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Old 02-14-2021, 07:24 AM   #41
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"When do you feel comfortable declaring you've hit your number"?

I also never had a number, I thought everyone worked till they fell over, really!

So, when my wife explained to me one day, that I should retire, I started looking for info to how, when, where and why. After running a million different financial calculators and finding ER I was convinced I could stop.

I always had a plan for what I would like, when that day came thou. My plan was to have enough in CD's/MM/savings accounts etc. to live on that and SS alone. My goal was not to have to depend on my investment portfolio. So, in my estimation it was going to be bullet proof plan. Lol Not sure that will be the case but we have a huge cushion for down times for long periods.

No final number for us when we exist that daily grind.
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Old 02-14-2021, 07:45 AM   #42
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I also never had a number. I had a date. Plan was to survive past that date on the amount of $ I had on that date.
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Old 02-14-2021, 08:01 AM   #43
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And, there may have been some whiskey involved!
Ha ha. Good one.
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Old 02-14-2021, 08:07 AM   #44
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Once the mortgage was paid off, there were 2 new cars in the driveway that were paid for, I was a year from Medicare, we had Tricare for Life, my wife was retired, there were no loans, and we had enough in non-equity investments to carry us through with our annual budget. It helped that i enjoyed how I was earning a living so no pressure to retire there otherwise it would have been earlier.



Cheers!
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Old 02-14-2021, 08:12 AM   #45
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I have found that having a very tight handle on our future expenses and a robust budgeting model contributed most to my confidence to retire early. We had been living according to detailed annual budgets for 26 years of accumulation and investing. We knew the numbers inside and out.

Having served on a condo board during that time I also learned all about the need for a separate capital expense fund. When I was sure that our assets were able to meet our forecasted expenses with room to spare, then I was comfortable with the numbers.

What we didn't count on was moving permanently outside the US and dealing with foreign exchange risk for income on assets that are valued in US dollars. That one was new and for the last 11 years has made me an alert student of its art and science.

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Old 02-14-2021, 08:15 AM   #46
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For those of us over 30, what does OMY stand for?

"Oh My?"

"On My Year?"

"On My Yacht?"


On a serious note, the way I decide my own OMY (One More Year) is not emotional but analytical. I do several runs of firecalc by changing the retirement year every time. I add OMY to the year I see where the success rate crosses from <100% success rate to 100%. Otherwise OMY can be open ended which may be OP's dilemma.
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Old 02-14-2021, 08:38 AM   #47
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When we hit 200%, I called it quits. That’s 2X the 100% $ amount based on several calculators including FIRECALC. DW kept working for another 8 years to my surprise...
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Old 02-14-2021, 12:59 PM   #48
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I think many of us like myself never feel "comfortable" with a final number. I've extended my number so many times for no real reason that I've lost track. I think for the most part it's because I've been a saver for so many years, it's hard to all of a sudden stop and spend it.

I have more than enough money to last me the rest of my life but I still end up saving money every month for no real reason other than not wanting to waste it. Which in turn is probably why I have so much saved unfortunately.
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Old 02-14-2021, 07:32 PM   #49
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Due to market fluctuations, you may hit your number one day, drop back below your number, and not come back up to your number for days, weeks or months.

At what point do you feel comfortable saying, "Yay, I/We made it!"?
We're humans, and our emotions make us overthink everything. The math & logic of financial independence has been rigorously tested over the last 25 years, but behavioral finance has proven that math & logic can be derailed with every recession.

When you reach assets of 25x annual spending, you're at the tripwire of the 4% Safe Withdrawal Rate. It's still valid if you dip down to 24.99x or even 24x.

You're at financial independence, and staying longer in the workplace is just padding the numbers. It's time to plan your transition, and you can execute it immediately.

People worry about the worst-case failures of the 4% SWR, but that's easily countered with longevity insurance. For most Americans who qualify, Social Security is all the annuity they'll ever need. SS is not counted as part of the 4% SWR computer simulations.

You'll see a potential failure of the 4% SWR coming from years away. You're not going to rigidly spend down your assets like a 4% SWR robot. You'll clamp down on your spending and use other variable-spending techniques to avoid failure long before it becomes a threat.

You might even earn an additional dollar or two during your FI. If you're approaching a failure situation then you only need $10K/year for a year or two in order to avoid it. Full-time jobs might be difficult to find during a recession, but part-time work is everywhere because most people pass it up to continue searching for full-time work.

