Anyone Retire With Less Than One Million '09-'13

[ferco]

A recent thread asked, "Anyone Retire With Less Than 500k "....and that provoked some interesting dialogue. Just wondering if we turned the dial a little were there more folk who ER'd in the 500k-1 million range and how they fared especially those without the traditional "golden parachutes" : ie., COLA health benefits and pensions. Particulary interested in those who made it on their own or were self-employed. How did you get there and how do you stay there ( ie., ER'd)....any regrets or things you'd do differently with the knowledge you'ven acquired now.

 

[Tyro]

A recent thread asked, "Anyone Retire With Less Than 500k "....and that provoked some interesting dialogue.

Are you sure that title is correct? I'm not finding it with the search tool.

Tyro

 

[Onward]

Here's the earlier thread.

http://www.early-retirement.org/for...-with-less-than-500k-67023-5.html#post1331280

 

[Tyro]

Ah, wrong forum. Thanks. I'm a dreamer, but not a young one, so I've never read that forum. It'd likely make me envious!

Tyro

 

[Major Tom]

I ESR'ed/ER'ed in mid 2011 at the age of 47 with about 615K. I have no pensions, but will have SS. My situation is very close to ER, as the extra income from a very minor part-time gig is less than 10% of the main income from my portfolio.


- Started saving in my late 20's using first an IRA, then a ROTH, and also the company 401K

- Bought a house to live in for 4 1/2 yrs in 1997, sold that, sat on the profits for a year before buying 3 rental houses, all of which I sold 18 months later at the top of the housing market.

- In 2011, received an inheritance equal to about 1/3rd of my portfolio at the time, which brought it up to about 615K and a level at which I thought ESR, at the very least, was worth a shot.

- In June 2011 (IIRC) started withdrawals of $1300/month ($15600/yr) which represents about 2.5% of the starting portfolio value.


So far, so good, but it's only been 2 years. Plenty of time for me to end up living under a bridge eating cold beans out of a can although in my case, I'd probably end up in a tatty old RV with 6 cats out on BLM land

 

[modhatter]

I am amazed at how people can live on so little. Even with medicare, I still am paying out nearly $400 a month for insurance ( Part A/B and Medicare Supplement Insurance.) I know I could live somewhere else where my RE taxes might be a little less, and utilities a little less, but I would not fare well in ultra conservative areas.

I was self employed all my life, so no 401K, pension or other goodies. Saved about $600,000 over the years from my business (could have saved more, which I regret - but no do overs) Then like you, I purchased some rental properties, and was lucky to sell a few before the crash was about a year old, but saw the others sink to levels below what I paid for them in and around 1995. But when I got sick, I turned over $500,000 to a well known bond investor, who invested part of it in Fanny Mae, General Motors, a bank that went under, and I can't remember the 4th one that went under, so I instantly lost $160,000 in a blink of an eye with no possibility of a come back, and the total amount shrunk down from $500,000 to $220,000. I am now back up to just a little over that $500,000 amount invested six years later. Not a great return. I had another portfolio I invested myself at about the same time (Only about $150,00) but that has now more than doubled. Still have one more rental. Trying to wait it out if I can before selling it.

At any rate, I managed to put together over a million. BUT IT'S NOT ENOUGH !!! I need almost three times what you live on, and I own my own home free and clear. If you can manage on $1300 a month, then your a better man than I. I am learning how to be frugal late in life, and wish I learned a little earlier.

 

[padlin00]

Everyone I know that has retired from where I work has done so with less then 1M, I'd say closer to 500k then 1M. All somewhere between age 55 and 60, a couple in the last few years, but most in 2000/2001 when there were big layoffs. Closest to a golden parachute is 1 yr severance if layed off, we do get medical if over 55, at least so far.

 

[scrabbler1]

Although I posted in the <$500k thread, I can also post here because I made a big switch of money when I ERed in late 2008.

When I left my company at the end of October that year, I had $247k in my 401k, all of which was pretax dollars except for $13k which was after-tax dollars. The company stock I held was worth $296k. My personal savings was about $300k. The 401k and personal savings were dropping quickly with the financial meltdown but the company stock had held farily steadily. The total of these 3 things was about $843k, $609k of which became my new taxable account's value ($300k + $296k + $13k).

I cashed out the company stock and combined it and the after-tax 401k dollars with my personal savings, basically moving about 1/3 of my total portfolio from my retirement savings plan to my taxable account, thereby doubling its value while halving my retirement savings (401k became a Rollover IRA). I needed to greatly boost my non-retirement account so it could generate the monthly dividends to cover my expenses which is has done so very nice in the last 4 1/2 years.

What is amazing is that since I ERed in late 2008 is how everything has bounced back so well since then. My taxable account's value has risen from $609k (and it dropped under $600k at the bottom of the meltdown in early 2009) to around $800k. The Rollover IRA's value has risen from $234k (after dropping some more in early 2009) to just over $400k.

So I began my ER with between $500k and $1M but I am now safely over $1.2M and I have not had any kind of paycheck in that time. It is purely from my money working for me instead of me working for my money.

