Is $1million enough

[nun]

Here's the scoop

45 years old, single, sold the house and now I have $500k in after tax and $500k in tax deferred investments.
I can move pretty much anywhere and I'm frugal in my lifesytle.

Has anyone ERed on this and if so what were your strategies.

 

[Dawg52]

The old question of 'how much is enough?' I'm sure it can be done but obviously it depends on your lifestyle and budget. Only you can decide if its enough. Good luck!

 

[brewer12345]

You are frugal and mobile, which means that you can almost certainly manage. But I think you'll have to solve one big problem: health insurance. Crack that nut, and you should be home free.

 

[Mr._johngalt]

Here's the scoop

45 years old, single, sold the house and now I have $500k in after tax and $500k in tax deferred investments.
I can move pretty much anywhere and I'm frugal in my lifesytle.

Has anyone ERed on this and if so what were your strategies.

 

[nun]

You are frugal and mobile, which means that you can almost certainly manage. But I think you'll have to solve one big problem: health insurance. Crack that nut, and you should be home free.

I'm in a position where I can move to Europe which would solve the heathcare issues, but probably limit my spending
power given exchange rate and othe cost of living issues.

 

[brewer12345]

I'm in a position where I can move to Europe which would solve the heathcare issues, but probably limit my spending
power given exchange rate and othe cost of living issues.

Again, depends on your lifestyle and location. I think there are parts of Eastern Europe taht are very cheap place to live: Czech (less so), Slovakia, Croatia, etc. I hear the Dalmatian coast is very nice. You could also try Greece. If Malta ever makes it into the EU (put your left foot in, put your left foot out...), its a very pleasant place to live that is pretty iexpensive.

Currencies I wouldn't get too excited about either. It is pretty easy to invest in Euro or other foreign currency denominated stuff.

 

[GMueller]

This has been discussed before. You might want to take a look at this thread: http://early-retirement.org/forums/index.php?topic=1494.0. $1M, without any other assets to rely upon, wouldn't fall within my comfort zone. But, that's just reflects my own situation . . . perhaps you feel more comfortable taking risks than I do. Good luck!

 

[MJ]

It depends on your lifestyle requirement and how far you are from your ss payments.
Live on $40k, in Thailand, live like a queen, in France, live like a nun.
If you feel comfortable enough to live on $40k before taxes (w/o ss), yes you can.

 

[Mach1]

Like others have said, it depends on your lifestyle and where you want to live. According to the us census the average family income is 45K, in your case being single using the 4% SWR it gives you 40K a year, I'll yes you can. Good luck.

Mach1

 

[Sam]

nun,

In my opinion, it's MORE than enough.  With 40K a year, you can live ANYWHERE you want in the world.

The real question is whether you want to do it.  Only you have the answer.

From http://www.washingtonpost.com/wp-dyn/content/article/2006/10/19/AR2006101901137.html
In 2006, the U.S. government drew the poverty line at $20,000 annually for a family of four, or a little more than $1,600 a month.

You are single, 1/4 of the above family.  Your income is 40K, twice as much.  What are you worrying about?  Plus in your very first post, you stated that your current monthly expense is $1,500.

Best of luck and congratulations on your wealth.

 

[youbet]

Here's the scoop

I'm frugal in my lifesytle.

Yeah, but what makes ya happy? When do you feel like you're having an adventure? What excites you?

Just hunkering down and living frugally wouldn't do much for me. But you can have a lot of fun on the cheap if your personality allows it. What's calling out to you? If you're contemplating ER to escape from something, that's bad. ER to go have some fun, that's good!

1. Solve the hospitalization insurance problem
2. Listen to yourself and determine how you want to spend your time.
3. There are lots of fun adventures to have involving part time work or volunteer work that provides room and board.
3. Don't run away from anything. Run towards what you want.

 

[maddythebeagle]

I am sure you could do it with less....get a working spouse or a government pension or even better marry somebody with a government pension

seriously, lots of people live on nothing more than social security....albeit, their health care is less of an issue...

 

[jeff2006]

Here's the scoop

45 years old, single, sold the house and now I have $500k in after tax and $500k in tax deferred investments.
I can move pretty much anywhere and I'm frugal in my lifesytle.

Has anyone ERed on this and if so what were your strategies.

Presuming that this post is not a put-on . . . OP would probably gain a lot of useful info from Bob Clyatt's book (Work Less, Live More), although the book is a little lite on the health insurance question

 

[tryan]

With 40K a year, you can live ANYWHERE you want in the world.

Not in the northeast (US) .... 15% federal and 5% state taxes leave you with 32K; healthcare will run 1k/mo ; a studio apt with utilities another 1k/mo; forget the car you can't afford the insurance (1k/year) .... Leaves you about 5-6k to eat, cloth and entertain yourself for the year.

Not my idea of FIRE.

 

[poyet]

Brewer,

A couple of addition to what you've said from a EU standpoint (as you know I'm French). There are some cheap places to live in eastern europe, that's correct, but not any longer on the dalmatian coast or in croatia. Prices have gone up as it it undoubtedly very nice. As far as Malta is concerned, it is a EU member state since 2004 though the currency does not seem to be the Euro (malta pounds) yet. As far as currencies are concerned I would not purchase Euros at the current exchange rate. Equivalence of products and services is around 1.1 and I would only start to by Euros from thereof. As you know I do the opposite and keep purchasing USD (better say stocks or assets denominated in USD) with my Euros as long as the Euro is above 1.1. I've been doing that for two (3?) years now and keep building up the position. But I've also a longer standpoint as I will not necessarily remain in Europe.

