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When do you feel comfortable declaring you've hit your number?
02-11-2021, 09:42 AM
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#1
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Recycles dryer sheets
Join Date: Mar 2012
Posts: 203
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When do you feel comfortable declaring you've hit your number?
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!"?
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From 2013, $170k -> $227k -> $244k -> $226k -> $312k -> $426k -> $462k -> $515k -> $791k -> $875k -> $808k
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02-11-2021, 09:47 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Dallas
Posts: 1,155
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OMY, and I am serious.
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02-11-2021, 09:54 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2015
Posts: 5,867
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Honestly, I never really had a "number". Five years before we retired, three FA told us we were good to go with our pensions and SS, plus what we had invested as back up.
I needed to work until 60 for Retiree medical benefits, which are significant and will disappear when we go on medicare.
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Give a Man a fish, he will eat for a day.
Teach a Man to fish, he will eat for a lifetime.
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02-11-2021, 09:56 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,999
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It depends on what percentage of your savings is in equities. If you hit your number by investing 100% of your savings in equities you are going to be subject to large fluctuations in net worth so you will need to have more cushion to protect against market volatility. That is why many of us drop our equity exposure down to a comfortable level (for me that was 55%) when we first retire to protect against sequence of returns risk.
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02-11-2021, 10:05 AM
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#5
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Recycles dryer sheets
Join Date: Mar 2012
Posts: 203
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Quote:
Originally Posted by Ready
It depends on what percentage of your savings is in equities. If you hit your number by investing 100% of your savings in equities you are going to be subject to large fluctuations in net worth so you will need to have more cushion to protect against market volatility. That is why many of us drop our equity exposure down to a comfortable level (for me that was 55%) when we first retire to protect against sequence of returns risk.
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Makes sense, thanks.
__________________
From 2013, $170k -> $227k -> $244k -> $226k -> $312k -> $426k -> $462k -> $515k -> $791k -> $875k -> $808k
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02-11-2021, 10:25 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,228
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I like having some buffer. Partly to protect against a market drop very early in my retirement, and more to protect me from an inaccurate budget. It's too easy for people to forget about things like replacing cars, house repairs, or including health insurance premiums but forgetting that they will be responsible for the deductible and co-pays.
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02-11-2021, 10:36 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Location: Denver
Posts: 3,519
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#1 : Settle on an annual budget by examining your past expenses & making some reasonable assumptions of the future. Add some headroom for safety.
#2: Settle on an SWR method and get your AA in line with its assumptions. Study the papers themselves rather than articles about them.
#3: Settle on a portfolio value that meets the above
Once you hit it, you're good to go. SWR takes the worst historical record into account so you shouldn't be worried about day to day fluctuations in the market.
#4: Always monitor your spending vs budget & be flexible in your spending.
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02-11-2021, 10:36 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,882
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There's the math, there's the emotions, and then there's the decisions. The timeline of each can be different.
Usually the math comes first. For me, I hit my number on June 20, 2015, when my FIRE stash supported a 95% success rate at my Quicken-measured spending level.
For me the decisions came next. I ran my numbers through more torture, thought about what would happen if the market dropped, etc. I went on sabbatical in November 2015 and officially RE'd February 19, 2016.
Emotionally coming to grips with everything is a process: "Am I really there? Do I deserve it? What will other people think? Does it feel safe?" I think most people process some or all of the emotional aspects before deciding to RE. I had been looking at FIRE and planning for it for probably fifteen years, so I had worked through much of the emotions over that time frame. Still, there was emotional processing after RE for me, which I think is just stuff you can't grok until you get there and actually do it.
As a direct answer to your question, I was watching and updating my numbers daily, and declared victory the first day the numbers hit the mathematical mark. If they had dropped below that number the next day or the next month, I still would have retired based on my temporary achievement; I would not have worked longer just to get the number back up. My thought was that those fluctuations were covered by the 4% rule. However, I can see other people choosing to do otherwise depending on their personal preferences and situation and goals. (Fortunately, I retired into a rising market, so my numbers have not yet dropped below that June 2015 data point.)
I'll add that in practice, once you get close to the FI point, it really becomes a little mushy and you can rationalize your way over or under the line by counting or not counting assets, income, or expenses. This behavior can easily delay or accelerate your FI date by a few years.
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"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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02-11-2021, 10:43 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Apr 2016
Location: Ex-Cali
Posts: 1,245
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That's a tough one. I KNOW I could pull the plug today but I still do OMY to pad the pile. However, on the days the work annoyances are the greatest I remind myself I can walk away. It makes work easier to do deal with.
