Have any BHs reduced spending to retire sooner?

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investingdad
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Have any BHs reduced spending to retire sooner?

Post by investingdad »

I've been modeling a retirement age of between 53 and 55 for nearly fifteen years now. What I mean is, my models and portfolio have consistently pointed to this age range since I was 32, am 47 now.

Interestingly, it has not really changed as our expenses increased...because our salary has increased proportionately and our saving has as well.

So that's all good news.

But, my modeling has also shown that if we can cut yearly spending by 25%, we could retire next year at 48. FIRECalc agrees.

I don't think we're willing to do this, but it's VERY empowering to know we could.

My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
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David Jay
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Re: Have any BHs reduced spending to retire sooner?

Post by David Jay »

You have hit on something important, there is only one essential factor for calculating retirement finances: Living Expenses.

If one knows their living expenses, they can calculate your retirement needs. If one doesn’t know their living expenses, they can’t determine if they need a 500 thousand dollar retirement portfolio or a 10 million dollar retirement portfolio.

So “yes”, If you are willing to reduce expenses (move to a low COL area, live more economically, etc.) you can certainly retire earlier.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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David Jay
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Re: Have any BHs reduced spending to retire sooner?

Post by David Jay »

David Jay wrote: Tue Sep 01, 2020 9:30 am You have hit on something important, there is only one essential factor for calculating retirement finances: Living Expenses.

If one knows their living expenses, they can calculate your retirement needs. If one doesn’t know their living expenses, they can’t determine if they need a 500 thousand dollar retirement portfolio or a 10 million dollar retirement portfolio.

So “yes”, If you are willing to reduce expenses (move to a low COL area, live more economically, etc.) you can certainly retire earlier.
If one knows their living expenses, the next part of the calculation is retirement age. One can quibble about the specifics, but the general outline looks something like this:

Retiring in one’s late 60s, 4% SWR (all percentages are inflation adjusted)
Retiring in one’s early 60s, 3.5% SWR
Retiring in one’s 50s, 3% SWR
Retiring in one’s 40s, 2.5% SWR
Retiring earlier, 2% SWR
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
H-Town
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Re: Have any BHs reduced spending to retire sooner?

Post by H-Town »

investingdad wrote: Tue Sep 01, 2020 9:21 am I've been modeling a retirement age of between 53 and 55 for nearly fifteen years now. What I mean is, my models and portfolio have consistently pointed to this age range since I was 32, am 47 now.

Interestingly, it has not really changed as our expenses increased...because our salary has increased proportionately and our saving has as well.

So that's all good news.

But, my modeling has also shown that if we can cut yearly spending by 25%, we could retire next year at 48. FIRECalc agrees.

I don't think we're willing to do this, but it's VERY empowering to know we could.

My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
Did you account for healthcare cost and healthcare insurance?
bloom2708
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Re: Have any BHs reduced spending to retire sooner?

Post by bloom2708 »

Quite a few blog about it:

www.rootofgood.com
www.1500days.com

Just a couple of examples.

If you and the entire family are willing to chop at expenses, that opens doors. Some are willing to do that. Others are not and thus work longer.

It is an eye opener when you realize buying more "stuff" doesn't make you any happier. Less is more beyond basics and essentials.
Last edited by bloom2708 on Tue Sep 01, 2020 11:12 am, edited 1 time in total.
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sailaway
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Re: Have any BHs reduced spending to retire sooner?

Post by sailaway »

We fully expect to cut spending significantly, as we will be returning to a lifestyle that we enjoyed, but was not compatible with changing work conditions.

However, we don't know how long we will want that lifestyle, so we continue to pad the kitty until we reach enough for our current lifestyle.

I think income and savings rate have a huge psychological impact. We fully expect to make up the difference in about two years, and it will appease our financially conservative anxieties. Big win for a minor trade off. Perhaps you can find a compromise wherein you cut some things that aren't going to affect your happiness much and split the difference between the ages.
David Jay wrote: Tue Sep 01, 2020 9:43 am
David Jay wrote: Tue Sep 01, 2020 9:30 am You have hit on something important, there is only one essential factor for calculating retirement finances: Living Expenses.

