Blogger Joe Udo says 25x expenses not enough for early-retirees

[mathjak107]

Quote:

Originally Posted by Markola Also, who says one has to add the inflation rate every year? Inflation can be controlled and reversed with lifestyle choices, eg the "Move to a LCOL area" option. Sent from my iPad using Early Retirement Forum

how much inflation effects someone is tied to the amount of discretionary income they have as they age .

typically we end up spending in a smile shape ,we spend more in the beginning of retiring , less through our middle older years and more at the end .

what we no longer buy or do pays for the increases in a lot of what we still buy and do .

but if everything in the budget is a need and not a want there is little that gets cut back .

most of these retire very early forums are based on cutting spending to a minimum and kind of living bare bones lives for the most part .

those folks will not likely have a whole lot of discretionary spending in the budget .

[Aerides]

The writer of the post concedes very early that his expense calculation was wrong, and he hadn't planned for the foreseeable costs associated with having a young child. So he didn't have 25x "expenses" when expenses was off by 30% (the wrong way). Doesn't matter what size nut you think you need, if your expenses aren't solid and accounting for variance.

[nun]

Quote:

Originally Posted by Aerides The writer of the post concedes very early that his expense calculation was wrong, and he hadn't planned for the foreseeable costs associated with having a young child. So he didn't have 25x "expenses" when expenses was off by 30% (the wrong way). Doesn't matter what size nut you think you need, if your expenses aren't solid and accounting for variance.

The systemic issue is that 25x uses historical returns and those might be a bit optimistic with the yield on 10 Year Treasuries being so low. So you might be better to use 33x......and of course do your expense planning accurately and then add a factor for unknown expenses.

[Corporateburnout]

Quote:

Originally Posted by Gumby That's a deliberate choice, Joe. You still don't "need" one. And the same applies to many of the other technological lifestyle upgrades you list.

+1.

One of my tennis colleagues still has no cellphone, no internet and no email. He can only be contacted on his landline.

[bmcgonig]

Quote:

Originally Posted by Corporateburnout +1. One of my tennis colleagues still has no cellphone, no internet and no email. He can only be contacted on his landline.

And his landline is probably more expensive than a monthly cost of having a cellphone with unlimited calls, texts and 1G data..


Sent from my iPad using Early Retirement Forum

[Corporateburnout]

Quote:

Originally Posted by bmcgonig And his landline is probably more expensive than a monthly cost of having a cellphone with unlimited calls, texts and 1G data.. Sent from my iPad using Early Retirement Forum

Have you heard of Vonage?

[bmcgonig]

Quote:

Originally Posted by Corporateburnout Have you heard of Vonage?

Yes. But it's VOIP and it kept going down on me during a call. I'm assuming that the guy has a real voice landline. And even Vonage is $25/mo if I remember.


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[purplesky]

So if I understand correctly this guys wife still works?
So how is he retired if he still has Family income coming into his household?

This guy is just a stay at home dad with a working spouse .

Thank you Mr. Money mustache

[MichaelB]

Quote:

Originally Posted by Gumby That's a deliberate choice, Joe. You still don't "need" one. And the same applies to many of the other technological lifestyle upgrades you list.

Yes, it is a deliberate choice. One that can add to the overall material well-being of the owner. It should be considered as a contribution to an improving standard of living. Like air conditioning, which is another choice. Seat belts and children's car seats (no choice there). Some, such as cable TV, are indeed dubious, but others, such as high speed internet access, add considerable value.

These all cost money, increase one's cost of living, but when first introduced into the budget are not part of the "inflation rate" because they improve the standard of living. In fact, our standard of living is continuously improving, but to fully participate and enjoy those improvements, they must be paid for over and above the usual changes in average cost of living.

This is something the "SWR" discussions usually don't include, because it is difficult to quantify the cost of our improving standard of living. It also has a different impact on a 70 year old retiree vs a 50 year old. But it is real.

[Big_Hitter]

Quote:

Originally Posted by purplesky So if I understand correctly this guys wife still works? So how is he retired if he still has Family income coming into his household? This guy is just a stay at home dad with a working spouse . Thank you Mr. Money mustache

yup

[tfudtuckerpucker]

If you read his blog, Joe says their monthly expense is mostly covered by their passive and online incomes, and they save her income. She also provides the health care insurance through her work.

I agree the blog is not quite as interesting, since there are many households with one spouse working, while the other doesn't. I'm not sure the blog would gain as many readers if his wife decided to "retire" instead.

[daylatedollarshort]

Quote:

Originally Posted by tfudtuckerpucker If you read his blog, Joe says their monthly expense is mostly covered by their passive and online incomes, and they save her income. She also provides the health care insurance through her work. I agree the blog is not quite as interesting, since there are many households with one spouse working, while the other doesn't. I'm not sure the blog would gain as many readers if his wife decided to "retire" instead.

Most of the ER blogs I have come across have either one spouse working or the household has investment income / wife's part-time income / husband's part-time income which is not much different than having one full time income in a two parent plus kids kind of household, which is not exactly newsworthy.

