Can I retire

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Olemiss540
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Re: Can I retire

Post by Olemiss540 »

pennylane wrote: Sat Dec 15, 2018 9:20 pm How the hell do you blow through so much money? Your net worth should be in the 7-8 figure range with an income like that. I’m assuming you’ve always been able to earn a high income.. seriously, how do you only save 70k a year? I save more than that and I make a little more than half what you make..
Constructive indeed. How about who care how much someone else spends?

You rock being able to save 70k on 150k salary. Let's try to assume everyone has a different goal with their life and not fat shame people that have saved 2.5 MILLION DOLLARS by their early fifties.

Edited to add: I see I was late to the anti-shaming posts now but think it's a great thing our community all had the same reaction so leaving this up.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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CyclingDuo
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Re: Can I retire

Post by CyclingDuo »

waxman003 wrote: Sat Dec 15, 2018 8:40 pm Thanks for the responses - even the blunt ones !

A couple of takeaways

I know I have to prepare a budget - I meticulously track all our finances - I just don't want to see what we spend on groceries and eating out (LOL). We live very well but equally have come from more frugal backgrounds and I believe we could get down to $110-130k expenses. Any good checklists / spreadsheets out there to help ensure i don't skip anything
We hear you on not wanting to see what we spend on the groceries and eating out.

:sharebeer

We love to cook, so it is rare we eat out (2 or 3 times a month max).

However...

We love wine, so that bumps the groceries portion of our budget up the ladder. We do our best to cut back to lower priced wines or what is on sale most of the time...

Image

In terms of budget spreadsheets, there are gobs of them available to download on the internet.

https://wallethub.com/edu/free-budget-t ... old-budget
https://www.mint.com/budgeting-3/keep-t ... t-template
http://www.budgetsaresexy.com/free-budg ... tes-sites/

I made our own a couple of years ago to help dial in things after we became empty nesters. I wanted categories that fit exactly where our cash flow goes, so I just list the categories we track diligently within our spreadsheet as an illustration. The 50/30/20 rule was simply used as a guiding rubric to see how our cash flow for the categories - on an after tax basis - would fit into the 50/30/20 rubric. We don't follow the 50/30/20 percentages at this point in our lives as we are super saving in our final working years - or at least have been once the nest was empty - so the percentages are tweaked to fit our desires.

Image

Looks like you are doing great with your savings and assets up to this point. I don't recall seeing the reason why you wanted to retire right now, but applaud your effort to take a good close look at your cash flow and honest assessment. The big three: housing, food, transportation are where we all need to get it right. :mrgreen:
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
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goingup
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Re: Can I retire

Post by goingup »

gotester2000 wrote: Sat Dec 15, 2018 12:21 am You can retire now if you can live on 80k per year.
To spend 150k/yr you need abt 5 million.
Where's this math coming from. A 54 yr old with a 2.5m portfolio with a 60/40 stock/bond asset allocation can withdraw about 4.5% according to the forum wiki VPW chart. https://www.bogleheads.org/wiki/Variabl ... withdrawal Let's say between 4-4.5% which gives him $112,500-$100,000.

The OP is currently saving 20% of his income. Figure he makes $325K, pays about $100K taxes, saves $70K. So expenses are $155K or so. I think to maintain that spending level the OP may need another 1million or $3.5m.

To retire now would require shaving about $50K in expenses. Might be tough. :|
pennylane
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Re: Can I retire

Post by pennylane »

WanderingDoc wrote: Sat Dec 15, 2018 10:21 pm
pennylane wrote: Sat Dec 15, 2018 9:20 pm How the hell do you blow through so much money? Your net worth should be in the 7-8 figure range with an income like that. I’m assuming you’ve always been able to earn a high income.. seriously, how do you only save 70k a year? I save more than that and I make a little more than half what you make..
I don't think the OP needs the shaming and lecture from you.

You have no idea how long he has been earning $250K per year. I know plenty of software engineers earning that, none of them have a net worth of 8 figures or even close to that.

Its not a competition on who can save more. Chances are, if he spent more than you, he had more and better life experiences. Period. 'Best things in life are free' is a myth if I've ever heard one. Travel, experiences, great food, business ventures, etc. all cost money. Reading a book is free, but its not "the best things in life" for most people.

No medal is awarded for being cheap at the end of the day. All you are left with is a bunch of money when you are old that you wish you'd spent when you had the vitality, energy, and time to do so 8-)
I agree, I’m not trying to be the richest man in the grave yard. I eat great food everyday, we eat out 1-2 times per week. We travel internationally at least twice a year. And we experience anything we want.
cherijoh
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Re: Can I retire

Post by cherijoh »

waxman003 wrote: Sat Dec 15, 2018 9:36 pm
pennylane wrote: Sat Dec 15, 2018 9:20 pm How the hell do you blow through so much money? Your net worth should be in the 7-8 figure range with an income like that. I’m assuming you’ve always been able to earn a high income.. seriously, how do you only save 70k a year? I save more than that and I make a little more than half what you make..
Thanks for the constructive feedback - last time I looked it was a 7 figure number - admittedly not a high one it seems
It isn't the absolute amount of savings that is important, but the multiple of years of retirement expenses. I suspect that it is only recently that you began saving that much - otherwise you would have more to show for it.

EDIT to ADD: I agree there is no need to shame anyone about their spending/priorities. However, anyone posting a "Can I retire?" thread should expect a reality check! :wink: The OP wants to retire as soon as possible, but still has considerable debt and a low multiple of savings In terms of both salary and current expenses).

I'm not sure where some of the posters are coming up with numbers like $2.5M in savings. The $170K in 529 plan, while impressive, certainly can't be counted as a retirement asset, nor should the value of his home. And with a value of $557K and a remaining mortgage balance $324K, that means home equity of only around $233K anyway.

Here's what I would consider as retirement assets based on original post:

$125K in Cash ---> also owes $47K in non-mortgage debt so reduce this to $78K in net cash
$130K in taxable investments
$520K in 401K
431K foreign assets in British pounds (?) = $543K (equivalent in dollars at current exchange rate)

So only a little more than $1.25M (if foreign assets are in pounds). That will not go very far for someone who will not be able to draw SS for a few years (and possibly also not able to draw on some of the foreign assets that are in the form of a pension).

