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Old 04-23-2015, 11:10 AM   #101
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It just depends on where you really feel comfortable, and want to draw the line. While I wouldn't feel comfortable retiring at 30 with $1M, once I had hit that amount I don't think I'd be able to tough it out in the workforce another 10 years to get to $5M. I'd probably call it quits once I hit around $2-3M.
Another amazing thread here!

This forum can go from people with $5MM and feeling that they don't have enough to people who think $1MM is enough to RE at 30 yo.

I've learned that FI and RE can mean so many different things here.

We seem to range from trust funders who spend their winters in the Alps; to retired business owners; to Fed and military pensioners; to those who might consider public housing as an RE option!

May be a future topic?
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Old 04-23-2015, 11:26 AM   #102
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Or a 4 BR 1800 square foot house in Raleigh and multi-week trips abroad every year. If you roll like we roll. YMMV of course.
Yes in Raleigh where insurance is cheap and so is housing I find its so much easier to live on so much less. My only issue here is the food price as its much higher than I expected. As a couple, I think we will be pushing $40k living in a luxury apartment, eating organic, and drinking a lot of expensive craft beer, highest internet service, new car, etc...so even cutting out a little can easily decrease that quickly, though our two week European cruise set me back a little. I'm shy of $1.2M now and looking to get to $1.6M before I finally move from semi to full retirement. I gave up the big house that cost me a fortune to maintain and swapped it for a luxury apartment that includes fun activities, pool, hot tub, gym which during the day is basically a private gym, and an indoor basketball court...its rough sitting under the canopy reading a book while I watch CNBC on the flat screen and sip a beverage in front of the outdoor fireplace... you know "living in a RV under a bridge".
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Old 04-23-2015, 12:53 PM   #103
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Living in a van(rv) down by the river doesn't look too bad actually:
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Old 04-23-2015, 12:59 PM   #104
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and swapped it for a luxury apartment that includes fun activities, pool, hot tub, gym which during the day is basically a private gym, and an indoor basketball court...its rough sitting under the canopy reading a book while I watch CNBC on the flat screen and sip a beverage in front of the outdoor fireplace... you know "living in a RV under a bridge".
By the sounds of it, that apartment in Boston would run you about $4000-$6000 a month! Parking another $2K extra, of course.
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Old 04-23-2015, 01:20 PM   #105
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By the sounds of it, that apartment in Boston would run you about $4000-$6000 a month! Parking another $2K extra, of course.
Exactly why we shopped around and left Chicago. You get all that for $1k, 2 bedroom, with a bigger kitchen and bathrooms than I had in my 2500 sqft house in the burbs. Similar cost $2k in Denver because of the big boom they are seeing..so we went east vs west.

That's the whole thing, $1M can go pretty far depending on where you live and how you live...and not necessarily give up the things you find must haves...ie craft beer and vacations for me...however, couldn't stay in Chicago where I pay that in property tax alone...and with their pension debt, those numbers will just keep skyrocketing.
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Old 04-23-2015, 01:25 PM   #106
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Most people in my family live on $30K/year or less, so I know it is possible. They don't live by the river either. They all own their own home (either inherited or purchased at a time when their income was higher). And they either have access to Medicare or some other sort of "socialized" medical system. But would I retire at 30 and feel satisfied with that kind of income for the rest of my life? Nope.
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Old 04-23-2015, 01:45 PM   #107
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Exactly why we shopped around and left Chicago. You get all that for $1k, 2 bedroom, with a bigger kitchen and bathrooms than I had in my 2500 sqft house in the burbs. Similar cost $2k in Denver because of the big boom they are seeing..so we went east vs west.

That's the whole thing, $1M can go pretty far depending on where you live and how you live...and not necessarily give up the things you find must haves...ie craft beer and vacations for me...however, couldn't stay in Chicago where I pay that in property tax alone...and with their pension debt, those numbers will just keep skyrocketing.
But the NC income tax is a bit higher than in Mass. OTOH, Mass has better winter weather, more courteous drivers and more pleasant people!
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Old 04-23-2015, 02:03 PM   #108
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It depends where you live and what you spend. I earned less than $30k gross for the first 18 years of my career, and only exceeded $50k 6 years ago. In spite of that I have managed to pay off my house and live comfortably. It helps that I enjoy DIY and have a hobby that is not only inexpensive, but sometimes even generates a small amount of money (music).

I am retiring next year at 54 with just 3x my salary in savings, but do have a fed pension. I have no worries at all. At my current rate of spending, $1M stuffed under the mattress earning 0% would last more than 40 years.
This is almost like saying I have little money, but a rich wife. A fed pension is gold.
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Old 04-23-2015, 02:08 PM   #109
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I wasn't really calling any specific couple "crazy," just the idea that $1m was enough for two thirty-somethings and a newborn to ER on comfortably at 4% WR. Some people believe 4% WR is safe no matter what your age and I do not. Also, I don't think three people living on $30k/year will be comfortable after decades of inflation. But if you want to live in a van down by the river, maybe it works.

However, there is a couple with an ER blog (they probably have more than $1m, I don't know) and their plan for healthcare for their kid is to get free healthcare from Taiwan (the mother's home). Which is fine, except they live in the US and are a 15 hour flight from Taiwan. Would you fly a severely sick kid across the pacific? Or, what if you had an emergency where US care is required and then you are on the hook for $$$$ out of pocket. That plan is either unrealistic or just plain irresponsible.
Likely the airline would not let the sick child board.

