"Early" retirement and have a portfolio that last in perpetuity.

[RetiredHappy]

Quarter million a year is very comfortable. That is our projection at 58 as well for a 2.5% WR assuming 50 percentile portfolio performance, which is in all likelihood, but even if it does underperform significantly, we are looking at a 2.5% WR to cover current lifestyle of $150k/year for a family of 4 (we are thrifty people). This does not include SS and my wife's small pension, which at the moment, we are looking to collect at 64YO, but again, we are planning everything without SS, who knows what will happen with it.

Are you on medicare yet? If not, what do you do for health insurance?

I pay full freight off-exchange.

 

[PristineSound]

OP, welcome to the "perpetuity" club. "Perpetual", to me, means outlasting the collision of the Milky Way and Andromeda galaxies, the decay of protons, the extinction of black holes from Hawking radiation and so on. Perpetual in financial terms is an even stronger condition: it means that the portfolio grows, relative to inflation. It means that the rate of return minus the withdrawal rate (if any) has to exceed taxes and inflation. And that, for a "balanced" portfolio, puts the SWR at around 2.5%, maybe slightly less.

As for circumstances, well... I'm a few years older, don't have kids or a spouse, and likely have a combination of much lower earnings but perhaps larger portfolio (some of us are loathe to post numbers). This means a smaller opportunity cost if one chooses to retire right away, and also more margin to cut expenses if that becomes necessary. But it also means less capacity to grow the portfolio through additional savings.

Our circumstances are all different, but our objectives/values can indeed align!

Thank you! I had a post limit so I didn't respond to any other posts last night. I guess it's a new member limitation.

Anyway, I first learn of the FIRE movement with Mr. Money Mustache long ago; I think it was at a time before the term "FIRE" was still not so widely used. I was hooked at first, but over the years the main philosophy of FIRE of minimalism and "luxury is a weakness" started to repel me away.

Over the years, the idea of the "Perpetuity Club" (which btw, I like this term that you coined, I might even think about starting a thread called the "Perpetuity Club Member Lounge" for those of us who intentionally plan for it and aspire to be in it), really got me motivated and I made up my mine that is what I want. I guess others who beg to differ may think, it's an ego thing, or unnecessary, or ill thought out. But I guess only those who aspire to it understands.

Anyway, love for others to chime in who's already in the Perpetuity Club to tell me what their thoughts are.

 

[PristineSound]

Not on topic, but I couldn't let this pass...I would never call $150K per year "thrifty".

I suppose it depends on cost of living and how many people are in your family and of course lifestyle.

For us, a family of 4, it's comfortable, but definitely not luxurious.

 

[SecondCor521]

Thank you! I had a post limit so I didn't respond to any other posts last night. I guess it's a new member limitation.

Anyway, I first learn of the FIRE movement with Mr. Money Mustache long ago; I think it was at a time before the term "FIRE" was still not so widely used. I was hooked at first, but over the years the main philosophy of FIRE of minimalism and "luxury is a weakness" started to repel me away.

The term FIRE has been around since the late 1990s. I think, but am not certain, that it was coined by someone on the Motley Fool message boards.

MMM has his own financial philosophy which has a lot of other things in addition to FIRE such as environmental stewardship and stoicism. His website represents his take on FIRE which is only one voice of many, as well as those other topics which aren't really FIRE proper.

Lately there seems to be the blossoming of a variety of FIRE terms to describe various versions: SIRE, Fat FIRE, barista FIRE, coast FIRE, etc.

Over the years, the idea of the "Perpetuity Club" (which btw, I like this term that you coined, I might even think about starting a thread called the "Perpetuity Club Member Lounge" for those of us who intentionally plan for it and aspire to be in it), really got me motivated and I made up my mine that is what I want. I guess others who beg to differ may think, it's an ego thing, or unnecessary, or ill thought out. But I guess only those who aspire to it understands.

Anyway, love for others to chime in who's already in the Perpetuity Club to tell me what their thoughts are.

Technically I'm in your club as are many others here.

I will repeat that I don't think it's a good thing to aspire to generally speaking. The juice isn't worth the squeeze: what you give up to get in the club is worth more than what you get by being a member. I will repeat my encouragement to you to consider the arguments against the club: yes, you might have a large degree of financial security, flexibility, and luxury, and those are all nice things. But you're giving up precious time and years of your life that you can't get back. It's even worse if you don't like your job or career or if you like other things better than the job or career.

I also think that most people in the club did so by accident or happenstance and not on purpose.

 

[pb4uski]

With a projected 0.2% WR in a few short months, I'm a member as well but not by design or intent, so I won't bother to pick up my membership card.

