$1,000,000 and the clothes on your back

[Hyperborea]

Good used cars are readily available in Japan for $1,000 (or less).

Yeah, I've noticed that too but the shaken (road tax + car roadworthiness check) can get expensive too - about $1000 or more every 2 years.  One of the plans for our "perpetual traveller" portion of retirement is to buy an older car in Japan and spend 6 months to 1 year travelling through the 4 main islands (Honshu, Shikoku, Kyushu, and Hokaido) and hit a lot of  the small towns.  We would probably try to sell the car at the end of the trip if possible and if not perhaps just "donate" it to a relative.

We've put most of our current savings into perhaps the most conservative investment there is outside of a passbook account, i.e., U.S. Savings Bonds (a combination of EE and I bonds).  When we retire, we intend to convert most of our assets into TIPS.

You may want to think about at least having a small portion (20% at least) in equities.  I'm not sure how old you are but if you've got a long retirement planned then you will need some growth.

By the way, despite popular belief, it isn't that much cheaper to live in a 3rd World country -- basically, "services" are very cheap, but "goods" (especially those that are imported) are at least as expensive as they are in the States.

That's true for the imported goods but a lot of the cost savings is that those imported goods and even the locally produced durable goods only make up a small percentage of one's expenses.  If you can reduce the cost of half the things (or likely more) in your budget that are "consumables" (food, rent, utilities, etc.) then that obviously reduces one's overall expenses.  Also, many of the locally produced "durable" goods one can buy in 3rd wold countries can be quite a bit cheaper.  Just my experience from trips to Thailand, China, India, etc.

 

[Hyperborea]

I guess my ignorance and lack of any planning
saved me.  Otherwise I would still be working and
trying to pile up that magic million so I could ER safely  

John, as has been pointed out to you numerous times you retired so close to being able to draw social security that it makes a significant difference to your ability to retire.  Most of us planning to retire in our 40's have a long stretch to support ourselves without it and with it being so far in the future we can't know what amount it will bring in with enough reliability.

Of course collecting SS does bring into question how "pure" a "believer" you are in the cult of Rand though.   Wouldn't a true holder of the name "John Galt" just move into the hills, leave all those messy ties to society behind and wait it out until society begged him to come back - much like a 3 year old holding their breath until they got what they wanted?

 

[John Galt]

Hello Hyperborea! Good questions. Here are some answers:

First, it is true that being close to SS takes a lot of pressure off. However, don't forget that I semiretired
at 49 and retired 100% at 54, and no working spouse
until 2002. Like Rush Limbaugh, I just make it look
easy

As far as my devotion to "Randian" ideas, I have to
live in this world and have no problem with getting whatever I can from the government. To do otherwise
simply to make a point would be madness IMHO.

Finally, I don't expect anyone to beg me to "come back"
and I would not if they did.

John Galt

 

[Hyperborea]

First, it is true that being close to SS takes a lot of pressure off.  However, don't forget that I semiretired
at 49 and retired 100% at 54, and no working spouse
until 2002.

"Semi-retired" is an order of magnitude easier.  I could semi-retire right now in my 30's.  I could cut back my income to maybe 1/3 of what I make now (roughly what I would need to pay for my lifestyle where I now live) and stop saving completely for "retirement".  I could cut back even further if I moved out of this high cost area.  Hopefully those income cuts would come with comensurate working hours and stress level cuts too.  I would then let my current stash roll around and grow for another 25 years (at low real growth rates) and it would be enough to support me - it would have grown, the amount of time that it needs to support me would have shrunk and I would also be able to be drawing one of the "social security" payments from at least one of the countries that says they will give me one.

Like Rush Limbaugh, I just make it look
easy

Oxycontin in Rush's case.

As far as my devotion to "Randian" ideas, I have to
live in this world and have no problem with getting whatever I can from the government.  To do otherwise
simply to make a point would be madness IMHO.

