How do you know when you have "won the game"?

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md&pharmacist
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How do you know when you have "won the game"?

Post by md&pharmacist » Mon Apr 30, 2018 5:21 pm

I often see here they say that you should stop playing when you have won the game. How do you know when you have won the game?

I ask because at 45, we have a very high net worth and annual income relatively speaking, based on what I've seen in what others post. I still worry about our finances as the kids are still pre-college (probably unwarranted) and we are a long way off from Social Security benefits, Medicare, IRA withdrawals, etc. A lot of people talk about retiring much younger here on Bogleheads, the thought never even entered my mind until I started reading these blogs.

I keep a very large (probably extreme) emergency fund and invest very aggressively in the markets what I do have invested, unorthodox style for most Bogleheads (active/leveraged). I don't even feel a need to buy anything at this point, so I don't feel I need anywhere close to 80% of my pre-tax income in retirement. Once the kids are moved out, I think we can live on 5-7% of our current pre-tax income comfortably.

Also when I have confidence in the "when" I won the game, what is the definition of stop playing? Retirement, slowing down at work, exiting the stock market or go low/no risk (ex. CD's), sell the big house and downgrade, sell the business/commercial real estate? Does one retire if they get satisfaction from helping others?

Help clear up my confusion. Thanks!

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Pajamas
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Re: How do you know when you have "won the game"?

Post by Pajamas » Mon Apr 30, 2018 5:28 pm

md&pharmacist wrote:
Mon Apr 30, 2018 5:21 pm


Also when I have confidence in the "when" I won the game, what is the definition of stop playing? Retirement, slowing down at work, exiting the stock market or go low/no risk (ex. CD's), sell the big house and downgrade, sell the business/commercial real estate? Does one retire if they get satisfaction from helping others?
That's it in red. If there is no need to take risk, don't take risk.

123
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Re: How do you know when you have "won the game"?

Post by 123 » Mon Apr 30, 2018 5:32 pm

Pajamas wrote:
Mon Apr 30, 2018 5:28 pm
...If there is no need to take risk, don't take risk.
+1
The closest helping hand is at the end of your own arm.

TravelforFun
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Re: How do you know when you have "won the game"?

Post by TravelforFun » Mon Apr 30, 2018 5:40 pm

I was admiring you and your post until I saw the words 'active/leveraged'. Fortune can change quickly for extreme risktakers.

TravelforFun

rebellovw
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Re: How do you know when you have "won the game"?

Post by rebellovw » Mon Apr 30, 2018 5:45 pm

When you are in your casket with a positive balance on your savings account.

md&pharmacist
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Re: How do you know when you have "won the game"?

Post by md&pharmacist » Mon Apr 30, 2018 5:46 pm

Pajamas wrote:
Mon Apr 30, 2018 5:28 pm
md&pharmacist wrote:
Mon Apr 30, 2018 5:21 pm


Also when I have confidence in the "when" I won the game, what is the definition of stop playing? Retirement, slowing down at work, exiting the stock market or go low/no risk (ex. CD's), sell the big house and downgrade, sell the business/commercial real estate? Does one retire if they get satisfaction from helping others?
That's it in red. If there is no need to take risk, don't take risk.
Okay, that makes sense. I only have about 15% of my total net worth at risk in the stock market currently, but can certainly decrease my risk appetite by going much more conservative than I have with that amount.

Now the hard part. I see the $50,000-$80,000/month in expenses running my business as a risk - would you agree? Of course when you give up risk you also give up reward. If I need to cut risk, would you give up a current $1,300,000-$1,400,000/year annual gross take home income in my position at age 45. I struggle with this one when I look on how and when to simplify.

md&pharmacist
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Re: How do you know when you have "won the game"?

Post by md&pharmacist » Mon Apr 30, 2018 5:50 pm

TravelforFun wrote:
Mon Apr 30, 2018 5:40 pm
I was admiring you and your post until I saw the words 'active/leveraged'. Fortune can change quickly for extreme risktakers.

TravelforFun
I've been told this and am looking to work on my risk appetite. While it's not my only risk, only about 15% of my total NW is at risk in the stock market, and looking to decrease this as bull market gets more lofty.

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Re: How do you know when you have "won the game"?

Post by gips » Mon Apr 30, 2018 5:57 pm

md&pharmacist wrote:
Mon Apr 30, 2018 5:21 pm
I often see here they say that you should stop playing when you have won the game. How do you know when you have won the game?

everyone is going to have a different definition. I subtracted our primary home and college expenses ($750k for 3 kids) from our net worth and figured at 50x projected expenses we'd won the game.

