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Old 07-21-2017, 04:17 PM   #101
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Or put another way, it is very functional to be reasonably prudent and conservtive (as I think I am and Vanguard is) but it is dysfunctional to be uber-conservative and in my opinion, and that of most knowledable planners, to insist that you never touch principal and have passive income sufficient to cover spending is irrationally conservative. ...
While I am not so conservative that I would insist to never touch principal in retirement, I would not consider it irrational to plan for that.

After all, our investments can shrink in buying power, and if we draw on them, we are reducing the amount that can produce divs, requiring additional draw down. As member haha has pointed out, the future certainly could be worse than the worst of the past. Some people might consider a plan to never touch principal as a back up plan - sure, if they are stuck, dip in. It's their safety net.

Sure, for some that might mean working much longer to protect against a very slim chance of failure - but that is their decision to make. That point has been discussed ad infinitum and ad nauseum, and we still don't have an answer, do we?

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Old 07-21-2017, 04:40 PM   #102
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To me there is a big difference between never touching principal (spending interest, dividends and market appreciation) and only spending intest and dividends, which is what someone seemed to be suggesting when they said that you had enough only once your passive income exceeded spending.

Even with a 60/40 portfolio, market appreciation is an important part of investment return and to not take advantage of it is siilly... admittedly it is more volatile than interest and dividends but over long periods of time it is quite reliable.
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Old 07-21-2017, 04:58 PM   #103
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How much is enough? A very good question for upcoming retirement.

When you have enough dough
When you've worked enough
Sat in traffic enough
Seen enough of your friends and family die
Had enough of your boss
Want enough time to do what you want to do

Yeah, a question one can only answer for one's self.
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Old 07-21-2017, 05:40 PM   #104
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Third, your entire life depends on our government: what would you do, if for example tomorrow ACA or even Medicare is not with us anymore?
Personally I'd be happy if Medicare and the ACA were eliminated (or really never enacted in the first place). Add SS to that list. Of course only after they refund me all the money I was already forced to pay in for 40+ years.

I'd be happy to buy my own medical insurance or self insure, as well as fund my own retirement, which I really already do since I don't depend on SS.
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Old 07-21-2017, 06:09 PM   #105
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I would not consider a 2% WR to be "irrationally" conservative for an early-50s retiree. The unknowns are many and potentially significant. Here's a partial list that keeps us somewhat conservative at this point...

1. LTC for self or spouse or both (no LTC insurance)
2. LTC and/or other assistance for aging in-laws with few assets (no LTC insurance)
3. Return of late 70s/early 80s inflation (we have one non-COLA pension and one partial-COLA)
4. Longevity (DW's family has history of longevity into mid 90s)
5. Sustainability of SS (means testing, etc)
6. Sustainability of Megacorp's pension and subsidized retiree health insurance (X2)
7. Sequence of returns risk

Clearly, some of those may be more or less probable than others, but none of them are "irrational" fears. They are legitimate unknowns that we have built a moderately conservative plan around. IMHO, possibly leaving money to our kids is far more fun to think about than being a burden on them later because we blew all the money on stuff we didn't need or want. YMMV.
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Old 07-21-2017, 09:58 PM   #106
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I guess we would agree to disagree on that then. Firecalc suggests that a safe WR (100% success rate) for 50 years for a 50/50 portfolio is ~3.1%....and 2% is less than 2/3rds of that..... so I would consider a 2% WR to be irrationally conservative.

FWIW, in a recent (April 2017) poll on this forum, less than 5% of respondents indicated that they would only be comfortable with a WR of 1.99% or less. The poll assumed that one was retirieng at age 60.... a little different from your early 50's.

http://www.early-retirement.org/foru...one-86319.html
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Old 07-22-2017, 12:04 AM   #107
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How much is enough? A very good question for upcoming retirement.

When you have enough dough
When you've worked enough
Sat in traffic enough
Seen enough of your friends and family die
Had enough of your boss
Want enough time to do what you want to do

Yeah, a question one can only answer for one's self.


+1
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Old 07-22-2017, 03:15 PM   #108
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How much is enough? A very good question for upcoming retirement.

When you have enough dough
When you've worked enough
Sat in traffic enough
Seen enough of your friends and family die
Had enough of your boss
Want enough time to do what you want to do

Yeah, a question one can only answer for one's self.
Wow I missed this one +2
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Old 07-22-2017, 03:27 PM   #109
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Originally Posted by RobbieB View Post
How much is enough? A very good question for upcoming retirement.

