Low NW FIRE

[FANOFJESUS]

This is pretty close to my situation too. I forget the exact dollar amounts but, IIRC, I had ~$640K on beginning portfolio withdrawals in 2011 at the age of 47. Current portfolio balance is $860k, even though I have been withdrawing from it for the last 6 years. If I claim SS early at 62, I'll have an extra 1k/month. It's not a fortune, but considering I'm currently living on $18K/yr, a useful extra amount of income. Also, as I age, I may feel comfortable increasing the WR a little above it's current level of ~2.1%. There are times when I think about how much more money I would have, had I continued to work and save, and how it would be easier to afford such things as travel and other extras but, truth be told, I have always been good at doing without things - perhaps a little too good.

I rent a small studio in a high COL area (the SF Bay area). Rent is $651/month. Transport is a 20 year-old bicycle, along with the excellent public transport here. I wear pajamas a lot of the time, but remember to put clothes on when I go out No cable TV or other pricey subscriptions. Cheap cell phone ($12/month), and cheap basic speed DSL. Healthcare costs me nothing out of pocket, as I am on Medicaid due to low income. If my income goes over the threshold, an ACA subsidy should still help a lot. There's a palm tree right outside my bay window which, with it's squirrels and birds, makes great kitty TV. When I've had a glass of wine, I've been known to put my feet up on the sofa and stare at it too, along with my 3 furry gals. It's cheap entertainment

Many would feel uncomfortable retiring without owning a home, but I'm adaptable. My rent is way below market rate, and I am open to moving outside the area if the high rents force me out. In fact, I'm almost willing it to happen, as it would be a good excuse to purchase a used RV and hit the road. Lots of boondocking, of course, to keep costs down.

Of course, had the market tanked again shortly after I retired, my story might be different. Still time for things to go wrong though. We'll see

$651 a moth would also buy a house in the Midwest but we can not match your weather.

 

[razztazz]

When i retired the market value of the small pension, the imputed market value of ex-employer provided medical insurance, plus my own stash all together came in under about 750-800 thou.

 

[brucethebroker]

OP here. Wanted this topic to roll a little before checking in....

The comment about adding pensions/SS to NW is valid. Our NW is quite a bit less than 750k, but SS figured in as a comparable asset still leaves us under $1M. We are low mortgage, no car payment, single car living in a Low Cost of living area. We travel and spend winters down south in our condo, so don't feel neglected. I have a PT hobby job that pays about 1/2 of our basic expenses. Some will argue that we are not "retired", nor FI but I would argue. I w*rk only because I enjoy it-not because we need it.

I just got back from the county assessor where I filed for the "low income" senior citizen property tax reduction. Like most government programs, they focus on income, not assets. And, of course, that includes ACA.

This is the ONLY forum where people like us would not sound like we are trying to brag (due to the NW of many here). My reason to start this thread was to encourage those with no hope of Multi-millions of NW (as promoted by our media for a successful retirement). You can do it on much, much less.

The comments are great. Thanks for the continued input.

 

[Mulligan]

I have a friend who just retired this year at 53 with a couple thousand bucks, no house, no Social Security...Oh wait I forgot to add, they are over 6 figures in annual pension income. They will be fine.

 

[dvalley]

I think it depends on:

1.Your retirement age (retiring at 40 with $800K is very different than retiring at 60 with the same amount.
2. Your health today and prospects in the future
3. Your monthly expenses (low cost of living area, paid for house, inexpensive hobbies all will go long ways to live comfortably on less)

 

[Floridatennisplayer]

When you say NW, are you including your home value minus it’s debt if any? I never understood people throwing in their home values to this. You can’t spend your home value.

 

[Fermion]

When you say NW, are you including your home value minus it’s debt if any? I never understood people throwing in their home values to this. You can’t spend your home value.

We sold our home and are spending it now. Who says you can't spend your home

 

[Walt34]

After a discussion with a 50ish friend who feels he can never retire due his low NW, I was wondering how many here have FIREd on less than a million in invest able Net Worth? Why not tell us how? Low expenses? Low COL area?

