How much is enough? - Page 3

Tadpole · 06-12-2007, 02:50 AM

Quote:

Originally Posted by FIREdreamer

My goal is $1.5 million minimum or 25 times our projected expenses ($60K a year).

I participate but don't fully appreciate these polls about savings goals. What perplexes me is that I may set a goal, say $1.5 million. So, as I approach that goal do I think I am close or do I think I may be one year from a 30% drop in a downturn so I need a 30% buffer? If you are $1 short, can you retire? If you are $100,000 short, can you retire? If you are $500,000 short? etc. It seems to me that "goal" risk is something similar to "inflation" risk, which I have factored into my savings goals to make up for pension increases that lag inflation, or tried to factor in. And, yes, past market performance says it straightens itself out in the end, but, a three year downturn could severely reduce the principle.

Spanky · 06-12-2007, 07:42 AM

Quote:

Originally Posted by Tadpole

I participate but don't fully appreciate these polls about savings goals. What perplexes me is that I may set a goal, say $1.5 million. So, as I approach that goal do I think I am close or do I think I may be one year from a 30% drop in a downturn so I need a 30% buffer? If you are $1 short, can you retire? If you are $100,000 short, can you retire? If you are $500,000 short? etc. It seems to me that "goal" risk is something similar to "inflation" risk, which I have factored into my savings goals to make up for pension increases that lag inflation, or tried to factor in. And, yes, past market performance says it straightens itself out in the end, but, a three year downturn could severely reduce the principle.

A cash buffer for x years of expenses and your pension should be able to cushion a prolonged market decline. We have to make some reasonable assumptions (i.e., risks, economy, market returns, expenses, health., etc) to determine whether we have enough to RE. If we keep predicting the worst scenarios, such as a global market downturn or recession for the next 100 years or the government or mega-corps default all their pension or social security obligations, we will never be able to RE.

tryan · 06-12-2007, 08:10 AM

Quote:

do I think I am close or do I think I may be one year from a 30% drop in a downturn so I need a 30% buffer? If you are $1 short, can you retire? If you are $100,000 short, can you retire? If you are $500,000 short?

No need to get wrapped around the axel ... 4% withdrawls are 100% safe.

retire@40 · 06-12-2007, 10:48 AM

Quote:

Originally Posted by Tadpole

I participate but don't fully appreciate these polls about savings goals. What perplexes me is that I may set a goal, say $1.5 million. So, as I approach that goal do I think I am close or do I think I may be one year from a 30% drop in a downturn so I need a 30% buffer? If you are $1 short, can you retire? If you are $100,000 short, can you retire? If you are $500,000 short? etc. It seems to me that "goal" risk is something similar to "inflation" risk, which I have factored into my savings goals to make up for pension increases that lag inflation, or tried to factor in. And, yes, past market performance says it straightens itself out in the end, but, a three year downturn could severely reduce the principle.

Then maybe your plan should be to semi-retire for 3 years after you think you are FI. That should satisfy your risk tolerance. If you did save enough, you've got some extra fun money to spend. If you didn't, you can ramp it to full-time again.

Meadbh · 06-17-2007, 01:42 PM

Quote:

Originally Posted by Ceberon

The way you say this makes me think that you assume that people who choose $1M have a pension? Many of us don't have any pensions (I know I won't have one), yet we're still aiming for about 1M. 1M for a 50-60 year old can throw off 35-40k per year. That's not too shabby.

So just to nitpick, if you're voting 3-4M, it's not because you have NO pension, it's because you are choosing a lifestyle which requires $105k-$140k per year.

First, all my calculations are in Canadian dollars (currently approaching par with US$, but that's unusual). Second, I am calculating based on $60-75K in today's dollars, and allowing for inflation. Third, I currently have a very tax efficient financial structure and expect to pay more, not less, tax during retirement. Fourth, I plan to move after ER, to an area with higher property costs. Fifth, I do not have kids who will look after me so I need to self insure for LTC.

OK?

aenlighten · 06-18-2007, 07:24 PM

I would have planned for more, simply to live more, but can live comfortably on much less. Ideally 35-45x expenses, because I am not satisfied with a constant standard of living, I want to grow rich in retirement.

blade3colorado · 06-18-2007, 09:12 PM

Poll may not apply to those with pensions . . . Working for the Federal Government (CSRS retiree), I'll receive 57k a year with COLA, if my early retirement goes through this year (age 52 with 32 years of civil service). However, if I stuck it out until age 55 (AAAAAAAAARRRRRGGGGHHHH), then it will probably be approx. 67-70k. I also have approximately 475k in stocks, cash, and home equity. In effect, I would be in big, big trouble without my pension and probably would not be able to retire this century . . . grin.

Alex · 06-19-2007, 01:00 AM

My number is $2.5 Million or age 50 - whichever comes first.

skyline · 06-19-2007, 02:13 AM

I thought my number was $2M (no pension, not counting RE equity), but when I hit it, I did some soul-searching and realized I was more risk-adverse than I thought, so I revised it to $2.5M. Hopefully when I hit that target (projecting sometime next year), I won't suddenly decide the new number is $3M!

dm · 06-19-2007, 06:00 AM

My number is 50. I just turned 50 and I have $400,000. Of coarse the $53,000 Cola pension helps. The wife is also going to work one more year full time and plans to teach a class or two at the local college for a while for an additional $13,000 to $26,000, this is for 4 to 8 hrs a week and summers off.

