One Million or less

[ferco]

Has anyone been FIRE for 5 years or more starting with one million or less in their portfolio (without a pension, SS or company sponsored health insurance). If so, how has it worked out? What asset allocation did you or are you using. Would you, in retrospect do anything different now that you have at least 5 years experience into FIRE. What advice would you give others who plan to do the same ( besides accumulating more money).

 

[mathjak107]

i cant say i would even have thought about trying it with so little unless i wanted to have everything in my life done on the cheap or dumpster diving later on but then again i live in nyc.

 

[ferco]

Mathjak,
The question is to anyone who has done it

 

[scrabbler1]

I have been ERed for only 4 years (actually 3 years and 11 months, I celebrate 4 years at the end of October). At the time I ERed (at the near-bottom of the financial meltdown), I had $608k in my taxable accounts, the accounts I am living off, and $234k in my rollover IRA, or $842k total. This has since risen to $1.1M with about 2/3 in my taxable accounts. I have had no change to my lifestyle and I don't eat from dumpsters LOL! I live near NYC, too (LI).

I have nearly 70% of my taxable accounts in bonds but I have 55% of my IRA in stocks.

Would I have done anything differently, in retrospect? No. Retiring during the financial meltdown was a HUGE break in my favor, greatly helping my investment income in the years since.

Make sure you build into your monthly/annual ER budget a cushion, or surplus, so you don't have to worry about relatively small, unforeseen events which can arise.

One more thing. I split my ER plan into two parts - getting to age ~60 intact versus after that. The latter will include my 3 "reinforcements" which are (1) unfettered access to my IRA, (2) SS, and (3) my frozen company pension. This is a big reason why I have vastly different AAs in my taxable accounts and my IRA.

 

[donheff]

Lots of working people raise families on less than the income from $1M. Get your AA and SWR advice here. Then visit any rural area in the US and ask people how they manage.

 

[rescueme]

Lots of working people raise families on less than the income from $1M. Get your AA and SWR advice here. Then visit any rural area in the US and ask people how they manage.

Agreed.

Also, it depends on your expected lifestyle, total debts at retirement, and future guaranteed income expectations (you may be able to retire at 60, if you expect to take SS at 62; however, if you're currently 40, it's a different story).

 

[Andre1969]

For a long time, $1M has been my goal to retire. But, the closer I get to it, I have to admit I'm having second thoughts.

 

[Midpack]

You may have seen this, there are lots of resources on retiring with less than a million...

 

[Fermion]

Agreed.

Also, it depends on your expected lifestyle, total debts at retirement, and future guaranteed income expectations (you may be able to retire at 60, if you expect to take SS at 62; however, if you're currently 40, it's a different story).

What does this mean? I am 43 and my SS statement says I will get $1673 at age 62 and my wife qualifies for half of that ($835). I consider this just as guaranteed as any private or public pension.

To the OP. $1,000,000 will net you $25,000 for at least 50 years if invested in 40% stock/60% bond. Probably could go for $35,000 if you went 60% stock/ 40% bond, with the risk that it only lasts 25 years or so.

$25,000 is a good income. At this level you will pay few federal taxes, small healthcare. It would help greatly if you had a place to live though.

 

[travelover]

Lots of working people raise families on less than the income from $1M. Get your AA and SWR advice here. Then visit any rural area in the US and ask people how they manage.

+1 It all depends on your expectations. Anyone else here that was just out of college, without two nickels to rub together and had the time of their lives?

 

[rescueme]

What does this mean? I am 43 and my SS statement says I will get $1673 at age 62 and my wife qualifies for half of that ($835). I consider this just as guaranteed as any private or public pension.

If you were to retire tomorrow, how would you fund the next 19 years until you start SS? That is what I meant when I mentioned the span of time you must wait until such income sources start.

BTW, your DW won't get half of that at age 62. It is reduced if you have not reached your FRA (Reference: http://www.ssa.gov/retire2/yourspouse.htm ).

And if you follow the general advice of one of you holding off till age 70, you have 27 years to think of before SS starts for you; of course, if you claim against your DW at her FRA age, you can receive 50% until age 70.

