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Is it possible?
Old 09-15-2004, 09:35 PM   #1
 
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Is it possible?

We have $650K liquid funds (and own no real estate), We are both 37 years old, no kids, and need about $40,000 net per year to live like we do now. My wife and I plan on working enough just to earn about $15,000 after-tax per year total ($7,000 to $8,000 each) before we quit those jobs for the year. We would continue doing this each year for as long as we need to (but hopefully not beyond age 50). Is this feasible to do for the next 50 years or do we still need to build our assets more before we attempt to go part-time or fully retired?

I feel like my investments are not earning as much as they should in CDs and index funds so I am hesitant to attempt this until either we can get a better return on our money or build our retirement fund closer to the $1 million mark which could be by the time we are in our early 40s. I'm averaging about 3.5% return on my money now.

Thank you in advance for your ideas.
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Re: Is it possible?
Old 09-15-2004, 09:53 PM   #2
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Re: Is it possible?

Hi Wonderboy,

Yeah, it's possible if I read your post correctly. You can run FIRECALC (click on the link at the opening page of this board) to see how your plan would have worked historically. I ran your numbers as I read them:

current nest egg = $650K
earn: $15K per year for next 13 years (I assumed this amount was inflation adjusted)
retire completely in 13 years (no further earnings)
I assumed no ss benefits and no pension.

I also assumed that you chose to invest your current nest egg in 50% equities/50% TIPS

I used CPI as the inflation index and assumed an expense ratio or 0.18

Historically, this kind of strategy would have supported a $36K per year lifestyle adjusted for inflation for at least 35 years.

If you use a CD and money market investment strategy, your safe withdrawal rate (SWR) would have been far less than $36K. Similarly, if your earnings for the next year are fixed at $15K rather than adjusting that upward for inflation, your SWR would be less.

Good luck with your plan.
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Re: Is it possible?
Old 09-16-2004, 09:07 AM   #3
 
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Re: Is it possible?

Wow, Wonderboy you are.
At least to me. Our situation:
$7,500 in retirement savings, House worth at least $275k (but a mortgage of $154k), 3 kids with 1 on the way. Paid off cars, but we've got to get a van now so that we can take the whole family at one time (plus it's hard getting the littlest one out of the carrier in the back of a Ford Escort).
My hat is off to you and your spouse!
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Re: Is it possible?
Old 09-16-2004, 09:31 AM   #4
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Re: Is it possible?

Quote:
$7,500 in retirement savings, House worth at least $275k (but a mortgage of $154k), 3 kids with 1 on the way. Paid off cars, but we've got to get a van now so that we can take the whole family at one time (plus it's hard getting the littlest one out of the carrier in the back of a Ford Escort).
My hat is off to you and your spouse!
Actually, I'm more impressed with you having some savings while also having 3 plus kids than the wonderboy situation.

They only had to save $2450 a month for 15 years assuming a 5% rate of return to have saved $650,000. I applaud them for it, but easily done with 2 good incomes and no kids. But raising 4 good kids deserves a standing O.

Some people can't have kids even though they want them, so I don't want to make it sound like they are selfish or less worthy in any way. But people that have all the expenses and all the less time to devote to earning money for ER because they have children should not think they are worse off because of that. I've always said that having a baby makes you an instant millionaire and no money or ER ambition can replace that.
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Re: Is it possible?
Old 09-16-2004, 11:16 AM   #5
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Re: Is it possible?

Quote:

Actually, I'm more impressed with you having some savings while also having 3 plus kids than the wonderboy situation.
I'm more impressed that they got two adults and three kids into an escort. *:P
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Re: Is it possible?
Old 09-16-2004, 12:09 PM   #6
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Re: Is it possible?

Having two kids I agree that there are some things money can't buy. *By becoming a parent I've prioritized raising my children over retiring as early as I'd like. *Most of us who are parents have made this choice and are better for it, and are indeed a different kind of multi-millionaire.

At the same time, if wonderboy and his wife have made a choice to not have kids that's up to them. *They can contribute to society in other ways.
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