Work Until You Drop

[BunsGettingFirm]

http://moneycentral.msn.com/content/Retirementandwills/InvestYourSavings/P34685.asp

Haha, $2 Million is not enough for two 65-year-olds to retire. More horse pucky brought to you by CFPs.

 

[malakito]

I agree. Where to begin!

One thing did catch my eye in this article:

"Blayney's rule of thumb, shared by other financial planners, is that you can pay yourself 5% of whatever your "personal endowment" is and in the process leave your principal holdings untouched. (The 5% is the same figure many foundations and universities use when calculating how much income from their endowments they can use each year.)"

I first wondered why universities and foundations could use 5% when their money (a) needed to last in perpetuity, (b) was probably invested more conservatively than mine will be, and (c) is not augmented by Social Security. All three of these factors would indicate that the 4% rule espoused here was either too conservative, or that the universities and foundations were spending too much.

Then it occurred to me. Universities and foundations, at least, receive donations into their endowment fund, whereas my personal endowment fund won't. Perhaps that's the difference.

malakito

 

[haha]

I think there are a couple of things here. One is that most early retirees, at least many on this board, really dislike work, and are willing to modify their lifestyles and expectations to achieve freedom from work. But a financial planner's clients are mostly going to be upper middle class people with upper middle class expectations.

If he counsels them to be too conservative, and they wind up with too much money, is he likely to get sued over that? On the other hand, if he says "go for it, it will really be fun", and they wind up on catfood, then I wouldn't want to be that planner.

How much money one needs to live is a very personal thing. Some people enjoy things like the Tightwad Gazette, others enjoy $1500 cashmere coats.

Think how little most of us had when we were students. But we had a ball on that very tight budget.

When the planner says $1 million will throw of $50,000 a year, but that isn't a "get out of town budget", it's clear to me that it wouldn't be for most people. And it may be an excessive draw too.

Still, if one likes to stay in hostels, camp out, etc. etc., that changes things a lot.

I think the people who post here are a very small group who really fit this style of living, and even more important, are single or who happened to have or have changed to spouses/SOs that think and feel the same way.

So overall, I don't fault planners for espousing a conservative path. Risk takers will figure out how to find out what they need to know anyway.

It's like learning to dance. If you go to a teacher, you learn a pretty conservative dance style. If what you want is dirty dancing, you have to hang out in clubs and figure it out for yourself.

Mikey

 

[sgeeeee]

I agree.  Where to begin!

One thing did catch my eye in this article:

"Blayney's rule of thumb, shared by other financial planners, is that you can pay yourself 5% of whatever your "personal endowment" is and in the process leave your principal holdings untouched. (The 5% is the same figure many foundations and universities use when calculating how much income from their endowments they can use each year.)"

I first wondered why universities and foundations could use 5% when their money (a) needed to last in perpetuity, (b) was probably invested more conservatively than mine will be, and (c) is not augmented by Social Security.  All three of these factors would indicate that the 4% rule espoused here was either too conservative, or that the universities and foundations were spending too much.

Then it occurred to me.  Universities and foundations, at least, receive donations into their endowment fund, whereas my personal endowment fund won't.  Perhaps that's the difference.

malakito

I wonder if tax differences don't figure into this too??

 

[unclemick]

The 5% is to keep the IRS off their back- less than 5% gets you un-foundationed and a big tax bill.

 

[Nords]

Re:  The IRS on institutional withdrawal rates

You would think that institutions would have some of the longest investing horizons around. They're largely using index funds, and the ones we read about are the ones that SHOULD be using index funds.

In 1999 the IRS proposed raising institution's payout rates to 6% because some of them were getting just a little too rich off the NASDAQ. The subject was quietly dropped in 2000...

 

[fire5soon]

...most early retirees, at least many on this board, really dislike work, and are willing to modify their lifestyles and expectations to achieve freedom from work.

