How much of a buffer did you have before ER?

[Koolau]

I am very close to giving notice and pulling the plug at 37, if I had to give a base WR, it is going to be about 2.5% for my normal spending, but I expect a few years to spike above that, such as for house buying costs (I am not buying in the current bad buy vs rent climate), or a small spike for moving costs/car replacement. I will someday have SS, a small pension, and a likely moderately sizeable inheritance, none of which have much of an effect when considering the buffer I want before retirement, due to the long time horizon.

Work is flexible but I have a new supervisor I like significantly less, a non-work lifestyle I really enjoy, and I simply don't see the need to go too crazy building a buffer for expenses I don't reasonably expect.

I applaude FIRE at 37 but can't quite relate to it. In my case, that would have left too many loose ends (primarily health care). I considered myself to be FI (Financially Independent) when my company vested my pension (albeit, reduced level) AND more importantly, vested their Retiree Health Insurance supplementation. This all happened at age 51. Not too young, but certainly "early" by most definitions.

With THOSE 2 biggies in hand PLUS my "stash" I was good to go - though (told many times) I didn't go for a few years because I was happy doing what I was doing - until I wasn't. YMMV as always.

 

[Delawaredave5]

Having a buffer in the number depends on the on one's "spending latitude".

If the $40k spending is a "hard minimum", then there's a 5% chance of running out of money.

If the spending can be adjusted downward if there's a down market after ER - then that's your "buffer"

 

[indiajust]

Hmm. I thought i was unemployed for 7 years while i invested and fixed and sold the house. Turns out I was retired at 44. Had less than 20k when the house sold. But it has been a few good years in the markets. I suspect the Roth might break 2Meg before I even need it.

From a buffer perspective, I was greatly negative as homeowner, now greatly positive as a renter.

 

[disneysteve]

Having a buffer in the number depends on the on one's "spending latitude".

If the $40k spending is a "hard minimum", then there's a 5% chance of running out of money.

If the spending can be adjusted downward if there's a down market after ER - then that's your "buffer"

That's a really good point. I hadn't thought of it that way. Yes, if your planned expense number includes a fair amount of discretionary spending, then your buffer is already built in. You can trim your vacation spending one year, for example, or eat out less for a while if you need to reduce spending.


The pandemic has taught us this big time. Our current spending is about $2,000/month less than it was pre-COVID. And we're perfectly content (okay, maybe not perfectly, but pretty content). If, in retirement, we found we needed to trim back, we know we could do that and still be very happy with our lifestyle.

 

[teetee]

That's a really good point. I hadn't thought of it that way. Yes, if your planned expense number includes a fair amount of discretionary spending, then your buffer is already built in. You can trim your vacation spending one year, for example, or eat out less for a while if you need to reduce spending.


The pandemic has taught us this big time. Our current spending is about $2,000/month less than it was pre-COVID. And we're perfectly content (okay, maybe not perfectly, but pretty content). If, in retirement, we found we needed to trim back, we know we could do that and still be very happy with our lifestyle.

I am still working on reducing my online shopping spree that I developed since the pandemic started. Something are more expensive online than in store..

I should really learn that being isolation does not mean I have to be surfing online all day.

 

[disneysteve]

I am still working on reducing my online shopping spree that I developed since the pandemic started.

We've found just the opposite. Since we are doing a lot more shopping online, it has eliminated browsing and impulse buying. We get just what we need and nothing else. I hope my wife keeps doing her Target orders online permanently .

 

[corn18]

We needed $1.4M for a comfortable retirement ($25k/ year of pure discretionary spending). Planned to retire at that number, but my separation package and good returns put us @ $2.1M @ retirement (12 Mar 2021 @ age 55). The buffer is nice, but we were willing to retire with the lower amount. I was done with work.

 

[mickeyd]

Define buffer please.

 

[Navigator]

When I retired I found it hard to have any confidence in an arbitrary safety factor, so I used Monte Carlo and Social Security simulators to model a range of possibilities. Performing this “what if” analysis allowed me to plan what I would do if various things happened and gave me good confidence that we’d be fine in retirement.

 

[Koolau]

When I retired I found it hard to have any confidence in an arbitrary safety factor, so I used Monte Carlo and Social Security simulators to model a range of possibilities. Performing this “what if” analysis allowed me to plan what I would do if various things happened and gave me good confidence that we’d be fine in retirement.

I guess I wasn't knowledgable enough to use much "analysis" so skipped right to the "what ifs." From there, I went to what I called the "back up plans." These added an incredible layer of comfort to my final decision (even in light of my buffer of "over saving.") Heh, heh, not ONE of my backups included going back to w*rk. Can you imagine? (I'm sure most here CAN but YMMV.)

 

[bclover]

I'm always the odd man out. Unfortunately after losing 3 significant people in my life( husband, baby brother and sister) over a 3 year span and all before they were 55 I recognized that working for a magical number was not what I wanted to do.
Now I have a pension and retiree health care that is extremely affordable (as in 50 bucks a month) so l guess I consider that my buffer.

I retired full time with one year living expenses buffer. The last 8 years in the market have given me a nice padding though.

I'm spending a chunk of it on home remodeling and vacations next year.

Never stressed about it

 

[Markola]

Having a buffer in the number depends on the on one's "spending latitude".



If the $40k spending is a "hard minimum", then there's a 5% chance of running out of money.



If the spending can be adjusted downward if there's a down market after ER - then that's your "buffer"

+1. The way our Vanguard PAS (AUM) “Dynamic Spending” program works is, we trust the numbers. In up years for our portfolio, we are advised we can spend up to 5% more than the prior year. In down years, we are advised we should spend no more than 2.5% less than the prior year. So if we have a couple of very bad years in a row, our spending will fall up to 5%.

We can handle that. In fact, we haven’t been needing the extra 5% more each year in this bull, so more buffer is being larded up.

 

[6miths]

We had quite a significant buffer - otherwise referred to as DSs' and DDs' (potential) inheritance.

 

[Koolau]

We had quite a significant buffer - otherwise referred to as DSs' and DDs' (potential) inheritance.

I always loved that bumper sticker. "We're Spending Our Children's Inheritance." Even though I'd just about bet money that folks displaying that sticker were NOT doing so, the sentiment was appropriate. Until you die it's YOUR money! Use it the way you want to. YMMV