If one knows their living expenses, they can calculate your retirement needs. If one doesn’t know their living expenses, they can’t determine if they need a 500 thousand dollar retirement portfolio or a 10 million dollar retirement portfolio.

So “yes”, If you are willing to reduce expenses (move to a low COL area, live more economically, etc.) you can certainly retire earlier.
If one knows their living expenses, the next part of the calculation is retirement age. One can quibble about the specifics, but the general outline looks something like this:

Retiring in one’s late 60s, 4% SWR (all percentages are inflation adjusted)
Retiring in one’s early 60s, 3.5% SWR
Retiring in one’s 50s, 3% SWR
Retiring in one’s 40s, 2.5% SWR
Retiring earlier, 2% SWR
Interesting...FIREcalc tells me I can pull ~3.5% for 60 years with a higher success rate than 4% over 30 years. Also, the younger I retire, the more opportunities I have to find some kind of work when the economy is thriving, if my projections are falling short or my priorities change.
3feetpete
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Re: Have any BHs reduced spending to retire sooner?

Post by 3feetpete »

We downsized our home and eliminated a mortgage and high taxes and utilities. That's the easiest way to cut 25% of living expenses without really cutting your standard of living.
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Re: Have any BHs reduced spending to retire sooner?

Post by Meg77 »

Which retirement spending pattern do you use in FIRECalc? The traditional withdrawal rate research is done assuming a steadily increasing spend pattern throughout life, along with inflation. More recent research indicates that after an initial increase as bucket list items are checked, most retirees actually spend LESS in real terms throughout retirement (often the result of retiring a mortgage and other debts, not helping kids any more, not being able/willing to eat or travel or shop as much in later years, et al). Yes, medical spending goes up especially at the very end - but not enough to offset the often dramatic reduction in discretionary spending that people who live very long lives usually have.

I believe FIRECalc gives you the option to incorporate that version of spending now; it may be interesting to compare the differences compared to the usual assumptions. Now if you are retiring in your early 50s, it may not apply as much since presumably you'll be healthy and active for a larger percentage of your retirement. But it's still interesting to keep in mind that if you live into your 80s, 90s, or to 100 (the "worst" case scenario from a SWR standpoint), your spending will eventually plummet as you lose interest in or ability to do a lot of things you currently enjoy.
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runner3081
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Re: Have any BHs reduced spending to retire sooner?

Post by runner3081 »

Yes, we did.

In our early 30's starting spending significantly less money. Moved from WA State to AZ and have further cut back on spending and increased saving in order to retire sooner. Bought a house about 50% of what we qualified for, buy older cars, etc.

Will let you know if this works out in 10-12 years ;0
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Re: Have any BHs reduced spending to retire sooner?

Post by Chuck107 »

.....
Last edited by Chuck107 on Mon Oct 05, 2020 8:23 am, edited 1 time in total.
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Re: Have any BHs reduced spending to retire sooner?

Post by iamlucky13 »

I'm in my mid-30s and working on this. I don't feel like I have a lot of confidence at this time what my living expenses will be 20+ years from now, but habitually controlling my expenses is part of my plan.

We'll see what age I actually decide to retire, but my plan is to have flexibility.

The market will obviously have a big effect on it. I tried to use conservative assumptions even before there was much concrete reason to be pessimistic about forward returns. I haven't revisited my numbers in a year or so, but if I remember, the range of scenarios I'm considering could see me able to retire as early as early 50's, or I could need to work into my late 60's, assuming the same expenses in retirement.
flyingaway
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Re: Have any BHs reduced spending to retire sooner?

Post by flyingaway »

I'm doing the opposite, increasing my spending to retire later.
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MrBobcat
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Re: Have any BHs reduced spending to retire sooner?

Post by MrBobcat »

Chuck107 wrote: Tue Sep 01, 2020 10:34 am
investingdad wrote: Tue Sep 01, 2020 9:21 am I've been modeling a retirement age of between 53 and 55 for nearly fifteen years now. What I mean is, my models and portfolio have consistently pointed to this age range since I was 32, am 47 now.

