Major Tom
Thinks s/he gets paid by the post
Hi, my name is Tom and I'm an INTJ. Oh, not much of a revelation here, sorry 
I first became interested in the idea of saving for retirement in my late 20's. I say saving rather than investing because at the time, that's what it was. I opened an IRA with my bank, put all the money into a money market fund, and after a year or two, couldn't figure out why I wasn't accumulating much in the way of growth. That was the point at which I realized that although putting money into an IRA was a good first step, I needed to work out how to make it beat inflation and then some.
I won't bore you with the details but 20 years later after fiddling around with IRA's, a 401(K) and some real estate investments, I have $400K divided between stocks, bonds and about 3 years living expenses in a high-interest savings account. $400K isn't a fortune but considering that my wages were around 35-40K/year and that I'm 46 years old, it's not a bad sum.
Initially, my goal was to get to the age of around 60 with enough money to retire and not have to live in a tin shack eating cold beans out of a can. In other words, I was motivated to save by fear. At some point, it occurred to me that I might be able to achieve some form of early retirement, either by finding some stunning investment, or by reducing my living expenses, or by a combination of the two.
Then just over a year ago, the company I had worked for for 16 years went out of business and I was laid off. The industry I was in has downsized a lot and isn't coming back, so I have to figure out a new way to make money.
Here's where it gets good. My bare minimum cost of living per month is:
Rent inc utilities $640
Food (inc occasional cheap meal out) $300
Landline/DSL $30
Netflix $20
Bicycle maintenance $20 (estimate)
Total $1010
These are my bare bones costs. I know from past experience that I can live very comfortably on a net income of $1600/month and am confident that I could happily get by on around $1300.
A quick spin with Firecalc tells me that if I wanted, I could start drawing $1100/month from my investments for the rest of my life. After capital gains taxes, that is almost enough for me to just survive. A part-time job bringing in a few hundred a month will allow me to live comfortably. If the worst-case scenario doesn't happen, maybe the portfolio will even grow a little
I might live like this for a while until I come across a way of supporting myself full-time that I like. At that point I could stop drawing on my investments, and perhaps even start adding to them again. If I never find another full-time gig that I like, it's good to know that I don't have to make much from a part-time job to get me through. If I never work again, I should still get around $800/month from SS at age 62 to supplement my investment income.
The one possible problem with this plan is that I have no health insurance. No-one will cover me as I have a touch of osteoarthritis in my knee, so I'm hoping that once the healthcare reforms kick in I'll be able to find affordable coverage. I did have the option to buy coverage under HIPAA, but it was going to cost almost $600/month - too much for my budget.
The great thing is that although I don't know what the future will hold, I am very glad that I saved. As I mentioned before, $400K isn't a fortune, but it does give me options. Whenever I talk to people about the benefits of saving, I try to emphasize that the best thing about having some dosh stashed away isn't that it means you can buy more things; it's the fact that it gives you more options and that, as the ads say, is priceless.
Apologies for the ramble!
I first became interested in the idea of saving for retirement in my late 20's. I say saving rather than investing because at the time, that's what it was. I opened an IRA with my bank, put all the money into a money market fund, and after a year or two, couldn't figure out why I wasn't accumulating much in the way of growth. That was the point at which I realized that although putting money into an IRA was a good first step, I needed to work out how to make it beat inflation and then some.
I won't bore you with the details but 20 years later after fiddling around with IRA's, a 401(K) and some real estate investments, I have $400K divided between stocks, bonds and about 3 years living expenses in a high-interest savings account. $400K isn't a fortune but considering that my wages were around 35-40K/year and that I'm 46 years old, it's not a bad sum.
Initially, my goal was to get to the age of around 60 with enough money to retire and not have to live in a tin shack eating cold beans out of a can. In other words, I was motivated to save by fear. At some point, it occurred to me that I might be able to achieve some form of early retirement, either by finding some stunning investment, or by reducing my living expenses, or by a combination of the two.
Then just over a year ago, the company I had worked for for 16 years went out of business and I was laid off. The industry I was in has downsized a lot and isn't coming back, so I have to figure out a new way to make money.
Here's where it gets good. My bare minimum cost of living per month is:
Rent inc utilities $640
Food (inc occasional cheap meal out) $300
Landline/DSL $30
Netflix $20
Bicycle maintenance $20 (estimate)
Total $1010
These are my bare bones costs. I know from past experience that I can live very comfortably on a net income of $1600/month and am confident that I could happily get by on around $1300.
A quick spin with Firecalc tells me that if I wanted, I could start drawing $1100/month from my investments for the rest of my life. After capital gains taxes, that is almost enough for me to just survive. A part-time job bringing in a few hundred a month will allow me to live comfortably. If the worst-case scenario doesn't happen, maybe the portfolio will even grow a little
I might live like this for a while until I come across a way of supporting myself full-time that I like. At that point I could stop drawing on my investments, and perhaps even start adding to them again. If I never find another full-time gig that I like, it's good to know that I don't have to make much from a part-time job to get me through. If I never work again, I should still get around $800/month from SS at age 62 to supplement my investment income.
The one possible problem with this plan is that I have no health insurance. No-one will cover me as I have a touch of osteoarthritis in my knee, so I'm hoping that once the healthcare reforms kick in I'll be able to find affordable coverage. I did have the option to buy coverage under HIPAA, but it was going to cost almost $600/month - too much for my budget.
The great thing is that although I don't know what the future will hold, I am very glad that I saved. As I mentioned before, $400K isn't a fortune, but it does give me options. Whenever I talk to people about the benefits of saving, I try to emphasize that the best thing about having some dosh stashed away isn't that it means you can buy more things; it's the fact that it gives you more options and that, as the ads say, is priceless.
Apologies for the ramble!
