$1Mil Enough? Age 35

[Al18]

Congratulation on having accumulated 1.6M at age 35.

That said, I don't think a budget of 12K or even 24K is realistic for a family of four. In addition to failing to include your insurance premiums (mentioned in an earlier post), here are some other items you may want to add to your budget:

New car every x years
Car maintenance
House maintenance, including a new roof every 25 years
Heating/AC replacement
Major appliance replacement
Home computer/tablet/phone/TV/stereo replacement

10% more for unexpected expenses

Lastly, I have a significant amount of money in my vacation/travel budget every year. What have you budgeted to fly to your favorite vacation area for 2-4 weeks per year for the next 40 years

 

[Ready]

I can't help but wonder if there are a number of forum members reading this thread wondering...why would someone who has amassed so much money at such a young age want to live on $12K per year for a family of four?

I also keep thinking about the food and gas budget of $440/month. We don't know the breakdown between food and gas, but let's assume it's mostly food, or $400 per month. To feed four people on $400 per month, assuming 30 days per month and 3 meals per day, that equates to $1.11 per meal per person. Even if the fruits and vegetables are free, what are you eating that averages $1.11 per meal?

 

[Dager]

I can't help but wonder if there are a number of forum members reading this thread wondering...why would someone who has amassed so much money at such a young age want to live on $12K per year for a family of four?

I also keep thinking about the food and gas budget of $440/month. We don't know the breakdown between food and gas, but let's assume it's mostly food, or $400 per month. To feed four people on $400 per month, assuming 30 days per month and 3 meals per day, that equates to $1.11 per meal per person. Even if the fruits and vegetables are free, what are you eating that averages $1.11 per meal?

We live very comfortably in a 4000 sq ft house. Solar (fully paid for) helps us save considerably on electric bills. We have Netflix at $8/mth and don't pay $100+/mth for cable (we always watched everything on DVR and realized we were wasting money on live tv).

As for food, I suggest you try using coupons and shop at Stater Bros instead of Trader Joes and Whole Foods, and avoid the pricey steaks and seafood (I didn 't grow up eating that, so I'm not missing out). We 're not an obese family like many, so that cuts down on food costs as well.

 

[Dager]

To answer the OP's original question....

Yes you have enough money to retire with the way you are living today. It seems that you been tracking your expenses for a while so you know how much you need and seems that you are living comfortably. You should be able to pull 30K a year if you want. Just pull the trigger and enjoy life with your family.

Me, my wife and two cats spend around 17K a year but we go out to eat and have fancy cells phones and spend money on services that we really don't need etc etc. I can't imagine spending 30-40K a year. I guess I would spend money every month on stuff that I don't need.

Dager if you don't mind can you share the specifics on how you are getting a return of 40% per year? what stock or funds are you investing on?

I am 28 and we are shooting to retire when we hit 750K; with a return of 7% I will hit the mark around 36-37. I would not mind retiring earlier

Thanks.

I do a lot of daily stock research; it keeps me busy since I'm semi-retired as of two years now. I've made a killing in AAPL, GOOG, MSFT, AIG, C, BAC, JPM, GM, F and QCOM. I generally look for beaten down blue chip stocks (value investing) and ride them up after a patient (and oft volatile) quarter. It has worked wonders for three years. At present , I own C and AIG, but will sell both when they reach 54-share (I bought them both under 40). I'm not sure yet what I'll buy next b/c everything in the market seems a bit pricey. I have my eyes on DVN if it goes back under 60, I may buy and ride it to 70, but that's the only low-risk opportunity I see for now. I suspect a market correction with the next gov't impasse will present me with new opportunities.

 

[Major Tom]

Me, my wife and two cats spend around 17K a year but we go out to eat and have fancy cells phones and spend money on services that we really don't need etc etc. I can't imagine spending 30-40K a year. I guess I would spend money every month on stuff that I don't need.

As has been said here many times before, it's interesting to notice the large variation in spending levels between members. I spend about the same you, but am just one person, living alone with 3 cats and unlike you, don't spend money on things I don't need; I have no cellphone, no paid subscriptions to anything (no Netflix, Hulu etc), no car.