Interestingly, it has not really changed as our expenses increased...because our salary has increased proportionately and our saving has as well.

So that's all good news.

But, my modeling has also shown that if we can cut yearly spending by 25%, we could retire next year at 48. FIRECalc agrees.

I don't think we're willing to do this, but it's VERY empowering to know we could.

My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
Retired 16 yrs ago, and No we did not reduce our expenses to retire sooner/early.

I think to do so is a fools game, in your example of doing this to retire at age 48, means you are willing to spend less in order to retire early but you will spend less for how long? 40 years potentially?

In your own statement " I don't think we're willing to do this, but it's VERY empowering to know we could."
Shows you don't even agree, and I see nothing "empowering" about it.

Nothing wrong with the exercise of ... What if's
But you need to do your calculations on reality, not what if's.
I disagree, feeling secure knowing you could get by, albeit at a lower standard of living than you might want to, is empowering. We've recently crossed that threshold and it's a relief. Will probably work another 8 years but I guarantee we'll be evaluating each year as they come balancing standard of living with pulling the plug and enjoying more free time.
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investingdad
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Re: Have any BHs reduced spending to retire sooner?

Post by investingdad »

MrBobcat wrote: Tue Sep 01, 2020 10:49 am
Chuck107 wrote: Tue Sep 01, 2020 10:34 am
investingdad wrote: Tue Sep 01, 2020 9:21 am I've been modeling a retirement age of between 53 and 55 for nearly fifteen years now. What I mean is, my models and portfolio have consistently pointed to this age range since I was 32, am 47 now.

Interestingly, it has not really changed as our expenses increased...because our salary has increased proportionately and our saving has as well.

So that's all good news.

But, my modeling has also shown that if we can cut yearly spending by 25%, we could retire next year at 48. FIRECalc agrees.

I don't think we're willing to do this, but it's VERY empowering to know we could.

My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
Retired 16 yrs ago, and No we did not reduce our expenses to retire sooner/early.

I think to do so is a fools game, in your example of doing this to retire at age 48, means you are willing to spend less in order to retire early but you will spend less for how long? 40 years potentially?

In your own statement " I don't think we're willing to do this, but it's VERY empowering to know we could."
Shows you don't even agree, and I see nothing "empowering" about it.

Nothing wrong with the exercise of ... What if's
But you need to do your calculations on reality, not what if's.
I disagree, feeling secure knowing you could get by, albeit at a lower standard of living than you might want to, is empowering. We've recently crossed that threshold and it's a relief. Will probably work another 8 years but I guarantee we'll be evaluating each year as they come balancing standard of living with pulling the plug and enjoying more free time.
Yes, this is my thinking. Living on 25% less would NOT be a hardship. At all. Which shifts a great deal of control over to us and away from those buying our time.

And as somebody that has lived through the stress of corporate layoff uncertainty my entire career and never had the luxury of a pension, that's the type of control I appreciate having.
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Re: Have any BHs reduced spending to retire sooner?

Post by mmmodem »

Not if I can help it.

We reached thin FIRE a little over a year ago. But that is no way to live. I didn't scrimp and save my whole life to scrimp in retirement. The way I look at it, every $ that we continue to work for is another $ we can use to enjoy excess.

Yes, it was extremely empowering to reach this milestone. I'm much less pressured and stressed at work. At any moment, I can be fired, laid off, or otherwise unable to work and I will be able to live without worry about money. So I just work for joy. (I actually like doing my job.) If it becomes too demanding, I just say no and I do not fear the repercussions or possible stunting of my career path.
Chuck107
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Re: Have any BHs reduced spending to retire sooner?

Post by Chuck107 »

.....
Last edited by Chuck107 on Mon Oct 05, 2020 8:23 am, edited 1 time in total.
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rich126
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Re: Have any BHs reduced spending to retire sooner?

