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Old 06-24-2014, 12:07 PM   #21
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I have a friend in PV MX who retired in 2008 with $50k investments and $750k in property including his house and 2 rental properties. He has the 2 rental properties on the market today so he can relax a little. But he runs a budget that is amazing. And his much younger Mexican wife tows the line.

He also gets SS. And he has US Medicare and also qualifies for VA services in the US.
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Old 06-24-2014, 12:21 PM   #22
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I'm considered self employed so I can deduct expenses. My "official" income will likely be around $15000 per year. I currently pay $34/mo for a silver plan from the ACA. It has a $500 deductible. If I make just a couple thousand more it changes a lot so no incentive to make more since i'm used to living on $15K/yr.
A light bulb moment for me was seeing the dorm room for one of our kids. I realized most these kids in the dorm live pretty happy lives in Southern California with a small housing space and small budgets but lots more free time than a 40+ hour a week job with commute, less stress, low financial overhead, time for socialization and low cost activities like biking, surfing, beach valley ball, cook outs and playing Frisbee in the park for fun.

Low overhead and part time or part year work is certainly an interesting lifestyle to consider.
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Old 06-24-2014, 01:20 PM   #23
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My MIL is living off of SS only as far as I know. Along with half of an inherited house, for which she is still making payments on the other half I believe. Definitely no portfolio. However she is doing fine and has family around. Not what I would chose, but something I could live with.
Good point. My MIL's income dropped when FIL passed away last year. Her total income is about $24k. That's SS (wep reduced), Federal Pension, and RMDs from her IRAs and TSP.

Somehow her savings keeps growing. She's spending about $13k all in. and banking almost $1k/month.

Her house is paid for. She has no vices. She doesn't spend on anything but groceries and utilities and cable tv.

We were worried that losing FIL's SS would make it so she started eating into the nest egg - but that hasn't happened... nest egg is growing at age 87.
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Old 06-24-2014, 02:45 PM   #24
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$1.35 million in investments plus a mostly paid off house ($40k remaining). RE'd at 33 with 3 kids.

Roughly a $32k/yr retirement budget.

Plan B is to cut expenses as necessary. Plan C is to pick up some part time work. Plan D is to head back to full time work. I don't have a Plan E yet, but I figure I have plenty of time to try out Plans A-D first.
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Old 06-24-2014, 02:52 PM   #25
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Good point. My MIL's income dropped when FIL passed away last year. Her total income is about $24k. That's SS (wep reduced), Federal Pension, and RMDs from her IRAs and TSP...
My mother lives very well on a bit more. I said "very well" because she was out shopping for clothes all the time.

So, as a geezer with Medicare and no dependents, one can retire with $20-30K, and that can come from SS or pension with no market risks. It is a lot scarier for an early retiree totally dependent on investment returns.
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Old 06-24-2014, 03:06 PM   #26
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I've seen a few winners who have the least. Seem to populate the libraries during the day and who knows where they go at night.

Not for me.
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Old 06-24-2014, 04:12 PM   #27
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I've seen a few winners who have the least. Seem to populate the libraries during the day and who knows where they go at night.

Not for me.
Sunday morning I walked downtown to drop off some books at the library. Hadn't opened, and a lot of leasty looking individuals were hanging out at the door. They must hate Sunday, as the opening is later than usual.

Ha
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Old 06-24-2014, 04:22 PM   #28
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I know there are some pensions on this forum in which I would need $0 saved. It all depends on your situation. With no pension you might need to be a good saver.
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Old 06-24-2014, 04:50 PM   #29
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I think the risks have to be weighed up - the risk of running out of money versus the risk of working longer than necessary. It isn't easy. I don't think I will ever get to a position where there is zero risk. I don't mind living on a low budget, but I always want to have money for anything I feel I need for my health. I have already (aged 44) had back problems, expenses for which included an electric recliner chair (which I wouldn't be without), and skin problems, as a result of which I need supplements on a permanent basis (which are working very well).
On the other hand, I think I will be able to take better care of my health if I'm not working.
I am very nearly ready to retire. Most of my money is invested in US real estate, although I'm not in the US myself. I use managing agents.
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Old 06-25-2014, 04:39 AM   #30
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I applaud those who RE on a shoestring. I couldn't of done it, though. I enjoy creature comforts and a sense of financial security.

