How much money do you want to retire?

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wrongfunds
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Re: How much money do you want to retire?

Post by wrongfunds » Sun Sep 30, 2018 3:35 pm

I came across this one while surfing. I think this is reasonable argument for front loading the expenses early years given the actual chance of running out of money while still being alive. I would have thought that this particular article would have been already ripped to shreds in the past but my limited memory does not recall any discussion about it.

How To Spend More Now, Less Later
https://assetbuilder.com/knowledge-cent ... less-later

StoopieHippo
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Re: How much money do you want to retire?

Post by StoopieHippo » Sun Sep 30, 2018 5:21 pm

First post for me!

I'm age 32 (hubs is 40) and just starting to save for retirement (ummm...$180k in loans when I graduated grad school...and another $150k for my husband. We're less than a year out from being done now, but it's been a helluva trip to get to this point). Once the loans are done, we will be maxing out his 401k, my 403b, my 457b (government plan, yay!), IRAs (and converting to Roth if necessary), and hoping to save another $2.5k/month. Our combined income is about $240k/yr, mortgage is $2.3/mo (damn it, Seattle!), no car loans or any other loans, no plans for kids (ever).

Assuming we move to another country with lower cost of living (options we've floated include Kuala Lumpur, Bangkok, and Bogota), we would need $1.2mil as we're planning to retire early (like in 12ish years early). We would supplement our living (hoping for $48k pre-tax) by renting out our condo while living overseas and using a management company so we would be very hands off.

If we plan to stay in Seattle (only because the condo would be paid off), we would need about $2.4mil, retiring still early for me (age 60 instead of 65). Living in Seattle is expensive, y'all...

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HomerJ
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Re: How much money do you want to retire?

Post by HomerJ » Sun Sep 30, 2018 11:07 pm

investingdad wrote:
Sat Sep 29, 2018 8:37 am
Each million should safely generate 30k. Five million should generate 150k. Our yearly expenses are about 125k.

It's pretty simple, not much to get about that.
At 65, each million should safely generate 40k, and you'll get Social Security.

Figure out what you'll get from SS at 65, let's say $50k, so now you only need $75k from your investments, so $2 million.

If you want to retire at 55 instead of 65, get from 55 to 65, you'll need $125k x 10, so $1.25 million....

So $3.25 million should do it. And that's if all your money makes 0% real from 55-65...

You would be fine with $3 million retiring at 55, $2 million if you retire at 65.
The J stands for Jay

Bacchus01
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Re: How much money do you want to retire?

Post by Bacchus01 » Mon Oct 01, 2018 5:52 am

I love following this thread because there is so much to learn just reading replies, strategies, and perspectives.

Pensions and SS play a huge role for people. In my case, I asked for a pension calculation earlier this year at my current company. I hit 5 years today with them. I’m 45, so pension draw is a long ways away, but I was actually very surprised with the numbers. I will draw a $20K/year pension from a previous company and my wife will draw a $5k/year from a previous company as well. From my current company, my accrued benefit is already $30k/year and going up rapidly based on salary and years of service. I am doing some modeling for the future, but even if I retire quite early, it’s conceivable I’ll get $50K+/year from this pension. $75K/year from pensions and then $50k/yr from SS (if not cut) for both of us and we need WAY less in investments post ~65.

wrongfunds
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Re: How much money do you want to retire?

Post by wrongfunds » Mon Oct 01, 2018 6:42 am

Bacchus01 wrote:
Mon Oct 01, 2018 5:52 am
I love following this thread because there is so much to learn just reading replies, strategies, and perspectives.

Pensions and SS play a huge role for people. In my case, I asked for a pension calculation earlier this year at my current company. I hit 5 years today with them. I’m 45, so pension draw is a long ways away, but I was actually very surprised with the numbers. I will draw a $20K/year pension from a previous company and my wife will draw a $5k/year from a previous company as well. From my current company, my accrued benefit is already $30k/year and going up rapidly based on salary and years of service. I am doing some modeling for the future, but even if I retire quite early, it’s conceivable I’ll get $50K+/year from this pension. $75K/year from pensions and then $50k/yr from SS (if not cut) for both of us and we need WAY less in investments post ~65.
I am sure I can still scare you enough by talking about black swan events and forbidden future political climate so that your required assets before considering retirement will need to be minimum 8 figures. This snarky comment is based upon reading all of your past replies here :beer

Bacchus01
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Re: How much money do you want to retire?

Post by Bacchus01 » Mon Oct 01, 2018 7:03 am

wrongfunds wrote:
Mon Oct 01, 2018 6:42 am
Bacchus01 wrote:
Mon Oct 01, 2018 5:52 am
I love following this thread because there is so much to learn just reading replies, strategies, and perspectives.

