How is it "early" if you can't get your money?

[Alan]

prin·ci·pal

Finance. a capital sum, as distinguished from interest or profit.


prin·ci·ple


an adopted rule or method for application in action: a working principle for general use

 

Picky picky picky. Is there any intelligent human being on this forum who didn't know what I was talking about? I think not.

HC, during your long career in education did you never correct your students? Since you are posting lots of financial advice travelover was just checking that you understood the difference between principle and principal.

Be nice, be happy

 

[friar1610]

These DB ponzi schemes are coming to an end soon. Sure I lucked out on one in education(though I could not retire until I had at least 30 years in and was at least 59.5 year of age), but that not ER.

Those in the military need to be officers to get the really decent money at the end of 20 years. And the same exists for the others. There are really only limited positions for advancement to the serious money for a quick 20 years out and ER. Very very few don't take some other job.

Yeah, it can be done, but the sacrifice in doing it has to be recognized. 99+% of Americans either cannot make that sacrifice either due to not enough income or not willing to constrict their lives in that way.

Money is not everything, but it almost has to be to make these numbers early.

I acknowledged in my post that most people work in a second career for a while. Although not all do; I know a number who didn't.

One scenario: Join the military at 18 out of high school. Stay in 20 years, retiring as an E-7. Age 38. Work for 10 - 12 years in a second career and save. Retire for good at about 50.

Another scenario: Join the military at 22 out of college. Stay in for 24 - 26 years, retiring as an O-5 or O-6. Work 10 years. Retire for good at 56 - 58.

I suppose it's subjective whether those are "early" retirements but I was simply pointing out another route to the goal. Worked for me.

 

[ziggy29]

I acknowledged in my post that most people work in a second career for a while. Although not all do; I know a number who didn't.

One scenario: Join the military at 18 out of high school. Stay in 20 years, retiring as an E-7. Age 38. Work for 10 - 12 years in a second career and save. Retire for good at about 50.

Another scenario: Join the military at 22 out of college. Stay in for 24 - 26 years, retiring as an O-5 or O-6. Work 10 years. Retire for good at 56 - 58.

Though not an early retirement per se, when I worked for an aerospace/defense company we had a LOT of "triple dippers." It was actually very common. These folks joined the military probably out of high school, put in their 20 and then went to work for the defense contractor. After another 15-20 years there, they would retire (now collecting two pensions and having health insurance taken care of) and re-up as contractors making a much higher hourly rate (since they don't really need the bennies at this point).

 

[Alan]

I acknowledged in my post that most people work in a second career for a while. Although not all do; I know a number who didn't.

One scenario: Join the military at 18 out of high school. Stay in 20 years, retiring as an E-7. Age 38. Work for 10 - 12 years in a second career and save. Retire for good at about 50.

Another scenario: Join the military at 22 out of college. Stay in for 24 - 26 years, retiring as an O-5 or O-6. Work 10 years. Retire for good at 56 - 58.

I suppose it's subjective whether those are "early" retirements but I was simply pointing out another route to the goal. Worked for me.

A good friend of ours did just that and at 58 he retired with a teacher's pension plus his military pension. His wife retired at the same time with her private pension so they are doing very well even though they were never earning 'big bucks'.

I don't see private pensions as ponzi schemes since these days they are pretty well regulated and have reasonable protection in the mandatory insurance protection scheme run by the government (PBGC).

 

[ziggy29]

I don't see private pensions as ponzi schemes since these days they are pretty well regulated and have reasonable protection in the mandatory insurance protection scheme run by the government (PBGC).

Ponzi scheme or not, I'd much rather have one than not...

 

[Alan]

Ponzi scheme or not, I'd much rather have one than not...

I've got 4 of the b*ggars so I certainly hope they don't implode, otherwise I'll be saying "Do you want fries with that?" during my senior years.

 

[rescueme]

I've got 4 of the b*ggars so I certainly hope they don't implode, otherwise I'll be saying "Do you want fries with that?" during my senior years.

Just let us know what window and Micky D's you're located at, and we'll stop off and say hi ...

 

[dex]

A pension does add some peace of mind. I worked 20 years for a GE company and will get 12K/yr at 60 - probably no increases over the years. That plus SS at 62 will provide me with close to 100% of my estimated budget at 62. That percentage falls to 60% in 23 yrs.

 

[Alan]

Just let us know what window and Micky D's you're located at, and we'll stop off and say hi ...

That's what I love about this community - lots of folk willing to give their support

 

[REWahoo]

That's what I love about this community - lots of folk willing to give their support

Hey, we expect you to slip us some extra fries!

 

[ziggy29]

That's what I love about this community - lots of folk willing to give their support

Just pay me back by supersizing it for me, okay?

 

[Alan]

A pension does add some peace of mind. I worked 20 years for a GE company and will get 12K/yr at 60 - probably no increases over the years. That plus SS at 62 will provide me with close to 100% of my estimated budget at 62. That percentage falls to 60% in 23 yrs.

3 of my pensions are not COLA'ed and I'm taking them now, topping up from regular savings, so (going back to the OP) I won't have need of the tax deferred savings before they can be withdrawn without penalty.

 

[Alan]

Hey, we expect you to slip us some extra fries!

Just pay me back by supersizing it for me, okay?

You can count on it !!

 

[ziggy29]

A pension does add some peace of mind. I worked 20 years for a GE company and will get 12K/yr at 60 - probably no increases over the years.

Yeah, my frozen pension will be about $8000 a year -- not adjusted for inflation -- if I take it at 65. By 2030 I figure that will buy a Happy Meal once a month when I go past Alan's drive through.

