big beautiful homes are standard.

 

[Meadbh]

Jealousy can eat you up.

Here is a vlog by a humble ER guy in California, who also has an excellent cooking channel. He explains why he chooses to live in a mobile home.

"Having sustenance and covering, we will be content with these things".

https://youtu.be/1ZBlGypSKg8

 

[W2R]

Not in Glencoe, I don't think. [...]You should see some of their neighbours' homes. Put Versailles to shame.

OK, that inspired me to "go" to Glencoe via Google Streetview. I went to the parts of town by the lake, figuring the more expensive homes might be there. Maybe but who knows. Anyway, that was so much fun!! What beautiful homes. To me a house like that would be a nightmare to own, but for a younger person with a staff to help out and a penchant for hosting large numbers of people, these homes would be pretty fabulous. Thanks, I really enjoyed the beautiful architecture and homes that I saw.

 

[daylatedollarshort]

I've been trying to use science as a way to reach nirvana in ER rather than advertising. There are few if any studies that point to a lot of consumer goods as a way to happiness. People tend to adapt to stuff - it is the hedonic treadmill at work. We try to focus on experiences more these days than buying a lot of stuff. And our experiences don't have to cost a lot. A Golden Poppy state parks pass in California is $125 a year and provides free entry to around 100 parks in places like wine country, Lake Tahoe, beaches, deserts, and Redwood forests.