Pensions and SS play a huge role for people. In my case, I asked for a pension calculation earlier this year at my current company. I hit 5 years today with them. I’m 45, so pension draw is a long ways away, but I was actually very surprised with the numbers. I will draw a $20K/year pension from a previous company and my wife will draw a $5k/year from a previous company as well. From my current company, my accrued benefit is already $30k/year and going up rapidly based on salary and years of service. I am doing some modeling for the future, but even if I retire quite early, it’s conceivable I’ll get $50K+/year from this pension. $75K/year from pensions and then $50k/yr from SS (if not cut) for both of us and we need WAY less in investments post ~65.
I am sure I can still scare you enough by talking about black swan events and forbidden future political climate so that your required assets before considering retirement will need to be minimum 8 figures. This snarky comment is based upon reading all of your past replies here :beer
Touché

I love sarcasm and snarkiness which unfortunate doesn’t come across as well in the written world.

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peterinjapan
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Re: How much money do you want to retire?

Post by peterinjapan » Mon Oct 01, 2018 7:06 am

I think I can do $4 million, which will do fine. If I can get to $5 million, I will be a happy camper. Wife should have another $1 million too, so I think we will be okay.

mptfan
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Re: How much money do you want to retire?

Post by mptfan » Mon Oct 01, 2018 10:52 am

peterinjapan wrote:
Mon Oct 01, 2018 7:06 am
I think I can do $4 million, which will do fine. If I can get to $5 million, I will be a happy camper. Wife should have another $1 million too, so I think we will be okay.
You "think" you will be okay at $5 million?
:oops:

letsgobobby
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Re: How much money do you want to retire?

Post by letsgobobby » Mon Oct 01, 2018 11:48 am

Our spending is at the very highest point, I think. Kids at the Pinnacle of expensive activities, paying off a rental, primary home, a vehicle. In ten years kids will be in college (saved for separately) and rental, vehicles will be things of the past. At that time I think we're going to realize we have twice as much as we need to comfortably retire. Until then our monthly outlay just boggles my mind and no amount of money seems like enough.

Health Care is a complete unknown. Right now we spend $10k per year out of pocket for vision, dental, and health co-pays and deductibles; the premiums for our insurances are another $20k, mostly paid by employer. To buy comparable on the open market would probably be $30k. That means health care alone demands a $1,000,000 dedicated savings account. How are folks saying they can retire early on $1-2 million?

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HomerJ
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Re: How much money do you want to retire?

Post by HomerJ » Mon Oct 01, 2018 11:59 am

letsgobobby wrote:
Mon Oct 01, 2018 11:48 am
Health Care is a complete unknown. Right now we spend $10k per year out of pocket for vision, dental, and health co-pays and deductibles; the premiums for our insurances are another $20k, mostly paid by employer. To buy comparable on the open market would probably be $30k. That means health care alone demands a $1,000,000 dedicated savings account. How are folks saying they can retire early on $1-2 million?
I agree Health Care is a huge unknown, and is the biggest reason I'm probably retiring in 6 years instead of 2 years.

But note that currently, you can play the "income game" and get large subsidies for health care. Those of us who are retiring on $1-$2 million ($40,000 - $80,000 a year expenses), can probably pull some taxable savings each year, and make our income look low enough to qualify for subsidies.

But that's just currently, not something one should count on.

And even if you're going to pay the full $30k a year yourself, you don't need $1 million (withdrawing at 3%) to finance a $30,000 health care plan forever. Just until 65 when you can get Medicare.

If I retire at 55, I'll only need to cover 10 years of health care, not indefinitely... I plan to bake $10k a year in medical expenses into my lifetime budget anyway, the other $20k a year, I'll only need for 10 years, not forever, so figure another $200,000 extra, not $1 million.
The J stands for Jay

letsgobobby
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Re: How much money do you want to retire?

Post by letsgobobby » Mon Oct 01, 2018 12:20 pm

Yes you're right. But Medicare doesn't cover everything so even after 65 there are expenses. I was thinking of someone (i.e. myself) retiring at 45 or 50 while kids are still on the dole - 20 years at $40k plus the additional ex-Medicare expenses after 65.

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HomerJ
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Re: How much money do you want to retire?

Post by HomerJ » Mon Oct 01, 2018 12:47 pm

letsgobobby wrote:
Mon Oct 01, 2018 12:20 pm
But Medicare doesn't cover everything so even after 65 there are expenses.
True enough. Health care unknowns are indeed very annoying.
I was thinking of someone (i.e. myself) retiring at 45 or 50 while kids are still on the dole - 20 years at $40k plus the additional ex-Medicare expenses after 65.
Yeah 45 to 65 is a long time.

I think the FIRE people who retire at 35 with $1 million just think they will be 35 and healthy forever.
The J stands for Jay

eurobogle
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Re: How much money do you want to retire?

