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Old 07-18-2007, 09:41 PM   #41
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I don't want to beat this to death, but are you saying for your probable, 1.25M in 2007 dollars is realy 2.25+M in 2027 dollars, i.e. 20 years till retirement. So your savings plan will allow you to save/invest to achive the 2.25M in 20 years in order to get your 4% swr equal to a $50,000 retirement today. ( i just picked 20 years as I have no idea what your er horizon is)
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Old 07-18-2007, 10:10 PM   #42
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I don't mean to speak for anyone else (and I'm not sure if you were asking me), but:

For me, when I say 1.25M in today's dollars, I mean that I intend to adjust that upwards each year to account for inflation [so the 2.25M in 20 years analogy would be the correct idea (trusting that you've done the math correctly)].
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Old 07-18-2007, 11:49 PM   #43
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I don't want to beat this to death, but are you saying for your probable, 1.25M in 2007 dollars is realy 2.25+M in 2027 dollars, i.e. 20 years till retirement. So your savings plan will allow you to save/invest to achive the 2.25M in 20 years in order to get your 4% swr equal to a $50,000 retirement today. ( i just picked 20 years as I have no idea what your er horizon is)
Yep. When I say I will need 1.5M in 2007 dollars to retire, I mean that if I retire in 20 years (with 3% inflation), I will need to build an actual 2.7M nest egg by the time I retire (the equivalent of 1.5M in 2007 dollars). It would give me an annual income of 108K at 4% SWR, which is the equivalent of 60K in 2007 dollars (which is what I need to maintain my current lifestyle). So I understand the damage inflation does to one's savings, it's just that I know what one dollar is worth today and it is easier for me to normalize everything to 2007 dollars.
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Old 07-23-2007, 04:53 PM   #44
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I'm the OP

I must say you guys are ridiculous, or live extravagant lifestyles. When I put in my original numbers, they are in future dollars...ie. not what I would need in today's dollars to retire. My optimistic scenario would mean retiring at 45 and living fairly frugally (I think my number was 800K or so....didn't look at my original post). A paid off house and savings of 500K or more would put you in the top 30% of net worths in the world I imagine....on this forum it appears that trying to retire with less than a million is blasphemy.

There are people out there who only live off SS and small savings and do just fine. My parents are an example of that. They live off gov't pension, very small (20K per year) work pension and have at most 200K saved up and they are doing fine...they never have to withdraw any of their pension money. I do their taxes so I know that they are living off about 35K per year with no problems whatsoever. We live in CAnada so health care is not a concern here. People saying they need 2mil + in TODAY'S dollars really need to look at their spending habits and determine where cuts can be made.
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Old 07-23-2007, 05:03 PM   #45
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I must say you guys are ridiculous, or live extravagant lifestyles.
I would rather say most people here are ambitious and have big plans for ER.

You are right that you can live a nice life on less than 1 million, but that doesn't make it ridiculous to want more.
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Old 07-23-2007, 05:07 PM   #46
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I would rather say most people here are ambitious and have big plans for ER.

You are right that you can live a nice life on less than 1 million, but that doesn't make it ridiculous to want more.
Yes, but for 99% of the people out there, going from 1mil to 2mil will take alot of sacrifice, BS, and stress, and for what? An extra $40K per year in retirement income that puts them in a higher tax bracket and which they probably won't spend anyways. They sure will have nice fat wallets when they die I guess......
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Old 07-23-2007, 05:09 PM   #47
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Accountingsucks,

Us Americans have to pay for health insurance out of our portfolios. I'm planning on paying for 30 years worth of premiums out of my own pocket, personally. I can only imagine what I will be charged in annual insurance premiums at age 64 (37 years from now). Health insurance and health care represent approximately 15-20% of my budgeted spending needs in ER.

I also have a family of 4 (with very young children) that may continue to grow. I'd like to have a little fun (that requires spending money) when I retire. There's also room in my budget for belt tightening, should the need arise. If I tried to retire with a portfolio that could only support a bare-bones retirement, I'd really be screwed if things went really bad investment-wise.

