Has anyone been able to ER on 600k or less? If so how did you do it? I read the Barron's article previously referenced, and was just wondering if this was a rare occurence or something done by a lot of folks (comfortably) in today's economic climate.
ER on less than 600K ?
- Thread starter ferco
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free4now
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Well, I suppose some people would consider me ER on about 600k... I have about 640k in liquid assets and a condo worth 550k free and clear. I just started ER a few months ago, living on about $2k/month (no housing payment since I own the condo), and I have a roomate whose rent pays my HOA and real estate taxes.
I don't think that's really what you were asking... I'm being kind of smart alecky. You probably were interested in people whose net worth including residence is 600k. I'm posting primarily to point out that the "net worth doesn't include your primary home" convention leads to confusion and strange conclusions.
Maybe someday we'll have one word for "net worth including residence" and another word for "net worth not including residence", but for now I suppose we're just stuck with the ambiguity.
I don't think that's really what you were asking... I'm being kind of smart alecky. You probably were interested in people whose net worth including residence is 600k. I'm posting primarily to point out that the "net worth doesn't include your primary home" convention leads to confusion and strange conclusions.
Maybe someday we'll have one word for "net worth including residence" and another word for "net worth not including residence", but for now I suppose we're just stuck with the ambiguity.
No problem if your 4% SWR of $24K/year fulfills all your needs. "Wants" might be another matter entirely...ferco said:
Depending on your income, the "33%" thread might do it.
The Kaderlis have turned $24K/year into an art form.
But for the most entertaining answer to your question I'd recommend going over to Raddr's board and asking JohnGalt. Remember that he's a Mensa member so his answers may be a little difficult for us mere mortals to comprehend.
And then there's The Legend of Dolly Freed...
cute fuzzy bunny
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Just a couple of people.
One ended up washing out tin foil and living in a group home. The other has a working wife but lies about it. The latter seems like a better option.
But seriously...you're looking at possum living, real problems with a big downturn as you dont have a lot of budget to cut back on, or a somewhat decent life in some areas outside of the US.
One ended up washing out tin foil and living in a group home. The other has a working wife but lies about it. The latter seems like a better option.
But seriously...you're looking at possum living, real problems with a big downturn as you dont have a lot of budget to cut back on, or a somewhat decent life in some areas outside of the US.
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
Nords said:
A bit sadistic today, are we Nords? :
wabmester
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You have to remember that the 4% number is just a guideline. Taking more out would have gotten you in trouble if you ER'd around 1929, for example, but you'll find a couple of old-timers here who retired on less, hit a nice 20-year bull market, and now are sitting very comfortable.
If I had $600K and was sick of working, I'd try to establish some backup plans *before* bailing. Instead of continuing the same grind for the next N years trying to hit D dollars, why not start looking for additional income streams that will keep going even after retirement? Real estate, laundrymat, website, etc. Get a little entrepreneurial to speed things up and to give you a fall-back after you cut the salary lifeline.
If I had $600K and was sick of working, I'd try to establish some backup plans *before* bailing. Instead of continuing the same grind for the next N years trying to hit D dollars, why not start looking for additional income streams that will keep going even after retirement? Real estate, laundrymat, website, etc. Get a little entrepreneurial to speed things up and to give you a fall-back after you cut the salary lifeline.
dory36
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There are also lots of very low cost lifestyles. When we were boating full time, the typical annual costs were in the $12 - $18k range, and $24k for the big spenders. That was with the boat paid for, and cheap health insurance.
Living on a boat in no fixed location, like RVing, living in Thailand, or the like, is great if it's something you want to do anyway. Doing it because it saves you money will probably make you miserable.
On the other hand, being miserable for the next 30-40 years will make it seem like you are living forever... cheap immortality!
Living on a boat in no fixed location, like RVing, living in Thailand, or the like, is great if it's something you want to do anyway. Doing it because it saves you money will probably make you miserable.
On the other hand, being miserable for the next 30-40 years will make it seem like you are living forever...
cheap immortality!
cute fuzzy bunny
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
yeah, you could move in with a lot of peoples ex-spouses and get that feeling of immortality with a lot less effort. In fact, going to work might feel pretty good after that.
cute fuzzy bunny
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
(first 5 things I was going to say, all written and deleted)
Hi Ferco--
You left some things out of the equation: Your age and where you live and its attendant costs of living. What about your lifestyle? Do you have any tpe of DB pension or social security in your future?
I am a firm believer that if the house is paid for, the cars are paid for, the kids are through college and married, and the credit cards are paid in full each month--the cost of retiring becomes much more doable.
Hope this helps put things in perspective.
Professor
You left some things out of the equation: Your age and where you live and its attendant costs of living. What about your lifestyle? Do you have any tpe of DB pension or social security in your future?
I am a firm believer that if the house is paid for, the cars are paid for, the kids are through college and married, and the credit cards are paid in full each month--the cost of retiring becomes much more doable.
