Would you retire at 30 with $1m?

[FUEGO]

Even if you qualify for low cost insurance, your out of pocket could still be a cost that is hard to afford... the US system can still be costly as opposed to the Canadian system...

Under 250% of AGI, you get some pretty serious cost sharing limits on silver plans. This means very low or no deductibles, low or no copays, and low out of pocket max. The plans we're looking at for later in 2015 or possibly 2016 are under $1000 for family deductible, $5 copays for PCP and $10 for specialists IIRC, $20-25 for ER copay. Max out of pockets are similarly low.

In other words, we'll pay ~$1000/yr for HI and then almost nothing up to maybe a few thousand worst case. There could obviously be a need to go out of network, if the hundreds of in network doctors can't or won't provide the services you need.

Then again, you get to enjoy early retirement in your 30's, so it's probably worth it if the potential downside is having to pick the 2nd choice cardiologist or whatever when you're 60.

 

[FUEGO]

In addition to medical expenses there are car repairs, home repairs if you own your home, etc.

The 30-somethings with "$1 million" don't own a home and don't own a car so none of those repair costs will crop up. They rent in some pretty nice places though (apartment in Taiwan where one of them is from, 3 BR house in San Miguel de Allende, etc).

Since I'll be back out mowing the grass in a few days, spreading weed and feed, and then working on our cars (brake pad replacement, oil change, for DW's car then pull the exhaust manifold and cat and replace it on my car), I understand the allure of not owning a house and cars. If only we lived in a place where cars aren't necessary.

 

[Fermion]

FUEGO, you will never convince people on here that life is more important than money. They waste 30 years worrying about if they will have enough money for their last 10, and many don't even make it to that point in the first place.

 

[youbet]

Depends on the definition of retiring. If it's like MMM just switching to self-employment on their own terms the answer would be yes.

+1

Like most of the discussions here concerning retirement on $X, the devil is in the details. If retiring at 30 on $1 mil with a 4% WR and adjusting for inflation means literally that (None, not a bit of other resources available, ever) then I'd say no, I wouldn't do it.

If the couple has some other resources in place or coming on line over time such as a part time business or part time work, an inheritance, a trust, whatever, (and these things are frequently not mentioned in our discussions) that might put the situation in a different light.

 

[Teacher Terry]

I agree with Youbet. Also yOu never know what is coming down the line health wise. I have had a few good friends have children suddenly develop life threatening diseases & even with insurance they had to pay a fortune out of pocket. Therefore, if one or both had some p.t. work in their field they are keeping current if 1 or both need to return to work f.t. again.

 

[photoguy]

For me, personally the answer would be no mainly because once I got off my career track it would be hard to get back on. At the time we pulled the plug we had over double the 1M figure.

But if somebody else wants to do so at age 30 with only 1M, that's fine by me. Everybody's situation is different and they may have more tolerance for a plan B or C.

 

[jim584672]

It is not like you could never make adjustments after you retire.
Perhaps buy a bunch of homes and rent them out, this should give enough to live on indefinitely. Or become a Youtube star.

Working a 9 to 5 job means you have no time to seize the opportunities.

 

[harley]

If 1 million at thirty, i would continue to work(how i choose) but devote very little to savings and most to enjoyment. And pretty much that is my plan for 40.

If I had a million at age 30, I can guarantee it would last the rest of my life. Problem is, that wouldn't have been very long. I grew up late. If at all.

 

[jon-nyc]

How is the ACA not a similar put option for Americans? If your family income is that low, you are not going to pay much of anything for healthcare.

It's certainly more security than prior to the ACA, though as the other poster noted it can be much more expensive. Even in Medicare years the out of pocket costs can be significant.

 

[jags86]

I'm 29 and about 750k away from that $1 million mark. If I had $1 million today, I would probably go find myself a super low stress job in the 30-35k range...and not worry about having to save any of it OR find myself some sort of 6 on 6 off arrangement. Whether it be just working for 6 months and quitting, or finding some sort of seasonal work...that could be nice.

Don't know how that fits in with "normal" people though...and unless you found yourself a partner in your same situation (highly unlikely) you'll likely either be pushed to conform or have a moocher on your hands.

 

[flyingaway]

I am amazed that people are willing to spend a lot of time to discuss the action of two particular persons to such a great depth. There are billions of people in the world and there are many actions that different people can take. These two guys want to retire at 30 with $1M in banks. Another two guys want to retire at 30 without money in banks and decide to rob the banks. Every one has his/her choice of life.

 

[Running_Man]

I am amazed that people are willing to spend a lot of time to discuss the action of two particular persons to such a great depth. There are billions of people in the world and there are many actions that different people can take. These two guys want to retire at 30 with $1M in banks. Another two guys want to retire at 30 without money in banks and decide to rob the banks. Every one has his/her choice of life.

That is why this is a retirement forum, to discuss retirement ideas! From reading various individuals retirement ideas one can better formulate or modify their own retirement, this to me is the purpose of the forum.

As for the couple, with present ACA and college funding, I do not see why if the spending can be held to 40K per year it would not work out. ACA will only be 242 per month for a family of 3 and if there is after tax money and can hold income recognized to 30K you are only talking about 100 per month. Additionally there would be no need to save for college for the child as present rules would most likely make grants available in the 10K per year range.

Downside would be lack of qualification for Social Security but whether or not the 4% withdrawal rate would work would be known pretty much by the time the couple was 40 and still able to work.

As long as the expense could be controlled to 40K and flexibility if work force reentry was an option, I see no reason to not give it a go.

 

[David1961]

Personally I wouldn't do it.

