FIRE Scenario - How are ya feelin' now!

[W2R]

Plus, I don't really want to quit right when a possible (long?) recession is starting. Not the best time to draw on the portfolio I hear.

Good idea - - keep working and paying into social security. Keep buying all those upscale things, to keep our economy thriving and unemployment down. After all, somebody's got to do it!

I'll regale you with tales of woe and misery from the front lines of retirement, as soon as I get there in late 2009. I can hardly wait!

 

[Dog]

I chose $2M if the idea was to ER at 50 without healthcare coverage and only SS to plan for 10 - 15 years from ER date.

 

[Marquette]

Chinaco, I think I know what you're trying to gauge, if the start of a bear has people less confident... but, and this may be because I'm still a long way off, but I'd look at my personal inflation rate, expenses, expected mortality, and assume I was set when the lines crossed with enough cushion in between them for me to be able to sleep at night. After all, if we're truly accounting for a portfolio to be able to withstand market gyrations, then this is just a blip.

That said, I'd be more inclined to semi-re if my planned lifestyle allowed it. Partially meeting my living expenses with a few hours here and there would let me sleep a lot better at night.

 

[chinaco]

Chinaco, I think I know what you're trying to gauge, if the start of a bear has people less confident...

That was it. I was just trying to make most variables fixed.

The parameters I listed are not mine. I have ret health care from DW (she took an ER package) and I am a little older than the age listed. I plan to ER at 55.

 

[hankster]

I also picked $2 million for this scenario. I'm 50 now and if DW and I were in this situation, I'm sure we would be traveling a fair amount of the time to enjoy it while relatively young and healthy. I would want a considerable cushion in our nest egg for any unforseen major expenses or bad investment performance.

 

[CuppaJoe]

I

You are 50 years old married and fairly healthy. Kids are out of the house and seem to be making it. You would like to FIRE.

You do not have health insurance so you need to provide for it till 65 (medicare).

....

Please comment.

How much money would you need in your portolf

Trick question?

At age 50, I might be foolish enough to go without health insurance, but wait, Chinaco, you wrote, "You would like to FIRE." So spouse could stay in the rat race and keep the insurance premiums paid. Less than $500,000, easy. Hopefully, spouse is younger so the after 65 insurance would be better than just MediCare.

I quit my job and moved cross country in '74 but was too busy having fun to notice there was a recession going on; took a few months off before getting another j*b.

 

[ladelfina]

When I ER'd and soon thereafter found this board, $1million (with home paid off and separate from this NW figure) seemed eminently doable. Now I'm much more pessimistic so I voted $2million even though I don't have anywhere near $2million in investments, more like $1.1 (which I predict soon to be less). As someone pointed out on another thread.. the more you LBYM the fewer places you have to cut back when TSHTF. The way real inflation has been for us recently, a 4% w/d puts us way behind where we were just a couple of years ago. You can get a 100% success rate with FIREcalc using historical parameters, but I'm concerned that the future has completely new stuff to throw at us.

We'll get by.. we can always downsize the house and get something bearable, either a small house in the US or an ok apt. here.. for a grand savings of maybe $200k. A lot, and yet.. not a lot given the magnitude of what that really would have to render. Maybe the easy money / good times worm got into the brains of even the apparently frugal..

 

[dm]

Well I fully retired last Oct. with a little less than 2mil with a paid for house, 50 yrs old and paying $800 month for health care. I'll admit the drop in the market does not thrill me because I don't have the income to be buying more stocks at this time. But I have a balanced portfolio and I dont have to sell any stocks at this time either. And of coarse I don't like the net worth dropping.

I'm tracking my spending as best I can and so far I have not had any suprises. If we had a prolonged downturn I would probably just cut back on some of the extras in the budget. Take some trips closer to home, ect.

I have some fat in my budget based on a 4% withdrawl rate. If we end up with some down years I'm sure we will cut back alittle, if we have some big up years I'm sure we will splurge alittle. I sure as hell am not planning on going back to work.

 

[Marquette]

That was it. I was just trying to make most variables fixed.

The parameters I listed are not mine. I have ret health care from DW (she took an ER package) and I am a little older than the age listed. I plan to ER at 55.

I've been thinking about what my actual, real response would be.

If I was looking at a choice between retiring now at 50 or working 5 more years until 55. I'd probably stay working just a bit longer... leverage my job through the bear market so I can buy stocks on sale and hold off just a bit longer on tapping into my portfolio. I have a feeling the "just a little bit longer" bug would be hard to fight, if you don't absolutely hate your job, in this market.

 

[FANOFJESUS]

I voted 1M but I am a cheapskate in the midwest.

 

[Dawg52]

Based on the suggestions here, there can't be many early retirees out there. I believe only 3% of the US population are millionaires. You know many of them are working and some will work beyond 65. Of course there are early retirees with good pensions that are not millionaires. I guess we are part of an exclusive club.

I wonder how many early retirees are in the US?

 

[Rich_by_the_Bay]

With everyone focused on "the number" it seems like a good time to remember Bob Clyatt's solution. Amazing how much even a modest income stream makes a difference, using the 25x rule of thumb. Bringing in even $20k per year in ESR is like having an extra $500K saved, at least for as long as you can keep up the work.

 

[Alan]

I voted $2m as that would make me feel comfortable as our existing plan is a non-COLA pension of $40k/year and portfolio of $1.5m.

However, what I would need to live very comfortably without our extensive travel plans would be $1.5m

 

[Arc]

Voted for 2M - like the fact that it provides lots of flexibility.

