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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 03:50 PM   #21
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Re: $1,000,000 and the clothes on your back

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This is nice, but incromprehensible to me. Must be part of the Galternate Universe. Motivation is important but far from everything if what you are trying to do is sell real estate, or mutual funds, or insurance.

But the only place I can see motivation playing much part in retirement affordability is the motivation to prefer privation over work. What else can motivation do? It can't increase returns, it can't lower prices of necessities, it can't make a cold house warmer, or a hamburger taste like steak.

I tell you what, I'll give you my motivation squared, and you give me a million bucks. Then I will be really comfortable, and I don't think think I will miss the motivation at all.

There are a whole bunch of people who work little, and live cheaply. They are called poor, and historically they have not appeared to be happy.

Mikey
Hey Mikey: Once again you show commen sense in your posts.
The only thing that motivated me to retire early, was the idea that I could live as if I were still working, but had the time to do the things that I didn't have time to while chasing a buck.
If I had to live like John Galt appears to live, I would still be working.
I've been poor, and as you stated, it's no fun.
Your point about the poster stating "my wife contributed to ER pile, so I therefore owe her, was also quite appropriate. My wife didn't work outside of the household, but she put up with me for years, so i couldnt expect her to put up with going backwards.
Retirement is great, but some posters may be fooling themselves if they think that retirement is a magical pill that allows them to completely overhaul their previous lifestyle and allow them (and their wife, if she doesn't haul your a-- into divorce court), to live once again like starting over. (It's a damn site different than the nostalgic memories of being a kid and living on a wing and a prayer.)
One important thing also, that never seems to be considered, is at what age you are talking about retiring.
There is a world of difference between retiring with $l,000,000.00 at age 40, and the same amount at age 60.
The amount that would be required is up to the individuals, but I don't believe that a complete overhaul works for most folks.
If you have enough money to live reasonably close to the way you were living when you were working, then by all means "pull the pin" if you have a desire to do so, but an error on the upside is the best.
Regards, Jarhead
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 04:06 PM   #22
 
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Re: $1,000,000 and the clothes on your back

Jarhead and Mikey.............. You guys make me laugh, which is a good thing. Nobody needs a million to retire. Nobody!
We lack for nothing. Nothing! Man. if anyone has a better life than I do, I'd like to see it. Fishing, biking,
dining with friends, boating, travel. I leave Sunday
for a week in Texas, including some striper fishing.
Also selling some land while there, so I will return awash in cash.
Then., more fishing and more biking until the weather
gets dicey. After that, off to Florida for a bit.
I've never seen a million dollars, but does this
sound like deprivation to you?

John Galt
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 04:20 PM   #23
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Re: $1,000,000 and the clothes on your back

Ok a mil and nothing else, and no bragging on doing it on a shoestring when a working wife is bringing home the paycheck.

I'd buy a nice place in an inexpensive area for $100k...plenty of places that are decent to live in have average housing prices in that vicinity. That "retirement place finder" suggested a dozen or so places in the southeast, new mexico, and arizona that were in the $80-120k range for average home prices. $25k in contents for the home.

A couple of low mileage used toyotas or hondas in good condition for another $25k.

Invest the other 850k in a conservative fund like Wellesley. Take the 3.5-4% dividend (recent) $30k-34k. Given this funds track record goes forward, the principal will more than keep up with inflation while continuing to throw off at least this level of dividend.

In fact, you could probably swing this with as little as 650-700k. But you're not going to pull it off with less than a half mil unless you're living in a shotgun shack and hunting/fishing for your dinner every day. Maybe you could do it for 20 years, but you'd be eating your principal and inflation would be nibbling away at you.

Without a mortgage, car payments or other debts, this income exceeds my current budget. We live pretty good. We eat well (our last 3 dinners were smoked salmon and trout, maine lobster, and prime rib...but I did the cooking), we drive nice recent model cars, live in a newer home in a nice subdivision, and have plenty of nice stuff. My working wife is kicking in some money, but most of her income goes to paying the health care and her retirement plans. Before we got married and mixed in her income though, this plan was fungible for me on my own.

No international travel, $40 bottles of wine, $200 outfits, regular expensive dining out, or $60k cars...but those things never made me happy anyhow.

Spending all of my time with my kid will, I suspect.

Not having to eat my self respect while dealing with stupid office politics and ridiculous boneheaded management maneuvers definitely does.

Sleeping until 1:18 in the afternoon like I did today? Priceless.

