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View Poll Results: What Would You Consider SWR at Age 50?
< 2% 5 4.31%
2.0 - 2.5% 4 3.45%
2.5 - 3.0% 21 18.10%
3.0 - 3.5% 49 42.24%
3.5 - 4.0% 27 23.28%
> 4% 10 8.62%
Voters: 116. You may not vote on this poll

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Old 07-20-2009, 11:59 AM   #61
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I think Kronk has a great point. All of life is a risk - you might get hit by a truck tomorrow. Every economic model makes the assumption that the future will be like the past - and we have just seen by this recession how easily that assumption can quickly change.

Instead of thinking "Early Retirement", perhaps it is better to think of it as your birthday of the last one-third of your life. You've got a next egg, the kids are off the payroll (hopefully), and your a lot wiser than when you started the second one-third of your life.

I really don't know many retired people who fit the prototype of playing checkers in a retirement home. Life and opportunities to make money don't end when you retire - some people spend their retirement handicapping horses, and some handicap investment opportunities. Making money doesn't have to be a "job" - it can be a great way to spend your time. I love to tinker in the garage with tools I have collected over the years. I can make rocking horses and then sell them from my front yard. As a former registered civil engineer, I gave classes to carpenters who wanted to understand more about structural engineering and earthquake design for their work.

Early retirement doesn't mean the end to to ways to bring in money - it just means you can do exactly what you want to do, and not do what you don't want to do.
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Waiting Carries Risk!
Old 07-20-2009, 01:51 PM   #62
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Waiting Carries Risk!

I also agree with Kronk. I want to mention that Life is a risk. I learned this weekend that a guy on our dock, who retired 4 years ago at 62, just was diagnosed with kidney cancer in both kidneys. Needless to say, the long term outlook for one having cancer in both kidneys is not good. I have to think that waiting to retire in order to obtain a conservative SWR, may severly cost you in terms of quality retirement years. Just how much would you pay for one more quality year of life in retirement?

I am glad I made the decision to retire at 60 rather than waiting to be better feathered. (My SWR is near 4%...hard to calculate exactly when delaying SS to 70 so I use 62 in the calc). And by the way, after having been retired now for about a month, I find it totally awesome!!
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Old 07-20-2009, 11:39 PM   #63
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Maybe I'm more of a risk taker. Or maybe I'm far enough away from ER that it is kind of academic at this point.

...

I'm like others, where I'd try out 4% for a few years, and if the market crashed I'd look into Plan B (cutting expenses) or Plan C (finding another j*b).
In my view, you are not a risk taker. At 4%, your chance of dying with more money than you started is much higher than your chance of living broke.

Sam
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Old 07-21-2009, 11:51 AM   #64
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2% is the new 4%.

I'm thinking of doubling the amount of nest-egg I'll need for retirement, meaning retirement at (I dunno) 75 rather than 65.
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Old 07-21-2009, 06:59 PM   #65
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Ain't much fun stuff to spend it on when you look like this:

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Old 07-22-2009, 06:42 PM   #66
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My believe is that anyone under 55 today is dreaming seeing social security before 65 and at that time most likely will be the lower rate. I think 68 might be the new full rate for under 55 at present. Something that may work will be 2% SWR and up it if possible by .5% every 5 years. This would seem to be safe but have 2 years estimated expense needs to start out with. Lucky I got bored with world travel after
1 1/2 years going back to work or shoul;d I put it am working now. As I enjoy working anyways I will see when I get bored with it again and up my SWR .5% for each year extra I work. I'll be working overseas so will still get to travel about 2 months a year for vacations and add 8% to savings per year with no draw down.
I will also have 2 years cash for living expenses when I stop work again. A few extra years before 55 I don't think will deprive me of too much sin I hope.
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Old 07-22-2009, 07:00 PM   #67
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Originally Posted by Lawrence of Suburbia View Post
2% is the new 4%.
Unfortunately, I agree. While we gleefully spent 4% (and more) the first four years of our retirement, we drastically cut back after the crash. Right now we are at about 2%. We could reduce our expenses so drastically because we were traveling more than 6 months out of the year; all we had to do was stay home. We sold our house when we retired, so "staying home" meant finding a cheap apartment.

2% is pretty austere for us: it means no travel at all. We will probably loosen up to 3% next year.
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Old 07-22-2009, 10:37 PM   #68
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....yes, maybe 2% is the new 4%. I doubt it will be that bad.

Just for fun, I just ran some figures real quick to see what would happen if I continued to do what I am doing until age 65...saving rate stays the same, etc. My WR at currently anticipated expense levels adjusted for inflation would be about 1%, but I would not be able to spend that much...too tired to do the hobbies and projects I currently look forward to, and would thus only need a WR of perhaps 0.75%. What do you do with 133 years worth of expenses saved up if you only think you are gonna live another 20 or 25 years...and not even enjoy them the way you had wanted? So, I'd rather go by 50 or 51 with 2.75-3%, enjoy what I can, and cut back if I must. I can always sell the McMansion and move into something smaller (probably happen by 65 or 70 anyway).

