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Re: Is $1million enough
Old 10-20-2006, 03:19 PM   #21
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Re: Is $1million enough

My son, a single teacher, lives in a nice town in Eastern Massachusetts and only this year hit $45K in income. He does have subsidized health insurance (IIRC he pays $100/mo plus copays). He also has 11% of his paycheck swooped off into the MA Teacher's Pension Fund. On what;s left, he lives in a small but OK 1-BR apartment in cute downtown Walpole, a 5-minute walk from the commuter train station, supermarket, drug store, Chinese restaurant(!), etc. Over the 5+ years he's been out of school (and never working a second job or during the summer), he saved $20,000. He travels in the summer--camping, Europe, my house--wherever. He says he's not doing without a thing he wants (other than his own condo, but that's coming).

Now if you need to live in a pretty, 3-BR single-family home in an upscale burb or apt in Boston, $40k might be a stretch without roomies.
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Re: Is $1million enough
Old 10-20-2006, 03:57 PM   #22
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Re: Is $1million enough

Quote:
Originally Posted by donheff

Also, keep in mind 50% of his nest egg is already taxed. Since he says he just sold his house and we recently came out of a fall there are probably very few capital gains in that chunk of money right now. I'll bet he pays closer to 1.5%-4% on the taxed funds he withdraws initially, gradually increasing as the years go by.
Thanks for the comments, its interesting to see how people's expectations and opinions differ. I realize that to do this I'll be living on a lot less than most folks, but I think I can do it by getting a small place to live (under $200k) and maybe doing some seasonal work - always wanted to be Santa Claus.
The after tax money is truely after tax, free and clear in 75% in index funds, 25% in MM/CDs. I've accounted for the capital gains on the house money.
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Re: Is $1million enough
Old 10-20-2006, 04:00 PM   #23
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Re: Is $1million enough

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Originally Posted by Rock
On an old thread I proposed defining generic ER for a couple 50 yrs of age as $1MM liquid, plus cars and a house all paid for.

FWIW there weren't too many takers at that time though it still seems doable.
Doable is understatement. I believe there were many silent takers. The ones who voiced their disagreements will probably continue to do so with $2MM, 3MM, or even more.
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Re: Is $1million enough
Old 10-20-2006, 04:12 PM   #24
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Re: Is $1million enough

1993 - 300k his and her's plus a duplex cranking out 6k/yr rent. No health insurance.

Really really cheap bastardhood and 0ne yr temp work AND Mr Market in the 90's allowed crossing 1mil around 1998,99, 2000 - not exactly sure.

Wouldn't look pretty on a spreadsheet in hindsight - but compared to work - ER was more better.

Post Katrina - right at 1 mil plus small pension plus early SS. Yes - and BC/BS health insurance.

Sort of miss the good old days when I was really cheap. Salvation Army is still my favorite clothing store - Walmart is second.

heh heh heh heh heh heh - more than one way to skin a cat.
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Re: Is $1million enough
Old 10-20-2006, 04:30 PM   #25
 
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Re: Is $1million enough

The number is different for everybody.

Here is the formula I came up with.

(( Bare Bones annual spending * 2) - Annual Pension Amt) * 25 = NEST EGG

This will give you flexibility to cut spending during a market downturn. - The flexibility is the (*2) part!

So for example you decide that $20,000 would cover all the necessities for the year. Food, Clothing, Taxes, Insurance, Shelter, Transportation. And that you received a $10K pension per year.

((20K * 2) - 10K ) * 25 = $750K
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Re: Is $1million enough
Old 10-20-2006, 04:38 PM   #26
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Re: Is $1million enough

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Originally Posted by Cut-Throat
The flexibility is the (*2) part!
Isn't that too much flexibility? 8)
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Re: Is $1million enough
Old 10-20-2006, 04:41 PM   #27
 
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Re: Is $1million enough

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Isn't that too much flexibility? 8)
I don't think so. - The expenses portion is truly bare bones. No entertainment, travel, eating out etc. - You have got to allow for that. And it if you don't have excess built into your budget, you cannot pare back in market downturns or if unplanned expenses occur.

What multiplier would you use?
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Re: Is $1million enough
Old 10-20-2006, 04:44 PM   #28
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Re: Is $1million enough

For more than a half a year I've been living off about a million after taxes. Living in the SF Bay Area is expensive, and after trying to make it work on about 40k a year for a few months I decided that was too bare bones for me... didn't include enough budget for getting out of the house and doing things. So I'm now spending at a burn rate of about 50-55k/year, recognizing that this is not sustainably safe, and exploring my options for moving to a cheaper location or taking on some work to bring in more income.
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Re: Is $1million enough
Old 10-20-2006, 04:46 PM   #29
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Re: Is $1million enough

Quote:
Originally Posted by Cut-Throat
And it if you don't have excess built into your budget, you cannot pare back in market downturns
Market downturn is already included in your "25", or 4% withdrawal rate.