 

[donheff]

Not in the northeast (US) .... 15% federal and 5% state taxes leave you with 32K; healthcare will run 1k/mo ; a studio apt with utilities another 1k/mo; forget the car you can't afford the insurance (1k/year) .... Leaves you about 5-6k to eat, cloth and entertain yourself for the year.

Not my idea of FIRE.

Not even close. You just took away 20% of his total income. He will be in 15% bracket but won't pay anything close to your 20% overall even if every penny he pulled out was taxed as regular income. Don't forget the standard deduction and the initial 10% bracket.

Also, keep in mind 50% of his nest egg is already taxed. Since he says he just sold his house and we recently came out of a fall there are probably very few capital gains in that chunk of money right now. I'll bet he pays closer to 1.5%-4% on the taxed funds he withdraws initially, gradually increasing as the years go by.

 

[modhatter]

If he wants to live WELL on $40,000 a year, I think Sorth Central America is a much better bet. Either Argentina or Ecuador (can really live well in Ecudor) or perhaps even Panama.

I think the key work here is "WELL" Of course this would necessitate learning a new language. But many do.

 

[heyyou]

Go for it. You will have to move away from where you made that kind of money. Spend some time looking for a low cost place to live. I want to live frugal near a warm beach until I get bored with it, then move on to whatever looks good. Both Panama and rural parts of the Southwestern US have a dollar denominated currency with English as a second language. Somewhere latitude meets elevation with your favorite weather. Medical care is most expensive in the US. Maintaining your good health is your next good investment. Choose a place that is conducive to healthy food and exercise. I liked a previous post about living within walking distance of a Super-Walmart (eye care, haircuts, and bank besides groceries and hardware). I would want proximity to a library. Plan B is to try ER and if you don't like it, you can go back to work doing anything until you are ready to retire. You are FI (financially independent) whether you stop working or not. If I read the 2006 Fairmark tables right, $40k income, Single filer with 8450 deduc & exemp, owes $4220 on 30,650 and $225 on the last 900. The effective rate is 11.1%, the marginal rate it 25%. As a US citizen you pay US income taxes regardless of where you live. Overseas income has different rules.

 

[RockMiner]

On an old thread I proposed defining generic ER for a couple 50 yrs of age as $1MM liquid, plus cars and a house all paid for.

FWIW there weren't too many takers at that time though it still seems doable.

 

[Calgary_Girl]

Brewer,

A couple of addition to what you've said from a EU standpoint (as you know I'm French). There are some cheap places to live in eastern europe, that's correct, but not any longer on the dalmatian coast or in croatia. Prices have gone up as it it undoubtedly very nice.

Have to agree. My family is from Croatia and my remaining relatives there are constantly complaining how inflation (especially over the past couple of years) is taking its toll.

 

[astromeria]

My son, a single teacher, lives in a nice town in Eastern Massachusetts and only this year hit $45K in income. He does have subsidized health insurance (IIRC he pays $100/mo plus copays). He also has 11% of his paycheck swooped off into the MA Teacher's Pension Fund. On what;s left, he lives in a small but OK 1-BR apartment in cute downtown Walpole, a 5-minute walk from the commuter train station, supermarket, drug store, Chinese restaurant(!), etc. Over the 5+ years he's been out of school (and never working a second job or during the summer), he saved $20,000. He travels in the summer--camping, Europe, my house--wherever. He says he's not doing without a thing he wants (other than his own condo, but that's coming).

Now if you need to live in a pretty, 3-BR single-family home in an upscale burb or apt in Boston, $40k might be a stretch without roomies.

 

[nun]

Also, keep in mind 50% of his nest egg is already taxed. Since he says he just sold his house and we recently came out of a fall there are probably very few capital gains in that chunk of money right now. I'll bet he pays closer to 1.5%-4% on the taxed funds he withdraws initially, gradually increasing as the years go by.

Thanks for the comments, its interesting to see how people's expectations and opinions differ. I realize that to do this I'll be living on a lot less than most folks, but I think I can do it by getting a small place to live (under $200k) and maybe doing some seasonal work - always wanted to be Santa Claus.
The after tax money is truely after tax, free and clear in 75% in index funds, 25% in MM/CDs. I've accounted for the capital gains on the house money.

 

[Sam]

On an old thread I proposed defining generic ER for a couple 50 yrs of age as $1MM liquid, plus cars and a house all paid for.

FWIW there weren't too many takers at that time though it still seems doable.

Doable is understatement. I believe there were many silent takers. The ones who voiced their disagreements will probably continue to do so with $2MM, 3MM, or even more.

 

[unclemick]

1993 - 300k his and her's plus a duplex cranking out 6k/yr rent. No health insurance.

Really really cheap bastardhood and 0ne yr temp work AND Mr Market in the 90's allowed crossing 1mil around 1998,99, 2000 - not exactly sure.

Wouldn't look pretty on a spreadsheet in hindsight - but compared to work - ER was more better.

Post Katrina - right at 1 mil plus small pension plus early SS. Yes - and BC/BS health insurance.

Sort of miss the good old days when I was really cheap. Salvation Army is still my favorite clothing store - Walmart is second.

heh heh heh heh heh heh - more than one way to skin a cat.

 

[Cut-Throat]

The number is different for everybody.

Here is the formula I came up with.

(( Bare Bones annual spending * 2) - Annual Pension Amt) * 25 = NEST EGG

This will give you flexibility to cut spending during a market downturn. - The flexibility is the (*2) part!

So for example you decide that $20,000 would cover all the necessities for the year. Food, Clothing, Taxes, Insurance, Shelter, Transportation. And that you received a $10K pension per year.

((20K * 2) - 10K ) * 25 = $750K