Obviously not a true believer then.  None of the followers of the cult of Rand that I've known have ever worried about the real world. Even Ayn herself didn't seem to from what I've read.

Finally, I don't expect anyone to beg me to "come back"
and I would not if they did.

John Galt

IIRC isn't that what your namesake did?

 

[cute fuzzy bunny]

I guess my ignorance and lack of any planning saved me.

My bet is that it was the wifes paycheck...

 

[Cut-Throat]

My bet is that it was the wifes paycheck...

That and The games not over yet.

If you end up flat broke at age 80 and just collecting SS, it may not have been a great retirement plan to begin with.

 

[John Galt]

Hey! Are you guys ganging up on me ?

I was doing just fine without a "wife's paycheck",
thank you. It sure helps though.

As far as "not a great plan to begin with", I had no plan,
so....................................

Cut-Throat, the game is truly not over yet. Not by a long shot. And, I can conjure up a couple of
"gotchas" which might land me in ER hell. However,
I think the odds are heavily with me. Anyway, living
without risk is impossible, ER or no ER. I quote
Al Pacino once again "You can get killed walkin' your
doggie!" Or even better, Clint Eastwood, "Tomorrow
is promised to no one!"

John Galt

 

[cute fuzzy bunny]

I dont think its really "ganging up" John, its just that you frequently propose that one can retire early with chump change and still do just fine "living by your wits".

As far as my reading on your situation goes, you were only retired for a very short time before marrying a working wife who contributes most or all of the income you use to offset expenses.

I only keep bringing up the working wife part because you dont, and because I think few people, if any, could manage even an extremely lower middle class lifestyle with under a half million bucks and nobody bringing home a paycheck.

Yes, if work is that horrible, one could manage some kind of subsistence level "retirement" by living in a group home or in a house with holes through the walls, driving a 25 year old car and eating whatever you can catch...I just dont think thats what most people have in mind when planning an early retirement.

 

[Bob_Smith]

Not everyone finds the JohnGalt vision of early retirement appealing, of course. I think that to a large extent that is because many see a way to have the best of both worlds--an escape from the rat race PLUS the consumer goods that are available to those spending more than JohnGalt does.

Nah, you have entirely missed the point. We hear a lot of talk about John Galt's lifestyle - how he could retire on $250,000, motivation, and brain-power... But John just posted this:

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...

Do the math. It would take ~$750,000 if you had nothing but the clothes on your back to live the $2200/month lifestyle John says he's living, with his home, vehicles, and personal possessions paid for. And that's making a 4% withdrawal - many here believe it's prudent to withdraw less. His $26,400 annual budget is well within the range of others who post here. All the rest is just smoke and mirrors.

 

[Cut-Throat]

Do the math. It would take ~$750,000 if you had nothing but the clothes on your back to live the $2200/month lifestyle John says he's living, with his home, vehicles, and personal possessions paid for. And that's making a 4% withdrawal - many here believe it's prudent to withdraw less. His $26,400 annual budget is well within the range of others who post here. All the rest is just smoke and mirrors.

As usual, you're right Bob_Smith. We all missed it.

But, as John says he has never really figured it out. But if he did, he would see that it costs him just about as much as it does us.

 

[FlowGirl]

That's true for the imported goods but a lot of the cost savings is that those imported goods and even the locally produced durable goods only make up a small percentage of one's expenses.  If you can reduce the cost of half the things (or likely more) in your budget that are "consumables" (food, rent, utilities, etc.) then that obviously reduces one's overall expenses.  Also, many of the locally produced "durable" goods one can buy in 3rd wold countries can be quite a bit cheaper.  Just my experience from trips to Thailand, China, India, etc.

This has been my experience as well. I'm currently temporarily living in one of those countries you just mentioned and it is extremely cheap. A restaurant meal costs me a buck or two, a used bicycle - $10, beer at the grocery store - 25 cents, and a bus across town - 15 cents. My personal language tutor - $2/hour. I'm over paying for housing a little, but it includes high speed internet, and all utilties and is still cheaper than getting an apartment in the US. This is in a major city too, although far away from the tourist areas.