I think the ideal is to maximize the following:

Portfolio at retirement / Age at retirement
Some would say Max Port/MINIMUM age or else one may never retire - the crux of the OMY (one more year) syndrome.
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Old 06-25-2014, 08:12 AM   #31
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Some would say Max Port/MINIMUM age or else one may never retire - the crux of the OMY (one more year) syndrome.
Portfolio at retirement divided by Age at Retirement implies that, given the same portfolio size, the older you are on the day of retirement, the less successful.

Two examples:

$1MM portfolio / 65 years old = a "score" of 15,385

vs

$1MM portfolio / 45 years old = a "score" of 22,222

So this formula rewards people who retire with the biggest portfolio at the youngest age, and somewhere between the extremes there is an optimum that each person must determine is right for them, given that most of us have to trade years of work for increases in portfolio size (IE, OMY syndrome).
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Old 06-25-2014, 08:47 AM   #32
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Portfolio at retirement divided by Age at Retirement implies that, given the same portfolio size, the older you are on the day of retirement, the less successful.

Two examples:

$1MM portfolio / 65 years old = a "score" of 15,385

vs

$1MM portfolio / 45 years old = a "score" of 22,222

So this formula rewards people who retire with the biggest portfolio at the youngest age, and somewhere between the extremes there is an optimum that each person must determine is right for them, given that most of us have to trade years of work for increases in portfolio size (IE, OMY syndrome).
Years of working aside, the 65 year old with $1M is likely to be in much better financial shape going forward because they will likely have accrued higher SS benefits and maybe pension benefits plus they have less years to bridge before collecting SS benefits, and are eligible for Medicare for health insurance. They may also have their house paid off and kids off the payroll, so expenses are lower.
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Old 06-25-2014, 08:56 AM   #33
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I'm probably not the lowest, but definitely in the lower echelon. Sometimes it's hard to relate to all the angst and OMY thinking from folks with multiples, sometimes many multiples, of what I'll be retiring with.
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Old 06-25-2014, 09:07 AM   #34
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I applaud those who RE on a shoestring. I couldn't of done it, though. I enjoy creature comforts and a sense of financial security.

I think the ideal is to maximize the following:

Portfolio at retirement / Age at retirement
I understand the logic of "retiring early with less" being equal to "retiring later with more". One is trading off wealth or the purchasing power against his time.

The simple formula does not weight the loss of time enough though, I think. Suppose a person has $1M at the age of 40. We know that the 2nd million will come a lot easier, so this person will likely get to $2M at 50 or even earlier.

Using your formula, he will keep doing OMY because he can double his stash in less time than doubling his age.
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Old 06-25-2014, 10:01 AM   #35
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Originally Posted by AnIntentionalRoad View Post
Portfolio at retirement divided by Age at Retirement implies that, given the same portfolio size, the older you are on the day of retirement, the less successful.

Two examples:

$1MM portfolio / 65 years old = a "score" of 15,385

vs

$1MM portfolio / 45 years old = a "score" of 22,222

So this formula rewards people who retire with the biggest portfolio at the youngest age, and somewhere between the extremes there is an optimum that each person must determine is right for them, given that most of us have to trade years of work for increases in portfolio size (IE, OMY syndrome).
Darn I read it as a either or thing and missed the math formula - my apologies.

Also have to study that a bit more as I have been using a way more complicated method. Yours may be a lot easier to use.
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Old 06-25-2014, 10:08 AM   #36
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I applaud those who RE on a shoestring. I couldn't of done it, though. I enjoy creature comforts and a sense of financial security.

I think the ideal is to maximize the following:

Portfolio at retirement / Age at retirement
Quote:
Originally Posted by NW-Bound View Post
I understand the logic of "retiring early with less" being equal to "retiring later with more". One is trading off wealth or the purchasing power against his time.

