ER on less than 600K ?

[Nords]

Quote:

Originally Posted by PortlandDiehard Hmm.* Am I wrong to think that some people here are spoiled?* $2,000/mo is more than many people in this country live on.* Here in Oregon, one can rent a nice 2 bedroom apartment for $700/mo.* $300/mo for food, $150 for utilities, etc.

Maybe we're spoiled by living anywhere other than Oregon.

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Originally Posted by PortlandDiehard Aside from health insurance, this is very doable.

Hey hey hey, that's not a throwaway-- that's a show-stopper.

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Originally Posted by PortlandDiehard Personally, I get a bit cranky when I see people scold anyone who dares contemplate a lower-middle class drawdown. *Heaven forbid the thought of wearing levi's and enjoying a burger and beer with friends at the local sloppy joe's. *Leave the $50 bottle of wine on the shelf and find a hobby that doesn't take you to the mall.

This would be different from scolding someone contemplating a middle- or upper-class drawdown. *But I'm not cranky.

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Originally Posted by PortlandDiehard When you factor in social security, I'd say $600K will allow an otherwise happy 50 year old to never work again - or work only sporadically.

Depends on the factor-- there's a difference between a 24-year working history with a lotta zeros and an annual SS benefit of $9K at age 62... and just about everyone else. *

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Originally Posted by PortlandDiehard - or work only sporadically.

Again, for some of us that's as big a show-stopper as health insurance.

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Originally Posted by PortlandDiehard Hmm. *Am I wrong to think that some people here are spoiled?

Well, unless you're living in Oregon, without health insurance, in a lower-middle-class lifestyle, with an overinflated estimate of Social Security and maybe a part-time job... well, perhaps we are spoiled. *But I don't think you'll have to worry about being crowded.

[GMueller]

I've been a "lurker" here for quite some time. This thread reminds we of a thread started some time ago regarding "$1,000,000 and the shirt on your back." The question, was, of course, could you retire with only $1M? At that time, my personal opinion was that $1M "and the shirt on my back" would be a very bare bones retirement. I'm quite conservative when it comes to investing. I'm rather sacrifice return for the security that comes with a near "sure thing." Thus, I don't envision $1M generating much more than $25K per year after I have set aside something to protect my nest egg against the erosion caused by inflation. To me, living on $25K per year is doable but is certainly not extravagent. Frankly, I can't imagine getting by with a $600K nest egg, unless I were willing to live in a low-cost overseas location. I have considered that, and may in fact choose the overseas option, but I also want to maintain the option of returning to the States. If I could accept the risk that generating $25K (after inflation) would entail off of a nestegg of only $600K, perhaps I would feel differently about it. But, for me, a $600K nestegg would result in too many sleepless nights. And that's not what I envision for my "golden years."

[jdw_fire]

GMueller, have you run FIRECalc?* Of course the amount of inflation adjusted income any portfolio can produce is dependant on how long the income needs to be produced.

[eridanus]

Quote:

Originally Posted by PortlandDiehard Hmm. Am I wrong to think that some people here are spoiled?

"Spoiled" is too harsh but, in short, yes. This is the board where a Lexus SUV is considered a "beater" and where some consider $40k/yr WITH a paid off house as cat food territory. Since the median household income in the US is just under $45k, and that includes a mortgage, it seems evident that most of us are on the top half of that curve. We have heard tales of those who live on less then $30k/yr, drive a newish car, and aren't resorting to beans and rice but we don't believe they exist in the civilized world.

That said, I wouldn't do it on $600k. If I hated my job, I might find something more fun and less stressful, or even take off a year to explore and travel, but I wouldn't attempt an ER in the states on that low amount.

[GMueller]

Yes, I have run FIRECalc. It's a good tool and has helped me reach an acceptable comfort level with my retirement plans. What may be different about my situation is I have a wife who is 23 years my junior. Thus, my nestegg is going to have to last a LONG time if I want to provide for her. For all practical purposes, I simply assume that the nestegg will have to last forever. With my goal of capital preservation and my aversion to risk, I figure my best course of action is simply to purchase a boatload of TIPS paying about 2.5 percent. above inflation. One million in TIPS will generate $25K per year. I realize that I have to pay taxes out of that and that the CPI doesn't track all the inflation that inevitably occurs, but it will capture enough. I also intend to invest another $100K in a global market fund to give me some exposure to stocks. That is about all the risk I have the stomach for. Perhaps the returns from the market will pay my taxes on the income generated by the TIPS, leaving me about $25K per year to live on. I just can't imagine trying to do this on $600K.

