$3 million the new rule of thumb?

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smitcat
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Joined: Mon Nov 07, 2016 10:51 am

Re: $3 million the new rule of thumb?

Post by smitcat » Sun Feb 02, 2020 4:36 pm

mptfan wrote:
Sun Feb 02, 2020 11:33 am
Pierre Delecto wrote:
Sat Feb 01, 2020 4:13 pm
Lots of discussion in this thread about possible early death and thus retiring early even when healthy. It seems like this assumes that retiring is inherently better than working. True for some I’m sure. But people who love what they are doing never seem to completely retire as long as health still permits.
I agree. Some people enjoy their work and do not want to retire, regardless of whether they are financially able to do so, and some do not. It's not more complicated than that.
"Some people enjoy their work and do not want to retire, regardless of whether they are financially able to do so, and some do not. It's not more complicated than that"
Exactly - well put.

MathIsMyWayr
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Re: $3 million the new rule of thumb?

Post by MathIsMyWayr » Sun Feb 02, 2020 4:48 pm

KyleAAA wrote:
Sun Feb 02, 2020 4:31 pm
MathIsMyWayr wrote:
Sun Feb 02, 2020 2:11 pm
KyleAAA wrote:
Sun Feb 02, 2020 12:12 pm
MathIsMyWayr wrote:
Sat Feb 01, 2020 2:11 am
KyleAAA wrote:
Sat Feb 01, 2020 1:37 am
I don't see anybody arguing otherwise. $120k in retirement is a lot of money today in most cities. It will likely not be a lot of money in 30 years. And you keep assuming there is no mortgage in retirement, which is increasingly untrue for new retirees and certainly won't be true for me.

I made that in a MCOL city and it was not a ridiculous amount of money. I couldn't even afford to buy a decent house in a decent neighborhood in Atlanta on $250k.
Do you mean an income of $250k or a house for $250k?
An income of $250k. Difficult to find anything decent in a nice intown neighborhood under $1mm anymore.
In any town, there are sections which are nice and expensive. Are you looking at the neighbourhood where Turners live?
No. Virginia Highland is not an upscale neighborhood. It's just expensive. It's not a bad part lf town, although the schools arent very good and there is plenty of petty crime. All the established intown neighborhoods are expensive, even many of the neighborhoods you might be afraid to walk alone in at night. The Turners would probably live in Buckhead or Paces Ferry near the governors mansion.
I did not know that decent houses in a nice neighbourhood in Atlanta easily go over $1mm for those of us who are not super-rich. I am visiting Atlanta (around the downtown area) soon and am concerned with finding a housing. Not sure whether I shouldn't consider the expense when finding a lodging. There must be a good reason why people pay over $1mm for a decent house in MCOL.

chipperd
Posts: 617
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Re: $3 million the new rule of thumb?

Post by chipperd » Sun Feb 02, 2020 4:58 pm

TheTimeLord wrote:
Sun Feb 02, 2020 4:13 pm
chipperd wrote:
Sun Feb 02, 2020 7:06 am
Some threads, this one included, seem to bring out a backlash against FI and FIRE. Not sure why, (and I'm not asking for input as to what the reasons are), but there seems to be a vocal minority of FI/ FIRE naysayers on Bogleheads. Guess it's a more financially conservative crowd.
That said, usually in a discussion, if one has a valid point, that point will typically stand on it's own merit without the need to judge another's lifestyle choice(s).Not sure why some spend their valuable time in this manner.
If one made or makes a financial miscalculation, they will figure it out. People are survivors.
I think starting out planning to quit in 15 years is probably very self limited. Why take a new job, promotion or try a new career when you are just running out the clock until you FIRE. I say focus on FI and get there first, then take a look around and evaluate what you want to do, don't turn in your resignation before, you ever start.This is a personal bias based on my feeling that one of my biggest mistakes was focusing retiring early instead of just focusing on Financial Independence. I got to the age I planned to retire and discovered I didn't want to.
"... they will figure it out. People are survivors"
And you did, Congrats!

Pierre Delecto
Posts: 298
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Re: $3 million the new rule of thumb?