I suppose the other option at this funding level if you love travel and fine dining is to do a Terhorst and own nothing, living transiently in low cost countries and dining out every meal... Invest via the same methods and live pretty well on the 35k-40k a year.
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 04:33 PM   #24
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Re: $1,000,000 and the clothes on your back

You'd need to find the right state for healthcare. I could get 100% coverage (except for small $10-20 copays) for both of us and our kid for under $500 a month. I was paying $170 for single coverage before she put me on her plan.

Its do-able. You probably couldnt sit in place in an expensive area though.
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 04:34 PM   #25
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Re: $1,000,000 and the clothes on your back

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Retirement is great, but some posters may be fooling themselves if they think that retirement is a magical pill that allows them to completely overhaul their previous lifestyle and allow them (and their wife, if she doesn't haul your a-- into divorce court), to live once again like starting over. *(It's a damn site different than the nostalgic memories of being a kid and living on a wing and a prayer.)
On the money Jarhead! When people ask what ER is like, I tell them it's great, and it is. But my life is almost exactly like it was before - minus the job - and plus an extra 40 hours/week to do what I want to do. But in many ways it's the same. All the same infrastructure is still in place and must be paid for. It's not magic, and it doesn't change most things.
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 04:51 PM   #26
 
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Re: $1,000,000 and the clothes on your back

And my life is nothing like what it was before.
Interesting...............

John Galt
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 05:13 PM   #27
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Re: $1,000,000 and the clothes on your back

John I don't want to understate the impact of replacing the job with time to do what one wants; that's huge. But most ERs, I suspect, have very much the same lives they had before in other respects - same families, same house, same town, same friends, same cars, same hobbies (just more time spent doing them), etc. I think what Jarhead was saying is that some may view ER as a way to start over and create an entirely new life, when in reality that's not likely to occur. You bring to ER what you had before, and who you were before, and all the obligations that entails.
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 05:20 PM   #28
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Re: $1,000,000 and the clothes on your back

I used a simple retirement payout calculator to determine how much income I can generate per month if I build a portfolio that will stay 2% ahead of inflation for 35 years. I consider that fairly conservative.
$1,000,000 at 5% with 3% inflation will provide $3397.90 per month (in todays dollars) and leave one broke at the end of the 35 year period
A combination of stocks, mutual funds and Treasuries should produce this by historical standards.

Being single I would begin with the perpetual traveler lifestyle. From what I've read by other posters and Paul and Vicki Terhorst's $50 a day rule (which is now probably $90). $2700 a month will do it. I always overspend the norm so I would add another $20 a day plus $400 a month to maintain my medical insurance. No working income means no more Social Security payments and income taxes should be minimal since the million is after tax dollars. Interest and dividends would be taxable income. So that would put me at $3700 a month (already in a deficit). No problem when Social Security kicks in it will make up the difference with excess. Medical insurance payments stop at age 65.

After the travel life the $3397.90 of todays money should be able to maintain a reasonable lifestyle in one of the warm weather areas of the US. I would probably rent (maybe buy a reasonably priced condo) and I do not need a Porshe.

Each of our desires will vary so I can understand why some need more, some less. I think one very important point made was a what age one plans on quitting their job. If you are 60 and married with SS checks 2 years away your cash requirment doesn't need to be that much. If your 40 your looking at possibly 50 more years and the million may not cut it.

My 2 cents about $1,000,000
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 05:25 PM   #29
 
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Re: $1,000,000 and the clothes on your back

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On the money Jarhead! When people ask what ER is like, I tell them it's great, and it is. But my life is almost exactly like it was before - minus the job - and plus an extra 40 hours/week to do what I want to do. But in many ways it's the same. All the same infrastructure is still in place and must be paid for. It's not magic, and it doesn't change most things.

Like TH, I thought retirement was sitting on the beach with a Mai Tai. I'm taking out the garbage every week!

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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 05:40 PM   #30
 
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Re: $1,000,000 and the clothes on your back

If you are 60 and married with SS checks 2 years away your cash requirment doesn't need to be that much. If your 40 your looking at possibly 50 more years and the million may not cut it.

[/quote]

Okay, I am 40, so if I'm looking at another 50 more years, a million may not cut it. So how much money would?
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 05:43 PM   #31
 
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Re: $1,000,000 and the clothes on your back

How do you highlight the quote like everyone else did. My e-mail before this one attempted to, but as you can see, was not successful. Help!
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 05:58 PM   #32
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Re: $1,000,000 and the clothes on your back

Hmmm - maybe it's me but aren't we looking at the wrong end of the stick - ala take your expenses and multiply by 25 - and then make durn sure your portfolio covers all your expenses in real money - aka dvidends and interest with some inflation fighting capability.

Unfortunately - history provided us with a tailwind from 1993 - 2004 so our 350k went to ballpark 1 mil.