Post by eurobogle » Tue Oct 02, 2018 6:55 am

I'm 40 and I want $2M to retire between 45-50 in Switzerland.

SQRT
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Re: How much money do you want to retire?

Post by SQRT » Tue Oct 02, 2018 7:35 am

It’s interesting how health care costs figure so prominently in this discussion. At first I thought “boy, glad I’m Canadian” but even then we budget about $18k for health care expenses per year above what our “Govt supported” plan pays. In fact this year we spent much more than that (whole new mouth of teeth for me and cosmetic procedures for my lovely wife which are not covered).

The one big advantage is these expenses were discretionary and we would never face the possible catastrophic health care expense that many in the US worry about.

We pay a little more in taxes, perhaps close to what people pay in California, but on the whole a reasonable compromise, methinks.

moehoward
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Re: A poll: How much money do you need to retire?

Post by moehoward » Tue Oct 02, 2018 8:25 am

Oneworld82 wrote:
Sat Jun 02, 2018 10:39 pm
blevine wrote:
Wed Aug 02, 2017 10:37 pm
So how do you count the 401k ?
Dollar for dollar, not same as your taxable savings.
And if you have large unrealized gain in taxable, is that really the same as if you had none ?

Kinda hard to meausure a total without considering the tax liabilities or possibly liquidity. If all your NW is tied up in real estate, then what ? You have to sell or live off cash flow.

Point is, not only are expenses a variable, but so is the value of your portfolio.

I just say save ALOT. More is better than less.
Then LBYM in retirement, whatever your means.
My only problem with that is: you save all your life, then when you are 65 you are old and get sick and die shortly after. Morale of the story: someone else will enjoy your hard work. I strongly advocate for savings, but please folks, PLEASE, don't forget that you only live once...
My Father saved and was also extremely cheap. Yes, he had some money but he died in his 60s. Mom and her boyfriend traveled and both enjoyed each other for a long time. Mom didn't die broke but she gave it a good run...

AnonJohn
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Re: How much money do you want to retire?

Post by AnonJohn » Tue Oct 02, 2018 4:06 pm

wrongfunds wrote:
Fri Sep 28, 2018 9:23 am
AnonJohn wrote:
Fri Sep 28, 2018 9:17 am
About $1M in 2014 dollars. $2 M would be ideal. But $1 M would be enough.
What is so special about 2014 dollars? Is that a typo?
Not a typo but nothing special! It was just the year I really put together a good IPS and long-term plan. So I set out goals then. I evaluate progress toward those goals in constant dollars. I realize that macroeconomic measures of inflation don't account for the changes in personal inflation that I will experience as I age, but it's better than assuming no inflation. :)

wrongfunds
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Re: How much money do you want to retire?

Post by wrongfunds » Tue Oct 02, 2018 4:42 pm

AnonJohn wrote:
Tue Oct 02, 2018 4:06 pm
wrongfunds wrote:
Fri Sep 28, 2018 9:23 am
AnonJohn wrote:
Fri Sep 28, 2018 9:17 am
About $1M in 2014 dollars. $2 M would be ideal. But $1 M would be enough.
What is so special about 2014 dollars? Is that a typo?
Not a typo but nothing special! It was just the year I really put together a good IPS and long-term plan. So I set out goals then. I evaluate progress toward those goals in constant dollars. I realize that macroeconomic measures of inflation don't account for the changes in personal inflation that I will experience as I age, but it's better than assuming no inflation. :)
That is an interesting and valid approach! Do you also do all the other future calculations in those dollars e.g. your future expenses, your future wages/salary/SS_benefits etc?

Out of curiosity, which specific benchmark do you use to do the conversion from 2014 dollars to say 2018 dollars?

ClaycordJCA
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Re: How much money do you want to retire?

Post by ClaycordJCA » Sat Oct 06, 2018 12:45 am

Looking to get to $2.5 million and retiring next year or three at age 60 to 62. Plan is to relocate out of the Bay Area and hopefully use house equity to buy in Reno or Sacramento area with no mortgage. Working to 62 allows 3 years of COBRA and Cal-COBRA to get me to Medicare. Younger DW already disabled and on Medicare. Will re-evaluate next year when there may be more certainty with the ACA and preexisting condition coverages.

Avenger45
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Re: How much money do you want to retire?

Post by Avenger45 » Sat Oct 06, 2018 6:03 am

1st post on BH.
age 64 Target for retirement 1.6 mil, now at 1.8 mostly in tax deferred accounts. Planning to cut working hours in about a year. Reduced contribution to 403b to min needed to get full match. Concerned that minimum required distribution will push me into higher marginal tax rate.

Greenman72
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Re: How much money do you want to retire?

