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

[TheWizard]

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

Correct, but as someone else said, the word "perpetuity" is generally used more for institutional endowments, that sort of thing.

But when it comes to individual investors, it's arguably rather simple to provide for the remainder of your long life. But looking to the next few generations, all bets are off.

How The Vanderbilts Blew Their Fortune And Went From American Royalty To Flat-Out Broke

During the Gilded Age, the mass accumulation of money by families like the Vanderbilts changed the economic, social, and physical landscape of the United States. The Vanderbilt family's wealth grew out of the shipping and railroad industries, both of which were largely monopolized by the the...

www.ranker.com

 

[ncbill]

The Missing Billionaires

"Over the past century, if the wealthiest families had spent a reasonable fraction of their wealth, paid taxes, invested in the stock market, and passed their wealth down to the next generation, there would be tens of thousands of billionaire heirs to generations-old fortunes today.

The puzzle of The Missing Billionaires is why you cannot find one such billionaire on any current rich list."

 

[imjustawarrior]

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.

The only way I know how to avoid the surprises is to expose yourself to FIRE and financial forums like this one and bogleheads. It doesn't take long to get exposed to most of the issues. I still watch the forums for new things. Laws change. Brokerages make changes.

Bogleheads follows a narrow philosophy that is very solid. This site is much more diverse. I believe each have their place.

 

[PristineSound]

But when it comes to individual investors, it's arguably rather simple to provide for the remainder of your long life. But looking to the next few generations, all bets are off.

Different people have different objectives for perpetuity. Some want to donate it to charity, others are more for a mental state of mind. And yes, some want to pass it on to their kids. There are arguments to be made if your kids would blow it all up on drugs and partying. But I think most of us aren't the Vanderbilt's to have that much to pass on, and there are mechanisms you can put into place.

For me, hopefully by the time I die, my kids are in the 40's, with 40ish years of life where they had to work hard for their own money, buy their own house and not knowing how much they will or will not inherit, they already built a habit of financial responsibility. The other thing I can do is say they will only get the money if they already have a certain amount saved up of their own, otherwise, they won't get it until 60 with a limited WR. I think like the most of us here know, once frugal, it's a very very hard habit to break.

 

[PristineSound]

The only way I know how to avoid the surprises is to expose yourself to FIRE and financial forums like this one and bogleheads. It doesn't take long to get exposed to most of the issues. I still watch the forums for new things. Laws change. Brokerages make changes.

Bogleheads follows a narrow philosophy that is very solid. This site is much more diverse. I believe each have their place.

Thank you. I shall investigate this bogleheads at once, first time hearing it.

 

[imjustawarrior]

Thank you. I shall investigate this bogleheads at once, first time hearing it.

The wiki on bogleheads is amazing.

 

[GrayHare]

If semi-perpetuity happens as a side effect of saving and good investing, well, congrats. Struggling for it, however, may not be worth the effort because so many events can destroy assets well before many future generations can benefit. Widespread warfare, economic collapse, an asteroid hitting the planet, a plague, the list is long. All have occurred in the past, and all can snuff out "perpetual" assets in short order, even assets tended with great care.

 

[PristineSound]

If semi-perpetuity happens as a side effect of saving and good investing, well, congrats. Struggling for it, however, may not be worth the effort because so many events can destroy assets well before many future generations can benefit. Widespread warfare, economic collapse, an asteroid hitting the planet, a plague, the list is long. All have occurred in the past, and all can snuff out "perpetual" assets in short order, even assets tended with great care.

As I mentioned on post #79, different people can have different goals for perpetuity.

Mine is for a piece of mind, first, then as inheritance to my kids second. There are few here who are playing the therapist role to make me more confident about a portfolio lasting my lifetime only, I appreciate their good gesture, but alas, I have rebuff them all.

The idea of perpetuity simply won't die, so I will give it one last attempt to explain why I want perpetuity.