I really really don't want to change our comfortable (read cheap) lifestyle of the last twelve years.

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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 05:58 PM   #33
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Re: $1,000,000 and the clothes on your back

I do not know how to highlight the quote. I am looking though the forum to find out how.
Maybe the experience posters will tell us.

But... how much money one needs at 40 to pack it in depends on the risk you are willing to take, the amount of money you require each month to live and the number of years it has to last.

If its conservative investing, about $3800 over 50 years the numbers I get are:


For an account of $ 1400000 at a interest rate of 5 % with an inflation rate of 3 % a year
Your Initial Monthly Payout : $ 3792.95
Over 50 Years
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 06:03 PM   #34
 
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Re: $1,000,000 and the clothes on your back

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How do you highlight the quote like everyone else did. *My e-mail before this one attempted to, but as you can see, was not successful. *Help!
If you look at the upper right hand portion of every post you will see the word 'quote' and 'modify'. Just click quote and Wa La! 8)
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 06:12 PM   #35
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Re: $1,000,000 and the clothes on your back

Sounds like some people can do it and some can't depending on lifetime expectancy and standard of living.

Looks like the average income needed per year is in the $40K to $50K range for a married couple. So with a SWR of 4%, it should be doable for the average family if they start at age 45 to 50.

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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 06:28 PM   #36
 
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Re: $1,000,000 and the clothes on your back

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Sounds like some people can do it and some can't depending on lifetime expectancy and standard of living.

Looks like the average income needed per year is in the $40K to $50K range for a married couple. *So with a SWR of 4%, it should be doable for the average family if they start at age 45 to 50.
Not so fast. - The original premise was just the clothes on your back. The $40K figure often sited is usually with a paid off house, furniture, cars etc.

I think it's a bit tight. Trailer on a Trout River trout Bum Tight 8)
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 07:19 PM   #37
 
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Re: $1,000,000 and the clothes on your back

Well, getting specific.............our combined SS
benefit, based on the latest annual statement would be about $2200 per month at 62. That's about what we are living on presently, and of course this excludes income from all other sources. This is why I have stated
that if I lost 100% of my investment portfolio
(but not my real estate) I would still be ERed and not
forced back to work nor reduced to dumpster diving.
And, we own a car, a truck, a motorcycle, a boat and 2
homes. Plus, no debt. Anyway, a "trout river trailer bum" lifestyle sounds pretty good to me

John Galt
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 07:57 PM   #38
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Re: $1,000,000 and the clothes on your back

So John, if you were a long ways away from SS, like many posters here, you'd need at least $660,000 (plus your home, cars, and personal possessions) if you planned to live off passive investments and live the lifestyle you're now living, right?

$26,400/year x 25 = $660,000 (assuming 4% WR)

So if you had only the clothes on your back you'd be looking at what... maybe $750,000 to maintain your current lifestyle? Not all that much different than what others are saying they'd need.
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 08:16 PM   #39
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Re: $1,000,000 and the clothes on your back

How about a different look?

With a million, most anyone could manage a moderate middle class ER lifestyle with no frills.

With two million, most anyone could manage an upper middle class ER lifestyle with reasonable frills.

Less than the 1 mil...chancy...more than 2 mil and you shouldnt be bothering to waste your time with considerations such as this.

Lifestyle wise, I took ER to be the oppportunity to re-evaluate my life and make a lot of changes. In fact I've hinted at this change several times lately. I see some people propose ERing and freezing their pre-ER lifestyle. Pretty good if you have $2M+, but otherwise...why wouldnt you consider making change if it could enable or assure a long ER?

I live in a smaller, but still nice house that cost half what my old one did. I didnt need that big huge honking house. My wife and I (pre marriage) had 5 cars between us. Now we have 2. We used to have a couple of mortgages and some car payments. Now we dont. We used to eat out all the time and take off to some island paradise for 2 weeks out of every year. Now we dont.

Net loss of "quality of life"? Zero. Cost? Less than one tenth of what it used to be.

I'd also caution those who are evaluating plans that eat principal and have an expected end date. You might not end when your plan does. Considering people born in the early 1900's could count on ~57 year lifespans and today its over 70...with medical advances coming faster every year, those of us in the 45-60 range might count on living to 90 or 100 with reasonable health...
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Re: $1,000,000 and the clothes on your back
Old 10-29-2004, 09:03 PM   #40
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Re: $1,000,000 and the clothes on your back

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Like TH, I thought retirement was sitting on the beach with a Mai Tai. I'm taking out the garbage every week!
How about this...I have a little sand in my shoes and some budweiser in the fridge? :P
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