Post by Greenman72 » Sat Oct 06, 2018 8:06 am

benign_user wrote:
Wed Aug 02, 2017 9:20 am
How much money do you want to retire?
I don't want any money to retire!!!! I want it to keep working for me for ever and ever!!!!

AnonJohn
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Re: How much money do you want to retire?

Post by AnonJohn » Tue Oct 16, 2018 4:33 pm

wrongfunds wrote:
Tue Oct 02, 2018 4:42 pm
AnonJohn wrote:
Tue Oct 02, 2018 4:06 pm
wrongfunds wrote:
Fri Sep 28, 2018 9:23 am
AnonJohn wrote:
Fri Sep 28, 2018 9:17 am
About $1M in 2014 dollars. $2 M would be ideal. But $1 M would be enough.
What is so special about 2014 dollars? Is that a typo?
Not a typo but nothing special! It was just the year I really put together a good IPS and long-term plan. So I set out goals then. I evaluate progress toward those goals in constant dollars. I realize that macroeconomic measures of inflation don't account for the changes in personal inflation that I will experience as I age, but it's better than assuming no inflation. :)
That is an interesting and valid approach! Do you also do all the other future calculations in those dollars e.g. your future expenses, your future wages/salary/SS_benefits etc?

Out of curiosity, which specific benchmark do you use to do the conversion from 2014 dollars to say 2018 dollars?
Sorry for the late / tardy replies here. Life! I try to avoid projecting future income streams backwards (fraught!).

I do dabble for a couple of things (e.g.) pension and social security benefit, since I think those will be part of my retirement income. I project earned benefits backward to 2014 assuming constant inflation at the average rate experienced during my career (darn close to 2%). I don't really think about future salary, or expenses (per se). My retirement goals were built on replacing full working income in 2014 (life seemed OK then, not rich, not poor). So that is a model of future expenses. It's a poor one when it comes to things like LTC and HC, but I wasn't sure I could do better no matter how much effort I put into it.

My preferred metric is the FRED's GDP deflator series. I did the same analysis with CPI-U at some point. Didn't really seem to matter. Also looked at the billion prices project. Again, seemed close enough. These kind of calculations are not precise so I try not to treat them that way.

I started down this whole road because I wanted to evaluate personal performance in real terms. Once I was pulling FRED data into my spreadsheet, one thing led to another ...

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Leif
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Re: How much money do you want to retire?

Post by Leif » Fri Oct 19, 2018 1:09 pm

Avenger45 wrote:
Sat Oct 06, 2018 6:03 am
1st post on BH.
age 64 Target for retirement 1.6 mil, now at 1.8 mostly in tax deferred accounts. Planning to cut working hours in about a year. Reduced contribution to 403b to min needed to get full match. Concerned that minimum required distribution will push me into higher marginal tax rate.
Welcome to the Bogleheads!

Yes, having most of your assets in a traditional IRA (tIRA) can result is a higher tax rate at 70. I have a large part of my portfolio in a tIRA. I'm doing Roth conversions now until when I take Social Security at 70.

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3wood
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Re: How much money do you want to retire?

Post by 3wood » Sat Oct 20, 2018 9:49 am

wrongfunds wrote:
Sun Sep 30, 2018 3:35 pm
I came across this one while surfing. I think this is reasonable argument for front loading the expenses early years given the actual chance of running out of money while still being alive. I would have thought that this particular article would have been already ripped to shreds in the past but my limited memory does not recall any discussion about it.

How To Spend More Now, Less Later
https://assetbuilder.com/knowledge-cent ... less-later
I've read this a while ago and I think it can work for many. I would have no problem doing this myself if the numbers fell that way. Obviously a bad sequence of returns would have an amplified negative effect if you are pulling over 6% like he suggests. Maybe a higher constant withdrawal with some flexibility based on sequence of returns?

Augustus
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Re: How much money do you want to retire?

Post by Augustus » Sat Oct 20, 2018 9:54 am

I'm an international teacher (I teach history, as you can tell by the username!) and my housing is covered, as are many of my expenses. I invest $20,000-$30,000 per year.

I'm young (late 20s) and plan to buy a house in the US around age 50 or so and retire to it some time in my 60s with my partner. I'm hoping that my investments will grow to a healthy amount by that time :sharebeer

nashirak
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Re: How much money do you want to retire?

Post by nashirak » Sat Oct 20, 2018 11:39 am

I would plan to retire between 55-60 (DW is about three years younger. If returns are conservative, I’ll net between $3-3.5 million if they are more in the 7% range I’ll net a little over $4 million. We are in a very low-cost area (Arkansas) so that will be more than enough to retire comfortably given that our needed annual expenses are only about 40k right now. We live well below our means and I think that trend will continue.

mmcmonster
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Re: How much money do you want to retire?

