Has anyone here retired in their 40's or aspires to?

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springwater
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Has anyone here retired in their 40's or aspires to?

Post by springwater »

How did you/are you planning to do it?

The biggest issues I can think of for a very early retiree are boredom, health care coverage, and outliving your assets.

The boredom thing is probably dependant on the individual. Some people's lives revolve around work and when they retire they don't know what to do with their lives. Others have so many interests that they will keep busy for two lifetimes.

Affordable healthcare is a big concern especially if you have a pre-existing condition. Otherwise, HSA's and chatastrophic coverage may make things affordable if you have good genes and live a healthy lifestyle.

The other is financial. The money may need to last 40-50 years. Depending on your lifestyle, $1 million with a 3% withdrawl rate is probably the bare minimum needed to retire early. $2 million with a 3% withdrawl rate is probably better though.
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Adrian Nenu
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Post by Adrian Nenu »

Michael LeBoeuf retired at the age of 46. He is at Diehards VI right now but he might drop in and offer more insight on how he did it.

Adrian
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Cashdollar
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Post by Cashdollar »

I'm hoping to... I think the most important thing is controlling your spending. One thing I do is if I want to buy something expensive, I will wait a week or two before I decide whether I am actually going to buy it.

Hopefully all this saving will add up to an early retirement for me. I'm guessing $1 mil, but it I'm still a long way off in years and $.
-Matt
livesoft
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Post by livesoft »

Lots of early retirees hang out at the early retirement forum.

A 4% safe withrawal rate is well documented and many early retirees are living that.

How to do it? One way is to save and invest half your income which can be easy to do. For example, my spouse is an engineer. We live off her income and invest my income. That's just one way of living well below your means.

There are lots of other ways to get there as well.
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goosecat
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Post by goosecat »

I would like to retire in my 40's but I don't think I can even consider it unless I have at least 3 million and more likely 4. The longer you are retired, the lower your SWR should be IMO. I am figuring a SWR of 3% max, ideally 2.5% or lower.

If you hit a big bear market right away, your portfolio could take a 25% hit or more and the remaining money has to last you the next 50 years.

If you can easily return to work anytime, then the SWR can obviously be increased but I'm not sure how many people have jobs that could accomodate a 10 or 20 year hiatus.

At 3 million dollars, 3% would equal 90k per year. Minus about 15% in taxes but potentially more, that goes down to $76.5k.

I think I need to allocate 5-10k per year for health care costs for a family. The max deductible for an HSA is $5,650 and premium costs will probably be around 2-4k/yr. Hopefully, you never have to even come close to maxing out the deductible but you never know.

Kids are potentially a huge expenditure as well. Early retirement means your kids may not be in college yet. If you plan on paying for college, that could easily tack on $30-40k/yr/child. Maybe they go on to a PhD or med school and you want to pay for that too.

The longer you are retired, the greater the chance of a major financial event that forces you to go beyond your SWR. It could be a lawsuit, medical issue, theft, earthquake, child getting into trouble with the law, etc.

There are just so many variables in a 50 year span that it is probably wise to be extra conservative.
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Post by livesoft »

goosecat wrote:At 3 million dollars, 3% would equal 90k per year. Minus about 15% in taxes but potentially more, that goes down to $76.5k.
If you are married, have significant qualified dividends (say $45K), you would pay less $7000 in taxes.
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stratton
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Post by stratton »

If you are married, have significant qualified dividends (say $45K), you would pay less $7000 in taxes.
One savings is no 7+% FICA. So on 45K you're not out ~$3400.

Paul
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Raybo
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Post by Raybo »

I retired at 48 in 2000. It wasn't really my plan but the business I was in ended up without any customers and I didn't want to start over so I decided to stop working. I had a paid off house and low expenses so I just retired.

At the time, I didn't know anything about SWRs and hadn't read any of the books recommended here. While the stock market meltdown occurred soon thereafter, I had very little money in tech stocks and had made quite a bit over the years in my IRAs. Still, I was at a 7.5% withdrawl rate, at the time.

Then, in 2004, I sold my house and moved in with my, now, wife. I got the entire amount in cash and began investing it using the ideas I learned here. I now am down to about a 3% - 3.25% withdrawl rate, which I believe to be sustainable (but who really knows?).

