Would you retire at 30 with $1m?

[brewer12345]

Depends on one's definition of retirement. If that means, "I will never work again," its not a good idea. If it means, "I will work from time to time when I feel like it and on my own terms," it could very well work out just fine.

[FUEGO]

I wouldn't personally want to do it on "only" $1 million, but we did it on just a bit more. $1.4 million plus a paid off house but with 3 kids instead of 1.

We spend around $32k/yr which works out to a little under 3% withdrawal rate after setting aside a couple hundred thousand for certain earmarks. A 20% drop in values from today would leave us with a 3.3% withdrawal rate. In other words, not the end of the world. I also have a small side hustle income which has increased steadily and comes close to covering our expenses some months. Will I ever work full time or part time again? I can't rule it out, and it might not even be for financial reasons. I might just get bored or stumble into an awesome opportunity.

As for the 30-something couple the OP mentions, if it's the Go Curry Cracker folks, I think the guy is 40 now. I also think they have maybe double that $1 million hypothetical amount but live off dividends from their taxable portfolio only. And their spending is very flexible because they don't have fixed expenses. Market crashes and they spend more time in Mexico, Central America, SE Asia, etc. The bull roars and they spend more time in western Europe. It's a pretty unique approach to spending since we can't really swing our expenses more than about 25% lower without making real sacrifices in quality of life.

As for $600k at age 30, I wouldn't personally do that. But maybe that's plenty for a single person who lives on the cheap and doesn't desire a lot of material possessions. $24k/yr isn't a lot less than what the five of us spend, but I don't rely on a 4% WR either.

[Fermion]

$1.4m here in mid 40s retired couple no kids. $1m is doable, but I think they should cut spending down to $30,000 a year. They won't have the SS backdrop we will have (wife qualifies for about $2000 a year at age 66 and I get half of that, so $3000 SS pension at age 66). If you started work at age 20 and worked until age 30, you would have a SS benefit of less than $1000 (maybe $2000 combined if both worked, otherwise $1500 combined).

Rampant inflation is not a issue, as that is controlled by the portfolio allocation and withdrawal rate. I mean, yes, pre WWII German style inflation would be bad, but it would not matter if you had $1m or $10m then.

[FUEGO]

Quote:

Originally Posted by Fermion $1.4m here in mid 40s retired couple no kids. $1m is doable, but I think they should cut spending down to $30,000 a year. They won't have the SS backdrop we will have (wife qualifies for about $2000 a year at age 66 and I get half of that, so $3000 SS pension at age 66). If you started work at age 20 and worked until age 30, you would have a SS benefit of less than $1000 (maybe $2000 combined if both worked, otherwise $1500 combined).

Those are monthly figures, right? DW and I will each get just over $1000/mo ($24k/yr combined) at age 66 and we each only have about 10 good years of earnings (plus 7-8 really lean years during HS and college with minimal earnings).

[Fermion]

Quote:

Originally Posted by FUEGO Those are monthly figures, right? DW and I will each get just over $1000/mo ($24k/yr combined) at age 66 and we each only have about 10 good years of earnings (plus 7-8 really lean years during HS and college with minimal earnings).

Yes, monthly figures. My wife put in 25 years of earnings and the last 17 or so were at max SS limit. I don't have quite enough credits myself so will just apply for half of her benefits unless I do some sort of work between now (age 44) and SS retirement age. The spouse getting half of the other spouse's benefits is pretty damn sweet.

[stepford]

Seems more a matter of life philosophy than numbers. They'd be committing to a more "interesting" lifestyle than I'd be comfortable with, but can we really say we've done so much better by grinding through 25-35 years of work just so we can retain our affluent existence for another 30-40 years of increasing dotage.

(apparently run-on sentences are a sign of my own increasing dotage)

FWIW like others here I think the adventure might be worth considering for someone on their own or perhaps a couple, but I'd be uncomfortable suggesting it as an option for a family. The adults can freely decide to chuck the standard 9-5 and live the dream, whatever the consequences, but the kids don't get a choice.

[flyingaway]

I think people can "retire" at any age with any amount of money. The homeless people on the street can certainly claim that they retired with a zero portfolio.

[MooreBonds]

Quote:

Originally Posted by soupcxan Over at another FIRE message board, people were discussing this family (two adults in mid-30s and a baby) that were theoretically retiring on $1M at 4%. Another case was a mid-20s shooting to ER at 30 with $600k @ 4%. I said these folks were crazy for using 4% and thinking these amounts could realistically last the rest of their lives. I got downvoted to oblivion for this opinion. Am I wrong?

