Join Early Retirement Today
View Poll Results: How much to RE today with two young kids and no pension/medical bens?
0.5M 1 1.04%
1.0M 1 1.04%
1.5M 4 4.17%
2.0M 25 26.04%
2.5M 15 15.63%
3.0M 22 22.92%
3.5M 8 8.33%
4.0M 9 9.38%
4.5M 2 2.08%
5.0M 9 9.38%
Voters: 96. You may not vote on this poll

Reply
 
Thread Tools Search this Thread Display Modes
How much to RE today with two young kids and no pension/medical bens?
Old 08-24-2009, 11:38 AM   #1
Recycles dryer sheets
 
Join Date: Aug 2003
Posts: 474
How much to RE today with two young kids and no pension/medical bens?

A recent discussion around if $2M is enough to retire led me to think we should update a poll from a couple of years ago.

What amount of money would be enough to make you personally feel comfortable retiring in the United States with no supplementary income, pension or medical benefits assuming you are 40 with a 40 year-old spouse and two children ages 10 and 12.
__________________

__________________
bongo2 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-24-2009, 11:50 AM   #2
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,449
We fit the bill (family of 4 no pension/medical). RE with 2.5M in 2005. Then got cut in half ... now on the mend.

We pretty much decided someone needs to get health bennies (BC/BS jumped over a 1k/mo ... was nearly HALF that in 2005). No movement yet thou.
__________________

__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Old 08-24-2009, 12:07 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
We will be roughly the hypothetical family. Hope to FIRE within 10 years, we'll be right at 40 years old, with a 13 year old and a 14 year old. $2 million is roughly what we will have including houses, cars, etc. So maybe $1.8 million in the portfolio. That is budgeting $1000 a month on average for health insurance premiums from age 40-65. 1.8 million invested would allow pulling $63,000 a year at 3.5%. We may do it on less and keep "go back to work" in the back pocket.
__________________
FUEGO is offline   Reply With Quote
Old 08-24-2009, 12:12 PM   #4
Thinks s/he gets paid by the post
Leonidas's Avatar
 
Join Date: May 2006
Location: Where the stars at night are big and bright
Posts: 2,847
I retired, with all of the things you excluded, at 45 with two kids aged 12 and 16.

Playing with the calculator, with $2 million, I could replace my pension (provided I got a good rate of return and the market didn't crash as it did a few years after I left), and health insurance. The thing that would kill the deal for me is not having a supplementary income. That extra money, on top of a diet-cola'ed pension, is what makes my lifestyle as pleasant as it is. The pension pays the basics easily, but the money for the extras that make life nicer, that comes out of the portfolio.

So, I think $2M would get it done, but it would not result in a retirement lifestyle I would want to undertake. I don't think our spending habits are extravagant (although compared to some of the really serious LBYM'ers out there it is). We clip coupons, shop sales, etc., and so on. But I'm not about to start recycling dyer sheets. I LBYM, but not freakishly so.

While I think I could do it on $2M, life in retirement would be very different from what I dreamed about. For my planning purposes, I had some things, that many would consider "extras" or even "frivolous", that were on my "must be able to do" list. And because I'm cautious and wanted a lot of wiggle room for disasters, my "number" was roughly double the given amount.

If I had really wanted to stop working, was willing to cut out some of the more expensive "extras" ("sorry kids, you got to pay your own tuition"), then I think a number closer to $3M would more to my liking. But, I didn't factor in much fudge factor there at all, and the recession and stock market disaster would have wreaked havoc on at least my ability to sleep well, if not my lifestyle (mac and cheese for dinner again!)
__________________
There is no pleasure in having nothing to do; the fun is having lots to do and not doing it. - Andrew Jackson
Leonidas is offline   Reply With Quote
Old 08-24-2009, 12:25 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
I'll add that I would feel much better with $2 million and today's stock valuations versus $2 million after 3-4 years of big upward surges in the stock market. It's hard to apply any real numbers, other than to say that I wouldn't exactly be jumping to pull the trigger if my portfolio had just doubled from 1 to 2 million over a short period of time.
__________________
FUEGO is offline   Reply With Quote
Old 08-24-2009, 01:01 PM   #6
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Assuming no change in the health care status quo, I don't think I'd be comfortable withdrawing more than about 2.5% a year starting at age 40, so needing $50K a year in current expenses, I'd say $2M. That's based on our current situation, lifestyle and income needs; YMMV, obviously.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 08-24-2009, 02:43 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Feb 2006
Posts: 1,183
It all depends on the lifestyle and expenses. Rural living with paid for home and a simple life with gardening and some hunting and fishing greatly reduces need for high cash flow. Two kids who can snag scholarships for the local State U following 2 years at Community College can get an education that will be 10's of thousands less. A temperate climate reduces utilities vastly. So, the devil is always in the details and reconciling wants vs. needs. Remember, that many live on $40K a year or less.
__________________
crazy connie is offline   Reply With Quote
Old 08-24-2009, 04:27 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
I miss the old days of the board when some people would always pipe up with how they raised 10 kids, sent them all to Harvard, ate like kings, and had fun all day long, on much less than $1 million. Then John Galt would add that these people were way over-financed.