But I did enter into FireCalc a portfolio of $1M, withdrawal of $40k per year and a 60 year time period and it gave a probability of success of 82% (which seems high to me). This used the default FireCalc settings. But like others have said, there are so many variables for a potential 60 year retirement that I would not feel comfortable.

 

[Sarah in SC]

I"m with Brewer and Fuego (and Fermion) on this: sure, I'd have done it, knowing that I'd probably have to do something for a few coins most years, and not have a problem with that. The kids thing is different for me, but it would seem you can raise them without spending exorbitant amounts of cash if need be.

The catastrophic events like major health problems would certainly worry me, and there's no question that money makes those kinds of things easier to deal with, but it would again probably be a gamble I'd have taken if I could.

I guess I wouldn't call it retirement, as such, but more of a lifestyle change to intermittent work. The old Travis McGee, if you will.

 

[harley]

I have a couple of old friends/cow*rkers who sort of did this, although not exactly. In their early 40s they "retired" to the beach in FL with the intention of living off their savings as long as they could, sort of like "retirement is wasted on the old". They lasted a decade or so, partly due to a fairly large payoff at the track. But last I heard they both have had to go back to work, and I don't think retirement is in their future for a long, long time. To each his own, but at 59 and having been retired for 9 years, I would be absolutely miserable going back to work.

 

[Fermion]

I have a couple of old friends/cow*rkers who sort of did this, although not exactly. In their early 40s they "retired" to the beach in FL with the intention of living off their savings as long as they could, sort of like "retirement is wasted on the old". They lasted a decade or so, partly due to a fairly large payoff at the track. But last I heard they both have had to go back to work, and I don't think retirement is in their future for a long, long time. To each his own, but at 59 and having been retired for 9 years, I would be absolutely miserable going back to work.

What?

How is this story of two people gambling at a racetrack at all related to someone investing $1m in a diversified portfolio and trying to live on 4% of it?

I heard a story about a guy who worked until age 60, retired, then lost all of his money on a bad business venture. I guess that proves that working until 60 doesn't work either.

 

[Andre1969]

What?

How is this story of two people gambling at a racetrack at all related to someone investing $1m in a diversified portfolio and trying to live on 4% of it?

I heard a story about a guy who worked until age 60, retired, then lost all of his money on a bad business venture. I guess that proves that working until 60 doesn't work either.

I might have read it wrong, but I took the story to mean that this couple tried to retire early when they thought they had enough money, but weren't able to sustain themselves. Perhaps they budgeted wrong or some big expense, or something came up. But then, they lucked out at the race track, and that was able to sustain them a bit longer. But in the end it wasn't enough to keep them retired, so they had to go back to work.

At least, that was my take on it.

 

[Fermion]

I might have read it wrong, but I took the story to mean that this couple tried to retire early when they thought they had enough money, but weren't able to sustain themselves. Perhaps they budgeted wrong or some big expense, or something came up. But then, they lucked out at the race track, and that was able to sustain them a bit longer. But in the end it wasn't enough to keep them retired, so they had to go back to work.

At least, that was my take on it.

They lasted one decade. There has not been ANY financial event in the markets of the past 60 years where a diversified portfolio of stocks/bonds in a reasonable mixture (say 60/40) failed at a 4% SWR in just 10 years.

This means they really didn't have enough money to even sustain a 4% SWR retirement and were counting on something else (gambling) to make their retirement work.

That is my take on it

 

[harley]

What, we're not allowed to off topic anymore? I must have missed the rule change. Sorry, please stop beating me massa! I...can't...breathe!

 

[Fermion]

What, we're not allowed to off topic anymore? I must have missed the rule change. Sorry, please stop beating me massa! I...can't...breathe!

You posted a story and then made the statement "To each his own, but at 59 and having been retired for 9 years, I would be absolutely miserable going back to work."

I thought your story was told as an attempt to reinforce that statement. I am sorry if you were just telling a story and making a separate statement and the two were unrelated.

I had a hamster once. He ate a marble and died. I do not think Social security will be cut.

Confused?

 

[MichaelB]

Why not just agree to disagree and keep it friendly.

 

[flyingaway]

That is why this is a retirement forum, to discuss retirement ideas! From reading various individuals retirement ideas one can better formulate or modify their own retirement, this to me is the purpose of the forum.

As for the couple, with present ACA and college funding, I do not see why if the spending can be held to 40K per year it would not work out. ACA will only be 242 per month for a family of 3 and if there is after tax money and can hold income recognized to 30K you are only talking about 100 per month. Additionally there would be no need to save for college for the child as present rules would most likely make grants available in the 10K per year range.

Downside would be lack of qualification for Social Security but whether or not the 4% withdrawal rate would work would be known pretty much by the time the couple was 40 and still able to work.

As long as the expense could be controlled to 40K and flexibility if work force reentry was an option, I see no reason to not give it a go.

OK. I get it. Everyone can retire regardless. One can have ACA for health care, and grants for kids' college education. Please don't forget there are food stamps (and churches) for people when they run out of money.

 

[Sarah in SC]

Alright y'all. No reason for such crankiness on a Monday morning, especially the already retired ones. I'm the one still working, at least I have an excuse.

 

[AnIntentionalRoad]

Depends on the definition of retiring. If it's like MMM just switching to self-employment on their own terms the answer would be yes.

+1

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[AnIntentionalRoad]

I think more people should take the route of extreme early retirement from "career" positions and live life, supplementing along the way, doing lower paid work that is more enjoyable or less stressful, when needed/wanted.

Even with kids. Raise your kids, teach them, be part of your community.

Maybe this is a generational perspective shift but I don't see any particular honor earned or bozo buttons handed out for putting in 30 years at megacorp, having strangers raise your kids, and living life through purchased products and annual vacations at the all-inclusive resorts, while looking at your best years and health fade in the rear view mirror.


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