Also when I have confidence in the "when" I won the game, what is the definition of stop playing?
the author of the phrase, Bill Bernstien observed retirees, heavily invested in equities, had to go back to work after the last financial crisis. Many of them weren't able to replace their pre-retirement comp. He suggests shockproofing portfolios by moving to a more conservative asset allocation (typically less equities, more fixed income). For us, it meant moving to a 40-60 fixed income to equities mix with a substantial amount of fixed income invested in CDs. If equities and bonds lose half their value tomorrow, we'll still be in good shape for retirement.


Retirement, slowing down at work, exiting the stock market or go low/no risk (ex. CD's), sell the big house and downgrade, sell the business/commercial real estate? Does one retire if they get satisfaction from helping others?

what would you do in retirement? do you enjoy your work? I'm not sure what you mean by "Does one retire if they get satisfaction from helping others?". I think most people get satisfaction from helping others. This can be accomplished by continuing to work and donating a large % of your income or working for charities/nonprofits in retirement. I took the latter approach.

good luck to you!


md&pharmacist
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Re: How do you know when you have "won the game"?

Post by md&pharmacist » Mon Apr 30, 2018 6:02 pm

Thanks gips, very insightful.

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Re: How do you know when you have "won the game"?

Post by dknightd » Mon Apr 30, 2018 6:46 pm

md&pharmacist wrote:
Mon Apr 30, 2018 5:21 pm
I often see here they say that you should stop playing when you have won the game. How do you know when you have won the game?
What game are you trying to win?

Many think that life is just a game, and there are many ways to play, and all you do is choose. (Stanley Clarke)
That might be true, but life is not a game you win or loose. In the end you will loose your life :(

If it is a game like checkers, or golf, or scrabble, you can always play another game.

If the game is becoming financially independent, I guess you win when you think you are.
Of course you could keep playing. Make a new goal. Maybe financially independent and very well off.
Or maybe play earning financial independence for your kids, and/or grandkids.

I think for many here the "game" is trying to accumulate enough money/income so you do not have to work for it any more. I probably fall in that group. But the truth is most of us will always have to at least think about money. Partly perhaps becuase many of us here have just always been that way, and old habits are hard to give up;

Most people are happy when they have won a game. Are you happy?

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Re: How do you know when you have "won the game"?

Post by KlangFool » Mon Apr 30, 2018 6:59 pm

OP,

1) Both my older brother and older sister early retired at 49 years old. They traveled everywhere around the world for fun. They are young enough and healthy enough. In fact, my sister is in a bike club that they flew into the foreign country and then cycle around the country.

2) My older brother retired when both kids leave for college. It is a perfect time to retire.

3) You can win the game when you are willing to say "enough". And, you realized that more money is not going to buy more time for you.

4) My oldest brother retired at 50+. He passed his physical exam with a perfect score. Then, he has fainted in the bathroom a few months later. They found an inoperable brain tumor in his head. He died a few months later.

Life is too short. Do not waste it earning more money that cannot buy more time for you.

KlangFool

ThrustVectoring
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Re: How do you know when you have "won the game"?

Post by ThrustVectoring » Mon Apr 30, 2018 7:03 pm

md&pharmacist wrote:
Mon Apr 30, 2018 5:21 pm
I keep a very large (probably extreme) emergency fund and invest very aggressively in the markets what I do have invested, unorthodox style for most Bogleheads (active/leveraged).
Leaving aside active vs passive, you're probably paying more for the leverage you're using than your emergency fund is earning in interest. Purely from an efficient execution standpoint, your emergency fund should probably be "add leverage to my investment portfolio". Eg, if you are okay with up to 20% leverage and you have $500k in net liquid assets, you're better off having an emergency fund of "pull up to $100k from my investment portfolio in leverage" rather than $100k cash + $100k margin loan in your investment portfolio.

I hope that made sense - you should be able to borrow money from your investment portfolio up to your current amount of leverage, so your emergency fund could be making whatever you're paying in leverage costs right now for you with no loss of liquidity.

md&pharmacist
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Re: How do you know when you have "won the game"?

Post by md&pharmacist » Mon Apr 30, 2018 7:25 pm

ThrustVectoring wrote:
Mon Apr 30, 2018 7:03 pm
md&pharmacist wrote:
Mon Apr 30, 2018 5:21 pm
I keep a very large (probably extreme) emergency fund and invest very aggressively in the markets what I do have invested, unorthodox style for most Bogleheads (active/leveraged).
Leaving aside active vs passive, you're probably paying more for the leverage you're using than your emergency fund is earning in interest. Purely from an efficient execution standpoint, your emergency fund should probably be "add leverage to my investment portfolio". Eg, if you are okay with up to 20% leverage and you have $500k in net liquid assets, you're better off having an emergency fund of "pull up to $100k from my investment portfolio in leverage" rather than $100k cash + $100k margin loan in your investment portfolio.