Hope this helps put things in perspective.
Professor
Arif
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If you're willing to move to a low cost country then it is doable without all the dumpster diving. Our budget runs less than 30k per year in Panama and that amount supports a family of three and private school. No car pmts and no cc debt though. We take a couple of days every other month to go explore the differnt parts of the country which is included in the above budget.
Our budget runs less than 30k per year in Panama and that amount supports a family of three and private school. No car pmts and no cc debt though. We take a couple of days every other month to go explore the differnt parts of the country which is included in the above budget.
Spanky
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I have a friend who used to work here and returned to Bombay India. During his recent visit, he said that you can live very comfortably with $12K a year.
PortlandDiehard
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Hmm. Am I wrong to think that some people here are spoiled? $2,000/mo is more than many people in this country live on. Here in Oregon, one can rent a nice 2 bedroom apartment for $700/mo. $300/mo for food, $150 for utilities, etc.
Aside from health insurance, this is very doable. If you want to travel, stay in a hostel. If you don't want to rent, you can buy a condo or rowhouse for $200K and get a reverse mortgage when the time comes.
Personally, I get a bit cranky when I see people scold anyone who dares contemplate a lower-middle class drawdown. Heaven forbid the thought of wearing levi's and enjoying a burger and beer with friends at the local sloppy joe's. Leave the $50 bottle of wine on the shelf and find a hobby that doesn't take you to the mall.
When you factor in social security, I'd say $600K will allow an otherwise happy 50 year old to never work again - or work only sporadically.
Jon
Aside from health insurance, this is very doable. If you want to travel, stay in a hostel. If you don't want to rent, you can buy a condo or rowhouse for $200K and get a reverse mortgage when the time comes.
Personally, I get a bit cranky when I see people scold anyone who dares contemplate a lower-middle class drawdown. Heaven forbid the thought of wearing levi's and enjoying a burger and beer with friends at the local sloppy joe's. Leave the $50 bottle of wine on the shelf and find a hobby that doesn't take you to the mall.
When you factor in social security, I'd say $600K will allow an otherwise happy 50 year old to never work again - or work only sporadically.
Jon
Lancelot
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ferco said:
Fero,
You could easily ER in Thailand on 600K. I've been here for +3 years, and I'm now spending about 13.2K per year inclusive of taxes, laptop, travel in China, Cambodia etc.
Lance
Right there with ya. I've been living on about 15000 a yr. Include market value of the medical insurance I get as retired military and it comes to about 21,000.
All I want is what I call "Having the Day". As long as I have sensory contact with the world, the sun, the air, and am not in too much pain I don't need a red sports car, a big house, expensive restaurants (which on my scale is any restaurant) or traveling plans
Jon and Razztazz - this is music to my ears. I'm right with you on this view. A very useful key to an unencumbered retirement is to understand that it's not how much we have but how much we need.
Beautifully put, both of you! 8)
Akaisha
Author, The Adventurer's Guide to Early Retirement
PortlandDiehard, well said! In NM a 2 BR apt can rent for less than $500 and that is your main cost driver.
Before I retired I noticed that the debt to income ratio for banks to provide a loan was in the 33% range. If this is a true estimate of what the amount of debt service a person can live with is then couldn't someone live debt free on twice what their equivalent "home" payment is, provided they didn't have to make an equivalent "home" payment? So if someone wanted to retire couldn't they retire (if they were debt free) by buying a 4 unit apartment building outright and living in one unit. With 25% of the projected rents (1 unit's rent) for building expenses (including vacancy factor) that would make their equivalent "home" payment 33% of the remaining rental income, which is exactly the banks qualification debt/income ratio. And in NM you can easily get a 4-plex with 2 BR units for $200k so it should be very doable to retire on $600k. All you need to do is find a 4-plex in an area and with the apartment size that you are willing to live in.
Before I retired I noticed that the debt to income ratio for banks to provide a loan was in the 33% range. If this is a true estimate of what the amount of debt service a person can live with is then couldn't someone live debt free on twice what their equivalent "home" payment is, provided they didn't have to make an equivalent "home" payment? So if someone wanted to retire couldn't they retire (if they were debt free) by buying a 4 unit apartment building outright and living in one unit. With 25% of the projected rents (1 unit's rent) for building expenses (including vacancy factor) that would make their equivalent "home" payment 33% of the remaining rental income, which is exactly the banks qualification debt/income ratio. And in NM you can easily get a 4-plex with 2 BR units for $200k so it should be very doable to retire on $600k. All you need to do is find a 4-plex in an area and with the apartment size that you are willing to live in.