I'm afraid the OP will need to keep his nose to the grindstone for a while and should get a handle on where the money is going.
Last edited by cherijoh on Sun Dec 16, 2018 11:09 am, edited 2 times in total.
wander
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Re: Can I retire

Post by wander »

AlohaJoe wrote: Sun Dec 16, 2018 6:54 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
Is it really so hard to imagine that other people could spend more money?

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000
Real family pays mortgage. Why doesn't your example have it?
moneywise3
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Re: Can I retire

Post by moneywise3 »

Olemiss540 wrote: Sun Dec 16, 2018 7:59 am
Constructive indeed. How about who care how much someone else spends?

You rock being able to save 70k on 150k salary. Let's try to assume everyone has a different goal with their life and not fat shame people that have saved 2.5 MILLION DOLLARS by their early fifties.

Edited to add: I see I was late to the anti-shaming posts now but think it's a great thing our community all had the same reaction so leaving this up.
Firstly, my question was not along shaming lines. After reading the word "shaming" in a couple of responses did it occur to me why some might construe my one liner question as shaming.

The few replies that actually show numbers adding up to 250K show 2/3 of it is discretionary - private schools, daycare (when one spouse is SAH), charity (although noble)... minus the taxes ~75-100K. I was just assuming someone looking to retire early would give up these in the very first round of cutting expenses.
gotester2000
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Re: Can I retire

Post by gotester2000 »

goingup wrote: Sun Dec 16, 2018 8:46 am
gotester2000 wrote: Sat Dec 15, 2018 12:21 am You can retire now if you can live on 80k per year.
To spend 150k/yr you need abt 5 million.
Where's this math coming from. A 54 yr old with a 2.5m portfolio with a 60/40 stock/bond asset allocation can withdraw about 4.5% according to the forum wiki VPW chart. https://www.bogleheads.org/wiki/Variabl ... withdrawal Let's say between 4-4.5% which gives him $112,500-$100,000.

The OP is currently saving 20% of his income. Figure he makes $325K, pays about $100K taxes, saves $70K. So expenses are $155K or so. I think to maintain that spending level the OP may need another 1million or $3.5m.

To retire now would require shaving about $50K in expenses. Might be tough. :|
Considering OP's age and taxes to pay on the income, I think a number near 3% is a safe bet than 4%.
keystone
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Re: Can I retire

Post by keystone »

cherijoh wrote: Sun Dec 16, 2018 10:07 am
Here's what I would consider as retirement assets based on original post:

$125K in Cash ---> also owes $47K in non-mortgage debt so reduce this to $78K in net cash
$130K in taxable investments
$520K in 401K
431K foreign assets in British pounds (?) = $543K (equivalent in dollars at current exchange rate)

So only a little more than $1.25M (if foreign assets are in pounds).
I believe you missed this detail:

Mutual Funds (Vanguard - IRA's, SEP IRA's, REIT): $1,600,000
Olemiss540
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Re: Can I retire

Post by Olemiss540 »

moneywise3 wrote: Sun Dec 16, 2018 10:42 am
Olemiss540 wrote: Sun Dec 16, 2018 7:59 am
Constructive indeed. How about who care how much someone else spends?

You rock being able to save 70k on 150k salary. Let's try to assume everyone has a different goal with their life and not fat shame people that have saved 2.5 MILLION DOLLARS by their early fifties.

Edited to add: I see I was late to the anti-shaming posts now but think it's a great thing our community all had the same reaction so leaving this up.
Firstly, my question was not along shaming lines. After reading the word "shaming" in a couple of responses did it occur to me why some might construe my one liner question as shaming.

The few replies that actually show numbers adding up to 250K show 2/3 of it is discretionary - private schools, daycare (when one spouse is SAH), charity (although noble)... minus the taxes ~75-100K. I was just assuming someone looking to retire early would give up these in the very first round of cutting expenses.
My post was quoting penny, not sure if you are replying to me on purpose?
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
marcopolo
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Re: Can I retire

Post by marcopolo »

cherijoh wrote: Sun Dec 16, 2018 10:07 am
waxman003 wrote: Sat Dec 15, 2018 9:36 pm
pennylane wrote: Sat Dec 15, 2018 9:20 pm How the hell do you blow through so much money? Your net worth should be in the 7-8 figure range with an income like that. I’m assuming you’ve always been able to earn a high income.. seriously, how do you only save 70k a year? I save more than that and I make a little more than half what you make..
Thanks for the constructive feedback - last time I looked it was a 7 figure number - admittedly not a high one it seems
It isn't the absolute amount of savings that is important, but the multiple of years of retirement expenses. I suspect that it is only recently that you began saving that much - otherwise you would have more to show for it.

EDIT to ADD: I agree there is no need to shame anyone about their spending/priorities. However, anyone posting a "Can I retire?" thread should expect a reality check! :wink: The OP wants to retire as soon as possible, but still has considerable debt and a low multiple of savings In terms of both salary and current expenses).

I'm not sure where some of the posters are coming up with numbers like $2.5M in savings. The $170K in 529 plan, while impressive, certainly can't be counted as a retirement asset, nor should the value of his home. And with a value of $557K and a remaining mortgage balance $324K, that means home equity of only around $233K anyway.

Here's what I would consider as retirement assets based on original post:

$125K in Cash ---> also owes $47K in non-mortgage debt so reduce this to $78K in net cash
$130K in taxable investments
$520K in 401K
431K foreign assets in British pounds (?) = $543K (equivalent in dollars at current exchange rate)

So only a little more than $1.25M (if foreign assets are in pounds). That will not go very far for someone who will not be able to draw SS for a few years (and possibly also not able to draw on some of the foreign assets that are in the form of a pension).

I'm afraid the OP will need to keep his nose to the grindstone for a while and should get a handle on where the money is going.
While I agree with your general assessment, I think you missed the $1.6m in mutual funds the OP listed. That is where 2.5m+ estimates are coming from.
Once in a while you get shown the light, in the strangest of places if you look at it right.
cherijoh
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Re: Can I retire

Post by cherijoh »

keystone wrote: Sun Dec 16, 2018 11:19 am
cherijoh wrote: Sun Dec 16, 2018 10:07 am
Here's what I would consider as retirement assets based on original post:

$125K in Cash ---> also owes $47K in non-mortgage debt so reduce this to $78K in net cash
$130K in taxable investments
$520K in 401K
431K foreign assets in British pounds (?) = $543K (equivalent in dollars at current exchange rate)

So only a little more than $1.25M (if foreign assets are in pounds).
I believe you missed this detail:

Mutual Funds (Vanguard - IRA's, SEP IRA's, REIT): $1,600,000
You are correct - :oops:
wander
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Re: Can I retire

Post by wander »

Op, you can retire, but not now.
Dottie57
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Re: Can I retire

Post by Dottie57 »

gasdoc wrote: Sun Dec 16, 2018 6:57 am
keystone wrote: Sun Dec 16, 2018 6:16 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
I don't think it's 250k in living expenses because the 250k includes taxes. If you take the OP's gross income and deduct savings you get 250k, the taxes have to be excluded to calculate living expenses.
+1 Taxes are a big part of his expenses at this point. And +1 on the desire to end the shaming. Thanks.

gasdoc

OP is in the same situation I was in when I joined the forum. Did not know how to figure out how much my expenses would be. It took me a while think through. Would no longer be putting money in tax deferred 401k and Ira. That eliminated 30k in expenses. I would no longer be putting money away for Roth conversions, so that went away.