Then someone would accuse Jarhead of moonlighting as a wheat bread fueled gigolo. Then we could all go back to arguing about paying off the mortgage until one of us got banned. It was like one of those survivor shows.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 08-24-2009, 04:31 PM   #9
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,074
We haven't heard from Jarhead in months. Guess the golfing weather must be great - or he's having trouble digesting all that wheat bread he's been eating...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 08-24-2009, 04:52 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by haha View Post
I miss the old days of the board when some people would always pipe up with how they raised 10 kids, sent them all to Harvard, ate like kings, and had fun all day long, on much less than $1 million.
I liked it best when the "doing it on peanuts" poster would end with the disclaimer that "oh yeah, DW is still working and makes $six figures plus extensive fringe benefits!

Just a little omission in the original story of high living on low dollars..........
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 08-24-2009, 05:01 PM   #11
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,074
Quote:
Originally Posted by youbet View Post
... "oh yeah, DW is still working and makes $six figures plus extensive fringe benefits!
I thought the term was 'French' benefits...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 08-24-2009, 05:41 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 5,874
Originally Posted by youbet
... "oh yeah, DW is still working and makes $six figures plus extensive fringe benefits!

and then ReWahoo piped up:
thought the term was 'French' benefits...

Have you guys been talking to my husband again?
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
Amethyst is offline   Reply With Quote
Old 08-24-2009, 05:48 PM   #13
Recycles dryer sheets
 
Join Date: Aug 2003
Posts: 474
Quote:
Originally Posted by ziggy29 View Post
Assuming no change in the health care status quo, I don't think I'd be comfortable withdrawing more than about 2.5% a year starting at age 40, so needing $50K a year in current expenses, I'd say $2M. That's based on our current situation, lifestyle and income needs; YMMV, obviously.

Ziggy, are you saying $50k if you had two children, or $50k is what you need now?

haha: so true. . .so true.
__________________
bongo2 is offline   Reply With Quote
Old 08-24-2009, 06:25 PM   #14
Recycles dryer sheets
 
Join Date: Jan 2009
Posts: 190
If you need $50K a year for expenses, that means you need to figure withdrawing $65K+ a year because of all the taxes. Or is that $50K pre-tax?
__________________
Kabekew is offline   Reply With Quote
Old 08-24-2009, 06:28 PM   #15
Thinks s/he gets paid by the post
Rambler's Avatar
 
Join Date: Jul 2007
Posts: 2,243
My kids are now in college, I am paying tuition for 4 years, all expenses for the first year, then books and rent after that (with it being their responsibility to earn money for food, play money and other essentials). I could not do all of that on 2m, nor could I do it on what I have now (quite a bit more). I voted 5m, because there wasn't an option for >5m.

I'll be punching out about 6 months before DD finishes college and maybe 6 months after DS finishes (assuming I don't get booted or burned out before then...not likely but you never know). At that point I will have just turned 51. My target SWR is <3%, and I am generously estimating expenses incl tax to be around $140k. I probably don't need that much, but DW and I want to be able to do some of the things we are not able to do now because of my overseas assignment, and with property taxes on the McMansion so high, no pension, no megacorp health insurance, and our desire to have a medium sized RV (read that as about 10-12k per year in depreciation and upkeep expenses), that we feel we need about that much to keep from being worried about eating cat food. That said, I could pull the plug now if I didn't have the desire to pay for the kids tuition, downsized the McMansion a bit, and got rid of the RV plan. At the end of the day, if I can't pull the trigger at age 51 with 3% or less SWR, then I will adjust my budget...maybe a travel trailer instead of a motorized RV, so that my SWR does end up around 3%, or perhaps I will do a little consulting work on the side, if that option seems to be available at the time.

Everyone's situation is different, but that's ours. Back to the original question though, I don't think I would want to pull the plug with two kids at home and only 50k to cover everything (at 40 I wouldn't go over 2.5-2.75% SWR). If I felt like I could go back to work anytime I wanted, maybe I would go part time or semi-retired, but for me, I doubt that I would be able to get the kind of position I have now if I had been completely out of the workforce for a couple years, let alone 5-10 years.

YMMV, of course.

R
__________________
Find Joy in the Journey...
Rambler is offline   Reply With Quote
Old 08-24-2009, 06:58 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,615
In 2006, I would've voted $2MM.

In 2007 I would've voted $2.5MM because a 20% decline would still leave me with $2MM.

Now in 2009, I'm thinking about $3MM because a 33% decline would still leave me with $2MM.

Quote:
If you need $50K a year for expenses, that means you need to figure withdrawing $65K+ a year because of all the taxes. Or is that $50K pre-tax?
Someone pays w-a-a-ay too much in income taxes. We will probably pay less than $10K in income taxes with an income north of $150K.
__________________
LOL! is offline   Reply With Quote
Old 08-25-2009, 10:23 AM   #17
Full time employment: Posting here.
Lusitan's Avatar
 
Join Date: Jan 2006
Location: Boston
Posts: 620
Too many variables for me to answer the poll in a meaningful way.