When you have enough dough
When you've worked enough
Sat in traffic enough
Seen enough of your friends and family die
Had enough of your boss
Want enough time to do what you want to do

Yeah, a question one can only answer for one's self.
+1
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Old 07-22-2017, 04:04 PM   #110
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It doesn't take much money to sit at home at watch TV or read a book. Some people are perfectly happy with that. Prisoners do it all day. It takes a lot more to enjoy life and the freedom that financial independence offers you.
It doesn't take a lot more for a lot of people. All of my hobbies and things that I enjoy are either free or very low cost...a round of golf is $20 or so, joining family friends on the deck for BBQ and a couple pops is inexpensive, running and working out is free as I work out at home, getting together with one of my bands to make music costs me less than $100 a year in strings, batteries, and maintenance, etc., which is more than offset by what I make in gig pay. And, I like reading books, too...$1 - $6 for a used book provides several hours of enjoyment....all the things I like to do are either free, inexpensive, or pay for themselves, and in none of those activities do I feel like a prisoner.

Of course, if you like gambling, racing cars, or buying boats then you very will need a lot of money. Luckily, I have no interest in those things.
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Old 07-22-2017, 04:57 PM   #111
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My situation is similar to the OP; only I retired but my wife is too afraid to do it herself, though she is getting a fuller BS bucket everyday.
I believe her concerns are both financial and non-financial.
On the financial front, I think she likes the steady high income that allows splurges and dreams of luxuries. (We could still live very well - if not routinely flying first class to Europe, we could still enjoy nice vacations.) I also believe that without the headaches and stress of work, the taste for luxuries fades. That has been my experience, anyway.
On the non- financial front she is not sure what she will do.
Finally, and probably most uncertain, is the combined non- financial/financial problem of health care. Not a simple monetary concern about affording it, but the greater concern that a couple in their mid 50's without jobs may not be able to get health care insurance at any price. Certainly this was a possibility before the ACA and could be reality again. Leaving the country to solve this problem is unpalatable.
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Old 07-22-2017, 06:31 PM   #112
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We have a fallback place (28 acres in Washington state) where our taxes are $29 a year and water/septic/garbage is about $15 a month (electricity is from solar, so pretty much free).

So we can spend at a ~3% to 3.5% SWR even at age ~47 because it is very easy to cut our expenses back to really nothing aside from food and health insurance. I guess we could have a 1% SWR even paying full price on health insurance and eating steak a couple times a week.
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Old 07-22-2017, 06:44 PM   #113
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We fit The Millionaire Next Door profile of cheap dates: "Many of the favorite activities of millionaires are not at all costly. It matters not if you are rich or poor, the best things in life are free or close to it."

Our local library system has free passes to about 50 cultural events and attractions in the Bay Area, a state parks pass for $125 a year has free entry to around California 100 state parks and a regional parks pass for $40 a year for vets includes free entry for 65 local parks with over a thousand miles of hiking trails. Our senior cubs are $20 a year each and have activities all week long. Add in membership passes for wineries, museums, gardens, seat filler events and we seem to keep pretty occupied without spending a fortune.
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Old 07-23-2017, 10:38 AM   #114
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It doesn't take a lot more for a lot of people. All of my hobbies and things that I enjoy are either free or very low cost...a round of golf is $20 or so, joining family friends on the deck for BBQ and a couple pops is inexpensive, running and working out is free as I work out at home, getting together with one of my bands to make music costs me less than $100 a year in strings, batteries, and maintenance, etc., which is more than offset by what I make in gig pay. And, I like reading books, too...$1 - $6 for a used book provides several hours of enjoyment....all the things I like to do are either free, inexpensive, or pay for themselves, and in none of those activities do I feel like a prisoner.

Of course, if you like gambling, racing cars, or buying boats then you very will need a lot of money. Luckily, I have no interest in those things.


We don't gamble, race cars or own boats or second homes. However we do enjoy dining out at nice restaurants that don't offer "deals", having great seats at live music and theatre performances, drinking good wine, and taking several nice trips per year, plus we like to gift. We also enjoy many of the free or inexpensive things So CA offers. As RobbieB said, it's very individual how much is "enough" and each person must decide that for themselves. For us, we waited to ER until we were reasonably confident we could continue to enjoy a similar lifestyle, and spend even more on travel and entertainment since we have more time in ER. If we later decide to spend less, that's fine, but hopefully we won't be forced to do so for financial or health reasons. We're prepared to make temporary adjustments during down markets.

I completely understand that it's hard for many people to leave money on the table; however the essence of ER is exchanging cash that could be earned for time that one can't get back.
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Old 07-23-2017, 12:20 PM   #115
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My hobbies and interests are low-cost. I have my square dancing twice a week which comes out to $800 a year, my costliest hobby. I like to read and make great use of the county library system to get my books. I get books and gift cards for books as gifts once in a while, and I get some from local library book sales.


I have my extensive Strat-o-Matic card collection from the 1970s and 1980s. I have added a few seasons and teams and cards after I returned to the game in 2006 after more than 10 years away. But those additions cost me very little because they were either gifts or I traded my surplus, unwanted cards for those I did want. My only direct costs are for some toner for my printer, paper, and notebooks.