Just sayin'...

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Old 07-23-2009, 09:50 AM   #69
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What do you do with 133 years worth of expenses saved up if you only think you are gonna live another 20 or 25 years...and not even enjoy them the way you had wanted? So, I'd rather go by 50 or 51 with 2.75-3%, enjoy what I can, and cut back if I must. I can always sell the McMansion and move into something smaller (probably happen by 65 or 70 anyway).
R
Yeah... Seven years ago, when both startups I was involved with showed no chance of surviving, I wondered if I should go back to megacorps to spend the rest of my days in shackles (I got offers from 2 of them). Then, seeing my father's health deteriorating, I decided that I'd rather work part-time to have time to enjoy life, knowing that there would be no job security compared to full-timers.

About the McMansion, when one is working, particularly if in a high management position, a big house is a status symbol, something one needs. Once retired and lounging around in Bermuda shorts and t-shirts, one only needs a smaller comfortable home. The need to impress is gone. And as one gets older, most status symbols start to lose meaning.

I have been reading blogs from people who retired early with apparently not a whole lot of money, and became nomads on class B or C motorhomes, or small trailers. They seem fairly happy compared to people in megacorps that I knew. Humble living like that is not for everybody though. It is all a state of mind. I can't say what is right or wrong. A person needs to find his own happiness.
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Old 07-23-2009, 11:02 AM   #70
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We'd be taking 4% but the recent downturn has made us into chickens.
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Originally Posted by Lawrence of Suburbia View Post
2% is the new 4%.

Isn't this exactly backwards?

Retiring at a market boom time is the time to be talking 2% WR, not after a collapse.

EXAMPLE A:

Year 2000 - $1M portfolio @ 2% provides $20,000 annual.

Year 20xx - market/NW has dropped 50%; The $20,000 annual from a now $500,000 portfolio is 4% WR.


EXAMPLE B:

Year 2000 - $500K portfolio @ 4% provides $20,000 annual.

Year 20xx - market/NW has dropped 50%; The $20,000 annual from a now $250,000 portfolio is 8% WR!


So, market booms are the time to be thinking in terms of a smaller percentage WR, right? Seems that emotions run the other way.

Another way to look at it is, historically FIRECALC is saying we just got hit with an historic drop. So when you run FIRCALC with your current portfolio, it runs you through *another* historically bad period. Well, we just don't get two historically bad periods in a row (otherwise, that would be one big bad period in FIRECALC, and the runs would reflect that).

Now if you are of the mindset that the future is likely to be worse than the past (I don't disagree), then a more conservative WR is consistent with that thinking. But I don't think it makes sense to say "Boom times, high WR is good; Bad times, cut the WR". FIRECALC reports with a constant purchase value WR. Be careful about "double counting" your conservative estimates.

-ERD50
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Old 07-23-2009, 11:04 AM   #71
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Isn't this exactly backwards?

Retiring at a market boom time is the time to be talking 2% WR, not after a collapse.
True. 4% is a heck of a lot "safer" now than it was two years ago.

It's also not as safe as it was in early March.
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Old 07-23-2009, 11:10 AM   #72
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I have been reading blogs from people who retired early with apparently not a whole lot of money, and became nomads on class B or C motorhomes, or small trailers. They seem fairly happy compared to people in megacorps that I knew. Humble living like that is not for everybody though. It is all a state of mind. I can't say what is right or wrong. A person needs to find his own happiness.
I'm always a bit skeptical of those. In some cases (not all), I suspect that those people feel the *need* to tell everyone how rosy it is. To not do so would be admitting failure, and many people just cannot do that. So they put on the happy face to cover any disappointment they may have.

I have to stress - not *everybody*, probably not even a majority - but I do wonder sometimes. I've seen it in many other cases, people tell you they "love their job", or their spouse, or their summer home, or whatever. And later it is apparent that they never really did.

-ERD50
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Old 07-23-2009, 11:26 AM   #73
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I'm always a bit skeptical of those. In some cases (not all), I suspect that those people feel the *need* to tell everyone how rosy it is. To not do so would be admitting failure, and many people just cannot do that. So they put on the happy face to cover any disappointment they may have.

I have to stress - not *everybody*, probably not even a majority - but I do wonder sometimes. I've seen it in many other cases, people tell you they "love their job", or their spouse, or their summer home, or whatever. And later it is apparent that they never really did.

-ERD50
What you said could be true! On the other hand, if you take their words at face value, some bloggers claimed that their nomad life was by choice, not necessity. One writer decided to buy an RV the day he heard from his doctor that his cancer was in remission.

On the other hand, I might be one of those who had to learn to be happy. I have learned to ration my purchases of toys, knowing that I would get used to them, and the pleasure might be short-lived.

Again, one needs to understand oneself. Even if one does, changing one's mind is tough. Some people need to teach themselves to be happy. I was, and may still am, one.
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