Early-retired 35 year old with $1 million

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Watty
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Re: Early-retired 35 year old with $1 million

Post by Watty » Sat Oct 28, 2017 12:58 pm

Slacker wrote:
Sat Oct 28, 2017 11:34 am
TomatoTomahto wrote:
Sat Oct 28, 2017 10:34 am
Congratulations on where you've gotten so far, but get a grip, you're not close unless you, your GF, and whatever kids you have will live like paupers.
Watty wrote:
Sat Oct 28, 2017 10:09 am
Even with a paid off house you would have to live very frugally to make your money last.
...Living on $30,000 - before taxes - would be a pretty basic life style after paying for health insurance and property taxes. People do live on that much but usually not by choice.
OP is in a low cost of living area, single, with a paid off house and you guys think $30,000/yr in expenses is living like a pauper and people only live on that because they are forced to? Maybe if healthcare is very expensive...

My wife and I are living on $31,000 / yr combined expenses after taking out Housing costs (also supporting several pets). Our annual savings is almost double our expenses (including housing costs) so we could easily spend more, but we see no reason for that. We also live in a LCOL area.
I agree that that it doesn't take a lot to live comfortably in a low cost area once your housing and health insurance is taken care of. I retired a few years ago in a medium to low cost of living area with a paid off house and my core living expenses are pretty moderate.

The OP's situation is probably a lot different than yours though. Just guessing at the numbers but the OP has a house that is worth $400K so might be paying 1%, $4,000 a year in property taxes and another $1,000 in home insurance. Budgeting 1% of a homes value for normal house maintenance is often mentioned but if even if you cut that in half that is another $2,000.

Healthcare, with dental costs, is a wild card but even $250 a month which is wildly optimistic which would be $3000 a year.

Combined that is $10,000 which brings the number down about $20,000.

It would be hard to even guess at some other costs like;

Since the OP is he single will likely still have to pay some income taxes on his income.

A $400K house in a low cost of living area is likely pretty large and would also have higher utility bills.

Living on the remainder is still doable but it would be a frugal lifestyle and leave little for things like travel, classes, or hobbies.

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knpstr
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Re: Early-retired 35 year old with $1 million

Post by knpstr » Sat Oct 28, 2017 1:03 pm

Even if you don't "retire" the good news is you don't need to save any more money.

At age 55 your $1M will likely be over $4M even if you contribute $0 from now until then.

:beer
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

mdavis6890
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Re: Early-retired 35 year old with $1 million

Post by mdavis6890 » Sat Oct 28, 2017 1:06 pm

I think the most important factor you should consider is that you don't have a wife and kids now, but you probably will later. Those years at home with your future family are worth much more than retiring now. I'd continue working until at least marriage, and probably until your first child. Then you can retire and enjoy life, or keep working if you still want to, but with considerable career freedom.

letsgobobby
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Re: Early-retired 35 year old with $1 million

Post by letsgobobby » Sat Oct 28, 2017 1:10 pm

BonziBuddy wrote:
Sat Oct 28, 2017 12:15 am
    A very high savings rate and a high paying job allowed me to early-retire this year.

    Basics
    • Debt: None
    • Tax Filing Status: Single
    • Age: 35

    Assets
    • $1 million in income-generating assets:
      • ~$700K Taxable (with ~$50K of unrealized gains)
      • ~$250K Tax-deferred (pre-tax 401k and HSA)
      • ~$60K Tax-free (Roth IRA and 401k)
      • Asset allocation: 80% stocks / 20% bonds
      • International allocation: 25% of stocks
      • Standard 3-fund portfolio (Total US Stock Market VTSAX, Total International Stock Market VTIAX, and Total US Bond Market VBTLX)
    • $75K cash (checking, savings, and no penalty CDs)
    • $400K home (owned outright) in a low cost of living area

      Other Information
      • I’m not sure I’ll be retired forever and may try some sort of relatively low-income self-employment in a few years. Though I think one million in income-generating assets is enough for myself, I’ll definitely need more If I marry my girlfriend (who has a low net worth) and we decide to have kids.
      • I’m insured with a 2 million umbrella policy

      Questions
      1. Please criticize my portfolio, I’m open to all feedback!
        • How should I best take advantage of the following low income years?
          A) Realize long term capital gains until I fill up the 15% tax bracket?
          B) Perform Roth IRA conversions of my pre-tax 401k until I fill up the 15% tax bracket?
          C) Keep a low income to maximize tax credits? (If my MAGI is $10K, I'll receive a $4,000 ACA premium tax credit. The ACA premium tax credit linearly decreases to zero at as I approach a MAGI of $45K.)
          D) Something else?
          • Is $75K cash appropriate for my situation?
            It’s about 2 years’ worth of expenses and 5% of my total net worth. I do not expect any large purchases on the horizon.
            Seems reasonable, well thought out.

            Obviously if you have kids your expenses will go up. Have to think about health care and what that looks like in the future.

            In your position, I wouldn’t call myself ‘early retired’ but rather ‘on extended sabbatical.’

            Bigbonds
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            Re: Early-retired 35 year old with $1 million

            Post by Bigbonds » Sat Oct 28, 2017 1:27 pm

            It’s more than enough especially if you have a paid off house in a low cost area, grand junction and Colorado Springs are two perfect examples. Health care is a not going to be an issue. Just go to the Colorado health care exachange and check the rates yourself. Using income manipulation you can get health care for next to nothing. If you take out 35k a year which would be 3.5% in 10 years you are likely to be sitting on 2 million. You can have a ton of fun in Colorado as a single guy on 35k a year almost all of which will be tax free. Many others have done it and traveled the entire world with that money. Need an example? Check out wherewebe rootofgood MMM, there are countless examples of people, wherewebe would be the closet example. Of course you can always go back to your high paying job and continue paying high taxes for stuff you probably don’t support while you waste away your health and youth, playing the “one more year” game till you don’t have the health to enjoy your money. It’s a very delicate balance. Steve Jobs had billions, access to the best medical care on the planet, still died working himself into the grave. Look up the Steve Jobs is dead principle on YouTube. Think about it.