I will also be entitled to collect social secruity (in a few more years), but I really don't want to count on SS as a source of income -- too many unknowns. Finally, I will have a government pension of about $18K that will kick in about 4 years after I retire (I'm taking a deferred retirement under FERS). My pension is my safety net should my wife and I wish to return to the States (we're thinking seriously about living overseas, at least until the pension kicks in). There is no Lexus in our driveway and I don't envision that there ever will be. My wife and I have accumulated our nestegg by LBYM and will probably continue that lifestyle. We know how to tighten our belts and are accustomed to living a modest lifestyle. We believe we can maintain that same modest lifestyle with about $25K per year overseas, and perhaps about $35 - 40K in the States. I just can't see trying to do that with only $600K. If I had a fatter pension, perhaps I'd give it a go. But with $600K and nothing else, that just would work for me. As I said before -- too many sleepless nights.

[FlowGirl]

Quote:

Originally Posted by PortlandDiehard Hmm.* Am I wrong to think that some people here are spoiled?* $2,000/mo is more than many people in this country live on.* Here in Oregon, one can rent a nice 2 bedroom apartment for $700/mo.* $300/mo for food, $150 for utilities, etc.

Good point, but I think it depends on the situation. If I were 55, tired and beaten down by work, I might choose the $24K lifestyle. In fact I wish my MIL would take this advice instead of continuing to search for her next big break at age 59. But since the spouse and I are in our early 30's, and pretty happy with our work life, I'm not quite willing to settle yet. We're not aiming for a luxury lifestyle... we're pretty happy right now living on about $50K after savings, but its been a long time since I've had to watch the pennys too closely and don't really care to go back. I'm also smart enough to realize that while $2K/month may be fine right now, my future self might have a different opinion.

[LOL!]

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Originally Posted by jdw_fire So if someone wanted to retire couldn't they retire (if they were debt free) by buying a 4 unit apartment building outright and living in one unit.*

No, because then they would have a job as a landlord.* And I thought having a job was anathema to being retired.

[obryanjf]

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Originally Posted by eridanus Since the median household income in the US is just under $45k, and that includes a mortgage.

I would presume that there are many other places other than Oregon that are low cost of living locations.* My next move closer to the kids cousins, aunts, uncles and grand parents has an average income of 32,000/yr. 32,000/.05 = 640,000.

job*

[unclemick]

Duh

I used to think this forum was a hoot - living in the Louisiana swamp with a paid up Fish camp, vehicles, 28 foot camper and no health insurance - having brought in one year at 12k(couple - she threatened murder if I ever tryed THAT again). Outside the city - we knew people who raised families on less than 20k.

Heh heh heh - now in MO with health insurance, a mortgage and er ah more expensive tastes(portfolio permitting) - I'm singing a different tune. Have yet to see how the first year budget works out.

Thinking outside the box - you have the most control over spending - limited only by your imagination.

600k at 4% is still a cake walk in many parts of the good old USA - not as easy as the 90's but doable.

No longer a cheap bastard - my nerves are shot spending all this money. Living on more than 24k/yr is emotionally traumatic.

heh heh heh

[shorttimer]

a lot depends on if you have kids and aging parents or not.

My kids are gone and financially independent. In fact they are almost adamant about not wanting any financial support including gifts, as they are thankful for a paid for education. They however do not live close. I have no doubt I could live on twenty thousand dollars a year with careful planning and exchanging my paid for house for one with cheaper taxes. We could go from two cars to one, and try to live within walking distance of most of what we need, which we would do if we needed to. But if I have grandchildren don't think for a minute I won't want to travel to see them.

I also have elderly in laws that we help out. Not a lot, but enough to put a dent in a 20,000/yr budget.

and the neverending health insurance drama.

If you can do it, fine, but like in all areas of our lives it is give and take, weighing all the options.

[youbet]

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Originally Posted by ferco Has anyone been able to ER on 600k or less?

There have been a lot of interesting replies to your query ferco and a lot of insight given out. *But in the end, you'll have to decide for yourself if the frugal lifestyle of living on $24K/yr is for you.

Having listened to all the chatter generated by your question, whatdaya think? *And why?