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The math is straightforward, when you've hit your number, even if it is at an all time market high, that's what your safe withdrawal rate is supposed to handle. But I think most people end up feeling worried about exactly that. I'd certainly feel better if I hit my number in the middle of a market crash. :)
Thanks, Retch, I was beginning to wonder whether people had forgotten how this works.

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Dealing with this right now at 48 y/o. According to firecalc, I'm there, at a 94% to 97% success rate. Market keeps going up and down, then up again, which affects the pot of resources needed to provide 2/3 of my expected spending level. The other 1/3 comes from the military retirement.

Plan is to keep working while 2 things happen: refi the mortgage to lower the expected expenses, and build up a cash reserve to mitigate the need to sell equities in a down market. (I'm thinking that 2 years of cash, backed up with a HELOC, ought to be enough)
Two years of cash in CDs worked fine for us during the first 10 years of sequence-of-returns risk.
https://the-military-guide.com/how-s...ng-retirement/
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Old 02-14-2021, 09:05 PM   #50
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I got upset about office politics two years ago and started playing with financial calculators to see if we could retire. Back then, our number seemed a little marginal as there were some historical cases that weren't great, we wanted to leave some to the kids and LTC can be a worry, so decided to stick with it.

But we cut some spending, the markets jumped up, we saved a lot and suddenly we find ourselves with savings of more than 40X expenses and that will get better once SS kicks in.

Since each day was getting harder to keep slogging it out at work, we finally pulled the plug, me last week, DW in two weeks. So I think we went from marginally OK to super conservative so fast we never noticed the switch.
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Old 02-14-2021, 09:25 PM   #51
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This morning I found a retirement plan I created in 2008 (when I was 38) after my dad died at age 64.

My goal was not to die while still working, so I picked 12/31/2024 (the end of the year I turn age 55) as my retirement goal. My plans said by 12/31/2024:

(1) I will have a certain 7-figure amount in my 401(k) and Roth accounts;

(2) the house will be 100% paid off;

(3) kids’ colleges paid or fully funded; and

(4) I will have a certain amount set aside in non-tax deferred savings (not in a retirement account).

I assumed a conservative rate of return, then calculated where each account needed to be at age 55 and again at 60 to provide a safe inflation adjusted 6-figure burn rate from age 55 - 90. This was long before I learned of firecalc or this site.

I also planned out what age my wife and I would take SS, when Medicare kicks in, and some thoughts on post retirement positions I could pick up if I got bored with retirement.

I am 51 and wife is 49, and we have already satisfied all 4 of my 12/31/2024 benchmarks, plus some. I even added a SepIRA and some rental properties. I don’t want to jinx it, but my 12/31/2029 (age 60) account numbers are within grasp (my plan assumed I would let the tax deferred account grow untouched until 60 at the earliest).

So in theory I could pull the plug now, but between the time I made my plan in 2008 and now, I have left the rat race and instead name my hours at my own small low overhead business. I actually credit this move for my ability to move my timeline forward, as I multiplied how much money I earned working on my own vs. working at a large company with its large overhead. Maybe once covid is done I will slow down and start traveling.
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Old 02-15-2021, 04:54 AM   #52
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.... If you're approaching a failure situation then you only need $10K/year for a year or two in order to avoid it. ...
Perhaps this is true most of the time, but not all the time.

I'd recommend reviewing these blog articles at Early Retirement Now's Safe Withdrawal Rate series for a different perspective on how flexible we may need to be in the worst historical situations. Of course - and fortunately! - the worst case rarely happens.

Part 23: Flexibility and Side Hustles!
https://earlyretirementnow.com/2018/...3-flexibility/

Part 24: Flexibility Myths vs. Reality
https://earlyretirementnow.com/2018/...hs-vs-reality/

Part 25: More Flexibility Myths
https://earlyretirementnow.com/2018/...ibility-myths/
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Old 02-15-2021, 09:11 AM   #53
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Perhaps this is true most of the time, but not all the time.

I'd recommend reviewing these blog articles at Early Retirement Now's Safe Withdrawal Rate series for a different perspective on how flexible we may need to be in the worst historical situations. Of course - and fortunately! - the worst case rarely happens.