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            Hyperborea
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            Re: Early-retired 35 year old with $1 million

            Post by Hyperborea » Sat Oct 28, 2017 1:31 pm

            Bigbonds wrote:
            Sat Oct 28, 2017 1:27 pm
            Steve Jobs had billions, access to the best medical care on the planet, still died working himself into the grave. Look up the Steve Jobs is dead principle on YouTube. Think about it.
            Actually, Steve Jobs was a health food/yoga/cosmic energy nut-bar. That's what did him in. He wanted to believe that eating the right smoothie would cure him. He didn't change his mind until it was too late. I think the takeaway from this is that rejecting science is bad for your health.

            randomguy
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            Re: Early-retired 35 year old with $1 million

            Post by randomguy » Sat Oct 28, 2017 1:37 pm

            Hyperborea wrote:
            Sat Oct 28, 2017 12:25 pm

            The problem is that after you've been retired a while or at an older age getting decent paying work again can be hard. The money from another year at a good paying job could be worth many years, maybe a decade or more, of work at a low paying job. Make sure that you have extra before you jump off the gravy train.
            To some extent you pretty rapidly figure out if you are in a very low SWR (<4%) environment or not. If in the first 5 years the market is up 5%+ real, a lot needs to go wrong to drop back into the <4% SWR worst cases. I definitely would stick it out another year or two to reduce the risk of having to flip burgers but I also realize there is a risk of always wanting more safety.

            I must admit the GF situation is the one that makes me a bit worried. You not working and her working could result in some interesting personal dynamics:). And of course she might prefer to live the 60k/yr life instead of the 30k one.

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            Cycle
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            Re: Early-retired 35 year old with $1 million

            Post by Cycle » Sat Oct 28, 2017 1:53 pm

            I'm 34, net worth 1.1M with wife's assets. We're FI by pauper standards, but I'm targeting 45 for early retirement, we should be at 3.5M in taxable/401k in 2017 dollars by then. That early retirement would still have like 20k of rental income, so not truly retired. Pretty safe assuming $80k annual withdrawal to cover health care and misc. Planning on $30k annual health care expenses.

            I'd run firecalc if you haven't already.

            Bigbonds
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            Re: Early-retired 35 year old with $1 million

            Post by Bigbonds » Sat Oct 28, 2017 1:58 pm

            Hyperborea wrote:
            Sat Oct 28, 2017 1:31 pm
            Bigbonds wrote:
            Sat Oct 28, 2017 1:27 pm
            Steve Jobs had billions, access to the best medical care on the planet, still died working himself into the grave. Look up the Steve Jobs is dead principle on YouTube. Think about it.
            Actually, Steve Jobs was a health food/yoga/cosmic energy nut-bar. That's what did him in. He wanted to believe that eating the right smoothie would cure him. He didn't change his mind until it was too late. I think the takeaway from this is that rejecting science is bad for your health.
            And he paid to jump to the front of the transplant line. That’s some serious bucks he spent that not even bogleheads could afford. Still didn’t save him. Still died and probably died wishing he spent more time with his family and enjoying life.

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            Hyperborea
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            Re: Early-retired 35 year old with $1 million

            Post by Hyperborea » Sat Oct 28, 2017 2:00 pm

            randomguy wrote:
            Sat Oct 28, 2017 1:37 pm
            Hyperborea wrote:
            Sat Oct 28, 2017 12:25 pm

            The problem is that after you've been retired a while or at an older age getting decent paying work again can be hard. The money from another year at a good paying job could be worth many years, maybe a decade or more, of work at a low paying job. Make sure that you have extra before you jump off the gravy train.
            To some extent you pretty rapidly figure out if you are in a very low SWR (<4%) environment or not. If in the first 5 years the market is up 5%+ real, a lot needs to go wrong to drop back into the <4% SWR worst cases. I definitely would stick it out another year or two to reduce the risk of having to flip burgers but I also realize there is a risk of always wanting more safety.

            I must admit the GF situation is the one that makes me a bit worried. You not working and her working could result in some interesting personal dynamics:). And of course she might prefer to live the 60k/yr life instead of the 30k one.
            I would suggest having a look at the results graphs on Firecalc. Set the inputs so that you get some failures - maybe even make the inputs aggressive. Some of the failures you can tell early, some not, some sequences that look like failures eventually succeed.

            Even given that, in 5 years after retirement, how employable do you think you'll be? Getting to a $1.4M net worth by 35 meant that you were earning some good money. Would you get hired again at your same job after 5 years of nothing on your resume? It's going to depend on your industry and location but even then you'll probably come in lower than you went out. I'll bet that the low cost of living location is probably more socially conservative and many employers there won't look too kindly on "layabouts".

            In your shoes, I'd make an extra amount that I don't need to live on and leave it untouched to grow to cover contingencies. That might mean an extra year or three of working. I wouldn't want to go just on the cusp of being able to support myself. I've retired myself about half way between your age and regular retirement age. Even then there's so much uncertainty with the long retirement that I've got a lot of wiggle room in my budget. I'm drawing 3% now probably going to 3.25-3.5% later but could in a bad situation drop to 2% (bare but liveable). Do you have any adjustment available?

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            Hyperborea
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            Re: Early-retired 35 year old with $1 million

            Post by Hyperborea » Sat Oct 28, 2017 2:13 pm

            gloss151 wrote:
            Sat Oct 28, 2017 1:53 pm
            I'd run firecalc if you haven't already.
            Firecalc is fine as far as it goes but for long retirements you need to be careful on the settings. You can't map the 30 year results into 50-60 results. Setting the retirement time to 60 then sounds like a good idea but it cuts the data size too small and excludes the worst time to retire - the late 60's / early 70's. You can use those 30 year numbers as an upper bound on the longer retirements.

            Probably the best Firecalc option available to help with the long retirements is setting the minimum portfolio option to say half of your starting portfolio. Another way to use Firecalc would be to run a 30 year model and then input the worst and maybe average results from that run into another 30 year run to give you some idea of what a 60 year run could be like.

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            whodidntante
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            Re: Early-retired 35 year old with $1 million

            Post by whodidntante » Sat Oct 28, 2017 2:16 pm

            celia wrote:
            Sat Oct 28, 2017 11:44 am
            The other thing we usually suggest is that they project the value of the tax-deferred retirement accounts at age 70. (You can't withdraw from them until age 59.5 anyway without an early withdrawal penalty (besides paying regular taxes on the withdrawal), so you are really depending on $700K to get you to that point.)
            Yes you can. 72t or Roth conversions.