The simple formula does not weight the loss of time enough though, I think. Suppose a person has $1M at the age of 40. We know that the 2nd million will come a lot easier, so this person will likely get to $2M at 50 or even earlier.

Using your formula, he will keep doing OMY because he can double his stash in less time than doubling his age.
So, thinking a bit more, and borrowing from your idea, I suggest the following formula.

First, let's set a minimum stash that our retiree needs before he even thinks of retiring. This level of course varies with each person, but for now assume that we can get very basic comfort with $750K. Below this level, we do not even think about ER, nor visit this forum. No, scratch that last idea.

Next, how much time do we have on earth? There's no point in doing OMY up to 79, if we only have 80 to work with. OK, we do not really know how much time we have, but let's use a life expectancy of 80 for now, or perhaps even lower it to 70 to allow time for our retiree to be healthy to enjoy that world cruise.

Then, what we want to maximize is (Stash - $750K) x ( 70 - Age).

The idea is to get an excess amount above that basic $750K, but not to the point of running out of time to enjoy that excess amount. In other words, we try to maximize "Leisure Money x Remaining Time".

You can see that below $750K, the excess stash amount is negative. Fail!
And as you approach 70, or whatever you set your age limit, your time is running out. Fail!

Suppose you're nowhere near $750K, and you are in your 60s and your time is running out? Ah hah, you will need to see what SS is worth that you are now eligible. Bingo! That quantity of "$ times remaining years" is now positive, and you now have something to optimize.
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Old 06-25-2014, 03:25 PM   #37
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Would love to post something intelligent, but instead of looking forward, find it easier to count "back" instead... ie. it has to last me 8 more years... seven more years... six more years, etc.

Much easier!
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Old 06-25-2014, 03:36 PM   #38
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Who around these parts had the guts to retire on the least amount of money? Would love to hear yhose stories.

While saving up a couple mill and retiring is impressive, i think the person who maximizes time over money wins. Thats a gamble of course as you try to cut it razor thin to being a pauper.
The problem with this question is that someone who retires with $50K in the bank and a $60K COLA'd pension probably has more security than someone with $2 million invested and no pension.

The other question is the definition of "money". Someone with (say) $2 million in rental real estate may have little money, but they have substantial assets, and probably a pretty significant income stream.
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Old 06-25-2014, 04:04 PM   #39
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So, thinking a bit more, and borrowing from your idea, I suggest the following formula.

First, let's set a minimum stash that our retiree needs before he even thinks of retiring. This level of course varies with each person, but for now assume that we can get very basic comfort with $750K. Below this level, we do not even think about ER, nor visit this forum. No, scratch that last idea.

Next, how much time do we have on earth? There's no point in doing OMY up to 79, if we only have 80 to work with. OK, we do not really know how much time we have, but let's use a life expectancy of 80 for now, or perhaps even lower it to 70 to allow time for our retiree to be healthy to enjoy that world cruise.

Then, what we want to maximize is (Stash - $750K) x ( 70 - Age).

The idea is to get an excess amount above that basic $750K, but not to the point of running out of time to enjoy that excess amount. In other words, we try to maximize "Leisure Money x Remaining Time".

You can see that below $750K, the excess stash amount is negative. Fail!
And as you approach 70, or whatever you set your age limit, your time is running out. Fail!

Suppose you're nowhere near $750K, and you are in your 60s and your time is running out? Ah hah, you will need to see what SS is worth that you are now eligible. Bingo! That quantity of "$ times remaining years" is now positive, and you now have something to optimize.
I like it! Still a simple formula to understand but it gets to the heart of the " money x years left" sweet spot.

It would be nice to not have absolute values ($750k and 70 years), as these are fairly arbitrary and everyone will have their own opinion about what numbers are "correct."
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Old 06-25-2014, 04:05 PM   #40
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While saving up a couple mill and retiring is impressive, i think the person who maximizes time over money wins.
Sounds good on paper. But until people expire, there is no telling who the winners are.
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