ER on less than 600K ?

[kat]

Jon,

I agree with the gist of what you're saying.

It might be easier for me because even though I've had some social perks from being a lawyer, I have never in my life spent over 24k in a year, even with owning my own house and paying cash for cars. (Got one car before the house, and got the other when it was paid off.) I don't even try. Hiking in the Adirondacks, my favorite activity, is free. Tomorrow I'm leaving for my parents' vacation place in the mountains in Vermont. I walk most places I go, because I like to. Some years I skipped health insurance because it didn't seem reasonable, but I found a good deal.

I think it helps too, never having spent any time around engineers or used a spreadsheet, or learned all the ways to be fearful and cautious.

I have "buckets", as some people favor, but one is called "travel" and the other is "maintenance/emergencies". My everyday expenses are a pittance, no matter what you hear about New York.

kate

 

[Nords]

Anyway, he reduced our 100yr "hope" to a 92/94 year "possible", resulting in a plan that among other things, says that DW/me can retire - today if we wish (at 100% of current income).
Yes - this opens up a lot of questions for DW/me at this time, but my intent is not to start a "discussion" - rather than just answer the original "thought" related to "longevity".
Sometimes, we need not plan for “forever”?

How wonderful it must be to have the self-confidence to knock down your clients' lifespans based on your knowledge of actuarial statistics.

It's like buying a stock because half of the other stocks in the market are going up. Hopefully yours does too!

Clients have to balance the possibility of outliving assets against the stress of continuing work in a toxic/stressful environment. So far the board's compromise position seems to be to escape bad situations with the possibility of part-time work until the portfolio has some slack in it.

 

[lazygood4nothinbum]

most of my ancestors of recent generations lived active lives well into their 80s & 90s. i have one bloodline (mom, her father, his mother) who died in their mid/late 70s from alzheimer's disease. and supposedly one cousin got hit by a bus in her 50s but i'm pretty sure she was a lesbian killing herself back when that so-called lifestyle wasn't in fashion.

so, yeah, i might get hit by a bus in my 50s: can't plan for that. i might die in my 70's and leave some happy niece/nephews behind or i can look foward to active living through my 80s and maybe even 90s if i'm lucky.

sleeping well also goes a long way towards reducing stress.

 

[kat]

A neighbor, the most friendly type of person you could ever imagine, retired early. He and his wife regularly headed out in their huge house on wheels. A couple months ago, he knew he was sick, two thousand miles away from home, and went to the ER, thinking it was the flu. Instead, it was lungs full of tumors. (He didn't smoke.) He died a week ago, two months later, at home. I miss him. It's really sad. But I imagine it's good he retired early.

 

[mathjak107]

i just read that one of the highest age groups to have alot of deaths is the 50's...odds are if you make it to 60 your going on to well past the age of 79.5 or so thats the supposed average life span...but thats average ....many did earlier and if not live alot longer

 

[garrynky]

It's interesting that so many on this board are paranoid of outliving their money when they're in their 80s or 90s.  That's the "upside" of the actuarial table.

The downside is that many of us will die in our 60s or heaven forbid, our late 50s.  Read the obits sometime.  To me, eating ramen at 90 is less scary than a life unlived.

One can bump life expectancy up somewhat not smoking or stuffing the face.  But, as they say, they bury joggers too.

The older I get, the more I realize that memories made young are worth more than memories made when old.  You have longer to savor them and they're made when the mind is plyable and willing to cement them in a non-cynical light.

If you've got $600K and you're 55, you have to look at those obituaries and ask yourself, "if that 64 year old was me, was my decision to work until I was 60 worth it"?  You've got a better chance of dying at 64 than living to 90.

Morbid stuff, but crucial for those of us who are realistically able to ask ourselves if we want to spend our prime years under the sun or under flourescant lights.

Jon

I agree with your outlook. I went in for a double hernia operation last week. While this isn't life threating, it does make me realize I'm mortal and mortals have life expectancies.

I'm retiring in about a year at 59, not exactly early retirement. I've made the choice to live large the first few years at the risk of eating noodles at 85 if I happen to make it that long. I couldn't agree more with your logic.

 

[Andy]

This is my first post, but I had to reply to this thread.

I think it is doable, for me at least.   I am 53, single, house paid for, major medical insurance in effect.   I quit work 10 monthes ago.  I had intended not to work, but a job came along that I have always wanted to try my hand at, so 2 monthes ago I started working 3 days/week. 

