Curious Minds Want to know... Are Super ER Really Retired?

[pj.mask]

.

We had five children at home with us. One bio-son, one adopted-son and three foster-children.

Curious because I don’t know (but have heard) - do they pay you for foster kids? I imagine if you like kids and already have the space/items (from other kids) could break even or even be a bit positive.

 

[traineeinvestor]

Retired in 2013 at 47.

Two daughters (both still in school)

I still do some very part time consulting on issues I find interesting but the income is irrelevant. Rents, dividends and interest exceed our expenses.

FWIW, DW found a job she absolutely loves - we don't need the money but who am I to complain.

 

[unclemick]

One more thing - after 26 years of ER I'm still learning.

Never volunteer - get a button, yard sign or special made baseball cap.

Practice your Curmudgeon frown.

Learn to say no -no matter how persuasive the argument.

heh heh heh - accept that you will get nailed anyway - once in a while. Just try and keep your no batting average up.

 

[Nords]

Clearly, if you don't have any kids, you will have an easier ER path.

That’s a financial oversimplification.

Many families first decide to pursue FI *because* they start a family and want to spend more time with their kids.

Maybe that family goal leads them to stop wasting money on consumerism. Kids probably cost the same amount of time & effort regardless of whether it’s done by a parent or outsourced to childcare, after-school programs, babysitters, and other household support. In addition, Laura Vanderkam (“All The Money In The World”) points out that families scale to some extent. The fixed expenses of raising kids make the 4th kid practically free.

Additionally, I suppose there is the MMM crowd out there who is comfortable living on a very low level of income and making their own toilet paper, but for those that inspire for a higher level of RE income, I have to believe super ER is more difficult to achieve, especially the fatter your FIRE plans end up being.

I’m so tired of the stereotype of equating MMM to deprivation. Pete advocates Stoicism, which is a completely different self-improvement philosophy, and it has little to do with FI.

Deprivation is a sacrifice in pursuit of a short-term goal, and it’s usually a worthy goal, but the effort is unsustainable. Accelerating FI through deprivation is sacrificing your present for a mythical “happily ever after.”

Meanwhile frugality in pursuit of FI is challenging and fulfilling. It feels like winning. You’re cutting out your wasted spending and optimizing your savings/investments for FI while living a high-quality present life in pursuit of a high-quality future.

If the high-quality life happens to involve very little money then FI might happen faster. That depends on income. Or maybe it takes just as long because the extremely frugal person pursues a lower-paying less-stressful career and takes plenty of sabbaticals along the way. The best example I know of that is Justin Taylor of The FI Show podcast and Saving-Sherpa.com. His income has risen quite a bit since he left the Air Force, but he was attaining his insanely high savings rates even as a 2LT while enjoying all of the fun he wanted.

If you want a higher level of income after FI then you just have to be willing to sacrifice your life energy for it. That’s up to you, and for your sake I hope it’s worth it. Either way you’ll find your own line between frugality & deprivation.

- How long have you been "retired"?

Since June 2002. I stopped work (for terminal leave) in February 2002, so it’s been 18 years.

- How many kids are you/have you raised while in RE? How did you/have you planned for kid costs (i.e. cars, auto insurance, college, misc) in your plan?

Just one, and she’s been our motivation for FI.

We raised her like everyone else— we figured out what things cost and made a budget for those expenses that were worth paying.

As an example, her college fund started when she was born with $400/month in equity mutual funds. I retired when she was nine years old, and we kept contributing $400/month through high school. As the equity funds compounded while she was a teen, we added I bonds (“For Education”) and gradually moved to CDs as she finished high school.

- What are your primary sources of income (i.e. X% SWR, pension, annuity, other)?

We started with my military pension and withdrew additional funds from investments (still >90% equities) at the 4% SWR. Over the years our portfolio has grown faster than inflation while our spending has remained largely flat (lagging inflation). The result is that after a decade of FI our withdrawal rate was dropping below 3.5% and today is even lower. The portfolio is self-sustaining for the rest of our lives.

- What level of income are you planning for and are you planning for any bigger bumps over time other than inflation?

Right now most of our spending is covered by my pension, some NOI from our rental property, and the dividends of our total stock market fund ETF shares. We don’t expect to touch our Roth IRAs.

My spouse starts her Reserve pension in a couple of years. At that point we expect our spending to be lower than our pension income.

We certainly didn’t see any of that coming in 2002. We simply worked with the 4% SWR.

Share the secret sauce!

Um. There isn’t any.

Achieve a high savings rate and continue with boring routine automated investing.

 

[DawgMan]

That’s a financial oversimplification.

Many families first decide to pursue FI *because* they start a family and want to spend more time with their kids.

Maybe that family goal leads them to stop wasting money on consumerism. Kids probably cost the same amount of time & effort regardless of whether it’s done by a parent or outsourced to childcare, after-school programs, babysitters, and other household support. In addition, Laura Vanderkam (“All The Money In The World”) points out that families scale to some extent. The fixed expenses of raising kids make the 4th kid practically free.