I had to add medical ins back in.

It takes a while t come up with a budget.

OP you will need to cut your expenses a lot or work longer. The numbers don’t lie.
Bacchus01
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Re: Can I retire

Post by Bacchus01 »

wander wrote: Sun Dec 16, 2018 10:19 am
AlohaJoe wrote: Sun Dec 16, 2018 6:54 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
Is it really so hard to imagine that other people could spend more money?

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000
Real family pays mortgage. Why doesn't your example have it?
That’s also not a trivial example from a real family. That’s an extreme amount of spending on the OPs income level.

But it really doesn’t matter.

The point is that either the OP needs to work longer and save more or the OP needs to cut spending. Or both.
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waxman003
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Re: Can I retire

Post by waxman003 »

Loving the comments ..

The original question was a mixture of rhetorical, tongue in cheek and desperation, Nevertheless some really good pointers.

FYI - I understand the concept of expenses in retirement and the various metrics used. My outline probably was not clear on this but my current expenses are no way near $250k - taxes are in the order of 27 - 30% , I max contribute to company 401(k) and save all by bonus to Vanguard MF's and 529.

My Net Worth 12 years ago was $329k so I "think" I am doing reasonably well and yes I do enjoy life and believe in treating yourself and family to some treats
rich126
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Re: Can I retire

Post by rich126 »

waxman003 wrote: Sun Dec 16, 2018 1:21 pm Loving the comments ..

The original question was a mixture of rhetorical, tongue in cheek and desperation, Nevertheless some really good pointers.

FYI - I understand the concept of expenses in retirement and the various metrics used. My outline probably was not clear on this but my current expenses are no way near $250k - taxes are in the order of 27 - 30% , I max contribute to company 401(k) and save all by bonus to Vanguard MF's and 529.

My Net Worth 12 years ago was $329k so I "think" I am doing reasonably well and yes I do enjoy life and believe in treating yourself and family to some treats
Really the only things you need to consider are:
1. How much are you really spending?
2. How much are you willing to reduce it?
Then you know how much you'll need in investments. Figure on a 4% SWR unless you are more/less aggressive.
----------------------------- | If you think something is important and it doesn't involve the health of someone, think again. Life goes too fast, enjoy it and be nice.
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willthrill81
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Re: Can I retire

Post by willthrill81 »

AlohaJoe wrote: Sun Dec 16, 2018 6:54 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
Is it really so hard to imagine that other people could spend more money?

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000
I don't mean this rude to anyone at all, really. But the first thing that comes to my mind when seeing that is this quote from Pete at Mr. Money Mustache. I don't agree with everything he says, but in this regard, I think that he's more right than wrong.
The standard line is that life is hard and expensive, so you should keep your nose to the grindstone, clip coupons, save hard for your kids’ college educations, then tuck any tiny slice of your salary that remains into a 401(k) plan. And pray that nothing goes wrong in the 40 years of career work that it will take to get yourself enough savings to enjoy a brief retirement.

Mr. Money Mustache’s advice? Almost all of that is nonsense: Your current middle-class life is an Exploding Volcano of Wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income. Or two thirds, or more. Sound like a fantasy? Not to readers of this blog.
http://www.mrmoneymustache.com/2013/02/ ... blog-post/

The idea that a family must spend more on childcare and food alone than the median U.S. household earns in a year is ludicrous. If they truly have the ability to do so, that's fine. But let's dispel any notion that such spending levels are necessary.
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willthrill81
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Re: Can I retire

Post by willthrill81 »

waxman003 wrote: Sun Dec 16, 2018 1:21 pmMy Net Worth 12 years ago was $329k so I "think" I am doing reasonably well and yes I do enjoy life and believe in treating yourself and family to some treats
You've made some excellent progress, to be sure. Keep doing what you're doing, and you should be in very good shape to retire down the road.

But you need to be honest with yourself; your current spending is multiples of what most American families earn in a given year. Even in a high cost of living area, that's very far from necessary. Treating yourself and your family is fine, but you are implicitly placing a higher priority on that than early retirement. That's perfectly fine, but you need to be fully aware that this is the choice you are making.

Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it.
The Sensible Steward
Bacchus01
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Re: Can I retire

Post by Bacchus01 »

waxman003 wrote: Sun Dec 16, 2018 1:21 pm Loving the comments ..

The original question was a mixture of rhetorical, tongue in cheek and desperation, Nevertheless some really good pointers.

FYI - I understand the concept of expenses in retirement and the various metrics used. My outline probably was not clear on this but my current expenses are no way near $250k - taxes are in the order of 27 - 30% , I max contribute to company 401(k) and save all by bonus to Vanguard MF's and 529.

My Net Worth 12 years ago was $329k so I "think" I am doing reasonably well and yes I do enjoy life and believe in treating yourself and family to some treats
If the question wasn’t real, why did you ask it?

As for whether you are doing well, of course you are. You make more than 99%+ of people in the world and have saved more than 99%+ of people in the world.

And yet you still can’t retire. Think about that.
smitcat
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Re: Can I retire

Post by smitcat »

willthrill81 wrote: Sun Dec 16, 2018 3:48 pm
waxman003 wrote: Sun Dec 16, 2018 1:21 pmMy Net Worth 12 years ago was $329k so I "think" I am doing reasonably well and yes I do enjoy life and believe in treating yourself and family to some treats
You've made some excellent progress, to be sure. Keep doing what you're doing, and you should be in very good shape to retire down the road.