Post by rich126 »

Of course it depends on what you are cutting but I think I would put that into the risky category. Once you are retired and if the market does poorly then I could see cutting back on stuff, but if you cut back prior to retirement and then need to cut further, you may start running out of good things to cut.

Moving locations is a tough one. When you retire you usually want to live somewhere for specific reasons - weather, family, activities, etc. And to change that for COL may make retirement less desirable.

And unless you have a lot of fat in it, 25% cut in spending is a lot to most people. I certainly expect my living costs to go down in retirement, maybe not every year but short of a bad medical situation, I think overall things will decrease.
Escapevelocity
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Re: Have any BHs reduced spending to retire sooner?

Post by Escapevelocity »

In general, I believe that most on this board are too biased towards financial security and too little emphasis given toward the realization that our number of years on this earth are finite. If you love your work so much as to never retire, that's wonderful, but if you yearn to enjoy a long and relaxing/fulfilling retirement, then it's OK to take on some reasonable level of risk. I would rather take on a 5% risk of running low on funds at age 85 than work another 10 years and be 50% likely to die with a huge pile of unused cash. After all, most of us are smart enough to cut back our spending level as needed if it looks like the 5% odds scenario is playing out.
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Re: Have any BHs reduced spending to retire sooner?

Post by McGilicutty »

I actually tried this. I quit a fairly high-paying, high-stress job on the coast, moved to a LCOL area, and tried cutting expenses to the bone. This was in my early 40's.

It didn't work out so well. There was just too much stuff I wanted to do that I couldn't at that low expense level.

So, I got a job that is low-stress and fairly easy but only pays about 1/5th to 1/6th what I made before. It covers my expenses and a little bit more but that is about it.

I now plan to retire in my mid-50s with about twice what my portfolio was (if everything works out) when I first tried to retire in my early 40's.

I don't recommend retiring with the idea that you will just reduce spending and everything will be fine. If you are forced into it, fine, but if you can tolerate your job keep working until you hit a comfortable "number". Retirement can last a long time and it's no fun scrimping all the time.
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Tourne
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Re: Have any BHs reduced spending to retire sooner?

Post by Tourne »

investingdad wrote: Tue Sep 01, 2020 9:21 am I've been modeling a retirement age of between 53 and 55 for nearly fifteen years now. What I mean is, my models and portfolio have consistently pointed to this age range since I was 32, am 47 now.

Interestingly, it has not really changed as our expenses increased...because our salary has increased proportionately and our saving has as well.

So that's all good news.

But, my modeling has also shown that if we can cut yearly spending by 25%, we could retire next year at 48. FIRECalc agrees.

I don't think we're willing to do this, but it's VERY empowering to know we could.

My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
DW and I have two worksheets on our "Projected Retirement Expenses" spreadsheet. The first is titled "Unconstrained expenses" with everything we would ever want to do as retirees. The second is titled "Constrained expenses" and lists the absolute must haves to keep us happy and healthy in retirement. The difference in total amount needed between the two worksheets is on the order of $600k. Whenever I have a particularly stressful week at work, I look at both worksheets and have a good hard think about whether I really need that extra $600K!
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stoptothink
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Re: Have any BHs reduced spending to retire sooner?

Post by stoptothink »

No, but we haven't increased our spending at all even though our HHI has tripled in the last 5yrs. This has put us in a position where we likely could retire in our mid-40's, but that isn't the plan (as of yet).
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Re: Have any BHs reduced spending to retire sooner?

Post by MJS »

Two things to watch for when reducing a family budget:
* Inattentively focusing on the non-budgeting spouse's quality of life: yard care or house keeping; beer or manicures... both partners need to have input.
* Eliminating the safety net: new car or new roof or unreimbursed healthcare or increased home insurance... the unexpected can be a nasty beast.
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investingdad
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Re: Have any BHs reduced spending to retire sooner?

Post by investingdad »

Tourne wrote: Tue Sep 01, 2020 11:23 am
investingdad wrote: Tue Sep 01, 2020 9:21 am I've been modeling a retirement age of between 53 and 55 for nearly fifteen years now. What I mean is, my models and portfolio have consistently pointed to this age range since I was 32, am 47 now.

