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Will I Ever Be Able To Retire Early?
Old 09-17-2011, 02:45 PM   #1
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Will I Ever Be Able To Retire Early?

Does anyone here ever feel like they are never going to reach their FIRE goal? I have been saving and investing for FIRE since I was 26. I am 41 now, and I still feel like it will take me forever to reach the level of savings that I need to cover my early retirement expenses.

My taxable and tax deferred investments would currently cover 35.3% of my early retirement expenses.

I have a vested pension that will cover about 11% of my cost of living in retirement, that I will receive when I am 60 and I have factored in inflation.

I have a Social Security estimate, based on an early retirement date and starting to receive at 62. Social Security would cover about 12% of my cost of living in retirement and I have factored in inflation.

My expenses between the time I was 26 and 41 old (except for paying back some student loan debt) have been somewhat artificially low due to certain life circumstances, my salary has been decent, I live below my means, and yet I am still rather far off from achieving my early retirement goal.

I guess my questions are- Does anyone else ever feel this way? If so, how do you deal with it? For those who are early retired already, did you find that your net worth increased signficantly at some point during your work and saving history? When you hit a certain percentage, where your investments could cover a certain percentage of your retirement spending based on a 4% withdrawal rate, did you then find that reaching your early retirement goal then came quicker? I feel like I am living below my means and investing all additional savings, but I am still not getting toward my early retirement goal soon enough.

I have used FIRECalc, and it looks like an early retirement may be available in 7 to 9 years, but that seems like a long time! If I work for 9 more years, that means I will have worked 24 years to acheive early retirement. If I had created an early retirement goal later in life, I would understand having to work 24 years to achieve it. But I started off fairly early.

As bad as things may sound now for me, the picture looked even worse for me in 2008-2009. Maybe I should try and focus on the positive?

Thank you for your insight.
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Old 09-17-2011, 02:55 PM   #2
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Originally Posted by midnighter777 View Post
Does anyone here ever feel like they are never going to reach their FIRE goal?
Never had the problem, since I never thought about retirement before age 65 (in my early 20's, back in the early 70's), later at age 66 since the government "suggested" that I should wo*k another year before collecting SS (never ever planned on age 62 for SS).

Heck, DW/me didn't even start saving/investing on our own till our mid-30's, when our respective DB (pension) plans were eliminated in favor for the new fangled 401(k)/IRA options ...

Since I never thought about retiring early, it was not a problem to me, nor did I ever think about it as a goal.

One could argue that I'm not really an ER guy, but seeing that I retired at age 59 vs. my target age of 66, I did get an extra seven years of personal freedom.

I never set my sights that high in this regard, and was pleased on the way it turned out.

Just my story...

BTW, if you don't reach your (to me) really early ER goal, what's the worst that can happen ?

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Originally Posted by midnighter777 View Post
I will have worked 24 years to acheive early retirement.
And I wor*ed 40 years to gain my seven years "vacation" . U R doing quite well, from my simple POV...
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Old 09-17-2011, 02:58 PM   #3
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The worst that could happen? I would have to work forever! Yuck! LOL!
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Old 09-17-2011, 03:20 PM   #4
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Originally Posted by midnighter777 View Post
I have a Social Security estimate, based on an early retirement date and starting to receive at 62. Social Security would cover about 12% of my cost of living in retirement and I have factored in inflation.

.
Something isn't adding up........

If SS would only cover 12% of your RE budget, it sounds like you're either under estimating SS or have a very generous RE budget. Even if you stop contributing to SS quite early or have a relatively low income, it's surprising how much SS pays out.

If you're going to receive, say, $10k (real dollars) of SS at 62, that implies your RE budget is $83k!
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Old 09-17-2011, 03:28 PM   #5
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No, I checked the math and the Social Security estimate does add up. I did use an early age to exit from the work force and 62 as the age to start to receive for the estimate. I live in the Northeast, in a fairly high cost of living area, but I have tried to keep my early retirement budget estimate numbers on the lower side of reasonable, the estimate is not near $83,000. My salary justifies me staying in this area now, and after I leave the work force, I think I will still want to stay here for friends and family etc.
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Old 09-17-2011, 03:38 PM   #6
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Tell us a bit about your SS estimate. How many working years and at what kind of salary levels are your estimates based? You're 41 now. What age did you use for RE? Did you actually use the calculator on the SS site?
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Old 09-17-2011, 03:54 PM   #7
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I put the estimate together when I did a FIRECalc analysis. I used the SSA website. I think I used my actual income history. My work life started as early as 18 or so, but I entered the professional world at 26. It would include at least 15 years of full time employment. I used 47 as my end work age and 62 as my start to receive SS date.
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Old 09-17-2011, 03:54 PM   #8
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...that implies your RE budget is $83k!
And the problem with that is? BTW, our's is currently higher and I'm sure there are those retirees on the board that exceed us, with no problem...
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Old 09-17-2011, 04:04 PM   #9
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And the problem with that is? BTW, our's is currently higher and I'm sure there are those retirees on the board that exceed us, with no problem...
Perhaps you need to move the glasses perched on your pup's nose onto your own face....... I was replying to OP, not you. If his goal is a very early retirement, then one of the things to consider would be working out a relatively modest post retirement budget.