I hope that made sense - you should be able to borrow money from your investment portfolio up to your current amount of leverage, so your emergency fund could be making whatever you're paying in leverage costs right now for you with no loss of liquidity.
Sorry, I may have created some confusion. I am not leveraged with any margin loans - I'm personally against that. I own leveraged mutual funds (among others) for increased returns - ie. Direxion 2x Nasdaq, Profunds Ultrafunds. (I understand it is definitely not Bogleheads style, but I can afford the small sum I have in these relative to net worth if things go south). My cash stockpile is just over $1,500,000 but keep in mind my business expenses are $50,000-$80,000/month. I also have a $500,000 HELOC that I have not borrowed anything against for insurance.

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Re: How do you know when you have "won the game"?

Post by PhilosophyAndrew » Mon Apr 30, 2018 7:31 pm

KlangFool wrote:
Mon Apr 30, 2018 6:59 pm
Life is too short. Do not waste it earning more money that cannot buy more time for you.
+1

KF is exactly right that the “one more year/I need to be ‘bulletproof’/black swan events might hurt me/if 30X expected spending is good 40X is even better” dynamic that pushes many to spend time on unwanted work comes at a real costs.

Yes, there is lots is fear and uncertainty about deciding to retire or determinig that you have reached financial independence. My sense is that KF’s rules about this provide a model for reaching g a definitive answer to the OP’s question — the point isn’t to slavishly folow KF’s rules, but rather produce rational rules that fit your own situation and then use those rules to avoid allowing fear and uncertainty to drive your decision making.

Andy.

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cfs
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Re: How do you know when you have "won the game"?

Post by cfs » Mon Apr 30, 2018 7:41 pm

Answer, when you realize that you have enough. That's what I did.

Listen, I have no desire to be one of the richest guys in the cemetery.

Good luck with your decision y gracias por leer ~cfs~
~ Member of the Active Retired Force since 2014 ~

md&pharmacist
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Re: How do you know when you have "won the game"?

Post by md&pharmacist » Mon Apr 30, 2018 7:48 pm

KlangFool wrote:
Mon Apr 30, 2018 6:59 pm
OP,

1) Both my older brother and older sister early retired at 49 years old. They traveled everywhere around the world for fun. They are young enough and healthy enough. In fact, my sister is in a bike club that they flew into the foreign country and then cycle around the country.

2) My older brother retired when both kids leave for college. It is a perfect time to retire.

3) You can win the game when you are willing to say "enough". And, you realized that more money is not going to buy more time for you.

4) My oldest brother retired at 50+. He passed his physical exam with a perfect score. Then, he has fainted in the bathroom a few months later. They found an inoperable brain tumor in his head. He died a few months later.

Life is too short. Do not waste it earning more money that cannot buy more time for you.

KlangFool
First and foremost, I am sorry for the loss of your oldest brother. Whenever we lose family, a part of us dies with them. I'm sure he was a great man.

Until recently, I thought everyone aimed to retire at full retirement age (mine is 67) regardless of early FI. It seems not, and I am reevaluating, hence this post. I just hired another nurse practitioner and am cutting back to a 3 day work week, even at the cost of income (I do not need nearly what I earn). I may continue this process over the next few years with the goal of transitioning to only CEO of the business and let the employed providers take over the daily operations. In the meantime, I aim to pay off the entire $4,000,000 property.

You said something that resonated with me - your "older brother retired when both kids leave for college. It is a perfect time to retire." I will be 51 when my youngest starts college. While mentally I know I can retire tomorrow, I have an unease about it, so maybe winning the game also requires a mental win and not just a financial win. At that point I will be debt free and have the option to sell the $4,000,000 building plus the value of my business hopefully to a hospital or investor group - a lot of my colleagues have done so recently. Also will have no need for the McMansion and the cars and look to simplify greatly around 50, not 67. The patients will still be helped by the great clinic I created - helps decrease the guilt of an early retirement.

I agree. Life is too short.

:sharebeer

jehovasfitness
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Re: How do you know when you have "won the game"?

Post by jehovasfitness » Mon Apr 30, 2018 7:49 pm

When I was able to set all bills on auto draft and not worry lol

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Re: How do you know when you have "won the game"?