Post by mmcmonster » Sat Oct 20, 2018 11:53 am

A couple years ago my wife told me that she could retire if we had $5M in investments. :oops:

She told me yesterday that we could retire if we win the Powerball drawing ($1Billion) tomorrow. So I guess that's something. :beer

KyleAAA
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Re: How much money do you want to retire?

Post by KyleAAA » Sat Oct 20, 2018 11:55 am

Subject to change, but $5mm and a paid off mortgage is the current goal.

MnD
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Re: How much money do you want to retire?

Post by MnD » Sat Oct 20, 2018 12:26 pm

We desire the the same or better very non-frugal financial lifestyle in retirement that we have have had while working in the years leading up to retirement. How that translates to a lump portfolio sum is highly individualized depending on numerous factors and variables.
41 days out from R-Day! :beer

Sandi_k
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Re: How much money do you want to retire?

Post by Sandi_k » Sat Oct 20, 2018 12:28 pm

3wood wrote:
Sat Oct 20, 2018 9:49 am
wrongfunds wrote:
Sun Sep 30, 2018 3:35 pm
I came across this one while surfing. I think this is reasonable argument for front loading the expenses early years given the actual chance of running out of money while still being alive. I would have thought that this particular article would have been already ripped to shreds in the past but my limited memory does not recall any discussion about it.

How To Spend More Now, Less Later
https://assetbuilder.com/knowledge-cent ... less-later
I've read this a while ago and I think it can work for many. I would have no problem doing this myself if the numbers fell that way. Obviously a bad sequence of returns would have an amplified negative effect if you are pulling over 6% like he suggests. Maybe a higher constant withdrawal with some flexibility based on sequence of returns?
Or you set aside the 6% of the investment portfolio for years 1-10 in bonds, TIPs, CDs, etc., long before you retire. The Sequence of Return risk won't make any difference. You can leave the invested portion alone, and draw down only from your set aside. SoR is most dangerous in the first 10 years - so that will solve the problem.

Our example: We're assuming an investment portfolio of $1.3M on my retirement date. I will have $250k set aside in cash/TIPs/CDs/bonds by that date, leaving an investment portfolio of ~$1M.

In years 1-5 of my retirement, I'll use the $50k each year (of that $250k pot) to live on (5 years x $50k). Plus disperse 3.75% of the remaining portfolio for additional income at a SWR . Thus 3.75% x $1M = Another $37k annually.

In years 6-10, our mortgage is paid off - so that's $30k to the good annually. DH files for Social Security: another $25k per year in income. And 3.75% SWR of ~ $800k = another $30k annually to play with each year.

That gets me to age 70, with my filing for Social Security, and RMDs plus discretionary withdrawals of 4%+ annually from the investment portfolio.

So we plan on at least an extra $50k each year in the first 10 years - which will allow travel, cars, entertainment, etc. that we're sure will be harder and less appealing once we're over 70. And if we're wrong, and we still want to do more at 70? We'll be able to take 4-5% and still be in the SWR territory, since our timeline is now 20 years, instead of 30...

Elena
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Re: How much money do you want to retire?

Post by Elena » Sat Oct 20, 2018 1:00 pm

46 next month. I would like to retire at 1.5M. Currently at 1.1+, half in taxable, half in retirement acct. House is paid off, old car paid off. Can remain in medical group plan if I stay at current job 7 more years. I do not know if I want to, but the problem is I do not know how to estimate medical expenses on my own, even after reading countless posts on subsidized individual plans. I have been saving over 70% of earnings forever. I am very frugal. Waiting for the market to correct or drop. I would not like to retire at the top of the market value.

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willthrill81
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Re: How much money do you want to retire?

Post by willthrill81 » Sat Oct 20, 2018 1:32 pm

Elena wrote:
Sat Oct 20, 2018 1:00 pm
46 next month. I would like to retire at 1.5M. Currently at 1.1+, half in taxable, half in retirement acct. House is paid off, old car paid off. Can remain in medical group plan if I stay at current job 7 more years. I do not know if I want to, but the problem is I do not know how to estimate medical expenses on my own, even after reading countless posts on subsidized individual plans. I have been saving over 70% of earnings forever. I am very frugal. Waiting for the market to correct or drop. I would not like to retire at the top of the market value.
Historically, the market is at or near all time highs about 75% of the time. Once you reach your number, you might have to wait a while for a bear market, and that may send you below your desired number.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Elena
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Re: How much money do you want to retire?