 

[Sarah in SC]

+1 It all depends on your expectations. Anyone else here that was just out of college, without two nickels to rub together and had the time of their lives?

Wait, we were supposed to grow out of that?

 

[Finder]

If you were to retire tomorrow, how would you fund the next 19 years until you start SS? That is what I meant when I mentioned the span of time you must wait until such income sources start.

BTW, your DW won't get half of that at age 62. It is reduced if you have not reached your FRA (Reference: Retirement Planner: Benefits For Your Spouse ).

And if you follow the general advice of one of you holding off till age 70, you have 27 years to think of before SS starts for you; of course, if you claim against your DW at her FRA age, you can receive 50% until age 70.

Don't SS statements assume that you continue working? In other words, wouldn't the actual dollar amount he would receive from SS be much less if he stops working?

 

[Fermion]

If you were to retire tomorrow, how would you fund the next 19 years until you start SS? That is what I meant when I mentioned the span of time you must wait until such income sources start.

BTW, your DW won't get half of that at age 62. It is reduced if you have not reached your FRA (Reference: Retirement Planner: Benefits For Your Spouse ).

And if you follow the general advice of one of you holding off till age 70, you have 27 years to think of before SS starts for you; of course, if you claim against your DW at her FRA age, you can receive 50% until age 70.

Ah right. I had only looked at the full retirement age figures in the past because that is where the numbers get really nice. I think it is around $2700 for me, $1350 for her, assuming we don't work another day from today and start drawing at age 70. This is $48,000 a year in today's dollars.

 

[ejman]

Has anyone been FIRE for 5 years or more starting with one million or less in their portfolio (without a pension, SS or company sponsored health insurance). If so, how has it worked out? What asset allocation did you or are you using. Would you, in retrospect do anything different now that you have at least 5 years experience into FIRE. What advice would you give others who plan to do the same ( besides accumulating more money).

Yes, it's very doable particularly if one is moving from a high cost location such as a large metro area on one of the coasts to a much lower cost small town or rural area. That's what we did when we ER'd in 2002. A House with a big mortgage in the city was converted to a smaller fully paid house with acreage in a rural area near a small city.

Once a mortgage is eliminated $1 M provides a comfortable living in many areas where the average family income is not that different from what $1m can generate. For us it worked out beautifully. We followed a standard 60/40 asset allocation turning slightly more conservative as the years have passed 50/50 now where I seem to be most comfortable.

Health insurance is the one area where my planning was dead wrong. It turned out to be very expensive and difficult to get. We are currently paying $8,900 a year for a policy that has a $10K deductible for the two of us and it was difficult to find even though we have no major health issues. This is our highest expenditure by far. Really looking forward to starting medicare in a few years.

I wouldn't really change a thing. I'm glad we retired when we did and knowing what I know now, it would have been physically a lot harder to start a little ranch with critters in our 60's than it was in our early 50's. Putting up a half mile of fence up and down the hill in our place was a hell of a lot easier 10 years ago than it would be today.

Our liquid NW now is 50% higher than when we retired so it has worked out well.

 

[Independent]

Has anyone been FIRE for 5 years or more starting with one million or less in their portfolio (without a pension, SS or company sponsored health insurance). If so, how has it worked out? What asset allocation did you or are you using. Would you, in retrospect do anything different now that you have at least 5 years experience into FIRE. What advice would you give others who plan to do the same ( besides accumulating more money).

Are you saying "no pension or SS ever" or "no pension or SS for the first 10 years"?

 

[martyb]

You may have seen this, there are lots of resources on retiring with less than a million...

On the nightstand, right next to my bed.

 

[Tyro]

+1 It all depends on your expectations. Anyone else here that was just out of college, without two nickels to rub together and had the time of their lives?

