Is 300K enough to retire on at age 37?

[LARS]

due to an injury that affected short-term memory, options are rather limited.

I know nothing about how you qualify, or if you would, but your memory issue made me think about SS disability. You might want to explore that if you haven't already. If you qualify, that would change the picture.

Good luck.

 

[haha]

Maybe if you have a paid off house and your 300K was worth 1M in 2007. Then you have a shot at your 300K coming back. Life is just a big crapshoot anywhoo.

That is a very interesting hypothesis. But I can't see how what her $300,000 was worth in 2007 could possibly affect her investments going forward.

Ha

 

[Major Tom]

That is a very interesting hypothesis. But I can't see how what her $300,000 was worth in 2007 could possibly affect her investments going forward.

Ha

I was about to say exactly the same thing.

 

[photoguy]

It is entirely possible to retire comfortably, as a single person, on $20k/year. A number of board members did it. And that was even before the 2014 health exchange option was on the horizon. Under that, someone living on $20k/year would have their premiums capped at $1k/year, and doesn't go up with age or new conditions.

When I was a grad student, I lived for several years on a stipend of about $1400/month and I thought I was doing really well. Rent was about $450 for my share of a 2 bedroom apartment and this left lots of money left over for eating out, car insurance, toys, etc. So definitely doable on even less if you can control health insurance costs.

 

[TomG]

To provide an opposing view:
if living expenses are $20k per year and you have $300k, Jr High algebra tells us you would have zero money in 15 years. And you would be eligible for social security ... in 15 years

Unfortunately, real world economics are a little different than an eighth graders textbook. But it does show that with that amount of money, you don't need to earn much more either. Which at least means a lot less of the whole job thing is very much a possibility

 

[tiredwrkr]

To provide an opposing view:
if living expenses are $20k per year and you have $300k, Jr High algebra tells us you would have zero money in 15 years. And you would be eligible for social security ... in 15 years

Unfortunately, real world economics are a little different than an eighth graders textbook. But it does show that with that amount of money, you don't need to earn much more either. Which at least means a lot less of the whole job thing is very much a possibility

I'm afraid social security is going down the tubes

 

[NW-Bound]

First congrats on accumulating $300K by age 37. The majority of people in this country sad to say will never see a nest egg that big...

I'll second that. Tiredwrkr, you can be proud of your accomplishment.

That said, it takes a large portfolio to generate money to replace one's income. As a rule of thumb, a $1million portfolio only generates $40,000/year, and even that has been questioned as perhaps on the optimistic side.

It appears to me that you are conservative with your spending. If so, if you are not happy in your current job, then perhaps a different and less stressful job, even if it is lower pay, would work for you. A lower income is still a lot better than no income. And if it has health benefits, it's a huge advantage.

And about SS, I do not believe it will go away. It will simply provide even less of one's needs than now. But if you have a supplemental savings, you will be OK. One more reason to find that less stressful job.

Best wishes to you.

 

[ikonomore]

To provide an opposing view:
if living expenses are $20k per year and you have $300k, Jr High algebra tells us you would have zero money in 15 years. And you would be eligible for social security ... in 15 years

How would he be eligible for SS at 52? 37 years old +15 years = 52.

 

[RonBoyd]

How would he be eligible for SS at 52?

Jr. High Algebra... the way I remember it.

 

[scrabbler1]

To provide an opposing view:
if living expenses are $20k per year and you have $300k, Jr High algebra tells us you would have zero money in 15 years. And you would be eligible for social security ... in 15 years

Unfortunately, real world economics are a little different than an eighth graders textbook. But it does show that with that amount of money, you don't need to earn much more either. Which at least means a lot less of the whole job thing is very much a possibility

This assumes zero inflation and zero growth on the $300k (i.e. put the money under the mattress - or in the bank which grants about the same amount in interest LOL!). These two forces offset each other to some degree, however.

And like ikonomore, I was wondering about the 37+15 getting to SS, too.

 

[plex]

I was thinking from his wording that he meant 37+15, and then there would be a 15 year gap to fill after that to reach SS at 67.

 

[Major Tom]

How would he be eligible for SS at 52? 37 years old +15 years = 52.