I’m so tired of the stereotype of equating MMM to deprivation. Pete advocates Stoicism, which is a completely different self-improvement philosophy, and it has little to do with FI.

Deprivation is a sacrifice in pursuit of a short-term goal, and it’s usually a worthy goal, but the effort is unsustainable. Accelerating FI through deprivation is sacrificing your present for a mythical “happily ever after.”

Meanwhile frugality in pursuit of FI is challenging and fulfilling. It feels like winning. You’re cutting out your wasted spending and optimizing your savings/investments for FI while living a high-quality present life in pursuit of a high-quality future.

If the high-quality life happens to involve very little money then FI might happen faster. That depends on income. Or maybe it takes just as long because the extremely frugal person pursues a lower-paying less-stressful career and takes plenty of sabbaticals along the way. The best example I know of that is Justin Taylor of The FI Show podcast and Saving-Sherpa.com. His income has risen quite a bit since he left the Air Force, but he was attaining his insanely high savings rates even as a 2LT while enjoying all of the fun he wanted.

If you want a higher level of income after FI then you just have to be willing to sacrifice your life energy for it. That’s up to you, and for your sake I hope it’s worth it. Either way you’ll find your own line between frugality & deprivation.


Since June 2002. I stopped work (for terminal leave) in February 2002, so it’s been 18 years.


Just one, and she’s been our motivation for FI.

We raised her like everyone else— we figured out what things cost and made a budget for those expenses that were worth paying.

As an example, her college fund started when she was born with $400/month in equity mutual funds. I retired when she was nine years old, and we kept contributing $400/month through high school. As the equity funds compounded while she was a teen, we added I bonds (“For Education”) and gradually moved to CDs as she finished high school.


We started with my military pension and withdrew additional funds from investments (still >90% equities) at the 4% SWR. Over the years our portfolio has grown faster than inflation while our spending has remained largely flat (lagging inflation). The result is that after a decade of FI our withdrawal rate was dropping below 3.5% and today is even lower. The portfolio is self-sustaining for the rest of our lives.


Right now most of our spending is covered by my pension, some NOI from our rental property, and the dividends of our total stock market fund ETF shares. We don’t expect to touch our Roth IRAs.

My spouse starts her Reserve pension in a couple of years. At that point we expect our spending to be lower than our pension income.

We certainly didn’t see any of that coming in 2002. We simply worked with the 4% SWR.


Um. There isn’t any.

Achieve a high savings rate and continue with boring routine automated investing.

Catching back up. Appreciate all the different perspectives.

Nords - "In addition, Laura Vanderkam (“All The Money In The World”) points out that families scale to some extent. The fixed expenses of raising kids make the 4th kid practically free." Scale... perhaps to some degree. 4th kid free... hell no!!

Look, while I can appreciate the frugality of a MMM, that lifestyle approach just isn't my cup of tea. Not faulting those who choose it, just not what I am striving for. I do think some of the FIRE community likes to pursue extreme frugality for the sport of it and frankly to wear the belt "I retired at 39". Hey, to each their own. It's all about choices. I was trying to suggest (from experience) that there are many expenses in raising kids (many that often pop up unexpectedly) that cost $$$. Had I been 39 with a plan for ER and trying to factor in what my 4 kids would have costed until they left the nest, I would have missed the mark by significant $$. This miss would have derailed my permanent ER. Have people done it... sure, but I just wonder if they really navigated thru all of the kid raising years without additional financial stress they may have missed in their ER planning. Again, we all different priorities, so no one size fits all.

 

[Offgrid Organic Farmer]

Curious because I don’t know (but have heard) - do they pay you for foster kids? I imagine if you like kids and already have the space/items (from other kids) could break even or even be a bit positive.

All states pay a 'stipend' for foster care. The idea is that the expense of food, utilities, and clothing should not be a financial burden on any family willing to take in foster children.

The son that we adopted is termed 'special needs' so his stipend became monthly 'child support' after we adopted him. That child support continued until he was 18.

For a few years we had three foster-children in our home. I can easily see where some families become dependent on those stipend checks.

 

[tb001]

Dawgman, curious what stands out as unexpected expenses you would have had because of kids.

One of our conditions for ER is that our kids wouldn’t pay the price. The big wild card that would be tough for us is if we decided one or both needed private school. Unexpected legal, medical or drug/alcohol issues are a wild card, but I think we can manage the one offs.

 

[DawgMan]

Dawgman, curious what stands out as unexpected expenses you would have had because of kids.

One of our conditions for ER is that our kids wouldn’t pay the price. The big wild card that would be tough for us is if we decided one or both needed private school. Unexpected legal, medical or drug/alcohol issues are a wild card, but I think we can manage the one offs.

So where do I start (and you hit a few)...

Private school when not planned for
Cars, car insurance, car accidents
Medical, prescriptions, therapy
College misc, sororities/fraternities, study abroad
Girls haircuts!!!
Financial bailouts
College graduation “starter kits”
Family travel with +1s

In my case x 4. That’s what initially comes to mind.