Not too hard, I picked a job and employer that had what I suppose is now considered a "Cadillac plan" - 100% COLA, heavily subsidized health insurance (becomes secondary to Medicare at 65 for both of us) which probably has a net present value of well over $1 million. When I applied for the job I was 22 years old. Who thinks about retirement at that age? So while our NW is well under a million if we both checked out next week, our house & vehicles are paid for and we have zero debt other than credit cards that we pay off in full every month, we are comfortable. We don't anticipate taking any round-the-world cruises, but then again, neither one of us wants that.

BTW, the plan I'm under no longer exists except for those who like me were grandfathered in when it was changed in the mid 1980's. It has since been modified a couple more times and now bears little resemblance to the one offered in 1973 when I was hired. Presumably my former employer is eagerly anticipating my demise.

I bookmarked the following thread because I think it is so neat that this guy, despite having what he describes as a modest income, planned ahead and is well on track for a comfortable, while not luxurious, retirement: http://www.early-retirement.org/for...aiming-at-fire-in-a-few-more-years-72212.html

He shows that even with a low income, it can be done.

 

[CoolRich59]

I don't know how many 1%ers are on here, but boatloads of 5%ers, for sure. It sure is depressing at times, reading these very high NWs, at such young ages. But then, I WILL be retiring earlier than I thought, in 30 months, with much more income than I thought, and no healthcare cost issues, so I glean what I can from the helpful here.

Not to hijack this thread (and I take no credit for this piece of wisdom), but, while I hear what you're saying, you should take comfort that you will be retiring early. That's what counts.

EDIT: I went back and found the post I was thinking of and, to my surprise, it came from the OP - brucethebroker

In one of my threads, I had said I could kick myself about not being more disciplined in my spending. He replied:

At least you figured it out now, and not in another 5 years, or after a health scare....
Good luck.

That was great advice for me and (to the extent applicable) good advice in your case too, IMO.

// End thread drift //

 

[pb4uski]

It's all in the expenses. If you can live on $50k a year and have $25k coming in SS then using the 4% guideline you "only" need $625k to retire at SS age... earlier would require $50k/year more so if you had $825k you coudl retire at SS-4 years.

If you can live on $40k a year then you could retire even earlier all else being equal.

 

[LauAnn]

When I retired at 55, my house was paid off. I live in a low COL area and live off of $27,000 annually.

I used $240,000 to purchase a lifetime annuity which nets me $15,240 a year. This annuity amount is used to pay my necessities -- utilities, food, property taxes, car maintenance, internet, and insurance (home, health, and car.)

In addition, I budget $11,000 a year from $230,000 in savings. This $11,000 is used for travel, hobbies, golf, bowling, etc.

I plan to take SS at 62 in 3.5 years which will more than cover the $11,000 I currently spend from savings on discretionary items. From then on, the savings remaining will be used for inflation, major expenses such as new car, roof, and to award myself some "raises".

So ER can be achieved with $500,000. It helped a lot that my house was paid off.

 

[Just_Steve]

I retired with just over 100k in tax deferred accounts but and a big BUT is a pension and full no cost healthcare.
I get a check mid month from the tax deferred and the end of the month the pension check. The tax deferred was and is only a bridge fund until SS.

 

[Sunset]

When you say NW, are you including your home value minus it’s debt if any? I never understood people throwing in their home values to this. You can’t spend your home value.

It's pretty well known for folks in CA who bought a house many years ago to be sitting in a house with low property taxes and the value of the house to be over 1 million.

When some of them retire, they sell that CA house and move to NV or AZ or even AL , buy a house for 200K and put the 800K left over into the spending account....

 

[Ed B]

DH and I do have pensions which allowed us to retire with less. We could have continued to work and max retirement accounts, but focused on getting spending lower to retire earlier.

I plan to retire June 2018. At that time, barring a major market correction I will have just under half a million investable assets. But like pacergal I will have a decent pension (non-COLA), high deductible exoensive company sponsored healthcare, and DW is receiving SSDI of just under 12k per year.

In our case my relatively modest nestegg doesn't have to do the heavy lifting. I will draw about 6.5% of it per year until I start taking SocSec. I will retire at 58 so that could only be 4 years. But but if my investments do well enough that it won't drain the nestegg I will delay SocSec as long as possible to leave a larger survivor benefit for DW.

I am not counting on net worth so much as reliable revenue sources throughout retirement. Our home value will only come into play when I pass and DW needs to sell it and move to a small place that is easier to maintain.