As for healthcare, I have always paid for it myself. The perk I got is that the government allowed me to write off half of it as a self-employed individual. I have been a member of Kaiser for over 20 years. They are expensive and their premiums grow at about 10% year. However, I never had to worry about leaving my employer's health care plan and getting another one. My health premiums are my single largest expense, by far.

As for boredom, I had worked at home pretty much by myself when I worked. Since I had no social life at work, I didn't miss it when I stopped working. I took on a house improvement project (bolting my house to its foundation), began reading the 11 volume Story of Civilization (Will and Ariel Durant), and started to ride a bike and prepare for taking some bike tours.

When I moved (to San Francisco) in 2004, I volunteered as a docent at Alcatraz island, began taking longer bike rides 2-3 times a week, started learning how to play the piano, and manage to fill up my time just living an easy life.

I've been retired for 7 years now and it just seems natural. In fact, I tend to stay around the house on week-ends because I don't want to fight the crowds that are everywhere on Saturday and Sunday.

Ultimately, I was lucky. I don't have children, have very low expenses, owned a house in a time of increasing real estate values, am able to live at my wife's house without paying rent, and was able to max out my retirement accounts.

On the other hand, if an opportunity came my way that allowed was interesting, I'd be willing to go back to work. But, I'm not looking very hard for it :)

Ray
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Post by livesoft »

stratton wrote:
If you are married, have significant qualified dividends (say $45K), you would pay less $7000 in taxes.
One savings is no 7+% FICA. So on 45K you're not out ~$3400.

Paul
I wasn't clear that $45K would be qualifed dividends and the other $45K would be ordinary income, so on that $90K you'd still pay less than $7000 in income tax if married filing jointly.

If you still had kids at home like I do, you get the child tax credit and your taxes go to practically ZERO if you live off of qualified dividends, realized LT cap gains, and return of capital.
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mlebuf
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Post by mlebuf »

I retired from being a Management professor at age 47 some 18 years ago. Several things made it possible:
1. The university where I worked had a retirement plan where one could retire with a reduced pension at 20 years of service and very reasonable health care.
2. I had no dependents other than myself at the time.
3. I had a second income source from writing and speaking that I had started 12 years earlier that was paying much more than my university salary with far less work.

Boredom? What's that? I never have felt a longing to go back to academia or pursue any kind of day job. I can always find plenty of hobbies and interests to occupy my time.

As for fear of outliving my assets, anything is possible but my net worth today at age 65 is much greater it was in 1989. Back then I was too ignorant to know that I needed an enormous nest egg. I just figured I would always be able to make enough money to feed myself and could always go back to teaching if I needed to.

If I had it to do all over again, I'd retire early a heartbeat. The last 18 years have been the best years of my life.

Best wishes,
Michael
Last edited by mlebuf on Sun Jun 10, 2007 9:42 am, edited 1 time in total.
Best wishes, | Michael | | Invest your time actively and your money passively.
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alvinsch
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Post by alvinsch »

I retired at 45 (my wife retired a year earlier), and have never regretted it.

Keys for retiring early:
- habitual savers
- both of us came from simple backgrounds so were never big spenders and we both hate to shop
- DINKs (dual income no kids), both engineers
- primarily lived off one salary
- Sold stock options during the tech bubble runup despite workmates saying that was crazy (accelerated early retirement)
- unfortunately no pension and minimal tax advantaged assets
- retirement decision process: would we have more than enough using 3% withdrawal rate based on 60/40 portfolio monthly value even if stocks dropped 50%.

Keys to happy retirement:
- high energy wife has no problem filling her days volunteering
- 2 years before retirement I got sucked into the horse world and now spend half of each day riding, playing and lessons on our horses (studies show pets contribute to longevity and happiness).
- diehards, investing, tax planning helps with the mental stimulation
- HSA / catastrophic health insurance for medical; ride horses, bike, hike, exercise club, etc. to stay in good health.
- too much travel as wife gets grumpy when she hasn't gotten to use her passport lately

- Al
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Post by rockH »

Retired at 48 in 2004. Saved like a maniac for 10 years to do it. Had a good run of bonuses and stock options during that period, and a severance package on the way out, and I banked 100% of them after-tax. I dollar-cost-averaged most of it into Total Stock Market and Total International in the 2001-2004 period - the timing was just dumb luck, I was DCAing all along but most of the big $$ came in that period.
Factors that helped - kids college was mostly paid for by retirement date, we bought our current house more than 15 years before retirement and the next house if there is one will be smaller.
Withdrawal rate is under 3%.
If you don't like working out, yard work, reading, etc don't do it.
Brad
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Post by Brad »

Springwater,

There are many places where you can run the numbers, and Vanguard can help you as part of your financial plan. I would not go above a 3% withdrawal rate, and I would recommend 2% to be conservative, especially for a long time frame like this. Even if the market halved, and stayed there for many years, your 2% rate would still only be a 4% rate.