Post by Pierre Delecto » Sun Feb 02, 2020 5:01 pm

TheTimeLord wrote:
Sun Feb 02, 2020 4:13 pm
chipperd wrote:
Sun Feb 02, 2020 7:06 am
Some threads, this one included, seem to bring out a backlash against FI and FIRE. Not sure why, (and I'm not asking for input as to what the reasons are), but there seems to be a vocal minority of FI/ FIRE naysayers on Bogleheads. Guess it's a more financially conservative crowd.
That said, usually in a discussion, if one has a valid point, that point will typically stand on it's own merit without the need to judge another's lifestyle choice(s).Not sure why some spend their valuable time in this manner.
If one made or makes a financial miscalculation, they will figure it out. People are survivors.
I think starting out planning to quit in 15 years is probably very self limited. Why take a new job, promotion or try a new career when you are just running out the clock until you FIRE. I say focus on FI and get there first, then take a look around and evaluate what you want to do, don't turn in your resignation before, you ever start.This is a personal bias based on my feeling that one of my biggest mistakes was focusing retiring early instead of just focusing on Financial Independence. I got to the age I planned to retire and discovered I didn't want to.
+ 1. Well said.

reln
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Re: $3 million the new rule of thumb?

Post by reln » Sun Feb 02, 2020 5:05 pm

Amadis_of_Gaul wrote:
Tue Jan 28, 2020 12:48 pm
I have a bad habit of clicking on financial clickbait. This one is worse than normal:

Thoughts?
Irony :mrgreen:

mnnice
Posts: 472
Joined: Sat Aug 11, 2012 5:48 pm

Re: $3 million the new rule of thumb?

Post by mnnice » Sun Feb 02, 2020 5:13 pm

willthrill81 wrote:
Sun Feb 02, 2020 3:01 pm
AerialWombat wrote:
Sun Feb 02, 2020 12:56 pm
CyclingDuo wrote:
Sun Feb 02, 2020 10:32 am
AerialWombat wrote:
Sat Feb 01, 2020 12:42 pm
Of course, I’d have to live in Bozeman. Darn. No way I could afford Jackson. Those listing Jackson, WY as low cost, it’s not. Housing in particular is approaching Bay Area costs.
Let's see if I can clear this up once and for all.

I chose in my examples the following cities and what I felt they represented in terms of whether or not a nest egg would go equally as far in each of these cost of living locations....

LCOL

Jackson, MI
Toledo, OH

MCOL

Bozeman, MT

HCOL

NY, NY
San Francisco, CA
Seattle, WA

As said in an earlier post upthread, feel free to substitute your choice of city/location for LCOL, MCOL, and HCOL if none of those fit your criteria.

CyclingDuo
LOL, I saw “Bozeman” and “Jackson” listed together and automatically assumed you meant Jackson, Wyoming. The one in Mississippi isn’t even part of my regular thought processes. Perhaps illustrates a difference in where we are from. :beer
MI is the abbreviation for Michigan. Mississippi's is MS.

The abbreviations for the states beginning with 'M' can get confusing. Maine's is probably the most, ME.
Both Jackson, MI and Jackson, MI probably qualify as LCOL. Not sure Jackson, MI or Jackson, WY count as real cities in terms of population. Jackson, MI isn’t too far from Toledo OH though.
Last edited by mnnice on Sun Feb 02, 2020 5:37 pm, edited 1 time in total.

SQRT
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Re: $3 million the new rule of thumb?

Post by SQRT » Sun Feb 02, 2020 5:21 pm

TheTimeLord wrote:
Sun Feb 02, 2020 4:13 pm
chipperd wrote:
Sun Feb 02, 2020 7:06 am
Some threads, this one included, seem to bring out a backlash against FI and FIRE. Not sure why, (and I'm not asking for input as to what the reasons are), but there seems to be a vocal minority of FI/ FIRE naysayers on Bogleheads. Guess it's a more financially conservative crowd.
That said, usually in a discussion, if one has a valid point, that point will typically stand on it's own merit without the need to judge another's lifestyle choice(s).Not sure why some spend their valuable time in this manner.
If one made or makes a financial miscalculation, they will figure it out. People are survivors.
I think starting out planning to quit in 15 years is probably very self limited. Why take a new job, promotion or try a new career when you are just running out the clock until you FIRE. I say focus on FI and get there first, then take a look around and evaluate what you want to do, don't turn in your resignation before, you ever start.This is a personal bias based on my feeling that one of my biggest mistakes was focusing retiring early instead of just focusing on Financial Independence. I got to the age I planned to retire and discovered I didn't want to.
I agree. Pretty hard to focus on succeeding in your career when the goal right from the start is to retire at a certain time. I didn’t once think about ER until I was FI and had succeeded in my career goals. That was in my early ‘50’s.

Unladen_Swallow
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Re: $3 million the new rule of thumb?

Post by Unladen_Swallow » Sun Feb 02, 2020 5:41 pm

SQRT wrote:
Sun Feb 02, 2020 5:21 pm
I agree. Pretty hard to focus on succeeding in your career when the goal right from the start is to retire at a certain time. I didn’t once think about ER until I was FI and had succeeded in my career goals. That was in my early ‘50’s.
I evolved similarly.