You must live in an area where the cost of housing is fairly low. I envy you! (Well, sort of - I'm actually quite content but I envy you in a kind of whimsical-yet-reasonably-satisfied kind of a way . )

 

[galeno]

Our SCHA is up over 36% YTD. "Magic Diligence" stocks are up 41% as of Nov 30th.

 

[Dager]

Congratulation on having accumulated 1.6M at age 35.

That said, I don't think a budget of 12K or even 24K is realistic for a family of four. In addition to failing to include your insurance premiums (mentioned in an earlier post), here are some other items you may want to add to your budget:

New car every x years
Car maintenance
House maintenance, including a new roof every 25 years
Heating/AC replacement
Major appliance replacement
Home computer/tablet/phone/TV/stereo replacement

10% more for unexpected expenses

Lastly, I have a significant amount of money in my vacation/travel budget every year. What have you budgeted to fly to your favorite vacation area for 2-4 weeks per year for the next 40 years

Thanks for your comments. We actually bought two new cars and have all new heating/AC, appliances, tablets, etc. within the past two years, so I don't expect to replace them. I don't consider these significant costs b/c I buy the cars cash (when extra money is there for it) and the rest came free and will probably always be free (lots of friends in those businesses who offer those items in exchange for my occasional help -- basically bartering. As for the insurance cost, it's $600/yr for my home insurance...that $50/mth isn't significant.

 

[explanade]

How much of the wife's income can support a higher budget?

What about taking the kids to Disneyland or amusement parks for the adults (Europe, Asia, etc)?

 

[Dager]

Investments that can go up 40% in one year usually can go down the same amount other years. Unless the money gets moved to less potentially volatile investments before you quit work, you have to count on some bear markets along the way. Sequence of returns matters.

Depends on how good you are at investing. A good investor makes money in both up and down markets. I don't buy funds and let my money sit only to watch it tanked three months later. I buy individual stocks after thorough research and watch them daily. In three years, I've bought and sold over 100 stocks and not lost a penny on a single one. I suspect you are buying funds/indexes and letting others make allocations/decisions for you.

 

[REWahoo]

In three years, I've bought and sold over 100 stocks and not lost a penny on a single one..

Can you say the same for how you performed in the three years prior to the past three?

 

[Dager]

How much of the wife's income can support a higher budget?

What about taking the kids to Disneyland or amusement parks for the adults (Europe, Asia, etc)?

In my vision of ER, I look to whether necessities can be covered with existing savings. All extraneous matters can be paid with extra income, if there is such. It's as all families live... luxuries are enjoyed with the extra money that exists. Based on my calculations, I have at least $1k/mth of extra money, and even if I used $24/yr (double current expense) on necessities, there will be occassions where extra income is earned from investments or consulting work to pay for luxeries. If not, then we forgo luxuries that year, but the fact we couldn't splurge on luxuries doesn't mean we cannot ER if we can at least pay necessities.

 

[explanade]

Most people probably made money in equities the past 3 years.

How about around 2007, 2008 and early 2009?

 

[foxfirev5]

Depends on how good you are at investing. A good investor makes money in both up and down markets. I don't buy funds and let my money sit only to watch it tanked three months later. I buy individual stocks after thorough research and watch them daily. In three years, I've bought and sold over 100 stocks and not lost a penny on a single one. I suspect you are buying funds/indexes and letting others make allocations/decisions for you.

Is this an early April Fools joke?

 

[MichaelB]

Can you say the same for how you performed in the three years prior to the past three?

+1

When I was first retired I did very well in the down market of '00 and the first part of '01. So much so, I increased my stock allocation to around 80% ... and got crushed. Almost ended my early retirement before it started.

It's a lot easier to make money in bull markets.

 

[MooreBonds]

In my vision of ER, I look to whether necessities can be covered with existing savings. All extraneous matters can be paid with extra income, if there is such. It's as all families live... luxuries are enjoyed with the extra money that exists. Based on my calculations, I have at least $1k/mth of extra money, and even if I used $24/yr (double current expense) on necessities, there will be occassions where extra income is earned from investments or consulting work to pay for luxeries. If not, then we forgo luxuries that year, but the fact we couldn't splurge on luxuries doesn't mean we cannot ER if we can at least pay necessities.