But you need to be honest with yourself; your current spending is multiples of what most American families earn in a given year. Even in a high cost of living area, that's very far from necessary. Treating yourself and your family is fine, but you are implicitly placing a higher priority on that than early retirement. That's perfectly fine, but you need to be fully aware that this is the choice you are making.

Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it.
'Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it."

This is not a real problem if you teach your kids all about life - if you don't teach them there will be many problems with this one not at the top of the list.
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willthrill81
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Re: Can I retire

Post by willthrill81 »

smitcat wrote: Sun Dec 16, 2018 4:14 pm
willthrill81 wrote: Sun Dec 16, 2018 3:48 pm
waxman003 wrote: Sun Dec 16, 2018 1:21 pmMy Net Worth 12 years ago was $329k so I "think" I am doing reasonably well and yes I do enjoy life and believe in treating yourself and family to some treats
You've made some excellent progress, to be sure. Keep doing what you're doing, and you should be in very good shape to retire down the road.

But you need to be honest with yourself; your current spending is multiples of what most American families earn in a given year. Even in a high cost of living area, that's very far from necessary. Treating yourself and your family is fine, but you are implicitly placing a higher priority on that than early retirement. That's perfectly fine, but you need to be fully aware that this is the choice you are making.

Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it.
'Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it."
This is not a real problem if you teach your kids all about life - if you don't teach them there will be many problems with this one not at the top of the list.
That's why I said "may." But to be honest, I've seen very few families with high levels of spending, even with seemingly very good parents, whose children did not grow up to want the same or more, at least until they learned the hard way that they simply couldn't. There are some, but they definitely seem to be in the minority.
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smitcat
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Re: Can I retire

Post by smitcat »

willthrill81 wrote: Sun Dec 16, 2018 4:17 pm
smitcat wrote: Sun Dec 16, 2018 4:14 pm
willthrill81 wrote: Sun Dec 16, 2018 3:48 pm
waxman003 wrote: Sun Dec 16, 2018 1:21 pmMy Net Worth 12 years ago was $329k so I "think" I am doing reasonably well and yes I do enjoy life and believe in treating yourself and family to some treats
You've made some excellent progress, to be sure. Keep doing what you're doing, and you should be in very good shape to retire down the road.

But you need to be honest with yourself; your current spending is multiples of what most American families earn in a given year. Even in a high cost of living area, that's very far from necessary. Treating yourself and your family is fine, but you are implicitly placing a higher priority on that than early retirement. That's perfectly fine, but you need to be fully aware that this is the choice you are making.

Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it.
'Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it."
This is not a real problem if you teach your kids all about life - if you don't teach them there will be many problems with this one not at the top of the list.
That's why I said "may." But to be honest, I've seen very few families with high levels of spending, even with seemingly very good parents, whose children did not grow up to want the same or more, at least until they learned the hard way that they simply couldn't. There are some, but they definitely seem to be in the minority.
I am guessing your kid(Kids) are very young. We have seen many kids growing up with very high levels of spending - and due to some atypical work situations we also se many kids growing up without the ability to spend much at all.
We experienced no correlation of the spending - but we see many issues with kids that have not had the advantage of being taught life lessons early on. You likely cannot imagine some of the tragedies out there but they do not tend to follow spending amounts , most folks do not come into contact with these situations.
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willthrill81
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Re: Can I retire

Post by willthrill81 »

smitcat wrote: Sun Dec 16, 2018 4:25 pm
willthrill81 wrote: Sun Dec 16, 2018 4:17 pm
smitcat wrote: Sun Dec 16, 2018 4:14 pm
willthrill81 wrote: Sun Dec 16, 2018 3:48 pm
waxman003 wrote: Sun Dec 16, 2018 1:21 pmMy Net Worth 12 years ago was $329k so I "think" I am doing reasonably well and yes I do enjoy life and believe in treating yourself and family to some treats
You've made some excellent progress, to be sure. Keep doing what you're doing, and you should be in very good shape to retire down the road.

But you need to be honest with yourself; your current spending is multiples of what most American families earn in a given year. Even in a high cost of living area, that's very far from necessary. Treating yourself and your family is fine, but you are implicitly placing a higher priority on that than early retirement. That's perfectly fine, but you need to be fully aware that this is the choice you are making.

Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it.
'Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it."
This is not a real problem if you teach your kids all about life - if you don't teach them there will be many problems with this one not at the top of the list.
That's why I said "may." But to be honest, I've seen very few families with high levels of spending, even with seemingly very good parents, whose children did not grow up to want the same or more, at least until they learned the hard way that they simply couldn't. There are some, but they definitely seem to be in the minority.
I am guessing your kid(Kids) are very young. We have seen many kids growing up with very high levels of spending - and due to some atypical work situations we also se many kids growing up without the ability to spend much at all.
We experienced no correlation of the spending - but we see many issues with kids that have not had the advantage of being taught life lessons early on. You likely cannot imagine some of the tragedies out there but they do not tend to follow spending amounts , most folks do not come into contact with these situations.
I'm not sure that the data support the idea that there is no relationship between parents' spending and their children's (I cannot tell whether you are implying that there is no relationship or only a weak one). The data are very clear (e.g. this Pew study) that parents' incomes have a large effect on their children's subsequent incomes as adults. Granted, income and spending are not the same, but the link between them is definite and strong.

Some of the key findings from the Pew study referenced above include the following:
Approximately half of parental income advantages are passed on to children. The IGE, when averaged across all levels of parental income, is estimated at 0.52 for men and 0.47 for women. These estimates are at the high end of previous estimates and imply that the United States is very immobile.

The persistence of advantage is especially large among those raised in the middle to upper reaches of the income distribution. The IGE among adults whose parents were between the 50th and 90th income percentiles is 0.68 for men and 0.63 for women. This means that approximately two-thirds of parental income differences within this region of the income distribution persist into the next generation.

Children born far apart in the income distribution have very different economic outcomes. While a finding of unequal outcomes is not in itself surprising, the magnitude of this inequality has not been well appreciated: The expected family income of children raised in families at the 90th income percentile is about three times that of children raised at the 10th percentile.
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AlohaJoe
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Re: Can I retire

Post by AlohaJoe »

wander wrote: Sun Dec 16, 2018 10:19 am
AlohaJoe wrote: Sun Dec 16, 2018 6:54 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
Is it really so hard to imagine that other people could spend more money?

