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07-03-2018, 11:28 AM
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#21
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Moderator Emeritus
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,727
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Quote:
Originally Posted by W2R
We do?
I don't know about other forum members, but personally I make no assumptions about how much others want to spend in retirement. Part of what makes this forum so rich in information and so much fun, is the broad range of incomes and spending here. A salute to members such as Major Tom, Shawn, and others at the LBYM end of spending, and also to those members at the high end such as Danmar, all of whom open our minds to the possibilities life presents.
Speaking of broad ranges of spending, since we are at the mid-year mark I carefully re-examined my projected 2018 spending, and found out that it is down tremendously compared with prior years. At $20K for the year before income taxes I am getting down almost to Major Tom territory (well, not quite). Wanna know why? No dental implants this year, and no big unusual expenses like replacing the AC or buying a Dream Home or hurricane evacuations.
Oh well, I know my lower spending will evaporate as soon as the next big unexpected expense comes up, but right now it's sure nice to add it up and do the projections. These "lumpy" expenses are something that prospective retirees sometimes do not fully consider unless they have several years of meticulous spending records.
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I felt good about our low spending for the first half of the year then I remembered the two dental implants I had done and the cost of DD's April wedding. Oh well, maybe next year!
__________________
*********Go Yankees!*********
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07-03-2018, 11:54 AM
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#22
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Thinks s/he gets paid by the post
Join Date: Sep 2016
Location: Acworth
Posts: 1,214
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Quote:
Originally Posted by stepford
But even those that do provide such info, and are broadly consistent with some metric like the 3-4% rule, are often greeted in the manner I describe if they fall outside the "accepted" range. The replies from forum members are usually very helpful and do provide useful analyses, but the bias I describe is often pretty apparent.
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I agree with you on how we (as a group) sometimes come across to those with outlier expenses. If someone says they think they're cutting it close because they only have $10M then there is almost guaranteed to be at least one or two replies along the lines of "well if $10M isn't enough, then what hope do the rest of us have of ever retiring?" or some other similar response. Similarly, if someone says they are contemplating retiring with $300k, some would post that they need to keep working even if that person would have a 3% withdrawal rate with their current spending and that portfolio.
Of course, everyone looks at things through their own perspective. When I see a person say they have $10M, and then explain that they aren't going to stop working for another 10 years though they'd only need $2M to have a 4% SWR, I can't help but say (internally only) "well just give me some of that extra money now and I'll go ahead and retire for both of us!"
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07-03-2018, 12:42 PM
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#23
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Thinks s/he gets paid by the post
Join Date: Aug 2005
Location: Crownsville
Posts: 3,745
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Y'know, as for that whole $1M rhetoric? Well, according to what source you want to believe, if you actually manage to amass $1M in net worth, that puts you in something like the top 8-9 percent of the population. So, even though $1M isn't what it used to be, it's still a pretty exclusive club.
Anyway, despite the fact that $1M is exclusive, the majority of people DO retire, eventually, so they must be doing it with far less than $1M.
Now everybody I know personally, who's retired (mostly relatives, friends of the family, etc) are making it because they have a pension, or some assistance from a family member. For instance, I have one relative who's in his mid 70's, and getting some kind of social security, disability, something like that...BUT, he's also living with his mother! When she passes away, I have no idea what he's going to do!
I can only think of one example in my life where someone amassed over $1M. That's my Mom and stepdad. However, they both retired back in 2011, and get good pensions that they can't even spend their way through. So in their case, they don't even need it.
So, just going from personal reference, I'm venturing into uncharted territory, with regards to retiring early, and relying mostly on what I've been able to save up over the years. I won't get a pension. I will get SS, but I'm guessing it will only be around $15-20K per year, tops. I have to admit, as the time gets nearer, the thought of it does become daunting. But, I have a feeling that it'll be like jumping into a swimming pool...once that initial shock is over with, the water's great!
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07-03-2018, 12:50 PM
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#24
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Full time employment: Posting here.
