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Old 09-16-2016, 04:15 PM   #141
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Firecalc default settings gives this a 98% chance of success. 72% if inflation adjusted.
Just curious - Do you discount those results any further for the potential case that future investment returns may not be as good or better than the past or do you use those results as they stand to make investment decisions?
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Old 09-16-2016, 04:33 PM   #142
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Yeah with three kids under 12 right now, a million falls well short for us to ER, but it's San Diego. I think 2 million will be the number that gets me really excited, as that will be when we could make it if we really had to. We'd like to be in the 3-4 range before we both quit earning completely, however. Our high income friends think that's a far too risky, poverty wage NW for their comfort. I just can't believe the numbers they are coming up with - 7,8,9,10, 20 million, even!
I live in the Bay Area (which I imagine makes San Diego seem affordable by comparison) and there is no way that one needs $7M+ for a "comfortable" retirement, unless one equates comfortable with permanent residence on a cruise ship or something like that.

For me, I'm thinking $2.5M ($100K annually at 4% withdrawal rate) is a good target. $3M ($10K/month!) would be super groovy. But clearly above the bare minimum.
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Old 09-16-2016, 04:36 PM   #143
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Just curious - Do you discount those results any further for the potential case that future investment returns may not be as good or better than the past or do you use those results as they stand to make investment decisions?

I don't really do anything with it. Was just using it to see if it was in the ballpark to make around 50k on a million. I plan to take variable withdrawals based on how the market actually performs.
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Old 09-16-2016, 05:15 PM   #144
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My bold....please tell us your simple secret on making a safe $50K per year on $1MM.

I know that's a 5% return but I can't seem to find anything that pays that much except for preferred stocks and junk bonds. Also, is that simple $50K after tax money?
First of all, no where did I mention safe. No risk , no reward. There are ETF super aggressive bond funds that I would put 250k. Next 450k in a global taxable bond fund. There you already have 50k in income. Then put the remaining 300k in a conservative stock fund for growth. Is this beyond the risk tolerance of most on the forum? Perhaps. But it is not beyond MY risk tolerance. The 50k would be before taxes. I said it would be a simple matter. It is. Safe? I never said that.
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Old 09-16-2016, 05:23 PM   #145
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Agreed - and in particular, $50K/yr, every single year, for a 30 or 40 year period.
Every single year. LBYM and have money to put in at lower prices. This equals more firepower for more income because you are buying more shares.
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Old 09-16-2016, 05:40 PM   #146
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First of all, no where did I mention safe. No risk , no reward. There are ETF super aggressive bond funds that I would put 250k. Next 450k in a global taxable bond fund. There you already have 50k in income. Then put the remaining 300k in a conservative stock fund for growth. Is this beyond the risk tolerance of most on the forum? Perhaps. But it is not beyond MY risk tolerance. The 50k would be before taxes. I said it would be a simple matter. It is. Safe? I never said that.
If it's not safe, than it's not that simple and probably not that desirable to do. If you are going to infer that it is simple to consistently pull $50 K from a fixed sum forever (lifetime) and expect people here to believe you, then by all means, detail your assumptions rather than stating it is simple to do.

Maybe it would be easier to pull off by purchasing annuities instead of taking market risk?

And taxes would eat into the $50 K.
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Old 09-16-2016, 05:48 PM   #147
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If it's not safe, than it's not that simple and probably not that desirable to do. If you are going to infer that it is simple to consistently pull $50 K from a fixed sum forever (lifetime) and expect people here to believe you, then by all means, detail your assumptions rather than stating it is simple to do.

Maybe it would be easier to pull off by purchasing annuities instead of taking market risk?

And taxes would eat into the $50 K.
If you would not do it, that is fine. I have already stated in detail how it could be done. If you don't agree that is fine. No problem.
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Old 09-16-2016, 07:07 PM   #148
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So a $150,000 bear market Cash emergency fund would be a really good idea to help with making withdrawals in a very down market
The bucket strategy To help preserve the $1 million
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Old 09-24-2016, 03:47 PM   #149
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Maybe you mentioned this in the past but how do you live on $17K/yr in SF.? Would I be correct to assume you have a paid off house or multiple roommates? I live on under $17K most years but I live in small town Wisconsin where I get a 2 bedroom, 1000 sq ft, top floor apartment for $560/mo.

Why would one want to live on only 17k = boring.
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Old 09-24-2016, 04:19 PM   #150
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Maybe you mentioned this in the past but how do you live on $17K/yr in SF.? Would I be correct to assume you have a paid off house or multiple roommates? I live on under $17K most years but I live in small town Wisconsin where I get a 2 bedroom, 1000 sq ft, top floor apartment for $560/mo.
Apologies for not replying to this sooner aaronc879. I didn't see this post originally, and only saw it when OrganicRain quoted it in his/her post above.

