Anyone here retiring with 1.5 - 2M, renting, and a LONG retirement?

[ivinsfan]

Quote:

Originally Posted by Out-to-Lunch In the earlier thread, the OP definitively stated that they presently have 8x expenses. She also restated her position more clearly at the end of the thread: https://www.early-retirement.org/for...ml#post2607762 The chief difference between that thread and this one is that the present one completely discounts the value of SS and the pension, assumimg both will be gone.

I think the OP has her head spinning with the concern of lifetime care for a special needs child. It has to beyond stressful to have that on your shoulders.


But you can't plan every outcome with the worst possible scenario. SS will not be gone, it might very well lose some if it's spending power, but it won't be gone.



If the OP could restate her goal more clearly it's not her retirement that needs to lasts 45 plus year. They want to fund retirement for their natural lives and have enough left over to care for their son for his natural life. Now the government has many many programs in place for adult special needs people so they won't need to fund every penny of that expense. I don't think they could even if they felt compelled to do that.



Those are actually two separate goals and it might be less stressful to approach them separately.



The can't care for their child unless they have a safe comfortable place to live and money for their own everyday expenses. Break that off first and then see what the numbers look like. Is there money for last to die insurance policy? Is it smarter to own a home that can be sold to pay their childs expenses? Where do they want to live keeping in mind that something LCOL areas offer less in the way of social benefits and money for the adult disabled.



OP hang with us we want to talk you through this.

[rodi]

Quote:

Originally Posted by RetiredHappy Look under the thread created by OP called "4% rule." https://www.early-retirement.org/for...le-109209.html

Thanks for posting that, RetiredHappy - gives a somewhat clearer picture.

Based on that thread I see she does not plan for her husband to retire till 15 years from now or so. And her main concern is taking care of her son with a special needs trust.

As was mentioned in that thread, life insurance might be a good way to handle the needs of her son when she and her husband pass.

The biggest difference between this thread and the previous, linked above, thread is the elimination of pension and SS.

So the question of whether 1.5-2M is enough, *again*, comes back to spending. Previous thread suggested pension, SS, and dividends would cover retirement expenses. Now she appears to be looking at just nest egg withdrawals. Again - it all comes down to spending. If the withdrawal rate is greater than the portfolio can support over a long period, the plan will fail. If the withdrawal rate is smaller, it can be sustainable eternally. (Barring the dreaded meteor strike, lol.) Rent is part of the spending that must be supported by whatever source (pension, ss, withdrawal from investments). The fact that it's rent, not a mortgage payment makes no difference... it's just an expense that must be included in the plan.

[Dtail]

Totally not including any pension or SS just doesn't really make sense.

OP - Can you splice together your thoughts from both posts, so then there can be more clarity of where your thoughts are?

[pb4uski]

Quote:

Originally Posted by rodi Regardless of the details. Whether the plan works with 1.5-2M still depends on one piece of information we don't have. SPENDING. If they have a low spend budget, skinny FIRE, they'll be fine. If they want a FAT FIRE... meh, not so much.

Totally agree... OP hasn't mentioned what their spending is... that is why I framed my response in post #3:

Quote:

Originally Posted by pb4uski .... According to FIRECalc, a $2m portfolio has a 95% success factor for withdrawals of $71,201/year for 45 years.... that is with a 75% equity allocation... the Investigate tab is your friend.

If their spending is $100k then they are underfunded... OTOH if their spending is $50k then they are good.

[Safire]

Quote:

Originally Posted by RetiredHappy I looked at an earlier thread in May by OP, she projected that they may have $3.3M with a paid up condo by the time they retire.

Not happening. I re-did the math with a REALISTIC rate of return, and we would be lucky to retire with 2M. I also did research on housing and we simply cannot afford a condo in California, especially not now with crazy real estate prices. We want to live here because there are excellent adult care services through the regional centers that we may not have access to in other states. Plus, we have family in California that indicated (during a recent meeting) that they do not intend to move and that also made me get realistic about where we'll retire and it is going to be here.

Also, I want to say that I get overwhelmed with the day to day care of my son, and sometimes post and then repost - not because I want to hog the site's bandwidth, but because I honestly just forget. So please bear with me.

The facts don't change but a little reassurance goes a long way.

My point of this thread is merely re-assurance, now that things are less foggy and I'm thinking more clearly. I just want to know that retiring on less than 2M and as renters is doable - without SS and pension. I've been browsing Bogleheads and I'm overwhelmed with the 4M to 6M numbers being spit out there that I began to feel like a sore loser for being both poorer and with more responsibility! Hence the question here where I felt people may identify with my situation. I wanted to really hear from people who are in a similar situation and how they're doing it.