As you mentioned durable goods make up a very small percentage of my expenses. Imported goods even less. But even in the US I don't buy a lot of "things". The only thing I really miss is a good used clothing/store thrift store.

 

[Cb]

$1M, a paid-for house, and a decent pension + SS in ~15 years would work for me, but not for my wife.  

While drawing up budgets a few years back she insisted on around $10K more for discretionary spending than I'd outlined. I figure our net worth might cover the higher target in another year and a half, so I recently asked her to review the higher budget again to be sure we were still on the same page. She quickly bumped several of the line items substantially, running the income requirement up another $10K.

I explained that I'm simply not willing to continue working long enough to cover her most recent budget increases - that I thought they were unreasonable and that she really ought to think them through a bit more. She responding by saying that I could quit whenever I felt it was reasonable, and that she'd continue working to cover the highest budget.  My plan is to continue working long enough to cover the budget we'd outlined sometime ago (another 18 months or so).

The truth is she isn't particlarly motivated to retire anytime soon, and won't even hold still long enough to review the 9 tab Excel worksheet I've developed over the years. She's content knowing that it'd probably turn up in the listing of my recently accessed Excel files in the event I was hit by a bus and she needed to know anything about our finances.

 

[GTM]

The multiply by 25 rule seems like a good way to do quick calculations.

Below is Charles Schwab's view of required cash based on historical data in his book You're Fifty Now What?

The ratio of dollars needed for every one dollar withdrawn per month over the periods noted.

Conservative                    
20 years                             250.1
30 years                             320.1
40 years                             340.1

Moderatlely Conservative
20 years                             240.1
30 years                             280.1
40 years                             280.1

Moderate
20 years                             240.1
30 years                             280.1
40 years                             250.1

Moderately Aggressive
20 years                             250.1
30 years                             280.1
40 years                             230.1

Aggressive
20 years                            260.1
30 years                            290.1
40 years                            220.1

A moderately conservative 40 year who requires $3500 per month and plans on living until 80 would need $980,000.
(Moderately conservative is 40% equities, 45% bonds, 15% cash).

An moderately aggressive 60 year old who requires $2000 per month for 30 years requires $560,000
(Moderately aggressive is 80% equities, 15% bonds, 5% cash)

 

[R.H.]

I genuinely admire those who have retired with what many would consider a marginal nest egg. I not talking about the foolhardy (those with no plan), but rather those who have taken calculated risks to achieve what would otherwise be outside their grasp. For myself, risk-taking simply isn't in my genes. I need something that is relatively risk-free. That is why I have established $1M as the minimum nest egg I feel comfortable with to fund my retirement. I don't expect $1M to afford me a lavish lifestyle; in fact, I rather suspect my lifestyle will be fairly modest. However, I believe I will be able to sleep well at night if I set modest income-generating goals for my portfolio, and for me sleeping well is more important than having a more robust cash flow. Thus, I don't feel comfortable with a smaller nest egg.

A million dollars certainly “ain’t what it used to be.” However, it’s still one hellacious climb to get there. But, I’m glad I took the “road less traveled by” because I’d far rather do what it takes to build a nest egg than be flipping burgers when I’m 75 -- a prospect that, unfortunately, I believe is in store for many of the boomer generation. I wish my generation well, but I fear too many of us are counting on the Government to make good on all of its unfunded liabilities. I prefer to rely on myself.

 

[hocus]

Nah, you have entirely missed the point. We hear a lot of talk about John Galt's lifestyle - how he could retire on $250,000, motivation, and brain-power... But John just posted this....

My take is that perhaps we are focused on different points. John Galt took his leave of a regular paycheck with a lot less than $1 million in his pocket. He is now doing just fine. So his testimony that you don't really need $1 million in your pocket to end up just fine is good testimony, it seems to me.

