For those that have retired with =>$5M in investable assets

[NW-Bound]

He was quite likely just jesting. So, we went along and contributed our own jokes. It's a good pastime to take one's mind off the market doldrums.

 

[audreyh1]

He was quite likely just jesting. So, we went along and contributed our own jokes. It's a good pastime to take one's mind off the market doldrums.

My assumption as well - at least tongue in cheek.

 

[ERD50]

OP seemed entertained rather than discouraged.

I lost track of who the Original Poster was.

-ERD50

 

[Lucantes]

if someone has a problem dealing with a little friendly sarcasm, I suspect they will have problems dealing with a lot of stuff.-ERD50

+1

 

[GravitySucks]

Ending up with more at year-end than when started IS THE PLAN of just about everyone on this forum.



Portfolio size isn't relevant, planning is.

Not me. The plan is to be down about 25% at 70 and SS starts. I'll be happy to blow through 60% over the next 13 years, then live off the maxed SS and the leftover.
Even if I end up with 10% plus SS at 70 I'll be okay.

Off topic enough?

 

[kcowan]

And ~ 1/2 the time you have as much buying power as when you started, and sometimes MUCH more.

-ERD50

That's no fun. We have to try harder to deplete it! So far, we have doing a poor job after 14 years, in spite of occasional market swoons.

 

[serie1926]

"Yes, the OP question certainly was peculiar. Inexperience perhaps."

Perhaps, but doubtful.

"OP seemed entertained rather than discouraged."

Actually, quite disappointed no one answered the question. Mostly folks trying to be funny.

So on and so on with other responses along the same lines.

My wife and are debating the $$$ number of our portfolio size as we get closer to FIRE. As most here, I believe, we LBOM (way below), but are struggling to say when is enough enough regardless of our detailed budget and 100% success rating.

 

[marko]

It is?

I thought it was for finding the point where your portfolio would be depleted if, and only if, the future was as bad as the worst of the past (depending what % historical success you used).

And with the default 95% success rate, that means that 95% of the historical time periods, your portfolio would not be depleted. And ~ 1/2 the time you have as much buying power as when you started, and sometimes MUCH more.

-ERD50

This is a good comment! I'd be interested to learn what others believe FC does or at least a confirmation.

If the above is true, it is news to me in a way. Something I sort of knew but hadn't had it spelled out so clearly.

Anyone?

 

[REWahoo]

This is a good comment! I'd be interested to learn what others believe FC does or at least a confirmation.

If the above is true, it is news to me in a way. Something I sort of knew but hadn't had it spelled out so clearly.

Anyone?

If you want confirmation, the best place to look is directly at the source: FIRECalc: How it works

If you get a "100% success rate" with what you have and what you plan to spend, this means that you would have been able to maintain your standard of living and not run out of money, despite the worst that we've ever seen, including the Great Depression. A lesser success rate helps you assess the risk of retiring with what you have and what you plan to spend.

 

[NW-Bound]

... My wife and are debating the $$$ number of our portfolio size as we get closer to FIRE. As most here, I believe, we LBOM (way below), but are struggling to say when is enough enough regardless of our detailed budget and 100% success rating.

Your original question is

For those that have retired with =>$5M in investable assets

How is your budget working out?

Curious to know if you end up with more money at year-end or shortfall?

There have been years that the market goes down. If you go 100% in bonds, that is also true. And even if you hold 100% cash, you will lose due to inflation.

So, it does not matter how much you spend out of your stash, there's no guarantee that you will have more money at year end. It is true whether you spend $0 out of $100K or $5M.

Of course, if you are a good stock picker, there are always some stocks that go up while the other 99% go down. Or you can be a good market timer and short stocks at the right moment. Failing the above, for longer periods, people rely on past average market returns, or in FIRECalc case, past worst case market returns over their expected remaining life, typically 30 years.

 

[Danmar]

Ignore it? How would that be "best"?

