How Much is Needed To Retire? (A Twist)

[anonx]

We have about $600k in income producing financial
assets plus a small business worth about $75k.

Lyn and I live very comfortably (to much so?)  on
$21k SS plus $25k IRA withdrawal.   The business
generated about $5k cash flow last year.  

Charlie

Don't get me wrong. I'm happy for you. I admire you. I really do but some of us don't have the luxury of 21K SS in our 30s,40s or even 50s. So planning for a 30K-40K budget of which if only we have the SS cushion of 21K is a really BIG deal.

 

[John Galt]

I totally understand the thing about folks trying
to ER in their "30s, 40s, 50s" looking at that long wait
until SS kicks in, I went through it myself and managed
to fill in the gap with some part time work/consulting
and some luck. Now I am close enough to max SS
(less what they reduce me for dipping in at 62) that I
know I can make it no matter what happens in the
interim. Back when I ERed at 49 though, SS looked like
a pretty far off end of the rainbow.

John Galt

 

[John Galt]

Okay, apologize (again) for repeating, and I realize
I am unusual, but here it is. I "semiretired" ( meaning
working part time) in 1993 at age 49. I had a non-working spouse and a 10 year old at home. Our total
net worth was under $250,000. I did not use this as
my "trigger". I just wanted to do it and quit. In 1998
when I fully retired (after my divorce), my TOTAL net worth
was still well under $400,000. Have not done a lick of work since and have lacked for nothing.

John Galt

 

[anonx]

 Our total
net worth was under $250,000.  ....  In 1998
when I fully retired (after my divorce), my TOTAL net worth
was still well under $400,000.  
John Galt

O.K. I'll bite. Having just ER fairly recently, I'm still trying to figure out the financial side of thing (how to live on my established budget, investing for fixed income, etc. ah.. the whole ball of complicated wax). I'll admit that I would not have the nerve/savvy/know-how to 'pull the trigger' when my net worth was at your 1998 level let alone 1993.

So best I can tell browsing through some of your posts and do correct me if I'm wrong here because I'm relying on my memory and not going back to check the facts: You are risk adverse so you're not in the market. You have the money in the bank at 3% so that's approx. 12,000 annual income that you have to live on. I don't think I can do it at that income level but at the risk of missing something here I just have to ask. Thanks

 

[anonx]

Few more things to the previous post: I'm with the gutless majority of 1M+ asset and have approx. 20+ years before SS if it still there for me to collect.

 

[John Galt]

Gosh anonx, I was hoping someone was paying attention. You get an A++ for asking that
question. First, all my money is not in the bank at 3%.
Far from it. Secondly, I have a working spouse. Thirdly, after my
divorce I worked/consulted for several years up until 1998. Fourth, the winding down of my small company
(which was not completed until after 1998)
produced much better results than anticipated, and
the assets owned by that company (now a small
holding company) produce a much better return than
anticipated. Still, the net worth numbers are accurate
and the reason they work is mostly due to cutting back
our total spending to about 25% of what it was
in the early 90s when I was married to my former spouse. Look at it this way. $400,000 at 4% is
$16,000 a year. Add the wife's salary and for us it's a walk in the park. But, I did it mostly with guts and luck. Not
for everyone I know.

John Galt

 

[charlie]

I think I may have mentioned this before, but when
I "retired" in 1989 it was to a consulting job with the
same company that I set up before quiting. It pissed
HR so much that they changed the rules later but
grandfathered me. Anyway, the 1 year job continued for about 3.5 years before ending. It was like heaven
going from a high pressure mid-level manager job to
an individual contributor with little supervision.

It is another subject, but I think companies are very
stupid for not allowing persons like myself, who can
still produce, to "retire" gracefully, The "up or out"
philosophy has not been helpful to company morale
and loyalty.

Not knowing how long the job would last, I started
the 72(t) option after about 1 year. The "double"
income allowed me to enlarge and remodel my
laundromat. This business was generating about
$30k cash flow per year until the recent recession and
excessive competition killed the golden goose.

So that's the rest of the story (so far).

Cheers,

Charlie

 

[John Galt]

Hi Charlie! Your story is similar to mine in that I also
took a 3.5 year job after semiretirement. I would be doing it still except the company decided they wanted full time and I wouldn't do that. I've always felt that
a well located laundromat would be an excellent
investment. Now, the time has passed for me.

John Galt

 

[bongo2]

I was hoping we would get a few more data points, but here is what we have (or my interpretation of it anyway) comma delimited.

,Age,Spouse Age,Year,Post Tax Assets,Pre Tax Assets,Home,Spending,Other Inc,Net Spending,SS,Kids
Anon,49,44,2002,1000,560,0,40,,40,,
john galt,54,,1998,400,0,0,,spouse,,,grown
unclemick,49,,1993,50,300,40,21,22% work,21,,
anon3,58,,2004,97,385,115,24,9,15,17 at 62,grown
OK - I'll Bite,51,49,2004,1035,0,85,40,20 for 4,40,,
rsboone,51,57,2001,380,1700,750,60,health,60,,
Anon5,55,50,2004,750,500,247,33,,33,,grown?
anon5,41,,2003,1000,160,70,35,30 at ,35,24 at ,
anonimouse,33,32,2005,1100,0,0,30,,30,,none
okay here's data,49,48,2003,1000,1000,0,,23 at 55 COLA,,,
anonother,51,50,2003,900,800,300,82,36,46,,
anon511,46,46,2003,3500,1000,1000,80,,80,,some
Chuck-Lyn,70,,2004,675,0,0,46,,25,21,

 

[bongo2]

Here is the median response:

Age ER'd: 51 (Spouse 49)
Year: 2003
Assets: 900k post tax, 385k pre-tax, 70k home
Spending: 40k

Interestingly with all the arguments about withdrawal rate the median WR is only 2.6%, and only unclemick reported a WR over 5%. Also, with all the talk of extreme frugality, most people had $1-2 million, and several had significant other income.

