Is $1million enough

[LRS]

If you have dual citizenship, you have it made. From my research, I gather that some countries offer special passports to non-citizens who are descended from emmigrants of that country. So that is another possibility for U.S. citizens who want to live abroad.

[nun]

Quote:

Originally Posted by Tawny Dangle If you have dual citizenship, you have it made.

Well like most things it has its pros and cons. Taxation becomes a big pain and if you are a US citizen there are nasty rules about investing money abroad. But I should get two SS checks one European and one US and although I'll probably pay a bit more tax in Europe the benefits are a lot better

[GMueller]

Perinova – I believe the typical early retiree could support an average American lifestyle with a $1.2 - $1.5M nest egg as the sole source of income. But, I also agree with you that it would be safer for the early retiree to have a house that was paid for. Like everything else, the cost of early retirement is going up. If you believe the results from various surveys conducted on this Board, I believe you will find that a $1.2 - $1.5M nest egg fits the typical profile of those users that have reached FIRE and are successfully sustaining it.

[poyet]

Quote:

Originally Posted by Tawny Dangle There is a treaty called the Schengen agreement which limits your stay in a EU counry to three months in any 12 month period. I'd be glad to find out there is some way around this [outside of working, studying or starting a business], but so far I haven't heard of one. Is there anyone out there with practical experience with this? I'd love to hear about it.

The Schengen agreement states also that you can freely move (if you're a citizen of one of the Schengen states) from one Schengen country to the other without any special paper or custom control (establishing residency is possible but requires still to register to your local consulate, etc.). So I guess as a tourist you could get a "pass" for a 3 months stay in GB then go wherever you wish in the Schengen states, then get 3 months for Germany and do the same, etc.... Italy (south), Portugal, Spain, Greece, south of France etc. have nice weather and could be enjoyable to stay. I do not know whether Malta is in the Schengen space ?

[perinova]

Quote:

Originally Posted by GMueller Perinova – I believe the typical early retiree could support an average American lifestyle with a $1.2 - $1.5M nest egg as the sole source of income. But, I also agree with you that it would be safer for the early retiree to have a house that was paid for. Like everything else, the cost of early retirement is going up. If you believe the results from various surveys conducted on this Board, I believe you will find that a $1.2 - $1.5M nest egg fits the typical profile of those users that have reached FIRE and are successfully sustaining it.

GM
I am agreeing with your number. I underlined "with house included" as an answer to nun's question.

I don't think a paid for house is necessary. IMHO a mortage is OK. Renting is also OK. Rent or House.Payment+Prop.Tax+Maintenance.Cost should be offset by an 25-times equivalent increase in assets.

By the way I recently computed (Financial computation only) what I think is equivalent Rent vs HomeValue and came up with a break even point of HomeValue=15*Year'sRent. Any comment from anyone?
PN.

[Martha]

Quote:

Originally Posted by Delawaredave I don't see how $1MM would support a comfortable ER anywhere in USA in their 40's and having to pay for a medical plan.

If you perfectly healthy, the insurance cost isn't that bad. Or, live in Washington state, where there is no underwriting if you move from a group plan under HIPAA. HaHa will tell you that the cost isn't bad there.

(Though I am not one to recommend an ER in your 40s on a million dollars--to long a time and too much can change or go wrong)

[retire@40]

Quote:

Originally Posted by perinova ...By the way I recently computed (Financial computation only) what I think is equivalent Rent vs HomeValue and came up with a break even point of HomeValue=15*Year'sRent. Any comment from anyone?

I don't know where you got the 15 factor, but why not just compute it by figuring out the cost at which the house would generate a break-even if it were to be rented at FMV?

For an oversimplified example:

(Monthly)

Rent potential: $1,200

Real estate tax $400
Insurance 100
Repairs 200
Total 700

Maximum mortgage $500

Then you back into the mortgage based on current interest rates. If you factor in a downpayment, then you should also factor in the opportunity loss your cash would have generated.

[GolferAndy]

Nun,

All of the answers you've received thus far seem to be predicated on a 4% SWR. A person like yourself (in their mid-forties) could very well live another 50 years or so. I believe that studies have shown that the storied 4% WR is not intended for a retirement much over 30 years. A much lower WR in your early years would be extremely important to the long-term survival of your available funds.