How can anyone learn unless it is pointed out that the question itself is off the mark?

I recently started perusing a technical forum, and a common response to an odd question is "A well phrased question is half answered". I take that to mean that if you have really thought about the question, that at least some of the answer will become evident. Then people can help fill in the missing pieces. But if you just throw out a question, w/o really thinking about it, you aren't even ready to absorb the answers.

PS - And if someone has a problem dealing with a little friendly sarcasm, I suspect they will have problems dealing with a lot of stuff.

-ERD50

Actually, Rodi's response was the best. The sarcasm didn't seem all that friendly. Sarcasm seldom is. The OP didn't seem entertained according to his post #82? Anyway, we move on.

 

[Travelwanted]

"Yes, the OP question certainly was peculiar. Inexperience perhaps."

Perhaps, but doubtful.

"OP seemed entertained rather than discouraged."

Actually, quite disappointed no one answered the question. Mostly folks trying to be funny.

So on and so on with other responses along the same lines.

My wife and are debating the $$$ number of our portfolio size as we get closer to FIRE. As most here, I believe, we LBOM (way below), but are struggling to say when is enough enough regardless of our detailed budget and 100% success rating.

Ok, I'll bite.

Ultimately the number is relative only to your spend rate/WR rate. If you have 5 or 10 or 100 million, what matters is how you invest it and what % you spend.

Only you can decide your comfort spending rate. If you have $5 mil in
investable assets (not NW) and can live on 150k per year (including taxes) or less I would be comfortable with that...but that is me. Obviously that's </=3%. Keep in mind this number moves with age in my opinion. My personal goal is about 2% wr.

If you are LBYM as you suggest, my belief is you will be fine as if things go south with investments you will take the appropriate tightening steps required. Mentality and knowledge are just as important as the hard numbers.

 

[kaudrey]

Now that you actually framed the question, you'll likely get more serious answers. A SWF is about 4%, historically. Many on these boards suggest 3% or 3.5%, especially if you plan for a 40 year or longer retirement (depending on your age). If you have a budget and stick to it (or have a plan and stick to it, if you use variable withdrawal rates or other methodologies), is what matters.


The ending value of your portfolio each year really doesn't matter - the stock market will go up and down in any given year, and the goal really shouldn't be to have a larger portfolio each year. It should be to ensure you have enough money when you are 90 to still be living OK.


As others were trying to say, whether you have $1M or $5M or $50M, what matters is your withdrawal rate and you plan - the $ amount you listed doesn't change the discussion -except that maybe you have more discretionary expenses if you are spending $200K a year vs. $40K a year, in which case you have LOTS of wiggle room to cut expenses if things go south somehow.

 

[scrinch]

My wife and are debating the $$$ number of our portfolio size as we get closer to FIRE. As most here, I believe, we LBOM (way below), but are struggling to say when is enough enough regardless of our detailed budget and 100% success rating.

serie1926, we're in about the same spot you and your wife are in. My DW is mostly Scottish, and regardless of uniformly successful future projections, she has a very hard time walking away from a salary. It's not a rational fear, but it's something we have to find some way to deal with. I understand your desire to be reassured by success cases that are similar to yours. I was hoping I might be able to point one or two out to my DW also.

Sent from my XT1254 using Tapatalk

 

[Joylush]

How is your budget working out?

Curious to know if you end up with more money at year-end or shortfall?

Thanks in advance!

I end up with more at year end. Trying to figure out how to practically give some away.

 

[meierlde]

Of course the real question about the LA example is if your living off assets and not working why live there, (or any high cost area in the US). Unless it is the climate, and they you are paying for it thru the housing cost. (I am not talking about living outside the US but there are far cheaper areas for housing in the US in particular in smaller towns) Now that amazon is carrying so much there is no longer a need to go to the big city to shop as long as you live where UPS or the USPS delivers. I suspect that one might even find the big island of Hi cheaper and with a similar climate.
So the guy with $5 mill who lives in la and does not have to live there for work, pays extra for the privilege.