There's nothing wrong with a generous retirement budget. In fact, it's a good thing if your retirement income supports it! But if you're extremely anxious to get out of the harness at a very early age, you might have to consider something more modest. You and I didn't really retire early. I stayed at it until age 58. It looks like you were a bit older yet. It's not surprising we have larger retirement budgets.
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Old 09-17-2011, 04:14 PM   #10
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Quote:
Originally Posted by midnighter777 View Post
I put the estimate together when I did a FIRECalc analysis. I used the SSA website. I think I used my actual income history. My work life started as early as 18 or so, but I entered the professional world at 26. It would include at least 15 years of full time employment. I used 47 as my end work age and 62 as my start to receive SS date.

That's 29 yrs of work history (18 - 47), 21 full time professional. What ball park number did the SS estimator give you?

In any case, not trying to pry, but you just haven't given any numbers for us to work with and I'm just trying to back into understanding what's happening with your progress towards FIRE. If your RE budget is, say, $50k, then your expected SS at 12% would be about $6k. It doesn't take many years of working or a very high salary to generate $6k of SS at 62. Perhaps your expectations of achieving FIRE at an early age vs your resources (SS, DB pension earned, savings and investments, etc.) aren't realistic.

There's obviously a gap between your expectations and what is actually happening and I'm not sure if your expectations are too high, actual results (investment performance, etc.) too low, or both.
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Old 09-17-2011, 05:48 PM   #11
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Quote:
Originally Posted by midnighter777 View Post
I have used FIRECalc, and it looks like an early retirement may be available in 7 to 9 years, but that seems like a long time! If I work for 9 more years, that means I will have worked 24 years to acheive early retirement. If I had created an early retirement goal later in life, I would understand having to work 24 years to achieve it. But I started off fairly early.
It's been my/DH experience that the last year of working seemed like a long time....
Quote:

As bad as things may sound now for me, the picture looked even worse for me in 2008-2009. Maybe I should try and focus on the positive?
Yes.

I think the worst thing you can do is get discouraged about early retirement. You seem to be doing the best you can....congratulate yourself for being on top of things.

Here....I'll start....Congratulations on your continuing progress to early retirement.
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Old 09-17-2011, 07:40 PM   #12
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You and I didn't really retire early. I stayed at it until age 58. It looks like you were a bit older yet. It's not surprising we have larger retirement budgets.
That's earlier than you give yourself credit for given your admitted healthy retirement budget. I'm aiming for around that age to RE, also with a healthy budget, and I consider that much earlier than average.

OP - shooting for much earlier than mid 50s takes too much effort from a savings point of view, and doesn't allow enough time for compounding to do the work for you. There is diminishing returns from cutting the age further and further. Much earlier also gives you a dangerous retirement lifespan (defined as beyond 30 years on average).

My preferred RE path is maxing all of my tax-deferred vehicles + matches. That allows for me around 30K of retirement only savings per year not counting pension which is a savings rate that borders on weird compared to the average person (not here!), and not counting other savings I do for other stuff (like cars). Beyond that, I'd just rather spend it now. You NEED a working career that goes well past 20 years in order to allow some of that "Einstein level" compounding to kick in.

I like to think of this approach as "consumption smoothing" with a heavy RE emphasis. If you can't tolerate your job for at least 20 years, then I'd suggest a different career field.
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Old 09-17-2011, 08:08 PM   #13
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Quote:
Originally Posted by midnighter777 View Post
I guess my questions are- Does anyone else ever feel this way? If so, how do you deal with it? For those who are early retired already, did you find that your net worth increased signficantly at some point during your work and saving history? When you hit a certain percentage, where your investments could cover a certain percentage of your retirement spending based on a 4% withdrawal rate, did you then find that reaching your early retirement goal then came quicker? I feel like I am living below my means and investing all additional savings, but I am still not getting toward my early retirement goal soon enough.
I have used FIRECalc, and it looks like an early retirement may be available in 7 to 9 years, but that seems like a long time! If I work for 9 more years, that means I will have worked 24 years to acheive early retirement. If I had created an early retirement goal later in life, I would understand having to work 24 years to achieve it. But I started off fairly early.
As bad as things may sound now for me, the picture looked even worse for me in 2008-2009. Maybe I should try and focus on the positive?
My retirement was defined by reaching 20 years of service, but by the time I got there I'd had 24 years of labor. A big part of that was running (and re-running) FIRECalc. And the T. Rowe Price calculator. And Financial Engines. And talking to 2-3 financial advisors. The conversations (and the incremental progress) helped keep from feeling frustrated.