Interestingly, it has not really changed as our expenses increased...because our salary has increased proportionately and our saving has as well.

So that's all good news.

But, my modeling has also shown that if we can cut yearly spending by 25%, we could retire next year at 48. FIRECalc agrees.

I don't think we're willing to do this, but it's VERY empowering to know we could.

My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
DW and I have two worksheets on our "Projected Retirement Expenses" spreadsheet. The first is titled "Unconstrained expenses" with everything we would ever want to do as retirees. The second is titled "Constrained expenses" and lists the absolute must haves to keep us happy and healthy in retirement. The difference in total amount needed between the two worksheets is on the order of $600k. Whenever I have a particularly stressful week at work, I look at both worksheets and have a good hard think about whether I really need that extra $600K!
Ha!

That's something.

I've got something very similar, call it a band of uncertainty. Bounded on the low side is the number below which I'm not comfortable based on projected expenses. On the high side is the number above which I can reasonably expect to be in very good shape based on spending.

Anything between these numbers is a gray area.

The amount that separates them in my calcs? 500K.
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Re: Have any BHs reduced spending to retire sooner?

Post by davemanjam »

The way I see it there are those that seek bare bones expenses which is borderline living in poverty.
What's the point in that.
If you are already money conscience you might be able to cut another 5-10% without feeling it.
But 25% is fairly aggressive, and at some point you are going to be giving up something that improves your livelihood.
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Re: Have any BHs reduced spending to retire sooner?

Post by smitcat »

investingdad wrote: Tue Sep 01, 2020 9:21 am I've been modeling a retirement age of between 53 and 55 for nearly fifteen years now. What I mean is, my models and portfolio have consistently pointed to this age range since I was 32, am 47 now.

Interestingly, it has not really changed as our expenses increased...because our salary has increased proportionately and our saving has as well.

So that's all good news.

But, my modeling has also shown that if we can cut yearly spending by 25%, we could retire next year at 48. FIRECalc agrees.

I don't think we're willing to do this, but it's VERY empowering to know we could.

My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
"My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?"
No - our goals included living a balanced life both before and after retiring. Balance was and is the key with our plans.
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Re: Have any BHs reduced spending to retire sooner?

Post by dknightd »

investingdad wrote: Tue Sep 01, 2020 9:21 am
My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
I suspect there are many people who have made that decision. I suspect there are many people who are happy with that decision. If you are tempted, give it try. Try living on your reduced income. I never bothered, I was pretty sure I did not want to give up income from working until I could replace it with income from savings. YMMV
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds (or none) from the market, invest the funds.
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Re: Have any BHs reduced spending to retire sooner?

Post by grettman »

bloom2708 wrote: Tue Sep 01, 2020 9:47 am Quite a few blog about it:

www.rootofgood.com
www.1500days.com

Just a couple of examples.

If you and the entire family are willing to chop at expenses, that opens doors. Some are willing to do that. Others are not and thus work longer.

It is an eye opener when you realize buying more "stuff" doesn't make you any happier. Less is more beyond basics and essentials.
But they make a good living off of blogging, affiliate ads, and business ventures. 1500days is far from retired.... It would be interesting to hear of someone who really cut expense significant so they can retire early. Unfortunately, all of the stories I am aware of come from people who are now making a living telling their story.
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Re: Have any BHs reduced spending to retire sooner?

Post by bloom2708 »

grettman wrote: Tue Sep 01, 2020 11:55 am
bloom2708 wrote: Tue Sep 01, 2020 9:47 am Quite a few blog about it:

www.rootofgood.com
www.1500days.com

Just a couple of examples.

If you and the entire family are willing to chop at expenses, that opens doors. Some are willing to do that. Others are not and thus work longer.

It is an eye opener when you realize buying more "stuff" doesn't make you any happier. Less is more beyond basics and essentials.
But they make a good living off of blogging, affiliate ads, and business ventures. 1500days is far from retired.... It would be interesting to hear of someone who really cut expense significant so they can retire early. Unfortunately, all of the stories I am aware of come from people who are now making a living telling their story.
Justin continues to "work" but their spending is under $35k/year. I don't think many here with 3 kids would try to work on a $35k or under budget.

