Is this Amount of Income Enough to Retire Early On?

[NW-Bound]

We can assume whatever we want...

Sure. Just like we assume that "past is prologue" when we extend FIRECalc past results into the future. So many decisions in our life are made based on assumptions.

Speaking of assumptions...... I assume you are spending more than $20K. And it's probably a good guess that at some point in your life your could have stopped working (I know you're still PT) and retired with a $20K spending level with a 100% prognosis of success. Yet, you keep accumulating. Maybe $20K isn't enough?

I already said what I have been spending more than once. Yes, it is more than $20K. Can it be cut back? Yes, if I cut out the "non-essential" expenditures, but again, medical costs are tough to manage. And why didn't I stop working? Well, you are making the assumption that I hate what I have been doing. If I truly abhor my job and need to ER asap, perhaps I could find a way to retire with $20K/yr.

About the accumulation, I have said more than once that I like to have money for the pleasure of counting it. I like to hoard money. And when I get paid to do interesting work, in order to have more money to hoard, well it's obvious what I have got to do.

 

[youbet]

perhaps I could find a way to retire with $20K/yr.

Uh huh...........

That's what's great about the internet. We can all "perhaps" do something! Me too!

Sounds to me like you wouldn't be a happy camper on a $20k pre-tax income. Makes sense to me, I wouldn't be either, although mine is just slightly above that. But I understand, it's fun to arm wrestle hypothetical stuff!

Way, way back at the beginning of this silly thread, I said that we wouldn't really be able to answer the question because we didn't have the information necessary to crunch the numbers and we don't know how OP feels about tight-budget living. We just know, from another thread, he makes real good money now, about $80k. So would he be able to enjoy his retirement and life based on a $20k pre-tax income while living in the NE. I have no clue and I think I'm done with this thread.

 

[NW-Bound]

Come on! Didn't I provide a link earlier in this thread showing how a single gal who is a full-time RV'er is having great fun on $20K/year? In my case, if I really like to RV that much, and if I can talk my wife to join me - I assume that she is allowed to bring her own $20K to the table, so to speak - then, my oh my, are we in hog heaven with that $40K or what?

 

[youbet]

Go for it! Keep us posted! And why not bring along a couple friends and have $80k?

You folks sure are high rollers out there. If I needed that kind of money to live, I'd still be working........

 

[NW-Bound]

Go for it! Keep us posted! And why not bring along a couple friends and have $80k?

Well, even two is a tight fit in a space of 8'x25'. Anyway, I do not know if I like to RV that much yet. I will find out after the Alaskan trip next year.

If I do not like it, then it would be just me. You, sir, on the other hand seem skeptical that people can have a good life living in an RV for $20K.

 

[youbet]

Well, I grew up in south Georgia without air conditioning. ..

Just as I thought...........

 

[youbet]

You, sir, on the other hand seem skeptical that people can have a good life living in an RV for $20K.

That's correct, and I'm proud of it! Although we sure do like to camp, fish and kayak.

 

[youbet]

I am still waiting for the info so I can go to Realtor.com and find a 1500 sq ft townhouse "in one of the most affluent areas of the country" in the "low $100k range."

Please, give an end to my suspense.

Ha..... I don't know specifically what area plex was refering to, but here's some data on the wealthiest zip codes. You could look at the top 10 or so (certainly "one of the most affluent areas of the country" would be in the top 10) and check town home prices.......

100 wealthiest cities (according to zip code) in the United States

My son lives in a town that's about one third of the way down the list. I can tell you that there are no 1500 sq ft town homes priced near $100k there. At least not any that don't have some "issue."

 

[haha]

In my case, if I really like to RV that much, and if I can talk my wife to join me -

And... If the ocean were whisky, and I were a duck, I'd swim to the bottom and never come up...

 

[79protons]

Just as I thought...........

What does this mean?

I grew up in Georgia, went to Georgia Institute of Technology for a BSEE then obtained a masters degree from MIT. I now work on the west coast, but still miss south Georgia.

Oh, were you implying I was a typical redneck hick?

 

[youbet]

No... no... don't be silly. What is a "typical redneck hick" anyhow? Why would you say something like that? Sheesh.......

I was refering to your proton count.

 

[79protons]

No... no... don't be silly. What is a "typical redneck hick" anyhow? why would you say something like that?

I was refering to your proton count.

And maybe a little due to the fact that you're advising a person they can live on $20k pre-tax in the NE even though you're someone who wouldn't consider doing it.

Oh, ok. I get defensive of Georgia even though I have lived in the NW now for over 17 years . I thought you were relating the lack of air conditioning in my youth to a typical poor southerner background.

What does the proton count have to do with air conditioning

gold has 79 protons in its nucleus. I like prospecting as a hobby here out west (although north Georgia had a history of some gold production, I never panned there).

 

[plex]

I was only away for half a day , here are your links.