First, why I don't want to retire now:

1. At the current moment, the goal of perpetuity is hardly a struggle, assuming my portfolio performs within 50 percentile and my math isn't terribly wrong. Even if it performed at the bottom of the 75 percentile, I could still have perpetuity, although lifestyle won't be much better than what I have now. My lifestyle now with a family of four, I call it "thrifty," I fully recognized that 150k/yr all-in spending is not thrifty at all.
2. I don't dislike my job and it's not stressful, so I don't have a dire need to retire ASAP. Yes, there are office politics and BS which I hate dealing with, but I've learned enough mechanism to slide under the radar of these office politics and BS. I also work from home full time, where I roll out of bed at 8:15 and get to work by 9, I sign off at 5; but more times than not, I sign off at 4:30ish. I have a home gym, so many times I will get my workout in during the middle of the day.
3. My kids are still in school, my target retirement age is when both kids are out of college. While my kids are in school, it's not like I can just travel for 2 months in the middle of the school year. During the summer, my kids have a very packed summer, I still can't travel for more than few weeks at most. So what is the point of retiring now? To wake up every day with no goals, no structure, no accountability and no traveling to look forward to?
4. I have unvested company stock with new stock awards every year; it is rolling vesting, unless I hit 55. So if I retire now, I will lose it all, which according to ChatGPT, it is more than the net worth of the 50 percentile of Americans. So that is a significant amount.
5. If I retire now, not only will I not have perpetuity, I'm not sure if I can weather anything outrageous, like the US government calling on me to help out with the $38T national debt (you might laugh at this, but this happened to more than a handful of countries in the past century including gold confiscation in the US in 1933).
6. If both my wife and I retire now, I need to buy health insurance for a family of 4; that is an outrageous amount of expense that I am not accustomed paying for.
7. I tried MMM's minimalism and "luxury is a weakness" philosophy for a year; and it truly suck balls. I live only once, and I already grew up poor. . .so you can figure out what I want in my life and in my retirement years. . .luxury and a lot of discretionary spending, retiring now prevents that. Now I do recognize that one's spending habit is unlikely to change, so I may not even spend like a rockstar even if I have rockstar money.

Why I want perpetuity:

1. For me, it's a damn cool goal and achievement. To be able to tell myself, my portfolio can last me until the end of time; heck, it might just add few more years to my life because of the good feeling it induces. My wife and I look at each other now giddy knowing we are on this path.
2. The financial security it affords, is another amazing feeling, it's one level up. To know that for virtually any rough situation, you can just laugh at it while some others might get a bit nervous. One member here started the thread talking about backup plans like moving to somewhere cheap, downsizing and possibly go get a job in retirement, are you kidding me? Backup plans and retirement job is a red line for me.
3. To be able to walk around knowing that I, in all practical means, I can never overspend, no matter how long I live, that is a priceless feeling.
4. I want to leave my kids with a good chunk, maybe it can help them retire at age 48, 10 years earlier than I can retire. That would be an epic gift, and it will give the term "rest in peace" when I die a whole new meaning.

 

[WhenIsItTime]

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.

Background: I agree with your sentiment. Wife and I are self-made, LBYM's, DIY'ers, living American dream via Corp America. Wife 'retired' when kids were young. I retired mid-2019 at 47 years old with grade school kids at about 3% WR. Absolutely waited until confident nest egg would outlive wife and me. I loved my employer even though I was a hamster on a screaming treadmill. I was committed to keeping my feet under me until I'd never have to work again. Keeping money invested so the money I worked hard for keeps working hard.
1) Amazing
2) Given history since 2019, 3% WR is now 2%. Maybe that is 'too conservative'.
3) I'm at 80% equities. Other 20% is directly held bonds or MM. Plenty to ride out a 3+ year stock market crash.
4) Only 'surprise': health insurance. History was healthy. Since retirement and after COBRA, we have had 4 years where somebody in our foursome hit or nearly hit the out-of-pocket maximum. Furthermore, the monthly premium is up at least 60% working off memory.
5) Hasn't happened yet. Not even close.
6) No mortgage, which meant I needed less cash in the 0-3 year timeline to provide for.