 

[FANOFJESUS]

Less than 1M. I think the key is a lcol area. Paid for house and car. Try to keep that house and car a very low percent of your net worth. My house and car might be 15% of my net worth. I thought about going to a cheaper house but in the city as you do that the crime gets higher. Somewhere like the Midwest. My income is 18k but I can live on that.

No pension and no social security for many years. I forgot to add that.

 

[Koolau]

Back almost 20 years ago when I first started thinking about ER, I found this book: https://www.amazon.com/Get-Life-Dont-Million-Retire/dp/1413300847

Admittedly 20 years is a big difference, even though inflation has been relatively tame in the time period. Still, I got a lot out of the reading - realizing that I COULD retire early if I were willing to lower my expectations - especially concerning our current high COL choice of place to live. As it turned out, I was able to tough it out (even enjoying a solid 8 years of my w*rk - until I didn't). Now retired for 12 years, things are good, but I couldn't have made it to Paradise on less than a million.

As one of my back-up plans I have reasonably carefully investigated what it would cost to live in my old midwest stomping grounds. I feel certain i could do it with less than a million - especially if I throw in SS (leave out the modest pension I have).

Of course, since I haven't done it myself - only planned it in my mind - YMMV.

 

[Teacher Terry]

We each have a 20k pension and I work p.t. for 22k/year. So that is 62k without using our savings. Tiny mortgage of 650/month. We spend 10k/year traveling and go out so could cut back if needed.

 

[street]

People don't need a high NW to retire. Like most here have said it all comes down to your expenses. I know many people that aren't even close to 1M and are retired.

 

[FANOFJESUS]

My aunt retired on like 100k. Her SS covers 90% of what she needs so she has plenty of money.

 

[brucethebroker]

When you say NW, are you including your home value minus it’s debt if any? I never understood people throwing in their home values to this. You can’t spend your home value.

I used the term invest able NW, which I meant to not include home, vehicles, or personal property.

Yeah, hard to spend the home value without selling or borrowing against.

 

[brucethebroker]

People don't need a high NW to retire. Like most here have said it all comes down to your expenses. I know many people that aren't even close to 1M and are retired.

Do you know anything about their stories? Could be interesting...

 

[brucethebroker]

We each have a 20k pension and I work p.t. for 22k/year. So that is 62k without using our savings. Tiny mortgage of 650/month. We spend 10k/year traveling and go out so could cut back if needed.

How do you compare on the NW scale, if you don't mind...

 

[alaska55]

Retired 2014 at 59 and single with about $425k split 60/40 TIRA and taxable brokerage accounts no pension til 65 and its small. At 60 I inherited a period certain annuity of $550 a month that ends in 2021. I get my first SS check in about 2 weeks. My essential expenses are less than $1500 a month. The catch is I live in the Philippines. When I left the Philippines at 16 I sorta thought I would be back. I spent all of my first 16 year living in a territory(Alaska) or Japan and the Philippines. My annual budget is about 36K a year and I have everything I had in cold ass Nebraska and more. I fly back once a year to visit my boys in Portland Or. Oh by the way my account adds up to 470K now. According to firecalcu and I-orp I can spend 45K with 100% success rate.

Domo Arigato

 

[UnrealizedPotential]

I retired in 2016. I had enough of the working environment. Thought I would be able to do it another 5 years. Woke up one day and decided I would sell my condo and relocate. Which I did.

I never went back to work. Thought about it, but I am doing fine. My expenses are about 1k month,sometimes a little more, sometimes less. My investable assets is not 500k yet. Cheap expenses opens up possibilities. I am slowly ramping up my stock allocation. It was 26% in 2016, now it is over 30.6%.

I am adding money every month to my portfolio, and will eventually reach 35% stocks. By that time I should have over 500k by then. So if someone is willing to relocate and have between 400k to 500k, they can do the same.
Edited to add:Health insurance will continue to add to my monthly expenses, but I will save up to 6 months premiums and stay ahead of it so it won't have a big impact.That's the plan. I get a subsidy so that helps me.

 

[dvalley]

We should start a <$1M club here so it's easy to find inspiration from folks here who are living proof it can be done. I'd love to read their blog-style posts and see how they're doing.