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            nedsaid
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            Re: Early-retired 35 year old with $1 million

            Post by nedsaid » Sat Oct 28, 2017 3:08 pm

            Hate to tell you this, I don't think you have enough to retire unless you live in a very low cost of living area. With 80% stocks, you are also vulnerable to a bear market. Are you really going to live on $30,000 a year?
            A fool and his money are good for business.

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            zaboomafoozarg
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            Re: Early-retired 35 year old with $1 million

            Post by zaboomafoozarg » Sat Oct 28, 2017 3:16 pm

            nedsaid wrote:
            Sat Oct 28, 2017 3:08 pm
            Hate to tell you this, I don't think you have enough to retire unless you live in a very low cost of living area. With 80% stocks, you are also vulnerable to a bear market. Are you really going to live on $30,000 a year?
            $30k isn't too hard for a single person who doesn't do a lot of expensive stuff in a low COL area. I've been over $30k only once before, and that was the year I bought a new car. Most years it's $20-25k.

            I still wouldn't retire at $1M though, probably would do $1.5M. Never know if expenses are going to go up for some reason (e.g. healthcare, medical problems).
            Last edited by zaboomafoozarg on Sat Oct 28, 2017 3:17 pm, edited 1 time in total.

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            Re: Early-retired 35 year old with $1 million

            Post by EddyB » Sat Oct 28, 2017 3:17 pm

            nedsaid wrote:
            Sat Oct 28, 2017 3:08 pm
            Are you really going to live on $30,000 a year?
            That's an important question (not that I think he necessarily needs to target a 3% withdrawal rate), but given that he has no rent or mortgage payment, it seems it's pretty much average spending. Depending on the OP's interests and priorities, living on an average budget in a wealthy nation, without having to continue to work for it, doesn't strike me as an unreasonable choice (which isn't to say it's for everyone).

            https://www.thesimpledollar.com/a-look- ... ving-more/

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            nedsaid
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            Re: Early-retired 35 year old with $1 million

            Post by nedsaid » Sat Oct 28, 2017 3:19 pm

            zaboomafoozarg wrote:
            Sat Oct 28, 2017 3:16 pm
            nedsaid wrote:
            Sat Oct 28, 2017 3:08 pm
            Hate to tell you this, I don't think you have enough to retire unless you live in a very low cost of living area. With 80% stocks, you are also vulnerable to a bear market. Are you really going to live on $30,000 a year?
            $30k isn't too hard for a single person who doesn't do a lot of expensive stuff in a low COL area. I've been over $30k only once before, and that was the year I bought a new car. Most years it's $20-25k.
            Yes, it is possible. I knew a couple who lived in a trailer park in my home state who moved to Kentucky 10 years ago and were able to buy a house with acreage. Big difference in living costs. The big metro areas of the West Coast are getting to be quite expensive to live in. $30K won't cut it there.
            A fool and his money are good for business.

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            Re: Early-retired 35 year old with $1 million

            Post by Katietsu » Sat Oct 28, 2017 4:07 pm

            I would suggest the OP learn or keep up skills that could be turned into self employment if needed. Being over 40 and not having worked in 5 years is not a good position to be in when job hunting. At 35, I was not conscious of age discrimination. Ask women who stepped out to raise kids or take care of parents -and those people have a reason more relatable for most hiring personnel.

            At 35, I also would have underestimated the cost of healthcare as one aged. Remember that MMM is a Canadian citizen so his back up plan for health insurance was to just move back across the border. The person who is budgeting $30,000 for he and his wife is in the right ballpark IMO if things like expanded Medicaid and highly subsidized insurance are not available. Could be worse if we go back to pre-ACA and you develop a pre-existing condition.

            I also wonder about keeping costs at $30,000 while supporting and maintaining a $400,000 house in a LCOL area. I guess I could see it if most of the value was in 50 acres of no maintenance woods.

            I would make sure you keep your income at below 250% of FPL in order to keep the reduced copay and deductibles. Otherwise, all three of your options are reasonable. I would probably start by keeping ACA premiums as low as possible since once those premiums are paid you are definitely out the money. It is possible you will be able to spend IRA and cap gains later without paying taxes. Would do Roth conversions preferentially over realizing cap gains.

            Bigbonds
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            Re: Early-retired 35 year old with $1 million

            Post by Bigbonds » Sat Oct 28, 2017 4:20 pm

            nedsaid wrote:
            Sat Oct 28, 2017 3:08 pm
            Hate to tell you this, I don't think you have enough to retire unless you live in a very low cost of living area. With 80% stocks, you are also vulnerable to a bear market. Are you really going to live on $30,000 a year?

            I’m guessing you would be shocked to know that the average American household income for a single filer is $35,000?

            https://www.google.com/amp/s/www.fool.c ... ow-do.aspx

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            Re: Early-retired 35 year old with $1 million

            Post by danaht » Sat Oct 28, 2017 4:35 pm

            A $400,000 home seems like it could be a lot of money for maintenance, insurance, and real estate taxes. You can probably retire at 35 with a million dollars - but you might need to downsize that home if you want to stay retired.

            Besides income and payroll taxes, my home (~$270,000 in value) is my biggest expense - and it's also fully paid for.

            Real estate taxes = $7,000 a year.
            Maintenance = $4,000 a year
            Utilities = $2,000 a year
            Home Insurance = $1,600 a year

            Total cost of home per year = $14,600.

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            Re: Early-retired 35 year old with $1 million

            Post by tfb » Sat Oct 28, 2017 4:36 pm

            JW-Retired wrote:
            Sat Oct 28, 2017 10:06 am
            A) Realize long term capital gains until I fill up the 15% tax bracket? Sure, costs you nothing.
            Realizing capital gains adds to the AGI, which reduces ACA premium tax credit. It effectively serves as a ~15% tax before 300% FPL and ~10% between 300% and 400% FPL.
            Harry Sit, taking a break from the forums.