Really retiring on $600K for two people and not working at all ever again and "retiring" on $600K plus even $24K in annual earned income is a pretty huge difference in overall lifetime retirement funding. $24K in annual earned income over 50 years adds another $1.2M in lifetime earnings to the initial $600K, plus higher SS payments at normal retirement age.

The extra earned income by continuing to work even part-time is the difference between $600K and $1.8M ($600K + $1.2M) in total lifetime retirement funding, even more with investment returns and higher SS benefits factored in.

[ExFlyBoy5]

Quote:

Originally Posted by purplesky So if I understand correctly this guys wife still works? So how is he retired if he still has Family income coming into his household? This guy is just a stay at home dad with a working spouse . Thank you Mr. Money mustache

How you define retirement is how YOU define it. How Joe defines it is how JOE defines it. I don't work but my DW does. She has no financial reason to do so, but refuses to quit all out working at 38 years old...she fears boredom, so she keeps toiling away in the salt mines. Those variables would lead you to call me UNEMPLOYED to which I say...um...NO. I am and will continue to be RETIRED.

Sent via mobile device. Please excuse any grammatical errors.

[purplesky]

Quote:

Originally Posted by ExFlyBoy5 How you define retirement is how YOU define it. How Joe defines it is how JOE defines it. I don't work but my DW does. She has no financial reason to do so, but refuses to quit all out working at 38 years old...she fears boredom, so she keeps toiling away in the salt mines. Those variables would lead you to call me UNEMPLOYED to which I say...um...NO. I am and will continue to be RETIRED. Sent via mobile device. Please excuse any grammatical errors.

So millions of Americans are currently retired early and they don't even know it?
I think most stay at home spouses would be offended if you called them retired

People with Mr. mustache fever might call themselves retired but that's a shortcut or fantasy that's not going to end well

[Major Tom]

Quote:

Originally Posted by purplesky People with Mr. mustache fever might call themselves retired but that's a shortcut or fantasy that's not going to end well

It will end well for him though, if the traffic and revnue from his site is anything to go by.............

[purplesky]

Quote:

Originally Posted by Major Tom It will end well for him though, if the traffic and revnue from his site is anything to go by.............

If he's lucky he will become a millionaire like Mr. mustache and be able to sell the fantasy of frugal lifestyle While taking your family on international trips making 30 K a year

Not.

[Major Tom]

Quote:

Originally Posted by purplesky If he's lucky he will become a millionaire like Mr. mustache and be able to sell the fantasy of frugal lifestyle While taking your family on international trips making 30 K a year Not.

I was talking about MMM. Not sure about this guy.

[scrabbler1]

Quote:

Originally Posted by tfudtuckerpucker If you read his blog, Joe says their monthly expense is mostly covered by their passive and online incomes, and they save her income. She also provides the health care insurance through her work. I agree the blog is not quite as interesting, since there are many households with one spouse working, while the other doesn't. I'm not sure the blog would gain as many readers if his wife decided to "retire" instead.

The f his wife's health insurance coverage from her job is probably more valuable than her income. If he had to cover HI premiums for a family with kids his expenses would be a LOT higher.

[rodi]

Quote:

Originally Posted by purplesky So millions of Americans are currently retired early and they don't even know it? I think most stay at home spouses would be offended if you called them retired People with Mr. mustache fever might call themselves retired but that's a shortcut or fantasy that's not going to end well

When my husband reached age 62 and chose to not work anymore... and even let his architectural license lapse - did he not retire? (Because I was still working?) I think if you've worked for decades and now are withdrawing from investments and/or pension rather than drawing a salary, you're retired in my book.

When I retired a few years ago - I had (and still have) kids at home. Does that make me a SAHM rather than retired? Or did I retire from a career of several decades? I am drawing from my investments rather than cashing a paycheck. Sure - I have responsibilities to parent my kids - but I had those responsibilities while working as well.

This whole arbitrary "that person isn't REALLY retired" argument drives me nuts. If you worked a career and drew a salary, and now don't and have to tap retirement resources (pension and/or savings).... then you're retired!!!!

[purplesky]

Quote:

Originally Posted by rodi When my husband reached age 62 and chose to not work anymore... and even let his architectural license lapse - did he not retire? (Because I was still working?) I think if you've worked for decades and now are withdrawing from investments and/or pension rather than drawing a salary, you're retired in my book. When I retired a few years ago - I had (and still have) kids at home. Does that make me a SAHM rather than retired? Or did I retire from a career of several decades? I am drawing from my investments rather than cashing a paycheck. Sure - I have responsibilities to parent my kids - but I had those responsibilities while working as well. This whole arbitrary "that person isn't REALLY retired" argument drives me nuts. If you worked a career and drew a salary, and now don't and have to tap retirement resources (pension and/or savings).... then you're retired!!!!

I am talking specifically about the Mr. mustache crowd

I've listened to many Podcasts and Watch many YouTube videos and these people to crack me up

There is a whole community of people that are trying to convince me that they're retired

It's a job for them

They think they found a magical shortcut To get out of working