Maybe I have lots of numbers. I'm just ready to go and I'll make it work out with what I have. I'm working 28 hours a week and I have 15 weeks to go. We need about $70,000 to cover what we spend now but it would not be to difficult to cut that back alittle if we choose to. We have no debt and no budget.

novaman · 06-19-2007, 06:27 AM

I guess those with pensions could figure out how much of a nest egg that pension is worth (25x??) and come up with a FIRE number...

ESRBob · 06-20-2007, 01:12 PM

Quote:

Originally Posted by dm

My number is 50. I just turned 50 and I have $400,000. Of coarse the $53,000 Cola pension helps.

DM,
Nothing like a 53k COLA'd pension to take the pressure off retirement finances... What sort of work did you do to earn that?

Congrats on your achievement, and just hang in there for the next 4 months and you'll be a free man...

megacorp-firee · 06-20-2007, 01:34 PM

Quote:

Originally Posted by ESRBob

DM,
Nothing like a 53k COLA'd pension to take the pressure off retirement finances... What sort of work did you do to earn that?

Congrats on your achievement, and just hang in there for the next 4 months and you'll be a free man...

COLA'ed? Gotta be government, military, or teacher

ESRBob · 06-20-2007, 03:11 PM

I'd guess that, too, but am always looking for any other avenues. I've gotta start giving my kid career advice, and a COLA'd pension needs to weigh into the equation somewhere. (Nords was visiting us in NY a few weeks back and gave him the full pitch on the joys of Special Operations, so I suppose that would get him a COLA'd pension, but good health insurance might also be required depending on how messy the fieldwork gets...)

megacorp-firee · 06-20-2007, 03:16 PM

Quote:

Originally Posted by ESRBob

I'd guess that, too, but am always looking for any other avenues. I've gotta start giving my kid career advice, and a COLA'd pension needs to weigh into the equation somewhere. (Nords was visiting us in NY a few weeks back and gave him the full pitch on the joys of Special Operations, so I suppose that would get him a COLA'd pension, but good health insurance might also be required depending on how messy the fieldwork gets...)

Other option is to steer him into something that makes gobs of money ... then you don't need no stick'en Cola'ed pensions

but I guess that would be a new thread....

blade3colorado · 06-20-2007, 03:31 PM

You're right megacorp-firee, primarily government, military, and teachers receive pensions w/cola . . . Feds are still paying CSRS pensioners, but will eliminate that cost due to all new hires being FERS since early '80s. Very grateful I went in as CSRS, since you better know what the hell you're doing investment wise if you are FERS. Sheesh, I know quite a few young Feds that have been with the government for 10 years or more that haven't begun contributing or have contributed the minimum amount. Bottom line? I think most public and private sector entities will eliminate all pensions in the next 20 years . . . Sheesh, as we all know, some haven't even honored what they initially promised to employees and/or bankrupted their company, e.g., United, Enron, etc. Sad.

ESRBob · 06-20-2007, 03:39 PM

Yeah, but he's not cut out for Wall St, and I wonder if he has the work ethic to be an entrepreneur, and even if he did, plenty of talented entrepreneurs never make much money.... The more I look back on my own experiences as an entrepreneur, the more I feel I was incredibly lucky to get the breaks that allowed us to ER. It could just as easily have gone the other way, which would have meant I would still be lugging the laptop around the country to a bunch of meetings for a bunch more years of 65-hour weeks...

dm · 06-21-2007, 06:04 AM

The wife is a school administrator and is in the public school retirement system. She has 22 years in and we were able to purchase 3 years for her to qualify for a reduced 25 and out benefit.

kcowan · 06-21-2007, 12:28 PM

Quote:

Originally Posted by blade3colorado

...Bottom line? I think most public and private sector entities will eliminate all pensions in the next 20 years . . . Sheesh, as we all know, some haven't even honored what they initially promised to employees and/or bankrupted their company, e.g., United, Enron, etc. Sad.

Also COLA using CPI will not be as good in the future as it was before they started tinkering with it to keep it down.

Quote:

Traditional inflation rates can be estimated by adding 7.0% to the CPI-U annual growth rate (3.8% +7.0% = 10.8% as of August 2006) or by adding 7.4% to the C-CPI-U rate (3.4% + 7.4% = 10.8% as of August 2006). Graphs of alternate CPI measures can be found as follows. The CPI adjusted solely for the impact of the shift to geometric weighting is shown in the graph on the home page of Shadow Government Statistics.