And I live in a moderate cost of living area. I could easily see a family looking to FIRE in the higher cost of living areas needing a $2 million portfolio to support a moderate middle-class lifestyle.

I'd rather put in a couple more years at the salt mine stashing away money so I can take a vacation and buy a new car every once in a while during FIRE. I'm personally hoping to stretch my FIRE out at least 4 decades, maybe 5 or 6 if I'm lucky! I'm thinking at some point during that time I'd like to have a little flexibility money-wise to do something I can't really imagine right now.
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Old 07-23-2007, 06:21 PM   #48
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What Justin said (couldn't say it any better myself).
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Old 07-23-2007, 07:10 PM   #49
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Aside question - why do you think OAS and CPP are in trouble? I'm a Canadian but I don't live in Canada at the moment so I'm a bit out of touch with Canadian politics... are Canadians concerned about OAS and CPP?
CPP has thrived since 1993 when it was taken out of the clutches of government and restructured to facilitate investment in the markets. The print version of this Macleans article had a neat diagram showing the cash flows of CPP (black and rising) and OAS (red and falling) since 1993.
Macleans.ca - Canada - Features | Rescue operation

CPP recently lost to the Ontario Teachers' Pension Plan in a bid to take over BCE and is now bidding on the Auckland airport. (This is not your grandfather's bond fund).
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Old 07-23-2007, 08:42 PM   #50
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I must say you guys are ridiculous, or live extravagant lifestyles.
Excluding savings, my monthly budget is just over $4000. Half of that is housing, and my house is less than $260k (as a hint, most housing in my area is around $500-$900k.. yes, I'm keeping up with the Joneses).

However, I'm also on a damn nice medical plan at work. Conservatively, I assume that I'll need to spend $800-$1000/month for my wife and I for coverage.

Assuming that my house was paid off, I'd need to be able to consistantly live on $3000 a month. We don't travel, we don't have expensive hobbies (well, we're both into photography, but that's a pretty small outlay all things considered) and we hardly ever eat out. Heck, we own one car; talk about unamerican! we do spend a lot on groceries (buying organic, locally-grown, fair trade, etc can kill your budget) and we donate a good bit but I'm definately not going to change either of those extravagant spending habits. Well, at least not until UNICEF runs out of children in need.

Frankly, if it comes to working five extra years so I can grow my portfolio to $1.5mm or get out 4 years sooner at $500k, I'm going to work a little longer so that I don't need to figure out how to live comfortably on SS. A 2-3% drawdown rate is what will let my wife and I sleep well at night without stressing about life. It'll let us be more active with our charitable giving and other things we want to do and, to me, that's worth it... extravagant or not.

And, I think you're way off base on another thing when you talk about the 'added stress of trying to grow a portfolio from $1mm to $2mm'. Frankly, as near as I can tell, that's the easiest part of the whole stupid equation.

Assume that you are getting a modest 7% return (a nice balance of total stock market and total bond market). On average, without you even checking your balance or contributing one extra penny, your portfolio will double in 10 years. It might have taken you 20 years of scrimping and saving to get to that $1mm mark, but that money is like a bread starter, it'll keep feeding and growing itself. Getting from $2mm to $3mm is even easier! It'll only take you five years.
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Old 07-23-2007, 10:29 PM   #51
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Getting from $2mm to $3mm is even easier! It'll only take you five years.
It will take six years.

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Old 07-24-2007, 12:47 AM   #52
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I must say you guys are ridiculous, or live extravagant lifestyles.
Well I am 33 and my current portfolio would allow me to retire immediately if I made the commitment to live a fairly Spartan life (20K per year after paying off the mortgage). The question is would I be able to keep up such a bare bone lifestyle for perhaps the next 50 years? No extra money for trips, or eating out, or going to the movies... What's the fun in (early) retirement if you can't enjoy living it up a little? Why would I want to live like that for the next 50 years (I hope) when I could work a few more years, build a nice size portfolio, give myself some cushion in case market returns lag or inflation picks up and not have to worry about counting pennies for the rest of my life? You said that having to work a few extra years to grow your portfolio would "take a lot of stress". Yes it might cost you 5 more years of stress. For me, retiring too early with too few dollars in the bank would create a lifetime of stress, constantly wondering if my nestegg will outlive me, hoping that my expenses won't increase too much, and praying that stocks won't go through an extended bear market.
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Old 07-24-2007, 01:52 AM   #53
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Congratulations! That is outstanding. I had about a 10th of that at age 27.
I didn't even have that. I thought I was doing great- I had $10,000 at age 30. I went to see a banker about a loan- he thought I was a real lightweight. His lack of respect for my savings kind of woke me up.