Big thing for us is we knew we had an annual budget that was very comfortable and market returns way over our WR have allowed us to do home improvements and upgrade trips/cars with no hesitation.

 

[TheWizard]

As I mentioned on post #79, different people can have different goals for perpetuity.

Mine is for a piece of mind, first, then as inheritance to my kids second. There are few here who are playing the therapist role to make me more confident about a portfolio lasting my lifetime only, I appreciate their good gesture, but alas, I have rebuff them all.

The idea of perpetuity simply won't die, so I will give it one last attempt to explain why I want perpetuity.

First, why I don't want to retire now:

1. At the current moment, the goal of perpetuity is hardly a struggle, assuming my portfolio performs within 50 percentile and my math isn't terribly wrong. Even if it performed at the bottom of the 75 percentile, I could still have perpetuity, although lifestyle won't be much better than what I have now. My lifestyle now with a family of four, I call it "thrifty," I fully recognized that 150k/yr all-in spending is not thrifty at all.
2. I don't dislike my job and it's not stressful, so I don't have a dire need to retire ASAP. Yes, there are office politics and BS which I hate dealing with, but I've learned enough mechanism to slide under the radar of these office politics and BS. I also work from home full time, where I roll out of bed at 8:15 and get to work by 9, I sign off at 5; but more times than not, I sign off at 4:30ish. I have a home gym, so many times I will get my workout in during the middle of the day.
3. My kids are still in school, my target retirement age is when both kids are out of college. While my kids are in school, it's not like I can just travel for 2 months in the middle of the school year. During the summer, my kids have a very packed summer, I still can't travel for more than few weeks at most. So what is the point of retiring now? To wake up every day with no goals, no structure, no accountability and no traveling to look forward to?
4. I have unvested company stock with new stock awards every year; it is rolling vesting, unless I hit 55. So if I retire now, I will lose it all, which according to ChatGPT, it is more than the net worth of the 50 percentile of Americans. So that is a significant amount.
5. If I retire now, not only will I not have perpetuity, I'm not sure if I can weather anything outrageous, like the US government calling on me to help out with the $38T national debt (you might laugh at this, but this happened to more than a handful of countries in the past century including gold confiscation in the US in 1933).
6. If both my wife and I retire now, I need to buy health insurance for a family of 4; that is an outrageous amount of expense that I am not accustomed paying for.
7. I tried MMM's minimalism and "luxury is a weakness" philosophy for a year; and it truly suck balls. I live only once, and I already grew up poor. . .so you can figure out what I want in my life and in my retirement years. . .luxury and a lot of discretionary spending, retiring now prevents that. Now I do recognize that one's spending habit is unlikely to change, so I may not even spend like a rockstar even if I have rockstar money.

Why I want perpetuity:

1. For me, it's a damn cool goal and achievement. To be able to tell myself, my portfolio can last me until the end of time; heck, it might just add few more years to my life because of the good feeling it induces. My wife and I look at each other now giddy knowing we are on this path.
2. The financial security it affords, is another amazing feeling, it's one level up. To know that for virtually any rough situation, you can just laugh at it while some others might get a bit nervous. One member here started the thread talking about backup plans like moving to somewhere cheap, downsizing and possibly go get a job in retirement, are you kidding me? Backup plans and retirement job is a red line for me.
3. To be able to walk around knowing that I, in all practical means, I can never overspend, no matter how long I live, that is a priceless feeling.
4. I want to leave my kids with a good chunk, maybe it can help them retire at age 48, 10 years earlier than I can retire. That would be an epic gift, and it will give the term "rest in peace" when I die a whole new meaning.

I think a lot of us have basically achieved your last four bullet items, no matter what we call it...

 

[PristineSound]

I think a lot of us have basically achieved your last four bullet items, no matter what we call it...

From what I can see so far, it looks like it.

But go back and read some of the posts here, some are really turned off by this idea and some are convincing me to not pursue such a goal. Maybe it's the fact that we are putting a label to the idea and to intentionally pursue it, while others unintentionally landed in that position.