 

[marko]

Many folks here, myself included have portfolios that have tripled or quadrupled since they retired early.

As such, I'd guess that portfolios potentially lasting in perpetuity are more the rule than the exception on this forum, although many end up deliberately dissolving at death due to charitable disbursements.

Everyone's expense profile is different but I didn't see anything in OPs introduction that was that unusual enough to preclude his intent of having his portfolio continue along the lines that most of us know.

(FWIW, I'm still cashing checks from a man who died 30 years before my mother was born...I suppose you could call that perpetuity)

 

[mrfeh]

I suppose it depends on cost of living and how many people are in your family and of course lifestyle.

For us, a family of 4, it's comfortable, but definitely not luxurious.

Ok, but "comfortable" and "thrifty" are not synonymous.

The median household income in the US is $83K. I think many people here forget or are unaware of how the average person lives.

 

[Diogenes]

MMM has his own financial philosophy which has a lot of other things in addition to FIRE such as environmental stewardship and stoicism. ...

... I will repeat my encouragement to you to consider the arguments against the club: yes, you might have a large degree of financial security, flexibility, and luxury, and those are all nice things. But you're giving up precious time and years of your life that you can't get back. It's even worse if you don't like your job or career or if you like other things better than the job or career.

MMM is an enterprising and inventive businessman. He's "retired" in the sense of no longer drawing a W2 or being answerable to a boss. But he stays busy in remunerative things, as an entrepreneur or self-supporting artisan would be.

For many of us, desire for "perpetuity" is a realization that we're not like MMM. We're only able to generate cash flow if sitting in a cubicle and filling-out a time-sheet every two weeks. If we cease doing that, then we switch into a scarcity mindset, where no portfolio-size is enough to assure even a semblance of dignified living, let alone a noteworthy wealth. Retirement is more of an abstract desire than something that we deliberately attain, and then, never look back.

I'd regard it as a grievous setback, if decades hence, my portfolio is lower than it presently is... and that's speaking as a person with no children and no heirs. The less skill that I have with making money, the more I cling to the vitality of the portfolio. And the larger the portfolio gets, the less tractable it becomes, to make-good on losses (or just underperformance) with either extra thrift or rejoining the workforce.

So for me, "joining the perpetuity club" is a coping mechanism and a search for security, a search for meaning and for encouragement. Giving up luxurious living, is a small price to pay, for the mental crutch of club membership.

 

[PristineSound]

Many folks here, myself included have portfolios that have tripled or quadrupled since they retired early.

As such, I'd guess that portfolios potentially lasting in perpetuity are more the rule than the exception on this forum, although many end up deliberately dissolving at death due to charitable disbursements.

Everyone's expense profile is different but I didn't see anything in OPs introduction that was that unusual enough to preclude his intent of having his portfolio continue along the lines that most of us know.

(FWIW, I'm still cashing checks from a man who died 30 years before my mother was born...I suppose you could call that perpetuity)

And that is the confusing part. Why are we still talking about perpetuity and the need for it or not. Or if it's good or not.

I really wish we can get past this. Perpetuity is my goal and that is the state of many here as it seems, whether that is their goal or not.

Let's just stop trying to convince me otherwise or pontify the need for it or not.

 

[SecondCor521]

And that is the confusing part. Why are we still talking about perpetuity and the need for it or not. Or if it's good or not.

This is a early retirement discussion forum. The discussion is one of the key strengths of the forum - you might learn something new or you might not; either way it's a win in my view.

I think you're doing yourself a disservice by not at least considering other points of view, even if you subsequently choose to disregard them.

Anyway, I'll drop the point now. I do wish you well regardless.

 

[Sand101]

Perpetuity is my goal and that is the state of many here as it seems, whether that is their goal or not.

If you're looking for ideas of what kind of withdrawal rates you need for a portfolio that lasts into perpetuity check out portfoliocharts.com. Some very deep analysis of differently constructed portfolios with a ton of calculations associated with each. In the withdrawal rates section you can see time bound safe withdrawal rates along with the long term withdrawal rate (i.e. perpetual rate). It calculates the LTWR of the 60/40 at 3.4%, for example.

 

[PristineSound]

This is a early retirement discussion forum. The discussion is one of the key strengths of the forum - you might learn something new or you might not; either way it's a win in my view.

I think you're doing yourself a disservice by not at least considering other points of view, even if you subsequently choose to disregard them.

Anyway, I'll drop the point now. I do wish you well regardless.

Thanks. As I stated on multiple occasions, this goal is non negotiable; it is a must; no one, not even God, can change my mind. I really don't know how else to say it.

Now let's all move pass trying to convince the new guy to subscribe to a different philosophy. I know you all mean well, thank you.