My volunteer work is for local school Scrabble groups (see my username?). My costs there are very low, mainly gas to drive to the schools. Even though it is volunteer work, they teachers give me a few bucks and I get some free pizza so I pretty much break even. It's my time and Scrabble expertise which they most need.


I have my internet and cable TV which keep me busy, sometimes multi-tasking. I cook most of my own food but my ladyfriend cooks for me often and we do go out to eat once in a while. One condition of my retiring early was that there would be no change to my everyday life when it came to spending patterns or priorities. If I needed to spend some money on something, my regular budget cushion, or surplus, could handle it. And it has, including the added costs from my health issues which arose 2 years ago.
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Old 07-23-2017, 01:55 PM   #116
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In October 1995, I was earning less than 50 Thousand a year. This is gross, not net. In my world we were living well, I had a nice 10 year old car that I had just bought, we lived in a small 1 bedroom apt, but everything in it was either new or in good shape. We went out to dinner at least once a week, every 2 weeks the bride got new clothes, not designer stuff, but with every pay check I went and got a new something for her. If our bellwether was our neighbors, we were not feeling deprived.
I remember hearing about some one who made 150K a year. Wow, more than triple of what i was doing. I let myself imagine all the things I could do and buy with that kind of dough.
Fast forward 22 years, and I just reran our numbers, we have over a 95 % chance of success (4 failures) if we wanted to spend that amount now over the next 51 years. The 150k due to inflation is now 246 if I did it right. Funny thing is I no longer dream of spending big bucks every year. Im happy with the 14 year old Hyundai(XG 350L) with 38K miles. I cant really spend any more money on food than I do now. I buy champagne and caviar for occasions, if i did it more often it wouldnt feel special. Our closets are busting with nice new clothes. Maybe a few designer ones , but no custom made one offs. Im happy financially. My current situation doesnt allow for travel, but we were never sight seers to start with. I spent my working lifetime working to get some bigger than needed amount of money. The bride set up recently a boy and girl charity scholarship program at our local Parochial school. We named it after ourselves, Hahahaha, Yeah Im a ham. Yup this is more than enough
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Old 07-23-2017, 02:34 PM   #117
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... so I would consider a 2% WR to be irrationally conservative.
Before throwing around the word irrational, you might want to immerse yourself in argumentation theory.

Argumentation Theory

I read several books on argumentation theory quite a few years ago, and was surprised how much more complex the formal analysis of an argument can be relative to its informal counterpart. In short, the formal analysis of an argument is high-effort thinking, something that humans tend to avoid whenever possible .
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Old 07-23-2017, 02:57 PM   #118
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Before throwing around the word irrational, you might want to immerse yourself in argumentation theory.

Argumentation Theory

I read several books on argumentation theory quite a few years ago, and was surprised how much more complex the formal analysis of an argument can be relative to its informal counterpart. In short, the formal analysis of an argument is high-effort thinking, something that humans tend to avoid whenever possible .
Love the link, and couldn't agree more.

Many times in my life after the DW and I met other couples, I would often conclude he's a "weather man". Which meant I didn't think the person had the ability to use logic and thought during interactions, and could only discuss the weather or other trivial topics.
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Old 07-23-2017, 04:24 PM   #119
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Before throwing around the word irrational, you might want to immerse yourself in argumentation theory.

Argumentation Theory

I read several books on argumentation theory quite a few years ago, and was surprised how much more complex the formal analysis of an argument can be relative to its informal counterpart. In short, the formal analysis of an argument is high-effort thinking, something that humans tend to avoid whenever possible .
An argument is a connected series of statements to establish a definite proposition.
No it isn't.
Yes it is. It isn't just contradiction.
Look, if I argue with you I must take up a contrary position.
But it isn't just saying "No it isn't."
Yes it is.
No it isn't. An argument is an intellectual process ... contradiction is just the automatic gainsaying of anything the other person says.
No it isn't.
Yes it is.
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Old 07-23-2017, 04:57 PM   #120
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Before throwing around the word irrational, you might want to immerse yourself in argumentation theory.

Argumentation Theory

I read several books on argumentation theory quite a few years ago, and was surprised how much more complex the formal analysis of an argument can be relative to its informal counterpart. In short, the formal analysis of an argument is high-effort thinking, something that humans tend to avoid whenever possible .
Lame.

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ir·ra·tion·al
i(r)ˈraSH(ə)nəl
adjective
adjective: irrational
1.
not logical or reasonable.
synonyms: unreasonable, illogical, groundless, baseless, unfounded, unjustifiable; absurd, ridiculous, ludicrous, preposterous, silly, foolish, senseless
I'll stand by what I wrote as 2% being unreasonable, illogical, absurd, silly, etc. Especially when evidence suggests that 3% is very sound and prudent. If you don't like it, tough nuts.... go read the first amendement.
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