 

[RetiredHappy]

I don't think anyone here is turned off by this idea and convincing you not to pursue such a goal. I remember most of the posts are about how we have all achieved a portfolio that will last in perpetuity because of low withdrawal rates. Many of us also have a certain percentage of our portfolio in fixed income type of instruments so that we can weather a prolonged bear market.

 

[Diogenes]

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.

My views...

2. According to "The Missing Billionaires", 2.5% is about right, depending on asset-mix, which bring us to...
3. Boglehead 3-fund, tilted very heavily towards stocks.
4. Main "gotcha" is that for some of us, resignation isn't just a burning of the bridge... it's setting off a hydrogen bomb. Be absolutely damn sure that you're never going back to any sort of employment.. no way, no how.

What I think that a lot of folks are saying here, quite reasonably, is that going from 4% annual withdrawal rate to 2.5% might imply many additional years of working. It might even mean foregoing early retirement entirely, and just retiring at a "normal" age (what is that these days? 65?). And that rather defeats the purpose of this site, doesn't it? So, attempt at being extra-safe, robs us of fruitful and pleasurable years of non-work...

... to which I'm keenly receptive! But the counterpoint is, that if I'm retired but fretting over whether I have enough money or if I've done "enough" in my career to merit concluding it, well then, are my years of non-work genuinely fruitful and pleasurable?

 

[PristineSound]

What I think that a lot of folks are saying here, quite reasonably, is that going from 4% annual withdrawal rate to 2.5% might imply many additional years of working. It might even mean foregoing early retirement entirely, and just retiring at a "normal" age (what is that these days? 65?). And that rather defeats the purpose of this site, doesn't it? So, attempt at being extra-safe, robs us of fruitful and pleasurable years of non-work...

As it stands right now, I am looking at 58 retirement, certainly not as early as some here, but I would still consider that early retirement. Although if market does well, 55 is possible. Anything earlier, I would have to give up unvested stocks from my company, which is a healthy chunk.

I also have alternative investments, which could push the portfolio performance into a higher performance percentile. So maybe 53 is possible if all stars aligned, but again, there is a golden handcuff at work that keeps me there till 55.

Once I retire, I will have to rebalance the portfolio to be less risky. I may even have to rebalance even earlier to mitigate any risk that prevents retirement at the age I want, but that also translates to slower growth.

There are just so many different levers and considerations, each with pro and cons.

Many here who retired in their late 40's in perpetuity, I admire you from afar. Looking back, there were few mistakes I made, which could have shaved off 3 to 4 years from my current trajectory, the price of being young and not thinking long term.

 

[zangbao]

As I mentioned on post #79, different people can have different goals for perpetuity.

Mine is for a piece of mind, first, then as inheritance to my kids second. There are few here who are playing the therapist role to make me more confident about a portfolio lasting my lifetime only, I appreciate their good gesture, but alas, I have rebuff them all.

The idea of perpetuity simply won't die, so I will give it one last attempt to explain why I want perpetuity.

First, why I don't want to retire now:

1. At the current moment, the goal of perpetuity is hardly a struggle, assuming my portfolio performs within 50 percentile and my math isn't terribly wrong. Even if it performed at the bottom of the 75 percentile, I could still have perpetuity, although lifestyle won't be much better than what I have now. My lifestyle now with a family of four, I call it "thrifty," I fully recognized that 150k/yr all-in spending is not thrifty at all.
2. I don't dislike my job and it's not stressful, so I don't have a dire need to retire ASAP. Yes, there are office politics and BS which I hate dealing with, but I've learned enough mechanism to slide under the radar of these office politics and BS. I also work from home full time, where I roll out of bed at 8:15 and get to work by 9, I sign off at 5; but more times than not, I sign off at 4:30ish. I have a home gym, so many times I will get my workout in during the middle of the day.
3. My kids are still in school, my target retirement age is when both kids are out of college. While my kids are in school, it's not like I can just travel for 2 months in the middle of the school year. During the summer, my kids have a very packed summer, I still can't travel for more than few weeks at most. So what is the point of retiring now? To wake up every day with no goals, no structure, no accountability and no traveling to look forward to?
4. I have unvested company stock with new stock awards every year; it is rolling vesting, unless I hit 55. So if I retire now, I will lose it all, which according to ChatGPT, it is more than the net worth of the 50 percentile of Americans. So that is a significant amount.
5. If I retire now, not only will I not have perpetuity, I'm not sure if I can weather anything outrageous, like the US government calling on me to help out with the $38T national debt (you might laugh at this, but this happened to more than a handful of countries in the past century including gold confiscation in the US in 1933).
6. If both my wife and I retire now, I need to buy health insurance for a family of 4; that is an outrageous amount of expense that I am not accustomed paying for.
7. I tried MMM's minimalism and "luxury is a weakness" philosophy for a year; and it truly suck balls. I live only once, and I already grew up poor. . .so you can figure out what I want in my life and in my retirement years. . .luxury and a lot of discretionary spending, retiring now prevents that. Now I do recognize that one's spending habit is unlikely to change, so I may not even spend like a rockstar even if I have rockstar money.

Why I want perpetuity:

1. For me, it's a damn cool goal and achievement. To be able to tell myself, my portfolio can last me until the end of time; heck, it might just add few more years to my life because of the good feeling it induces. My wife and I look at each other now giddy knowing we are on this path.
2. The financial security it affords, is another amazing feeling, it's one level up. To know that for virtually any rough situation, you can just laugh at it while some others might get a bit nervous. One member here started the thread talking about backup plans like moving to somewhere cheap, downsizing and possibly go get a job in retirement, are you kidding me? Backup plans and retirement job is a red line for me.
3. To be able to walk around knowing that I, in all practical means, I can never overspend, no matter how long I live, that is a priceless feeling.
4. I want to leave my kids with a good chunk, maybe it can help them retire at age 48, 10 years earlier than I can retire. That would be an epic gift, and it will give the term "rest in peace" when I die a whole new meaning.

Looks to me like you're seeking perfection, tying your happiness to it and swapping years of retirement for work.

I grew up in poverty as well, but after a brief chase with the perfect retirement financial plan I realized I only need to be content and thus retired at 50 with what I had. Then discovered that I can live well within my pension so 0% withdrawal rate so far.

 

[pjigar]

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.

We have signed up for the perpetuity club a long time ago. We have came to the conclusion that a WR less than 3% should be able to keep us there. We plan to hold a large amount of equity (>90%) to perpetuity to help us stay there. If you have more balanced portfolio of 60% equity-40% bonds then 2-2.5% WR sounds plausible. I haven't done analysis for 60:40 scenario. YMMV.

 

[Vincenzo Corleone]

Looks to me like you're seeking perfection, tying your happiness to it and swapping years of retirement for work.

I grew up in poverty as well, but after a brief chase with the perfect retirement financial plan I realized I only need to be content and thus retired at 50 with what I had. Then discovered that I can live well within my pension so 0% withdrawal rate so far.

Different strokes for different folks.

 

[Dtail]

Different strokes for different folks.

Agree. We will not have the luxury of perpetuity of portfolio. Nothing better than retirement for us and I did love my career.
However certainly nothing wrong to pursue it as a goal. If one had to work to 75 y.o., perhaps a different response from me.
Go for it OP.

 

[Surewhitey]

I like the idea of perpetuity but I don't think I'd want to sacrifice time for it too much. DW, however, doesn't subscribe to ER, so I have a different battle. She just shared with a visiting friend how she felt about someone using the ACA to benefit their "lifestyle" when they were able bodied to work.

We're encouraged to be content @ church. I think contentment is a good thing to reach for.

I’m also in the camp for ~4-5% WR on a 50/50 portfolio a stable goal for ER & then dropping off when you take SS & pension.

"WE" plan for lumpy things in addition to basics + vacation expenses. Also ACA is in the cards imo.

