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Old 12-29-2010, 09:14 AM   #21
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left me puzzled as to why he wouldn't even hear me out about this. He respects my thoughts on finance as I'm actually an accountant and knows I'm fairly well versed in investments.
Those two thoughts seem to contradict each other.

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Old 12-29-2010, 09:55 AM   #22
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This is all really interesting to me to watch. Dad and mom worked hard, scrimped, and saved all their lives. We save a lot, but live a little too. Little sis saves a little. Middle sis and bro earn little, save nothing, and prefer to be in debt (mom and dad never had debt besides the mortgage, which they paid off early). I've just wondered how the apple fell so far from the tree in my sibs' case. Might make an interesting study.

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I think this is par for the course. My brother nearest to me in age, and I, have been very money conscious our entire lives. We also both planned to exit work early if we could. On the other hand, a younger brother and my sister have been feckless spendthrifts and have essentially no savings. What security there was came from pension expectations- in brother's case his own teacher's pension, in sister's case her husband's pension. I am closer to BIL than I am to her, and it is clear that he would gone in a moment but that she would then become an even more expensive liability than she already is.

Another former city worker I know is in the same position. He feels that half of his pension plus his SS would not be enough for him. Also, without a lot of luck in the courts he would lose his paid off house.

Some people are locked to jobs by a big carrot-golden handcuffs. Others are locked to a spouse by a big stick-what they may perceive as economic ruin that a split-up would bring.
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Old 12-29-2010, 10:57 AM   #23
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My two younger brothers never plan to retire early. They say it is not possible to have a stash big enough to generate the same low 6-figure income they get now. So, they do not bother to even try, and just want to enjoy the good life now. Both have non-working wives and young children.

I don't know if they have ever thought of how their retirement, at 65 or whenever, will get funded. I guess they think that it will work out somehow. I believe they both max out their 401k, but am not sure if they have much outside of that.
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Old 12-29-2010, 01:25 PM   #24
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My brother mentioned that he would definitely like to retire before 60 but that it would be tough and would require at least $5 million in savings. My brother does well making about 250-300k a year, paid off home (worth about 750K) but him and his wife have fairly expensive taste in cars, food, etc.

Anyways I told him that I was thinking before 50 and explained that if he just had 30X his yearly expenditures saved he should be able to pull it off if one has a balanced portfolio.

If his yearly expenditures are (and will remain) $167K, at 30X his yearly expenditures he would need $5M. If his income is $250 -$300K/yr the spread is great enough where he should be able to reach the $5M goal before hitting 60 (unless he is running out of years).

Now if he were to trim his expenditures to a measly $100K/yr, he could retire early.
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Old 12-29-2010, 04:06 PM   #25
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He laughed and said that no way that would ever work in practice
Think of how much fun you'll have sending him pictures of you enjoying retirement.
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Old 12-29-2010, 07:51 PM   #26
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It is difficult for the average person to retire early, but it is not too difficult for the average person to retire at 65. The average life span is about 80, so someone who retires at 65 only has to finance 15 years of retirement, on average. The average family spends about 50k a year, and the average person collects about 12k a year in social security benefits. So, the average couple might collect 24k in social security benefits, and would only need to replace about 26k in spending for 15 years. That's not too hard. If a couple had $300k in savings earning 5% a year, they could withdraw 26k a year for 15 years.
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Old 12-30-2010, 12:41 AM   #27
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I have no siblings to discuss retirement with, but I have observed many discussions with friends.

For me, it was easy to say "I will retire early at 56, and accept a more frugal retirement lifestyle"

I call it my Buy-A-New-Toyota-Corolla-Every-5-Years lifestyle.

Many people want to continue their Porsche lifestyle. They may scoff at my decision, but I'm happy......and I hope that they're happy working on Monday morning.

Don't be bothered by your brother's reaction, he's just got a different perspective
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Old 12-30-2010, 08:02 AM   #28
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You may just need to acknowledge that his concern is legit, but that Firecalc and Financial Engines factor that into their projections in calculating portfolio survivability. Actually, 25x (4% SWR) should do, and 30x would be conservative.
So if I expect to have expenses of $50,000 per year, I should shoot to have (50,000 x 30) $1.5 million in assets? Does it matter if that is gross or net? For instance, the bulk of my assets would be in 401k accounts that I would pay tax on when I withdraw the money.
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Old 12-30-2010, 08:06 AM   #29
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So if I expect to have expenses of $50,000 per year, I should shoot to have (50,000 x 30) $1.5 million in assets? Does it matter if that is gross or net? For instance, the bulk of my assets would be in 401k accounts that I would pay tax on when I withdraw the money.
Gross. Taxes are expenses. You should include in that $50k figure whatever taxes you expect to pay.
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Old 12-30-2010, 08:13 AM   #30
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Gross. Taxes are expenses. You should include in that $50k figure whatever taxes you expect to pay.

Ok thanks. I have seen many of you list "taxes" in your expense itemization but I guess just never looked at it that way. I sort of track what I "take home" versus what I "spend" after taxes. Thought being I can't control the taxes so there is no decision to spend.
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Old 12-30-2010, 08:17 AM   #31
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Thought being I can't control the taxes so there is no decision to spend.
I think it is just the opposite - you can't control the taxes so there is no decision not to spend (pay them). If you don't build tax expenses into your plan you will be forced to cut back somewhere else to find the money.
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Old 12-30-2010, 10:41 AM   #32
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This tax issue also shows a vulnerability in planning. W know what taxes are now, how could be know what they will be?