 

[Bob_Smith]

To those who don't know this (I just made a guess and it worked) you can drag across and copy bongo2's data, paste it into a text file, and then save that text file with a *.csv extension. Then double click on it and it pops up in Excel. Takes about 5 seconds to do and you'll be able to see it in well defined columns.

 

[bongo2]

Thanks Bob. You can also copy and paste the data directly into Excel, and then go to Data/Text to Columns, select "delimited", then check the "comma" box.

 

[retire@40]

I am currently 36. I plan on semi-retiring at 40 with about $900K net worth. I can earn about $30K a year in semi-retirement working only 3 hours a day only 2 days a week in my own home-office doing consulting work.

I could fully retire at 42 at over $1 million net worth, but I may continue the 6 hour workweek until I get sick of it, probably by age 45. I like the benefits of writing off travel and entertainment expenses and some of the other perks that go along with self-employment and being able to contribute to Roth IRAs for my wife and me, so I may just "earn" enough to max out the Roth IRA contributions and justify the writeoffs.

I may get $150K as inheritance at some point in the future, but I'm not counting on it for deciding on ERing. I will just add it to the pot to lower my withdrawal rate.

I need $45K present value to live the lifestyle I want, but can survive with $35K.

 

[cc]

All you need is $15k return on your $900K so you're in great shape. I wonder how many of us at age 40 would choose to work only 6 hours/week at $100/hour? Personally I would be inclined to put in a few more hours!

CC

 

[John Galt]

Re. "put in a few more hours ", not me! Every hour
lost can not be replaced. This is true for everyone
on the planet. You want an absolute certainty?
That's it!

John Galt

 

[grumpy]

Re: How Much is Needed To Retire? (A Twist) Age ER

Anon,


Age ER'd: 57 (Spouse 56)
Year: 2004
Assets: $450K Cash (Post Tax)
$500K 403b, IRA's, TSP (Pre-Tax)
House equity $300K
No Debt
DBP's $60k/yr

Don't plan to skrimp on expenses. Expect $90/yr income


Grumpy

 

[MJ]

Re: How Much is Needed To Retire? (A Twist) Age ER

DBP's $60k/yr

Hi Grumpy,

What is DBP, a pension?

MJ

 

[MJ]

Anon,

I guess I'll add my $2.35 worth.

I plan to ER at 57 (single) in April 2005
Anticipated Assets:
$750K Cash (Post Tax)
$300K 401K, IRA's (Pre-Tax)
House equity $450K
I also get an income of $6K for apartment rental
I have no debt.
I expect about $20K at 62 or $28K at 66 from SSA

I would like to live on $45K to $50K a year.
In a down market I could survive on less $17K if I needed to.

MJ,57,,2005,750,300,450,50,6 rental,44,20,none

MJ

 

[dex]

MJ,
Your picture look a lot like mine.
I think the results of this survey point out one thing.
There are a lot of people out there with a lot of money.
My plan.
Retile @ 50 - single with
IRA 225k
Other 975
Penson 13K @ 60
SS max at 63 - I think it is about 25k infuture dollars 17K in current dollars.

 

[dex]

I forgot to add looking for annual post tax spending of 45K

 

[MJ]

Hi dex,

I see a one minor difference, you are planning to ER 7 years sooner.

Congrats!

By the way, the SS I quoted are future $.

MJ

 

[cc]

Several people here have talked about ERing at 50 or younger with max SS benefits. There must be something I don't understand about the benefit calculation - don't you need 35 years of max SS earnings to get the max benefit? At 50 or younger wouldn't most people still have some "zero" years in their history?

My confusion on this started last fall with one of those retirement "check-up" articles in USA Today. It was a single guy 55 I think who had left private industry at 50 for a government job. His retirement "plan" included both the government pension and $1900/mo. SS at age 62! I e-mailed the author to ask how that was possible but got no reply...

 

[Jarhead*]

CC (guest):

I was out of soc. sec. system at age 49.

Had 5 no counts. (Total of 30 in systems).

At age 62, almost 5 years ago, drew just a little short of max. Soc. Sec. (About $75.00 short of max.)

If I had continued in system for the additional 13 years, would have paid over $50,000 more into soc. security.

The formula they use is very non-punitive for the amount of soc. sec. you receive if you are close to 35 years.
I always paid the max. into soc sec., and for me there was very little difference as you can see.
Hope this helps, Jarhead

 

[cc]

Thanks for the info - I was aware that "diminishing returns" set in as you complete the 35 years but I didn't realize you could drop out 5 and still be that close. I'll have to play around with the benefit calculator a little more to get a better feel for it...

CC

 

[John Galt]

Hello Jarhead! Good post. I have wondered about
some of that myself. When you say you get
"75.00 short of maximum" SS, I assume you mean short
of what would be max. for retirees at 62. Correct?

Awaiting your answer I will continue to ponder
"Adams apples" and related gender issues

John Galt