[tryan]

20k/ year is living at the poverty level in the US for a family of 4

24k is poverty for a family of 5.

Frankly, I'ld rather keep w*orking.

http://www.census.gov/hhes/www/pover.../thresh04.html

[perinova]

yes it is doeable
a big chunk of the population is doing it
and as tryan mentioned in some areas of the country and depending how may people in household it might be poverty level.

if the definition of poverty line is having necessities covered, no fancies or discretionaries. I would make sure to be at least above the line.

-------

 Table H-3. Mean Income Received by Each Fifth and Top 5 Percent
of Households (All Races): 1967 to 2001

(Households as of March of the following year. Income in current
and 2001 CPI-U-RS adjusted dollars28/)
------------------------------------------------------------------------
Lowest Second Third Fourth Highest Top 5
Year fifth fifth fifth fifth fifth percent
------------------------------------------------------------------------
Current Dollars

2001 $10,136 $25,468 $42,629 $66,839 $145,970 $260,464

[jdw_fire]

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Originally Posted by LOL! No, because then they would have a job as a landlord.* And I thought having a job was anathema to being retired.

Well then how about buying 2 adjacent 4-plexes for the $200k each, live in 1 apt, use the rent from 2 apts for expenses (including a vacancy factor), pay for a property manager with the rent from 1 apt, leaving you the income from 4 apts to live on.* Would that qualify as retirement?

[haha]

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Originally Posted by jdw_fire Well then how about buying 2 adjacent 4-plexes for the $200k each, live in 1 apt, use the rent from 2 apts for expenses (including a vacancy factor), pay for a property manager with the rent from 1 apt, leaving you the income from 4 apts to live on. Would that qualify as retirement?

It would for me. Where do I find these 4-plexes @$200K each, in a neighborhood where I won't get my throat cut?

I would even be happy collecting my own rents.

Ha

[ferco]

I would probably "bucketize" the 600k into 3 200k buckets into 6 yr buckets. Bucket 1 fixed income ; Bucket 2 in a balanced fund like Vanguard Wellington or STAR; and Bucket 3 into an "aggressive" fund like a Target 2035 or 2045....this ought to get me there smoothly and relatively safe.

[free4now]

Nords, that Dolly Freed Possum Living link was a hoot:

http://www.soilandhealth.org/03sov/0...030206toc.html

Raising rabbits in the basement for sale, boarding horses for transportation, distilling your own spirits, terrorising your enemies, no insurance. *

Here's a fun quote:

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We like the anecdote about the stranger in a small Vermont village. Walking down the street, he notices that the man walking ahead of him is provoking some peculiar behavior. The men glare at him or shake their fists. The women turn up their noses. The children are bustled across the street to avoid coming near him. * "What's going on?" he asks one of the villagers. "Is he a wifebeater? A drugpusher? A childmolester?'' * "Nup. Dipped into his capital." * My kind of people!

[jdw_fire]

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Originally Posted by HaHa It would for me. Where do I find these 4-plexes @$200K each, in a neighborhood where I won't get my throat cut? I would even be happy collecting my own rents. Ha

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Originally Posted by jdw_fire * And in NM you can easily get a 4-plex with 2 BR units for $200k so it should be very doable to retire on $600k.* All you need to do is find a 4-plex in an area and with the apartment size that you are willing to live in.

And with $600k you could go to >$250k apiece.

[perinova]

Quote:

Originally Posted by ferco I would probably "bucketize" the 600k into 3 200k buckets into 6 yr buckets. Bucket 1 fixed income ; Bucket 2 in a balanced fund like Vanguard Wellington or STAR; and Bucket 3 into an "aggressive" fund like a Target 2035 or 2045....this ought to get me there smoothly and relatively safe.

If you use well diversified funds like Target/Asset Mgr/STAR etc? You could dump everything into one of those funds with your preferred allocation except for the short term MM funds. I did my initial allocation suing index funds from Vanguard Total Intl -Total stock and Total Bond thenI noticed that my allocation was pretty much copied by the Target 2035.

Now is there really any advantage in using the 2 buckets since those funds are constantly reallocated?

[d]

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is there really any advantage in using the 2 buckets

the essense of the bucket approach is that you are in control of the rebalancing ... when it suits your needs.* with the target funds, the rebalancing is automatic and might not suit your needs. that said, i'm not sure one is better than the other.