[Running_Man]

Quote:

I don't see how $1MM would support a comfortable ER anywhere in USA in their 40's and having to pay for a medical plan

I have always thought it would be easy to live on $40,000 per year.
A catastrophic health care plan with a $5,000 deductible will have a cost of between $300-350 per month for a healthy 40 year old. In Northwest Indiana you could easily rent a 1 bedroom apartment for $550 in a safe neighboorhood. The apartment would include heat and water and broadcast televison (WGN,3- PBS stations, FOX, ABC, NBC,CBS). Electricity would run about $50-$75 per month depending on use and assuming $100 per week for groceries and supplies. Budget would appear:



Rent 550.00
Groceries/Household supplies 300.00
Electricity 75.00
Phone 35.00
DSL Internet Access 35.00
Car Insurance 50.00
Gasoline 75.00
Car replacement 150.00
Car Maintenance 50.00
Healthcare Catastrophic Policy 350.00
Healthcare personal exp 300.00
Income taxes 450.00

Total Basic Expenses $2,420 per month.

Tax Calculation: First $8,700 of income is exempt from Federal taxes. Your next $11,200 is taxable at 10% the remainder of $40,000 income (assuming all taxable) is taxable at 15%. This leaves the Federal Tax Bill @$4,135 per year and state Taxes $1,200 for a total tax bill of $5,350.

This leaves $900.00 per month for personal preferences.


Local amenities include in Valparaiso a nearby University with all the interesting life that a college brings, a university public library and a very good county library, with an extensive DVD collection for free, and all current best sellers on the New York Times list are almost always immediately purchased.

An annual pass to all of Indiana State Parks is $36.00 which will get you into the nationally acclaimed Indiana Dunes and its long lakeshore trails and beaches. Access to Chicago via commuter rail line for $12.00 round trip. In Chicago you can buy an single use all-day pass for unlimited buses and subway rides for $5.00 a day. For that you can enjoy all Chicago has to offer. Rachael Ray is able to eat 3 meals in great Chicago Restaurants for $40.00 a day so I think there is plenty one can do on $40,000.

[perinova]

Quote:

Originally Posted by retire@40 I don't know where you got the 15 factor, but why not just compute it by figuring out the cost at which the house would generate a break-even if it were to be rented at FMV? For an oversimplified example: (Monthly) Rent potential: $1,200 Real estate tax $400 Insurance 100 Repairs 200 Total 700 Maximum mortgage $500 Then you back into the mortgage based on current interest rates. If you factor in a downpayment, then you should also factor in the opportunity loss your cash would have generated.

R@40
That is pretty much what I did but the other way around. Since few people rent the same house they would buy I made a purely financal analysis.
In your example:
12*700/4%WR=$210K of Assets. House value? Maybe $275K-325K with those expenses. Total Assets available to generate rent = $485K-$535K.

Rent generated by above @4%WR = $1616-$1783
Here house value is 14-15 times rent.

Now this means that if I find a house I like at below 15 times rent I should go for it right away (assuming I will stay there a while). At more than 15 times rent I shouldn't use my assets for this house. If I real want it the best is to put the minimum downpayment.

FYI here is NJ I rent a condo for $1500. That's an equivalent of $270K with this computation. There is no way I can find a house around at that price and prop tax is very high. But there should be plenty of places where decent housing can be found for $200K-250K and rent of 2BRs goes for $1100-$1400...

[perinova]

Quote:

Originally Posted by Running_Man I have always thought it would be easy to live on $40,000 per year. A catastrophic health care plan with a $5,000 deductible will have a cost of between $300-350 per month for a healthy 40 year old. In Northwest Indiana you could easily rent a 1 bedroom apartment for $550 in a safe neighboorhood. The apartment would include heat and water and broadcast televison (WGN,3- PBS stations, FOX, ABC, NBC,CBS). Electricity would run about $50-$75 per month depending on use and assuming $100 per week for groceries and supplies. Budget would appear: Rent 550.00 Groceries/Household supplies 300.00 Electricity 75.00 Phone 35.00 DSL Internet Access 35.00 Car Insurance 50.00 Gasoline 75.00 Car replacement 150.00 Car Maintenance 50.00 Healthcare Catastrophic Policy 350.00 Healthcare personal exp 300.00 Income taxes 450.00 Total Basic Expenses $2,420 per month. Tax Calculation: First $8,700 of income is exempt from Federal taxes. Your next $11,200 is taxable at 10% the remainder of $40,000 income (assuming all taxable) is taxable at 15%. This leaves the Federal Tax Bill @$4,135 per year and state Taxes $1,200 for a total tax bill of $5,350. This leaves $900.00 per month for personal preferences. Local amenities include in Valparaiso a nearby University with all the interesting life that a college brings, a university public library and a very good county library, with an extensive DVD collection for free, and all current best sellers on the New York Times list are almost always immediately purchased. An annual pass to all of Indiana State Parks is $36.00 which will get you into the nationally acclaimed Indiana Dunes and its long lakeshore trails and beaches. Access to Chicago via commuter rail line for $12.00 round trip. In Chicago you can buy an single use all-day pass for unlimited buses and subway rides for $5.00 a day. For that you can enjoy all Chicago has to offer. Rachael Ray is able to eat 3 meals in great Chicago Restaurants for $40.00 a day so I think there is plenty one can do on $40,000.