 

[imjustawarrior]

PrestineSound,

do you have any specific questions? That may help focus the thread. Asking for general comments can open Pandora's box. Also, this is a fire forum. You strategy means you are not retiring as early as others with the same resources. Personal finances are personal. If your approach works for you, great.

 

[PristineSound]

PrestineSound,

do you have any specific questions? That may help focus the thread. Asking for general comments can open Pandora's box. Also, this is a fire forum. You strategy means you are not retiring as early as others with the same resources. Personal finances are personal. If your approach works for you, great.

General and any feedback, on things like, but not limited to:

1) How is it working out for you?
2) Is 2%-2.5% too conservative or not conservative enough.
3) What portfolio mix would be recommended, based on what timeline and what risk tolerance, etc.
4) What are some of the gotchas? The only one I can think of is health insurance.
5) On years where you don't get enough return, do you cut spending?
6) Someone recommended that I shouldn't carry a mortgage, why or why not?

The short of it is, I don't know what I don't know. If you are living it, then you would know what you didn't know and chances are, I wouldn't know it now, so please do share.

 

[PristineSound]

For many of us, desire for "perpetuity" is a realization that we're not like MMM.

100%, exactly why after a year of trying to live the minimalist life made me realized that I wasn't happier. I didn't like the idea that if I needed a specific tool to do some work around the house, I should wait few days to make sure I need it before I buy it. I didn't like the idea that, I shouldn't hire a tutor for my son instead I should sit down and help him myself, or maybe the 4 of us should cramp into a one room hotel on vacation. I live once, while I'm not asking to live like a Saudi Prince, I don't want to live like MMM.

So for me, "joining the perpetuity club" is a coping mechanism and a search for security, a search for meaning and for encouragement. Giving up luxurious living, is a small price to pay, for the mental crutch of club membership.

I don't think you have to give up luxurious living to join the "perpetuity club," though there are some things you do have to give up. In my case even earlier of an retirement, but retiring at 58 is fine by me as I don't really dislike my job and it's not a high stress job. Not to mention, my kids are still young and in school, it's not like I can just take off for a 2 month vacation in the middle of the school year.

 

[TheWizard]

Not on topic, but I couldn't let this pass...I would never call $150K per year "thrifty".

That's for a family of four, as he said.
I'm a family of one with a bit more income than that...

 

[PristineSound]

Ok, but "comfortable" and "thrifty" are not synonymous.

The median household income in the US is $83K. I think many people here forget or are unaware of how the average person lives.

I suppose you are right, I guess my definition of "thrifty" can still be comfortable. And I guess my definition of comfortable can be luxury for others. Perspective is important indeed.

 

[mrfeh]

That's for a family of four, as he said.

I am aware. Still would never call that thrifty.

I'm a family of one with a bit more income than that...

We're talking spending, not income.

 

[imjustawarrior]

General and any feedback, on things like, but not limited to:

1) How is it working out for you?
2) Is 2%-2.5% too conservative or not conservative enough.
3) What portfolio mix would be recommended, based on what timeline and what risk tolerance, etc.
4) What are some of the gotchas? The only one I can think of is health insurance.
5) On years where you don't get enough return, do you cut spending?
6) Someone recommended that I shouldn't carry a mortgage, why or why not?

The short of it is, I don't know what I don't know. If you are living it, then you would know what you didn't know and chances are, I wouldn't know it now, so please do share.

1) my 2.5 years of retirement has been great. The market has been strong, so it has been working for everyone.

2) That is for you to decide. It is more conservative than most.

3) This long article is a must read: The Safe Withdrawal Rate Series.

4) Health insurance is not really a gotcha. It is just expensive if you do not get someone else to pay it (employer or government subsidies). I budget $40k/yr. It is the price to play the retirement game.

5) There will be down years. No need to cut spending unless things are worse than you planned for. There are many approaches to this. I think a lot of people use a similar strategy to what they used pre-retirement. I know I do.

6) Debt is a financial tool. It is neither good or bad. You have to decide what you want to do. I chose to be out of debt by 40 and never go into debt again. My decision goes beyond purely financial. We are not just financial beings.

I have had no surprises in retirement. I was on Bogleheads for 12 years before retiring. I think that made all issues known. I lurked on here a few years before retiring.

Going into retirement I mainly had to figure out two things: health insurance and making tax payments. I will start Roth conversions this year, but I know how to do that. It is very similar to backdoor Roth.

 

[disneysteve]

I am new here and would like to share my situation and goal to see who is already in this position that I aspire to be in and provide feedback, comments, caveats, etc.

Goal/Plan:
Conservative SWR of 2% to 2.5% where the portfolio will grow in perpetuity; long after we are dead. My wife and I have financial anxiety, so this is very important for us to keep us sane, the goal must be an ever-growing portfolio until the end of time.