I think he means that after the 300K had run out in 15 years, then in another 15 years he'd be eligible for SS. 37 + 15 + 15 = 67.

Yes the math is fuzzy and a bit basic, but I think TomG is trying to show that even very rough math would indicate that 300K isn't enough.

OTOH, I'd like to echo the words of those who praised tiredrkwr for amassing such a sum at his age. To have close to 300K saved up on a retail workers wage at the age of 37 is really something.

As one or two others have said, there are ways to live on 10K/yr in the US, but it will be hard work. Take some time to play with Firecalc and input different scenarios. See what happens if you never save again and just work to cover your expenses for another 5 yrs, 10 yrs, 15 yrs. It looks like you must have saved a good portion of your wages in the past, so perhaps now you could give yourself a break, continue working at a slightly more enjoyable job, but spend the extra money on some fun instead of saving it - or just work less.

Best of luck to you - I think you've already done the hard part in saving that chunk of money!

 

[TomG]

Poorly written. Trying to show $300k with current expenses is exactly half needed to retire (or even 2/3 if you go by age 62)

Math isn't fuzzy. It's the logic that ignores things like inflation, changes to social security, unplanned expenses, et cetera, that doesn't work

But it is just a matter of perspective as to how close or far away you are from being able to retire completely or at least cut way back

 

[Major Tom]

Poor choice of the word fuzzy. My apologies.

 

[Andre1969]

First off, let me join the others in congratulating you in your accomplishment. $300K saved by the age of 37 is damned impressive...especially considering the way the economy has turned in the past few years!

Unfortunately, if you stop working now, I have a feeling that $300K will get used up fairly quickly. If you burn through it at the rate of $20K per year, my guess is that it would probably be gone in 15-20 years.

The old rule of thumb I'd heard was no more than 4% withdrawal rate, adjusted for inflation, if you want your nest egg to last at least 30 years. However, if you go down to a 3% withdrawal rate, there's a good chance it would last forever.

One thing you might want to consider, if you're really getting fed up with the workforce, is finding part-time work. Preferably, work enough hours that you at least have health insurance. If you went with the 3% withdrawal rate, you could pull out $9,000 per year, and if your expenses stay at $20K per year, you'd only have to work enough to cover the $11K difference.

 

[Sarah in SC]

You mentioned that you are a loner and don't like working with the public. Many of us feel that way, I promise!
But, with your memory loss, you might inquire about jobs for those with disabilities through local agencies, or, and this may be a reach, but what about placement services or temp agencies that have some experience with Asperger's sufferers.
I have been in a job similar to yours and it was awful. But please don't paint yourself into a corner that this is the only job you can do. Keep looking, keep an open mind, and hopefully you will find something you can stand while you save more money.
Best to you!

 

[ESRwannabe]

Hello, new here.

I am 37, from the US and completely sick of the work grind.

Suppose, hypothetically if I reached my goal of 300K in savings by the end of this year and got laid off, would it be enough to retire on?

I am risk-averse and not familiar with most financial products (still learning). I have no dependents so I would be spending this mostly on myself with a few exceptions.

My expenses are roughly $20K a year - I would like to live comfortably without having to work ever again - preferably in the US (!)

Curious, do you think this would be doable - or what changes / sacrifices in my lifestyle would I have to make in order to be able to afford to retire w/ this money?

Thank you for any insights,
Pat

I would suggest you consider ESR (early semi-retirement). Instead of withdrawing the full $20k a year from your investments, you could take just half and earn the other half through work. Earning $10k a year should be pretty easy. You will have an abundance of options.

This is the goal that I am after. My living expenses are around $30k a year (could be $20k if I owned a house). Generating the full $30k a year would require me to save for too long. I would rather shoot for $15k a year and work for the other $15k a year. That way I can hit my goal much sooner and find work that is less stressful asap.

What I am considering doing when I get closer to my goal is to get a job in a foreign country teaching english. My anecdotal opinion is that these types of jobs are easy to get for anyone that has a college degree. You will not make much money, but it will be enough to live on, and you will get to experience another country. A benefit to this option is that every year I spend doing this, is another year my investments would have to compound. This might be the type of thing I pursue when I am close to my goal but still need a year or two of investment growth.