 

[ER Eddie]

I hope there are many such people (retiring with less than a million). I plan to be one of them. One of the best pieces of news I got, when I first started reading about early retirement, is that you don't have to have a million dollars to do it.

 

[Gotadimple]

I retired in May 2008, just before turning 59, and before the crash with about $900k in IRAs, 401K, and taxable investments. After the crash my accounts were 15% less. I have a non-cola pension that covers the mortgage, and retiree healthcare from megacorp that I pay 75% of the premium for. I also take advantage of an HSA to set up extra cash to pay for medical expenses after I am on Medicare. I am not yet eligible for Medicare and am delaying Social Security to FRA.

I have been taking between 4 and 5% of my portfolio to cover living costs. That said, my accounts are in excess of $1M today (well maybe not since yesterday, but I haven't looked!).

So can one retire with less than $1M? Of course, but timing is everything. Retiring during a downturn can give one the opportunity to recoup or increase asset size as the market rebounds. The same might not be true if one retires at the top of the market.

The OP was interested in those without "COLA health benefits and pensions." My health benefits are not COLA (I don't think there is an animal like that), but they are broader than what I could buy in the private market at the same cost.

- Rita

 

[youbet]

I retired in May 2008, just before turning 59, and before the crash with about $900k in IRAs, 401K, and taxable investments. After the crash my accounts were 15% less. I have a non-cola pension that covers the mortgage, and retiree healthcare from megacorp that I pay 75% of the premium for. I also take advantage of an HSA to set up extra cash to pay for medical expenses after I am on Medicare. I am not yet eligible for Medicare and am delaying Social Security to FRA.

I have been taking between 4 and 5% of my portfolio to cover living costs. That said, my accounts are in excess of $1M today (well maybe not since yesterday, but I haven't looked!).

So can one retire with less than $1M? Of course, but timing is everything. Retiring during a downturn can give one the opportunity to recoup or increase asset size as the market rebounds. The same might not be true if one retires at the top of the market.

The OP was interested in those without "COLA health benefits and pensions." My health benefits are not COLA (I don't think there is an animal like that), but they are broader than what I could buy in the private market at the same cost.

- Rita

Hi Rita.....

Could you have made it without the pension, employer subsidized health care and future SS? For example, if you were a relative youngster and won a million bux, would you be able to live out a long retirement just on that million bux?

 

[FIREd]

It must be possible. I know only a few millionaires but a lot of retired people! MIL retired with a paid for home and $200K, no pension, and about $1,100 a month in SS. My mom retired on even less. Of course they did not retire early.

 

[youbet]

It must be possible. I know only a few millionaires but a lot of retired people! MIL retired with a paid for home and $200K, no pension, and about $1,100 a month in SS. My mom retired on even less. Of course they did not retire early.

Someone retiring late, say SS age, with SS and some money makes sense. And, of course, they had little choice as it was time.

But one million bux for a relative youngster with no other income flows is possible but, I'll still contend, would require some planning and discipline. It would be a completely different scenario than someone cutting the cord in their 60's with SS.

 

[FIREd]

But one million bux for a relative youngster with no other income flows is possible but, I'll still contend, would require some planning and discipline.

Agreed. I think that retiring early on <$1M requires some outside-the-box thinking. But that's nothing new for people who go against the grain to achieve ER. I think we had a lot more ER mavericks in the early days of the board. But 2008 changed all that it seems.

 

[ER Eddie]

I think we had a lot more ER mavericks in the early days of the board. But 2008 changed all that it seems.

Interesting perspective. I haven't been around long, just a few months. I would've liked to have seen the boards back then. But you're right, I'm sure 2008 scared the pants off some people.

 

[Major Tom]

I'm sure 2008 scared the pants off some people.

Some of us ER people don't wear pants, so it's not a problem

 

[FIREd]

Interesting perspective. I haven't been around long, just a few months. I would've liked to have seen the boards back then. But you're right, I'm sure 2008 scared the pants off some people.

You can take a drive down memory lane if you want. The good old days live on on a server somewhere. Select a forum, scroll down the page and go to the last page. You'll be beamed back to 2002.

 

[walkinwood]

Why this obsession with how much other people need to ER?

It all depends on how much you live on while making sure you're not overlooking any significant expense category.

After that, research SWR methodologies till you're comfortable with one, add some fudge factor that lets you sleep at night - and voila! you should know how much you need.

One of the toughest things for DW & me on our way to ER (especially in the early days) was disregarding how other people chose to lead their lives.

 

[veremchuka]

Why this obsession with how much other people need to ER?

It all depends on how much you live on while making sure you're not overlooking any significant expense category.

After that, research SWR methodologies till you're comfortable with one, add some fudge factor that lets you sleep at night - and voila! you should know how much you need.

One of the toughest things for DW & me on our way to ER (especially in the early days) was disregarding how other people chose to lead their lives.

I agree. You need to examine your life style and expenses to know if you can retire on less than $1M. I did but I am very frugal. What I live on each month I suspect a great many here would consider a struggle to do or perhaps a week or 2 weeks worth of expenses for the month.

LBYN and you'll be able to retire on less than you think but not everyone wants to do this or can do this. To me (and a many here) that comes naturally but that's me (them) maybe not you.