Post by Elena » Sat Oct 20, 2018 2:29 pm

willthrill81 wrote:
Sat Oct 20, 2018 1:32 pm
Elena wrote:
Sat Oct 20, 2018 1:00 pm
46 next month. I would like to retire at 1.5M. Currently at 1.1+, half in taxable, half in retirement acct. House is paid off, old car paid off. Can remain in medical group plan if I stay at current job 7 more years. I do not know if I want to, but the problem is I do not know how to estimate medical expenses on my own, even after reading countless posts on subsidized individual plans. I have been saving over 70% of earnings forever. I am very frugal. Waiting for the market to correct or drop. I would not like to retire at the top of the market value.
Historically, the market is at or near all time highs about 75% of the time. Once you reach your number, you might have to wait a while for a bear market, and that may send you below your desired number.
Yes, the idea is to reach target nr. in a bottom trend market, but then there is the temptation to work longer and pour "new" money buying cheaper. Ah, the inverstor's psychology... :P

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willthrill81
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Re: How much money do you want to retire?

Post by willthrill81 » Sat Oct 20, 2018 2:33 pm

Elena wrote:
Sat Oct 20, 2018 2:29 pm
willthrill81 wrote:
Sat Oct 20, 2018 1:32 pm
Elena wrote:
Sat Oct 20, 2018 1:00 pm
46 next month. I would like to retire at 1.5M. Currently at 1.1+, half in taxable, half in retirement acct. House is paid off, old car paid off. Can remain in medical group plan if I stay at current job 7 more years. I do not know if I want to, but the problem is I do not know how to estimate medical expenses on my own, even after reading countless posts on subsidized individual plans. I have been saving over 70% of earnings forever. I am very frugal. Waiting for the market to correct or drop. I would not like to retire at the top of the market value.
Historically, the market is at or near all time highs about 75% of the time. Once you reach your number, you might have to wait a while for a bear market, and that may send you below your desired number.
Yes, the idea is to reach target nr. in a bottom trend market, but then there is the temptation to work longer and pour "new" money buying cheaper. Ah, the inverstor's psychology... :P
Yes, I can see the appeal if you're still at your target after the market has taken a 25% dive.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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3wood
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Re: How much money do you want to retire?

Post by 3wood » Sat Oct 20, 2018 3:23 pm

Sandi_k wrote:
Sat Oct 20, 2018 12:28 pm
3wood wrote:
Sat Oct 20, 2018 9:49 am
wrongfunds wrote:
Sun Sep 30, 2018 3:35 pm
I came across this one while surfing. I think this is reasonable argument for front loading the expenses early years given the actual chance of running out of money while still being alive. I would have thought that this particular article would have been already ripped to shreds in the past but my limited memory does not recall any discussion about it.

How To Spend More Now, Less Later
https://assetbuilder.com/knowledge-cent ... less-later
I've read this a while ago and I think it can work for many. I would have no problem doing this myself if the numbers fell that way. Obviously a bad sequence of returns would have an amplified negative effect if you are pulling over 6% like he suggests. Maybe a higher constant withdrawal with some flexibility based on sequence of returns?
Or you set aside the 6% of the investment portfolio for years 1-10 in bonds, TIPs, CDs, etc., long before you retire. The Sequence of Return risk won't make any difference. You can leave the invested portion alone, and draw down only from your set aside. SoR is most dangerous in the first 10 years - so that will solve the problem.

Our example: We're assuming an investment portfolio of $1.3M on my retirement date. I will have $250k set aside in cash/TIPs/CDs/bonds by that date, leaving an investment portfolio of ~$1M.

In years 1-5 of my retirement, I'll use the $50k each year (of that $250k pot) to live on (5 years x $50k). Plus disperse 3.75% of the remaining portfolio for additional income at a SWR . Thus 3.75% x $1M = Another $37k annually.

In years 6-10, our mortgage is paid off - so that's $30k to the good annually. DH files for Social Security: another $25k per year in income. And 3.75% SWR of ~ $800k = another $30k annually to play with each year.

That gets me to age 70, with my filing for Social Security, and RMDs plus discretionary withdrawals of 4%+ annually from the investment portfolio.

So we plan on at least an extra $50k each year in the first 10 years - which will allow travel, cars, entertainment, etc. that we're sure will be harder and less appealing once we're over 70. And if we're wrong, and we still want to do more at 70? We'll be able to take 4-5% and still be in the SWR territory, since our timeline is now 20 years, instead of 30...
Sounds like a decent bucket strategy approach. I think most gurus recommend a total return approach. Kitces wrote something about it I remember reading. There was no advantage to the buckets. The buckets aren’t really an actual thing. More of a mental construct to help us understand and get comfortable. If it allows you to stick to your plan than I guess it’s fine but it isn’t necessary. I’m sure someone smarter than me can comment further.

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Re: How much money do you want to retire?

Post by mrspock » Sun Oct 21, 2018 3:37 am

arf1410 wrote:
Sat Jun 16, 2018 6:56 pm
Personally, I think this thread would have been much more interesting, if folks expressed their desired amount as a function of salary, ie 20X, as opposed to a specific dollar amount...
More interesting yet if they quoted how much five years extra in their 40s or 30s would be worth. When folks quote these $5M+ numbers, I am somewhat interested in how they would answer this question.