We spend $70-80k for 2 as we have reduced our monthly needs by paying off the home & cars. Cash flow is part of the ACA game in addition to the after tax accounts. Being flexible with prep or post tax accounts is important imo.

We are 54 & 60, so not super ER's, but I'm guessing maybe OMY. You will likely always have something you'll have to walk away from regarding golden handcuffs. I'm trying to convey that to DW as she's on a "every 6 month" carrot system. Again, contentment, comes into play.

Leaving something for "everyone" will likely be squandered by someone who hasn't worked for it, so I don't worry about it but we will likely have... I just want to not burden anyone when we decline.

 

[PristineSound]

Looks to me like you're seeking perfection, tying your happiness to it and swapping years of retirement for work.

I grew up in poverty as well, but after a brief chase with the perfect retirement financial plan I realized I only need to be content and thus retired at 50 with what I had. Then discovered that I can live well within my pension so 0% withdrawal rate so far.

I'm not sure how you came to this conclusion after reading the 7 points as to why I don't want to retire now.

 

[zangbao]

I'm not sure how you came to this conclusion after reading the 7 points as to why I don't want to retire now.

I didn’t imply that you needed to retire now maybe consider retire earlier once you feel you have enough. But that is your stroke.

About ten years ago, a mid 70s mid nine-digit millionaire once told me it would take 10 billion in order for one to never outspend money. i paid for his lunch once.

 

[PristineSound]

She just shared with a visiting friend how she felt about someone using the ACA to benefit their "lifestyle" when they were able bodied to work.

Your DW's integrity makes me feel extremely guilty.

Because you only qualify for subsidy if your income level is equal or below a certain level, to me, it explicitly implies ACA is not just meant for those who can't get health benefits from employers. Additionally, if I remember correctly, Obama once mentioned something along the lines of how some people didn't want to take the risk of entrepreneurship because they won't have healthcare insurance if they left their jobs to chase an idea. If that is the intent, then to me, ACA is meant for anyone and everyone.

*I only cited Obama to give context; this is not meant to be a political post, so please do not reply back and take this down into the realms of politics.

 

[PristineSound]

I didn’t imply that you needed to retire now maybe consider retire earlier once you feel you have enough. But that is your stroke.

About ten years ago, a mid 70s mid nine-digit millionaire once told me it would take 10 billion in order for one to never outspend money. i paid for his lunch once.

Well, the earliest is 55 for me anyway, due to the golden handcuff. If I hated my job, then I would leave that big chunk of unvested stock and unshackle myself from the golden handcuff.

 

[Surewhitey]

Because you only qualify for subsidy if your income level is equal or below a certain level, to me, it explicitly implies ACA is not just meant for those who can't get health benefits from employers. Additionally, if I remember correctly, Obama once mentioned something along the lines of how some people didn't want to take the risk of entrepreneurship because they won't have healthcare insurance if they left their jobs to chase an idea. If that is the intent, then to me, ACA is meant for anyone and everyone.

*I only cited Obama to give context; this is not meant to be a political post, so please do not reply back and take this down into the realms of politics.

Agree with that. I suggested someone was pulling the strings when it was designed around income & not assets.

Also her company changed the healthcare availability for spouses this year if they qualify for their own employment coverage. I say anything within the law of the land (or corporate) should be open to anyone who qualifies. The only thing that is constant is change with HC.

I went solo in 2018... But DW foot the HI bill. We'd be covered in ER, but can't convince it to my wifey.

 

[imjustawarrior]

Well, the earliest is 55 for me anyway, due to the golden handcuff. If I hated my job, then I would leave that big chunk of unvested stock and unshackle myself from the golden handcuff.

I retired at 55. We were FI a few years before that. I waited until 55 so that I could officially retire. That meant I could keep all vested stock options and unvested stock options and RSUs would continue to vest. It also made retiree health insurance available. I loved the technical work, but I hated many other parts of the job. I use to think I should continue to work until all the kids graduated HS. I thought that modeled the proper work ethic. Then I decided RE modeled financial responsibility. I retired with 2 still in HS.