Regarding pensions, I am of the opinion that they are only as good as the employer's financially ability to honor them. If not, that's just one castle in the clouds that vaporizes when reality hits.

To answer the question on spending: We're frugal and currently live on around 7K a month but that includes our son's private child-only health insurance, our other kid's private tutoring, and a large rent. Once our high schooler graduates high school, we're thinking of moving to a cheaper / more rural area of California (if one still exists by then), so that our rent would come down by at least around $500 each month. That means we may be able to get by on 5K/month, including rent.

[rodi]

$84k/ is higher than fire calc says is 100%. But not by huge amounts... But, you've also got the unlikely scenario of ZERO SS and ZERO pension. These might get a haircut, but are unlikely to go to zero.

Try putting your numbers in with 50% haircuts for SS and pension.

If you are looking for reassurance from similar folks. I retired with 1.45m, and two middle schoolers. (Now ages 20 & 18) We have similar annual spending. 7 years later the portfolio is up by almost 40%. Some differences:. We own our house outright, we have a granny flat that produces income, DH is on SS, I have a pension that gives about $4.5k/year. I'm also in expensive Cali.

Keep investing, keep your eye on the ball. You'll be fine.

[pb4uski]

+1 Run your situation through FIRECalc.... first with 100% SS and 100% pension. And then with 75% SS and 75% pension. And then with 50% of each.

Note the 95% success level of sending for each alternative and that shuould give you some idea of the boundaries of your retirement finances.

If one of you is still working and you have income to cover spending for now, go to the Not Retired tab.

[GaryInCO]

I'm almost 65, thinking about when to retire -- I've been "semi-retired" for decades, self-employed and working about half-time most of the time.

I expect to do it with about $2M net worth and a mortgage. The 4% rule says I could pull $80k per year, which sounds pretty cush. But I don't want to burn off my account; I think my sons will need it worse than I will.

But I don't intend to put it all in very conservative stuff and live on 4% or less.

I have never had any skill at stock picking. But a trivial basket of SPY (S&P500) and TLT (20-yr bonds), rebalanced once a year, will get you a LOT more than 4%, assuming we don't go into a major financial calamity.

A 70/30 balance averages 10.4% in the last 20 years, with the worst year since 2002 being -15% (2008). But that was part of the 2007-2008 crash, and it had a 32% drawdown from mid-2007. If you can't stomach that, a 50/50 balance only drops the yearly return to 9.5%, and the worst drawdown is 18%. Worst year is -3%.

simple backtest HERE

I don't have the data history to extend the backtest beyond 2002 (I'm working on it) but from what I've seen, you would get similar results at least back to the 70's.

With $1M in a 50% SPY / 50% TLT basket you would live very comfortably. If you aren't a crazy spender, your $1M should grow well ahead of inflation. Put the other $1M in more conservative stuff and sleep well at night.

[kcowan]

We did it back in the day. After 5 years, we purchased a snowbird property. That saved us because of the lower living costs living down south. Then we upgraded to a place we could live in fulltime. Still renting up north.

[armor99]

Quote:

Originally Posted by Safire Title is my question, in a nutshell. I would really love to hear from those who are / have / will be retiring with less than 2M (1.5M - 2M), will be renting in retirement, and who have an unusually long retirement (45+ years) for any reason. In our case, our "retirement" includes our son's potential lifetime that will need to be funded by an inheritance from us as he is disabled and unlikely to support himself. The 1.5M - 2M figure at retirement comes from me assuming a 5% rate of return on our assets from this day until retirement. How do you plan to remain financially solvent for the entire time period? Is it possible / doable? I am assuming NO SS and NO pension. The reason I don't factor in SS & pensions in retirement figure assumptions is because I tend to believe the persistent opinions voiced by folks around me (and on many Internet forums) that SS might be non-existent by the early / mid 2030-s and given that pensions are only as reliable as the employer paying them. Are we the only ones in the difficult situation above? Thanks for sharing!

I think I might shy away from the idea of long term renting. Especially for 45+ years. There are a few reasons for this.

No matter how nice a place you might have, or how easy to deal with the landlord might be, I would think you are opening yourself up to lots of things completely out of your control, that can easily derail a retirement. 45 years is a very long time. Long enough that your rent could grow out of control. Property could be sold to a jerk landlord. And in general over time, the value of a property goes up. This would be nice to pass on to your child that will need it.

When you own your own property, you control many of the variables again. But yes… it is a hassle and work to own a home, thst is the trade off…

[Gumby]

This thread has reached the end of its useful life and is being closed. An entirely off-topic fight about the social security trust fund directly contributed to that decision, and the posts comprising that fight have been deleted. You all can have a policy discussion about the social security issue in a separate thread if you like, but leave the politics and the snide personal comments out of it.

https://www.youtube.com/watch?v=gBzJGckMYO4