I'm not advocating that others do things the way John Galt did things. I'm saying that there is more than one way to skin a cat. If there is a set amount that you want to spend for the rest of your life, and you have no give on this, you need to plan carefully to make sure that that amount is covered. If you are highly flexible as to how much you will spend, you can afford to retire earlier because there is a lot more give in your definition of what constitutes "the good life."

John Galt ended up with Social Security and a wife helping him. That's good. Joe Dominguez ended up with living in a group house (as he planned from the beginning) working for him. That's good. Some others recognized that they had a desire to possess more buying power during retirement and they set things up so that they would indeed possess more buying power, and that worked for them. That's good.

What I am reacting to is the idea that the only thing that matters in this game is to make the numbers work out. I am very much in favor of using numbers as a guide (I hope that no one will dispute this after my experiences with the SWR matter). But numbers are not always king. What I hear John Galt saying is that "flexibility as to how much buying power you will possess down the line is sometimes king." I think this is a good point. I think that flexibiity (which he refers to as "motivation") can count for as much of hundreds of thousands of dollars in making a plan work.

If you have a relatively easy means of getting your hands on the hundreds of thousands of dollars needed to make flexibility less of an issue, you should do so. Having cash in hand is always a good thing. But I dispute the idea that it is always necessary to have $1 million in hand before handing in a resignation from a steady paycheck. There are all sorts of ways to pull this Retire Early thing off, and people who see appeal in the idea need to examine all the options before dismissing the goal as unrealistic.

John Galt took a path a little different than some others, and I think we learn from hearing about it. I don't want John Galt or any others who did things somewhat along the lines of what he did feeling that they need to clam up because some others feel that they didn't work the numbers hard enough or didn't save enough before pulling the trigger or whatever. His approach (I won't call it a "plan") did work, didn't it? That counts for something, doesn't it?

 

[dex]

*****,
Good point son John Galt and his ER point of view. I like reading his posts. In my mind he has "street cred" (what would that be in the ER world "ER cred").

In a lot of discussions the conflicts come from the definitions. In this thread "$1m and the clothes on your back" can be taken literally by some; others will consider paid up home, cars, and a working spouse included in the calculations.

I consider ER to mean you (including spouce if you have one) have severed all ties with the working world as the gold standard of ER. Why? because the person has delt with all the emotional, financial and risk issues associated with ER. Having said that, having a working spouce is a personal choice and part of the negociations to retire early and is just as valid as neither working.

A few comments about "ER cred". Those that had a high level of income while working and then ER without a large savings are highest on my list. Those are the people who know what they are giving up. A person who has a guaranteed early retirement inflation indexed pension plan are the lowest - they should be on the "Lottery winners" board. It is not that they didn't earn it - it is just that they do not have the same level of emotional issuses to address - this is not intended to be a slam on anyone.

As to the topic of this question - $1m and the clothes on my back wouldn't work for me. I want $1m, paid for car and home, social security - not much else. Why? I have 35 - 40 more years of living remaining - I want to be able to experince life and not have to worry too much or be limited too much by the amount of $ I have.

 

[REWahoo]

I have 35 - 40 more years of living remaining

Have you selected an exact date yet?

 

[MJ]

I genuinely admire those who have retired with what many would consider a marginal nest egg.

I was very happy to discover this website 7 months ago. I have gotten a lot of useful information here.

One obvious fact is, each of us, who is planning to ER, or has already Er'd, has different lifestyles and situations, like being single or married, and with kids, with a non-working SO or a working SO with insurance coverage, in their 40's, 50's, or older, with a current or future pension and/or SS payment (we all hope).

So people relatively new to this site must be familiar with the replying person's background to understand their ER plans.

For myself, risk-taking simply isn't in my genes. I need something that is relatively risk-free.