Once you feel you are financially ready, you do not need to necessarily pull the trigger. Knowing that you could retire can take the edge off of work (not worrying about promotions, raises, all the office politics). Just knowing that you could walk in and say bye bye can make the working world more liveable (assuming you are burnt out and thus asking this question).

As for what to do, you need to know yourself. How do you spend your weekends? Can you see doing that 7 days a week? My guess is that if you can do it financially, you would figure a way to occupy your time.
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Post by SteveB3005 »

Some great stories, I think the most important thing I get from them is the common thread was save your butt off and live below your means. Not a person yet has said they did it because they had a small-value tilt with 5% commodities and an overweight to emerging markets.

So Alvin I gotta ask, with all you got going your way I just have to wonder looking at your avatar. Why the long face?
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Post by YDNAL »

Raybo wrote:
I retired at 48 in 2000. It wasn't really my plan but the business I was in ended up without any customers and I didn't want to start over so I decided to stop working. I had a paid off house and low expenses so I just retired.
springwater,
Like Raybo, I stopped working at 50 in 2002, with the thought of retirement, after 9/11 crippled my wholesale travel business. But unlike Michael LeBoeuf, my wife doesn't have a reduced-pension option :( and still worked to meet pension requirements. We had health insurance. I kind of felt guilty and went back to work in 2005. During this time we budgeted ourselves (+/-) as if we were both fully-retired. Medical coverage is a HUGE financial burden in our country for those without Medicare, so early retirees need to make sure this base is covered properly.
Regards,
YDNAL
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Post by livesoft »

Brad wrote: ...
I would not go above a 3% withdrawal rate, and I would recommend 2% to be conservative, especially for a long time frame like this. Even if the market halved, and stayed there for many years, your 2% rate would still only be a 4% rate.
One of the take-home messages I get from the early retirement forum is that the 4% rate is pretty conservative already. Obviously, folks disagree about that. I have never seen a 2% rate advocated.

I guess that if you want to retire and are working towards a SWR, then going for a 2% SWR will keep you working much, much longer than you need to. That's 50 times your expenses!!! Who could ever retire given that hurdle to achieve?
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nick22
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SWR

Post by nick22 »

The swr is hard to answer, but if I recall the Monte Carlo simulations with a 60/40 equity/bond split and a 3% withdrawal rate there is a 90% chance of your money lasting 50 years. I think with a 4% rate the chance of your nest egg lasting 50 years drops to around 50%. There are many moving parts here, but it illustrates the importance of small changes in swr. Certainly if you can live on 3% withdrawal rate and have a plan to cover health coverage, retiring in your 40s may be feasible. Any many of us, like Michael, wouldn't retire and do nothing, but just have different activities and sources of income to supplement our life styles.
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Petrocelli
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Kids

Post by Petrocelli »

It seems that many people who retire in their 40s either don't have children or had children at an early age.

If you have teenagers in the house, retirement is out of the question. They are very expensive. However, I would rather have kids than be retired.
Petrocelli (not the real Rico, but just a fan)
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Post by bob90245 »

livesoft wrote:
Brad wrote: ...
I would not go above a 3% withdrawal rate, and I would recommend 2% to be conservative, especially for a long time frame like this. Even if the market halved, and stayed there for many years, your 2% rate would still only be a 4% rate.
One of the take-home messages I get from the early retirement forum is that the 4% rate is pretty conservative already. Obviously, folks disagree about that. I have never seen a 2% rate advocated.

I guess that if you want to retire and are working towards a SWR, then going for a 2% SWR will keep you working much, much longer than you need to. That's 50 times your expenses!!! Who could ever retire given that hurdle to achieve?
I agree. I think the floor for SWR is somewhere around 3% -- especially if you tinker around with how you fund your portfolio. For example, an investor can put all their funds into a dividend ETF like DVY and simply live off the 3% dividend distributions. Over time, the distributions should rise to offset inflation.
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nick22
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Petro

Post by nick22 »

Isn't it nice, Rob, how the capitalist economies disincentivize having children? I envision myself at around age 50 with 3 teenagers, a stay at home wife, and a million dollars of impending higher education fees looming. But then I guess retirement planning wouldn't be as much fun if it were easy. What would I do if I was single and could simply save millions of dollars with no obstacles? It would be kind of boring.
Nick22
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Post by larryswedroe »

I could have retired at about 43 but did not. I cousel lots of very high net worth people who want to retire.
My advice is always that you have to find something to retire TO. Whatever it is that gives you emotional and intellectual satisfaction.