 

[hnzw_rui]

Of course the real question about the LA example is if your living off assets and not working why live there, (or any high cost area in the US). Unless it is the climate, and they you are paying for it thru the housing cost. (I am not talking about living outside the US but there are far cheaper areas for housing in the US in particular in smaller towns) Now that amazon is carrying so much there is no longer a need to go to the big city to shop as long as you live where UPS or the USPS delivers. I suspect that one might even find the big island of Hi cheaper and with a similar climate.
So the guy with $5 mill who lives in la and does not have to live there for work, pays extra for the privilege.

Hawaii is around the same or slightly higher cost of living as Los Angeles. That said, few cities in the US are more expensive (e.g. San Francisco, New York, etc).

If you don't have to choose housing based on commute time from work, etc, it's possible to spend less on housing even in LA. Mind, if the mortgage is already paid off, then Prop 13 is very helpful.

 

[imoldernu]

About 1/10th of the cited $$$ has sustained us in retirement for nearly 27 years, with no hardship involved.

 

[marko]

About 1/10th of the cited $$$ has sustained us in retirement for nearly 27 years, with no hardship involved.

Imoldernu!! Welcome back! You had a few of us wondering where you went.

 

[marko]

If you want confirmation, the best place to look is directly at the source: FIRECalc: How it works

Thanks! Again, one of those things I knew sort of subliminally but had not really thought about linearly. I suppose it does hit you visually when you look at your personal chart and see '2 out of 3500' simulations going negative.

 

[rrppve]

Well just to play devil's advocate. Let's say youre 30 and live in social.

5m at 2% is 100k.
That's 8300/mo.
Almost impossible to find a house in a non high crime area in the LA region for under a million. So that's about 4500/mo. I'm talking 2000 sqft with a 5500 sqft yard in an ok neighbourhood .

So that leaves 4k.
Take 1k for health insurance.
Take 500 for food.
500 for bills.
Maybe 500 for taxes.
And 500 for fun stuff.

That leaves about 1k/month for buffer which is pretty good but you're not renting private jets or even flying first class more than once a year .

Now take that same amount and move to south Carolina where you can buy a better house in a similar neighbourhood for 800/mo.

Sent from my HTC One_M8 using Early Retirement Forum mobile app

At least this is a productive start. For SoCal family these numbers are actually light.
Health insurance runs 1500/mo
Oop medical 500/mo
Car insurance 200 w/kids
Home insurance 100
Umbrella insurance 100 (gotta protect those assets)
Property tax 700
Grocery runs 1000
Restaurants 500-1000
Housekeeper, gardener, etc. 1000
House maintenance 250
Car maintenance 250
Car replacement fund 1000 (2 cars every 5 years)
Mutual fund fees 425 @10 bps
Travel 1000

So that's about $7k in additional monthly expenses including some hidden expenses that should be included in the withdrawal rate

I always get a kick out of the live off of <$50k threads, but it is not realistic in a decent area if SoCal. Big difference between here and the Midwest or South

 

[papadad111]

At least this is a productive start. For SoCal family these numbers are actually light.

Health insurance runs 1500/mo

Oop medical 500/mo

Car insurance 200 w/kids

Home insurance 100

Umbrella insurance 100 (gotta protect those assets)

Property tax 700

Grocery runs 1000

Restaurants 500-1000

Housekeeper, gardener, etc. 1000

House maintenance 250

Car maintenance 250

Car replacement fund 1000 (2 cars every 5 years)

Mutual fund fees 425 @10 bps

Travel 1000



So that's about $7k in additional monthly expenses including some hidden expenses that should be included in the withdrawal rate



I always get a kick out of the live off of <$50k threads, but it is not realistic in a decent area if SoCal. Big difference between here and the Midwest or South

Most costs are actually quite similar except for major lifestyle differences:

I get a kick out of someone who spends 1000 on a gardener and law care for their 5000 sq foot lawn and a maid to clean up after themselves...