...
I am a strong proponent of his very last point. That is, I wage retirement the same way the US military has waged war over the past century - with overwhelmingly superior firepower. There is great flexibility inherent in an inexhaustible supply of ammunition.
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Old 02-15-2021, 09:48 AM   #54
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4% is a guideline, not a rule. If someone wants to march into their boss's office the day they hit 25x, good luck to them, but I sure wouldn't have felt safe doing that, and I wouldn't advise anyone else to do that.

As for getting a part-time job as a fall back, I'd much rather work OMY than go back to some lower paying less skilled job later. If it turns out it was unnecessary, then I've got Fat FIRE and that ain't so bad.

If someone is at 4% and has just lost their job, or absolutely hates it, or it is endangering their life/health, maybe starting ER and dealing with one of those fall back cases if they have to is worth the risk.

If you're going to retire at 25x annual spending, you better have a very good handle on what your annual spending will be, including irregular expenses.
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Old 02-15-2021, 10:12 AM   #55
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^ it always important to turn over every stone. In many cases here the 25x expenses they haven't including SS down the road. I really believe if you have 25x there is a high percentage they will be fine.
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Old 02-15-2021, 12:13 PM   #56
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4% is a guideline, not a rule. If someone wants to march into their boss's office the day they hit 25x, good luck to them, but I sure wouldn't have felt safe doing that, and I wouldn't advise anyone else to do that.
I agree with this statement. But what would be the right number, on your opinion?
I think there is no such a magic number that would perfectly work for everybody. But I still believe somewhere between 30X and 33X will work for most people.
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Old 02-15-2021, 12:45 PM   #57
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I think many of us like myself never feel "comfortable" with a final number. I've extended my number so many times for no real reason that I've lost track. I think for the most part it's because I've been a saver for so many years, it's hard to all of a sudden stop and spend it.

I have more than enough money to last me the rest of my life but I still end up saving money every month for no real reason other than not wanting to waste it. Which in turn is probably why I have so much saved unfortunately.

I'm at 45X and still think about a market pullback. Who wants to watch $300,000 disappear, even though it won't make any difference in what I spend. It is still a game to watch.
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Old 02-15-2021, 12:53 PM   #58
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Many of us have significant pensions and social security as it relates to our current costs. For me it's not so much a number anymore, more like when can I afford to take the hit of the early pension with reductions. So I'm faced with this sliding scale of 25 x something that's variable, as weighed against y minus something else. It's a bit of a pain in the ass!
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Old 02-15-2021, 01:11 PM   #59
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I agree with this statement. But what would be the right number, on your opinion?
I think there is no such a magic number that would perfectly work for everybody. But I still believe somewhere between 30X and 33X will work for most people.
I don't know. I read above that supposedly social security doesn't count, but it seems to me a lot of people say "I want to spend $X, I have a pension + SS = $Y, so I need to be able to withdraw $Z, which is $X-$Y, so my withdrawal rate on $Z is WR%." I don't know why you wouldn't want to include SS and pension in your calculations, though probably a discounted rate of SS seems prudent.

Other factors are how good of a handle one has on expenses, whether there's a lot of fat in the budget one would be willing to trim, and so on. A lot also depends on one outlook. Will the US, and the world, continue to have prosperous times, or will natural or man-made events make historical look-backs meaningless? Maybe the pandemic will drag on with different strains for many years.

Someone looking to ER at 40 faces a lot more uncertainty than someone at 62.

I give it a wider range, 20x to 40x. That's kind of off the top of my head. For me, personally, I was looking for just what you said, 30-33X. I don't remember exactly what I was when I pulled the plug but I'm pretty sure it was around 30.
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Old 02-15-2021, 01:43 PM   #60
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I don't know. I read above that supposedly social security doesn't count, but it seems to me a lot of people say "I want to spend $X, I have a pension + SS = $Y, so I need to be able to withdraw $Z, which is $X-$Y, so my withdrawal rate on $Z is WR%." I don't know why you wouldn't want to include SS and pension in your calculations, though probably a discounted rate of SS seems prudent.

Well, SS certainly changes the picture, I have 4 years to 70 yrs old before I collect, the young wife has 9 yrs. Conservatively SS will cover 50% of our spending, if it's not discounted first.


We need to start socking it to the workers to fund SS at a higher rate to cover our butts. Or not .
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