"...consistently ranks as one of the top five wealthiest cities in the United States with population between 2,500 to 9,999 — it currently is listed at the number four position and in 1990 it was ranked number two."

Bloomfield Hills, Michigan - Wikipedia, the free encyclopedia

Townhouse listing on zillow (sorry its 1,050 sqft for this one, but its below 100k), when the bottom hit during the housing crisis a couple years, I believe a couple were scooped up for below 50k. 99k seems to be on the high end for an asking price among the townhouses:

746 E Fox Hills Dr, Bloomfield Hills, MI 48304 MLS# 28153919 - Zillow

Point made. And no, this isn't a community like Miami where there are walled off communities of wealthy surrounded by extremely poor areas, the median income is in the the high 100k range. With some research, I would not have any trouble finding similar locations, though i do agree you need to check them in person to be certain.

There would also be no state taxes on income past age 65. Energy subsidy (or any kind of subsidy other than for healthcare in 2014) would be impossible in just about any state on 20k/year, the cutoff is near the poverty line for any assistance at all.

 

[obgyn65]

Hello Fuego - quick question if I may. How is it possible to pull $45-50k per year from one's portfolio "fairly easily" without exceeding $33000 AGI ? Thank you for letting us know.

I'll be able to pull $45-50k a year from the portfolio fairly easily without exceeding $33000 AGI, hence get free or very cheap health insurance.

 

[79protons]

Hello Fuego - quick question if I may. How is it possible to pull $45-50k per year from one's portfolio "fairly easily" without exceeding $33000 AGI ? Thank you for letting us know.

Pull from Roth

Sell underperforming stocks to realize capital loss to offset any gains

Invest in municipal bonds

Probably plenty of other ways.

 

[FUEGO]

Hello Fuego - quick question if I may. How is it possible to pull $45-50k per year from one's portfolio "fairly easily" without exceeding $33000 AGI ? Thank you for letting us know.

Pull from Roth

Sell underperforming stocks to realize capital loss to offset any gains

Invest in municipal bonds

Probably plenty of other ways.

What mr. gold said, and a few other comments:

If I'm selling taxable investments, only the capital gains are included in AGI, not the portion of the sale proceeds that is basis. And I can offset gains with losses.

For example, say I need 50,000 for 2011. I sell $50,000 worth of my VWO etf that has appreciated 100% since I bought it a few years ago. My basis is $25000, my gains are 25000. My AGI, assuming no above the line deductions, is $25000. I'm barely above the poverty line for my family of 4. Done. If I really wanted to optimize my income stream, I suppose I could do a 72t on a Trad IRA to get 16000 of ordinary income, then sell 34000 of the hypothetical 100% appreciated VWO to generate 50k cash and 33k AGI. Ignoring taxable dividends that are in AGI of course.

I could tax loss harvest to partially or fully offset those cap gains. I could pull funds from my HSA to cover any medical/dental/vision expenses. I could do a 72t on my Roth.

I guess for some who have virtually all assets in traditional IRAs or 401k's, it may be hard to reduce your AGI artificially by crafting your income streams. But for most folks who have some tax diversity, it shouldn't be too hard to make AGI significantly less than your cash flow.

 

[haha]

I was only away for half a day , here are your links.

"...consistently ranks as one of the top five wealthiest cities in the United States with population between 2,500 to 9,999 — it currently is listed at the number four position and in 1990 it was ranked number two."

Bloomfield Hills, Michigan - Wikipedia, the free encyclopedia

Townhouse listing on zillow (sorry its 1,050 sqft for this one, but its below 100k), when the bottom hit during the housing crisis a couple years, I believe a couple were scooped up for below 50k. 99k seems to be on the high end for an asking price among the townhouses:

746 E Fox Hills Dr, Bloomfield Hills, MI 48304 MLS# 28153919 - Zillow

Point made.

Well, no doubt about it, Blomfield Hills does qualify. Not attractive for me, but it is definitely an upscale quality place where you are not likely to get mugged in your driveway.

Fuego was right too. Prices really do vary around the country!

For example, search on 98112- a very mixed but central Seattle zipcode. One could not buy a legal lot on the worst block of the worst street for$100k, and likely not for $200K.

In Seattle area Redfin will not be listing or buyer's agent on a property less than $200,000.

Ha

 

[FUEGO]

Fuego was right too. Prices really do vary around the country!

I didn't mean to be trite when I made that comment. But I know some people get used to prices in their localities and can't believe prices could be so low (or so high) elsewhere.

Plenty of places still have decent homes for $100k. It would be tough to find something like that where I live, but for a little more you can get a nice single family house. I thought it was 1999 again when I was driving around and saw signs advertising "Homes from the 130's" in a new neighborhood in a nice part of town.

