Curious??

[syd03]

I've attempted to dig through old threads here to answer this question but haven't uncovered one yet.

I realize that expenses are what really drive feasibility and that every circumstance is different.....but I'm curious to know if there are a decent number of folks on this forum that have successfully retired with $2M in assets or less, no defined pension, no company subsidized health insurance, when they were 50 years of age or younger? I may as well throw a spouse and a kid into the mix, as I have both

Lastly, if you meet the criteria above and its been more than a year or two since you pulled the plug...how would your access your situation now? Happy as a clam, a tad nervous, wish you'd of hung on longer?

I'd love to hear from you!

Thanks-Syd

 

[Texas Proud]

Am I reading this right

You have been a member since 2007 and have 18 posts!!! Talk about a slow poster.....


But, the answer is yes... many people have retired on less than $2 mill.... but as you say, it really is the expenses that matter...

 

[David1961]

But, the answer is yes... many people have retired on less than $2 mill.... but as you say, it really is the expenses that matter...

+1. Everyone's situation is unique.

 

[syd03]

Am I reading this right

You have been a member since 2007 and have 18 posts!!! Talk about a slow poster.....


But, the answer is yes... many people have retired on less than $2 mill.... but as you say, it really is the expenses that matter...

18 posts sounds about right. I'm on here learning every once and a while, but don't post much. Truth be told I've spent about 9 or 10 hours a day in front of a computer for the past 26 years at work. Don't really feel much like jumping back on one at night. Hopefully this dynamic shifts....real soon

These people you speak of that have made this work, do you have a feel for whether they often do this without a pension to fall back on? If I had one I'd feel different about my situation, no doubt. I am out of work now due to a company closure and still have not had any success securing another job. Wife and I have spent the last 5 months shoring up our expenses and cutting several altogether. We've led a fairly conservative life all along, never big spenders. Because we're conservative it seems like a daunting task to spread $2M out over 45 years, God willing.

 

[pb4uski]

....Lastly, if you meet the criteria above and its been more than a year or two since you pulled the plug...how would your access your situation now? Happy as a clam, a tad nervous, wish you'd of hung on longer?...

Retired at 56 four years ago. Happy as a clam, although Mr. Market has been kind since I retired so despite withdrawals I am still up over 20% from when I retired 4 years ago. We live nicely, but modestly, and things are going fine.

And it is assess, not access.

 

[braumeister]

I realize that expenses are what really drive feasibility and that every circumstance is different.

You say this, but I'm not sure you really get it. Sure, plenty of people have done this. Plenty have also done it with considerably less, and plenty have needed far more. It all comes down to where you live and what your lifestyle is.

Unless you have a seriously good handle on your expenses, both now and projected, you can't forecast your retirement situation with any confidence. Track your spending closely, use FIRECalc and similar calculators, and you'll really know what the prospect is for you.

 

[travelover]

You say this, but I'm not sure you really get it. Sure, plenty of people have done this. Plenty have also done it with considerably less, and plenty have needed far more. It all comes down to where you live and what your lifestyle is.
.

I believe that 3% of 2 million is $60K a year. Average family income in the US is about $52K and most of them are paying a mortgage or rent.

 

[Rickt]

I realize that expenses are what really drive feasibility and that every circumstance is different.....but I'm curious to know if there are a decent number of folks on this forum that have successfully retired with $2M in assets or less, no defined pension, no company subsidized health insurance, when they were 50 years of age or younger?

Info about your financial situation (liquid assets, etc) is missing so here's what I think.

Your expenses and WR in particular will determine if you can successfully retire on $2M in assets. It also matters what $2M consists of:
1. $2M all in liquid investments in after tax accounts-3% to 4% WR will make it work.

2. $1M liquid in after tax accounts+$1M in Pretax -3% to 4% WR initially from after tax account till 59.5 yrs of age & thereafter from pre-tax accounts will also make it work.

3. $2M mostly in Pre-Tax retirement accounts plus equity in your home/real estate with very limited liquid funds in after tax accounts---will not work.

Cheers

 

[mrfeh]

I realize that expenses are what really drive feasibility and that every circumstance is different.....but I'm curious to know if there are a decent number of folks on this forum that have successfully retired with $2M in assets or less, no defined pension, no company subsidized health insurance, when they were 50 years of age or younger? I may as well throw a spouse and a kid into the mix, as I have both

I'm going to be a member of this group this year.

Our initial withdrawal rate will be 3%. Should be good to go.

 

[NW-Bound]

If you are 50, SS is not that far away. Figure out how much you will get if you claim at 62, FRA, and 70. Then enter the 3 scenarios into FIRECalc along with your stash. It should give you some warm fuzzy feeling.

 

[Fean]

I'm curious to know if there are a decent number of folks on this forum that have successfully retired with $2M in assets or less, no defined pension, no company subsidized health insurance, when they were 50 years of age or younger? I may as well throw a spouse and a kid into the mix, as I have both

Lastly, if you meet the criteria above and its been more than a year or two since you pulled the plug...how would your access your situation now? Happy as a clam, a tad nervous, wish you'd of hung on longer?

