Low NW FIRE

[brucethebroker]

After a discussion with a 50ish friend who feels he can never retire due his low NW, I was wondering how many here have FIREd on less than a million in invest able Net Worth? Why not tell us how? Low expenses? Low COL area?

Does not have to be exact figures: could be referred to as "under $750k", "just under 1M", etc. Those working at a PT or hobby job could also be included in FIRE discussion.

My guess is that some view our forum and get a little discouraged when they read about the "heavy hitters" who post. Perhaps we could encourage a few people.

Who's in?

 

[sturbridge]

I'm not retired yet. I thought I was doing well until visiting this site for the first time a few years ago. I'm relatively frugal for my income level, our expenses are typically between 3 and 4K per month, but that's with employer-mostly-paid health care and not counting taxes. I don't know what ss will do in the future, and don't want my success in retirement completely dependent upon ss not being changed as to benefit levels (because I don't think this would be a good assumption). I think a 1.5 million baseline is reasonable (to return 5K/month) , and may even not be enough with inflation. And not sure if a 4% return will be reasonable going into the future. I'm of the generation that came of age with 401Ks and never expected (nor got) a pension.

So knowing that I'm relatively low end with my wants, but still chasing that elusive retirement, I'm dying to know what tradeoffs people make to do it with less.

 

[MrLoco]

NW is only part of the equation. A bigger component is what are the expenses in retirement? Someone with a NW of $500,000 but a pension and SS which covers 100% + of monthly expenses should do just fine.
Someone with a NW of millions but no pension and little SS and high expenses needs to be careful.

And if one retires before 65, the big elephant in the room is healthcare expenses before MEdicare. This is probably one of the most under estimated expenses for early retirees.

 

[Totoro]

Bogleheads is discouraging. Out here I'd wager 30%+ of active members are below the 1M mark.

As in how: lower expenses, of course. And/or pension.

 

[Maenad]

From what I've seen, the folks who do that prioritize lowering expenses, and developing a hobby into a small income stream to make up any difference.

If you want to capital-R Retire, with no possibility of EVER needing to go back to work, you need to be more conservative with your withdrawals, and have a bigger nestegg. If you're able and/or willing to be flexible, to move to a LCOL area of your own country or another country, or to pick up a part-time job, that gives you a little breathing room.

If folks on this board are worried, Mr. Money Mustache and Early Retirement Extreme have great tips on reducing expenses. I know that plenty of folks here see them as filled with pie-in-the-sky idealists, but I find a lot of value at MMM as well as here.

 

[iloveyoga]

I know there are different opinions here....but one thing that worked for us was no debt at all and I had also worked to lower all other bills as much as possible. I also like the simplification this brings to my life as the household finance person. Expense control!

 

[IMATERP]

I know there are different opinions here....but one thing that worked for us was no debt at all and I had also worked to lower all other bills as much as possible. I also like the simplification this brings to my life as the household finance person. Expense control!

+1

Paid off home, no debt, healthcare covered via State retirement, a modest State pension & no spending habits. Don't really need very much cash to afford the rest. Sitting w/ over 750K and just about good to go.

Michael

 

[Carol1862]

I, too, was quite amazed at the NW of the members on this forum. But quickly realized that like people gather together. For the rest of us that feel we're doing "ok" but clearly not in the 1% group, there is a wealth of information here that is helping us make better financial decisions in regards to retiring. That's why I'm here.

We do not have pensions and healthcare is extremely expensive. But temporary. There's a light at the end of the tunnel. I have kept track of our expenses for years so I see where we can tighten our belts if markets start their descent.

We retired to a much lower COL area which we absolutely love. So far, several relatives have visited and they, too, have bought property near us.

Firecalc says we are good and gives us 100% based on our expenses. Unlike others here that have their expenses met by investment dividends, pensions, SS, and/or real estate and do not have to dip into savings/investments etc, we will have to. That's ok. That's why we saved. It will be very nice to have an estate to leave those we love. We never received an inheritance, and we are ok leaving a small amount to our children. The hardest thing, truly, is when we will have to watch our portfolio dip instead of grow. So far we have been ok with expenses as the markets have been very kind.

We have no debt. Hopefully the kids will continue on their path and not be a financial burden in the future (so far, so good)! Life is good!

 

[97guns]

I Fired on $280k, it bought me 4 houses in 2008 that generated $55k a year, works out to a sweet 20% return on investment

 

[Perryinva]

I don't know how many 1%ers are on here, but boatloads of 5%ers, for sure. It sure is depressing at times, reading these very high NWs, at such young ages. But then, I WILL be retiring earlier than I thought, in 30 months, with much more income than I thought, and no healthcare cost issues, so I glean what I can from the helpful here.