Join Date: Feb 2017
Location: Severn
Posts: 947
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46k spending YTD.
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07-03-2018, 01:55 PM
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#25
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Recycles dryer sheets
Join Date: Feb 2017
Location: Weatherford Texas
Posts: 456
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With regard to the categories mentioned in the OP, I and a significant minority of others on this forum fall into another category where our savings makes up a much smaller piece of the ER-FI equation. And I think it can be helpful for newcomers to recognize our different paths to FIRE.
My pension + DW's modest stipend provide a $60k floor on our annual revenue. We use our retirement savings, which is significantly less that $1m, to provide an additional $20k/year while we wait to start Social Security. Therefore, we don't need $1m or more to retire early and achieve our desired lifestyle.
Many of you rely much more heavily on your investments, sometimes exclusively so, while waiting for your start of SoSec if indeed it is available to you.
I think there is a bias toward retiring as early as our finances will allow, mainly because this is an ER community, but I haven't sensed a hostile bias against to $150-$200k/ year retirees. As mentioned in this thread everyone's view of what ER will be like and the financial requirements to achieve that vision, are unique to our respective households.
__________________
Retired June 1, 2018
RE AA 65/35
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07-03-2018, 03:23 PM
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#26
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2009
Posts: 5,308
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I think the OP has a good point. I can even see it in this thread as well as other threads. The general gist I've seen is that people here are mostly middle class or above and $1,000,000 gives you $40k a year and anything below that is basically not middle class. (Not necessarily said in those words but that is the gist).
My response to that is that it misses a couple of things.
To use myself as an example. DH and I have SS income of roughly $48k a year without touching the portfolio. $40k from $1,000,000 would make our income $88k a year. Going forward, at this time (now that kids are gone and we are downsized), I don't expect to need that much. So, yes, we could live a middle class existences on less than $1,000,000. (Yes, I am away that one SS will go away when one of us dies -- if our case we have roughly equal SS -- but some expenses go down so the point doesn't change). The point of all this is that these posts about is X portfolio big enough sometimes all but ignore SS or other sources of income.
Now -- to use my mom as an example. She recently died in her 90s. Her income was about $23k a year from a combination of SS, small pensions, and her RMD from a small IRA.
Going over her financial records I found that over the last 10 years she saved $50k on that $23k a year. That is, she was saving about $5k a year on an income of $23k. How did she do that? Her expenses were low. True, she didn't have some things that many people want as part of a middle class existence (she missed the whole internet thing). On the other hand, she didn't hesitate to spend for anything she wanted. She had just got to a point though where she pretty much had everything she needed. Actually one of the issues going through her stuff is that she actually bought some things that she never used at all. She just didn't need anything. She paid off her house years ago. Her main expenses were house maintenance/utilities and medical. Yes, she had to pay for some services (yard and house cleaning in later years) but she also quit traveling and eating out mostly and didn't drive much during the last 10 years. She would have said that she had everything she wanted.... spending about $18k a year.
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07-03-2018, 03:37 PM
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#27
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: ATL --> Flyover Country
Posts: 6,649
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Quote:
Originally Posted by Katsmeow
Now -- to use my mom as an example. She recently died in her 90s. Her income was about $23k a year from a combination of SS, small pensions, and her RMD from a small IRA.
Going over her financial records I found that over the last 10 years she saved $50k on that $23k a year. That is, she was saving about $5k a year on an income of $23k. How did she do that? Her expenses were low. True, she didn't have some things that many people want as part of a middle class existence (she missed the whole internet thing). On the other hand, she didn't hesitate to spend for anything she wanted. She had just got to a point though where she pretty much had everything she needed. Actually one of the issues going through her stuff is that she actually bought some things that she never used at all. She just didn't need anything. She paid off her house years ago. Her main expenses were house maintenance/utilities and medical. Yes, she had to pay for some services (yard and house cleaning in later years) but she also quit traveling and eating out mostly and didn't drive much during the last 10 years. She would have said that she had everything she wanted.... spending about $18k a year.