            CZjc1330
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            Re: Early-retired 35 year old with $1 million

            Post by CZjc1330 » Sat Oct 28, 2017 4:37 pm

            You are off to a great start. Congrats! BUT Sorry I think you are too, too young to retire. Hang in there until you are 45. Then you will really be set and still quite young to enjoy life. Good Luck!

            halfnine
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            Re: Early-retired 35 year old with $1 million

            Post by halfnine » Sat Oct 28, 2017 5:21 pm

            I don't think it's impossible for you to retire but I do think there are some risks that can be better avoided by working a bit longer.

            For longevity insurance, I'd certainly consider contributing enough to social security to get to the first bend point. It's possible you are there already. And, if not, a high paying job certainly gets you there quicker than a minimum wage one. Getting to the first bend point would be advisable for your girlfriend as well but that could mean she would have to work many more years after you have retired.

            I'd want a paid off home that was less than 30% of my net worth. Having a home protects you against rental inflation. And a home that is a low portion of your networth eliminates concentration risk in real estate.

            At your level of net worth, I wouldn't retire until a few years after I was done having kids. Too many unknowns until then.

            At a minimum, I'd be more inclined to retire on an amount of expenses of around 50K/yr (inclusive of worst case of either home ownership expenses or imputed rent). While a family could certainly live on less this would provide more flexibility.

            Healthcare is a huge risk. Definitely need to have a plan B in mind to address this.

            But, I'd say your individual biggest risk by far is a divorce in which you do not become the primary care giver for the children. If this happens you could very well be back at work and working for a long time.

            Slacker
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            Re: Early-retired 35 year old with $1 million

            Post by Slacker » Sat Oct 28, 2017 5:34 pm

            danaht wrote:
            Sat Oct 28, 2017 4:35 pm
            A $400,000 home seems like it could be a lot of money for maintenance, insurance, and real estate taxes. You can probably retire at 35 with a million dollars - but you might need to downsize that home if you want to stay retired.

            Besides income and payroll taxes, my home (~$270,000 in value) is my biggest expense - and it's also fully paid for.

            Real estate taxes = $7,000 a year.
            Maintenance = $4,000 a year
            Utilities = $2,000 a year
            Home Insurance = $1,600 a year

            Total cost of home per year = $14,600.
            That could vary wildly - OP could be living in Texas or Florida and paying more than $10,000 a year in property Taxes or could live in Las Vegas or Colorado and pay around $3000 a year in property taxes.

            My $475K (not paid off) home in Colorado:
            Taxes: $3700 / yr
            Maintenance: $400 / yr over the last 2-1/2 years because the house was just built in early 2015
            Utilities: $1800 / yr
            Insurance: $1480 / yr

            Total cost of home excl P&I: $7500 / yr

            Slacker
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            Re: Early-retired 35 year old with $1 million

            Post by Slacker » Sat Oct 28, 2017 5:39 pm

            Watty wrote:
            Sat Oct 28, 2017 12:58 pm
            Slacker wrote:
            Sat Oct 28, 2017 11:34 am
            Watty wrote:
            Sat Oct 28, 2017 10:09 am
            Even with a paid off house you would have to live very frugally to make your money last.
            ...Living on $30,000 - before taxes - would be a pretty basic life style after paying for health insurance and property taxes. People do live on that much but usually not by choice.
            OP is in a low cost of living area, single, with a paid off house and you guys think $30,000/yr in expenses is living like a pauper and people only live on that because they are forced to? Maybe if healthcare is very expensive...

            My wife and I are living on $31,000 / yr combined expenses after taking out Housing costs (also supporting several pets). Our annual savings is almost double our expenses (including housing costs) so we could easily spend more, but we see no reason for that. We also live in a LCOL area.
            I agree that that it doesn't take a lot to live comfortably in a low cost area once your housing and health insurance is taken care of. I retired a few years ago in a medium to low cost of living area with a paid off house and my core living expenses are pretty moderate.

            The OP's situation is probably a lot different than yours though. Just guessing at the numbers but the OP has a house that is worth $400K so might be paying 1%, $4,000 a year in property taxes and another $1,000 in home insurance. Budgeting 1% of a homes value for normal house maintenance is often mentioned but if even if you cut that in half that is another $2,000.

            Healthcare, with dental costs, is a wild card but even $250 a month which is wildly optimistic which would be $3000 a year.

            Combined that is $10,000 which brings the number down about $20,000.

            It would be hard to even guess at some other costs like;

            Since the OP is he single will likely still have to pay some income taxes on his income.

            A $400K house in a low cost of living area is likely pretty large and would also have higher utility bills.

            Living on the remainder is still doable but it would be a frugal lifestyle and leave little for things like travel, classes, or hobbies.
            Yes, only the OP knows if they are including a portion of their annual expenses as a "big housing expense" funding.

            I don't believe the OP would be paying any taxes at all though. $10K standard deduction + personal exemption to do Roth rollovers from their 401K and then take the living expenses out of the taxable account and make sure LTCG + dividends stay within the 15% tax bracket with the only tax to worry about being State income taxes which should be very low as a percentage in just about any state at that income level (even the few flat tax states and higher tax states wont take too big a percentage when you earn just $37000/yr).

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            FrugalInvestor
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            Re: Early-retired 35 year old with $1 million

            Post by FrugalInvestor » Sat Oct 28, 2017 5:42 pm

            JW-Retired wrote:
            Sat Oct 28, 2017 10:06 am
            But good luck giving it a try for a while!

            Welcome to the Forum!
            JW
            And good luck trying to find a job you'll be happy with after laying out of the job market for awhile. And then good luck stretching your money into normal retirement years. And then good luck living in your normal retirement years with little to nothing in Social Security. Oh, and good luck in the meantime affording health insurance or living without it or with what comes free.

            A million bucks isn't as much as it sounds like when you need it to support you and maybe others for 50+ years.

            I'd re-consider your decision.
            IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

            Wakefield1
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            Re: Early-retired 35 year old with $1 million

            Post by Wakefield1 » Sat Oct 28, 2017 5:46 pm

            nedsaid wrote:
            Sat Oct 28, 2017 3:08 pm
            Hate to tell you this, I don't think you have enough to retire unless you live in a very low cost of living area. With 80% stocks, you are also vulnerable to a bear market. Are you really going to live on $30,000 a year?
            Some like to live on the edge
            If he gets married and kids then things get much more complicated even if the kids are healthy
            A child with disabilities can change the rest of your life.