One additional important fact is that a number of members are very investment savy. I am an investment moron. I hope it's not genetic and that I can improve my knowledge. That is making me a a bit nervous as at 57, I am planning to ER in 5 to 6 months. I hope to have $1,000K and I have a paid up $500K+ house.

MJ

 

[Bob_Smith]

John Galt took his leave of a regular paycheck with a lot less than $1 million in his pocket. He is now doing just fine. So his testimony that you don't really need $1 million in your pocket to end up just fine is good testimony...

All I'm saying is this: if a potential early retiree was planning to live off passive investments, and cover a long stretch of life with those investments, he/she would require ~$750,000 (and the shirt on his back) to support the monthly expenditures John has. Does anyone dispute that?

 

[Jarhead*]

All I'm saying is this: if a potential early retiree was planning to live off passive investments, and cover a long stretch of life with those investments, he/she would require ~$750,000 (and the shirt on his back) to support the monthly expenditures John has. Does anyone dispute that?

Hey Bob:

I'm sure you noticed that even the 2nd. time around, H----- still missed the point. (Part of conversation is also the ability to listen).
Because of Galt's age, and also depending on how long his wife continues to work, $750,000 could be a little a little on the low side.
In any case, it isn't $250,000.00 and superior brain power that enabled him to pull the pin.
I think you properly stuck the pin in his baloon on bragging to new posters about the "John Galt Myth".
Nice job, Bob, and it is posters like you that can be very helpful to potential "early retirees".
Regards, Jarhead

 

[hocus]

I think you properly stuck the pin in his baloon on bragging to new posters about the "John Galt Myth".

It may be that there is some history here that I am not familar with. I still feel that I can say that I have learned from John Galt posts (as well as from Bob Smith posts and ex-Jarhead posts, of course), and that I am grateful for what I have learned from them.

 

[cc]

John Galt is probably too shy to defend himself (ha ha), so I'll have to try.

The key as I see it is that he fully retired on an income that is about equal to age 62 SS (with a same-age spouse on the same record). So his "SWR" horizon was 8 years or a little less until SS would take over. It wouldn't take much of an asset base to support that plan...

 

[PL]

Fortunately, this $1M or bust idea has been debunked by Scott Burns in a whole series of articles on the theme of "Living Lite."

Sure, $1M+ or more is nice, but it is FAR from the asset level that the vast majority of people retire with, ER or not. In fact, Burns writes that the most contented retired people do not consider money to be all that important.

For example, in a series looking for new ideas on how to cope with the demographic problems in Social Security, Burns writes,

"Those of us who are older have a choice. We can be hypnotized by finger-pointing politicians. Or we can ignore their empty posturing. We can figure out what we personally can do to cope. We might just make a really good "best of the situation." We could invent a brand new future. What's most clear is that the time to plan and learn is now.

So how can you help?

Simple. There are pioneers out there. They are people who live differently and think differently. They are people who march to a different drummer. They are people who live on less money but feel wealthy, if they think about such things at all. I believe most of them are entirely indistinguishable from ordinary human beings."

http://www.dallasnews.com/sharedcon...umns/2004/stories/031404dnbusburns.5835a.html

See also his whole series on "Living Lite:"

http://www.dallasnews.com/sharedcon...aders/stories/SBlivinglitereader.6751ea37.htm

In sum, cheer up. It doesn't take $1M, $2M or any fixed amount to ER. It only takes enough to live on!

 

[PL]

Here's a working link (I hope) to Scott Burn's articles on "Living Lite:"

http://www.dallasnews.com/sharedcontent/dws/bus/scottburns/readers/
stories/SBlivinglitereader.6751ea37.html

 

[PL]

One more time. I'm just learning how to do this (it seems to work in the 'preview mode.')

Here's that Scott Burns' link on "Living Lite:"

http://www.dallasnews.com/sharedcon...ders/stories/SBlivinglitereader.6751ea37.html