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000
Real family pays mortgage. Why doesn't your example have it?
Why should I need it? I listed some examples. I didn't say I was presenting an exhaustive list of every single thing that someone could spend more money on than Mrxyz spends. I also didn't say I was presenting a complete budget. I was, as I said, presenting some examples to someone who couldn't possibly imagine how anyone in the entire country could spend more than they do.
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Re: Can I retire

Post by pennylane »

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000

I don’t know who posted this but I gotta tell ya, if these are some of your expences, you better be bringing home close to 7 figures per year.
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Re: Can I retire

Post by Dottie57 »

AlohaJoe wrote: Sun Dec 16, 2018 6:54 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
Is it really so hard to imagine that other people could spend more money?

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000
Spendy amounts. You have a lifestyle I have never lived.

P.s. i believe some think it is hard to imagine having the salary and not having more in retirement if retirement is desired now.
retiringwhen
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Re: Can I retire

Post by retiringwhen »

Dottie57 wrote: Sun Dec 16, 2018 7:22 pm Spendy amounts. You have a lifestyle I have never lived.

P.s. i believe some think it is hard to imagine having the salary and not having more in retirement if retirement is desired now.
Everyone makes priority choices in life and we are all unique. For example, my wife made more money than I did when we got married, but instead of spending 75% of one of our salary's to pay for child-care she chose to stay at home and raise (including educate) our 3 children. As an opportunity cost, it was more expensive than that list above. It delayed our retirement by at least a decade maybe more, but we valued that choice and have no regrets.

Someone with those costs is willing to work harder (as in high salary position with likely considerable commitment and responsibility) and/or two wage-earner home to provide those opportunities to their children because (I hope) they value return on the investment in their children. To each his own...

More than one road to Rome....
finite_difference
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Re: Can I retire

Post by finite_difference »

Dottie57 wrote: Sun Dec 16, 2018 7:22 pm
AlohaJoe wrote: Sun Dec 16, 2018 6:54 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
Is it really so hard to imagine that other people could spend more money?

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000
Spendy amounts. You have a lifestyle I have never lived.

P.s. i believe some think it is hard to imagine having the salary and not having more in retirement if retirement is desired now.
Depends on how many kids you have. In a HCOL area, child care is really expensive. Easily $2k/month/child. So if you have 2 kids in childcare that’s $48k/year. In some areas public school is not an option, so if you have to pay for that then that could be a similar cost (e.g. 2 kids in private school as well, so 4 kids total.)

That’s why it’s tough to afford having many kids, unless you can have relatives take care of them or have one person stay at home (cuts total salary in half, but saves on childcare.)

In a HCOL area you are not rich by any stretch if you earn $200-300k and have kids. You are well off and can have a great upper middle class life though.

But the average Boglehead earns 6 figures and lives in a LCOl area, and doesn’t understand nor have to worry about these things ;)
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
Bacchus01
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Re: Can I retire

Post by Bacchus01 »

finite_difference wrote: Sun Dec 16, 2018 8:59 pm
Dottie57 wrote: Sun Dec 16, 2018 7:22 pm
AlohaJoe wrote: Sun Dec 16, 2018 6:54 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
Is it really so hard to imagine that other people could spend more money?

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000
Spendy amounts. You have a lifestyle I have never lived.

P.s. i believe some think it is hard to imagine having the salary and not having more in retirement if retirement is desired now.
Depends on how many kids you have. In a HCOL area, child care is really expensive. Easily $2k/month/child. So if you have 2 kids in childcare that’s $48k/year. In some areas public school is not an option, so if you have to pay for that then that could be a similar cost (e.g. 2 kids in private school as well, so 4 kids total.)

That’s why it’s tough to afford having many kids, unless you can have relatives take care of them or have one person stay at home (cuts total salary in half, but saves on childcare.)

In a HCOL area you are not rich by any stretch if you earn $200-300k and have kids. You are well off and can have a great upper middle class life though.

But the average Boglehead earns 6 figures and lives in a LCOl area, and doesn’t understand nor have to worry about these things ;)
Public school is always an option, as is where you live.
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Re: Can I retire

Post by BolderBoy »

waxman003 wrote: Fri Dec 14, 2018 11:59 pm SS will be $2400 per month at 67
Are you sure you are doing the math correctly on this? Retiring at 54 will give you a lot of years of zeros out of the 35 highest.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
finite_difference
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Re: Can I retire

Post by finite_difference »

Bacchus01 wrote: Sun Dec 16, 2018 9:05 pm
finite_difference wrote: Sun Dec 16, 2018 8:59 pm
Dottie57 wrote: Sun Dec 16, 2018 7:22 pm
AlohaJoe wrote: Sun Dec 16, 2018 6:54 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am

Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
Is it really so hard to imagine that other people could spend more money?

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000
Spendy amounts. You have a lifestyle I have never lived.

P.s. i believe some think it is hard to imagine having the salary and not having more in retirement if retirement is desired now.
Depends on how many kids you have. In a HCOL area, child care is really expensive. Easily $2k/month/child. So if you have 2 kids in childcare that’s $48k/year. In some areas public school is not an option, so if you have to pay for that then that could be a similar cost (e.g. 2 kids in private school as well, so 4 kids total.)

That’s why it’s tough to afford having many kids, unless you can have relatives take care of them or have one person stay at home (cuts total salary in half, but saves on childcare.)

In a HCOL area you are not rich by any stretch if you earn $200-300k and have kids. You are well off and can have a great upper middle class life though.

But the average Boglehead earns 6 figures and lives in a LCOl area, and doesn’t understand nor have to worry about these things ;)
Public school is always an option, as is where you live.
Yes, if you don’t mind commuting. But yeah I would try my utmost to live in a good public school district, and then find a job within a short distance.

That also fits the Boglehead stereotype: Earns 6 figures in a LCOL area w/ great public schools, with little or no commute.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
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Re: Can I retire

Post by AlohaJoe »

Bacchus01 wrote: Sun Dec 16, 2018 9:05 pm Public school is always an option, as is where you live.
It is actually illegal for me to send my children to public school where I live. In Australia public schools cost up to AUD$18,000 a year if you aren't a permanent resident (i.e. are just there on a visa for work for a few years) under the theory that you haven't been spending years paying taxes to support the system and so shouldn't get it for free.

One should be careful speaking in absolutes, we live in a diverse and varied world!
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Re: Can I retire

Post by Bacchus01 »

AlohaJoe wrote: Sun Dec 16, 2018 9:29 pm
Bacchus01 wrote: Sun Dec 16, 2018 9:05 pm Public school is always an option, as is where you live.
It is actually illegal for me to send my children to public school where I live. In Australia public schools cost up to AUD$18,000 a year if you aren't a permanent resident (i.e. are just there on a visa for work for a few years) under the theory that you haven't been spending years paying taxes to support the system and so shouldn't get it for free.