Post by jehovasfitness » Mon Apr 30, 2018 7:50 pm

rebellovw wrote:
Mon Apr 30, 2018 5:45 pm
When you are in your casket with a positive balance on your savings account.
Lol. My mom died with like $300 in her account. Part of me felt terribly sad at that but then again she was dead it didn't matter to her at that point

KlangFool
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Re: How do you know when you have "won the game"?

Post by KlangFool » Mon Apr 30, 2018 8:00 pm

md&pharmacist wrote:
Mon Apr 30, 2018 7:48 pm
KlangFool wrote:
Mon Apr 30, 2018 6:59 pm
OP,

1) Both my older brother and older sister early retired at 49 years old. They traveled everywhere around the world for fun. They are young enough and healthy enough. In fact, my sister is in a bike club that they flew into the foreign country and then cycle around the country.

2) My older brother retired when both kids leave for college. It is a perfect time to retire.

3) You can win the game when you are willing to say "enough". And, you realized that more money is not going to buy more time for you.

4) My oldest brother retired at 50+. He passed his physical exam with a perfect score. Then, he has fainted in the bathroom a few months later. They found an inoperable brain tumor in his head. He died a few months later.

Life is too short. Do not waste it earning more money that cannot buy more time for you.

KlangFool
First and foremost, I am sorry for the loss of your oldest brother. Whenever we lose family, a part of us dies with them. I'm sure he was a great man.

Until recently, I thought everyone aimed to retire at full retirement age (mine is 67) regardless of early FI. It seems not, and I am reevaluating, hence this post. I just hired another nurse practitioner and am cutting back to a 3 day work week, even at the cost of income (I do not need nearly what I earn). I may continue this process over the next few years with the goal of transitioning to only CEO of the business and let the employed providers take over the daily operations. In the meantime, I aim to pay off the entire $4,000,000 property.

You said something that resonated with me - your "older brother retired when both kids leave for college. It is a perfect time to retire." I will be 51 when my youngest starts college. While mentally I know I can retire tomorrow, I have an unease about it, so maybe winning the game also requires a mental win and not just a financial win. At that point I will be debt free and have the option to sell the $4,000,000 building plus the value of my business hopefully to a hospital or investor group - a lot of my colleagues have done so recently. Also will have no need for the McMansion and the cars and look to simplify greatly around 50, not 67. The patients will still be helped by the great clinic I created - helps decrease the guilt of an early retirement.

I agree. Life is too short.

:sharebeer
md&pharmacist,

That was my plan too. Aka, FI when my kids go to college. But, I gambled on Telecom stock 10+ years ago. As a result, I lost 50% of my savings at that time. I am recovering from that but I lost 5 years of my life in the process. I have to work to pay my kids' college education. Then, I can FI. So, please do not take unnecessary risk.

I would not have my 5 years back. I would not be as healthy as I was 5 years ago. I will be more limited in what I can do and where I can travel.

KlangFool

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Toons
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Re: How do you know when you have "won the game"?

Post by Toons » Mon Apr 30, 2018 8:02 pm

For us,,,in retirement
We do what we want monetarily ,yet.
Our net worth continues to grow.

:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: How do you know when you have "won the game"?

Post by aum » Mon Apr 30, 2018 8:12 pm

OP: Plan was to retire at 55 with 3.5M but my company had a re-org and I had a pay cut so I decided to quit and retire at age 52 with 3M in Dec 2016. 3M did not include Kids' college education(separate in 529) and paid off house value about 700K.
The way I calculated winning the game was - have 3% cover all my needs and an extra 1% for travel and fun. If market tanks then I let go fun part and if goes up then I've that extra 1% for fun/travel. So far 4% WR(120K) have worked well for me.
Our youngest go to college in 2022 and thats when DW and I plan to travel the world.

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Re: How do you know when you have "won the game"?

Post by aristotelian » Mon Apr 30, 2018 8:15 pm

Based on history, which is all we have, you would be predicted to have a 100% success rate in your money lasting in perpetuity once you get to about 30X your desired expenses.

Based on what you have said, it sounds like you have won the game. If you keep working, it is not for any financial necessity.

dbr
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Re: How do you know when you have "won the game"?

Post by dbr » Mon Apr 30, 2018 8:18 pm

My counter quip to that quip is "It isn't a game and you can't quit."

However, in fairness to Bernstein the point he is trying to underline is the simple one that if one has enough money to fund their retirement, then it is foolish to have that money at high risk. One of the outcomes of too much risk is that one may no longer have enough to fund their retirement when it is too late to do anything about it. By high risk he is explicitly addressing investors who have and continue to have too much allocated to stocks. He would rather have people shift a good chunk of that to low risk investments, a TIPS ladder, or even an inflation indexed annuity.