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My Dad was in a similar situation as your Mom. He died leaving a decent amount of $ yet only spent about 15K to 20K a year for the last 10 years. His expenses were very low and he wanted for nothing. I also have come across a lot of stuff that was never touched. Funny thing is that over the last few years I asked him repeatedly if there was anything he wanted to see or do and he was content to visit local "haunts".
__________________
FIRE'd in 2014 @ 40 Years Old
Professional Retiree
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07-03-2018, 05:07 PM
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#28
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2009
Posts: 5,308
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Quote:
Originally Posted by ExFlyBoy5
Funny thing is that over the last few years I asked him repeatedly if there was anything he wanted to see or do and he was content to visit local "haunts".
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This was true for my mom as well. I said in my post she had everything she needed. That was true. She also had the things she wanted. She just didn't want a lot of things. But, she bought the jewelry she wanted. She put in new windows in her den that were really nice. She bought me a nice Christmas present every year. But, what she was interested in buying/spending did decrease during that last 10 to 15 years.
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07-03-2018, 06:41 PM
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#29
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Posts: 1,788
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Quote:
Originally Posted by stepford
The main question many posters ask in their first ER forum post is "Do I have enough?" The answer, as many always helpfully chime in, depends strongly on age and spend rate. But I've noticed, almost independent of these factors, we tend to say NO to any nest egg under $1M and some variant of "You have so much you should have retired years ago" to anything over about $4-5M.
Granted this is a fairly broad range, but I think it reveals our assumptions about spending - that pretty much everyone needs something over $30-40K/yr to live on and anyone should be happy with anything over about $200K. While there are clearly those for whom these assumptions are incorrect I see this bias time and again in our responses to these initial posts. In other words, we mostly have middle to upper middle class ER lifestyles and tacitly assume everyone else should do the same.
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Well, really, though, that will probably encompass 95% of people (need over 30k/yr but not over 200K/yr), so it's a fair assumption.
I think intelligent posters will always ask what the person's annual expenses are going to be. If people are giving advice without knowing that, they're not being smart or helpful.
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07-03-2018, 07:59 PM
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#30
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Thinks s/he gets paid by the post
Join Date: Aug 2005
Location: Crownsville
Posts: 3,745
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Here's a few lower-income examples I can think of, from my family...
1) Grandmom's cousin (the one with the mid-70's son I mentioned). She gets around $40K per year in pension, so she's not doing *too* bad. However, she borrowed against her home equity over the years, and a lot of that was to help out her children and grandchildren. She currently owes around $210K on a house she had inherited, free and clear, back in 1971. She did have to pay inheritance tax though, because it passed through her stepmother, rather than a blood relative. She currently has the house for sale, for $400K, but no takers. She said at the rate she's going, she might die there. She's also almost 94, so she might be right...
2) My uncle (Mom's brother). About to turn 66. Currently living off of around $18K per year in SS. He did inherit around $120K when Grandmom passed away back in 2015. He's been drawing that down though, and it's now down to around $80K. He did buy a new truck, though, which took a pretty big chunk. And, over the years, I helped him invest, so he has around $250K in an IRA to tap, when the time comes. He's living in Grandmom's house, which we haven't sold yet, and figured he could stay there as long as he wants. We're procrastinating on that one, because he really wouldn't be able to make it on his own, but Mom doesn't want him living with her. I had sort of planned on him living with me, at some point, but I'm beginning to second guess that!
3) Grandmom. Passed away in 2015, at the age of 91. She was bringing in around $40K per year, between pensions and SS. And not spending all that much. When she passed away, even after expenses there was still around $360K left. Plus, the house. Uncle had been living with her, and while he was benefitting from that, so was she. She would not have been able to make it on her own for so long if it hadn't been for him being there. She would have either had to come live with me or Mom, or gone into assisted living.