Other options I will also look into would be peace corps and graduate school. If I got into graduate school in a science field and got a TA stipend, then that would be a fun way to spend a few years while my investments compound.

 

[tiredwrkr]

Guys, here is an update. I am seriously kicking myself for the decision I just made. Recently I hooked up with an RIA who invested about 80K of my assets into a Cole REIT. The 7% yearly dividend seemed quite attractive but she did not mention that the companies are unlisted, thus making it a real possibility I will never, ever see the principle.

I am feeling like a complete idiot right now, as with the support of you guys there is no excuse for doing something so incredibly impulsive - but water is over the dam and I can't turn back. I have to lock this money for 7 years - which is not a problem - but the possibility that I can not ever liquidate this investment is making me seriously ill.

Curious, have any of you ever had experience with Cole REITs?
Pat

 

[Hiredgun]

Cole REIT: Hate to be the bearer of bad news, but a quick Google search picked this up:

Cole REIT Has Dividend Problems • REIT Wrecks Forum

 

[tiredwrkr]

Cole REIT: Hate to be the bearer of bad news, but a quick Google search picked this up:

Cole REIT Has Dividend Problems • REIT Wrecks Forum

Yup, read this as well. And I just tied up about 80K in this product.

I might as well just quit working. I'm losing assets faster by investing through unscrupulous people than actually quitting my job and getting unemployment. Actually I just feel numb when I should probably be enraged.

 

[shotgunner]

If I am reading this correctly the increase in the % of dividend is due to the drop in share value.

http://tickerforum.org/akcs-www?post=141411

Just curious if there a short period of time where you can back out of your commitment to purchasing this product. I think some states have laws to the effect.

 

[RunningBum]

Yup, read this as well. And I just tied up about 80K in this product.

I might as well just quit working. I'm losing assets faster by investing through unscrupulous people than actually quitting my job and getting unemployment. Actually I just feel numb when I should probably be enraged.

One bad decision shouldn't lead to another.

 

[ESRwannabe]

Sorry to hear about your REIT investment. I personally think it is too early to buy REITs right now and I would probably only consider buying an index for them, if I did want to buy.

Vanguard's REIT index had a yield of around 3% last time I checked, which is too low to interest me. In comparison you can buy stocks like PG, KO, PEP, MCD etc with yields above 3%. If you wanted a higher yield I'd look at CVX, JNJ, PM, MO, and T.

 

[tiredwrkr]

If I am reading this correctly the increase in the % of dividend is due to the drop in share value.

Non Traded REIT cuts value - Letter from Cole Capital REIT [Realty] - MarketTicker Forums

That sounds about right. My investment advisor did not explain this to me. Apparently, the equity I raised in newly investing in this product is what is paying current investors dividends. It sounds like a Ponzi scheme. The RIA had me sign a lot of complicated documents and it was probably in the fine print how illiquid it actually is. When she sold it to me, I was under the impression that in 3 years the redemption price would be 100%. But what I did not see was this:

"We may terminate the redemption program at any time, in our sole discretion, to protect the investors of the Trust. We may waive the one-year holding period in the event of the stockholder's death or bankruptcy, or other exigent circumstances."

So maybe if I die, I may get my money back.

Just curious if there a short period of time where you can back out of your commitment to purchasing this product. I think some states have laws to the effect.

I've looked at the Cole fact sheet and elsewhere and cannot find a time frame.

 

[tiredwrkr]

Sorry to hear about your REIT investment. I personally think it is too early to buy REITs right now and I would probably only consider buying an index for them, if I did want to buy.

Vanguard's REIT index had a yield of around 3% last time I checked, which is too low to interest me. In comparison you can buy stocks like PG, KO, PEP, MCD etc with yields above 3%. If you wanted a higher yield I'd look at CVX, JNJ, PM, MO, and T.

Thank you for the ideas. I don't know why I didn't just invest with Vanguard to begin with. I truly believe in safety in numbers rather than investing in something so obscure that it has very little accountability.