As to how one knows how much is enough and whether his advice is valid, that is another discussion, but this is my understanding of his quip:

You have won when you have enough money, and the game is investing in stocks.

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randomizer
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Re: How do you know when you have "won the game"?

Post by randomizer » Mon Apr 30, 2018 9:02 pm

I'd quit tomorrow in your situation. Get a library card. Volunteer somewhere. Maybe strap on a backpack and hike the John Muir Trail etc.
87.5:12.5, EM tilt — HODL the course!

md&pharmacist
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Re: How do you know when you have "won the game"?

Post by md&pharmacist » Mon Apr 30, 2018 9:45 pm

I see a disconnect. Many Bogleheads admire Warren Buffet who didn't quit when he "won the game". Not sure what everyone thinks of Trump, but he didn't quit either. T Boone Pickens, Rupert Murdoch, George Soros, etc.

Most could have quit much younger than many of us, but didn't. How does one reconcile this?

Also, many hear talk about travel, hiking, reading books in retirement. What about cutting work to 50%, doing the rest 50%. I'm about to start a 3 day work week - plenty of time the other 4 days? Or should one look at it as an all or none?

md&pharmacist
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Re: How do you know when you have "won the game"?

Post by md&pharmacist » Mon Apr 30, 2018 9:46 pm

Many here

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Re: How do you know when you have "won the game"?

Post by AlohaJoe » Mon Apr 30, 2018 9:48 pm

You've "won the game" when your Funded Ratio is substantially above 1.0. Say 1.5 or higher.

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Re: How do you know when you have "won the game"?

Post by avoidingdumbmistakes » Mon Apr 30, 2018 10:24 pm

We're all so unique when it comes to this type of decision. Work can be a grind for a paycheck or it can be a fun way to make money and enjoy your days. Time spent enjoying things doesn't have to not include making money.

My wife and I are on a good track to call it quits "grinding for a paycheck" in about 8 years or so. We are already close to our number saved right now but I want a cushion and also want to leave a chunk to my 4 kids so they can continue the legacy.

Technology allows you to make semi passive income more easily now than at any time in history and it will only get easier. I'm building a low overhead ecommerce business in my spare time with my bro-in-law and my wife is in the process of monetizing a blog about something she loves writing about. We both plan to continue to earn for 20 more years but it will be a totally different way than commuting to an office or "grinding" every day like we do now.

As long as we have an internet connection we can continue earning but we can travel and do all sorts of things at the same time. If our current side projects hit 80k a year before 8 years from now then we're both retiring from our careers instantly. We've discussed it at length for the last 2 years. A balance of nearly complete freedom while still generating some revenue sounds like a great middle ground for us. Best of both worlds.

Personally, I'm still too ambitious to just hang it all up even if I could. But I'm very ready to drop what I'm doing now because it's stressful and too many people count on me every day. But we all have our own goals and comfort zone in life. If you are ready to stop doing what your doing now but unsure about going from that to "doing nothing" then come up with a middle ground plan that drops the stress of the grind but still produces fruit. Even if the harvests are small...gardening can be rewarding and satisfying without having a quota to hit.
Last edited by avoidingdumbmistakes on Mon Apr 30, 2018 10:26 pm, edited 1 time in total.

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Re: How do you know when you have "won the game"?

Post by GCD » Mon Apr 30, 2018 10:25 pm

md&pharmacist wrote:
Mon Apr 30, 2018 9:45 pm
I see a disconnect. Many Bogleheads admire Warren Buffet who didn't quit when he "won the game". Not sure what everyone thinks of Trump, but he didn't quit either. T Boone Pickens, Rupert Murdoch, George Soros, etc.

Most could have quit much younger than many of us, but didn't. How does one reconcile this?

Also, many hear talk about travel, hiking, reading books in retirement. What about cutting work to 50%, doing the rest 50%. I'm about to start a 3 day work week - plenty of time the other 4 days? Or should one look at it as an all or none?
Those guys are doing what they want. You should do what you want and not what anyone else tells you. Most of the posts on BH are telling people what they can do, not what they should do.

Many people find paid work very rewarding. If that's the case, work till you drop.

I just take issue with people who argue that paid work is the only way to be productive. There are any number of nuns, priests, and charitable organization workers that do productive things for little or no pay. As an extreme example, Mother Teresa took a vow of poverty. I think few people would argue she was unproductive.

Do the work/hobby/retirement thing in whatever proportion you choose. I retired at 51 to go back to grad school.