That is the key IMO. If ER is more important to you than obtaining the material possessions, then you will not be sucked in to buying those things, thus having to work longer/harder to support the ‘habit.’ I would love to have a new Corvette, but I would rather have that $50k in my investment account because it supports the lifestyle I have chosen and will hopefully get me closer to my FIRE goals.

1% of it is God given ability (intelligence)… the other 99% is a matter of lifestyle choices (focus, drive, goals)

 

[Telly]

Maybe it's a new obsession... but lately I find myself doing more mental multiplication.

An example: Let us say something I am considering buying is $50. I find myself adding a zero to it, then multiplying times four. In this example, that's $2000. So it took $2000 of funds a whole year to generate that $50 that I'm about to spend.

SWR in action, bit by bit.

And that is just for a measily 50 bucks! Think about big stuff! What about that new car?

It's a whole new way of looking at things. Maybe it'll start a movement!

And I'll design and market a must-have trendy product for this movement. The Gino Verslotchy "Fundy". You wear it (I'm not saying where, I don't want to crimp my customers imagination, you know) and when you see something you are thinking of buying, you swipe the Fundy over it. It then instantly calculates the amount of SWR'ed funds required to support your proposed purchase.

To avoid regressive thinking, the product will only be available via three unequal payments.

 

[haha]

Maybe it's a new obsession... but lately I find myself doing more mental multiplication.

Well, according to at least one expert, you have solved the probelm of happiness.

"We act as though comfort and luxury were the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about."

- Einstein

Mikey

 

[BigMoneyJim]

So it took $2000 of funds a whole year to generate that $50 that I'm about to spend.

SWR in action, bit by bit.

I believe the perceived cost of dryer sheets has just gone up. :

Seriously, that's a great way of looking at things! I had previously learned to add in taxes, credit interest and some opportunity loss to all my purchase decisions, but this reverse-SWR perspective is very powerful indeed. Thanks!

On the other hand, I may never buy anything again...

 

[BunsGettingFirm]

I like the latest Land Rover commercial. Two Gen-Y trekkers were walking along side a mountain road on their way to the next trailhead and discussing whether a simple life of pottery making will lead to true happiness when a Ranger Rover pulled up next to them. The owners, a typically handsome 30-something yuppie guy and a stylish, trim blonde woman offered the Gen-Yers a ride. Upon entering the Range Rover and having taken a look at the burled walnut trim and baby-soft leather seats, the Gen-Yers immediately changed their life outlook. They said, "Maybe we can just minor in pottery making instead."

 

[haha]

Re: Work Until The Bad Guys Drop

Here's a story about a guy who isn't into ER, more like CW- continued work. He is an 81 yo guy who leases and operates a used car lot somewhere in Texas. One day he was talking to his landlady, a woman of 74 years, in his little office on the lot. Some punk walks in, grabs him and starts beating him at gunpoint. He ties him up in a chair, and rifles his pockets. Meanwhile the old lady has retreated to another room. The intruder starts beating her and yelling about where is all the money.

Our original CW then frees himself, grabs a WW2 era Springfield and runs in and threatens to shoot the attacker. He holds him at gunpoint until the police arrive.

I have to admit that while I was reading this I was hoping the badguy would wind up all over the office wall, but I think this is a pretty good outcome too.

Mikey

 

[nwsteve]

Latest Research per WSJ--Longer you are "working", the longer you are here
From today's edition:

"After crunching the data at the six-year and 12-year marks, and controlling for individuals' health at the beginning of the study, among other factors, the researchers found that it was work -- whether a person kept working or retired -- that emerged as a major determinant in whether a person was still alive. Among the 1,000 people studied, those who continued to work at the age of 70 and beyond were 2.5 times as likely to be alive at the age of 82 as those who had retired and weren't working at the beginning of the study."

Rest of article really focus not on the act of employment so much as having a reason to get up and do something YOU consider productive--could even by flyfishing for some ;-)

Clearly being glassy-eyed zombie in front of CNN does not qualify.