One should be careful speaking in absolutes, we live in a diverse and varied world!
And yet you just stated that it’s an option.
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MP123
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Re: Can I retire

Post by MP123 »

BolderBoy wrote: Sun Dec 16, 2018 9:18 pm
waxman003 wrote: Fri Dec 14, 2018 11:59 pm SS will be $2400 per month at 67
Are you sure you are doing the math correctly on this? Retiring at 54 will give you a lot of years of zeros out of the 35 highest.
If he had high-ish income work starting at 19 that estimate might be close.

But you're right that most SS calculators including the SSA assume you'll keep making the same wage until 65 (or 67) so he should definitely look into it further.

If he kept working he'd be overlaying lower previous years with a presumably higher salary now and getting a higher benefit.

If he didn't have 35 years already though then the benefit would be lower. Possibly much lower.

Hard to say without knowing the specifics.
AlohaJoe
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Re: Can I retire

Post by AlohaJoe »

Bacchus01 wrote: Sun Dec 16, 2018 9:36 pm
AlohaJoe wrote: Sun Dec 16, 2018 9:29 pm
Bacchus01 wrote: Sun Dec 16, 2018 9:05 pm Public school is always an option, as is where you live.
It is actually illegal for me to send my children to public school where I live. In Australia public schools cost up to AUD$18,000 a year if you aren't a permanent resident (i.e. are just there on a visa for work for a few years) under the theory that you haven't been spending years paying taxes to support the system and so shouldn't get it for free.

One should be careful speaking in absolutes, we live in a diverse and varied world!
And yet you just stated that it’s an option.
I thought I just stated it is illegal for me to send my children to public school? I do not live in Australia, though re-reading my comment, I can see how it is unclear about that. Australia was simply another example.
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Re: Can I retire

Post by willthrill81 »

MP123 wrote: Sun Dec 16, 2018 9:44 pm
BolderBoy wrote: Sun Dec 16, 2018 9:18 pm
waxman003 wrote: Fri Dec 14, 2018 11:59 pm SS will be $2400 per month at 67
Are you sure you are doing the math correctly on this? Retiring at 54 will give you a lot of years of zeros out of the 35 highest.
If he had high-ish income work starting at 19 that estimate might be close.

But you're right that most SS calculators including the SSA assume you'll keep making the same wage until 65 (or 67) so he should definitely look into it further.

If he kept working he'd be overlaying lower previous years with a presumably higher salary now and getting a higher benefit.

If he didn't have 35 years already though then the benefit would be lower. Possibly much lower.

Hard to say without knowing the specifics.
My 'quick and dirty but mostly accurate' method of doing this for myself since too am planning on retiring no later than 55 is to multiply my estimated SS benefit, which is based on my current earnings, by the proportion of the years that I will have had 'good' earnings divided by 35. For instance, I'll probably have about 25 years of good earnings, so my 'approximated' benefit is approximately 71% (25/35) of the SS estimate. And under current law, this will be cut by around 30% in about 15 years as well, so I very well might only get half of the SS estimate. That, along with the 15 year gap between my retirement and starting benefits (at age 70 for maximum SS benefit), leads to me to completely disregard SS benefits from our planning. In no way would I feel comfortable relying on any benefit of enough size to really move our needle.
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Re: Can I retire

Post by 80125 »

Retiring at 54 will give you a lot of years of zeros out of the 35 highest.
More than a few of us old dogs out here that have blown that out. Was on SSA.gov and doing some modeling today as I'm looking to walk in 2020. Can't speak for the OP but I'm sittin' here at the age of 54 now, have 37 years 'in-the-books' and not a single zero to be found. Once I file for 2018 I'll still be 54 and bump to 38 years without a gap. Two more years of current employment helps my average a bit but not that excited about it.
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Re: Can I retire

Post by radiowave »

Something to consider from a one more year (OMY) perspective, especially near the end of a long career and highest earning potential is that each additional year of working replaces the lowest annual salary of the 35.
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quantAndHold
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Re: Can I retire

Post by quantAndHold »

80125 wrote: Sun Dec 16, 2018 10:32 pm
Retiring at 54 will give you a lot of years of zeros out of the 35 highest.
More than a few of us old dogs out here that have blown that out. Was on SSA.gov and doing some modeling today as I'm looking to walk in 2020. Can't speak for the OP but I'm sittin' here at the age of 54 now, have 37 years 'in-the-books' and not a single zero to be found. Once I file for 2018 I'll still be 54 and bump to 38 years without a gap. Two more years of current employment helps my average a bit but not that excited about it.
Depends on how long he’s been making good money in the US, but it’s very likely a high earner will be past the 2nd bend point by 54. Another 10 years of work will increase his PIA, but not by much.
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Re: Can I retire

Post by Starfish »

Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Made me think and do some math.
We spend 2k on gas, and electricity each, 3k on phone, 8k on disability, 6k on insurance
2k on car, 650 on HOA, county tax of 5k
Car once every 10 year = 50G OR 5 G per year
So this is roughly 35k/year minimum
Rest is eating out, vacation, shopping.
No mortgage.

Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
We have 1 kid in 1st grade, we live pretty modestly and these are my expenses taken from Mint for 2017:
1. House: almost 40k. Mortgage + insurance + property taxes plus some minor DYI stuff. 2bdr, 1600sq ft in case you wonder.
2. Travel 17k$. 2017 was not a representative year because we use a lot of points from chase cards, about 10k in value.
3. Education 17k (student loans for my wife, some after school for the kid).. it's easy to spend this amount only for 1 kid in preschool.
4. Auto 16k (mostly loan repayment for 2 cars, insurance, gas)
5. Food & dining 13k. We go only couple of times a month to restaurant.
6. Everything else 25k (unities, cell phone, internet, amazon, netflix, all the shopping and all other expenses etc)

You have to add what is subtracted directly from my paycheck, like health insurance which is not small (3-4k more a year?).