Quote:
Originally Posted by Cut-Throat
What multiplier would you use?
If I were to use your formula, I would use 1.5 (150%).
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Re: Is $1million enough
Old 10-20-2006, 04:49 PM   #30
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Re: Is $1million enough

For me the advice to quit now and look for a cheap place to live would be the deal breaker. I donít mean a fancy house- mine is anything but- but a decent neighborhood in a the city or town where you like to be, where you like or least donít hate the weather, where your friends and family are, where you can walk to interesting places and events if you enjoy that.

I would far rather find an ok job and stay where I wanted to stay than go looking for cheap. Itís like buying an ugly suit, because no one else wants it so it is cheap.

People who mention small southern towns- I sure hope they know what small Southern towns are like before they head off to one. The Bible Belt would not be everyoneís cup of tea.

I was eating at a Cracker Barrel Restaurant with a friend and her parents, sibs, etc not too far outside Nashville. Suddenly I thought I was having a heart attack. Turns out I was on the verge of panic, merely at the idea that I might have to listen to these people for another hour or so.

I should add that my family is from the South, and has been for a couple hundred years at least, so I am not complaining about something I know nothing about.
Ha
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Re: Is $1million enough
Old 10-20-2006, 04:54 PM   #31
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Re: Is $1million enough

Quote:
Originally Posted by Sam
If I were to use your formula, I would use 1.5 (150%).
Why not just use your actual ratio? For example, if half of your expenses are discretionary, then 2.0 would be the right multiplier.
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Re: Is $1million enough
Old 10-20-2006, 04:56 PM   #32
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Re: Is $1million enough

Quote:
Originally Posted by wab
Why not just use your actual ratio? For example, if half of your expenses are discretionary, then 2.0 would be the right multiplier.
I'd say that 2.0 gives enough flexibility to avoid risking your life by saying "Sorry, honey, but that's a discretionary expense!"
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Re: Is $1million enough
Old 10-20-2006, 05:07 PM   #33
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Re: Is $1million enough

My ratio of (budgeted/barebones) is 1.42, but I've already cut back on a lot, so I think a higher number like 1.75 would be more reasonable.

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Re: Is $1million enough
Old 10-20-2006, 05:09 PM   #34
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Re: Is $1million enough

Quote:
Originally Posted by Cut-Throat
Do me a favor and look at your spending and weed out all of the discretionary items (Dining out, cable TV, Travel, vacations, Hobbies,) - I'm betting your budget could be cut in half.
What? You actually want me to work?

Seriously, the difference here might be in the definition of discretionary. What I might consider absolute neccessity might be different from yours, and vice versa.

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Re: Is $1million enough
Old 10-20-2006, 05:15 PM   #35
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Re: Is $1million enough

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Originally Posted by Nords
I'd say that 2.0 gives enough flexibility to avoid risking your life by saying "Sorry, honey, but that's a discretionary expense!"
Chicken!
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Re: Is $1million enough
Old 10-20-2006, 05:37 PM   #36
 
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Re: Is $1million enough

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Originally Posted by Sam

Seriously, the difference here might be in the definition of discretionary. What I might consider absolute neccessity might be different from yours, and vice versa.

Well, my formula said "Bare Bones" - Not "Non discretionary". 8)
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Re: Is $1million enough
Old 10-20-2006, 05:51 PM   #37
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Re: Is $1million enough

A rose by any other name...

Quote:
Originally Posted by wab
Why not just use your actual ratio? For example, if half of your expenses are discretionary, then 2.0 would be the right multiplier.
1.5 it is.
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Re: Is $1million enough
Old 10-20-2006, 05:58 PM   #38
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Re: Is $1million enough

2.0

CT must have read my mind.

heh heh heh
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Re: Is $1million enough
Old 10-20-2006, 06:20 PM   #39
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Re: Is $1million enough

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Chicken!
Buk buk buk buk-awk!

We didn't make it to 20 years of marriage by taking stupid chances...
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Re: Is $1million enough
Old 10-20-2006, 06:52 PM   #40
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Re: Is $1million enough

Quote:
Originally Posted by HaHa
For me the advice to quit now and look for a cheap place to live would be the deal breaker. I donít mean a fancy house- mine is anything but- but a decent neighborhood in a the city or town where you like to be, where you like or least donít hate the weather, where your friends and family are, where you can walk to interesting places and events if you enjoy that.

I would far rather find an ok job and stay where I wanted to stay than go looking for cheap. Itís like buying an ugly suit, because no one else wants it so it is cheap.

People who mention small southern towns- I sure hope they know what small Southern towns are like before they head off to one. The Bible Belt would not be everyoneís cup of tea.

.
Ha
I agree with Ha, having lived in the Bible Belt for six long years, and I'd rather work full time at Wal Mart than go back, no matter how cheap it is. Living in a compatible community where you can make friends and, above all, make a HOME is more important than almost anything else, for me anyway. I would rather live in a cheap apartment in a community I love than a nice house in some out of the way place. Also, if you have never lived overseas, then a test run is in order before making any important decision about that. Good luck!
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