 

[walkinwood]

... and others choose to live a very frugal life while earning a reasonable salary.
... and others have ER'd with kids

There are many ways to achieve ER, but they all take commitment and patient execution.

 

[glippy]

So reality has to set in here.

Just my opinion.

Yes, please tell this group of early retirees about how early retirement is impossible.

 

[Khan]

My ER pension the first year was ~$21K; a bit more than a year later increased to ~$25K.
I will tap my retirement funds later this year, starting with the traditional IRA.

 

[RunningBum]

Originally Posted by RunningBum
That's a very narrow view. There are plenty of other ways to amass wealth. Some hit it big with company stock options. Some invested well in the stock market. Some saved enough to tide them through until a nice pension kicks in. Some built their own business up and were able to sell at a nice price. Some invested in real estate and watched it appreciate as they collected rent. And so on. And how much one needs is very much up to the individual.

Sure..... but if you think this is attainable by more than a very very small percentage of the population, then you are living in a dream world bubble and should try to do it with all the normal stuff of living: buying a house, living on a salary or wages, having any children, paying healthcare, etc.

Get out your calculator. Figure the numbers you need. I don't know anybody in MY WORLD who has this kind of money. I'm sure many do, and maybe many on this very narrow framework forum, but for 99% of the population this is really only the territory of the Lottery.

What's your point? The OP asked a specific question, and it was correctly answered. The posters here have, can or hope to have the means to retire early. I do have my calculator out, at least monthly, and I can do this, I'm just figuring out when it's best for me to pull the trigger, but it will almost certainly be while I'm still in my 40s. Some that hope won't make it, but even if they fall a bit short of ER they will be more set in normal retirement for trying.

Just because you can't comprehend this doesn't make it a dream bubble for many of us. This isn't a forum for the other 99% of the population or whatever that number really is.

 

[rescueme]

This isn't a forum for the other 99% of the population or whatever that number really is.

Exactly.

Those that can, do. Those that can't? I guess they just complain about how it can't be done (based upon their personal situation) ...

 

[plex]

Wow, Hsao has some serious reading to do still, pretty much everything he/she said was wrong. The median household spending amount should be obvious just from looking at Wikipedia, no need to make up numbers. Not even to mention how a little knowledge and planning can put you well ahead of the average household in many ways. Also, it is ridiculous to make all encompassing statements, outliers certainly do exist, and this forum is full of them.

 

[Leonidas]

I'm so grateful for that ignore function. It is time.

Regretful, but we all are sometimes pressed to the point where we have to stand by our principals.

 

[HsiaoChu]

Here's another definition you appear to have missed.
Pension: a fixed sum paid regularly to a person: a (archaic): wage b : a gratuity granted (as by a government) as a favor or reward c : one paid under given conditions to a person following retirement from service or to surviving dependents. (italics added)

Ponzi scheme: an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks.

The fact that some pension funds have been mismanaged doesn't make all DB pensions a swindle.

OK.... Look. I have one of these ponzi pension schemes. Its the PA Public School Teacher fund. Its pretty well managed even though it did manage to lose 20 billion in the market crash. Its untouchable by the state government, and the state constitution would have to be changed to have the state deny the payments. However, while it does draw on the funds, its not only the funds that manage it. While teachers put in money all along, the state is also supposed to put in money, and the school districts are supposed to do so. Since 2001, the state told itself and the school districts that they didn't have to add anything. So what its drawing on now is the funds in the markets, and the payments of people who are working. Its supposed to be 85% financed for everyone who is in the fund even those who are 33 years from retirement. It won't run out of money for me, but some time in the future, the paying teachers may be paying for the retirement of the retired teachers.

Thats like SS. No interest built up to draw on. Do the payments from the people who still putting in the money. Only works when you have a whole lot more people putting in money than taking out money.

In my opinion, anyway.

HC

 

[HsiaoChu]

Yes, please tell this group of early retirees about how early retirement is impossible.

Depends very much on how early you want to retire, and how much disposable income you want to have, and how lucky you expect to be in the markets, and how deprived you want to be during your working years, and other stuff.

Tell me how much you need, whether you expect to have children, whether you expect to buy a house, have a couple of cars, get married, how early you want to retire,etc. and then I'll tell you how possible this is.

Its really not hard to figure out. Its not rocket science.

 

[HsiaoChu]

My ER pension the first year was ~$21K; a bit more than a year later increased to ~$25K.
I will tap my retirement funds later this year, starting with the traditional IRA.

For many people who want to retire, trying to live on $21K is really really hard. It would be almost impossible where I'm moving for retirement.

If your view of ER finacially independent is living on 21K a year, then, heck, you can do that with about $500,000 if you are very careful about what your investments are and throw in a day at Walmart in something fairly mindless.

I'm shooting more for more than 3 times that. My daughter will want me to visit her in California, and my son in Germany at least once a year.

If the common view here of ER is living on 21K a year, heck, anyone can do it. I was under the perhaps mistaken impression that most people here wanted to retire with something approaching 60-70 grand a year, not 1/3 of that. If you want to do the 60-70K, then I just don't see how the numbers come up with most of what people say, unless they are willing to leave a lot of the stable money in the markets and are hoping to pick up a good stable 6-8% per year. But then this is what a lot of my baby boomer friends did, and now they have a 1/3 of what they had before.

HC

 

[Milton]

The bottom line that everyone should realize is that to retire early you have to have made what is for most normal americans an obscene amount of salary or income. You have to have a huge amount of disposable income to put into investments.

That's a pretty categorical statement.

Many people on this forum have proven, through practical experience, that one does not need to earn a fortune to be able to FIRE. The key is a non-extravagant (though comfortable) lifestyle, both pre- and post-retirement.