Studies on what makes people happy (or not) find that once you have sufficient money to provide basic needs there are really just two things that matter
A) the depth and breadth of your personal relationships (connectedness to society)
B) Keep challenging your mind (be it learning to play piano, bridge, a business, or whatever)

Good luck
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Post by DRiP Guy »

I'm hoping to join the ranks of the FI/RE'ed in my mid-to-late forties.

And, as someone said earlier, my own demo (demographic) is single, professional, never married or had kids, so that makes it a lot easier to think seriously about.
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Re: Kids

Post by livesoft »

Petrocelli wrote:It seems that many people who retire in their 40s either don't have children or had children at an early age.

If you have teenagers in the house, retirement is out of the question. They are very expensive. However, I would rather have kids than be retired.
My experience is different. We had our children when we were in our late 30s. We will have no problem retiring before 50 while having teenagers in the house. Before we had kids, we were able to invest quite a bit and just kept it up afterwards.

Once again, it goes back to live well below your means.
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bob90245
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Re: Petro

Post by bob90245 »

nick22 wrote:What would I do if I was single and could simply save millions of dollars with no obstacles? It would be kind of boring.
I like boring. :D
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nick22
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Boring

Post by nick22 »

There is nothing wrong with boring, but I have chosen the obstacle-filled path with less margin for error. I guess this will at least keep me socially connected and engaged, even if slightly more impoverished.
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csf
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Post by csf »

larryswedroe wrote:My advice is always that you have to find something to retire TO. Whatever it is that gives you emotional and intellectual satisfaction.

Studies on what makes people happy (or not) find that once you have sufficient money to provide basic needs there are really just two things that matter
A) the depth and breadth of your personal relationships (connectedness to society)
B) Keep challenging your mind (be it learning to play piano, bridge, a business, or whatever)
My experience bears this out. I retired 5.5 years ago at 44. I never thought I would have any problems, but I had a rough 1.5 years getting adjusted. Part of that was moving to a new place, and essentially starting over, but I underestimated how much of myself was wrapped up in "my career". A lot of soul searching, discovering what really matters. I can say now, with no reservation, the best move I ever made. I'm more content and at peace living a simple life than I ever was making large $$. SWR is about 3.25%. Health care is clearly the biggest "issue", especially down the road.

csf
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Petrocelli
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Re: Kids

Post by Petrocelli »

livesoft wrote:Once again, it goes back to live well below your means.
I agree that you must live well below your means to retire early.

I live below my means. I do not live well below my means. If you are able to do it, good for you. I simply can't cut my lifestyle drastically given my family commitments. Moreover, I would rather work until 65, and retire with a nice lifestyle than retire at 45 and have to cut back.

I have spent more than 2 decades creating a client base, and getting the largest office in my company. Even if I could retire, it would be hard to walk away from a career which has taken decades to build.

In the end, it's a matter of personal choice.
Petrocelli (not the real Rico, but just a fan)
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SoonerSunDevil
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It's easy!

Post by SoonerSunDevil »

For someone who is 45 with no kids and has no desire to leave money to anyone, an immediate annuity could provide the boost in income that one would need to live a comfortable early retirement.

Let's assume someone is 45 and has $2,000,000. While 2mm is a lot of money for someone at 45, I'm sure there are plenty of doctors, lawyers, CPA's, MBA's, Engineers, etc. that could have that kind of nest egg if they saved often and early.

If this person decides to take $1,000,000 and buy a fixed immediate annuity (45 years old, male, living in Texas), the monthly payout would be $5,166. This works out to almost $62,000 a year, most of which will be tax-free as a lot of the payment will be a return of capital.

With a house that is owned free and clear, especially in parts of the Midwest, $62,000 a year is living well, especially for a single man with no dependents. This doesn't even consider what the early retiree could do with the $1,000,000 that isn't invested in the annuity, nor does it take into account any pension or Social Security payments that he might receive.