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            Hawaiishrimp
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            Re: Early-retired 35 year old with $1 million

            Post by Hawaiishrimp » Sat Oct 28, 2017 6:13 pm

            Just for reference. I'm at $2MM, age 42 and I think I have about 10 years full time employment ahead of me before I can comfortably call it a day. Things are expensive nowadays, better save a little more than come a little short down the road. YMMV.
            I save and invest my money, so money can make money for me, so I don't have to make money eventually.

            tomtoms
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            Re: Early-retired 35 year old with $1 million

            Post by tomtoms » Sat Oct 28, 2017 7:11 pm

            I am in my 30s and financially, we are very similar. I have also thought about early retirement many times.

            You are not going to get much support on this forum (or anywhere) and that is fine. Most people are risk adverse but then most people are also consumers so they will need to keep on working. There is no other option.

            I am different. My family was on food stamps when I was growing up and although I am making more than $300 k/year now (work plus business), my life has not change all that much. I am not materialistic (kinda hard to be when your family didn't have much money). I don't have any debt. I don't buy too many things. My life is rather simple and that is how I like it to be.

            Most people think that best thing you can do for your kids is to keep on working. I think the best thing you can do is to spend quality time with them and to make sure they are not caught up on materialistic things. If you play your cards right, they may even qualify for college financial aid. How much is that worth? 5-10 years of working?

            I see people get stressed out and sick all of the times because of work. You would be doing your health (and your pocket) a big favor by taking it easy. There is a reason why cardiovascular disease is now the #1 killer in women too.

            As for me...I am planning to buy 2 or 3 rental properties. Once that is set, I am going to join you. :sharebeer :sharebeer

            Remember...you can always buy a car or house but you can't buy time.

            - TT

            staythecourse
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            Re: Early-retired 35 year old with $1 million

            Post by staythecourse » Sat Oct 28, 2017 7:44 pm

            TomatoTomahto wrote:
            Sat Oct 28, 2017 10:34 am
            Right now, your human capital is far larger than your investment capital. Retiring throws the human capital out the window and forces you to rely on the investment capital. Don't underestimate how difficult it can be to get back in the labor market.

            Congratulations on where you've gotten so far, but get a grip, you're not close unless you, your GF, and whatever kids you have will live like paupers.
            Agreed.

            No one wants to hear criticism about the plan they have already chosen, but there is some serious concerns with your plan. For example, how much do you spend? What do you see yourself doing for the next 50+ years (in terms of cost to do x activities)? Do you want to be married? Do you want kids? Do you live in a HCOL area? Would you be open to moving and freeing up some of that home equity which will likely be needed? Why do you want to quit working forever (mind you I didn't ask why you quit your former job)? Is you skill set amenable to being out of the work force 20 years and just jumping back in? The last I can answer is NO. No one has a job that has a background where you can just jump back in especially with the obvious age discrimination that exists in the workplace when it comes to new hiring.

            My answer is no you don't have anywhere close to enough money UNLESS you move out of the country for awhile. Doesn't sound so bad... Being young, some money, and living on some beach as an expat when your health care needs are low.

            Good luck.

            p.s. Don't forget you won't get much supplementation from SS down the road since you haven't worked for many quarters either so that is off the table as well.

            p.s.s. What are you going to do for health care forever? Have you worked enough to be eligible for medicare when the time comes?
            "The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

            Bigbonds
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            Re: Early-retired 35 year old with $1 million

            Post by Bigbonds » Sat Oct 28, 2017 7:54 pm

            FrugalInvestor wrote:
            Sat Oct 28, 2017 5:42 pm
            JW-Retired wrote:
            Sat Oct 28, 2017 10:06 am
            But good luck giving it a try for a while!

            Welcome to the Forum!
            JW
            And good luck trying to find a job you'll be happy with after laying out of the job market for awhile. And then good luck stretching your money into normal retirement years. And then good luck living in your normal retirement years with little to nothing in Social Security. Oh, and good luck in the meantime affording health insurance or living without it or with what comes free.

            A million bucks isn't as much as it sounds like when you need it to support you and maybe others for 50+ years.

            I'd re-consider your decision.
            So worst case scenario he could end up at “retirement age” and be in the same boat as the other 95% of Americans who hardly have enough money to fund even one or two years of retirement?

            EddyB
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            Re: Early-retired 35 year old with $1 million

            Post by EddyB » Sat Oct 28, 2017 8:06 pm

            staythecourse wrote:
            Sat Oct 28, 2017 7:44 pm
            TomatoTomahto wrote:
            Sat Oct 28, 2017 10:34 am
            Right now, your human capital is far larger than your investment capital. Retiring throws the human capital out the window and forces you to rely on the investment capital. Don't underestimate how difficult it can be to get back in the labor market.

            Congratulations on where you've gotten so far, but get a grip, you're not close unless you, your GF, and whatever kids you have will live like paupers.
            Agreed.

            No one wants to hear criticism about the plan they have already chosen....”
            I was just thinking that a lot of the replies come across as if the OP even asking his question is a criticism of the respondents’ choices.

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            Re: Early-retired 35 year old with $1 million

            Post by RadAudit » Sat Oct 28, 2017 8:11 pm

            People have been retiring on less at about your age for a number of years. You might want to read "Your Money or Your Life" - (Revised or updated). If you don't mind wading thru the pseudo-motivational stuff, it has some ideas on how you check to be sure if you have enough.
            FI is the best revenge. LBYM. Invest the rest. Stay the course.

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            JoMoney
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            Re: Early-retired 35 year old with $1 million

            Post by JoMoney » Sat Oct 28, 2017 8:17 pm

            I don't see trying to replace $30,000 in income off a $1million portfolio as being exceptionally risky.

            A $400,000 home though seems a bit much for someone living on $30k, taking the 'imputed rent' into account as adding to equivalent income it seems like too much house to me.
            "To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

            MrNewEngland
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            Re: Early-retired 35 year old with $1 million

            Post by MrNewEngland » Sat Oct 28, 2017 8:35 pm

            What are your taxes on a $400k home? What are your plans for medical insurance? I could see those two things alone costing you well over $10k annually leaving you with less than $20k to live on.

