What were your FIRE numbers?

[besa]

Plugging numbers into FIRE, I found that 100% of the time....

I can go 40 years spending $50k a year, if I can get 4% per year on $1.7 M.

The variable is how to guarantee 4% a year.

My question to the group is:

What were some numbers folks had when they "successfully" stop working forever? Any gotchas?

Are there any of you here or is this a fantasy?

For example: Expenses - $30k/year, Savings - $1.5 M (invested 60/40), etc etc.?

Does it have to be complicated?

1 poster said: $2.1 M at 3.8%. How do I guarantee 3.8%. Sometimes, like now, that number is not available guaranteed.

Thanks.

 

[SecondCor521]

That poster probably meant that they had $2.1M and were withdrawing an amount of 3.8% of their nest egg each year. They probably did not mean that their investments were returning 3.8% per year.

Many posters here, me included, used accurate to conservative personal numbers in multiple retirement calculators (including FIREcalc) and checked for 100% success or "green" or "OK" or whatever was the best answer the site could give.

I think few here rely mostly on guaranteed rates of return. I think most, me included, have some balance between stocks and bonds. We usually deal with the uncertain and not-guaranteed rates of return in various ways. A common one is to withdraw less than the average rate of return and reserve the excess in the portfolio to address the volatility. Another common one is to have budget flexibility. A third is to follow a variable withdrawal strategy. Another is to have a base of relatively guaranteed income such as Social Security or a pension. Most here use a blend of these.

There are lots of gotchas. The most common one I've seen is not doing a complete and accurate assessment of spending needs / aka budget before retiring. Another common one is not understanding what the early retirement studies and data say specifically and how and whether to apply them to one's own situation. Health insurance and health care is a big issue to consider.

The example expenses you give are typical for a person here. Some have more, some have less.

No, it doesn't have to be complicated. A person in the example situation you gave, who had a paid off house, was 55 or so, had a well-vetted budget, had health care covered somehow, and had a pension or SS waiting for them at 62/65/70 would probably be just fine.

 

[aaronc879]

No one on this forum knows if they successfully retired forever. You don't know that until you are dead.

 

[besa]

....No, it doesn't have to be complicated...

Makes sense. There is no easy answer. Even someone with $40 M saved is going to have the issue of lifestyle maint.

They could easily make it to the grave if they live below what they were used to.

Thanks for the free lesson/reminder SecondCor521.

 

[Dtail]

Actually I think the poster did mean a return of 3.8% on 2m+ investment portfolio.
This investor IIRC has mainly if not all investments in CD's and has loaded up on many Credit Union type special deals.
Starting from scratch currently, it would be next to impossible in the current yield environment to get a portfolio yield of 3.8% in CD's.

 

[Truckinalong]

I think you are asking regardless of what poster meant, when people did pull the plug, what was their 1) annual expense projection, 2) how much did they have invested and 3) what asset allocation.

It can be very complicated to answer that but for simplicity those 3 line items would be cool to know for most here.

 

[DrRoy]

We were funded to absorb something like this. For 2020 I have a pension equal to .7% WR and raised cash of 2.7% for the highest RE budget so far. Half of that was for remodeling projects and travel. Part of that very discretionary half is already spent, some is deferred now to 2022, and most of the rest will be spent later this year or next. Bottom line is, we have a lot of room to spend less.

 

[atmsmshr]

25 years actuarial life expectancy left for myself, and 27 for DW.

If we are among the lucky, we will share at least 20 more years together before one of us passes.

On the average, I expect only the next 10-15 years to be good health.

Those were my hard deck numbers.

 

[Fermion]

We are building a house that will not have a loan and most of our money is in IRA/401K so hopefully if things get really bad, we can be protected from creditors/hospital bills somewhat.

Fall back plan is SS with a paid for house and travel limited to walks in the parks and trips to the library.

This is for the scenario that the market drops 80% and stays there for a decade.

 

[pacergal]

We targeted our retirement budget based on our expected pension, which was very close to our budget at the time.
Then I found this website and learned a whole lot about expected retirement expenses, Firecalc, DIY investing, medicare, etc. And I am still learning.
So we adjusted our budget even more, made sure we had some cushion, and felt comfortable with a bare bones budget if needed (thanks to imoldernyou, may he rest in peace--loved his perspectives)
We do have our savings and retirement monies in guaranteed cash account, balanced funds, and dividend stocks.
Retired a little over 3 years and doing OK. Come here almost daily to continue to read, learn and get reassurance for those much, much wiser than me.