Everything works, until you try it and it doesn't.

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Old 04-23-2015, 02:54 PM   #110
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This is almost like saying I have little money, but a rich wife. A fed pension is gold.
+1. I still find it interesting that many retirement articles focus on savings alone rather than total net worth, which would include the net present value of 75% SS (future fully funded) and funded pensions, which may be seven figure amounts.

The Consumer Expenditure Survey and reports on retiree income from sources like Vanguard and AARP show only a fraction of most retiree household income is from asset income:

http://www.aarp.org/work/retirement-...fographic.html
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Old 04-23-2015, 05:35 PM   #111
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Honestly, I didn't want to retire at age 30. At that age, I had other goals and ambitions.

But suppose that I did - - in that case, I'd probably try living on $30K/year to see how that felt. If I liked it, then I'd go from there. I'd probably keep working at least part time until I was in my mid 50's.
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Old 04-23-2015, 05:49 PM   #112
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+1. I still find it interesting that many retirement articles focus on savings alone rather than total net worth, which would include the net present value of 75% SS (future fully funded) and funded pensions, which may be seven figure amounts.

The Consumer Expenditure Survey and reports on retiree income from sources like Vanguard and AARP show only a fraction of most retiree household income is from asset income:

Retirement Income Then and Now – AARP
+1000

We only have $1.4mil invested and retiring at mid 40s. My wife though has paid into SS over $2mil in wages (and of course has 40 credits) and qualifies for a $2000 SS COLA'd pension at age 70. I can get $1000 just for being her husband.

$36,000 a year in today's dollars at age 70. With our spending only around $40,000, that is a significant asset for the future.
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Old 04-24-2015, 09:01 AM   #113
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But the NC income tax is a bit higher than in Mass. OTOH, Mass has better winter weather, more courteous drivers and more pleasant people!
The more generous NC standard deduction/exemptions makes NC taxes lower for incomes below $68,200 (assuming married filing jointly and no kids). And $68k plus a paid off house would buy you a pretty nice standard of living in any NC city. Not sure how far that would get you in Mass. metro areas.

At least Mass. has those nice cold, long, dark winters to keep folks happy.
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Old 04-24-2015, 09:35 AM   #114
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+1000

We only have $1.4mil invested and retiring at mid 40s. My wife though has paid into SS over $2mil in wages (and of course has 40 credits) and qualifies for a $2000 SS COLA'd pension at age 70. I can get $1000 just for being her husband.

$36,000 a year in today's dollars at age 70. With our spending only around $40,000, that is a significant asset for the future.
That is assuming that you are both still alive at 70 .
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Old 04-24-2015, 10:04 AM   #115
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+1. I still find it interesting that many retirement articles focus on savings alone rather than total net worth, which would include the net present value of 75% SS (future fully funded) and funded pensions, which may be seven figure amounts.
Very interesting since this is more or less my situation. What would be the best way to estimate the net present value of SS or other pension arrangements? Ie $50.000 in yearly income from now or from some date in the future?

If I do a quick reverse calc assuming $50.000 is the 4% WR then the net present value would be $50k / 4% or $1.250.000 but then I might forget something beeing the newbie I am.
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Old 04-24-2015, 10:18 AM   #116
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That is assuming that you are both still alive at 70 .
If you both are then everything is great. If you are both dead, then everything is also great because your spending drops to zero. If one is still alive then they get survivor benefits plus spending is reduced (at least on some items).

Not seeing the issue here?
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Old 04-24-2015, 10:24 AM   #117
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Very interesting since this is more or less my situation. What would be the best way to estimate the net present value of SS or other pension arrangements? Ie $50.000 in yearly income from now or from some date in the future?

If I do a quick reverse calc assuming $50.000 is the 4% WR then the net present value would be $50k / 4% or $1.250.000 but then I might forget something beeing the newbie I am.
I got a ballpark number for DH's pensions from playing around with the calculator at immediateannuities.com. I also Googled net present value of Social Security. For pensions, if you have a lump sum option that is also a number you can work with, though it may not be accurate. My lump sum option offer was the same NPV as a non-COLA annuity, but I have a COLA, so in reality it was worth a lot more to me as an annuity, since it is well funded and private, with PBGC as a backstop.
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Old 04-24-2015, 11:43 AM   #118
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If you both are then everything is great. If you are both dead, then everything is also great because your spending drops to zero. If one is still alive then they get survivor benefits plus spending is reduced (at least on some items).

Not seeing the issue here?
The reduction to spending is minimal . You still have the same property taxes , utilities & maintenance on less income .
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Old 04-24-2015, 11:51 AM   #119
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The reduction to spending is minimal . You still have the same property taxes , utilities & maintenance on less income .
I think Fermion's point is he only has to cover expenses from savings / asset income to age 70, because after that their household SS income will come close to covering their annual expenses.

This was a light bulb moment for me, too, after looking at the Consumer Expenditure Survey and seeing what average spending was for most Americans in retirement and comparing it to our combined SS and pension income.
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Old 04-24-2015, 12:23 PM   #120
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The reduction to spending is minimal . You still have the same property taxes , utilities & maintenance on less income .
I think you are quite wrong but I don't want to dwell on scenarios of losing my spouse so I will let you think you are correct.
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