Is $1million enough

[donheff]

Quote:

Originally Posted by Mr._johngalt And for those of you who might be wondering: No DSL, cable or water softener. Prepaid cell only.

JG - do you do all your posting on a dial-up or is there a hip, Internet cafe in that rural location? Surely not a library?

[RockMiner]

Quote:

Originally Posted by GMueller Can a $1M nest egg safely and consistently generate enough income to sustain the average middle-class lifestyle? Perhaps, but IMHO it would retire taking on more risk than I feel comfortable with. I want a $40K/year lifestyle with very little risk. Why, because I don’t want to worry about how I’m going to make ends meet when I retire, or worry that a “down year” in the market could send me back to work, or that I might have to "cut back" drastically. So, in my opinion, ER requires more than $1M nest egg. Without a pension, or any other source of income, I venture that $1.2 – 1.5M would be a more reasonable target.

IMO many (if not most) of the people who have managed to accumulate that much capital are also accustomed to living pretty well. While 40k/yr may be very doable in some areas, for many it would feel very tight, especially for a couple. No one likes the sensation of barely keeping your head above water. If it includes a paid for house and cars we're getting warmer.

Not everyone wants to live like a Possum...exceptions like Mr_johngalt duly noted.

[modhatter]

Well, here'e a thought. Since the OP states he is single. One solution to increasing his income would be to marry. If he is a man, as I am assuming, there are a multitude of women out there looking for a good man.

Or, if opposed to marriage, you can just live together and share all expences. There are always options for men if you get financially pressed.

[audreyh1]

Quote:

Originally Posted by Rock IMO many (if not most) of the people who have managed to accumulate that much capital are also accustomed to living pretty well. While 40k/yr may be very doable in some areas, for many it would feel very tight, especially for a couple.

Not necessarily. In fact it's the LBYMers who are far more likely to have accumulated $1M and these folks are used to living modestly. "The Millionaire Next Door" is does a great job of refuting the myth that those folks living large are also the ones which a high net worth. In reality, it's usually the opposite.

Then, when you are looking at a SINGLE person, which the OP is, $40K is not so lean. Of course, it's highly dependent on the cost of living in a particular geographical location.

Sure, $40K per year is modest, but is it doable - absolutely. Especially if your current monthly expenses are $1500/month - that's only $18K per year.

Audrey

[Corporateburnout]

Quote:

Originally Posted by audreyh1 Not necessarily. In fact it's the LBYMers who are far more likely to have accumulated $1M and these folks are used to living modestly. "The Millionaire Next Door" is does a great job of refuting the myth that those folks living large are also the ones which a high net worth. In reality, it's usually the opposite. Then, when you are looking at a SINGLE person, which the OP is, $40K is not so lean. Of course, it's highly dependent on the cost of living in a particular geographical location. Sure, $40K per year is modest, but is it doable - absolutely. Especially if your current monthly expenses are $1500/month - that's only $18K per year. Audrey

We need to underline "cost of living in a particular geographic location". $1500 a month won't get you far in the northeast. My daughter is one year out of college makes 38K per year and barely makes with 2 roomates in Boston.

[heyyou]

nun, the OP, is single, frugal, house-less, and willing to move. By asking the question, nun has shown an interest in foregoing more employment. Audrey is right. Other than health care, nun is in good shape financially. The poster with $15K expenses of property tax and food needs to save $375K (25 multiples) extra just to cover those expenses. I'm sure that is a nice home but I couldn't afford that when working and most certainly not in retirement. I'm glad that I can see what others have and say "Oh, I can't afford that." They feel better until I say "I retired a year ago."

[saluki9]

Quote:

Originally Posted by heyyou I'm sure that is a nice home but I couldn't afford that when working and most certainly not in retirement. ."

Ha "nice home" it's actually a small 2 bedroom condo that I've been trying to sell for 3.5 months.

[Mr._johngalt]

Quote:

Originally Posted by Rock Not everyone wants to live like a Possum...exceptions like Mr_johngalt duly noted.

