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Old 08-20-2010, 01:40 PM   #41
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Originally Posted by HsiaoChu View Post

So reality has to set in here.

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

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Old 08-20-2010, 01:49 PM   #42
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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.
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Old 08-20-2010, 02:16 PM   #43
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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.
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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.
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Old 08-20-2010, 02:36 PM   #44
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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) ...
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Old 08-20-2010, 04:24 PM   #45
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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.
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Old 08-20-2010, 04:37 PM   #46
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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.
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Old 08-20-2010, 05:07 PM   #47
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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
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Old 08-20-2010, 05:11 PM   #48
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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.
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Old 08-20-2010, 05:17 PM   #49
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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
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Old 08-20-2010, 05:24 PM   #50
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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.
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Old 08-20-2010, 05:32 PM   #51
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So the bottom line is that you have to have enough cash to sustain a $60,000 income on something that can't take your principle, such as CD's or Treasuries. Get out your calculator. Current CD rates are about 3% in a best case scenario for a lot of money. To get 60K you need 2 million in cash reserves at the present no loss principle rates.
HC, I do get what you are saying. My long term retirement plan is to save enough and spend little enough to live off my TIPS interest if I had to.

I think you are right, most people are never going to save enough to retire early if they have to save a huge amount of money. But I think a lot of the people who post here aren't in the majority. And as others have noted, many have fantastic pensions, some sold businesses, some are extremely frugal, some are in unusually high paying professions, some have two six figure incomes, some received inheritances, some live in low cost of living countries etc.
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Old 08-20-2010, 05:55 PM   #52
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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
Crap hun, I could probably live on $10K if I wasn't so lazy.

If you are greedy/lazy to retire, fine. Don't burden us with your greed/needs/wants.
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Old 08-20-2010, 09:02 PM   #53
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Absolutely. I've put anyone who doesn't agree with me on my Ignore List. Its the only way that works. Who wants to talk with people who disagree with us.
Not me, Babes!
On the City Data forum, I have 41 people who are on my Ignore list. All of them disagree with me.
ROTFLMAO!!!!
I think the principle of the principal relevant data on this board is how many of its members have added you to their "Ignore Poster" lists. Luckily the moderators will help you keep track of any notable milestones.

You have a nice life now.
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Old 08-21-2010, 02:11 AM   #54
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(snip)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
I'm also a public employee and participant in a defined benefit pension plan. I work for a city, not a state, but otherwise the conditions sound similar: the pension system is badly underfunded (it's actually quite a lot worse off than PA), the City is on the hook to make up any shortfall, and it would require legislation to change or discontinue the payments. Instead of taking a contribution holiday in 2001, the City added an unfunded partial COLA to the pension benefit. We got shellacked in 2008, and to add insult to injury, also lost a little over 1% of its assets that year to a collapsing hedge fund. As a result, it is also paying out more in benefits than it is bringing in in earnings, and even with drastic increases in both employee contributions and the City match (probably starting next year), we may not see the 100% funding level again in my lifetime.

None of that makes either system, or any other DBP a swindle. You're making the mistake of attributing to malice what can be adequately explained by incompetence.
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Old 08-21-2010, 08:46 AM   #55
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Going 100% or close to it in CDs for the future just because it would have been a great strategy for the last 10 years is a very questionable plan, especially if inflation kicks up.

CD's worked fine for me from 1988 - 2010. That works out to 22 years. Currently locked in to 2013 at 5.66%. Tell me about when inflation kicks in and your principal starts (or aleady has) to decline. I would/could not think of a worse situation.
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Old 08-21-2010, 11:38 AM   #56
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I think the principle of the principal relevant data on this board is how many of its members have added you to their "Ignore Poster" lists. Luckily the moderators will help you keep track of any notable milestones.

You have a nice life now.
Interesting that the principal of this discussion has suddenly seen his post count spike from the 50's to over 380. Even more interesting is the fact his older posts and a comment on his profile page...
Quote:
Hi Zarathu

In response to your comment the other day,...
...refer to "Zarathu", not "HsaioChu".

Looks to me like someone has been caught in a bit of a deception. Does this call into question the principal's principles?
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Old 08-21-2010, 11:41 AM   #57
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Hello,

I've been reading lots of interesting things on this board, and some of the debates I've seen about different kinds of retirement accounts (IRA, TSP, 401k, etc.) have puzzled me.

If a normal retirement account doesn't actually let you access any of its contents (with exceptions for education, 1st home purchase, or withdrawing principal from a ROTH IRA) until you're more or less at the traditional retirement age of 60+/-, then how are they useful to someone who wants to retire earlier than that? I mean, yes, obviously being able to reinvest your profits tax-free (or tax deferred) will earn you more than doing the same thing in a taxable account, but how is a non-taxable account I can't touch until I'm 60 going to help me if I want to retire at 45?

I feel like I'm missing a vital part of this equation. Perhaps some of you helpful folks can point me in the right direction?

Josh
Josh, one of the nicest features of the Roth IRA is that you can withdraw your contributions (which are after-tax) at any time, at any age, for any reason. The earnings on the contributions are tax free, and those can only be withdrawn pre-59.5 yrs under the conditions you mention (1st time home buyer, education, etc). Just one reason why I think its the best vehicle available for most people to save for retirement...
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Old 08-21-2010, 11:53 AM   #58
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Interesting that the principal of this discussion has suddenly seen his post count spike from the 50's to over 380. Even more interesting is the fact his older posts and a comment on his profile page...
...refer to "Zarathru", not "HsaioChu".

Looks to me like someone has been caught in a bit of a deception. Does this call into question the principal's principles?
What does it mean? that Zarathu and HsaioChu are one and the same?
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Old 08-21-2010, 11:55 AM   #59
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What does it mean? that Zarathu and HsaioChu are one and the same?
Perhaps one of them will be along in a while to answer that question...
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Old 08-21-2010, 12:01 PM   #60
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Perhaps one of them will be along in a while to answer that question...
As always, nice pickup. Busted.
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