Yes The big Wammy is housing so if you can rent for $500/mo or find a house for $100k. Living on $1M is definitely a possibility. After all the stats only show the average that means 50% of the people are below this number 8)

[Zoocat]

Quote:

Originally Posted by nun Health Insurance is a concern if I stay in the US, what are the premiuns like for a healthy single person. Living in the NE I'm keeping a close eye on the MA law that mandates that everyone must have health insurance. I think they are capping the premiuns at $250/month

I am in the process of buying individual health insurance and it is a nightmare. "Healthy" is a relative term. For the insurance company, if you have any previous condition, you are a reject. It doesn't even have to be a condition that you are currently receiving treatment for. If they don't like it, you're out. They don't have to give any reason. I am seriously considering Kaiser Premanante, an HMO. I expect to pay about $300 a month with a $2000 HSA deductible policy. For a very general idea of what you might pay, go to www.ehealthinsurance.com and fill in your info. But that is just a ball park figure since you can't input any of your past or present health conditions.

[Zoocat]

[quote=Running_Man ]
I have always thought it would be easy to live on $40,000 per year.
A catastrophic health care plan with a $5,000 deductible will have a cost of between $300-350 per month for a healthy 40 year old. In Northwest Indiana you could easily rent a 1 bedroom apartment for $550 in a safe neighboorhood. The apartment would include heat and water and broadcast televison (WGN,3- PBS stations, FOX, ABC, NBC,CBS). Electricity would run about $50-$75 per month depending on use and assuming $100 per week for groceries and supplies. Budget would appear:



Rent 550.00
Groceries/Household supplies 300.00
Electricity 75.00
Phone 35.00
DSL Internet Access 35.00
Car Insurance 50.00
Gasoline 75.00
Car replacement 150.00
Car Maintenance 50.00
Healthcare Catastrophic Policy 350.00
Healthcare personal exp 300.00
Income taxes 450.00

Total Basic Expenses $2,420 per month.

Tax Calculation: First $8,700 of income is exempt from Federal taxes. Your next $11,200 is taxable at 10% the remainder of $40,000 income (assuming all taxable) is taxable at 15%. This leaves the Federal Tax Bill @$4,135 per year and state Taxes $1,200 for a total tax bill of $5,350.

This leaves $900.00 per month for personal preferences.


/quote]

That sounds fine, but does the "healthcare personal expenses" include optical and dental? There is also the question of whether you would want long term care insurance, which would be approximately another $100 a month.

Also, I wouldn't count on rent remaining stable at $500/month. Utiliites either. But that's kind of beyond this exercise, I suppose.

[trixs]

It really is amazing how expensive it is in some parts of the country. I am currently stationed in Georgia and it is extremely cheap. I bought a brand new, 2000sf, brick house here a few years back for 130k. This is one of the nicer neighbohoods aswell.

Lets check my expenses and see if 40k would do:

Mortgage(include tax and house insurance): $950
Electric: $150
Cable/Internet: $105 - I like hbo?
Water/Trash/Gas: $30
Phone: $50 - ONly a cell.. Why do people have home phones now days?
Car Insurance: $28 - Hey, Ive never had an acciddent or ticket

ALL BILLS TOTAL: $1313 or $15756 Per yer

That leaves you with almost 25k for food/fun/extra savings for new car everyfew years or whatever.

I would retire today with $1million.

[GolferAndy]

Quote:

Originally Posted by trixs It really is amazing how expensive it is in some parts of the country. I am currently stationed in Georgia and it is extremely cheap. I bought a brand new, 2000sf, brick house here a few years back for 130k. This is one of the nicer neighbohoods aswell. Lets check my expenses and see if 40k would do: Mortgage(include tax and house insurance): $950 Electric: $150 Cable/Internet: $105 - I like hbo? Water/Trash/Gas: $30 Phone: $50 - ONly a cell.. Why do people have home phones now days? Car Insurance: $28 - Hey, Ive never had an acciddent or ticket ALL BILLS TOTAL: $1313 or $15756 Per yer That leaves you with almost 25k for food/fun/extra savings for new car everyfew years or whatever. I would retire today with $1million.

I think you forgot a few things trixs. Like..