 

[CRLLS]

Given the original conditions of earning 4% guaranteed income on a 1.5M investment with a 30K expense budget should last you forever. That is earning 20K more per year than expenses.

To be meaningful, a lot more info is needed to find a meaningful answer. Even then the answer is typically historically based. One never knows what the next 30-40 years will bring in both earnings and expenses. As they say, "Past performance is not indicative of future results". Retirement readiness is a crap shoot, but if you do your homework, you will be playing with loaded dice.

You are on a good start in that your required income for your expenses are lower than a hypothetical 3.5 or 4% withdrawal rate.

 

[Starsky]

A few years after DW and I were married, we met with a financial planner and jointly determined that it would take about $3M for us to retire and keep our standard of living - at the time I was 42. That was our number, and my lodestar for RE. DW and I weren't eligible for any pensions, but I had high confidence that $3 Million was a number we could make work to survive on in retirement.

As soon as I knew that we had reached that number, and we had our streams of income securely in place with rental Real Estate, we pulled the rip cord. (Almost 6 years ago) I was 53 and DW was 65, and could start collecting SS. (My original prediction was that I would retire in 2020!)

To address your portfolio question, I think everyone has their own idea of what is 'being ready' to retire based on their lifestyle and expectations. I couldn't bring myself to retire based on an expected market return that I couldn't take confidence in. We need income. It would be very hard to retire now. That's probably why people are already forecasting the end of ER, now that interest rates are at zero and could even go negative in the future. What do we do? Pray for inflation? Frankly, I always felt that restricting my investments to the stock market was as foolish an investment strategy as not diversifying a stock portfolio and investing in one company.

If I were 100% dependent on Wall Street for my retirement funds, I would be very concerned right now, and would be looking for alternative types of secure investments to pursue that would make FIRECalc work for me. Inputting a 4% return in the market right now would be a fantasy, although when the market eventually turns, higher market returns may be quite possible.

 

[daylatedollarshort]

We used matching strategies and a zero real return for planning purposes, meaning our investments kept up with inflation and anything we earned above and beyond that was gravy. Most of our investments are in fixed income like TIPS, CDs and stable value funds. The basic formula was 100 / retirement years = SWR. Right now at our ages our safe withdrawal rate could be up to 100 / 30 = 3.33%, plus a bit more because most of our TIPS purchases were well over the 0% real return mark. Plus we have SS, a few modest pensions, a little hobby income, and low overhead. So far it has worked out well.

 

[besa]

I am learning with each new post.

With the covid now I am so ready to retire.

I don't want to retire because I am sick. I want to retire and live my life strong for many years.

I have been staying home from work since 13 Mar and been getting pretty good at filling the day with small projects, exercise, and mindless entertainment.

I put together a financial plan/proposal to present to my wife based on pension, rental income, SWR from penalty free liquid assets, etc, etc. compared to projected expenses.

Once SoSec kicks for both of us, we are golden making over $6k/month on top of assets (counting my pension and rental income).

It is pretty much more complicated than she wants, but the main thing is to give her reassurance of what we have. Her significant contribution to all of this is a 401k of about $500k, currently in a money market fund (~1.5% projected earnings), she is still working for a few years, and her SoSec in about 10 years.

I moved $100k into the market this week buying mostly aristocrat dividend etfs and funds. This is a risk, but I am betting on the win. These investments are the ones that send the FIREcalc into the stratosphere when I use big numbers. But, like one poster said, we could be in for a recession etc. so this is basically gambling money for now.

I am confident there are a few quiet folks here that are sitting on millions because they got Netflix, Telsa, Amazon etc. at $20/share. So, we need some risk.

Another factor is that my job is easy and my boss is generally great. Why retire? We have guys in their 60's all over the place. This factor is following the crowd. But, is the crowd lost?

Thanks.

 

[pb4uski]

....1 poster said: $2.1 M at 3.8%. How do I guarantee 3.8%. Sometimes, like now, that number is not available guaranteed.

Thanks.

But 3.8% is a WR, not a rate of return. IOW, if you withdraw 3.8%/year over 40 years, you are withdrawing 152% and will have $0 at the end.... so the implicit rate of return is only 2.22%.