First of all, let me say congrats on your progress because it sounds like you could be very close

Our situation almost meets your criteria. Our assets are a bit over your limit but we have no pension or company insurance. DW and I are in our early 40s with one child and we've been retired for a little over 2 years.

I don't know if I can answer your question yet about if we are successfully retired -- ask me again in 50 years if it was successful I don't have any regrets yet though. I wouldn't trade the extra time I can spend with my family for anything. I am homeschooling our daughter and there is no way I'd trade that time with her for some extra cash. This is literally a once-in-a-lifetime opportunity and you can never get that time back if you squander it.

I do have moments of anxiety (even small downturns feel a LOT different when you don't have a salary coming in) but overall I can sleep at night. The biggest help to me is to do the math, create a plan, and then trust the plan.

If you are on the fence, my recommendation would be the following:

1. Track your expenses thoroughly. I tracked every penny we spent (yay for Quicken!) for 3+ years before I was comfortable pulling the plug. Before Quicken, I thought that I knew what we were spending, but I was wrong. Very very wrong.
2. Research asset allocations and determine what risks you are comfortable with. You need to be able to handle market crashes without panicking -- especially once you are living off of your investments.
3. Determine a withdrawal rate that you are comfortable with based on your asset allocation and expected retirement duration. In another recent thread, the withdrawal rates of very early retirees (at least the ones who posted) were typically in the 2.0 - 2.5% range. I'm at the higher end of that range (2.44% in 2014, 2.46% in 2015) but I'm still comfortable with it. We have targets where if our WR exceeds X% we will cut discretionary spending and if WR exceeds Y% I'll head back to the workforce.
4. If your average yearly expenses (plus expected taxes) can be met with your target withdrawal rate, you're done. Enjoy retirement If not, you might still be able to retire, but it could mean making sacrifices in your budget, living with more risk than you want, or delaying retirement. That's a personal decision your family will need to make.
5. Finally, don't forget to analyze exactly where your income will be coming from. Just because your portfolio may be able to support an X% withdrawal rate doesn't mean you can get to that money easily if a lot of it is tied up in retirement accounts.

Hope this helps!
-Fean

 

[rodi]

I don't meet your exact criteria - but close enough.

Family of 4. Portfolio significantly less than $1.5M, but over $1M. Paid for house that has a rental property.

I will get a VERY small pension later this year (when I turn 55). Less than $500/mo.
We get rent on our granny flat - this is a biggy for our budget. $1400/mo.
DH is on SS, but it's small since he started collecting at 62 and had gaps in his work history. Just under $1300/month.

We withdraw about $40k/year from the portfolio... some of it is taxable since it's an RMD from an inherited IRA, some is from after tax accounts.

Our spend - including all taxes, healthcare premiums (before the ACA tax credit), etc is $84k/year. We could cut about 10-12k/year pretty easily if we needed to... things like Piano lessons for the kids, buying less organic food, less travel.

The budget is absolutely the driver. When I got serious about retiring sooner I started focusing on recurring expenses. Changed cell phone carriers, paid off mortgage, changed cable/internet package to a lower tier, changed landline to magic jack, etc. By the time I retired, I was confident that I could meet our $84k/year budget and still live pretty large and not have to pinch pennies.

 

[Sunset]

Info about your financial situation (liquid assets, etc) is missing so here's what I think.

Your expenses and WR in particular will determine if you can successfully retire on $2M in assets. It also matters what $2M consists of:
1. $2M all in liquid investments in after tax accounts-3% to 4% WR will make it work.

2. $1M liquid in after tax accounts+$1M in Pretax -3% to 4% WR initially from after tax account till 59.5 yrs of age & thereafter from pre-tax accounts will also make it work.

3. $2M mostly in Pre-Tax retirement accounts plus equity in your home/real estate with very limited liquid funds in after tax accounts---will not work.

Cheers

Good points related to availability of the cash based on age.

Also OP your mix of investments is important, as 2M in stocks is far more dangerous than a 70/30 mix where you could withdraw $ from bonds instead of stocks if the market tanked 20%-70% or more.

 

[jkern]

I come close to your criteria.

Retired at 51 in 2009. Portfolio was about $500k cash and $400k in 403b. No pension. House paid off and standard of living cost about $50k per year.

I received a substantial package from my employer and I was able to live off of that for several years. In 2010 and 2011 I bought 3 rental condos for $290k. Today they provide about half of my required income and the other half is still coming from my cash portfolio.

Almost 7 years later, all is quite well and my Net Worth has increased by approximately $900k.

 

[syd03]

2. $1M liquid in after tax accounts+$1M in Pretax -3% to 4% WR initially from after tax account till 59.5 yrs of age & thereafter from pre-tax accounts will also make it work.

this one. Thanks!!

 

[syd03]

I'm going to be a member of this group this year.