I'm not doing the "Possum living" thing, but it's awfully nice to know that
I could.

JG

[Mr._johngalt]

Quote:

Originally Posted by donheff JG - do you do all your posting on a dial-up or is there a hip, Internet cafe in that rural location? Surely not a library?

Dial-up, but as soon as this blasted machine dies (again) I am considering
going with the library 100% and junking this piece of crap.

JG

[RockMiner]

Quote:

Originally Posted by Mr._johngalt I'm not doing the "Possum living" thing, but it's awfully nice to know that I could.

I stand corrected...was exaggerating to make a point

I understand the LBYM thing, (I are one) but I'd like to see actual numbers on how many people with modest incomes actually get to $1MM of investable assets. It's not so easy. Obviously, some manage it but my sense is that savings correlate pretty well with income (though not 1:1). Sure, I've known a number of big spenders who probably have very little put away, but saving is a LOT easier for those with more coming in. That said, a life of LBYM has to make for an easier transition to ER.

Sorry for topic detour.

[nun]

Quote:

Originally Posted by audreyh1 Not necessarily. In fact it's the LBYMers who are far more likely to have accumulated $1M and these folks are used to living modestly. Audrey

Exactly Audrey, I live in the NE and I've managed to save for ER by living below my means. I don't think I'm frugal, but others probably would. I drive a 15 year old car that I bought new and I don't spend a lot on clothes. I do go out a lot with friends, but my monthly spending is about $3.5k including everything, house, food, travel etc. If you take housing out of the equation I live on $2k/month. I intend to buy a small place and see if what i have left will generate $24k/year.

I've run some numbers and if I spend $200k on a small apartment I'll have $500k tax deferred and $300k after tax. Assuming 3% inflation, a 6% annual invetsment return that's taxed at 15% capital gains, a 20% income tax rate on my tax deferred money and an initial $24k/year withdrawal rate it works well. The fightening thing is that by the time I'm 90, with 3% inflation I'll be spending $100k/year. I don't actually think this is correct as I expect my spending to tail off if I get pasted sat 75 or 80.

Health Insurance is a concern if I stay in the US, what are the premiuns like for a healthy single person. Living in the NE I'm keeping a close eye on the MA law that mandates that everyone must have health insurance. I think they are capping the premiuns at $250/month

[Mr._johngalt]

Quote:

Originally Posted by nun Exactly Audrey, I live in the NE and I've managed to save for ER by living below my means. I don't think I'm frugal, but others probably would. I drive a 15 year old car that I bought new and I don't spend a lot on clothes. I do go out a lot with friends, but my monthly spending is about $3.5k including everything, house, food, travel etc. If you take housing out of the equation I live on $2k/month. I intend to buy a small place and see if what i have left will generate $24k/year. I've run some numbers and if I spend $200k on a small apartment I'll have $500k tax deferred and $300k after tax. Assuming 3% inflation, a 6% annual invetsment return that's taxed at 15% capital gains, a 20% income tax rate on my tax deferred money and an initial $24k/year withdrawal rate it works well. The fightening thing is that by the time I'm 90, with 3% inflation I'll be spending $100k/year. I don't actually think this is correct as I expect my spending to tail off if I get pasted sat 75 or 80. Health Insurance is a concern if I stay in the US, what are the premiuns like for a healthy single person. Living in the NE I'm keeping a close eye on the MA law that mandates that everyone must have health insurance. I think they are capping the premiuns at $250/month

Ah, the "People's Republic of Mass.", you gotta love 'em.

Here's the way I reached FI-ER.......Cadillacs and country clubs.
Big boats, big vacations and big lunch/dinner/drink tabs. Nice clothes,
big houses, nice furnishings, etc etc. In my case LBYM clearly
meant "Live beyond your means."
Disclaimer: I am not recommending
this to anyone. I have no regrets though.

JG

[Delawaredave]

I don't see how $1MM would support a comfortable ER anywhere in USA in their 40's and having to pay for a medical plan.