 

[candrew]

Low NW Fire

DW & I are definitely in the "single comma club" (between 500K and 1M) when it comes to investable assets. I E.R.'d last year and just turned the big six-oh, DW is 62. Not necessarily all that "early" compared to some who have managed to E.R. at much younger ages. DW can start her SS at anytime, though we're both planning to wait until at least FRA to do so. We're debt free, relatively low COL area, each of us with modest pensions that cover 50% of our expenses, including the discretionary ones that account for about 1/3 of total spend. That leaves room for belt-tightening, if need be. DW occasionally substitute teaches, though it's more a hobby thing right now. For health care, we have an ACA silver plan and qualify for subsidies. If that goes away, we can enroll in DW's state retiree health care, but at much higher cost. In Firecalc and Fidelity RIP, we built some safeguards into our retirement plans figuring a 25% reduction in our SS benefits, below average market performance, 4% average inflation and reduced our investable assets by 30%. Firecalc gave us 100% success, and Fido RIP - a score of 125. We have an emergency fund for those one-off expenses that might arise plus 3 years cash to cover expenses due to poor market perf.

We're one year in to our retirement and so far, so good (knocking on my wooden head right now) We've even managed to do long term travel overseas while staying within our spending budget and are having a blast.

We've learned that having a really good handle on spending lets us know how much we'll need. Being disciplined helps a lot and having us both on the same page when it comes to finances along with agreeing on "wants" vs. "needs" is invaluable.

There is a collective strength to draw from on this forum through other members sharing their experiences, wisdom and insight. It certainly helped inspire us to take the plunge into E.R.

 

[scrabbler1]

When I ERed in late 2008, as the markets were tanking, I had my portfolio in 3 roughly equal parts. The first was ~$300k in personal, after-tax savings. The second was ~$300k I had in employer stock in my 401k I was going to cash out at low tax rates (NUA) and have it join my after-tax savings, boosting it to ~$600k. The third was the remainder of my 401k which I was going to roll over into an IRA. That amount was down to $234k but I wasn't really worried because I wouldn't need to access it for at least another 14 years (age ~59.5). Taken together, I had between $800k and $900k with about 2/3 of available to invest and pay for my expenses.

The important thing was to make that initial ~$600k last until age ~59.5 when I would begin having unfettered access to the IRA, the first of my "reinforcements" which included my frozen company pension and SS becoming available later on. And so far, after nearly 9 years, despite some small increases in my expenses and a decline in the dividends per share in my main bond fund (the one I put the stock proceeds into), all has gone well. Also, in the last 9 years, the ~$600k has grown to just over $900k while the IRA has grown to $550k, putting me well over $1M.

 

[John Galt III]

Less than 1 mil NW here. Trade-offs would be no world travel, no expensive restaurants, no gas guzzler SUV or truck, no $150 concert tickets, or $200 football tickets. (Not that any of those things are bad, just expensive). I have a modest pension from Megacorp. And I have a lot of free time to seek out the cheapest deals on stuff. Plus, the ACA makes health insurance very cheap for me due to low income. Home is paid off. No credit card debt. This lifestyle, even with less than 1 mil net worth, is waaaaaaaaaaaaaaaaaaaaaaay better than w*rking. No complaints, really.

 

[Which Roger]

My guess is that some view our forum and get a little discouraged when they read about the "heavy hitters" who post. Perhaps we could encourage a few people.

Who's in?

As pointed out by others, NW is only part of the equation. My NW makes me a somewhat heavy hitter by your definition, but I sometimes get discouraged by seeing so many on this forum who have a big pension and/or former-employer-subsidized health care, which I don't. And of course there are a lucky few who have all of the above. And those who have none of the above don't tend to hang out around here.

 

[FANOFJESUS]

Less than 1M. I think the key is a lcol area. Paid for house and car. Try to keep that house and car a very low percent of your net worth. My house and car might be 15% of my net worth. I thought about going to a cheaper house but in the city as you do that the crime gets higher. Somewhere like the Midwest. My income is 18k but I can live on that.

 

[Blue Collar Guy]

After a discussion with a 50ish friend who feels he can never retire due his low NW, I was wondering how many here have FIREd on less than a million in invest able Net Worth? Why not tell us how? Low expenses? Low COL area?

Does not have to be exact figures: could be referred to as "under $750k", "just under 1M", etc. Those working at a PT or hobby job could also be included in FIRE discussion.

My guess is that some view our forum and get a little discouraged when they read about the "heavy hitters" who post. Perhaps we could encourage a few people.

Who's in?

I have commented on this before. My wifes uncle retired with probably $2,000 net worth. It was invested 50 % in his checkbook,and 50 % in his underwater drawer. he gets less than $1100 a month social security, and $190 a month in food stamps. He lives in a very high cost of living area, NY. He stopped working at 62, he had a few kids under 18 so he was getting social security for them too. He stopped working full time at about 50. Had many stretches of no work. He sleeps like a baby at night. He is eating well, has no copays for any medical. So sure you dont need millions to retire. He should write a book, How To Retire In NY on a $2000 nest egg.

 

[FIREd]

After a discussion with a 50ish friend who feels he can never retire due his low NW, I was wondering how many here have FIREd on less than a million in invest able Net Worth? Why not tell us how? Low expenses? Low COL area?