The compounding curve is supposed to be exponential, but the returns are lumpy enough that you probably have a lot of reversions above & below the mean. However if history repeats enough of itself then the math still works-- eventually-- and you start seeing your success rate going over 80%. Or your withdrawal rate goes under 4%. Or you meet whatever your goal is.

If you don't like the finish line then move it. Reduce your success rate (read Bernstein's "Calculator From Hell" articles in the FAQ archives.) Reduce your retirement budget. Put more of your asset allocation in stocks (although at your point I wouldn't make any really radical moves). Cut your current expenses.

If you don't like the pace then cut back to half-time (accepting that you'd have to work longer) or try to generate more income (although hopefully passively).

If this is really a post about "I hate my job", then... get another one. Nobody can put up with 7-9 years of a really hateful job without a serious risk of health injury.

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As bad as things may sound now for me, the picture looked even worse for me in 2008-2009. Maybe I should try and focus on the positive?
Well, this type of attitude change could help too!
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Old 09-17-2011, 08:16 PM   #14
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I feel like I am living below my means and investing all additional savings, but I am still not getting toward my early retirement goal soon enough.
I hate to say it (almost as much as you will hate to hear it), but... you can do the math, you can figure out if you are on track to retire when you planned to do it, and if you aren't, you probably need to tighten your belt even more.

Nobody ever said this was easy. Wish it was. I guess the reverse side of that coin is that when you DO retire, you'll feel like you really accomplished something huge and justifiably so.

P.S. - - and yes, in 2000 I wrote my brother an e-mail in despair, saying that I thought I'd be working until I dropped dead in my 90's if I lived that long. He sent me an e-mail saying something like what I said above and actually I'm glad he did. I retired in 2009.
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Old 09-17-2011, 10:25 PM   #15
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Out of curiosity, what percent of your income (pick gross or net but specify) are you saving and spending currently?

This comment comment about your expenses being low and salary fairly high:

Quote:
Originally Posted by midnighter777

My expenses between the time I was 26 and 41 old (except for paying back some student loan debt) have been somewhat artificially low due to certain life circumstances, my salary has been decent, I live below my means, and yet I am still rather far off from achieving my early retirement goal.
Makes me think it might be an investing problem? Are you leaking money due to buying high and selling low?

Or are you just not saving enough, but a more traditional 10-15%, which probably won't get you a super early retirement.

More specific info could help diagnose.
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Old 09-18-2011, 01:11 AM   #16
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Originally Posted by midnighter777 View Post

I guess my questions are- Does anyone else ever feel this way? If so, how do you deal with it? For those who are early retired already, did you find that your net worth increased signficantly at some point during your work and saving history? When you hit a certain percentage, where your investments could cover a certain percentage of your retirement spending based on a 4% withdrawal rate, did you then find that reaching your early retirement goal then came quicker? I feel like I am living below my means and investing all additional savings, but I am still not getting toward my early retirement goal soon enough.

I have used FIRECalc, and it looks like an early retirement may be available in 7 to 9 years, but that seems like a long time! If I work for 9 more years, that means I will have worked 24 years to acheive early retirement. If I had created an early retirement goal later in life, I would understand having to work 24 years to achieve it. But I started off fairly early.

I have had the same questions/concerns you have mentioned. I have found the best ways to 'keep the faith' is to:
a) have a plan/stick to it/and modify if necessary.
b) read and be inspired by the people that have done it on this board. There was a thread here that listed some Success Stories
c) go to step a

I have a general plan to early semi retire at age 55. Drop down to part time/put in 20ish hours a week to keep benefits, keep funding retirement accounts and paying living expenses. I could handle working 2 to 2.5 days every week and then doing whatever the rest of the week. I would do this till medicare or whatever plan(s) are available then.
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Old 09-18-2011, 06:45 AM   #17
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What did you do in the last 12 months that mimics Early Retirement? Did you take a couple of 2-week vacations and practice Early Retirement? Every month, did you take a 4-day weekend to practice Early Retirement? Did you come home early from work 3 days a week? Did you go to work late 2 days a week?

Don't get stuck on some monetary goal when you can be Early-Retired now (as least part-time).
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Old 09-18-2011, 09:24 AM   #18
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Thank you for the encouragement.
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Old 09-18-2011, 09:53 AM   #19
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Perhaps you have to consider Semi-Retirement at an earlier age which I have been doing this for the past 5 years. I am now at the point where I can go into full retirement, however, even now I still like the benefits of the extra cash flow and the work is fairly easy so I continue.

I have to admit that I probably felt the way you are feeling when I was 40. When I was about 45, I changed jobs and my feeling toward work changed. Perhaps you need a change of job or career?
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Old 09-18-2011, 10:00 AM   #20
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OP: Seriously, do not obsess about this. I expect you will find a solution!
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