Complete article here:
Shadow Government Statistics: 3. Consumer Price Index (UPDATE)

fluffy · 06-21-2007, 12:42 PM

View Poll Results: What is your targeted savings goal to reach FIRE
$1 million or less	48	18.05%
between $1 million and $2 million	106	39.85%
Between $2 million and $3 million	59	22.18%
Between $3 million and $4 million	27	10.15%
Between$4 million and $5 million	11	4.14%
At least $5 million	15	5.64%
Voters: 266. You may not vote on this poll

06-18-2007, 07:24 PM	#46
aenlighten Recycles dryer sheets Join Date: Apr 2007 Posts: 268	It's never enough until it must be I would have planned for more, simply to live more, but can live comfortably on much less. Ideally 35-45x expenses, because I am not satisfied with a constant standard of living, I want to grow rich in retirement.

06-19-2007, 01:00 AM	#48
Alex Full time employment: Posting here. Join Date: May 2006 Posts: 696	My number is $2.5 Million or age 50 - whichever comes first. __________________ Oh, you hate your job? Why didn't you say so? There's a support group for that. It's called EVERYBODY, and they meet at the bar.--Drew Carey

06-18-2007, 09:12 PM	#47
blade3colorado Dryer sheet wannabe Join Date: Jun 2007 Location: Morrison Posts: 11	Poll may not apply to those with pensions . . . Working for the Federal Government (CSRS retiree), I'll receive 57k a year with COLA, if my early retirement goes through this year (age 52 with 32 years of civil service). However, if I stuck it out until age 55 (AAAAAAAAARRRRRGGGGHHHH), then it will probably be approx. 67-70k. I also have approximately 475k in stocks, cash, and home equity. In effect, I would be in big, big trouble without my pension and probably would not be able to retire this century . . . grin.

06-19-2007, 02:13 AM	#49
skyline Recycles dryer sheets Join Date: Apr 2007 Posts: 106	I thought my number was $2M (no pension, not counting RE equity), but when I hit it, I did some soul-searching and realized I was more risk-adverse than I thought, so I revised it to $2.5M. Hopefully when I hit that target (projecting sometime next year), I won't suddenly decide the new number is $3M!

06-19-2007, 06:00 AM	#50
dm Recycles dryer sheets Join Date: Mar 2005 Posts: 269	My number is 50. I just turned 50 and I have $400,000. Of coarse the $53,000 Cola pension helps. The wife is also going to work one more year full time and plans to teach a class or two at the local college for a while for an additional $13,000 to $26,000, this is for 4 to 8 hrs a week and summers off. Maybe I have lots of numbers. I'm just ready to go and I'll make it work out with what I have. I'm working 28 hours a week and I have 15 weeks to go. We need about $70,000 to cover what we spend now but it would not be to difficult to cut that back alittle if we choose to. We have no debt and no budget.

06-19-2007, 06:27 AM	#51
novaman Recycles dryer sheets Join Date: May 2007 Posts: 158	I guess those with pensions could figure out how much of a nest egg that pension is worth (25x??) and come up with a FIRE number...

06-20-2007, 03:11 PM	#54
ESRBob Thinks s/he gets paid by the post Join Date: Mar 2004 Posts: 1,278	I'd guess that, too, but am always looking for any other avenues. I've gotta start giving my kid career advice, and a COLA'd pension needs to weigh into the equation somewhere. (Nords was visiting us in NY a few weeks back and gave him the full pitch on the joys of Special Operations, so I suppose that would get him a COLA'd pension, but good health insurance might also be required depending on how messy the fieldwork gets...)

06-20-2007, 03:31 PM	#56
blade3colorado Dryer sheet wannabe Join Date: Jun 2007 Location: Morrison Posts: 11	You're right megacorp-firee, primarily government, military, and teachers receive pensions w/cola . . . Feds are still paying CSRS pensioners, but will eliminate that cost due to all new hires being FERS since early '80s. Very grateful I went in as CSRS, since you better know what the hell you're doing investment wise if you are FERS. Sheesh, I know quite a few young Feds that have been with the government for 10 years or more that haven't begun contributing or have contributed the minimum amount. Bottom line? I think most public and private sector entities will eliminate all pensions in the next 20 years . . . Sheesh, as we all know, some haven't even honored what they initially promised to employees and/or bankrupted their company, e.g., United, Enron, etc. Sad.

06-20-2007, 03:39 PM	#57
ESRBob Thinks s/he gets paid by the post Join Date: Mar 2004 Posts: 1,278	Yeah, but he's not cut out for Wall St, and I wonder if he has the work ethic to be an entrepreneur, and even if he did, plenty of talented entrepreneurs never make much money.... The more I look back on my own experiences as an entrepreneur, the more I feel I was incredibly lucky to get the breaks that allowed us to ER. It could just as easily have gone the other way, which would have meant I would still be lugging the laptop around the country to a bunch of meetings for a bunch more years of 65-hour weeks...

06-21-2007, 06:04 AM	#58
dm Recycles dryer sheets Join Date: Mar 2005 Posts: 269	The wife is a school administrator and is in the public school retirement system. She has 22 years in and we were able to purchase 3 years for her to qualify for a reduced 25 and out benefit.

06-21-2007, 12:42 PM	#60
fluffy Recycles dryer sheets Join Date: Jun 2006 Posts: 82