250 per month on very basic car maintenance on the 4 or 5 year old car isn't necessary unless you're paying 40 or 50 bucks on an oil change or tire rotation... We DIY here in the Midwest. Even on the west coast we did basic maintenance in the driveway.

Really spend 1000 bucks to eat in restaurants? . 1x per week for family of 4 is our max budget .. 100 bucks or less per visit.

Oh and 5 out of our 6 cars are at least 10 years old ...just one is new... so that sinking fund can be a lot smaller too.

1000 per month on travel is a lot of travel. family of 4 traveling internationally from the USA for the holidays might be 6K on a nice trip including international airfare. You must be traveling far, often, and staying in high high end places.

Like I said. Lifestyle and keeping up with the neighbors are the likely differences.

 

[rodi]

At least this is a productive start. For SoCal family these numbers are actually light.
Health insurance runs 1500/mo
Oop medical 500/mo
Car insurance 200 w/kids
Home insurance 100
Umbrella insurance 100 (gotta protect those assets)
Property tax 700
Grocery runs 1000
Restaurants 500-1000
Housekeeper, gardener, etc. 1000
House maintenance 250
Car maintenance 250
Car replacement fund 1000 (2 cars every 5 years)
Mutual fund fees 425 @10 bps
Travel 1000

So that's about $7k in additional monthly expenses including some hidden expenses that should be included in the withdrawal rate

I always get a kick out of the live off of <$50k threads, but it is not realistic in a decent area if SoCal. Big difference between here and the Midwest or South

Are these all *additional* expenses for living in SoCal? Or are they the full expenses?

I live in a very nice part of San Diego in overpriced housing. (My mortgage is paid off, though). I don't see why anyone would pay $1000/month *MORE* for gardening and housekeeping in SoCal. The Insurance/OOP figures sound about right for the FULL insurance/oop... not additions for SoCal. (Note - NorCAL does pay a premium in insurance... SoCal is probably below national averages in insurance.)

I am "La Jolla Adjacent" (in a zip code that adjoins 92037) and in a top school cluster. I don't have $5M so I'm not qualified for that - but FWIW - our budget is $7k/month in this pricey area with 2 kids. The three big things that hit folks in SoCal is real estate prices, fuel prices, and taxes (property/sales/income). That other stuff should not be more expensive for SoCal.

This is not intended to discount the OP, just this specific quoted post. I'm trying to bring in my personal data of someone who lives quite nicely in SoCal on a much smaller budget.

 

[NW-Bound]

FWIW, the OP, Serie1926, shows on his profile that he lives in Texas.

But, regardless, if it takes that much to live in CA, Southern or Northern, it does not matter, then how do most of Californians afford to live there? The majority of them must be living in slums and eat ramen year round (ramen is cheaper than cat food).

 

[LOL!]

I get a kick out of someone who spends 1000 on a gardener and law care for their 5000 sq foot lawn and a maid to clean up after themselves...

250 per month on very basic car maintenance on the 4 or 5 year old car isn't necessary unless you're paying 40 or 50 bucks on an oil change or tire rotation... We DIY here in the Midwest. Even on the west coast we did basic maintenance in the driveway.

Really spend 1000 bucks to eat in restaurants? . 1x per week for family of 4 is our max budget .. 100 bucks or less per visit.

We have maids that cost less than $150 per month. We do our own lawn care. My octagenarian neighbors do not do their own lawn care.

Car maintenance so far has been $100 a year which includes inspection sticker and oil change (tire rotation comes with oil change) for the past 2 years. Newer cars just don't need much maintenance. Maybe they get their car detailed / cleaned every week? Sure one needs to replace tires and battery every few years or so, but not every month.

I can see eating out a lot. If you have the money, then why not? One can easily find great nutritious meals in good restaurants. We are not talking about all-you-can eat pasta nor fast food places.