Personally I would be very careful of what assumptions you make. What most of want to plan is a lifestyle, not a dollar amount. So if elements of that lifestyle get much more expensive, and our income does not change in real terms, our lifestyle gets dialed down, even if we can more or less maintain CPI parity- which itself is a bigger trick than seems to be commonly assumed.

Ha
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Old 12-30-2010, 06:50 PM   #33
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This has been a very good thread. As the youngest of four siblings, who are 5, 9, and 13 years older, from their perspective I could not possibly be worth anything or know more than they do, but am probably in the best shape of the four, except for possibly the oldest who will have a pension from academia (don't know COLA or not) and her DH who retired as probably a GS-12 or 13.

But I had that Scarlet O'hara experience 30+ years ago that showed me a place to which I knew I never wanted to return . The others did not have that experience, and I doubt that they realize the extent to which it affected me.
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Old 12-30-2010, 09:38 PM   #34
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Over Christmas my DW and I were having dinner over my sister-in-laws home. The conversation came up about when I would be looking for another job. I currently work about 5 hours a week servicing my long time customers. I told my sister-in-law that I did not intend on working again and that I considered myself semi-retired. She was exasperated. I reminded her that her husband retired at 55, and she said but he had a pension. I said that it was not her business but I have saved all my life and was prepared for this. I think there is a jealousy factor within the family dynamic. We also talked about our plans to move out of state when DW retires. Warmer climate, lower taxes, and lower cost of living. That also was a shocker.

My sister claims that I am abandoning the family and don't love them, and that she will be responsible for everyone. She makes a great living around 300k. She helps pay for her son's condo, her deadbeat husband's race horses, her daughter at 29 still lives at home (soon to be joined by her fiancé from Israel), and finally she gives my parents $200 per month. She does spread herself thin, but that is her life not mine.
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Old 12-30-2010, 10:15 PM   #35
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My sister claims that I am abandoning the family and don't love them, and that she will be responsible for everyone.
That sounds like "If you really loved me then you'd stay here near me and be as miserable as I've made myself"...
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Old 12-30-2010, 10:22 PM   #36
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My sister claims that I am abandoning the family and don't love them, and that she will be responsible for everyone. She makes a great living around 300k.
At 300K, surely she could afford to bribe you so you will stay. Did she make you an offer?
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Old 12-30-2010, 10:37 PM   #37
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I have not gotten one of my brother-in-laws horses head in my bed yet, if that's what you mean.
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Old 12-31-2010, 02:23 AM   #38
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I think this is par for the course. My brother nearest to me in age, and I, have been very money conscious our entire lives. We also both planned to exit work early if we could. On the other hand, a younger brother and my sister have been feckless spendthrifts and have essentially no savings. What security there was came from pension expectations- in brother's case his own teacher's pension, in sister's case her husband's pension. I am closer to BIL than I am to her, and it is clear that he would gone in a moment but that she would then become an even more expensive liability than she already is.

Another former city worker I know is in the same position. He feels that half of his pension plus his SS would not be enough for him. Also, without a lot of luck in the courts he would lose his paid off house.

Some people are locked to jobs by a big carrot-golden handcuffs. Others are locked to a spouse by a big stick-what they may perceive as economic ruin that a split-up would bring.
I don't follow how he would loose his paid off house.
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Old 12-31-2010, 05:27 AM   #39
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Over Christmas my DW and I were having dinner over my sister-in-laws home. The conversation came up about when I would be looking for another job. I currently work about 5 hours a week servicing my long time customers. I told my sister-in-law that I did not intend on working again and that I considered myself semi-retired. She was exasperated. I reminded her that her husband retired at 55, and she said but he had a pension. I said that it was not her business but I have saved all my life and was prepared for this. I think there is a jealousy factor within the family dynamic. We also talked about our plans to move out of state when DW retires. Warmer climate, lower taxes, and lower cost of living. That also was a shocker.
...
She probably interprets your ESR as not pulling the load and helping your DW (who is still working).... lazy BIL! Who knows... she may be using you as a whipping boy for her frustration with her husband (who is ERd).

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...
My sister claims that I am abandoning the family and don't love them, and that she will be responsible for everyone. She makes a great living around 300k. She helps pay for her son's condo, her deadbeat husband's race horses, her daughter at 29 still lives at home (soon to be joined by her fiancé from Israel), and finally she gives my parents $200 per month. She does spread herself thin, but that is her life not mine.
Sounds like your sister has become an enabler.

I would not let a siblings feelings affect my decision.

However, there may come a day when your parents need help because of health issues. That type of situation is the one where siblings' help is most needed. If you are so inclined... you might reassure your sister that (if that day comes and you are able)... you will help.
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Old 01-07-2011, 03:41 AM   #40
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I have not gotten one of my brother-in-laws horses head in my bed yet, if that's what you mean.
Crispus,

Off topic, but Im dying to know what decision you made about your daughters wedding. Please will you resurrect that old thread. Thx.
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