Our initial withdrawal rate will be 3%. Should be good to go.

thx mrfeh...we've been figuring 3%, possibly 2.5% which makes me feel better. For us 2.5 would mean some part time work for bit and that's OK

 

[nun]

I retired at 54 with $1.2M. But I'm single, no kids and have zero debt. My annual budget is $36k. I get $14k in rent so my portfolio only has to produce $22k. I just used $280k to buy into a COLAed state pension that starts later this year at $19600/year and I'm taking $4k/year in dividends from after tax investments so the vast majority of my remaining $920k portfolio is just compounding.

Health insurance was costing me $500/month until I discovered that I could get a $430/month subsidy because of my low income. When I start taking the pension I'll also get "cadillac" state health insurance for $100/month.

 

[dallas27]

2million is FU money for probably 99.5% of the planet.


Sent from my iPhone using Early Retirement Forum

 

[syd03]

If you are 50, SS is not that far away. Figure out how much you will get if you claim at 62, FRA, and 70. Then enter the 3 scenarios into FIRECalc along with your stash. It should give you some warm fuzzy feeling.

Thanks NW. I like a warm/fuzzy feeling....

When I run SS#'s I typically reduce the projected payout in each scenario by 30 to 40%. Sometimes I run the numbers with zero SS. Ouch.

When you were in my shoes did you go full bore on SS for your analysis or reduce a bit?

 

[syd03]

First of all, let me say congrats on your progress because it sounds like you could be very close

Fean-thank you so much for your insight. You have your priorities straight and it's touching.

I sometimes wonder if I attempted to homeschool our teen if she'd give me a dose of the same medicine I tormented my own teachers with 35 years ago. Of course I was a boatload more immature then than she is now. Heck, I might be more immature now than she is now. For starters, I'm the only one of the 2 of us still cranky on a golf course, or when someone doesn't use their cruise control, or......

 

[LARS]

I believe that 3% of 2 million is $60K a year. Average family income in the US is about $52K and most of them are paying a mortgage or rent.

And let's not forget SS and Medicare taxes...


Sent from my iPad using Early Retirement Forum

 

[syd03]

I don't meet your exact criteria - but close enough.

Family of 4. Portfolio significantly less than $1.5M, but over $1M. Paid for house that has a rental property.

Thanks Rodi. We have thought long and hard about a rental scenario for several years. But we never jumped in. Yet. Seems as though a ton of people on this forum have rentals and do quite well, yourself included. Some form of passive income would REALLY be nice in our scenario. We'll have absolutely nothing coming in until SS and that's, well, a bit scary. We have lingering doubts whether we're equipped to do the rental scene. I'm handy but until now I never seemed to have enough time to go there. And even now, I'm not sure it's what I want to be doing. I've talked to a couple property mgmt. cos and wasn't overly impressed with the 'deal'. But going it alone is still very much on our radar.

Thanks for sharing!

 

[rodi]

Thanks Rodi. We have thought long and hard about a rental scenario for several years. But we never jumped in. Yet. Seems as though a ton of people on this forum have rentals and do quite well, yourself included. Some form of passive income would REALLY be nice in our scenario. We'll have absolutely nothing coming in until SS and that's, well, a bit scary. We have lingering doubts whether we're equipped to do the rental scene. I'm handy but until now I never seemed to have enough time to go there. And even now, I'm not sure it's what I want to be doing. I've talked to a couple property mgmt. cos and wasn't overly impressed with the 'deal'. But going it alone is still very much on our radar.

Thanks for sharing!

We were accidental landlords... Built a detached 1 bedroom granny flat to care for my in-laws. When they no longer needed it rented it to various extended family for a few years for reduced rent. When they no longer needed it we put it on the open market and get a nice steady income. It's very convenient having it literally in our backyard... so DH just walks down the path to do any repairs. It helps that we've got dream tenants.

 

[nun]

We were accidental landlords... Built a detached 1 bedroom granny flat to care for my in-laws. When they no longer needed it rented it to various extended family for a few years for reduced rent. When they no longer needed it we put it on the open market and get a nice steady income. It's very convenient having it literally in our backyard... so DH just walks down the path to do any repairs. It helps that we've got dream tenants.

I bought a two family home 18 years ago and now that the mortgage is paid off the $1200/month rent for the downstairs apartment is very useful. I also have a great tenant.

 

[NW-Bound]

Thanks NW. I like a warm/fuzzy feeling....

When I run SS#'s I typically reduce the projected payout in each scenario by 30 to 40%. Sometimes I run the numbers with zero SS. Ouch.

When you were in my shoes did you go full bore on SS for your analysis or reduce a bit?

I run FIRECalc with SS at full face value. And FIRECalc tells me I can spend about 30% more than what I have been doing. And in recent years, I had many non-recurrent expenses (daughter's wedding, home improvement/repair on 2 homes, $10K health deductible each year for 3 years straight).

So, I should have plenty of safety margin. Needless to say, it makes me feel warm all over.

All I need now is to live for another 30 years to match that FIRECalc run length, and I have doubts that I will live that long.