My trick is to have rent that is not much more than yours. I have a small (285 sq ft) studio in a lovely old house with a bay window looking out onto the local dog park. Lots of views of dogs, birds and squirrels, which my 3 cats love. It's small, but comfortable. The house is owned by an older gentleman who is aware that he could be charging more, but doesn't. For the first 5 years, the rent was constant, at $640/month including electricity. A couple of months ago, he apologized profusely that, due to the rising cost of everything, he had no choice but to raise the rent - to $651. Needless to say, I'm quite happy with my first rent increase in 5 years

The biggest difference in cost of living in high COL areas is due to housing, so I have that one taken care of, at least for the time being. I don't own a car, but a bicycle and public transport get me everywhere I need to go. The rest of it is the usual frugal living, as I know you are well familiar with, and a true artist at!

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Why would one want to live on only 17k = boring.
I have told my story several times here, and don't feel like doing so again, especially as the wording of your post doesn't seem to indicate genuine curiosity. I think it takes a certain personality type - the ability to be satisfied with a low material standard of living, and a tendency toward frugality. In many major metropolitan areas, once you have the cost of housing taken care of, there are a lot of things to do that cost very little. We're lucky in the SF Bay Area that we have a lot of opportunities for outdoor recreation at minimal or no cost.

Last week, my SIL took me as a guest on her membership to SFMOMA. It has recently re-opened, and is well worth a visit. As a thanks for getting me in, I bought her lunch. I have spent the last few days building some neat portable ham radio gear (my hobby). This morning, I built and tested a lightweight antenna. Next week, I'll stuff it into my backpack and cycle to Volmer Peak, a local high spot up in the hills above Berkeley, with a great view of the Bay Area, and test out the radio gear. This weekend, my best friend is coming over. We'll have some snacks, drink a little wine (well, maybe more than a little), watch the new episode of SVU, listen to music, and generally chat and have fun. She is staying over the night. I'm sure you'd find that terribly boring, but it doesn't cost much, and we like it

Yes, it's a very dull life
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Old 09-24-2016, 04:31 PM   #151
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BTW aaron - I'd love to have 1,000 sq ft for the rent you pay. Maybe a move to WI is in order!
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Old 09-24-2016, 05:42 PM   #152
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For the first 5 years, the rent was constant, at $640/month including electricity. A couple of months ago, he apologized profusely that, due to the rising cost of everything, he had no choice but to raise the rent - to $651. Needless to say, I'm quite happy with my first rent increase in 5 years
Wow, I'll bet you were SO relieved when he told you the new rent! It could have been so much higher. If I had been in your shoes, I would have been freaking out, thinking of where to move and how, until finding out that the increase was so small. He sounds like a very nice old man.
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Last week, my SIL took me as a guest on her membership to SFMOMA. It has recently re-opened, and is well worth a visit. As a thanks for getting me in, I bought her lunch. I have spent the last few days building some neat portable ham radio gear (my hobby). This morning, I built and tested a lightweight antenna. Next week, I'll stuff it into my backpack and cycle to Volmer Peak, a local high spot up in the hills above Berkeley, with a great view of the Bay Area, and test out the radio gear. This weekend, my best friend is coming over. We'll have some snacks, drink a little wine (well, maybe more than a little), watch the new episode of SVU, listen to music, and generally chat and have fun. She is staying over the night. I'm sure you'd find that terribly boring, but it doesn't cost much, and we like it

Yes, it's a very dull life
Sounds fun to me, a perfect retirement.
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Old 09-25-2016, 10:53 AM   #153
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Wow, I'll bet you were SO relieved when he told you the new rent! It could have been so much higher. If I had been in your shoes, I would have been freaking out, thinking of where to move and how, until finding out that the increase was so small. He sounds like a very nice old man.
As it happens, we're on fairly strict rent control here, so there is a limit to how much he can raise it. I don't think he's very familiar with the details of the rent control laws though - it's just that his rent increases are so few and far between that historically, he hasn't raised the rent as much as the law will allow. This particular raise was pretty close to the allowed maximum in one year but, given that the rent was low to begin with, and he hasn't raised it in the 5 years I've been here, I was quite happy to pay the new amount!

My neighbors in the house and I are more concerned about what will happen when he's no longer able to manage his properties, and the property passes into new hands. I think that's the point at which we'll be looking for new places to live. It's a lovely old house, but it's very likely a new owner would be more interested in putting a new building on the site, than maintaining this characterful old structure that will need quite a lot of work at some point in the future.

