How much of a buffer did you have before ER?

[DrRoy]

3% WR.

 

[mrfeh]

We often talk about the number we need/needed to retire. How much of a buffer do you factor into that number?



Let's say your expenses are 40K and you're using the 25x income for your number, so $1M. Would you actually retire when you hit $1M or would you want 10% or 20% or some other amount over $1M before you felt comfortable walking away from the paycheck?

I felt comfortable when our annual expenses were 3% of our portfolio.

 

[racy]

Achieving "The number" wasn't my reason for retiring from megacorp in 2013. Rather my BS bucket was full. The buffer turned out to be 50% (not factoring in SS).

 

[FLSUnFIRE]

I'm not sure many people feel completely "comfortable" before FIRE no matter what the buffer (especially here where folks are a bit more financially conservative than many online FIRE communities). Anecdotally, from these forums, it also seems that most feel much more comfortable a few years into FIRE as some of the unknowns become known and the diligence and worry fed into their planning prior to FIREing paid off. Many more complaints about not leaving sooner than wishing they had stayed on longer!



Circumstances and people are different (some can jump back in, consult, etc, while others will not be able to go back to the well that has fed them for so long) so the practical and psychological need for a buffer will vary greatly.


I'm just a couple weeks out from giving notice and anticipate a great mental decompression -as much from decision fatigue on quitting as the actual work stress I will be leaving behind. I don't think in terms of a buffer but I'm 47 and my current expenses (pretty lean but there is not much I'm wanting for other than time) were ~1.9% of my liquid assets EOM April. Under 2.5% is semi-comfortable to me pre-FIRE with as long a horizon as I have.


FLSunFIRE

 

[ShokWaveRider]

Not taking into account SS 3x. With SS 2 x. That is what we did. It has not failed for us. Still going strong after 15 years.

 

[Markola]

No OMY buffer. I left when it was a good time to go, and after DW left. Other buffers include, if even needed, decades of compounding home equity, less expensive or less frequent travel, enjoyable part time work, SS at 70, equal possibility our portfolio performs in the upper bands of the Monte Carlo simulation vs. the SHTF lower bands.

 

[razztazz]

I just left a mid-five-figures amount on the side "off the books" so that if I needed to cover a heavy unexpected something I could throw money at it without upsetting the main retirement calculations. I planned I would replenish it over a period of time if I had spent any of it.

 

[Ronstar]

I had a home remodel and one vehicle buffer or around $100k

 

[dixonge]

Our 'buffer' did not come in the form of investments but income (pensions/SS) - we retired when income was projected to be 2x our budget. It's been four years since the first pension check, 2 since the first SS check, and 3 mo. since our 2nd pension check. In that time we boosted our investments from around $10k to $100k. Target is $500k since our pensions are non-COLA. We may or may not hit that amount, but you need goals, right?


Yes, we achieved this mainly by living frugally in our early retirement years. But we're used to that, and have increasingly splurged as our worries about 'having enough' recede.

 

[Ready-4-ER-at-14]

I looked at ER differently. I calculated bare bones retirement. Current actual costs retirement, and Flush Retirement which included our current rate of annual retirement saving to save, give away, or blow on travel or whatever.
I then looked at free cash flow without selling anything (some of this with annuities when interest rates were much better than now that are last to die) and we are between actual and approaching fat right now with < year for younger of us to hang up the employment mantle.
I expect to draw down 2% for ~4 years then have accts grow without withdrawal till we spend, die or have given parts of it away as dividends tend to grow over time and another SS will be added.
I'm more cautious than is probably prudent. I found this site when the journey was nearly done and although embracing and moving towards index investing now underperforming stock market with fixed income portion now.

 

[audreyh1]

We probably had 2x needs plus a little extra set aside for travel when we took our very early retirement.

 

[W2R]

When I retired the ACA was not yet available, and I felt that private insurance at that time was insanely high priced and "iffy". So, instead of basing my retirement date on nestegg size, I felt compelled to wait until the day after I was eligible for retiree medical insurance. During that time I continued to LBYM and "live like a student". As you might expect, by the time I retired I had saved considerably more than needed for my desired spending level.

Because my retirement date was not based on nest egg size, I really can't give you a meaningful answer to your question. I used some of the extra to buy my Dream Home, and I have been making an effort to BTD in general. During the past 12 years, my average spending has been almost 112% of the spending level I had originally planned for. Despite that my retirement is presently still over-funded. That's kind of nice. Better over-funded than under-funded, IMO.

I would have preferred to retire earlier, but c'est la vie - - for me, that's water under the bridge.