4) My Dad. Retired back in 2008, at the age of 62, to care for Granddad (his father). He was only living off of around $18K per year, by 2016, between SS and pension. It was a situation similar to Grandmom, where he lived at Granddad's house, but took care of him, and that helped keep him out of assisted living, until he passed away just one month shy of his 102nd birthday. Alas, Dad passed away just six months later, a few days after he turned 71. Dad has two brothers, and we're still in the process of settling that mess.
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07-03-2018, 11:35 PM
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#31
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Recycles dryer sheets
Join Date: Jul 2017
Location: Seattle
Posts: 81
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Quote:
Originally Posted by Rianne
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5. Watch Small Expenses
Buffett invests in businesses run by managers who obsess over the tiniest costs. He once acquired a company whose owner counted the sheets in rolls of 500-sheet toilet paper to see if he was being cheated (he was). He also admired a friend who painted only the side of his office building that faced the road.
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But then Buffet invested mult-billions of $ in a company where the CEO had the employees make the inside of the computer case (that you never see) as beautiful and polished as the outside
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07-04-2018, 12:30 AM
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#32
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gone traveling
Join Date: Aug 2006
Posts: 994
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.
I retired early [comfortably with a nice paid off home in Dallas] at age 55 and I wasn't even close to a million dollars. But my nest egg keeps growing, so I might yet get there before I die!
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07-04-2018, 01:12 AM
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#33
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Stepford, FYI there is a fatfire subreddit on Reddit for people who want to retire on bigger budgets.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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07-04-2018, 03:13 AM
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#34
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Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: Midwest
Posts: 1,795
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Quote:
Originally Posted by stepford
But even those that do provide such info, and are broadly consistent with some metric like the 3-4% rule, are often greeted in the manner I describe if they fall outside the "accepted" range. The replies from forum members are usually very helpful and do provide useful analyses, but the bias I describe is often pretty apparent.
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I see your point, but do not really agree with your conclusion. If the title of the forum was "big income/savers retirement forum", or "retire using fire calc forum" the answer would be more obvious.
It is a little intimidating here for lower income retirees, (who get along just fine, thank you) to expose themselves financially here. When reading about the multi-millionaires, it can be humbling to go public about your own under 1 mill of investable assets portfolio. As a result, my guess is that many such retirees are silent and simply lurk about. They have their own bias-that a "micro" retirement it is possible, but remain quiet most of the time. (A few years ago I started a lower income retirement thread and got many positive responses).
We can all be victims of our own situation. If you can retire comfortably on a lower asset base (perhaps without a mortgage in a low COL area), you realize it can easily be done. (Of course, if you do it by taking SS at age 62, have a PT/hobby job, or through owning rental property you run the risk of hitting other trip wires of heated debate). If you live in a high COL area, and are used to a $100k+ a year spending life style, you cannot imagine anyone living on less. In essence, you will defend what you believe to be true about retirement based on personal experience.
I see the high income crowd defending their position out of compassion, not because they want to brag. They are just trying to make sure others don't make a serious mistake (being under funded) at a critical point of their lives.
Two things: retirement is all about income and expenses. If, through non-traditional investments, I can make a 7% or higher return, logic says I can get by on a lesser asset base. If my expenses are half of other folks, the same applies.
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07-04-2018, 03:47 AM
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#35
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2015
Location: Michigan
Posts: 5,003
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Quote:
$1M to $4M would replace the income for the vast majority of Americans. The following data, for 2015, shows the upper limit for each income quintile in the US.
| Upper Limit | | Mean | | Assets @ 4% | | | | | | | | | Lowest | $22,800 | | $12,457 | | $570,000 | UL/4% | Second | $43,511 | | $32,631 | | $1,087,000 | | Third | $72,001 | | $56,832 | | $1,800,000 | | Fourth | $112,262 | | $92,031 | | $2,806,000 | | Highest | ***** | | $202,366 | | $5,059,000 | Mean/4% |
So, yes you can retire with more or less than the above but you would be at the extremes.