I had this low net worth in spite of making pretty good money. I just loved to spend it. Living in LA I found lots of things to do with money that I preferred to saving it!

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Old 07-24-2007, 01:55 AM   #54
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People saying they need 2mil + in TODAY'S dollars really need to look at their spending habits and determine where cuts can be made.
Ever hear of MYOB?

Try it! Even if you don't like it, we will!

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Old 07-24-2007, 03:54 AM   #55
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OP - I don't know if you have really thought through the possible expenses of retirement. I would not dream of retiring without at least $1m in today's dollars, and we're talking in addition to a fed gov't pension, stable health care costs, paid off housing and plans of mostly gardening and raising small livestock. When you don't know your retirement horizon - how long you will live - and you don't know what health care, taxes, inflation, etc will cost, it is much better to be prudent now than eating cat food later, IMHO.

Yes, people do it now, but people now still get SS and, some, pensions.
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Old 07-24-2007, 04:22 PM   #56
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Age 27. Portfolio just broke $300,000. Plus I've got another $30-40k in a pension-like plan that will be fully vested in a couple years. Saving $60,000+ per year. The savings rate is likely to increase significantly in the next few years and at a rate about twice that of inflation (in nominal terms) thereafter.

I should hit my target in 8-9 years assuming 8-9% market returns.

I also plan to save a little extra for those big one-time expenses I'll have since kids won't be out of the house at FIRE-time.
Just to be nosy a little more, but do your numbers include a spouse's income or accumulated assets? Are you the sole breadwinner in your family (assuming you have one). If you're not married, then your assets and savings rate are quite impressive for someone who is 27 years old.

Personally, I didn't start seriously saving money until I was 30, but I've made pretty solid progress in the last 6 years. If you add my wife's assets and savings rate to my own, we could ER in the next 2-3 years (with me at 38 and her at 34).
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Old 07-24-2007, 04:37 PM   #57
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Just to be nosy a little more, but do your numbers include a spouse's income or accumulated assets? Are you the sole breadwinner in your family (assuming you have one). If you're not married, then your assets and savings rate are quite impressive for someone who is 27 years old.
My numbers are for our household earnings, savings, and invested assets. My wife has worked off and on for a couple of years between going to school and having kids (and taking off around 5 months each time). My $1.4 million target number is for our family of 4 (2 kids age 2 and under right now).
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Old 07-25-2007, 09:40 AM   #58
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My numbers are for our household earnings, savings, and invested assets. My wife has worked off and on for a couple of years between going to school and having kids (and taking off around 5 months each time). My $1.4 million target number is for our family of 4 (2 kids age 2 and under right now).
If memory serves me, you're a lawyer, right? The difficulty you may face is sustaining your level of earnings/savings. Many lawyers go through a transition period in their early-30s (after making partner, not making partner, going in-house, going to work for the government), all of which will affect future earnings and savings. The key for you now is to save as much as possible, and let compound interest do the rest.
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Old 07-25-2007, 09:58 AM   #59
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$2M for me + 5 investment properties paid for.
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Old 07-25-2007, 12:48 PM   #60
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If memory serves me, you're a lawyer, right? The difficulty you may face is sustaining your level of earnings/savings. Many lawyers go through a transition period in their early-30s (after making partner, not making partner, going in-house, going to work for the government), all of which will affect future earnings and savings. The key for you now is to save as much as possible, and let compound interest do the rest.
I finished law school but opted not to practice law. I'm practicing as an engineer now. I hope to get my professional engineer's license in the next year and I expect the salary to jump up somewhat after that. I could have a transition period where I switch from private practice to a government/agency position though (along with a drop in pay and massive increase in time off).
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