 

[seabourne]

Agreed. I think that retiring early on <$1M requires some outside-the-box thinking. But that's nothing new for people who go against the grain to achieve ER. I think we had a lot more ER mavericks in the early days of the board. But 2008 changed all that it seems.

I think that there is also a self-sorting effect. The board over at ERE is fairly active, and most of the people there are looking at retiring with $500k or less (I'm holding out for more if I can deal with my current position another couple of years), and I know that the MMM board is active, though I don't spend any time reading it. I also suspect that a lot of the people are still reading here, even if they aren't posting. There can be a pretty aggressive response here to people talking about living for $20k a year and retiring under 40. I think that a number of people looking for feedback are posting elsewhere.

As for retiring under $1M, that's certainly my intention, though I may end up looking a lot more semi-retired, since my hobby is sailing tallships, and since I'm experienced and licensed, people will pay me to do it. (There's work involved, but when it's helping other people learning to sail or the work of sailing an maintaining the ship, well - the work is the hobby, and I don't mind when they pay me, feed me, and give me a place to sleep.)

I could easily live my current lifestyle - I spend about $32k/year right now, about $2k is an indulgence in an expensive gym membership, and $7k is the mortgage, so there is a lot of space for me under the income that $1M can provide, even with a long time span.

 

[ER Eddie]

I think that there is also a self-sorting effect. The board over at ERE is fairly active, and most of the people there are looking at retiring with $500k or less

Thanks for mentioning the ERE board/forum. I wasn't aware of it. Looks like I may have some things in common with the folks over there (although I'm probably not as "extreme" as some, not interested in recycling my urine, etc.).

 

[foxfirev5]

I am amazed at how people can live on so little. Even with medicare, I still am paying out nearly $400 a month for insurance ( Part A/B and Medicare Supplement Insurance.) I know I could live somewhere else where my RE taxes might be a little less, and utilities a little less, but I would not fare well in ultra conservative areas.

I was self employed all my life, so no 401K, pension or other goodies. Saved about $600,000 over the years from my business (could have saved more, which I regret - but no do overs) Then like you, I purchased some rental properties, and was lucky to sell a few before the crash was about a year old, but saw the others sink to levels below what I paid for them in and around 1995. But when I got sick, I turned over $500,000 to a well known bond investor, who invested part of it in Fanny Mae, General Motors, a bank that went under, and I can't remember the 4th one that went under, so I instantly lost $160,000 in a blink of an eye with no possibility of a come back, and the total amount shrunk down from $500,000 to $220,000. I am now back up to just a little over that $500,000 amount invested six years later. Not a great return. I had another portfolio I invested myself at about the same time (Only about $150,00) but that has now more than doubled. Still have one more rental. Trying to wait it out if I can before selling it.

At any rate, I managed to put together over a million. BUT IT'S NOT ENOUGH !!! I need almost three times what you live on, and I own my own home free and clear. If you can manage on $1300 a month, then your a better man than I. I am learning how to be frugal late in life, and wish I learned a little earlier.

Not sure I'm correct but if you're of medicare age, have a cool mil in investments, you should be ok with a 3900/ mo lifestyle.

 

[Katsmeow]

Thanks for mentioning the ERE board/forum. I wasn't aware of it. Looks like I may have some things in common with the folks over there (although I'm probably not as "extreme" as some, not interested in recycling my urine, etc.).

You might also try the MMM board. I read it some and occasionally post. It definitely tends to have a younger crowd more what here would be Young Dreamers and I think an overall more frugal crowd. It is a good example between here and there that every board typically has a culture that tends to become the norm. I don't necessarily fit the MMM board crowd culture in many respects, but then I don't always fit the crowd culture here. Regardless, I get value from seeing both perspectives (some of which align in both forums, while in other ways they are quite different).

 

[ER Eddie]

Will do, thanks Kats.

p.s. Geez, the ERE forums keep going down. Upgrade your server, you cheapskates, lol.

update: Think I'll stick to this forum. The ERE forum seems to be filled with youngsters with dreams of retiring by 35 or 40. I'm 51, so I'm in a different phase of life. MMM focuses mostly on frugality, which is fine (I've bookmarked it), but I'm more interested in talking about retirement issues.

 

[jkern]

I retired at age 51 in August 09' with my portfolio at $900K and no pension.

1) Cash $550K
2) 403b $350K
3) Package from former employer equaling approximately 2 1/2 years salary ($250K over three years)
4) Fully funded lifestyle approximately $50K to $55K per year.

What made it work:

1) Used income from former employer to cover first three years.
2) 403b was at a low point after the crash and has increased to approximately $675K
3) Invested $300K in three rental properties netting 8% to 9% ROI per year. Purchased properties that were slashed by 60% from the peak. While not counting capitol appreciation in my plan, the properties have already increased in value over $150K.

Today at age 55:

1) Portfolio at approximately $900K
2) Rental properties valued at approximately $450K
3) Rental income about $25K, withdrawal from portfolio at about $25K to $30K
4) SS comes online in 6 1/2 years, expecting $20K per year.

I've had a little luck, but so far the plan appears to be working.