Categories are not precise, mint is not very good at assigning categories and I do not bother correcting it. But the total is about there: >130k$. Plus tax, comes close to 200k in my state.
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Re: Can I retire

Post by Bacchus01 »

80125 wrote: Sun Dec 16, 2018 10:32 pm
Retiring at 54 will give you a lot of years of zeros out of the 35 highest.
More than a few of us old dogs out here that have blown that out. Was on SSA.gov and doing some modeling today as I'm looking to walk in 2020. Can't speak for the OP but I'm sittin' here at the age of 54 now, have 37 years 'in-the-books' and not a single zero to be found. Once I file for 2018 I'll still be 54 and bump to 38 years without a gap. Two more years of current employment helps my average a bit but not that excited about it.
Yeah, at 45 I have 31 years with no gaps. Not sure why someone would think 54 would not have gotten to 35 for many people.

Granted, 4 more years of higher earnings and then beyond would knock off those early low earnings, but when you’re well past the second bend point the additional value is pretty small.
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Re: Can I retire

Post by Bacchus01 »

Starfish wrote: Mon Dec 17, 2018 12:30 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Made me think and do some math.
We spend 2k on gas, and electricity each, 3k on phone, 8k on disability, 6k on insurance
2k on car, 650 on HOA, county tax of 5k
Car once every 10 year = 50G OR 5 G per year
So this is roughly 35k/year minimum
Rest is eating out, vacation, shopping.
No mortgage.

Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
We have 1 kid in 1st grade, we live pretty modestly and these are my expenses taken from Mint for 2017:
1. House: almost 40k. Mortgage + insurance + property taxes plus some minor DYI stuff. 2bdr, 1600sq ft in case you wonder.
2. Travel 17k$. 2017 was not a representative year because we use a lot of points from chase cards, about 10k in value.
3. Education 17k (student loans for my wife, some after school for the kid).. it's easy to spend this amount only for 1 kid in preschool.
4. Auto 16k (mostly loan repayment for 2 cars, insurance, gas)
5. Food & dining 13k. We go only couple of times a month to restaurant.
6. Everything else 25k (unities, cell phone, internet, amazon, netflix, all the shopping and all other expenses etc)

You have to add what is subtracted directly from my paycheck, like health insurance which is not small (3-4k more a year?).

Categories are not precise, mint is not very good at assigning categories and I do not bother correcting it. But the total is about there: >130k$. Plus tax, comes close to 200k in my state.
There is absolutely o thing wrong with what you wrote or how you prioritize your spending. But it’s not modest.
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Re: Can I retire

Post by Flashes1 »

Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Made me think and do some math.
We spend 2k on gas, and electricity each, 3k on phone, 8k on disability, 6k on insurance
2k on car, 650 on HOA, county tax of 5k
Car once every 10 year = 50G OR 5 G per year
So this is roughly 35k/year minimum
Rest is eating out, vacation, shopping.
No mortgage.

Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
For me: We spend around $15k/year at our Country Club (maybe more), $12k/year to board my daughter's horse, and $15K/ year for son's football/baseball lessons including 2 week boarding at IMG Academy in the summer. That doesn't include my S550 and wife's $80k Lincoln Navigator, $13k of property taxes on our $800k house-----restaurants, vacations, etc etc. Life ain't cheap!
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Re: Can I retire

Post by smitcat »

willthrill81 wrote: Sun Dec 16, 2018 4:34 pm
smitcat wrote: Sun Dec 16, 2018 4:25 pm
willthrill81 wrote: Sun Dec 16, 2018 4:17 pm
smitcat wrote: Sun Dec 16, 2018 4:14 pm
willthrill81 wrote: Sun Dec 16, 2018 3:48 pm

You've made some excellent progress, to be sure. Keep doing what you're doing, and you should be in very good shape to retire down the road.

But you need to be honest with yourself; your current spending is multiples of what most American families earn in a given year. Even in a high cost of living area, that's very far from necessary. Treating yourself and your family is fine, but you are implicitly placing a higher priority on that than early retirement. That's perfectly fine, but you need to be fully aware that this is the choice you are making.

Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it.
'Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives. Again, it's your choice, but I would suggest that you consider it."
This is not a real problem if you teach your kids all about life - if you don't teach them there will be many problems with this one not at the top of the list.
That's why I said "may." But to be honest, I've seen very few families with high levels of spending, even with seemingly very good parents, whose children did not grow up to want the same or more, at least until they learned the hard way that they simply couldn't. There are some, but they definitely seem to be in the minority.
I am guessing your kid(Kids) are very young. We have seen many kids growing up with very high levels of spending - and due to some atypical work situations we also se many kids growing up without the ability to spend much at all.
We experienced no correlation of the spending - but we see many issues with kids that have not had the advantage of being taught life lessons early on. You likely cannot imagine some of the tragedies out there but they do not tend to follow spending amounts , most folks do not come into contact with these situations.
I'm not sure that the data support the idea that there is no relationship between parents' spending and their children's (I cannot tell whether you are implying that there is no relationship or only a weak one). The data are very clear (e.g. this Pew study) that parents' incomes have a large effect on their children's subsequent incomes as adults. Granted, income and spending are not the same, but the link between them is definite and strong.

Some of the key findings from the Pew study referenced above include the following:
Approximately half of parental income advantages are passed on to children. The IGE, when averaged across all levels of parental income, is estimated at 0.52 for men and 0.47 for women. These estimates are at the high end of previous estimates and imply that the United States is very immobile.

The persistence of advantage is especially large among those raised in the middle to upper reaches of the income distribution. The IGE among adults whose parents were between the 50th and 90th income percentiles is 0.68 for men and 0.63 for women. This means that approximately two-thirds of parental income differences within this region of the income distribution persist into the next generation.

Children born far apart in the income distribution have very different economic outcomes. While a finding of unequal outcomes is not in itself surprising, the magnitude of this inequality has not been well appreciated: The expected family income of children raised in families at the 90th income percentile is about three times that of children raised at the 10th percentile.
'I cannot tell whether you are implying that there is no relationship or only a weak one
I'm not sure that the data support the idea that there is no relationship between parents' spending and their children's"
I was implying that your original statement below was not accurate from all the experiences that I have seen, this is what you had stated...

'Also, I would humbly suggest that you may be setting up your children for a very tough go of it. By growing accustomed to such a high standard of living, it may be very difficult, if not impossible, for them to maintain that standard later in their own lives.