Does the portfolio include the value of real estate, i.e. are we to assume that the living expenses need to cover a mortgage or rent, or are those expenses eliminated by a paid-off home?

Do you want to pay for your children's undergraduate education, or do you want them to pay for it on their own? Do you want to finance advanced degrees for them as well, or do you draw the line at undergrad?

Do you live in a place where you're happy with the public schools, or do you want to send your kids to private school for some reason (religious preferences, etc.)?

How far do you need to travel to visit family, i.e. are annual trips abroad to visit close relatives "back in the Old Country" important to you? Or are large travel expenses more discretionary?

Do you really, truly plan on never doing paid work again? Or is the FIRE plan more along the lines of stepping off the treadmill, quitting the rat race, and maybe finding work or a small business that you enjoy and can do on a part-time basis?

Are you healthy enough to obtain private medical insurance at a reasonable rate, or do you have an existing condition that would make it much more expensive?

And then, of course, there's the basic question of what material lifestyle do you want ("need") ... keeping in mind of course that even the lower middle class American lifestyle is far wealthier than the vast majority of the world's population.

Depending on all those variables, I could see 0.5 million being enough for some, and 5 million not being enough for others.
__________________
Lusitan is offline   Reply With Quote
Old 08-25-2009, 10:41 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,254
Quote:
Originally Posted by haha View Post
I miss the old days of the board when some people would always pipe up with how they raised 10 kids, sent them all to Harvard, ate like kings, and had fun all day long, on much less than $1 million. Then John Galt would add that these people were way over-financed.

Then someone would accuse Jarhead of moonlighting as a wheat bread fueled gigolo. Then we could all go back to arguing about paying off the mortgage until one of us got banned. It was like one of those survivor shows.

Ha
ROFLOL....
__________________
Texas Proud is offline   Reply With Quote
Old 08-25-2009, 10:50 AM   #19
Thinks s/he gets paid by the post
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 3,393
Quote:
That is budgeting $1000 a month on average for health insurance premiums from age 40-65
I think that health insurance can be the real killer here. To budget $1000 for health insurance basically assumes everyone stays healthy and can get insurance for a reasonable price from the private market. In a state high risk pool (Texas) for that age and 2 kids the cost is north of $20,000 for a plan with a $5000 deductible oer person as I recall. Now maybe that kind of plan won't be needed but over a 25 year period, who know?
__________________
Katsmeow is online now   Reply With Quote
Old 08-25-2009, 11:27 AM   #20
Recycles dryer sheets
 
Join Date: Aug 2003
Posts: 474
Quote:
Originally Posted by Lusitan View Post
Too many variables for me to answer the poll in a meaningful way.

Does the portfolio include the value of real estate, i.e. are we to assume that the living expenses need to cover a mortgage or rent, or are those expenses eliminated by a paid-off home?

Do you want to pay for your children's undergraduate education, or do you want them to pay for it on their own? Do you want to finance advanced degrees for them as well, or do you draw the line at undergrad?

Do you live in a place where you're happy with the public schools, or do you want to send your kids to private school for some reason (religious preferences, etc.)?

How far do you need to travel to visit family, i.e. are annual trips abroad to visit close relatives "back in the Old Country" important to you? Or are large travel expenses more discretionary?

Do you really, truly plan on never doing paid work again? Or is the FIRE plan more along the lines of stepping off the treadmill, quitting the rat race, and maybe finding work or a small business that you enjoy and can do on a part-time basis?

Are you healthy enough to obtain private medical insurance at a reasonable rate, or do you have an existing condition that would make it much more expensive?

And then, of course, there's the basic question of what material lifestyle do you want ("need") ... keeping in mind of course that even the lower middle class American lifestyle is far wealthier than the vast majority of the world's population.

Depending on all those variables, I could see 0.5 million being enough for some, and 5 million not being enough for others.
The spirit of the poll was to ask how much money you would personally need with the restriction that you live in the US and have a family. All those other questions are optional for the responder. What lifestyle would you personally want? Do you want to send your children to private school? Are you comfortable not paying for your children's college? Would you be comfortable cutting it close and taking a chance of needing to go back to work?

Yes, the $X would include any value in real-estate or home equity, so up to you to use that money for a home or invest it elsewhere. Assume you and your family don't have any conditions that make it abnormally difficult to get health insurance.
__________________

__________________
bongo2 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Made the break today. Have Pension . capt bill Hi, I am... 11 05-29-2009 10:04 PM
Semi-ER @ 41 with young kids. Crazy? LeavinEarly Hi, I am... 9 05-23-2008 10:09 PM
1 million dollar; 2 young kids; enuff to get out??? Enuff2Eat FIRE and Money 13 01-04-2006 01:57 PM
Young family with preschool kids er hopeful FIRE and Money 4 08-03-2004 12:57 PM

 

 
All times are GMT -6. The time now is 10:59 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.