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            TomatoTomahto
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            Re: Early-retired 35 year old with $1 million

            Post by TomatoTomahto » Sat Oct 28, 2017 9:00 pm

            EddyB wrote:
            Sat Oct 28, 2017 8:06 pm
            staythecourse wrote:
            Sat Oct 28, 2017 7:44 pm
            TomatoTomahto wrote:
            Sat Oct 28, 2017 10:34 am
            Right now, your human capital is far larger than your investment capital. Retiring throws the human capital out the window and forces you to rely on the investment capital. Don't underestimate how difficult it can be to get back in the labor market.

            Congratulations on where you've gotten so far, but get a grip, you're not close unless you, your GF, and whatever kids you have will live like paupers.
            Agreed.

            No one wants to hear criticism about the plan they have already chosen....”
            I was just thinking that a lot of the replies come across as if the OP even asking his question is a criticism of the respondents’ choices.
            I guess that this will go into the column of criticizing his choices, but I'm of a school that thinks that a 35 year old wanting to retire is someone for whom I have complex thoughts and feelings. Probably whatever got him to the $1M mark at age 35 was somewhat interesting. If not, he seems to have sufficient skills to find something else interesting. As has been pointed out by others, there are people living on less, and getting by, but my read is that most of them don't have options that would have gotten them to $1M by age 35.

            I "retired" to be a stay-at-home-dad (SAHD) around 15 years ago. I did it because I thought it was good for the family, and I'm happy I did it, but I sorely missed my previous job. I was a good father, if I say so myself, and the family was better for me "retiring," but I missed the productive things I did outside the home.

            OP has no obligations to me. He might have an obligation to society, but that's not for me to say. I will say that I get a sad and empty feeling when I see how many people on various fora want desperately to no longer work, not even as volunteers. I think it's sad that there are apparently so few jobs/careers/activities that feel rewarding and gratifying to the workers. I'm not sure that the fault lies in the jobs.

            There, I've said it. I would not make this choice. OP is entitled to make the choice, but I don't have to encourage it.

            lostdog
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            Re: Early-retired 35 year old with $1 million

            Post by lostdog » Sat Oct 28, 2017 9:16 pm

            Semi-retire or find something you really enjoy doing and get paid for it. You don't have to fully retire but you have the freedom to do something you really enjoy and get paid for it. Most people don't have these options or freedom. Most people in this country are slaves to debt, their employer and must maintain their current salary to live paycheck to paycheck. You're FI and have the freedom to find find a job you really enjoy.
            Financial Independence is the best revenge. | "Our life is frittered away by detail. Simplify, simplify." -Thoreau

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            nedsaid
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            Re: Early-retired 35 year old with $1 million

            Post by nedsaid » Sat Oct 28, 2017 9:27 pm

            Wakefield1 wrote:
            Sat Oct 28, 2017 5:46 pm
            nedsaid wrote:
            Sat Oct 28, 2017 3:08 pm
            Hate to tell you this, I don't think you have enough to retire unless you live in a very low cost of living area. With 80% stocks, you are also vulnerable to a bear market. Are you really going to live on $30,000 a year?
            Some like to live on the edge
            If he gets married and kids then things get much more complicated even if the kids are healthy
            A child with disabilities can change the rest of your life.
            A million bucks ain't what it used to be, or as the great American philosopher Yogi Berra put it, "A nickel ain't worth a dime anymore."
            A fool and his money are good for business.

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            nedsaid
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            Re: Early-retired 35 year old with $1 million

            Post by nedsaid » Sat Oct 28, 2017 9:31 pm

            Bigbonds wrote:
            Sat Oct 28, 2017 4:20 pm
            nedsaid wrote:
            Sat Oct 28, 2017 3:08 pm
            Hate to tell you this, I don't think you have enough to retire unless you live in a very low cost of living area. With 80% stocks, you are also vulnerable to a bear market. Are you really going to live on $30,000 a year?

            I’m guessing you would be shocked to know that the average American household income for a single filer is $35,000?

            https://www.google.com/amp/s/www.fool.c ... ow-do.aspx
            Some parts of the country are more expensive than average particularly the large metropolitan areas of the West Coast. Some East Coast metro areas are similarly expensive.

            Not shocked at the $35,000 level, I think the average family income in the United States is a bit over $50,000. Again, you have to compare averages with cost of living in different areas of the country. San Francisco is much more expensive than let's say "flyover country."
            A fool and his money are good for business.

            staythecourse
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            Re: Early-retired 35 year old with $1 million

            Post by staythecourse » Sat Oct 28, 2017 9:40 pm

            TomatoTomahto wrote:
            Sat Oct 28, 2017 9:00 pm
            OP has no obligations to me. He might have an obligation to society, but that's not for me to say. I will say that I get a sad and empty feeling when I see how many people on various fora want desperately to no longer work, not even as volunteers. I think it's sad that there are apparently so few jobs/careers/activities that feel rewarding and gratifying to the workers. I'm not sure that the fault lies in the jobs.

            There, I've said it. I would not make this choice. OP is entitled to make the choice, but I don't have to encourage it.
            I must be getting old. Or maybe just old thinking since I am only 6 years older the OP. Either way I tend to feel the same way. If my kid said the same thing at 35 I would say, "Great. Quit your job and do something you love to do". If the OP has something planned that he loves to do then I apologize. To me it seemed like he/ she just didn't want to work anymore.

            Good luck.
            "The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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            Wildebeest
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            Re: Early-retired 35 year old with $1 million

            Post by Wildebeest » Sat Oct 28, 2017 9:44 pm

            I am happy for you.

            Let us know in 5 years and 10 years from now if it all worked out.

            Maybe the real test test is when you are 65 and it all worked out ( or not).

            I hope it does.

            W.
            The Golden Rule: One should treat others as one would like others to treat oneself.

            Bigbonds
            Posts: 77
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            Re: Early-retired 35 year old with $1 million

            Post by Bigbonds » Sat Oct 28, 2017 9:49 pm

            nedsaid wrote:
            Sat Oct 28, 2017 9:31 pm
            Bigbonds wrote:
            Sat Oct 28, 2017 4:20 pm
            nedsaid wrote:
            Sat Oct 28, 2017 3:08 pm
            Hate to tell you this, I don't think you have enough to retire unless you live in a very low cost of living area. With 80% stocks, you are also vulnerable to a bear market. Are you really going to live on $30,000 a year?

