Poll:Who has a better chance of surviving early retirement ?

[cyber888]

If you had 2 friends, who has a chance of better survival into early retirement? Both are healthy and no medical problems.

1) First friend is 33 years old, the guy has $1.2 million dollars and 3 kids (below 12 years old), and he and his wife retires permanently. Yearly expenses is around $65,000. When they reach 62 or 63 - social security income is a bit small. They have 29-30 years to get any social security benefits.

2) Second friend is 53 years old, the guy has $700,000 dollars, he and his wife retires permanently, no kids at all. Yearly expenses is around $40,000. When they reach 62, social security income is bigger than the first friend. They have 9 - 10 years to get any social security benefit.

[W2R]

Yikes! I didn't vote for either one, because it sounds like neither is well prepared for the retirement they have in mind.

But then, maybe I'm wrong about that. I'd suggest to either one that they should run FIRECalc, and see what it says, and come back and tell us about the results.

[youbet]

Yesterday was April Fool's Day. This is a joke, right?

[rodi]

For giggles I put it into firecalc.
For the younger couple I assumed $20k/year SS starting in 30 years. I put in a 50 year retirement.
For the older couple I assumed $30/year SS starting in 15 years. I put in a 40 year retirement.

The younger couple fails half the time.
The older couple has a 98% success rate. Despite the lower assets, they have a lower spend, fewer years, and more SS income coming online.

My assumptions could be off - you didn't list them. Feel free to run your own simulations on firecalc...

[W2R]

Quote:

Originally Posted by rodi For the older couple I assumed $30/year SS starting in 15 years.

$30K/year SS with a retirement budget of $40K? Pfft. All they'd need other than SS is a paper route I suppose.

Of course you are right, but I agree with you, that it's all in the assumptions. I think we'd get a better answer if they ran FIRECalc themselves.

[NW-Bound]

The older couple.

I voted then saw that the majority agreed.

[Hermit]

Quote:

Originally Posted by W2R ... All they'd need other than SS is a paper route I suppose.

Ug! Can I assume you never had a paper route? Getting up and 4:00 am or so every day to deliver papers is not my idea of retirement.

[soupcxan]

Don't tell the MMM forum that a family of 5 can't retire with $1.2m at 33...unless you want them to get their pitchforks...

[youbet]

If I assume that the older couple spent the 20 years between 33 and 53 yrs old being extremely miserable, literally wishing they were dead due to an extreme hate of their careers, then the younger couple's situation looks pretty good. They still have the chance to retire, perhaps reducing expenses when the kids are gone, to a lifestyle where everyday is a true pleasure.

It's hard to put a value on the worth of quality time. OP did not specify the motivations for retiring for either couple. But, there might be issues beyond straight forward monetary calculations.

[cyber888]

No, the older couple spend their 20 years traveling 25 - 30 countries and lived the good life ... and that's why they were not able to save $1 million+. And now, they don't need to travel abroad to Europe or Asia anymore.

So, the old couple already had the great life. The younger couple - not yet. They just worked and save, no travel, nothing.

Quote:

Originally Posted by youbet If I assume that the older couple spent the 20 years between 33 and 53 yrs old being extremely miserable, literally wishing they were dead due to an extreme hate of their careers, then the younger couple's situation looks pretty good. They still have the chance to retire, perhaps reducing expenses when the kids are gone, to a lifestyle where everyday is a true pleasure. It's hard to put a value on the worth of quality time. OP did not specify the motivations for retiring for either couple. But, there might be issues beyond straight forward monetary calculations.

[youbet]

Quote:

Originally Posted by cyber888 No, the older couple spend their 20 years traveling 25 - 30 countries and lived the good life ... and that's why they were not able to save $1 million+. And now, they don't need to travel abroad to Europe or Asia anymore. So, the old couple already had the great life. The younger couple - not yet. They just worked and save, no travel, nothing.

I love these "make 'em up as you go along" polls! I guess I'll vote for whichever couple you fantasize as having the best lives and retiring with the best chance of "surviving."

