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Re: $1,000,000 and the clothes on your back
Old 10-30-2004, 04:39 PM   #61
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Re: $1,000,000 and the clothes on your back

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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.
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Re: $1,000,000 and the clothes on your back
Old 10-30-2004, 04:59 PM   #62
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Re: $1,000,000 and the clothes on your back

$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.
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Re: $1,000,000 and the clothes on your back
Old 10-30-2004, 05:59 PM   #63
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Re: $1,000,000 and the clothes on your back

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)

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Re: $1,000,000 and the clothes on your back
Old 10-30-2004, 08:21 PM   #64
 
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Re: $1,000,000 and the clothes on your back

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.
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 01:05 AM   #65
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Re: $1,000,000 and the clothes on your back

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?
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 03:01 AM   #66
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Re: $1,000,000 and the clothes on your back

*****,
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.
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 05:48 AM   #67
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Re: $1,000,000 and the clothes on your back

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I have 35 - 40 more years of living remaining
Have you selected an exact date yet?
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 07:28 AM   #68
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Re: $1,000,000 and the clothes on your back

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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.

Quote:
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
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 01:47 PM   #69
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Re: $1,000,000 and the clothes on your back

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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?
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 03:01 PM   #70
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Re: $1,000,000 and the clothes on your back

Quote:
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
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 03:07 PM   #71
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Re: $1,000,000 and the clothes on your back

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.
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 03:35 PM   #72
 
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Re: $1,000,000 and the clothes on your back

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...


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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 04:11 PM   #73
 
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Re: $1,000,000 and the clothes on your back

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/sharedcont...rns.5835a.html

See also his whole series on "Living Lite:"

http://www.dallasnews.com/sharedcont...r.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!
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 04:20 PM   #74
 
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Re: $1,000,000 and the clothes on your back

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

http://www.dallasnews.com/sharedcont...burns/readers/
stories/SBlivinglitereader.6751ea37.html
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 04:40 PM   #75
 
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Re: $1,000,000 and the clothes on your back

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/sharedcont....6751ea37.html
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 06:38 PM   #76
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Re: $1,000,000 and the clothes on your back

As far as I can tell those links don't work - can you copy and past the article?
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 07:29 PM   #77
 
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Re: $1,000,000 and the clothes on your back

It looks like you have to register at the Dallas Morning News web site, www.dallasnews.com, for those links to work.

Normally I hate having to register, even if it is free, but in this case those with ER interests will find it very rewarding. Scott Burns is their personal finance columnist, and he writes quite a bit on ER related topics. I think all of his columns for the past several years are archived on the site.

Here, just for example, are the titles of his columns on "Living Lite." Burns certainly has a "low cost" vision of retirement, but that's probably the situation most people will be in.

Living Lite:

Hearing different drummers (May 2, 2004)
Liberty from gas pumps (April 27, 2004)
A house of cards in Vegas (April 25, 2004)
In Las Vegas, it's in the cards (April 20, 2004)
Putting a solution on wheels (April 18, 2004)
Unlocking the secret to an RV retirement (April 13, 2004)
RV parks can be a vision (April 10, 2004)
RV resorts, guests banking on value (April 5, 2004)
Growing older than Florida (April 3, 2004)
These aren't your typical RVs (March 30, 2004)
Retiring with ease in an RV (March 27, 2004)
Toyota's newest hybrid is a 'lite' driver's dream (March 27, 2004)
Life can be a beach for most (March 23, 2004)
Elite few can retire in luxury (March 21, 2004)
Florida housing market forecast: continued sunny (March 21, 2004)
Want to go sailing away? Here's how (March 16, 2004)
Margarita Portfolio: a new investment recipe (March 16, 2004)
Seeking a full life with less (March 14, 2004)
Spend Less and Retire Sooner (Feb. 8, 2004)
Think Beyond Money when Planning for Retirement (Jan. 29, 2004)
Less Cash, More Time to Spend (March 24, 2003)
For a Rich Retirement, Get a Life (Dec. 24, 2002)
Addiction to Wealth has a Cure (Oct. 27, 2002)
Will You Ever Have Enough Money?: The Overspent American (May 31, 1998)


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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 08:33 PM   #78
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Re: $1,000,000 and the clothes on your back

Just to clear the air on the John Galt situation, since I'm the one that keeps bringing it up.

And John, I hope you dont feel like I'm picking on you, you're just persistent in telling part of the story.

The frequently issued post is "I retired on almost no money and dont invest in stocks and I'm doing fine".

The reality is "I retired on almost no money, married a working woman a year or so later, she's paying most or all of the bills, I own no stocks, and I'm doing fine".

The real reality is without the working wife, I would bet John would be dead broke by now. Despite good intentions, ingenuity, brilliant maneuvers, hard work, dedication, and good luck.

In other words, dont be encouraged to bail out on your job if you've got less than a half million unless you have a VERY short horizon, social security and pensions coming to you. Or you really, really like taking risks. On top of that, if your risk tolerance says "no stocks", think long and hard about doing it on less than a million, even with a horizon of 10 years or so.

The math just doesnt work out long term.

But those working wives are better than a COLA pension...lets make sure we acknowledge them for all their hard work and contributions...
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 10:03 PM   #79
 
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Re: $1,000,000 and the clothes on your back

From TH
Quote:
Just to clear the air on the John Galt situation, since I'm the one that keeps bringing it up.

And John, I hope you dont feel like I'm picking on you, you're just persistent in telling part of the story.

The frequently issued post is "I retired on almost no money and dont invest in stocks and I'm doing fine".

The reality is "I retired on almost no money, married a working woman a year or so later, she's paying most or all of the bills, I own no stocks, and I'm doing fine".

The real reality is without the working wife, I would bet John would be dead broke by now. Despite good intentions, ingenuity, brilliant maneuvers, hard work, dedication, and good luck.
The backstory is that JG is a "retired" Businessman or, member of "The Merchant Class", as Adam Smith
would call him.

He can't talk to anybody without lying about what he's "selling", or attempting to perpetrate a fraud if even in some minor, meaningless way. It's how most of them "make a living".

Like Safire said about Hillary... it's congenital. If your genes make you exceptionally big or fast, you go into professional sports. If your genes make you exceptionally smart, you go into science. If your genes make you lie to people about almost everything especially when you're talking about money, you become a businessman.
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Re: $1,000,000 and the clothes on your back
Old 10-31-2004, 11:29 PM   #80
 
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Re: $1,000,000 and the clothes on your back

TH -- I'm glad you cleared the air with respect to J.G. I, too, don't want him to feel that he is being picked on. I don't post very often, but I read the threads on this board every day and I've always found J.G.'s posts to be thoughtful and welcome contributions. Further, I admire his courage to take the plunge without having what some would consider a robust nest egg. And, as far as the working wife, I have a working wife too. We're still saving for retirement, but I certainly couldn't make it without her, or if I tried, it would cost me another 10 years as a working stiff. My wife is younger than I and may very well decide to work after I retire. We haven't decided that one yet. But, if she elects to work, I'll gladly accept the additional income.

Regarding your premise that, as a general rule, it would not be wise to retire without at least a "half million" squirreled away . . . I understand your point, but I believe that "half million" would be a risky proposition in today investing environment. I'd think $750K was more like it. However, that's a personal choice everyone is entitled to make for themselves.
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