 

[retiringby50]

I thought I would take a poll. This has been done before, but I thought it would be interesting to see how people are feeling right now (economy on the ropes). There are too many variables to get this very accurate so I will limit the situations.

You are 50 years old married and fairly healthy. Kids are out of the house and seem to be making it. You would like to FIRE.

You do not have health insurance so you need to provide for it till 65 (medicare).

You have no pension except SS for you and your spouse.

You own your house.

Added - Your local economies costs are the national average (not the extreme highs like NYC or Silicon Valley or lows )



Please comment.

How much money would you need in your portolf

Good post! I voted for $3M just to be safe. I was just thinking about the same thing. I want to retire at 50. What if the economy is how it is when I'm 50? Do I retire or work a few more years? When I'm 50, I would have the same as you stated above except that I would have no pension but hopefully $400K in 401(k), and I do live in the "extreme highs." I guess I would opt to retire anyway.

 

[kat]

I voted $1 million -- because the distance is too wide between 500k and 1 million. I'm confident life would be fine for me somewhere in between. My tastes won't suddenly change and I have good back up plans for sudden, unexpected setbacks.

 

[Lyle]

I voted 1.5M, which seems right to me. Question though. Will all of the baby boomers retiring now have 1.5M to retire on? If not what will the 80%-90% that do not have 1.5M on do?

 

[chinaco]

I've been thinking about what my actual, real response would be.

If I was looking at a choice between retiring now at 50 or working 5 more years until 55. I'd probably stay working just a bit longer... leverage my job through the bear market so I can buy stocks on sale and hold off just a bit longer on tapping into my portfolio. I have a feeling the "just a little bit longer" bug would be hard to fight, if you don't absolutely hate your job, in this market.

I have been liking my j*b less lately. But I am intending to work another 46 months. I can take ER and get a pension and Health Care Insurance.

If I left now, I would get my pension at 65.

My current plan is to do my time. I guess I am glad the recession is happening now. It should be on the mend and a healthy upswing in the next year or so. It would be in sync with the business cycle.

 

[kat]

I voted 1.5M, which seems right to me. Question though. Will all of the baby boomers retiring now have 1.5M to retire on? If not what will the 80%-90% that do not have 1.5M on do?

My gut feeling is money will be treated differently. People who saved will be taxed heavily, and social security will be severely means tested.

The media says younger people don't expect social security to be there, but I think they are creating that reality. I expect it to be there. But my whole life story -- I'm 45 -- is things changed just before I got there. I have three older brothers and all went through bigger classes and more electives in school, for example, and my year was the sudden cutbacks. The only plausible explanation I heard was new birth control options changed things that generation.

But I'm waxing on. I think there will be changes. There always are!

 

[Alan]

I have been liking my j*b less lately. But I am intending to work another 46 months. I can take ER and get a pension and Health Care Insurance.

If I left now, I would get my pension at 65.

My current plan is to do my time. I guess I am glad the recession is happening now. It should be on the mend and a healthy upswing in the next year or so. It would be in sync with the business cycle.

That is very much where I am and in fact changed locations and jobs in January within Megacorp to ease the pain of w*rk these last 2 years. If I had been laid off and didn't have the nest egg I needed then I would look for another job for a few years if only to get health care.

 

[Delawaredave5]

$1M for an income stream plus another $500K reserve for the health insurance situation, a total of $1.5M.

This is a good/realistic point above.

It is boggling to me (maybe it shouldn't) that 1/3 of a persons retirement nest egg probably needs to be allocated to health care.

Maybe an average split is:
1/3 health care allocation
1/3 "sustenance" allocation (housing, food, etc)
1/3 "living" - hobbies, travel, entertainment

I've always been hoping/dreaming that 80% of the 4% I draw could be used for fun stuff....

 

[ziggy29]

My gut feeling is money will be treated differently. People who saved will be taxed heavily, and social security will be severely means tested.

The media says younger people don't expect social security to be there, but I think they are creating that reality. I expect it to be there.

I have no doubt SS will still be there for even the youngest people today...in some form. Like you, I expect the taxation and means testing to be greater, and the benefit levels to be lower.

I'm 42, so I may or may not be heavily hit by it. My guess is that when it becomes less generous, I'll be in the "transition" or "phaseout" group.

 

[Lyle]

My gut feeling is money will be treated differently. People who saved will be taxed heavily, and social security will be severely means tested.

The media says younger people don't expect social security to be there, but I think they are creating that reality. I expect it to be there. But my whole life story -- I'm 45 -- is things changed just before I got there. I have three older brothers and all went through bigger classes and more electives in school, for example, and my year was the sudden cutbacks. The only plausible explanation I heard was new birth control options changed things that generation.

But I'm waxing on. I think there will be changes. There always are!

You may be right about the social security being tied to means testing. I am afraid with medical cost and war cost the government is going to have to find ways to reduce cost which means the individual pays more. The part I don't like is I am beginning to feel like the grasshopper who worked all summer and stored grain for the winter while his friend played, but now I must share my grain with him.


Lyle

 

[Meadbh]

You are 50 years old....
You do not have health insurance so you need to provide for it till 65 (medicare).
You have no pension except SS for you and your spouse.

I voted >$3m because of these three conditions, and because my personal risk profile urges me to plan for unforeseen contingencies.

 

[TickTock]

I voted 1.5M, which seems right to me. Question though. Will all of the baby boomers retiring now have 1.5M to retire on? If not what will the 80%-90% that do not have 1.5M on do?

Social Security. Medicare. Lower standard of living.