It's ok to retire completely. I give you permission :beer

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Re: How do you know when you have "won the game"?

Post by Peter Foley » Mon Apr 30, 2018 10:28 pm

When your bond allocation is sufficient to cover 30 years of retirement.

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Re: How do you know when you have "won the game"?

Post by AlohaJoe » Mon Apr 30, 2018 11:08 pm

Peter Foley wrote:
Mon Apr 30, 2018 10:28 pm
When your bond allocation is sufficient to cover 30 years of retirement.
I'm 42. How does this rule possibly fit me?

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Re: How do you know when you have "won the game"?

Post by MotoTrojan » Tue May 01, 2018 12:11 am

OP, you may want a new thread to just go over your investment plan. 15% equity exposure is quite low. Also those leveraged funds are trading vehicles. Longterm holding will not give you double the longterm hold of unleveraged.

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Re: How do you know when you have "won the game"?

Post by Nate79 » Tue May 01, 2018 12:40 am

Have you stress tested your assets? How did they hold up in the Great Recession? What if we get a major downturn, your business takes a hit and those leveraged funds drop significantly?

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Re: How do you know when you have "won the game"?

Post by Chan_va » Tue May 01, 2018 12:58 am

Boglehead answer: When you can live on the interest on your interest. Anything less is wildly reckless.
MrMoneyMoustache answer: Trick question, because everyone has won the game. Show me a family of 4 spending more than $5 a year living in Manhattan, and I will show you flagrant excess.

The Truth (paraphrasing Justice Stewart) "I shall not today attempt further to define the amount of assets I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it.."

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Re: How do you know when you have "won the game"?

Post by carolinaman » Tue May 01, 2018 7:36 am

When you have accumulated enough safe assets to assure you and your families needs for a lifetime. That would probably mean long term treasuries as assets. That does not mean you have to invest all your assets in treasuries (but you must meet a reasonable definition of safe) and you do not necessarily have to quit working. You can now do what you want to do. Some may continue working, others may become philanthropic, others a life of travel and leisure, and for others some combination of the above.

dbr
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Re: How do you know when you have "won the game"?

Post by dbr » Tue May 01, 2018 8:23 am

One of the problems in that quip in first place is that having "won the game" doesn't have a clear-cut criterion. Comments that one has enough low risk assets to live on is slippery because what was really said was low risk assets to cover essential needs plus risky assets to meet additional wants. It is not specified how that line is to be drawn.

There is also a financial conundrum in that safely providing for income from low risk assets takes a lot of money. It is not a breakthrough to point out that someone with lots and lots of money can probably safely retire. The only way to use money "safely" and also provide income is though an inflation indexed annuity. Even annuities have their drawbacks.

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Re: How do you know when you have "won the game"?

Post by dbr » Tue May 01, 2018 8:23 am

AlohaJoe wrote:
Mon Apr 30, 2018 11:08 pm
Peter Foley wrote:
Mon Apr 30, 2018 10:28 pm
When your bond allocation is sufficient to cover 30 years of retirement.
I'm 42. How does this rule possibly fit me?

For you the rule is 60 years.

FootballFan5548
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Re: How do you know when you have "won the game"?

Post by FootballFan5548 » Tue May 01, 2018 8:26 am

OP, I'm sure you're a very smart person based on your profession and success. One piece of advice I'd recommend, is over-insure your business against medical malpractice or other liabilities. I work in the commercial insurance business and have seen entire companies disintegrate due to a bad verdict or a mediation went wrong.

I'd imagine you have highly trained doctors and nurses, but mistakes happen, so I'd increase the limits you currently buy (unless they're more than sufficient) in your medical malpractice and general liability insurance.

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Re: How do you know when you have "won the game"?

Post by Grt2bOutdoors » Tue May 01, 2018 8:28 am

md&pharmacist wrote:
Mon Apr 30, 2018 9:45 pm
I see a disconnect. Many Bogleheads admire Warren Buffet who didn't quit when he "won the game". Not sure what everyone thinks of Trump, but he didn't quit either. T Boone Pickens, Rupert Murdoch, George Soros, etc.

Most could have quit much younger than many of us, but didn't. How does one reconcile this?

Also, many hear talk about travel, hiking, reading books in retirement. What about cutting work to 50%, doing the rest 50%. I'm about to start a 3 day work week - plenty of time the other 4 days? Or should one look at it as an all or none?
They are not playing a game. They are creating a dynasty. The stress level is much less than the average rank and file. Buffet could lose 99% of his at risk wealth, still have enough for him and his wife's lives.