            I’m guessing you would be shocked to know that the average American household income for a single filer is $35,000?

            https://www.google.com/amp/s/www.fool.c ... ow-do.aspx
            Some parts of the country are more expensive than average particularly the large metropolitan areas of the West Coast. Some East Coast metro areas are similarly expensive.

            Not shocked at the $35,000 level, I think the average family income in the United States is a bit over $50,000. Again, you have to compare averages with cost of living in different areas of the country. San Francisco is much more expensive than let's say "flyover country."
            Yes you are correct, retiring in San Francisco or N.Y. on a million would be silly. I’m assuming the OP has enough common sense to know that too. I am simply stating that the average American is getting by on 35k a year and paying taxes and rent on that also, two things the OP shouldn’t have to worry about if he manipulates his income correctly as others have pointed out. 35k after tax with a paid off house would allow the OP to live pretty well in about 40 out of the 50 states out there.

            If the OP sells his 400k house and gets something more reasonable in a low property tax state such as Colorado there is no doubt he is set for life. Remember the median American family has $5,000 dollars saved for retirement!

            https://www.cnbc.com/2017/04/07/how-muc ... y-age.html

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            ClevrChico
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            Re: Early-retired 35 year old with $1 million

            Post by ClevrChico » Sat Oct 28, 2017 10:20 pm

            For me, $75k sitting in cash is too much . See:

            https://www.bogleheads.org/wiki/Emergency_fund

            With an extremely low income, I'd tax gain harvest living expenses, rebalancing my portfolio along the way. The house seems over the top, due to taxes and maintenance, but maybe you really like it. I don't see any other red flags.

            You can definitely have a great life without needing a lot of money. We're a family of four and could cover our expenses, plus college savings, plus medical for $45k/year in a lcol area.

            Good luck!
            Last edited by ClevrChico on Sat Oct 28, 2017 10:47 pm, edited 1 time in total.

            EddyB
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            Re: Early-retired 35 year old with $1 million

            Post by EddyB » Sat Oct 28, 2017 10:36 pm

            staythecourse wrote:
            Sat Oct 28, 2017 9:40 pm
            TomatoTomahto wrote:
            Sat Oct 28, 2017 9:00 pm
            OP has no obligations to me. He might have an obligation to society, but that's not for me to say. I will say that I get a sad and empty feeling when I see how many people on various fora want desperately to no longer work, not even as volunteers. I think it's sad that there are apparently so few jobs/careers/activities that feel rewarding and gratifying to the workers. I'm not sure that the fault lies in the jobs.

            There, I've said it. I would not make this choice. OP is entitled to make the choice, but I don't have to encourage it.
            I must be getting old. Or maybe just old thinking since I am only 6 years older the OP. Either way I tend to feel the same way. If my kid said the same thing at 35 I would say, "Great. Quit your job and do something you love to do". If the OP has something planned that he loves to do then I apologize. To me it seemed like he/ she just didn't want to work anymore.

            Good luck.
            Could be, but this is a forum for “personal investment help,” not sharing your view of the morality of the OP’s proposed use of resources. I think there are very interesting discussions to be had about some of the issues TomatoTomahto raised, but I don’t see how they’re personal-finance related.

            inbox788
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            Re: Early-retired 35 year old with $1 million

            Post by inbox788 » Sat Oct 28, 2017 10:40 pm

            Soon2BXProgrammer wrote:
            Sat Oct 28, 2017 9:47 am
            not saying you can't make it work... but if you want to decrease lifetime risk.. making a little money for a few years, and not spending out of your 1 million will really reduce your longevity risk.

            THink about it this way..

            35 with 1
            36 with 1.05
            37 with 1.1

            Not that you have to work super hard... but the biggest bang for your buck is not to spend money out of your portfolio now.. and make a little income (might not take that many hours if your high pay).. and keep your skills fresh, and reduce your longevity risk.

            personally, i want to quit too... and i'm just a little younger than you.. with roughly the same asset base.. maybe i have "OMY" (one more year) syndrome... but... there are just too many unknowns and the tolerance for errors is too tight....

            I know the money right now is really good, and as a risk reduction exercise i am still working... Hopefully i'll be able to switch to part time in a year or so.. if they say no.. i am not sure if they have a choice.

            But that part time work for me wouldn't be to save more money.. but to not spend my assets for another year or so... or maybe 2
            OP, what milestones are you counting on for this investment? You could be at $1M or more at age 45 or 55 and still be on track, and if the investments grow more than minimum, then you'd be well on your way, but there's potential for a market drop or crash that depletes the investments, so you may need to be prepared to re-enter the workforce when you're 45 or 55. It's safer to plan a bigger contingency now.

            User avatar
            TomatoTomahto
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            Re: Early-retired 35 year old with $1 million

            Post by TomatoTomahto » Sun Oct 29, 2017 7:20 am

            EddyB wrote:
            Sat Oct 28, 2017 10:36 pm
            staythecourse wrote:
            Sat Oct 28, 2017 9:40 pm
            TomatoTomahto wrote:
            Sat Oct 28, 2017 9:00 pm
            OP has no obligations to me. He might have an obligation to society, but that's not for me to say. I will say that I get a sad and empty feeling when I see how many people on various fora want desperately to no longer work, not even as volunteers. I think it's sad that there are apparently so few jobs/careers/activities that feel rewarding and gratifying to the workers. I'm not sure that the fault lies in the jobs.

            There, I've said it. I would not make this choice. OP is entitled to make the choice, but I don't have to encourage it.
            I must be getting old. Or maybe just old thinking since I am only 6 years older the OP. Either way I tend to feel the same way. If my kid said the same thing at 35 I would say, "Great. Quit your job and do something you love to do". If the OP has something planned that he loves to do then I apologize. To me it seemed like he/ she just didn't want to work anymore.

            Good luck.
            Could be, but this is a forum for “personal investment help,” not sharing your view of the morality of the OP’s proposed use of resources. I think there are very interesting discussions to be had about some of the issues TomatoTomahto raised, but I don’t see how they’re personal-finance related.
            This is much more than a “personal investment help” forum. There are posts on travel, philanthropy, saving/not saving, financial relationships in marriage, financial relationships to children, cars (always cars), home repairs, etc.