 

[sailor]

Ha,
also in the zip code list posted by youbet, there is quite a lot of ~100k town houses available for sale in Greater Atlanta Metro area (three zip codes in Roswell and Marietta made the top 100 list).
I think Atlanta area has great salary/home price ratios.

 

[youbet]

I was only away for half a day , here are your links.

"...consistently ranks as one of the top five wealthiest cities in the United States with population between 2,500 to 9,999 — it currently is listed at the number four position and in 1990 it was ranked number two."

Bloomfield Hills, Michigan - Wikipedia, the free encyclopedia

Townhouse listing on zillow (sorry its 1,050 sqft for this one, but its below 100k), when the bottom hit during the housing crisis a couple years, I believe a couple were scooped up for below 50k. 99k seems to be on the high end for an asking price among the townhouses:

746 E Fox Hills Dr, Bloomfield Hills, MI 48304 MLS# 28153919 - Zillow

Point made. And no, this isn't a community like Miami where there are walled off communities of wealthy surrounded by extremely poor areas, the median income is in the the high 100k range. With some research, I would not have any trouble finding similar locations, though i do agree you need to check them in person to be certain.

There would also be no state taxes on income past age 65. Energy subsidy (or any kind of subsidy other than for healthcare in 2014) would be impossible in just about any state on 20k/year, the cutoff is near the poverty line for any assistance at all.

Well there ya go. Good catch plex. Buying a home in a desperately distressed (Detroit suburb) area might just be a cheap living solution for someone trying to make it independently on $20K per year pre-tax.

I did notice (on the Zillow map below the listing) that many of the condos in that bldg and in adjacent buildings were also for sale and probably vacant. This condo itself has been on the market for a year with three different realtors. I suppose the buyer would have to be careful that maintenance, etc. on the building would be done with so many vacancies and the resulting lack of association fees being paid. And that the neighborhood would stay up to par in general. Those are risks you have to assume when bargain hunting in extreme situations like this.

I have a close friend who recently sold his single family home in nearby Flushing, Mich. He had to bring a small check to the closing since the value of his home had dropped so much. And he said it had gotten depressing living in an area with so many for sale signs and vacant properties. Still, the houses themselves were bargains. He's in Dayton now and likes it much better.

 

[RonBoyd]

Home prices falling faster in most metro areas

Home prices are falling faster in the largest U.S. cities, and a record number of foreclosures are expected to push prices down further through next year.

 

[haha]

He's in Dayton now and likes it much better.

My goodness, who would ever think of that? As the world turns...

Ha

 

[youbet]

My goodness, who would ever think of that? As the world turns...

Ha

That someone would move to Dayton?

Not to continue to steal the thread, but....... and since we long ago drifted from the specific topic of retiring in the NE on $20 pre-tax.....

You've mentioned you're doing some condo hunting as of late. How would the prospect of buying a condo in a building with many long term vacancies in a neighborhood of condo buildings also having many units for sale sound to you? On the positive side, there's always the chance the auto industry and other rust belt industries, whose demise has pulled Detroit real estate into the dumper, will recover and re-employ. Or, other industries might develop there. On the downside, maybe Detroit's economic prospects are going to be nil for a long, long time and some surrounding neighborhoods will become serious, detiorating problems. Or something inbetween.

I love bargains. But sometimes things are priced low for a reason.

 

[Independent]

You guys just love to argue. In what sense is Topeka, KS northeast? Northeast of Guymon, OK?

I remember reading of some yogi who lived on air and water, no need for food. I bet that would help quite a lot too.

Ha

Sorry. I thought this: "Unless there is some place in America where there are no drugs, no section 8, no illegals living 8 to an apartment, no street crime or break-ins in cheap neighborhoods, etc- then this stuff is mostly fantasy." was a statement about America in general, not specific to the northeast.

 

[haha]

That someone would move to Dayton?

Yes. Everytime I read about Dayton, some company is leaving. Dayton is pretty, a lot of very nice big houses were built first by the wealth generated from their excellent soil, and later by machine tools, auto components, NCR, and other excellent middle American manufacturing concerns. But that was yesterday, right?

Not to continue to steal the thread, but....... and since we long ago drifted from the specific topic of retiring in the NE on $20 pre-tax.....

that one was DOA

You've mentioned you're doing some condo hunting as of late. How would the prospect of buying a condo in a building with many long term vacancies in a neighborhood of condo buildings also having many units for sale sound to you? On the positive side, there's always the chance the auto industry and other rust belt industries, whose demise has pulled Detroit real estate into the dumper, will recover and re-employ. Or, other industries was develop there. On the downside, maybe Detroit's economic prospects are going to be nil for a long, long time and some surrounding neighborhoods will become serious, detiorating problems. Or something inbetween.

I love bargains. But sometimes things are priced low for a reason.

I agree of course. Speculating is one thing, living another. Who wants to live in a place where the young people are migrating elsewhere? Of course it's cheap, but...

Ha