I see my expenses going up after ER - more free time for hobbies and entertainment will add expenses filling time that I was working.

Working friend of mine says there's a "financial double whammy" to his wife working:
1. Working makes money, and
2. Working reduces time she could be shopping....

Fortunately I have a lot of cheap hobbies...

[Spanky]

Quote:

Originally Posted by Delawaredave Working friend of mine says there's a "financial double whammy" to his wife working: 1. Working makes money, and 2. Working reduces time she could be shopping.... Fortunately I have a lot of cheap hobbies...

My hobbies are pretty economical, such as biking, walking, reading at the library. My concern is that my wife likes shopping and travel to Europe or Southeast Asia.

[Mr._johngalt]

Quote:

Originally Posted by Spanky My hobbies are pretty economical, such as biking, walking, reading at the library. My concern is that my wife likes shopping and travel to Europe or Southeast Asia.

Sounds like trouble.

JG

[tryan]

Quote:

Living in the NE I'm keeping a close eye on the MA law that mandates that everyone must have health insurance. I think they are capping the premiuns at $250/month

Nun, I hope this works out for you .... buuuut , a friend (~55 years young) in MA just got a MA BCBS policy for 2 (himself and wife) for $946/mo. $250/month is far fetched.

[retire@40]

Quote:

Originally Posted by nun ...Living in the NE I'm keeping a close eye on the MA law that mandates that everyone must have health insurance. I think they are capping the premiuns at $250/month

Capping the premiums at $250/month?

[LRS]

$40,000 sounds doable to me. We live on $55,000 with two kids. No problem (but we do have a paid-off house).

Take away kids, savings, taxes and what's left? About $40,000, I would imagine. Now, where to live? I agree that moving to a lower cost area just for the sake of saving money is somewhat silly. Who will your friends be? Will you be safe? I could move to a trailer park a couple miles away and save a bundle, but someone was killed there not too long ago. Guess I'll stay in my nice middle class neighborhood as long as I can afford to pay the property tax.

Now, the part about moving abroad to a cheaper country is interesting to me. Several people mentioned different countries in Central Europe and so on. The only countries I know of that offer a special visa for retirees are Mexico and Thailand. Mexico allows pensioners (or anyone) with a reliable income above $1500 ($2000 for couples) a long term visa. I have heard something similar about Thailand. But I have looked at the visa requirements for Slovakia and other Central European countries, and there is no provision for a pensioner's visa. Other European Union countries are similar--you may want to live in Europe, but you will not qualify for a visa unless you are employed in that country, you are a student in a local university, or you have the means to start a business and employ locals.

There is a treaty called the Schengen agreement which limits your stay in a EU counry to three months in any 12 month period. I'd be glad to find out there is some way around this [outside of working, studying or starting a business], but so far I haven't heard of one. Is there anyone out there with practical experience with this? I'd love to hear about it.

[nun]

Quote:

Originally Posted by Tawny Dangle There is a treaty called the Schengen agreement which limits your stay in a EU counry to three months in any 12 month period. I'd be glad to find out there is some way around this [outside of working, studying or starting a business], but so far I haven't heard of one. Is there anyone out there with practical experience with this? I'd love to hear about it.

OP hear, I have the luxury, or maybe complication is a better description, of having dual citizenship so I can reside in the US and anywhere in the EU. Right now the hot places to buy property are Romania and Bulgaria as they will be entering the EU next year. With flights so cheap within Europe lots of people are buying retirement and vacation homes there.

I'm not that adventurous though and my choices are between staying in the US or
going to "Old Europe"

[perinova]

Quote:

Originally Posted by nun Does this $1.2M-$1.5M include a house?

I didn't see Gmueller's answer.
I do agree with the $1.2M minimum - assets including house in a low cost area such as in an inexpensive midwestern state. I also computed about $1.5M in coastal states.
That is with my present frugal lifestyle and a 4%WR.