1) Health Insurance (Till you're 65.. then medicare supplemental after that)
2) Dental costs (A cost that increases markedly with age for most people)
3) House maintenance (figure 3%/yr. of house's value)
4) Car maintenance
5) Travel (unless you want to spend the rest of your life in one spot)

[haha]

Quote:

Originally Posted by Running_Man Local amenities include in Valparaiso a nearby University with all the interesting life that a college brings, a university public library and a very good county library, with an extensive DVD collection for free, and all current best sellers on the New York Times list are almost always immediately purchased. An annual pass to all of Indiana State Parks is $36.00 which will get you into the nationally acclaimed Indiana Dunes and its long lakeshore trails and beaches. Access to Chicago via commuter rail line for $12.00 round trip. In Chicago you can buy an single use all-day pass for unlimited buses and subway rides for $5.00 a day. For that you can enjoy all Chicago has to offer. Rachael Ray is able to eat 3 meals in great Chicago Restaurants for $40.00 a day so I think there is plenty one can do on $40,000.

This the type thing that I rally like on these boards. This plus the rent info tells me that this could easily be a pleasant and cheap way to live.

Thanks for the on the ground info.

Ha

[Running_Man]

Quote:

That sounds fine, but does the "healthcare personal expenses" include optical and dental? There is also the question of whether you would want long term care insurance, which would be approximately another $100 a month. Also, I wouldn't count on rent remaining stable at $500/month. Utiliites either. But that's kind of beyond this exercise, I suppose.

Yes I would include optical and dental in healthcare personal expenses. Personally I would create a seperate bank account to be funded with a $300 monthly transfer for all of those types of expenditures from one account to my medical account as medical is a big deal. It could build in good years and draw down in expensive years. Rent has been relatively stable in this area for a long time. There are many places in Northwest Indiana for even less per month if you want an older place or a studio apartment. The place I quote is where my 80 year old father has lived for several years while on only social security. It is clean comfortable safe and backs onto the county park where you can fish, swim in the lake walk on the 5 miles of trails.

If you are in your forties it will rapidly become apparent if the 1 million is enough or not. The alternative must not be too attractive so I would say go for it.

I also have visited Georgia have ridden several times in the Bike Ride Across Georgia. And the low cost of housing in some of the communities such as Plains, Metter or Rome is really amazing. However, my limited impression is that these small towns are really not friendly towards Northerners looking to relocate to their small town for early retirement. So building fruitful friendships could be more challenging.

[perinova]

Quote:

Originally Posted by GolferAndy 3) House maintenance (figure 3%/yr. of house's value)

Are you sure? That much? I have heard as low as 1% of value before.
PN

[obryanjf]

Quote:

Originally Posted by GolferAndy Nun, All of the answers you've received thus far seem to be predicated on a 4% SWR. A person like yourself (in their mid-forties) could very well live another 50 years or so. I believe that studies have shown that the storied 4% WR is not intended for a retirement much over 30 years. A much lower WR in your early years would be extremely important to the long-term survival of your available funds.

Yes the 4% number is based on 30 or 40 years, but also no extras like SS, spouse SS, pension, PT work, etc. It also does not include Bernickes model. Below are the SWR's over time and including some of the other items if they fit in your model. 40k/yr with 1MM as a early ER would work for me. In my case, I want 1MM of total financial assets with no mortgage to go to the next step.

Mode Time in R WD % @ 95% level: + JOB extras +Ty Bernike
Fixed 10 7.4 7.4 7.5
Fixed 20 4.6 5 5.5
Fixed 30 3.9 4.8 5.3
Fixed 40 3.7 4.9 5.5
Fixed 50 3.6 4.8 5.3
Fixed 60 3.5 4.7 5.3
Hybrid 10 10.5 10.5 10.7
Hybrid 20 6.4 7.4 7.8
Hybrid 30 5.4 7.4 7.8
Hybrid 40 5 7.4 8
Hybrid 50 4.8 7.4 7.8
Hybrid 60 4.6 6.8 8
ESRBob 10 9.4 9.4 9.4
ESRBob 20 6.6 7.8 7.8
ESRBob 30 5.7 7.8 7.8
ESRBob 40 5.5 7.8 7.8
ESRBob 50 5.4 7.8 7.8
ESRBob 60 5.4 7.4 7.8

job

[GolferAndy]

Quote:

Originally Posted by perinova Are you sure? That much? I have heard as low as 1% of value before. PN

If it's a new (or new-ish) home.. 3% is perhaps too high. But when you include longer-term re-modeling costs.. 3%/yr. is about right. Also depends some on climate.