We have not seen that affect - and in all fairness the disposable inocme we have seen with kids is far above what the OP was indicating in many cases. In just the past year we have had many 'kids' visit us in our living room that have many mutiples of those incomes. They all have been motivated and are living well themselves not just related to money.
In any case we are no passed the stage where we need be concrned about our kids having a tough go due to any type of standard they were a part of during these ages.
smitcat
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Re: Can I retire

Post by smitcat »

BolderBoy wrote: Sun Dec 16, 2018 9:18 pm
waxman003 wrote: Fri Dec 14, 2018 11:59 pm SS will be $2400 per month at 67
Are you sure you are doing the math correctly on this? Retiring at 54 will give you a lot of years of zeros out of the 35 highest.
Retiring at 54 would have given me no zeros and 3 lower entries- not sure where your thoughts are coming from.
smitcat
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Re: Can I retire

Post by smitcat »

willthrill81 wrote: Sun Dec 16, 2018 9:52 pm
MP123 wrote: Sun Dec 16, 2018 9:44 pm
BolderBoy wrote: Sun Dec 16, 2018 9:18 pm
waxman003 wrote: Fri Dec 14, 2018 11:59 pm SS will be $2400 per month at 67
Are you sure you are doing the math correctly on this? Retiring at 54 will give you a lot of years of zeros out of the 35 highest.
If he had high-ish income work starting at 19 that estimate might be close.

But you're right that most SS calculators including the SSA assume you'll keep making the same wage until 65 (or 67) so he should definitely look into it further.

If he kept working he'd be overlaying lower previous years with a presumably higher salary now and getting a higher benefit.

If he didn't have 35 years already though then the benefit would be lower. Possibly much lower.

Hard to say without knowing the specifics.
e.My 'quick and dirty but mostly accurate' method of doing this for myself since too am planning on retiring no later than 55 is to multiply my estimated SS benefit, which is based on my current earnings, by the proportion of the years that I will have had 'good' earnings divided by 35. For instance, I'll probably have about 25 years of good earnings, so my 'approximated' benefit is approximately 71% (25/35) of the SS estimate. And under current law, this will be cut by around 30% in about 15 years as well, so I very well might only get half of the SS estimate. That, along with the 15 year gap between my retirement and starting benefits (at age 70 for maximum SS benefit), leads to me to completely disregard SS benefits from our planning. In no way would I feel comfortable relying on any benefit of enough size to really move our needl
"My 'quick and dirty but mostly accurate' method of doing this for myself since too am planning on retiring no later than 55 is to multiply my estimated SS benefit, which is based on my current earnings, by the proportion of the years that I will have had 'good' earnings divided by 35. For instance, I'll probably have about 25 years of good earnings, so my 'approximated' benefit is approximately 71% (25/35) of the SS estimate. And under current law, this will be cut by around 30% in about 15 years as well, so I very well might only get half of the SS estimate. That, along with the 15 year gap between my retirement and starting benefits (at age 70 for maximum SS benefit), leads to me to completely disregard SS benefits from our planning. In no way would I feel comfortable relying on any benefit of enough size to really move our needl"

I have not found this method to be accurate when compared to visiting he SS.Gov site and using my numbers along with entering zeros for years I expected to be a non earner.
smitcat
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Re: Can I retire

Post by smitcat »

Bacchus01 wrote: Mon Dec 17, 2018 6:36 am
80125 wrote: Sun Dec 16, 2018 10:32 pm
Retiring at 54 will give you a lot of years of zeros out of the 35 highest.
More than a few of us old dogs out here that have blown that out. Was on SSA.gov and doing some modeling today as I'm looking to walk in 2020. Can't speak for the OP but I'm sittin' here at the age of 54 now, have 37 years 'in-the-books' and not a single zero to be found. Once I file for 2018 I'll still be 54 and bump to 38 years without a gap. Two more years of current employment helps my average a bit but not that excited about it.
Yeah, at 45 I have 31 years with no gaps. Not sure why someone would think 54 would not have gotten to 35 for many people.

Granted, 4 more years of higher earnings and then beyond would knock off those early low earnings, but when you’re well past the second bend point the additional value is pretty small.
Yes - absolutely what we see as well.
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goingup
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Re: Can I retire

Post by goingup »

gotester2000 wrote: Sun Dec 16, 2018 11:15 am
goingup wrote: Sun Dec 16, 2018 8:46 am
gotester2000 wrote: Sat Dec 15, 2018 12:21 am You can retire now if you can live on 80k per year.
To spend 150k/yr you need abt 5 million.
Where's this math coming from. A 54 yr old with a 2.5m portfolio with a 60/40 stock/bond asset allocation can withdraw about 4.5% according to the forum wiki VPW chart. https://www.bogleheads.org/wiki/Variabl ... withdrawal Let's say between 4-4.5% which gives him $112,500-$100,000.

The OP is currently saving 20% of his income. Figure he makes $325K, pays about $100K taxes, saves $70K. So expenses are $155K or so. I think to maintain that spending level the OP may need another 1million or $3.5m.

To retire now would require shaving about $50K in expenses. Might be tough. :|
Considering OP's age and taxes to pay on the income, I think a number near 3% is a safe bet than 4%.
Sure 3% is safer than 4%. Can't argue that. There is a thing as unnecessarily conservative. It's a bit of a balancing act (and a leap of faith) to choose a withdrawal rate from one's portfolio. For myself, I'm just running the numbers in various retirement calculators and using 4 - 4.5% at our ages.

The OP has a bit more of a dilemma because the spending absolutely sinks his portfolio survivability.
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HomerJ
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Re: Can I retire

Post by HomerJ »

AlohaJoe wrote: Sun Dec 16, 2018 6:54 am
Mrxyz wrote: Sun Dec 16, 2018 6:04 am
moneywise3 wrote: Sun Dec 16, 2018 1:12 am How can someone spend 250k a year in living expenses?
Maybe I/we need to spend more but there is no way I can see use spend 250k per year!
What am I missing?
(Just curious if my calculations are wrong and in no way trying to shame anyone)
Is it really so hard to imagine that other people could spend more money?

Here are some trivial examples from a real life family of four
Childcare $42,000
Property taxes $20,000
Charity/tithing $25,000
Food $23,000
Home maintenance $5,000
Vacations $18,000
Children's lessons (ballet, piano, tutoring) $12,000
Private school $50,000
Clothes $9,000
Pennylane, who is 26, with no kids, has no right to be telling the OP he's spending too much.

On the other hand, you really shouldn't be using the word "trivial" above when talking about spending that only the top 2% can do. That's equally ridiculous.

The OP needs to go through his spending carefully.. Lots of kid expenses will go away, and if they pay off the house or downsize, it's quite possible he can get his expenses low enough to retire early.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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