Don't rely on this forum to provide the answers. Retirement is a whole different ballgame, it requires adjustment especially for those whose whole life has been associated with another task or series of tasks that are no longer required. What will you do with your time on a consistent basis? This is not wholly solved by money.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: How do you know when you have "won the game"?

Post by Jack FFR1846 » Tue May 01, 2018 8:33 am

When I was your age, I expected my kids' college expenses would be around a million dollars. My oldest has one year left and will only have cost me about $300k. Second needs a private high school because of learning challenges, so his costs started early, but his aims are community college and potentially state college after that. So I'd guess his costs won't exceed $300k. Currently at 50X spending saved, I've decided that when son #1 graduates college, I'm going to declare victory.
Bogle: Smart Beta is stupid

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Re: How do you know when you have "won the game"?

Post by Atgard » Tue May 01, 2018 8:49 am

md&pharmacist wrote:
Mon Apr 30, 2018 9:45 pm
I see a disconnect. Many Bogleheads admire Warren Buffet who didn't quit when he "won the game". Not sure what everyone thinks of Trump, but he didn't quit either. T Boone Pickens, Rupert Murdoch, George Soros, etc.

Most could have quit much younger than many of us, but didn't. How does one reconcile this?

Also, many hear talk about travel, hiking, reading books in retirement. What about cutting work to 50%, doing the rest 50%. I'm about to start a 3 day work week - plenty of time the other 4 days? Or should one look at it as an all or none?
For me, being financially independent means (in the words of the great Forrest Gump) "I don't need to worry about money no more." That then means that you can retire if you want, travel or volunteer, work part-time, keep working but have the peace of mind that if things go south or boss/clients want you to do something you're not comfortable with, you walk out the door, etc. It gives you the freedom to choose what you want... you're not longer beholden to a job to pay your bills.

Some people love their work or have started a company and enjoy doing it well past the point they need the money; since they're doing it for other reasons, having enough money doesn't make them stop. On the other hand, some people frankly are addicted to money and power and greed and are never satiated. (One difference between the two is the former probably gives most of their money away, the latter does not.)

Most people don't get the option to phase back to part-time, but if you do then that's certainly a viable option to "transition" into retirement or just take it easy as you get older and don't need as much income. So I don't think you need to look at it as all or none, just that (in my experience) having that option is rare.

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Re: How do you know when you have "won the game"?

Post by RickBoglehead » Tue May 01, 2018 9:00 am

As several have stated, it's different for everyone. I guess I don't view it as a game, because life is too short. In the past few years, we've lost too many friends and relatives. Some were very elderly and their time had come, but many were not. We are at that point now - kids are moved out and portfolio is where I feel comfortable to retire. If my wife works 3 more years, which she seems to want to do, she gets a small pension and the ability to tap into a state medical insurance plan for life. I have on my docket this year to fully evaluate this insurance plan, understand benefits and costs as they compare to what we'd by on our own, and determine if we'd utilize it if she goes 3 more years.

A couple of suggestions:

- Setup your business to minimize risk and to run more without your involvement. It may not be as profitable, but why would you turn off something that has a nice revenue stream if you can spend a few hours a week/month keeping it going? If you can't, then either sell it or shut if down when you're ready.

- Determine the most money you'll need to last your the rest of your life, add a buffer, and set it up in as much of a bulletproof portfolio as possible. Then, take the remainder and set it up for a nice estate for your children to inherit.

Then, go enjoy life.

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Re: How do you know when you have "won the game"?

Post by randomguy » Tue May 01, 2018 9:36 am

rebellovw wrote:
Mon Apr 30, 2018 5:45 pm
When you are in your casket with a positive balance on your savings account.
+1. Though you probably should add in your spouse. The strategy of how you play changes but you are playing til you die.

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Re: How do you know when you have "won the game"?

Post by LiterallyIronic » Tue May 01, 2018 10:20 am

PhilosophyAndrew wrote:
Mon Apr 30, 2018 7:31 pm
KlangFool wrote:
Mon Apr 30, 2018 6:59 pm
Life is too short. Do not waste it earning more money that cannot buy more time for you.
+1

KF is exactly right that the “one more year/I need to be ‘bulletproof’/black swan events might hurt me/if 30X expected spending is good 40X is even better” dynamic that pushes many to spend time on unwanted work comes at a real costs.
+2

Hear, hear. You only live once.

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HomerJ
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Re: How do you know when you have "won the game"?

Post by HomerJ » Tue May 01, 2018 10:37 am

dknightd wrote:
Mon Apr 30, 2018 6:46 pm
I think for many here the "game" is trying to accumulate enough money/income so you do not have to work for it any more.
This. Being financially independent. Having "enough".