I think kids are probably the biggest hurdle to an early retirement, I know my younger brothers and I have used a lot of my parents' money :)

John


See the annuity link here. http://www.immediateannuities.com/infor ... rates.html
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Post by unclemick »

Layed off age 49, jan 1993, total assets his and hers - maybe 350k.

Easy living in the Big Easy(New Orleans) - in hindsight. Stocks done good in the 90's.

heh heh heh heh - more complicated than that but it worked.
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nick22
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Annuity

Post by nick22 »

The problem with the immediate fixed annuity is the 6% yearly payout at age 45 probably isn't inflation adjusted. So assuming a 3% inflation rate, at age 69 your purchasing power is only 50% of what it as at age 45, and close to the end of life your purcahsing power is only 25% what it initially was. And this is assuming a steady and reasonable rate of inflation, but if periods of higher inflation appeared the annuity could be a disaster. I tend to prefer the CPI inflation adjusted option, but then we have to trust the government and the calculation of the CPI to begin with.
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SoonerSunDevil
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Re: Annuity

Post by SoonerSunDevil »

nick22 wrote:The problem with the immediate fixed annuity is the 6% yearly payout at age 45 probably isn't inflation adjusted. So assuming a 3% inflation rate, at age 69 your purchasing power is only 50% of what it as at age 45, and close to the end of life your purcahsing power is only 25% what it initially was. And this is assuming a steady and reasonable rate of inflation, but if periods of higher inflation appeared the annuity could be a disaster. I tend to prefer the CPI inflation adjusted option, but then we have to trust the government and the calculation of the CPI to begin with.
Hi Nick,

Obviously you raise good points about the annuity, but keep in mind that the hypothetical retiree still has the $1,000,000 portfolio to work with, and with a steady income from the annuity, the retiree could invest in a higher allocation to stocks to help offset inflation. By the time the retiree is 69, assuming that his $1,000,000 portfolio returned 8% a year, his $1,000,000 would now be worth $6,341,181, or $2,777,165 after inflation, assuming a 3.5% annual inflation rate. Also, keep in mind that the retiree is eligible for Social Security before the time he's 69, although that age is always subject to change, and Medicare will also be available.

I don't think an immediate annuity is right for a lot of people, but for someone who isn't concerned with leaving behind a financial legacy, these can be very attractive products.

Go Sooners! :D

John
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nick22
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True enough

Post by nick22 »

That would provide reasonable portfolio growth. Now if I can only find the % of American males in their 40s who can avoid marraige, kids, overspending and manage to save $2 million dollars who can implement this strategy. I would assume it is a small % and I know it does not include me, my neighbors, or any colleagues. I know I will likely just shift careers in my 50s or 60s and do not envision a wholesale retirement until my late 60s to 70s.
Nick22
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SoonerSunDevil
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Re: True enough

Post by SoonerSunDevil »

nick22 wrote:That would provide reasonable portfolio growth. Now if I can only find the % of American males in their 40s who can avoid marraige, kids, overspending and manage to save $2 million dollars who can implement this strategy. I would assume it is a small % and I know it does not include me, my neighbors, or any colleagues. I know I will likely just shift careers in my 50s or 60s and do not envision a wholesale retirement until my late 60s to 70s.
Hi Nick,

Count me in your group as well. I don't think I'll be able to retire in my 40's as I plan to have a wife, a couple of kids, and a comfortable lifestyle. Like Petrocelli said, I'd rather have a wife and kids than retire early, but to each his own.

John
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nick22
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Retirement Dividends

Post by nick22 »

John. You are a very unique Sooner to even make it out of Norman unmarried. My wife is a Sooner, and I thought she was the only one.

On a more serious note, I think part of the return and fun in retirement will be provided by my kids and grandkids, so maybe it is an investment in happiness. (a very expensive investment)
Nick22
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Petrocelli
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Re: It's easy!

Post by Petrocelli »

OUJohnNasr wrote:Let's assume someone is 45 and has $2,000,000. While 2mm is a lot of money for someone at 45, I'm sure there are plenty of doctors, lawyers, CPA's, MBA's, Engineers, etc. that could have that kind of nest egg if they saved often and early.