Is a slightly bigger house, nicer car or nicer hotel + 1st class air fare in retirement worth those 5 (or more?) years? I could probably hit that, but why? Five extra years of prime health in retirement is worth on the order of $10s of millions to me... probably more. An extra few million? Lolz

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Re: How much money do you want to retire?

Post by MikeG62 » Sun Oct 21, 2018 7:00 am

I'll answer it this way.

Enough money that DW and I can live off ~3% of our financial assets living the lifestyle we lived while working (which was not fugal), including a very healthy increase for T&E as well as covering health care expenses (and income taxes) in that amount. I would assume as well that we get no SS, not because I think it is at risk (because unlike others I don't), but just to add more conservatism to the modeling (and/or to provide a health slug of money for outsized health care expenses later in life).

FWIW, this is precisely where we got to when I early retired three year ago at 53 (DW was a SAHM for the last 25 years).
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Re: How much money do you want to retire?

Post by BanquetBeer » Sun Oct 21, 2018 4:25 pm

Admiral wrote:
Sun Sep 30, 2018 7:33 am
Also I would like to see the math on how one even gets to $5m unless one has a household income well over $300k per year.
I disagree. If you live on around half your income this number can easily be hit in 27 years if you save around 75k/yr. Could retire by 50. True I don’t know why you would want to save that much from that income but if your earning >300k then you can easily hit 5 mill in your late 30s early 40s

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Re: How much money do you want to retire?

Post by BanquetBeer » Sun Oct 21, 2018 4:43 pm

I’m 31; goal of about $4mill at age 45.

Started with target of about 120k/yr in 2017 dollars (to answer a similar question my spreadsheet multiplies that target by annual inflation numbers; including some % of the current year. Example: 120*(1+2.2%+2.5%+2.7%*223days/365)

This is my share of things, I earn well less than 200k but share expenses with spouse (separate savings/discretionary spending)

Still evaluating 3-3.25% withdrawal rate. 12 budget for health insurance. Another revision may be the decision between 120k being pre or post tax (assumes about a 10k difference)

Don’t want to have to worry about cost. Do like buseiness class travel if funds don’t get used for other needs. Main driver is school age for kids.

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Re: How much money do you want to retire?

Post by Lieutenant.Columbo » Sun Oct 21, 2018 6:33 pm

mmcmonster wrote:
Sat Oct 20, 2018 11:53 am
A couple years ago my wife told me that she could retire if we had $5M in investments. :oops:

She told me yesterday that we could retire if we win the Powerball drawing ($1Billion) tomorrow. So I guess that's something. :beer
poor mmcmonster, his wife will never retire...
Elena wrote:
Sat Oct 20, 2018 1:00 pm
[...]I would like to retire at 1.5M [...] I would not like to retire at the top of the market value.
willthrill81 wrote:
Sat Oct 20, 2018 1:32 pm
Once you reach your number, you might have to wait a while for a bear market, and that may send you below your desired number.
So this mean one's desired number is only relevant if attained during a bear market, isn't it?
Last edited by Lieutenant.Columbo on Mon Oct 22, 2018 8:04 am, edited 1 time in total.
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Re: How much money do you want to retire?

Post by willthrill81 » Sun Oct 21, 2018 8:06 pm

Lieutenant.Columbo wrote:
Sun Oct 21, 2018 6:33 pm
Elena wrote:
Sat Oct 20, 2018 1:00 pm
[...]I would like to retire at 1.5M [...] I would not like to retire at the top of the market value.
willthrill81 wrote:
Sat Oct 20, 2018 1:32 pm
Once you reach your number, you might have to wait a while for a bear market, and that may send you below your desired number.
So this mean one's desired number is only relevant if attained during a bear market, isn't it?
It is definitely a very conservative take on the issue. I don't personally espouse it, but I can see why the idea is appealing to some.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: How much money do you want to retire?

Post by Outstandingrush » Mon Oct 22, 2018 5:03 am

as much as possible? That would be nice
I have already opened a paper writings feedback service and if i don't fail it would turn my old age in the golden age
Last edited by Outstandingrush on Tue Oct 30, 2018 7:44 am, edited 2 times in total.

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Re: How much money do you want to retire?