Two other things to keep in mind:

1) make sure you both have enough credits to qualify for Medicare at 65

2) be aware that if you get free healthcare through the Medicaid program, not only will you have limited choices of medical professionals that take Medicaid, but if you and/or spouse gets sick and has Medicaid pick up the tab (after 55?), then when the first spouse passes on, Medicaid may come back and take assets from the estate to pay for previous medical expenses. That has the potential to be a giant whammy to the surviving spouse and to the portfolio! It's essentially making you 'self-insured' for medical care after 55 - albeit, with a delayed payback.

 

[NW-Bound]

... A good investor makes money in both up and down markets. I don't buy funds and let my money sit only to watch it tanked three months later.

... In three years, I've bought and sold over 100 stocks and not lost a penny on a single one...

I will say that you do not need advice from any of us here. You can certainly retire anytime you like, and still get richer every year.

 

[explanade]

Where do you check for Medicare credits?

 

[SumDay]

Where do you check for Medicare credits?

I believe it's on your Social Security statement, which you can get online.

my Social Security ? Sign In Or Create an Account

 

[Calico]

......As for food, I suggest you try using coupons and shop at Stater Bros instead of Trader Joes and Whole Foods, and avoid the pricey steaks and seafood (I didn't grow up eating that, so I'm not missing out)......

Depends on how good you are at investing. A good investor makes money in both up and down markets......I suspect you are buying funds/indexes and letting others make allocations/decisions for you.

Oh my. If hubris could be used as currency, you'd be financially set for life.

 

[brewer12345]

Can you say the same for how you performed in the three years prior to the past three?

Under Chuck Norris' beard is... another fist!

 

[FUEGO]

Dager, I don't think you are way off, but make sure to put together an all inclusive detailed budget that includes taxes, insurance, any extra healthcare or dental expenses, and capital replacement items (big house maintenance like roof/siding and new(er) cars for example).

I recently ER'd at age 33. I have put together a pretty comprehensive retirement budget of $32k/yr for our family of 5 (3 kids from age 2 to age 8). That number includes a paid off house and all taxes, insurance premiums, core expenses, and discretionary expenses. I'll PM you a link to my budget I've posted elsewhere (that also includes how I developed that early retirement budget). Obamacare subsidies will pick up most of our HI costs.

Kid expenses might go up during their teen years, but I bet they will drop off at some point a few years after they are no longer teenagers. It'll all even out most likely.

I haven't ruled out the possibility of picking up some cash doing a little hustling during my ER. Especially if my kids make an honest attempt at bankrupting my ER.

 

[Gatordoc50]

I see no reason why you wouldn't be able to maintain your current lifestyle in retirement.

 

[Ready]

As for food, I suggest you try using coupons and shop at Stater Bros instead of Trader Joes and Whole Foods, and avoid the pricey steaks and seafood (I didn 't grow up eating that, so I'm not missing out). We 're not an obese family like many, so that cuts down on food costs as well.

So if you get your fruits and vegetables from your garden, and you don't eat steak or seafood, what are you buying at Stater Brothers? I haven't shopped there in years, but from what I recall, other than produce and meat/chicken/fish, just about everything there is just processed food.

 

[brewer12345]

So if you get your fruits and vegetables from your garden, and you don't eat steak or seafood, what are you buying at Stater Brothers? I haven't shopped there in years, but from what I recall, other than produce and meat/chicken/fish, just about everything there is just processed food.

Twinkies: the other white meat.

 

[kikechico]

Dager, I don't think you are way off, but make sure to put together an all inclusive detailed budget that includes taxes, insurance, any extra healthcare or dental expenses, and capital replacement items (big house maintenance like roof/siding and new(er) cars for example).

I recently ER'd at age 33. I have put together a pretty comprehensive retirement budget of $32k/yr for our family of 5 (3 kids from age 2 to age 8). That number includes a paid off house and all taxes, insurance premiums, core expenses, and discretionary expenses. I'll PM you a link to my budget I've posted elsewhere (that also includes how I developed that early retirement budget). Obamacare subsidies will pick up most of our HI costs.

Kid expenses might go up during their teen years, but I bet they will drop off at some point a few years after they are no longer teenagers. It'll all even out most likely.

I haven't ruled out the possibility of picking up some cash doing a little hustling during my ER. Especially if my kids make an honest attempt at bankrupting my ER.

Can you PM the link to your budget? Thanks