Investing heavily in the stock market can be risky.

If you need $2 million to retire, and you hit $2 million, it could be considered foolish to continue to invest heavily in stocks. Because what if the stock market crashes 30%, or 50%, or 80%? Those are all possible.

Why risk money when you already have enough? This is especially true the older you get, since you may not have the time or the ability to recover losses.

That's all it means.

As for knowing when you have "enough", that's a personal choice, and based on your desired expenses.

25x expenses is generally considered enough for a 30 year retirement, 30x-33x for a longer retirement. Some people here are super-conservative, and want 50x expenses before they consider themselves financially independent.
The J stands for Jay

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HomerJ
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Re: How do you know when you have "won the game"?

Post by HomerJ » Tue May 01, 2018 10:50 am

md&pharmacist wrote:
Mon Apr 30, 2018 9:45 pm
Most could have quit much younger than many of us, but didn't. How does one reconcile this?
Oh, if you enjoy your work, keep working. It's not like Warren Buffet is laying bricks or sitting through boring meetings that don't really concern him.

You own your own business, and there's a very different satisfaction level there than there is for people who work for a company.

Just remember that time is a limited resource just like money, and you have to balance the two.

If you're sitting in a meeting room on a beautiful spring day like today, and there's nothing else you'd want to do, then keep sitting there. But if there IS something else you'd want to do, and you don't need money anymore, then why sit there?
What about cutting work to 50%, doing the rest 50%. I'm about to start a 3 day work week - plenty of time the other 4 days? Or should one look at it as an all or none?
That is an excellent balanced choice. I think many of us here would love that solution to ease into retirement. Unfortunately, it's not that easy for many jobs. Most people are forced to work all or none. You are in a great position.

I do intend to look for part-time work when I first retire. Semi-retirement, really. BUT, because I can't COUNT on part-time work, I'll probably want to be nearly fully financial independent before I make that plunge. Just in case I can't find good part-time work.

But, at that point, I won't really need part-time work, so why do it? I guess I'll wait and see if I can find something worth my time.
The J stands for Jay

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Re: How do you know when you have "won the game"?

Post by cherijoh » Tue May 01, 2018 11:05 am

aum wrote:
Mon Apr 30, 2018 8:12 pm
OP: Plan was to retire at 55 with 3.5M but my company had a re-org and I had a pay cut so I decided to quit and retire at age 52 with 3M in Dec 2016. 3M did not include Kids' college education(separate in 529) and paid off house value about 700K.
The way I calculated winning the game was - have 3% cover all my needs and an extra 1% for travel and fun. If market tanks then I let go fun part and if goes up then I've that extra 1% for fun/travel. So far 4% WR(120K) have worked well for me.
Our youngest go to college in 2022 and thats when DW and I plan to travel the world.
The nice thing about being FI, is that when something like what you experienced happens, you have the option to modify your plan and retire early. :sharebeer

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Re: How do you know when you have "won the game"?

Post by Earl Lemongrab » Tue May 01, 2018 1:30 pm

You can't, because the game doesn't end until you do and the rules can change at any time.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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shum
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Re: How do you know when you have "won the game"?

Post by shum » Tue May 01, 2018 1:57 pm

Just pick up Bogle’s book titled “Enough”and read his story about two famous authors at a rich guy’s party. One author said to the other, how do you feel knowing this guy will make more tomorrow than all you ever made on your most famous book? The other author replied, “I know I have enough.”

Freedom is powerful—you do what you want, full time, rather than part time.

I’m 76 and retired at 50. As many have said, I don’t know how I ever had time to go to work.

Find Bogle’s book and then you will know who the two authors were and you will have started on your way.
-shum

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Re: How do you know when you have "won the game"?

Post by CnC » Tue May 01, 2018 2:46 pm

Pajamas wrote:
Mon Apr 30, 2018 5:28 pm
md&pharmacist wrote:
Mon Apr 30, 2018 5:21 pm


Also when I have confidence in the "when" I won the game, what is the definition of stop playing? Retirement, slowing down at work, exiting the stock market or go low/no risk (ex. CD's), sell the big house and downgrade, sell the business/commercial real estate? Does one retire if they get satisfaction from helping others?
That's it in red. If there is no need to take risk, don't take risk.

I disagree whole heartedly with this. Instead of winning the game and taking a Victory lap that's winning the game and burning the stadium down afterwards.


I wouldNEVER suggest going no risk. Unless you had no desire to leave any kind of legacy for future generations.

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