I have tracked my spending for a long time, am pretty frugal in areas that do not matter to me, but spend in areas that do matter.   I live quite comfortably and consistantly on about 13k a month.   That is below the 4% rule, but I figure that allows for things like "when the roof needs to be replaced..."  I really can not say I lack anything.   I am enjoying this job, so will continue as long as it is fun.
If the day comes that it isn't -I'm out of there.

I think only you can answer whether that is enough money.   How much do you spend?  Is your life fullfilling enough with that amount.  There are lots of things I like to do that spend no, or very little money.

If you don't already spend some time reading the Simple Living boards.

 

[cute fuzzy bunny]

I wonder if you get different answers to this question if you ask it in 1999 or early 2006 vs late 2000-2002..

 

[maddythebeagle]

This might be another thread, but it would be interesting what 20-25k/yr buys you for folks that plan on this kind of retirement. Obviously with a paid off house and health insurance, your expenses will be lower. Also, how do people factor in home repairs and improvements (I guess that I have seen some fixed income folks that simply dont update their house and some let the house fall apart into old age ).

 

[Billy]

Nords

Clients have to balance the possibility of outliving assets against the stress of continuing work in a toxic/stressful environment. So far the board's compromise position seems to be to escape bad situations with the possibility of part-time work until the portfolio has some slack in it.

Working part time is not a 4 letter word nor is it something to be looked at like a 'failure' ... Most people, after the initial euphoria of ER, find that they want to do something productive or with social interaction. 

We know plenty of people who actively and happily supplement their income with money received from their hobbies or part time employment. One man 'updates' computers for those who are not computer savvy. Easy for him, and it provides a service.  It's a win-win.

Another blows the leaves off lawns, flushes the toilets and watches Snowbird residences for problems after storms. He has a whole 'paper route' of these places, for  the staggering fee of $10 monthly. Gives him a reason to wake up in the morning, his 'clients' feel safe and secure, and it isn't tough labor. Brings him thousands of $$ a year. 

Still, another man loves to build. He puts in utility rooms, bathrooms, closets, or what have you for folks... brings in dependable supplemental income every single year. He's happy, out of his wife's hair and they travel to foreign countries on that money and buy their grandkid's gifts, etc. It's a great life. Great exercise for him too.

garrynky

I agree with your outlook. I went in for a double hernia operation last week. While this isn't life threating, it does make me realize I'm mortal and mortals have life expectancies.

I agree with this as well. Billy and I are active retirees and yet, with all this running around the world, we see ourselves slowing down. It is shocking.  How is it that we will see all the countries we still want to if we slow down? Even recovering from the flu takes longer - it's a fact of life.

We are both happy we retired when we did...    we can't imagine just starting out at this age. Our 'requirements' would have to be higher and we couldn't have done all the camping, jumping into the backs of trucks, taking small boats, hiking and white water rafting, seeing hilltribes in the middle of nowhere, etc. that we have already done if we were just starting out... I realize that this is our perspective, however. 8)

Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[d]

am pretty frugal ... live quite comfortably ... on about 13k a month

imagine i too could live quite comfortably on 13k a month, but that doesn't seem too frugal. (is there a decimal missing?)

 

[SteveR]

imagine i too could live quite comfortably on 13k a month, but that doesn't seem too frugal. (is there a decimal missing?)

Hmmm.. $156k per year would be a nice income to live on. Not filthy rich but enough to do most of what anybody could want until you get too old to do it anymore.

I'll take it!

 

[jdw_fire]

I just ran FIRECalc using the Bernicke "Reality Retirement Plan" and a $600k portfolio for a 55yo running 35yrs and the 95% successful W/D is $34,110/yr.  Interesting!

 

[d]

W/D is $34,110/yr

but do note that in 20yrs the withdrawal is then only about 20k

 

[jdw_fire]

but do note that in 20yrs the withdrawal is then only about 20k

I guess it comes down to whether you believe the study that backs the Bernicke "Reality Retirement Plan".  (Do remember that the future dollar amounts are adjusted for inflation so that you are comparing current year dollars to current year dollars.)  If you do then the 20k (in today's dollars) in 20yrs will be enough if the 34k (in today's dollars) is enough at 55yo.

 

[Andy]

I finally get brave enough to post, and I blow it on my first post :! As you probably guess it was suppose to be 1300, not 13k.

 

[haha]

Hey Andy, we were all just groovin" on that $13,000 a month, wondering what to buy next.