Article mentioned that results are from first controlled long-term study of retirees. Unfortunately for this audience, all the participants were 70 already when the study started.
Nevertheless some worthwhile messages about remaining active ,engaged and the value of doing things that create "self worth" have on long life.
Perhaps that is why men who start second families late in life, tend to be long lived. They have no time to worry about getting bored and, if anything, probably are "over-stimulated" compared to their peers. Perhaps this is TH's strategy for making sure full value from SS is collected.
Results leave unanswered what impact would be if the study population was 50 at inception. Certainly adds a different spin on the Boeing/Gen Dynamics data
NWsteve

 

[cute fuzzy bunny]

Then theres this:

http://early-retirement.org/cgi-bin...ther_refs_board;action=display;num=1077887062

Dont trust studies

Follow the money...who paid for the study and then what might their motivations be. Nobody does one just to "see what happens".

Mine all started "here's what we want to 'find out', here's how we think we can 'find this out' most directly. if we dont get the results I want, I have the right to suppress the final report. If we do get the results I want, there are more studies in the future for you."

These were major consulting firms and big universities. Trust in any organizations fidelity should be questioned.

 

[cute fuzzy bunny]

Perhaps this is TH's strategy for making sure full value from SS is collected.

Its my first family! I skipped the first marriage and divorce and went straight to the trophy wife in my 40's

But I'm certainly going to be a busy, busy guy. Think of playing ball with a 10 year old in your mid 50's...(sigh)

Dave Letterman and Tony Randall is/were my heroes too...

 

[Jarhead*]

TH:

Must have missed posts about your up-coming parenthood.
Congratulations. (It will make you a better man).
Nothing wrong with a youngster at your age. (If you haven't done if before.)
Think what great shape you're going to be in keeping up with a teen-ager
You'll be fine.

 

[cute fuzzy bunny]

Yep its my first one.

As far as keeping up with a teenager...ooog.

 

[KB]

Start off dealing with a baby first. After toddler, youngster, pre-teen.....you'll be more than ready for teenage. Babies are harder because of the lack of sleep.

Good luck, it will be wonderful and well worth it.

 

[John Galt]

Being a Dad...........best thing I ever did, hands down.

John Galt

 

[nwsteve]

My former colleagues used to consider me the ultimate skeptic but I can now see my "attributes" paled in comparison with TH. I must become your understudy!
That said, I can all too well relate to the advise of trying to see why the study was done and who is really funding the boys at Harvard School of Public Health. Any ideas of an easy way to shake that tidbit of info loose from the "system"?
NWsteve

 

[cute fuzzy bunny]

Oboy, an understudy!

Stop by tomorrow, 9am. I wont be up until 12, but start by washing any carlike substances in the driveway. If you finish that by 12, go buy beer.

Well, there are four ways to figure out who made the "investment". #1: who gained the most by the results, #2: a footnote in the paper/document/research, #3: who used the results the most, #4: call or email and ask them.

Cynical? You would be ayyyymazed at who I got to say what about whom or what...

 

[nwsteve]

Th--note I suggested status as a Master Skeptic.
As I understand the difference, a skeptic always questions while a cynic not only questions but believes no mater what the answer, something bad is going to happen. Expects the worst at all times.
Hence I stand by Skeptic--I have only seen honest questioning in your posts. But I guess you would know best.
NWsteve

 

[cute fuzzy bunny]

I am very skeptical of your response.

Now wheres the beer?

 

[trumpeting_angel]

Buck up, TH, and think how much better playing ball with a 10-year-old will be for your health and your life, than being a suit in the Corporation!

Seriously, kids can be quite stressful, but in my life, the stresses I've encountered in childrearing ALL pale in comparison to the stress of trying to combine it with WORK, especially when my daughter was young. The dearth of decent child care was the primary factor behind my decision to stop at one. Finding good child care (so that I could WORK, even half-time) was an absolute nightmare when my kid was under 3.

Limber up, TH, and take your vitamins. This kid will keep you young!


Anne

 

[cute fuzzy bunny]

Is beer a vitamin? I think its one of the four food groups.

What are they again? Beer, pizza...I forget the other two.