I've read through this thread and wanted to weigh in.

As others have said, your goal of "perpetuity" is something that many here are doing and have done whether that was their actual goal or not, and in most cases it probably wasn't their goal. It's just how things work out. I think you're just stating it differently.

Lots of people on this forum have 2% or 1% or 0% or even negative withdrawal rates. Their pension and SS fully cover their living expenses so their portfolio just continues to grow. Or they have what you're referring to as a conservative WR with the same result. The money just keeps growing. I think there's a thread here about people seeing their net worth grow in retirement.

Personally, I officially retired at the end of May 2024 though effectively 1/1/24. Since then, our portfolio has increased by nearly $1 million thanks to our "conservative" WR and the ongoing bull market. We've currently got $4.3 million. The standard 4% WR would mean we could spend $172,000/year. Our actual spending for 2024 was $128,000. It will be higher this year because we remodeled our kitchen but probably still won't top 172K. Despite being retired, we're up nearly 500K YTD. Unless there is a serious and prolonged bear market, I fully expect our bottom line to continue to grow over time and have us die with way more money than we started with.

So I don't think your desire for perpetuity is unusual at all, at least not among this crowd.

 

[marko]

So I don't think your desire for perpetuity is unusual at all, at least not among this crowd.

+1. The stars seem well aligned for OP.

A "non-negotiable goal" that is almost guaranteed is a great strategy. Takes a lot of pressure off!

 

[ShokWaveRider]

Assuming we are not called on to help reduce the national debt ($38t), our stash should last in perpetuity. We do not take anywhere near 4%, I really do not track our actual WR, as we simply take what we need from it when we need it. But we do get SS and a small pension that helps reduce the "current" WR. And being on Medicare also helps. We ER'd about 20 years go, and now while not officially ER's anymore, the numbers still works. The ACA had sensible premiums when it came out and that certainly helped a lot.

 

[PristineSound]

1) my 2.5 years of retirement has been great. The market has been strong, so it has been working for everyone.

2) That is for you to decide. It is more conservative than most.

3) This long article is a must read: The Safe Withdrawal Rate Series.

4) Health insurance is not really a gotcha. It is just expensive if you do not get someone else to pay it (employer or government subsidies). I budget $40k/yr. It is the price to play the retirement game.

5) There will be down years. No need to cut spending unless things are worse than you planned for. There are many approaches to this. I think a lot of people use a similar strategy to what they used pre-retirement. I know I do.

6) Debt is a financial tool. It is neither good or bad. You have to decide what you want to do. I chose to be out of debt by 40 and never go into debt again. My decision goes beyond purely financial. We are not just financial beings.

I have had no surprises in retirement. I was on Bogleheads for 12 years before retiring. I think that made all issues known. I lurked on here a few years before retiring.

Going into retirement I mainly had to figure out two things: health insurance and making tax payments. I will start Roth conversions this year, but I know how to do that. It is very similar to backdoor Roth.

Helpful.

My biggest concern are gotchas and surprises. I don't know what I don't know and I really rather not find out what I don't know when I don't have anymore time left to prepare.

 

[PristineSound]

Assuming we are not called on to help reduce the national debt ($38t),

You hit the nail right on the head. This national debt and a prolong recession keeps me up at night.

I already am planning to retire without social security, so if it does go insolvent, I was never counting on that money. But the national debt is the wild card.

 

[Semi-Retyrd]

While I am a member of the P-Club now, it only happened in recent years. How I got here is probably not so usual.
I retired in 2008 at 59 with the plan to spend down a large IRA until I reached 70 to max out my SS payments. At the same time my wife and I bought a large house for cash with most of my after tax savings along with a couple of new cars.
For health insurance there was no ACA so I bought my wife and I catastrophic policies that covered all expenses after an annual $10K max that capped our health exposure.
Until I hit 70 my withdrawal rate was around 8% which consumed about 75% of my IRA. The WR dropped to about 3% when SS kicked in in 2019.
Then at the end of 2022 we sold our house (which was way too big for us to maintain) and moved to Korea and bought a small condo for cash. The extra cash from the home sale grows as part of our perpetual portfolio.
Medicare doesn't provide coverage outside the USA, but we have Korean national health insurance instead which costs us a total of around $120/mo and includes a portion for long term care either through home visits or separate facilities.
Now our combined SS payments together with a small pension cover our regular expenses, so our withdrawal rate is near zero. I manage our portfolio now mostly as an inheritance for my two grown daughters.
You can't retire in Korea unless you are married to a Korean, so my situation is a little unusual as most ex-pats here have a work visa through their employer.