If this person decides to take $1,000,000 and buy a fixed immediate annuity (45 years old, male, living in Texas), the monthly payout would be $5,166. This works out to almost $62,000 a year, most of which will be tax-free as a lot of the payment will be a return of capital.
The problem with the example is this: Assume the MBA is making in the low six figures. Let's say he is making $300,000 and has a very comfortable life. He has a wife and two kids who are used to living on $300,000. It would be awfully hard to say, "Sorry guys. I'm retiring. You have to live on $62,000."

In the real world, people who make large salaries find it hard to walk away from their jobs. It's like Shelley Long walking away from Cheers. Ride the train until it stops.
Petrocelli (not the real Rico, but just a fan)
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SoonerSunDevil
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Re: It's easy!

Post by SoonerSunDevil »

Petrocelli wrote:
OUJohnNasr wrote:Let's assume someone is 45 and has $2,000,000. While 2mm is a lot of money for someone at 45, I'm sure there are plenty of doctors, lawyers, CPA's, MBA's, Engineers, etc. that could have that kind of nest egg if they saved often and early.

If this person decides to take $1,000,000 and buy a fixed immediate annuity (45 years old, male, living in Texas), the monthly payout would be $5,166. This works out to almost $62,000 a year, most of which will be tax-free as a lot of the payment will be a return of capital.
The problem with the example is this: Assume the MBA is making in the low six figures. Let's say he is making $300,000 and has a very comfortable life. He has a wife and two kids who are used to living on $300,000. It would be awfully hard to say, "Sorry guys. I'm retiring. You have to live on $62,000."

In the real world, people who make large salaries find it hard to walk away from their jobs. It's like Shelley Long walking away from Cheers. Ride the train until it stops.
Hey Petro,

I don't disagree with anything that you wrote. If you quoted my entire post, instead of that snippet, you'll notice that I wrote that my example works for a 45 year old man with no kids, and no desire to leave money to anyone, like a wife for example.

You're absolutely right that it's tough to walk away from a $300,000/year job for $62,000/year annuity and only a $1,000,000 nest egg, but there are some single men in their 40's who wouldn't mind doing this. However, I'm not one of them. The point of my originally example was to point out that you don't need that much to retire at 45, so long as you don't have kids or a wife, or if you have a frugal wife.


Best,

John


P.S. I bumped this http://socialize.morningstar.com/NewSoc ... 10#1396259 thread up on the M* board in hopes that you'd notice it.
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nick22
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Frugal wife

Post by nick22 »

That would partly explain why you haven't yet tied the know, John, because you are waiting to find the world's first frugal wife (insert laughs).

And Petro, I think Shelley Long was vindicated with by her stellar film career in leaving Cheers. The Brady Bunch movies and the Money Pit would not have been the same without her.
Nick22
Brad
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Post by Brad »

Depending on family circumstances, retiring in your 40's can be a bold move. Especially with kids, and the uncertainty of future expenses, this is asking alot of one's portfolio. While I have seen the 4% advocated this is often assuming 30 years retirement. When 50 years is considered (certainly possible for a couple in their 40's even without major medical advances between now and 2060), I have seen a number of people espouse a low 3% withdrawal rate.

Let's say you currently have a portfolio to sustain 4% today. Even at a 60/40 equity/bond split, this has averaged 9.5% since 1960. Not touching one's portfolio and continuing to work (even without any additional savings), the portfolio would double on average in under 8 years. To go from 3% to 2% would take about 5 years.

If you are comfortable with 4%, great. I would be at 65. But if you are thinking about retiring 20 years earlier, waiting another half dozen years or so could make it that much safer.

1926 is often seen as the starting point of the modern market, so that is only 80 years of history. The next 50 can be very different. The US was on the upswing in the 20th century. I am not sure this is the case in this century. If equities only average 7 or 8%, then adding in inflation and taxes, a 4% withdrawal rate seems potentially tight to me.
livesoft
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Re: It's easy!

Post by livesoft »

OUJohnNasr wrote: ....The point of my originally example was to point out that you don't need that much to retire at 45, so long as you don't have kids or a wife, or if you have a frugal wife.
Or a wife that works! :D
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alvinsch
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Post by alvinsch »

SteveB3005 wrote:So Alvin I gotta ask, with all you got going your way I just have to wonder looking at your avatar. Why the long face?
Not more BAD horse humor: ;)

One day, while I was petting a Shetland Pony at the zoo, a friend of mine asked, "How are you today?." I responded, "I'm feelin a little hoarse."
All I need to know in life I learned from my horse:

- When in doubt, run far, far away.
- You can never have too many treats.
- Passing gas in public is nothing to be ashamed of.
- New shoes are an absolute necessity every 6 weeks.
- Ignore cues. They're just a prompt to do more work.
- Everyone loves a good, wet, slobbery kiss.
- Never run when you can jog. Never jog when you can walk. And never walk when you can stand still.
- Heaven is eating at least 10 hours a day... and then sleeping the rest.
- Eat plenty of roughage.
- Great legs and a nice rear will get you anywhere. Big, brown eyes help too.
- When you want your way, stomp hard on the nearest foot.
- In times of crisis, take a poop.
- Act dumb when faced with a task you don't want to do.
- Follow the herd. That way, you can't be singled out to take the blame.
- A swift kick in the butt will get anyone's attention.
- Love those who love you back, especially if they have something good to eat.
A Letter from Your Horse

(original version)

When you are tense, let me teach you to relax.

When you are short-tempered, let me teach you to be patient.

When you are short-sighted, let me teach you to see.

When you are quick to react, let me teach you to be patient.

When you are angry, let me teach you to be serene.

When you feel superior, let me teach you to be respectful.

When you are self-absorbed, let me teach you to think of greater things.

When you are arrogant, let me teach you humility.

When you are lonely, let me be your companion.

When you are tired, let me carry the load.

When you need to learn, let me teach you.

After all, I am your horse.


And now, the REAL DEAL....................

When you are tense, let me teach you that there are lions in them thar woods and we need to leave NOW!

When you are short-tempered, let me teach you to slog around the pasture for an hour before you can catch me.

When you are short-sighted, let me teach you to figure out where, exactly, in the 40 acres I am hiding.

When you are quick to react, let me teach you that herbivores kick much faster and harder than omnivores.

When you are angry, let me teach you how well I can stand on my hind feet because I don't feel like cantering on my right lead today.

When you are worried, let me entertain you with my mystery lameness.

When you feel superior, let me teach you that, mostly, you are the maid service.

When you are self-absorbed, let me teach you to PAY ATTENTION. Remember how I told you about those lions in them thar woods?

When you are arrogant, let me teach you what 1200 lbs of "YAHOO LETS GO!" can do when suitably inspired.

When you are lonely, let me be your companion. Let's do lunch. Also, breakfast, snack and dinner.

When you are tired, don't forget the 600 lbs of grain that needs to be unloaded.

When you are feeling financially secure, let me teach you the meaning of "Veterinary Services".

When you want to learn, hang around, bud. I'll learn ya.
And don't get me started on "stable value funds".

- Al
Nitsuj
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Re: Annuity

Post by Nitsuj »

nick22 wrote:The problem with the immediate fixed annuity is the 6% yearly payout at age 45 probably isn't inflation adjusted. So assuming a 3% inflation rate, at age 69 your purchasing power is only 50% of what it as at age 45, and close to the end of life your purcahsing power is only 25% what it initially was. And this is assuming a steady and reasonable rate of inflation, but if periods of higher inflation appeared the annuity could be a disaster. I tend to prefer the CPI inflation adjusted option, but then we have to trust the government and the calculation of the CPI to begin with.
Of course, depending on where you choose to retire to, 62K a year with low taxes can get you a great life. Most of my friends would love 62K a year gross and are earning 30-40K.
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MossySF
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Post by MossySF »

It might be possible for me to retire in my mid-40s but not sure if that would set a good example for my offspring. I'm doubt trying to explain "daddy/mommy doesn't work because they invested very dilligently and lived below their means earlier in life" is going to work with kids/teenagers. I might need to open a simple business to pretend to go to work everyday.
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springwater
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Post by springwater »

I'm doubt trying to explain "daddy/mommy doesn't work because they invested very dilligently and lived below their means earlier in life" is going to work with kids/teenagers.
I think that's a wonderful life lesson for children. And if I have children one day, I will be teaching them this from a very early age.

By saving, living below your means, and investing wisely all throughout your life, you in essence control your own destiny and have the financial freedom to do whatever it is you want.

If that is to stay in your career till 50 or 60 or 70, or to change careers and take a huge pay cut to volunteer or work at a non-profit, or to retire travel the world and explore new cultures, or live quietly in the mountains somewhere, you would have that choice.