I think that there is a big gap between never being able to retire and FIRE. I know plenty of people who have been able to retire in their 60's on much less than a million (pretty much everyone in my or DW's family in fact).

 

[daylatedollarshort]

Reddit has a leanfire subreddit for people trying to retire early on leaner nest eggs.

 

[pacergal]

DH and I do have pensions which allowed us to retire with less. We could have continued to work and max retirement accounts, but focused on getting spending lower to retire earlier.

 

[Sunset]

Paid off home, no debt............

+1

Having a modest house, fully paid for, makes living lower cost than someone renting, so it's cheap living.

Being a DIY I do some of the repairs around here which saves $ even if it's just buying the new washer and driving home with it to save the $50 delivery fee.

No debt of any kind, especially no CC debt saves a lot compared to someone carrying a debt load, and keeps my Rating high, so I get nice bonuses for new credit cards (that I cancel after a year).

I'm Amazed at how low some folks NW is when they retire.

 

[Fermion]

The lower your net worth the more likely SS will be there for you so it sort of just works out pretty well if you have low expenses.

I fully expect we will receive most if not all of the estimated $3,000 a month from our combined SS (in today's dollars), which covers over 75% of our current $3800 a month expenses.

If someone needs $10,000 a month then SS is not going to cut it and they may actually not get as much SS when you calculate taxes and such.

It pays to live like you are poor

 

[Red Badger]

< $1M NW.

A couple modest pensions.

Tricare for med stuff.

Retired this year at 60 using pensions and a slightly high burn rate on our portfolio (will drop to 3 - 3.5% when we both start drawing SS in two years.

Moderate to (for us) abundant North America travel - at least one trip per month. Maybe some overseas later, but no big desire to do so.

A couple of comfy and happy clams here

 

[daylatedollarshort]

The lower your net worth the more likely SS will be there for you so it sort of just works out pretty well if you have low expenses.

I fully expect we will receive most if not all of the estimated $3,000 a month from our combined SS (in today's dollars), which covers over 75% of our current $3800 a month expenses.

If someone needs $10,000 a month then SS is not going to cut it and they may actually not get as much SS when you calculate taxes and such.

It pays to live like you are poor

Picasso is often quoted as saying, "I'd like to live as a poor man with lots of money." Pensions and SS will cover most of our (post kid / post college years) basic expenses in retirement. Currently, keeping our MAGI low enough for subsidies keeps our health insurance premiums under $200 a month and the kids college tuition was free, covered by grants.

 

[Red Badger]

But, OBTW, for those of you with 2 commas or 10 digits, congrats on hitting those amazing milestones!

 

[Major Tom]

Less than 1 mil NW here. Trade-offs would be no world travel, no expensive restaurants, no gas guzzler SUV or truck, no $150 concert tickets, or $200 football tickets. (Not that any of those things are bad, just expensive). I have a modest pension from Megacorp. And I have a lot of free time to seek out the cheapest deals on stuff. Plus, the ACA makes health insurance very cheap for me due to low income. Home is paid off. No credit card debt. This lifestyle, even with less than 1 mil net worth, is waaaaaaaaaaaaaaaaaaaaaaay better than w*rking. No complaints, really.

This is pretty close to my situation too. I forget the exact dollar amounts but, IIRC, I had ~$640K on beginning portfolio withdrawals in 2011 at the age of 47. Current portfolio balance is $860k, even though I have been withdrawing from it for the last 6 years. If I claim SS early at 62, I'll have an extra 1k/month. It's not a fortune, but considering I'm currently living on $18K/yr, a useful extra amount of income. Also, as I age, I may feel comfortable increasing the WR a little above it's current level of ~2.1%. There are times when I think about how much more money I would have, had I continued to work and save, and how it would be easier to afford such things as travel and other extras but, truth be told, I have always been good at doing without things - perhaps a little too good.

I rent a small studio in a high COL area (the SF Bay area). Rent is $651/month. Transport is a 20 year-old bicycle, along with the excellent public transport here. I wear pajamas a lot of the time, but remember to put clothes on when I go out No cable TV or other pricey subscriptions. Cheap cell phone ($12/month), and cheap basic speed DSL. Healthcare costs me nothing out of pocket, as I am on Medicaid due to low income. If my income goes over the threshold, an ACA subsidy should still help a lot. There's a palm tree right outside my bay window which, with it's squirrels and birds, makes great kitty TV. When I've had a glass of wine, I've been known to put my feet up on the sofa and stare at it too, along with my 3 furry gals. It's cheap entertainment

Many would feel uncomfortable retiring without owning a home, but I'm adaptable. My rent is way below market rate, and I am open to moving outside the area if the high rents force me out. In fact, I'm almost willing it to happen, as it would be a good excuse to purchase a used RV and hit the road. Lots of boondocking, of course, to keep costs down.

Of course, had the market tanked again shortly after I retired, my story might be different. Still time for things to go wrong though. We'll see