            I don’t think I ever mentioned morality. Perhaps I brushed into ethics, lightly. My point was more sympathetic, perhaps poorly stated, that I find it sad to read of people who think their job is what causes their ennui. To me, retiring at 35 is a symptom, not a goal.

            runner540
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            Re: Early-retired 35 year old with $1 million

            Post by runner540 » Sun Oct 29, 2017 7:36 am

            tomtoms wrote:
            Sat Oct 28, 2017 7:11 pm
            Most people are risk adverse but then most people are also consumers so they will need to keep on working. There is no other option.
            The criticisms on the thread are not because people think OP should wait to have more money to "consume" luxury goods or indulge desires. The posters are concerned about OP's ability to pay for such "consumption items" as healthcare, property taxes, and support of kids. OP has a very long time frame that his assets need to last (50-60 years). By the time he/she knows if it will work out or not, their human capital will have diminished significantly, and their Social Security will be a very low floor on income after FRA.

            staythecourse
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            Re: Early-retired 35 year old with $1 million

            Post by staythecourse » Sun Oct 29, 2017 8:02 am

            EddyB wrote:
            Sat Oct 28, 2017 10:36 pm
            staythecourse wrote:
            Sat Oct 28, 2017 9:40 pm
            TomatoTomahto wrote:
            Sat Oct 28, 2017 9:00 pm
            OP has no obligations to me. He might have an obligation to society, but that's not for me to say. I will say that I get a sad and empty feeling when I see how many people on various fora want desperately to no longer work, not even as volunteers. I think it's sad that there are apparently so few jobs/careers/activities that feel rewarding and gratifying to the workers. I'm not sure that the fault lies in the jobs.

            There, I've said it. I would not make this choice. OP is entitled to make the choice, but I don't have to encourage it.
            I must be getting old. Or maybe just old thinking since I am only 6 years older the OP. Either way I tend to feel the same way. If my kid said the same thing at 35 I would say, "Great. Quit your job and do something you love to do". If the OP has something planned that he loves to do then I apologize. To me it seemed like he/ she just didn't want to work anymore.

            Good luck.
            Could be, but this is a forum for “personal investment help,” not sharing your view of the morality of the OP’s proposed use of resources. I think there are very interesting discussions to be had about some of the issues TomatoTomahto raised, but I don’t see how they’re personal-finance related.
            Point taken.

            Good luck.
            "The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

            Soon2BXProgrammer
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            Re: Early-retired 35 year old with $1 million

            Post by Soon2BXProgrammer » Sun Oct 29, 2017 8:05 am

            inbox788 wrote:
            Sat Oct 28, 2017 10:40 pm
            Soon2BXProgrammer wrote:
            Sat Oct 28, 2017 9:47 am
            not saying you can't make it work... but if you want to decrease lifetime risk.. making a little money for a few years, and not spending out of your 1 million will really reduce your longevity risk.

            THink about it this way..

            35 with 1
            36 with 1.05
            37 with 1.1

            Not that you have to work super hard... but the biggest bang for your buck is not to spend money out of your portfolio now.. and make a little income (might not take that many hours if your high pay).. and keep your skills fresh, and reduce your longevity risk.

            personally, i want to quit too... and i'm just a little younger than you.. with roughly the same asset base.. maybe i have "OMY" (one more year) syndrome... but... there are just too many unknowns and the tolerance for errors is too tight....

            I know the money right now is really good, and as a risk reduction exercise i am still working... Hopefully i'll be able to switch to part time in a year or so.. if they say no.. i am not sure if they have a choice.

            But that part time work for me wouldn't be to save more money.. but to not spend my assets for another year or so... or maybe 2
            OP, what milestones are you counting on for this investment? You could be at $1M or more at age 45 or 55 and still be on track, and if the investments grow more than minimum, then you'd be well on your way, but there's potential for a market drop or crash that depletes the investments, so you may need to be prepared to re-enter the workforce when you're 45 or 55. It's safer to plan a bigger contingency now.
            my point was.. i'm not sure if he has enough wiggle room.. he might be ok at 40 at 1m assets if we just went through a bear market...

            But based on where he is now, and the market is now. i'm not sure if there is enough wiggle room in the numbers with a 60 year time horizon, and there is a bad event in the first few years, and he is taking money out during that time.

            Its a calamity of errors issue.

            if i'm wrong, great. let me know so i can quit my job.

            scorcher31
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            Re: Early-retired 35 year old with $1 million

            Post by scorcher31 » Sun Oct 29, 2017 8:39 am

            Op you have a very nice amount of money saved up for your age. Way over what me and my wife have and only a couple years older. According to firecalc it will last if you can really keep your expenses at 30k. How likely is that to happen... probably not very. If the market crashes soon you will take a real hit and probably have to come out of retirement quickly.

            The real question besides expenses is how long will it take you to get to 2 million? If it took you 15 years to get this far and say it will take you another 10 years to double then forget it. If you are in a high paid area like medicine and can knock it out in 3 or 4 years I would say stay the course. When you get to 2 million then you have an estimate of 60k to spend per year which is much more reasonable. Decrease it to 50k or so just to make sure it lasts for you but you'll be much more comfortable.

            If you have a high paying job that is not unsafe and does not likely lead to you being sued, I would continue to work, increase to that 2 million mark quickly but otherwise don't take anything personally. If you have a jerk of a manager or anything else just let it roll of your shoulder, increase the money, don't worry about the company or anything else because you are almost there and if they let you go so what at this point.

            fm3040
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            Re: Early-retired 35 year old with $1 million

            Post by fm3040 » Sun Oct 29, 2017 8:52 am

            No, you do not have enough given the long time horizon, family, kids, healthcare needs, etc. I would say, go back to a high paying job for another ten years and keep saving aggressively. You will have contributed at the max level (with a high paying job) towards social security during the next ten years. Chances are at that point, you will realize that you do not have nearly enough and have to keep yourself (or your spouse) employed in some form or the other, at least to get health insurance for you and your family.

            Now if you were 65 years old today and could draw social security of, say, $2500 per month in addition to your savings, that is another story.

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