The key thing is by saving and investing responsibility, if you choose to work it's because you want to, not because you have to.
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MossySF
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Post by MossySF »

springwater wrote:
I'm doubt trying to explain "daddy/mommy doesn't work because they invested very dilligently and lived below their means earlier in life" is going to work with kids/teenagers.
I think that's a wonderful life lesson for children. And if I have children one day, I will be teaching them this from a very early age.
It's a great lesson but whether kids will actually believe it is a totally different story. Especially if all they see are the end results and not the 20 years preceding that made it happen.
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Post by Chip »

We retired in our late 40s in 2001. There was mix of skill and luck in getting there. The skill was mostly in living well below our means (partly via having no kids) and choosing lucrative places to work. Though I suppose the work choices could be counted as luck. The rest of the luck was having 90% equities from 1981-2000. And my wife getting an early retirement package that included health care (we pay 1/3 of the group premiums), keeping her stock options, and a year's pay.

As the saying goes, sometimes it's better to be lucky than good. I'd venture to say that most who retired early in the late 90s probably need to give at least some credit to the biggest bull market in US history.

We stay busy with travel, biking, hiking, cooking, woodworking and fix-up projects. My wife volunteers about 20 hours a week. I hike the golf course about 10 hours a week.
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orthros
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Post by orthros »

It would seem that the biggest factor (other than frugality) in retiring in the 40s is having no children. It has come up again and again in these conversations.

Frugality is all well and good, and I could (quite literally) retire in my mid 30s if I didn't have four children, but as someone else put it: where's the fun in that? :)
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Post by Nitsuj »

orthros wrote:It would seem that the biggest factor (other than frugality) in retiring in the 40s is having no children. It has come up again and again in these conversations.
When raising a kid, without factoring in college, costs more than a house in most areas. It makes sense.
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Post by White Coat Investor »

I ran the numbers and don't think I can manage to pull off retirement in my 40s. 50 at the earliest. The main reason for me isn't the kids, but rather that I didn't start making any significant money until I was 31.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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kramer
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Post by kramer »

I recently semi-retired at age 41 (single, no kids, no house). Although I had planned to retire in my 40s for some time, the fact that I really disliked my job helped drive my decision (I worked as an engineer in high tech). I had to make a change, whether it was semi-retirement or another job because I simply could not produce in my former job anymore. I only started a regular job at age 29, and never made big money on stock options, so it is possible. In fact, my after tax stock option money over the years was less than my school loans (I paid my own way through both undergrad and grad school).

I agree with many who state that 4% SWR is probably too high for a very early retiree. I actually plan to only withdraw an average of 2% over my first five years and work 1-2 years overseas teaching English (to help get me down to 2%). After that, it will probably be a 3% SWR. My Social Security amount is already decent after paying in the max for over a decade (and there is a surprisingly small marginal benefit for paying in more).

I did not start out choosing to be single, it just really happened that way. But it is true that I never had a strong desire for children. And I am sure that made a big difference financially.

Fortunately, I am pretty healthy, and was able to get a high deductible health plan for less than $100/month. I just started an HSA, and just the tax savings will pay my premiums for 9 months this year. I am considering all of my HSA contributions to be a current health care cost and I do not plan to draw on them until my late 50s at the earliest, so this will help me balance out my health care costs over retirement. I figure that my total health care costs will increase around 7% per year more than CPI inflation (due to both aging and excess health care inflation).

As for activities, I plan to start semi-retirement with a lot of long term traveling. And then ease into the teaching gig after that. My US overhead while traveling is only about $100/month for health insurance and car storage. I will be spending significantly less traveling the world than it costs me to do do nothing in my current high cost area. I also plan to move nearer to my extended family as I was only in Silicon Valley for my job and have no family here.

I am keeping all of my options open. If I get bored for some reason, I could return to my former career at lower pay. But if I did return, it would be located close to extended family, and only something I was really interested in doing, since the money would not be so important (or even a different career altogether).

Kramer
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frose2
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Medicare entry is important

Post by frose2 »

A key issue in retiring early is whether Medicare will be there when you expect it. There is less visibility at that early age since your planned time of entry into Medicare is so far away (and lies beyond the current point of projected Medicare bankruptcy, which I think is 2018).

You also have to assume a rising level of expenditure due to individual health insurance if you have to buy that. I am not sure that 7% + CPI, as suggested by kramer, is sufficiently conservative.

Any early retirement based on individual health insurance is risky because the insurer could withdraw from the market and force you to requalify medically at a time when you are no longer medically eligible for individual insurance.
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