[Spudd]

Quote:

Originally Posted by soupcxan Don't tell the MMM forum that a family of 5 can't retire with $1.2m at 33...unless you want them to get their pitchforks...

Ah but over there a family of 5 would be allowed to spend 30K/year max, 65K is just stupidly luxurious!

[daylatedollarshort]

Quote:

Originally Posted by Spudd Ah but over there a family of 5 would be allowed to spend 30K/year max, 65K is just stupidly luxurious!

We've had years where our medical or dental expenses alone were more than $30K (braces for more than one family member). The biggest medical expense year was pre-ACA, but who knows what the future will hold. The ACA has not been around very long and who knows how long the current rates will continue or if asset based premium pricing will kick in.

[DrRoy]

Older. Shorter time frame with similar draw down.

[NW-Bound]

Quote:

Originally Posted by cyber888 No, the older couple spend their 20 years traveling 25 - 30 countries and lived the good life ... and that's why they were not able to save $1 million+. And now, they don't need to travel abroad to Europe or Asia anymore. So, the old couple already had the great life. The younger couple - not yet. They just worked and save, no travel, nothing.

Both couples are stated to be healthy. But disaster can strike anytime, even for young people. I have read plenty of stories of people dying of terrible diseases before they reach 50, and indeed some even in their 30s.

So, the 50-ish couple can always say they have had 5 decades on earth, while there's no guarantee that the 30-ish couple will even make it to 50.

[youbet]

Quote:

Originally Posted by NW-Bound Both couples are stated to be healthy. But disaster can strike anytime, even for young people. I have read plenty of stories of people dying of terrible diseases before they reach 50, and indeed some even in their 30s or 40s. So, the 50-ish couple can always say they have had 5 decades on earth, while there's no guarantee that the 30-ish couple will even make it to 50.

You make an interesting argument that's it's better to be older than younger....... I wish I could buy into that, but at 68 yo, I can't.

Geezer - "I've had a nice life. It's mostly behind me now but no one can take the memories away from me so I'm glad I'm old and there is no risk that I'll have a short life."

Youngster - "The adventure of life is ahead of me, but gosh, I could die young. To avoid that risk, I wish I could just go to sleep and wake up old knowing that I survived to geezerhood!"

[ERD50]

Quote:

Originally Posted by youbet I love these "make 'em up as you go along" polls! I guess I'll vote for whichever couple you fantasize as having the best lives and retiring with the best chance of "surviving."

Then let's play!

I say one of the younger couple is the prodigy of Bill & Melinda Gates, and set to inherit the few % that isn't given to charity (which is still ~ 1B?)!

And I still want to know the story behind the extended "[ * ]" that trailed cyber888's posts for a long time (I think he was blaming the forum software?).

-ERD50

[Senator]

Quote:

Originally Posted by cyber888 1) First friend is 33 years old, the guy has $1.2 million dollars and 3 kids (below 12 years old), and he and his wife retires permanently. Yearly expenses is around $65,000. When they reach 62 or 63 - social security income is a bit small. They have 29-30 years to get any social security benefits.

If the $1.2M is in tax-deferred accounts, this couple has it made if they can keep their AGI income low.

[old woman]

The older couple has better odd since the young one has children, children have accidents and illnesses too so 5 people with something could go wrong. They might be able to cut expenses and once the kids are grown might be ok but the budget could blow. The older couple in 10 years would have spent 400K from savings but it might have investment returns and they probably have a home that will be paid off. Their main risk is when one dies and the other has to live on one SS check.

[harley]

Quote:

Originally Posted by Senator If the $1.2M is in tax-deferred accounts, this couple has it made if they can keep their AGI income low.

How? I must be missing something. Even leaving aside the difficulty of getting money out of tax deferred accounts at age 33, they will have to pay the normal 15% bracket on most of the withdrawals on the $65K, which is too high an amount to be safe anyway. If the money was in taxable accounts, they could play some games and minimize taxes, although the 5.42% WR is still too high to be safe.