Ha

 

[SteveR]

I finally get brave enough to post, and I blow it on my first post :!  As you probably guess it was suppose to be 1300, not 13k. 

No problem... the sharks here hardly noticed.  

Welcome to the board.  Feel free to do a formal intro. in the Hi I AM board.  

Looking forward to hearing more from you.  Good luck in your journey to FIRE.

 

[d]

If you do then the 20k (in today's dollars) in 20yrs will be enough if the 34k (in today's dollars) is enough at 55yo.

with only two letters, IF is a mighty big word ... indeed, if Bernicke is correct (and he might be, or he might not be), then a 40% cut in expenditures might indeed be sufficient.

 

[bearkeley]

It would for me. Where do I find these 4-plexes @$200K each, in a neighborhood where I won't get my throat cut?

I would even be happy collecting my own rents.

Ha

Well here is a real world example of this from some properties we just looked at in suburban Atlanta.

2 condo style 4plexes @ 300 k each

Rents 700 per unit

Gross operating income $64,000
total operating expenses $20,000

Net operating income $44,000

This includes among other expenses

Repairs 3000
Management Fee 6945.1
Landscaping 1830
5% vacancy.

So if you managed the property and did the lawns and some maintenance yourself you coulld increase your income. Of course if you lived in one unit you would lose $8400 in income but then you could have your pick of the units. Also much of your income would be protected from taxes because of the depreciation.

So can you live on $44k a year in Marietta?

I would think you could live quite well and as costs go up rents go up. The units are 2 bed 2 bath 1350 sqft with a screened porch surrounded by woods in a reasonably nice quiet residential neighborhood.

It is not Wysteria Lane but those people don't seem all that happy anyway.

So based on that I think if you were okay with living in a condo and living a simple life you would be fine.

 

[ferco]

What is Bernicke's "Reality Retirement Plan"?

 

[REWahoo]

What is Bernicke's "Reality Retirement Plan"?

From the description in FIRECalc:

Ty Bernicke's "Reality Retirement Planning: A New Paradigm for an Old Science" describes extensive research showing that most people see significant reductions in spending with age (not related to reduced assets or income). If selected, this option will reduce your current dollar withdrawals from your nest egg (based on your initial Annual Spending setting, but not other adjustments) by 2-3% per year starting at age 56, and then stabilizing at age 76 to keep up with inflation. You should read his article for details if you plan to use this option.

 

[free4now]

Good find on those 4plexes bearkeley. Here in the Bay Area $300k gets you a very small studio condo that rents for maybe $900/mo. If $300k can get you $2800 in rents you're pretty golden.

 

[kat]

This might be another thread, but it would be interesting what 20-25k/yr buys you for folks that plan on this kind of retirement. Obviously with a paid off house and health insurance, your expenses will be lower. Also, how do people factor in home repairs and improvements (I guess that I have seen some fixed income folks that simply dont update their house and some let the house fall apart into old age ).

Hi there. I don't really plan on improvements, after I get my house sided and windows replaced, replace the back deck, and fix the front steps, things I'll be doing the next 12 months..... I will take care of regular maintenance, replace applicances, roof etc as needed. I'm funding the next 12 months with a pot I built up for that work. Ongoing maintenance is part of my regular budgeting. I also have a separate travel pot but will always add to it. Every day expenses just don't amount to much, and I have never had to try hard at that. Just three bills to pay next month and I already scheduled automatic payment.....

 

[education]

Hi Everyone--

I think the $600,000 is pretty-open-ended and leaves way too much unanswered.

I will be retiring with $500,000. But...I am 59. I have a small DB (with a 1% cola). I'll draw a fair sized Social Security check at 62. My home has been paid for for several years. My kids are adults--college and weddings paid for. I owe nothing on two relatively new cars (03 and 05 ). I pay credit card in full every month. My home is nice, while not grand. It has 2,000 sq ft and a no frills pool. In fact, everything about me is no frills. I have been replacing things around the house before I retire.

In a past life I spent lavishly and was in debt up to my eyeballs. My job demanded a certain lifestyle and I was always more than happy to oblige. I'm pleased to say that today that is not the case. My epiphany came during a financial planning seminar by an old guy in a parrot green blazer and white pants and white loafers. The program was called "How to be a Greedy Geezer". Lots of misinformation to be sure, but it put me in the right frame to get out early.

Just my two cents on what it takes.


Professor