Maybe we're spoiled by living anywhere other than Oregon.PortlandDiehard said:
Hey hey hey, that's not a throwaway-- that's a show-stopper.PortlandDiehard said:
This would be different from scolding someone contemplating a middle- or upper-class drawdown. But I'm not cranky.PortlandDiehard said:
Depends on the factor-- there's a difference between a 24-year working history with a lotta zeros and an annual SS benefit of $9K at age 62... and just about everyone else.PortlandDiehard said:
Again, for some of us that's as big a show-stopper as health insurance.PortlandDiehard said:
Well, unless you're living in Oregon, without health insurance, in a lower-middle-class lifestyle, with an overinflated estimate of Social Security and maybe a part-time job... well, perhaps we are spoiled. But I don't think you'll have to worry about being crowded.PortlandDiehard said:
I've been a "lurker" here for quite some time. This thread reminds we of a thread started some time ago regarding "$1,000,000 and the shirt on your back." The question, was, of course, could you retire with only $1M? At that time, my personal opinion was that $1M "and the shirt on my back" would be a very bare bones retirement. I'm quite conservative when it comes to investing. I'm rather sacrifice return for the security that comes with a near "sure thing." Thus, I don't envision $1M generating much more than $25K per year after I have set aside something to protect my nest egg against the erosion caused by inflation. To me, living on $25K per year is doable but is certainly not extravagent. Frankly, I can't imagine getting by with a $600K nest egg, unless I were willing to live in a low-cost overseas location. I have considered that, and may in fact choose the overseas option, but I also want to maintain the option of returning to the States. If I could accept the risk that generating $25K (after inflation) would entail off of a nestegg of only $600K, perhaps I would feel differently about it. But, for me, a $600K nestegg would result in too many sleepless nights. And that's not what I envision for my "golden years."
PortlandDiehard said:
"Spoiled" is too harsh but, in short, yes. This is the board where a Lexus SUV is considered a "beater" and where some consider $40k/yr WITH a paid off house as cat food territory. Since the median household income in the US is just under $45k, and that includes a mortgage, it seems evident that most of us are on the top half of that curve. We have heard tales of those who live on less then $30k/yr, drive a newish car, and aren't resorting to beans and rice but we don't believe they exist in the civilized world.
That said, I wouldn't do it on $600k. If I hated my job, I might find something more fun and less stressful, or even take off a year to explore and travel, but I wouldn't attempt an ER in the states on that low amount.
Yes, I have run FIRECalc. It's a good tool and has helped me reach an acceptable comfort level with my retirement plans. What may be different about my situation is I have a wife who is 23 years my junior. Thus, my nestegg is going to have to last a LONG time if I want to provide for her. For all practical purposes, I simply assume that the nestegg will have to last forever. With my goal of capital preservation and my aversion to risk, I figure my best course of action is simply to purchase a boatload of TIPS paying about 2.5 percent. above inflation. One million in TIPS will generate $25K per year. I realize that I have to pay taxes out of that and that the CPI doesn't track all the inflation that inevitably occurs, but it will capture enough. I also intend to invest another $100K in a global market fund to give me some exposure to stocks. That is about all the risk I have the stomach for. Perhaps the returns from the market will pay my taxes on the income generated by the TIPS, leaving me about $25K per year to live on. I just can't imagine trying to do this on $600K.
I will also be entitled to collect social secruity (in a few more years), but I really don't want to count on SS as a source of income -- too many unknowns. Finally, I will have a government pension of about $18K that will kick in about 4 years after I retire (I'm taking a deferred retirement under FERS). My pension is my safety net should my wife and I wish to return to the States (we're thinking seriously about living overseas, at least until the pension kicks in). There is no Lexus in our driveway and I don't envision that there ever will be. My wife and I have accumulated our nestegg by LBYM and will probably continue that lifestyle. We know how to tighten our belts and are accustomed to living a modest lifestyle. We believe we can maintain that same modest lifestyle with about $25K per year overseas, and perhaps about $35 - 40K in the States. I just can't see trying to do that with only $600K. If I had a fatter pension, perhaps I'd give it a go. But with $600K and nothing else, that just would work for me. As I said before -- too many sleepless nights.
I will also be entitled to collect social secruity (in a few more years), but I really don't want to count on SS as a source of income -- too many unknowns. Finally, I will have a government pension of about $18K that will kick in about 4 years after I retire (I'm taking a deferred retirement under FERS). My pension is my safety net should my wife and I wish to return to the States (we're thinking seriously about living overseas, at least until the pension kicks in). There is no Lexus in our driveway and I don't envision that there ever will be. My wife and I have accumulated our nestegg by LBYM and will probably continue that lifestyle. We know how to tighten our belts and are accustomed to living a modest lifestyle. We believe we can maintain that same modest lifestyle with about $25K per year overseas, and perhaps about $35 - 40K in the States. I just can't see trying to do that with only $600K. If I had a fatter pension, perhaps I'd give it a go. But with $600K and nothing else, that just would work for me. As I said before -- too many sleepless nights.
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