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Sounds fun to me, a perfect retirement.
It really is. Once you have the basics taken care of the rest, I think, is up to your imagination and your knowledge of what it takes to make you happy.
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Old 09-25-2016, 11:34 AM   #154
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A household at the income level of 56,500 per year is not going to come close to saving $1 million in retirement accounts During a working career

Unless They live in a van down by the river or follow Mr. mustache And drive a 10-year old. Beater and live in a tiny house for the rest of their lives . Or maybe live in someone's basement

That's a lower middle-class wage Yes the stories of the struggling middle class are true

But typically in this early retirement.org community people will start talking about how the middle-class over spends and they shouldn't buy iPhones and Starbucks And the wonderful phenomenon of shareholder value economics and globalization Low wage Math is somehow ignored
I started out on $24K/yr and by age 40 had DW, 2 kids, 2 cars, a typical mortgage, and also hit $1 million in investments. My pay by then was above $54.5K but the average over those years was less. My savings rate had been between 10 and 20%. It can be done.

I also agree that most people today will not do it. I do believe that in part it is because the average person is not sufficiently disciplined to save enough. However, some costs are higher today like energy and health care, and I also think that future stock and bond returns will be lower that what I saw due to changes in the condition of the economy going forward.
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Old 09-25-2016, 12:53 PM   #155
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In many major metropolitan areas, once you have the cost of housing taken care of, there are a lot of things to do that cost very little. We're lucky in the SF Bay Area that we have a lot of opportunities for outdoor recreation at minimal or no cost.
Same here. Our housing is taken care of and we also find a lot of free and cheap things to do, outside and inside. This week it is drinks and a play in San Francisco with friends, lunch in Berkeley's gourmet ghetto, a visit to the Berkeley Art and Film Museum, and a group dinner at an Italian restaurant planned so far. With Groupons bought during sales, free event passes through the libary, seat filler memberships, etc. we can go out every day some place fun and not spend much.
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Old 09-25-2016, 04:49 PM   #156
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I have a relative that lives on about $17-20k CDN/yr. She's not retired but lives a very cost controlled life. Doesn't mean she doesn't go out and have fun though. Somewhat similarly as Major Tom, she lives in a basement suite with a very inexpensive rent; no increases since she's been there as she's a good tenant. I suppose there's a bit of luck at play with the cheap rent (and I suppose good health) but it's also about being able to enjoy life without needing to throw money at it.
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Old 09-25-2016, 06:21 PM   #157
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lunch in Berkeley's gourmet ghetto,
I have eaten in that area quite a few times, though didn't know it was referred to that way. My best friend, who is an Oakland native, gave me a "You didn't know that?" look

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I suppose there's a bit of luck at play with the cheap rent (and I suppose good health) but it's also about being able to enjoy life without needing to throw money at it.
I think there's a mixture of luck and diligent work in finding a place if you're looking in a pricey market. For others, it might simply be a case of finding a market-rate apartment in a rent-controlled area, and staying in it for a long time. We're putting ourselves partially at the mercy of our landlords and the movements of the market but, as with anything, a good plan B is a handy secret weapon.
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Old 09-25-2016, 06:47 PM   #158
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I started out on $24K/yr and by age 40 had DW, 2 kids, 2 cars, a typical mortgage, and also hit $1 million in investments. My pay by then was above $54.5K but the average over those years was less. My savings rate had been between 10 and 20%. It can be done.

I also agree that most people today will not do it. I do believe that in part it is because the average person is not sufficiently disciplined to save enough. However, some costs are higher today like energy and health care, and I also think that future stock and bond returns will be lower that what I saw due to changes in the condition of the economy going forward.
So it sounds like your income must've really jumped big time as you approached age 40 ?

A savings rate of 10 to 20% at $55,000 Per year income is definitely not going to get it done to get to $1million in 20 years.
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Old 09-25-2016, 07:37 PM   #159
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Why would one want to live on only 17k = boring.
Without kids $17,000 per year might be doable if you drink enough cheap wine

With children living only on $40,000 or less by choice I wouldn't feel comfortable Setting that kind of Poor work ethic example if you're choosing to just sit around and hang out doing nothing

My millennial DS is old enough to do the math.

My DS does not have one college classmate that wants to work just 10 years and then sit around doing nothing.

So whatever.

I don't think sponging off other people is something to brag about. I just don't get it.
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Old 09-25-2016, 07:53 PM   #160
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BTW aaron - I'd love to have 1,000 sq ft for the rent you pay. Maybe a move to WI is in order!
Better pack a winter coat. The weather is just a bit different here.
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