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The plan was September 1, 2022 and I am 95% there. Still working a few hours a week at the real job.
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02-11-2021, 10:52 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2016
Location: Northern Virginia
Posts: 7,591
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I had 3 numbers: low, mid and high.
I pulled the trigger after exceeding my high number.
Had I disliked my job it could have been several years earlier.
Now? I'm at 2x my low number.
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02-11-2021, 11:31 AM
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#11
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gone traveling
Join Date: Feb 2021
Posts: 19
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When dividends from stocks and stock ETFs cross 130k per year. Means 10k for taxes and 10k a month for living expenses.
Of course one also needs few 100k in cash.
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02-11-2021, 11:34 AM
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#12
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,501
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Quote:
Originally Posted by pacergal
Honestly, I never really had a "number". [...]I needed to work until 60 for Retiree medical benefits[...]
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+1 Same here. I retired before the Affordable Care Act, so I had to work several years past when I was FI in order to qualify for retiree health insurance. Which I still have, although it converted to a (very nice!) Medicare supplement after I turned 65. I retired on the first day when I was eligible for retiree medical.
I continued to save for retirement as before, during those years, which is why I have more than the absolute minimum needed to fund my retirement lifestyle.
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02-11-2021, 11:47 AM
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#13
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Full time employment: Posting here.
Join Date: Oct 2015
Posts: 900
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I would agree with most that has already been said, but add I had different "numbers" at different stages of life and continually moved the goal posts, partially due to lifestyle creep, partially due to setting arbitrary numbers. In the end, it was more about a date target (when my heavy lifting with 4 kids was done). As long as my min number was hit by then (which it was), the rest was figuring out what I wanted to do next.
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02-11-2021, 12:03 PM
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#14
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Moderator Emeritus
Join Date: May 2007
Posts: 12,901
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For me it was when I could afford to live decently to age 100 even if my investments were to return 0% real for the duration - without counting social security, inheritances, or home equity. So basically: Investment portfolio value > desired annual spending x (100-current age).
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02-11-2021, 12:18 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Jan 2010
Location: 5-sided building
Posts: 1,184
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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)
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02-11-2021, 02:38 PM
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#16
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Recycles dryer sheets
Join Date: Dec 2016
Posts: 413
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Hawkeye
consider at least a 3-5 year CD ladder
(remember that HELOC's can be canceled and were during the GFC)
As for the question:
I viewed any "number" as a squishy threshold
I modeled potential cash flows, various inflation estimates, etc and had reduced equities prior
(mine wasn't that early (60)) but mine was mostly tied to retiree health care and to insuring that any return to the salt mines wouldn't be needed for either
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02-11-2021, 03:52 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,366
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I was satisfied when I had some safety margin, extra discretionary dollars beyond our normal budget, the stock market didn't seem to be in a peak or dip, and I felt that we could survive on just SS if we had to. Then our division was terminated and I retired about six months ahead of plan. So a push helped too.
Keep in mind that the 4% rule/FIRECalc uses stock price data for just one specific day each year. That should mostly eliminate market peaks and dips, and means you're abusing the data a bit if you base your 4% success on a mid-year market peak value.
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02-11-2021, 04:03 PM
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#18
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Moderator
Join Date: Nov 2014
Posts: 9,182
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Yeah, there’s your number and then there’s what you need to live. If I thought I needed $1M to live off of, my number would likely be something like $1.5M. So a bit of fluctuation around my number - the $1.5M, wouldn’t bother me too much. Of course, having a 25% drop in the market the day you retire is still a bad day no matter how conservative your assumptions are.
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Every day when I open my eyes now it feels like a Saturday - David Gray
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02-11-2021, 04:06 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Mar 2009
Posts: 2,985
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30x anticipated annual expenses on top of SS and mini pension. The rest is 90+% equities in Roth accounts. Let it ride. Your results WILL vary.
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Took SS at 62 and hope I live long enough to regret the decision.
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02-11-2021, 04:07 PM
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#20
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Recycles dryer sheets
Join Date: Mar 2012
Posts: 203
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Quote:
Originally Posted by Jerry1
If I thought I needed $1M to live off of, my number would likely be something like $1.5M. So a bit of fluctuation around my number - the $1.5M, wouldn’t bother me too much.
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A 50% fluctuation doesn't bother you? I'm having a hard time understanding that. Is it that your yearly expenses fluctuate wildly each year over the past 10 years?
__________________
From 2013, $170k -> $227k -> $244k -> $226k -> $312k -> $426k -> $462k -> $515k -> $791k -> $875k -> $808k
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