 

[Teacher Terry]

Dawg, lots of those items are discretionary. We had 3 boys. The first drove our old car so insurance not that much. When middle son drove they shared the car. By the time number 3 drove the oldest 2 were gone. Just one of many ways we saved money. I retired at 58 and 7 years later still teaching a online college class and doing a little consulting.

 

[DawgMan]

Dawg, lots of those items are discretionary. We had 3 boys. The first drove our old car so insurance not that much. When middle son drove they shared the car. By the time number 3 drove the oldest 2 were gone. Just one of many ways we saved money. I retired at 58 and 7 years later still teaching a online college class and doing a little consulting.

Agreed... arguably, other than basic food, clothing, shelter, and some medical needs they are all discretionary. Here is my point in all of this, especially as it relates to having to factor in multiple kids in a super ER. From my experience, had I made a decision to do ER when my 4 kids were young, I would not have had the foresight to see what all these future kid expenses could have been and I would have severely under-budgeted effecting my long term plans to stay retired. Sure, I could plug in a number for college, cars and few other items, but I think there would have been significant stress on staying retired based on the unknowns that will come. And yes, while very discretionary in many cases, I chose to stay working through the gauntlet of all of these expenses until kid 4 was bought and paid for, in an effort to provide certain things/opportunities to my kids without jeopardizing my long term RE. I suppose it is a values argument for all of us, but I suspect if you really put a real list of both discretionary kid costs (particularly those things you might prefer to provide for your kids if you could) and the "wasn't expecting that" kid costs (i.e. car accidents, legal/other trouble, ongoing expensive prescriptions, private school for unplanned reasons) and their respective potential costs on the table, you might find out this would change the plans of many super ER folks, especially those that have no plans to generate income again.

Just one man's opinion.

 

[kgtest]

- How long have you been "retired"?

Still accumulating, er on 50th bday in 2031 provided no OMY

- How many kids are you/have you raised while in RE? How did you/have you planned for kid costs (i.e. cars, auto insurance, college, misc) in your plan?

3

- What are your primary sources of income (i.e. X% SWR, pension, annuity, other)?

3.5% SWR from Rental, Cash, Taxable DIV. Then, IRA at 60, Pension at 65 reduces SWR then SS at 70 and 72 for DW reduces it again.

- What level of income are you planning for and are you planning for any bigger bumps over time other than inflation?

College.

Share the secret sauce!

A mix of LBYM and diversifying between taxable and tax deferred. Minimizing cost/taxes and maximizing opportunity. Rentals are part of the plan fortunate for small pension and decent SS. Inheritance might be a Multi-Million$ kicker.

Things that helped: no student loan debt, minimal interest payments over our lives (we lived in low interest environments and are keeping leveraged debt low), we never pay retail, we budget, received a couple 20k gifts, cook our own food, mainly enjoy free entertainment, minimize travel expenses, being able to expense businesses for part of our careers, 401k match, low expense ratios, 100% equities during accumulation, maintained healthy lifestyles with minimal large or debilitating health expenses and problems, sticking to a defined IIP and Asset Allocation strategy, did I mention the refi to 2.75% that was HUGE!

 

[Teacher Terry]

Dawg, that’s makes sense and we never planned to retire young. I do think some on Mr. MM are making a big mistake. Living on 40k for a family of 4 will get old fast.

 

[kgtest]

Dawg, that’s makes sense and we never planned to retire young. I do think some on Mr. MM are making a big mistake. Living on 40k for a family of 4 will get old fast.

True...technically I live on 40k...discretionary...
If you subtract the Taxes, Social Security, Medical Insurance, Life Insurance, 401k contributions, our mortgage, the daycare expenses,

Heck when mortgage and daycare expenses are done that's 47k right there. Of course we loose some daycare tax breaks but they can take 'em!

If we can take daycare expense and put it towards the note, hopefully by 45 we have like 5 to 6 years to stack straight cash in a broker account.

 

[esterhazy]

- How long have you been "retired"?
- How many kids are you/have you raised while in RE? How did you/have you planned for kid costs (i.e. cars, auto insurance, college, misc) in your plan?
- What are your primary sources of income (i.e. X% SWR, pension, annuity, other)?
- What level of income are you planning for and are you planning for any bigger bumps over time other than inflation?

Retired 2 years ago at age 42. Planning to have 1 kid this year. Having kids in early retirement isn't that hard. Most early retirees budget a decent amount of travel, which just gets redirected to spending on kids.

Income is entirely from portfolio. No part-time jobs or spouse income.

Talking about "inflation" is almost meaningless for retirees. My spending profile looks absolutely nothing like that basket of goods used to calculate inflation. But I expect it to increase "more than inflation" since the whole point of economic progress is for standard of living to increase faster than inflation and I don't expect my standard of living to be stagnant for 50+ years. You don't live like someone from 1960 do you?