For our earning power at the time (near min wage), yes. Expectations and attitude. We were told during college that we should expect to have a lower standard of living than our parents (due to the changing culture & economy) and I believe that was the case. It was from many years of hard work, living beneath (below?) our means (when possible) and saving as much as we could, that 20 years later we were able to understand and appreciate the saying that "Life Begins at 40." Grateful Dead - Truckin' - YouTube was our mantra, and that's what we did (kept truckin', pluggin', working at life). While things were definitely not easy, we still had the time of our lives (as much as we could within our means) getting here, and what a long strange trip it's been!

Tyro

 

[rescueme]

Don't SS statements assume that you continue working? In other words, wouldn't the actual dollar amount he would receive from SS be much less if he stops working?

As I understand it (since I'm just an old phart, soon to turn 65 and have yet to claim SS), yes.

My statements (which I get online every first of the month) have had $0 entries for "last year's income", since I retired a bit over five years ago, so my future (e.g. 66/70) dosen't change. The one number that does change is "if you claim today" (which I don't plan on doing, but you never know - sh*t happens).

Anyway (and my personal statement reflects this), earnings in the later years have little effect on your actual SS.

 

[easysurfer]

Also another factor not yet mentioned is if you were/are retiring with $1M or less is how the rest of your situation stacks up. For example, do you have kids to put through college? Is your house paid off?

 

[ferco]

Grown kids......No college expenses.....No mortgage.....No alimony etc....NADA

 

[imoldernu]

Less than $1 million?
Yes... much less. Happily retired since 1989. Homes in Il and Fl and a "lake place"

I started a thread here:
http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251.html
... that comes from notes that I made along the way. A little long, perhaps, but I am using it as a way to share my diary with friends, and hope to add notes from time to time, as new things pop up, or major changes happen.

Certainly not for those who have world travel, or elegant living in their plans, and many will not be content to change their current lifestyle to adjust to limited income.

I'd agree that someone retiring today may need a little more than what we had when we retired, but I honestly feel that learning "frugal" would allow for retirement for much less than $1 million. (the "Kicker" is covering the healthcare cost before Medicare comes in.)

The saving grace for early retirement, is the ability to go back to work if things don't work out. We were prepared to, but were lucky, and have lived happily everafter... so far.

Good luck!

 

[HFWR]

Barring [-]winning the lotto[/-] [-]marrying a rich widder woman[/-] unforeseen circumstances, I will retire with quite a bit less than $1M. I do have subsidized health insurance to get me to Medicare, will have a teeny tiny non-COLA pension of about $300/mo., and a SS check. Plus, at 58 and counting, I don't believe I'll have to fund 40-50 years of retirement, like some here.

 

[67walkon]

I think it could be done, but I'm not gonna do it! We have a 2d home in a rural area of Western NC. The costs of running that home-taxes, electric, gas, insurance, any maintenance I can't do, etc. are less than $5,000 a year. They're actually right around $4,000, but we aren't there in the winter. I figure that if everything goes south with our retirement plans, we could live there easily on $40-50,000 until SS kicked in.

So yes, it could be done, but I don't want to be the one to do it. I would prefer to have a good bit more.

 

[unclemick]

My past is too messy to follow but let me toss out some tidbits. Remember this was the 90's when a dollar was a dollar. Ballpark net worth 250k including 6k RE income age 49. I don't recommend going 12 years without health insurance like I did(too mean to get sick) or doing one year on 12k(she said I was sick in the head). Lived in a payed up fish camp over Lake Ponchartrain technically still in the City and Parrish of New Orleans. The hard to compare part comes from not keeping detailed records(aka spreadsheet), temp work in 95/96, small non-cola pension in 98, early SS in 2005 and that wonderful Mr Market til year 2000. We ran a lot of years maybe 18 to 24k expenses.

Now in my old age 40 - 60k with maybe half in the discretionary(aka party on category) - more than beater pickup, travel, remodeling, eating out a lot, etc.

And next year when I turn 70 plus - good ole RMD - so I gotts to spend a tad more cause I can't take it with me.

heh heh heh - All praise too Saint Jack(aka index funds), my cheap SOB ways early, and of course the point in history when I was layed off - and morphed into a born again slacker, I mean high class ER. I may not live in New Orleans anymore but I intend to party on in KC.