Post by wrongfunds » Mon Oct 22, 2018 10:23 am

willthrill81 wrote:
Sun Oct 21, 2018 8:06 pm
Lieutenant.Columbo wrote:
Sun Oct 21, 2018 6:33 pm
Elena wrote:
Sat Oct 20, 2018 1:00 pm
[...]I would like to retire at 1.5M [...] I would not like to retire at the top of the market value.
willthrill81 wrote:
Sat Oct 20, 2018 1:32 pm
Once you reach your number, you might have to wait a while for a bear market, and that may send you below your desired number.
So this mean one's desired number is only relevant if attained during a bear market, isn't it?
It is definitely a very conservative take on the issue. I don't personally espouse it, but I can see why the idea is appealing to some.
People usually don't voluntarily retire during a bear market, do they?

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Re: How much money do you want to retire?

Post by willthrill81 » Mon Oct 22, 2018 10:30 am

wrongfunds wrote:
Mon Oct 22, 2018 10:23 am
willthrill81 wrote:
Sun Oct 21, 2018 8:06 pm
Lieutenant.Columbo wrote:
Sun Oct 21, 2018 6:33 pm
Elena wrote:
Sat Oct 20, 2018 1:00 pm
[...]I would like to retire at 1.5M [...] I would not like to retire at the top of the market value.
willthrill81 wrote:
Sat Oct 20, 2018 1:32 pm
Once you reach your number, you might have to wait a while for a bear market, and that may send you below your desired number.
So this mean one's desired number is only relevant if attained during a bear market, isn't it?
It is definitely a very conservative take on the issue. I don't personally espouse it, but I can see why the idea is appealing to some.
People usually don't voluntarily retire during a bear market, do they?
No. That's a good point.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: How much money do you want to retire?

Post by wrongfunds » Mon Oct 22, 2018 10:48 am

I think we both agree that

1) People don't want to voluntarily retire during bear market.
2) People don't want to voluntarily retire during bull market.

I have no idea if this discussion is helping any body at all :-)

What I really think is that the people who do voluntarily retire, the type of market they were in at the time of retirement was not a factor.

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Re: How much money do you want to retire?

Post by Lieutenant.Columbo » Mon Oct 22, 2018 11:47 am

wrongfunds wrote:
Mon Oct 22, 2018 10:48 am
I think we both agree that

1) People don't want to voluntarily retire during bear market.
2) People don't want to voluntarily retire during bull market.

I have no idea if this discussion is helping any body at all :-)

What I really think is that the people who do voluntarily retire, the type of market they were in at the time of retirement was not a factor.
it is helping me! :wink:
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Re: How much money do you want to retire?

Post by flyingaway » Mon Oct 22, 2018 11:51 am

wrongfunds wrote:
Mon Oct 22, 2018 10:48 am
I think we both agree that

1) People don't want to voluntarily retire during bear market.
2) People don't want to voluntarily retire during bull market.

I have no idea if this discussion is helping any body at all :-)

What I really think is that the people who do voluntarily retire, the type of market they were in at the time of retirement was not a factor.
I prefer to retire after a bear market, in a rising bull market. I think people do not want to retire in a full-blown bull market, like the one we have now.

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Re: How much money do you want to retire?

Post by wrongfunds » Mon Oct 22, 2018 1:11 pm

Do you think we are in "full-blown bull market"? From all the blood I am seeing in the market, aren't we in in bear territory already? Are all the news wrong?

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Re: How much money do you want to retire?

Post by mrspock » Mon Oct 22, 2018 1:13 pm

wrongfunds wrote:
Mon Oct 22, 2018 1:11 pm
Do you think we are in "full-blown bull market"? From all the blood I am seeing in the market, aren't we in in bear territory already? Are all the news wrong?
Stocks are roughly around where they were in *July* not even remotely close to a bear market (20% decline). If folks have weak knees now, they should rethink their AA.

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Re: How much money do you want to retire?

Post by visualguy » Mon Oct 22, 2018 1:35 pm

wrongfunds wrote:
Mon Oct 22, 2018 10:48 am
I think we both agree that

1) People don't want to voluntarily retire during bear market.
2) People don't want to voluntarily retire during bull market.

I have no idea if this discussion is helping any body at all :-)

What I really think is that the people who do voluntarily retire, the type of market they were in at the time of retirement was not a factor.
Not sure - I never actually met anyone who retired truly voluntarily... In terms of involuntary retirement, I would imagine that it's more common during bear markets than bull markets.

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Re: How much money do you want to retire?

Post by The Wizard » Mon Oct 22, 2018 1:42 pm

visualguy wrote:
Mon Oct 22, 2018 1:35 pm
wrongfunds wrote:
Mon Oct 22, 2018 10:48 am
I think we both agree that

1) People don't want to voluntarily retire during bear market.
2) People don't want to voluntarily retire during bull market.

I have no idea if this discussion is helping any body at all :-)

What I really think is that the people who do voluntarily retire, the type of market they were in at the time of retirement was not a factor.
Not sure - I never actually met anyone who retired truly voluntarily....
You're kidding, right?
Attempted new signature...

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