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It's not bias, it's just math.
__________________
"The mountains are calling, and I must go." John Muir
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07-04-2018, 04:19 AM
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#36
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Full time employment: Posting here.
Join Date: Jun 2018
Location: Brisbane
Posts: 855
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brucethebroker ,
could i suggest the low-income ( early ) retirees are an unnaturally brave bunch to start with , already resisting peer-pressure , and avoiding stereo-typing .
as i see it they WILL have to invest smarter and be more financially agile , but neither skill is impossible to acquire ( just hard effort )
good luck to all who try
__________________
i hold the Australian listed versions of AU ( Anglo Ashanti ) , BHP , and JHG .
You must learn from the mistakes of others. You can't possibly live long enough to make them all yourself.
Samuel Levenson
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07-04-2018, 06:23 AM
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#37
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Posts: 1,788
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Quote:
Originally Posted by Oz investor
brucethebroker ,
could i suggest the low-income ( early ) retirees are an unnaturally brave bunch to start with , already resisting peer-pressure , and avoiding stereo-typing .
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My thought, too. To me, keeping expenses low is a source of pride, because it means I've got the courage and smarts to live independently, relatively free from social programming about consumerism/materialism and what the "good life" supposedly requires. It also seems like evidence to me that I've managed my finances pretty well in my life, so that I'm not saddled with lots of expenses.
My retirement expenses will be about 32K/yr. I could be more frugal, but I'm not a fanatic about it.
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07-04-2018, 07:03 AM
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#38
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Full time employment: Posting here.
Join Date: Jun 2018
Location: Brisbane
Posts: 855
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i was partly programmed by mum
mum ( and dad ) having grown up in the great depression ( 1930s )
used to put on a special Sunday dinner bread and dripping sandwiches
the bread was not so fresh and 'dripping ' is recycled cooking fats with a little pepper and other spices ( whatever is at hand )
the good part was those economy measures let them pay out the mortgage several years early ( and just as well , father died in 1969 after a short illness at not even 48)
but that bias has probably already crept into my posting here
cheers !!
__________________
i hold the Australian listed versions of AU ( Anglo Ashanti ) , BHP , and JHG .
You must learn from the mistakes of others. You can't possibly live long enough to make them all yourself.
Samuel Levenson
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07-04-2018, 07:27 AM
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#39
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Thinks s/he gets paid by the post
Join Date: Nov 2009
Location: SF East Bay
Posts: 4,342
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Quote:
Originally Posted by Oz investor
used to put on a special Sunday dinner bread and dripping sandwiches
the bread was not so fresh and 'dripping ' is recycled cooking fats with a little pepper and other spices ( whatever is at hand )
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Growing up in the Midlands in England in the 70's, I remember my Mum wiping a piece of bread around the pan to pick up the dripping. Tasty!
Dripping - Wikipedia
__________________
Contentedly ER, with 3 furry friends (now, sadly, 1).
Planning my escape to the wide open spaces in my campervan (with my remaining kitty, of course!)
On a mission to become the world's second most boring man.
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07-04-2018, 10:03 AM
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#40
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by ER Eddie
My thought, too. To me, keeping expenses low is a source of pride, because it means I've got the courage and smarts to live independently, relatively free from social programming about consumerism/materialism and what the "good life" supposedly requires. It also seems like evidence to me that I've managed my finances pretty well in my life, so that I'm not saddled with lots of expenses.
My retirement expenses will be about 32K/yr. I could be more frugal, but I'm not a fanatic about it.
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+1. I don't have super low expenses like some of the posters here in low cost of living areas, but our retirement expenses are down by about 66% from what we used to spend pre-retirement and we've been pretty excited by that. Our retirement principle has been to cut the expenses, keep the lifestyle.
It is a hoot on Reddit how many pre-retiree households say they are making are making $300 - $500K+, living middle class lifestyles and investing the rest to retire early. All those early retirement blogs really have had an impact on at least some of the next generation of retirees.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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