 

[ExFlyBoy5]

I'm just a couple weeks out from giving notice and anticipate a great mental decompression -as much from decision fatigue on quitting as the actual work stress I will be leaving behind. ...

Congrats! I think most folks would tell you that the decompression that results from going full on FIRE is immeasurable. For me, the last day I drove home from w*rk will be in the top 3 days of my life. It was glorious!

Anyway, I am lucky to have a pension that covers all our normal expenses and have some left over. We have also been very fortunate in that our portfolio has done exceedingly well and at this point we could pretty much maintain our current standard of living even if my pension went away (at a 3.5% SWR). The only bad thing in all of this is that my DW has yet to pull the w*rking plug even though we are 100% in FIREcalc.

 

[pacergal]

I also waited until age 60 for retiree medical benefits from work.
Blessed to have pensions and ss that easily covers our budget. Savings and if needed, the house, are our buffer.

 

[kcowan]

Owing to market conditions, I had a negative buffer, so I actively traded stocks until we could last until age 105. Then stopped trading.

We have an individual stock portfolio that has grown to 85% of the total and have been "blowing the dough" for 3 years now. Our spend prior to this current phase was 1.85 %.

 

[Major Tom]

I didn't have a buffer when I stopped working. I refer to it as "stopped working" and not "retired" because, at the time my company went out of business and laid me off, I spent a year or two considering the possibility of going back to work at some point.

My numbers were marginal at first, so I was entertaining the possibility of some kind of work in the future, if things didn't work out. Then 2 things happened. I came into a modest sum from my father's estate, on his passing. This, combined with what turned out to be the most marvelous bull run, graduallly eased me into retirement.

In my case, my "buffer" was my flexibility, and ability to turn on a dime. I am single, with no kids, so these sorts of lifestyle and economic decisions are much easier for me than some others.

 

[CRLLS]

The 25x expenses is just a rule of thumb, which is one that I actually believed in prior to leaving the place that paid me. Another ROT is when savings x 4% is > than your take home pay after deducting any monthly retirement savings. These estimates don't take into count pensions or SS or maybe inheritances. I now believe that it is an over simplified method. There are so many more detailed calculators that help confirm your plan. As it it turned out, we had around a 100% buffer after when the other income sources. I guess that is good since our SS will cover our fixed plus planned discretionary annual expenses. That leaves the entire savings for the real buffer! It is our longevity insurance so we don't go too wild. We lived a life of LBYM so we really don't know how to go wild.

 

[freedomatlast]

Felt comfortable retiring with a 2X buffer.

 

[TheWizard]

My "expenses" and my desired income in retirement are two different things.
This allows me flexibility in retirement to spend more on discretionary expenses.

So my target back before start of retirement in 2013 was simply to replace 100% of my net employment income.
This approach has worked out well...

 

[tb001]

I’ll add that early in our planning, when our success rates were cutting it closer, I looked at possible inheritances as another buffer. Not a sure thing, but potential upside, along with the other items I mentioned.

I’m glad I listened to people here who wisely told me not to count on that. We’re lucky to have parents in their 90s, but caring for them in the last few years has been very expensive. I’m just grateful that they (so far) have planned well enough that there are dollars available for their care.

 

[Exchme]

We probably could have retired 2+ years before we did, but the extra savings from working that time and the recent market performance give us a lot of confidence that the question will be "how much inheritance we leave the kids?", instead of "do we have enough?".

My dad thought he was going to have plenty and instead, he had a decade of nursing home care for Alzheimer's that ate up almost everything, so that experience drove me to keep going past the minimum. I like the peace of mind of knowing we should be OK.

 

[Out of Steam]

We were about 10% above our savings goal at retirement, not including an ESOP that isn't available to us to draw yet. My wife (the employee) has tended towards caution regarding its value, but it has done well so far.

I based Firecalc simulations on that savings goal and was well above 90% success to age 94/95).

 

[statsman]

With a very conservative portfolio, we planned for more than most would have. In almost four years of retirement, we haven't hit 1% WR yet. But inflation is here, so we'll see.

 

[Surewhitey]

My buffer is working 6 years longer than DW... Well, maybe that's her buffer.

 

[NW-Bound]

The year I stopped working, our expenses ran around 4%WR. However, I knew our expenses would go down due to many non-recurrent items going away with time, such as college expenses, some house-related items, and just plain Bernicke's effects. Future SS was also a big factor.

Nine years later, the above effects happened as thought. Additionally due to a fortunate sequence of return, my WR has been 1% with just my wife claiming SS, and I am still delaying my SS till 70.

Huge buffer now.

And I still do not feel the need to "blow the dough".