Let me guess - the MMM forum? I tried pointing out the errors in various posters' understanding of the 4% SWR theory (I even exchanged posts with MMM's wife once, when she claimed the 4% SWR meant "never having to spend your principal", but she never replied). They don't seem to want to acknowledge the risks they are taking on.

So what is their plan for health insurance? Are they prepared to shoulder a huge % of their annual budget for health expenses as a typical child grows up?

Does at least one of the 30-somthing couple have the full 40 quarters of SS to qualify to receive Medicare at age 65? This would be a major issue for someone retiring at 30.

[mathjak107]

not something i would do with only 1 million.

[Theseus]

Knowing what I now Know - no!

That tongue twister aside, if I could have a do-over and be 30 with a million bucks - I bet I'd be tempted Although, I'd still think it was less 'retirement' and more like 'dropping out' or going 'off-grid.'

[Travelwanted]

Agree with most posters in this thread. Given the young age, it would seem MORE stressful than w*rk! I would think a 3% wr or less would be much safer. Adding in kids...yikes. The idea of ER is great, but not if you will struggle financially forever.

[Badger]

No.

You never know what the future holds. I have always been in good shape and healthy. Two years before I retired I had to have 3 major surgeries on my back with the third fusing the lumbar. It has never been right before or since. Fortunately I had medical insurance through work. I am presently going through PT on a major destruction of my rotator cuff and another surgery scheduled in a couple of months to work on the other shoulder. Recovery and PT will continue for at least 8 more months. Fortunately again it will be covered by Medicare and Tricare for Life. I would hate to try and cover the expenses on $30k/yr.

In addition to medical expenses there are car repairs, home repairs if you own your home, etc.

I would not want to jeopardize the well being and future of my family at your age.

Cheers!

[rayinpenn]

Ok let's say you've got a million bucks and are 30. I'll assume you have no mortgage
And no other debt.

Retire? Hell no Id go back to school and get that degree in the field you wish you had on the first place... Law, medicine, web design, farming etc. I'd then find or create that job that I've always wanted to do. Live the frugal smart life debt free and just be happy...






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[soupcxan]

Quote:

Originally Posted by MooreBonds Let me guess - the MMM forum? I tried pointing out the errors in various posters' understanding of the 4% SWR theory (I even exchanged posts with MMM's wife once, when she claimed the 4% SWR meant "never having to spend your principal", but she never replied). They don't seem to want to acknowledge the risks they are taking on.

I can't stand MMM or his disciples. He makes thousands of dollars a month from his blog, hardly the same as living off your portfolio...

[jon-nyc]

Quote:

Originally Posted by thefinancebuff Depends on the definition of retiring. If it's like MMM just switching to self-employment on their own terms the answer would be yes.

And if you had a health care put option at zero premium (Canadian citizenship in his case).

For the rest of us it's pretty risky. It could work, but it could easily fail for reasons out of your control.

[Fermion]

Quote:

Originally Posted by jon-nyc And if you had a health care put option at zero premium (Canadian citizenship in his case). For the rest of us it's pretty risky. It could work, but it could easily fail for reasons out of your control.

How is the ACA not a similar put option for Americans? If your family income is that low, you are not going to pay much of anything for healthcare.

[Texas Proud]

Quote:

Originally Posted by Fermion How is the ACA not a similar put option for Americans? If your family income is that low, you are not going to pay much of anything for healthcare.

This should go to another thread if you want to discuss since it could get heated...

Even if you qualify for low cost insurance, your out of pocket could still be a cost that is hard to afford... the US system can still be costly as opposed to the Canadian system...

[jim584672]

I would be amazed if the ACA survives over the long term, which sucks for me.

[Mulligan]

The term retirement for a 30 year old is probably pretty fluid. Anyone who can accumulate a million by their 30s would certainly be confident enough to not worry about withdrawal rates. They would just go back to making a pile of cash again if they felt the money stash was too low.


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[REWahoo]

Quote:

Originally Posted by jim584672 I would be amazed if the ACA survives over the long term, which sucks for me.

Prepare to be amazed.

Although I'm sure there will be changes, the ACA will almost certainly survive. The opposition to the ACA is very similar to what followed the implementation of Social Security in the 1930's. Like it or not, SS is still around.