So if you had $100 in a savings account earning 2.22% and took out $3.8 each year for 40 years, at the end of 40 years then you would have $0.

OTOH, if you had $100 in a savings account earning 3.8% and took out $3.8 each year for 40 years, at the end of the 40 years you would still have $100.

2.22% is a much easier rate of return to achieve than 3.8%.

The 2.22% return is a real rate of return... if withdrawals are increased each year for inflation then the required return is roughly 2.22% + the inflation rate... more precisely"

	inv return	real return
inflation	2.22%
5.00%	7.04%	2.04%
4.00%	6.08%	2.08%
3.00%	5.11%	2.11%
2.00%	4.15%	2.15%
1.00%	3.19%	2.19%
0.00%	2.22%	2.22%

 

[besa]

...does 65/35/0 AA mean stocks/bonds/mutual fund accumulated amortization?
[/TABLE]

?

 

[SecondCor521]

Another factor is that my job is easy and my boss is generally great. Why retire? We have guys in their 60's all over the place. This factor is following the crowd. But, is the crowd lost?

At age 44, I had enough to FIRE. I didn't, because my job was easy and my boss was great.

Then my megacorp moved me to a new project with a new group of people and a new boss. My job became hard and my boss was awful.

After trying to change things, then trying to fix things, then trying to just tolerate things, I gave up and FIREd at age 46.

Point being: things change, sometimes not for the better.

P.S. - Health is another thing that can change, especially in middle age, and usually not for the better.

 

[Gumby]

...does 65/35/0 AA mean stocks/bonds/mutual fund accumulated amortization?

If you are referring to pb4uski's signature line, I believe he means that his target for asset allocation (AA) is to have his portfolio consist of 65% stocks, 35% bonds and 0% cash (65/35/0). That's how the majority of us here describe our target allocation. If it drifts too far from that target, we reallocate assets to regain those percentages.

 

[Kamei]

As soon as my retirement income exceeded my spending income by a 20% cushion.

 

[Dtail]

?

Do you remember which poster stated 3.8% on 2.1m?

 

[jollystomper]

No one on this forum knows if they successfully retired forever. You don't know that until you are dead.

True. However, one can still strive to lessen the odds of having one's retirement disrupted.

The general guidance has been that a SWR in the range of 3-4% was "safe". However, I personally did not not consider retiring unless our SWR was closer to 2% (having a pension, even non-COLA, helped that). In my opinion a required 4% SWR is not good enough these days.

Also, we targeted our retirement expenses at $125K, as that would give us a generous lifestyle (our basic survival expenses are $80K), and was well below what FIRECalc (and other calculators) said our 95% success rate expenses were.

Since retiring in mid-2018, our cash flow has been less than half of what we expected, and we have been living very comfortably (a lot of comfortable travel, a 3rd car, etc.).

So - just my opinion, what ever FIRECalc says, use it in conjunction with other retirement calculators to get a better overall picture. Also, it cannot hurt to pad your expenses in modeling, to see what would happen if you underestimated them, for example, by 20%.

 

[1242Vintage]

Just retired last week ...

Financial goal lines for retirement were (1) after deducting for health care and taxes, an annual net pension of at least $100k/yr, (2) zero long-term debt (mortgage, cars and kids college expenses) and (3) security for our disabled daughter.

Met those middle of last year at age 55 but hung on for one more year.

Final net pension figure (w/ a COLA provision) ended up at $9.5k per month ($114k/yr).

And my fully-funded and independent pension system will provide an ongoing financial benefit and health care to support our disabled daughter after my wife and I pass.

We are very aware that we are blessed to enter retirement in this financial condition.

 

[LARS]

No one on this forum knows if they successfully retired forever. You don't know that until you are dead.

True, but I haven't worked for 25 years. Now in my early sixties, I feel pretty darn confident to put it mildly that whatever comes my way I will be able to successfully handle it for a successful retirement until the day I (and my DW) die.

That 25 year track record gives me near bullet proof confidence.

 

[Dtail]

True, but I haven't worked for 25 years. Now in my early sixties, I feel pretty darn confident to put it mildly that whatever comes my way I will be able to successfully handle it for a successful retirement until the day I (and my DW) die.

That 25 year track record gives me near bullet proof confidence.

Agree and makes sense.
Only 3 years for us, so SORR still very much in play.