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Old 05-03-2021, 08:16 PM   #21
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My buffer was to not consider SS in what I needed, and to aim for "pleasantly plump" Fire. Ten years later, it is working out just fine, and my net worth is still growing.
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Old 05-03-2021, 08:31 PM   #22
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I added 20% to my annual spending for the first 15 years of ER for excess spending. I suppose that could be considered a buffer. I have not spent any of that yet as frugal habits die hard. But, alas, DW has stepped up and had planned some very extensive trips for this summer and 2022.
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Old 05-03-2021, 09:44 PM   #23
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I'm factoring in lots of buffer but it depends on how you define buffer and what the retirement police rules are.

I'm planning to retire next year but the missus is going to continue working for another 5-8 years because she works a quasi public sector job, has a db pension, and wants to build it up to a certain level because they've implemented various penalities because too many members were retiring early and putting strain on the viability of the plan. No guarantees though as she could get pushed out of her job as soon as tomorrow because of the situation at her workplace.

When I retire next year, our investable assets will be about 50-55x our current spend.
However, our retirement plan is to travel half the year. Based on that budget, our investable assets at my retirement drops to about 27x that estimated spend.

For sake of simplicity:
If we run into a rough patch, first level of buffer will be being flexible with our travel spend.
Second level of buffer is that we haven't factored in government benefits in our estimates because who knows what changes there might be to benefits with the current environment.
Third level of buffer is our house which we can tap into the equity or trade in for a retirement community/assisted living facility.

It's likely too much buffer but not having to sweat it out when the markets take an extended hit is worth it for us.
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Old 05-03-2021, 09:54 PM   #24
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If you retired with 75x, please don't advise people with 25x to jump.
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Old 05-03-2021, 10:31 PM   #25
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When we started making those irreversible decisions that set us on the path to ER, yes, we had a buffer, but nothing like what some here are describing. At that point, we had a 95% success rate, if we included SS.

But I tried to be generous in our budget so we had a bit of flex. I also counted a few riskier investments as zeros. And also assumed zero income from an investment which had been delivering about 5-10% of our spend, which ended up being a good thing as it was in the hospitality industry in nyc and went under not long after covid. We also have a significant percent of our net worth (and spend) tied up in our home, so if we decided to sell it at some point that would change the numbers significantly.

The flip side is that we have young kids, so spend is inherently more difficult to forecast, and a longer time horizon.

Almost three years later, DH has continued to work as a consultant and we’ve had a few of those riskier investments return capital. That, coupled with market returns and three fewer years of retirement horizon, means we’re now at 100% and can theoretically spend about 10% more than my initial budget.

Three years in, our initial planned budget looks like it was about 10% higher than what we’re spending, but we’ve had some ‘one time’ costs I’m not including in that spend. Those extras felt ok with ‘extra’ income coming in from DH’s consulting, but we’ll definitely cut back on that type of spend now that business is slowing down.

I agree with the comments around understanding the source of funds and the spend. We are relying mostly on our portfolio and are funding a relatively fat fire. While it wouldn’t be our preference right now, the ability to downsize our lifestyle gives us a built in buffer.

One other point I would make. I was miserable in my job and wanted out. Because of that I was willing to push the numbers and take on more risk. When we started first thinking about ER it was 95%, assuming we sold our house in 20yrs and downsized, which I was good with. But it feels far better to have the buffer we have now. I think my stress level would be an order of magnitude higher without it.
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Old 05-04-2021, 04:06 AM   #26
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Old 05-04-2021, 04:39 AM   #27
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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.
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Old 05-04-2021, 04:59 AM   #28
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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).
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Old 05-04-2021, 05:00 AM   #29
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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.


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Old 05-04-2021, 05:40 AM   #30
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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.
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Old 05-04-2021, 06:15 AM   #31
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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.
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Old 05-04-2021, 06:33 AM   #32
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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.
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Old 05-04-2021, 06:57 AM   #33
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I had a home remodel and one vehicle buffer or around $100k
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Old 05-04-2021, 06:59 AM   #34
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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.
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Old 05-04-2021, 07:18 AM   #35
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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.
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Old 05-04-2021, 07:47 AM   #36
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We probably had 2x needs plus a little extra set aside for travel when we took our very early retirement.
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Old 05-04-2021, 09:10 AM   #37
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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.
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Old 05-04-2021, 09:26 AM   #38
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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.
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Old 05-04-2021, 09:27 AM   #39
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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.
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Old 05-04-2021, 09:50 AM   #40
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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 %.
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