Every retired person fiddles with things..some fiddles might earn you some money. Some might cost you some money.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
Chuck107
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Re: Have any BHs reduced spending to retire sooner?

Post by Chuck107 »

.....
Last edited by Chuck107 on Mon Oct 05, 2020 8:23 am, edited 1 time in total.
Alas, I find moderation of this forum too restrictive for my tastes, farewell.
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MrBobcat
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Re: Have any BHs reduced spending to retire sooner?

Post by MrBobcat »

Chuck107 wrote: Tue Sep 01, 2020 11:09 am
MrBobcat wrote: Tue Sep 01, 2020 10:49 am
Chuck107 wrote: Tue Sep 01, 2020 10:34 am
investingdad wrote: Tue Sep 01, 2020 9:21 am I've been modeling a retirement age of between 53 and 55 for nearly fifteen years now. What I mean is, my models and portfolio have consistently pointed to this age range since I was 32, am 47 now.

Interestingly, it has not really changed as our expenses increased...because our salary has increased proportionately and our saving has as well.

So that's all good news.

But, my modeling has also shown that if we can cut yearly spending by 25%, we could retire next year at 48. FIRECalc agrees.

I don't think we're willing to do this, but it's VERY empowering to know we could.

My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
Retired 16 yrs ago, and No we did not reduce our expenses to retire sooner/early.

I think to do so is a fools game, in your example of doing this to retire at age 48, means you are willing to spend less in order to retire early but you will spend less for how long? 40 years potentially?

In your own statement " I don't think we're willing to do this, but it's VERY empowering to know we could."
Shows you don't even agree, and I see nothing "empowering" about it.

Nothing wrong with the exercise of ... What if's
But you need to do your calculations on reality, not what if's.
I disagree, feeling secure knowing you could get by, albeit at a lower standard of living than you might want to, is empowering. We've recently crossed that threshold and it's a relief. Will probably work another 8 years but I guarantee we'll be evaluating each year as they come balancing standard of living with pulling the plug and enjoying more free time.
Ok, nothing wrong with disagreeing.
You yourself admit to probably working another 8 yrs, why?

I'm not saying it can't be done.
However if you cut expenses to the bone and retire early (patting oneself on the back)
What happens when something comes up in life as a major unexpected expense? ( Starting at age 48ish)
Where does the money come from for that?
Also given Black Swan events in the markets.
It's better to have some fat on the bone for the unexpected lean times, which will come with aprox 40 yrs to go.

Empowering? I don't agree.
It's a step in the right direction for sure, but just a step up the ladder.
Obviously I don't agree with having "just enough" to retire especially retiring that early.
But that's me, others will disagree of course.
I want to work another 8 years (I'll be 62) because I want to be able to do what I want in retirement. What I have now that I didn't before was a choice. Before I had to work, now it's a trade off between standard of living vs not having to work any more. I've obviously opted to keep working because I'd rather have a higher standard of living.
Kelrex
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Re: Have any BHs reduced spending to retire sooner?

Post by Kelrex »

Yep.

We cut our spending dramatically while actually increasing our standard of living. Not for retiring early mind you, neither SO nor I have any real plan to ever retire.

However, having very low living expenses makes risk extremely manageable. It's easy to make enough to live on, it's easy not to worry about the markets, it's easy to generate a lot of capital when needed, or if we want to spend on something substantial. It's just so much easier having a low fixed cost life.
zie
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Re: Have any BHs reduced spending to retire sooner?

Post by zie »

sailaway wrote: Tue Sep 01, 2020 9:50 am
David Jay wrote: Tue Sep 01, 2020 9:43 am If one knows their living expenses, the next part of the calculation is retirement age. One can quibble about the specifics, but the general outline looks something like this:

Retiring in one’s late 60s, 4% SWR (all percentages are inflation adjusted)
Retiring in one’s early 60s, 3.5% SWR
Retiring in one’s 50s, 3% SWR
Retiring in one’s 40s, 2.5% SWR
Retiring earlier, 2% SWR
Interesting...FIREcalc tells me I can pull ~3.5% for 60 years with a higher success rate than 4% over 30 years. Also, the younger I retire, the more opportunities I have to find some kind of work when the economy is thriving, if my projections are falling short or my priorities change.
There is a whole thread about how 3% might be a safe perpetual withdrawal rate.

Seems to me the safest WR would be, turn off dividend reinvestments and live off of the dividends, whatever they happen to be that year. As I understand it, that's been around 2% generally for a TSM fund like VTI/VTSAX.
EddyB
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Re: Have any BHs reduced spending to retire sooner?

Post by EddyB »

sailaway wrote: Tue Sep 01, 2020 9:50 am We fully expect to cut spending significantly, as we will be returning to a lifestyle that we enjoyed, but was not compatible with changing work conditions.

However, we don't know how long we will want that lifestyle, so we continue to pad the kitty until we reach enough for our current lifestyle.

I think income and savings rate have a huge psychological impact. We fully expect to make up the difference in about two years, and it will appease our financially conservative anxieties. Big win for a minor trade off. Perhaps you can find a compromise wherein you cut some things that aren't going to affect your happiness much and split the difference between the ages.
David Jay wrote: Tue Sep 01, 2020 9:43 am
David Jay wrote: Tue Sep 01, 2020 9:30 am You have hit on something important, there is only one essential factor for calculating retirement finances: Living Expenses.

If one knows their living expenses, they can calculate your retirement needs. If one doesn’t know their living expenses, they can’t determine if they need a 500 thousand dollar retirement portfolio or a 10 million dollar retirement portfolio.

So “yes”, If you are willing to reduce expenses (move to a low COL area, live more economically, etc.) you can certainly retire earlier.
If one knows their living expenses, the next part of the calculation is retirement age. One can quibble about the specifics, but the general outline looks something like this:

Retiring in one’s late 60s, 4% SWR (all percentages are inflation adjusted)
Retiring in one’s early 60s, 3.5% SWR
Retiring in one’s 50s, 3% SWR
Retiring in one’s 40s, 2.5% SWR
Retiring earlier, 2% SWR
Interesting...FIREcalc tells me I can pull ~3.5% for 60 years with a higher success rate than 4% over 30 years. Also, the younger I retire, the more opportunities I have to find some kind of work when the economy is thriving, if my projections are falling short or my priorities change.
Other than the first two in David Jay's post, they're probably just random numbers.
k b
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Joined: Tue Oct 15, 2013 8:43 pm

Re: Have any BHs reduced spending to retire sooner?

Post by k b »

Couple of points -
  • Easier to think of or target FI rather than FIRE. It’s good to be FI even if you plan to work till you drop dead.
    I often see mentions of healthcare costs. Undoubtedly an important point. I just want to add that “health planning” is as important as financial planning. Never too early to start working on your health and learn more which diet / exercise - does or does not work for you.
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TheTimeLord
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Re: Have any BHs reduced spending to retire sooner?

Post by TheTimeLord »

investingdad wrote: Tue Sep 01, 2020 9:21 am I've been modeling a retirement age of between 53 and 55 for nearly fifteen years now. What I mean is, my models and portfolio have consistently pointed to this age range since I was 32, am 47 now.

Interestingly, it has not really changed as our expenses increased...because our salary has increased proportionately and our saving has as well.

So that's all good news.

But, my modeling has also shown that if we can cut yearly spending by 25%, we could retire next year at 48. FIRECalc agrees.

I don't think we're willing to do this, but it's VERY empowering to know we could.

My question is simple, has anyone made the decision to bail years ahead of schedule by cutting spending and then sticking with it?
I think you should live your live starting from today on and not be on hold for some magical day in the future when you retire. Don't cut spending but prioritize it. Spend on what is important to you. If that is a trip to Africa or a house with another bedroom it might just be worth another 3-6 months working, it might not. Just my two cents, it is your life prioritize it that way.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
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