Until my late 30s, my only financial focus was career development and becoming debt free. By 39, we were debt free (paid off home). At that time I turned my mind to financial independence, which in turn led to early retirement planning.

If I hadn't gone down this path, perhaps I would have just assumed that everyone works until 65.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

KyleAAA
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Re: $3 million the new rule of thumb?

Post by KyleAAA » Sun Feb 02, 2020 5:55 pm

MathIsMyWayr wrote:
Sun Feb 02, 2020 4:48 pm
KyleAAA wrote:
Sun Feb 02, 2020 4:31 pm
MathIsMyWayr wrote:
Sun Feb 02, 2020 2:11 pm
KyleAAA wrote:
Sun Feb 02, 2020 12:12 pm
MathIsMyWayr wrote:
Sat Feb 01, 2020 2:11 am

Do you mean an income of $250k or a house for $250k?
An income of $250k. Difficult to find anything decent in a nice intown neighborhood under $1mm anymore.
In any town, there are sections which are nice and expensive. Are you looking at the neighbourhood where Turners live?
No. Virginia Highland is not an upscale neighborhood. It's just expensive. It's not a bad part lf town, although the schools arent very good and there is plenty of petty crime. All the established intown neighborhoods are expensive, even many of the neighborhoods you might be afraid to walk alone in at night. The Turners would probably live in Buckhead or Paces Ferry near the governors mansion.
I did not know that decent houses in a nice neighbourhood in Atlanta easily go over $1mm for those of us who are not super-rich. I am visiting Atlanta (around the downtown area) soon and am concerned with finding a housing. Not sure whether I shouldn't consider the expense when finding a lodging. There must be a good reason why people pay over $1mm for a decent house in MCOL.
There are plenty of cheap houses in the suburbs, but then you have to deal with a 60-90 minute commute. Condos can be had for a reasonable price if a 1br works for you. If you’re visiting for fun, I’d advise you to avoid downtown. Other than the aquarium there’s not very much to do.
Last edited by KyleAAA on Sun Feb 02, 2020 5:58 pm, edited 2 times in total.

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TheTimeLord
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Re: $3 million the new rule of thumb?

Post by TheTimeLord » Sun Feb 02, 2020 5:56 pm

chipperd wrote:
Sun Feb 02, 2020 4:58 pm
TheTimeLord wrote:
Sun Feb 02, 2020 4:13 pm
chipperd wrote:
Sun Feb 02, 2020 7:06 am
Some threads, this one included, seem to bring out a backlash against FI and FIRE. Not sure why, (and I'm not asking for input as to what the reasons are), but there seems to be a vocal minority of FI/ FIRE naysayers on Bogleheads. Guess it's a more financially conservative crowd.
That said, usually in a discussion, if one has a valid point, that point will typically stand on it's own merit without the need to judge another's lifestyle choice(s).Not sure why some spend their valuable time in this manner.
If one made or makes a financial miscalculation, they will figure it out. People are survivors.
I think starting out planning to quit in 15 years is probably very self limited. Why take a new job, promotion or try a new career when you are just running out the clock until you FIRE. I say focus on FI and get there first, then take a look around and evaluate what you want to do, don't turn in your resignation before, you ever start.This is a personal bias based on my feeling that one of my biggest mistakes was focusing retiring early instead of just focusing on Financial Independence. I got to the age I planned to retire and discovered I didn't want to.
"... they will figure it out. People are survivors"
And you did, Congrats!
I think there is a large difference between FIRE in your 50s and FIRE in your 30s.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

Pierre Delecto
Posts: 298
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Re: $3 million the new rule of thumb?

Post by Pierre Delecto » Sun Feb 02, 2020 8:01 pm

TheTimeLord wrote:
Sun Feb 02, 2020 5:56 pm
chipperd wrote:
Sun Feb 02, 2020 4:58 pm
TheTimeLord wrote:
Sun Feb 02, 2020 4:13 pm
chipperd wrote:
Sun Feb 02, 2020 7:06 am
Some threads, this one included, seem to bring out a backlash against FI and FIRE. Not sure why, (and I'm not asking for input as to what the reasons are), but there seems to be a vocal minority of FI/ FIRE naysayers on Bogleheads. Guess it's a more financially conservative crowd.
That said, usually in a discussion, if one has a valid point, that point will typically stand on it's own merit without the need to judge another's lifestyle choice(s).Not sure why some spend their valuable time in this manner.
If one made or makes a financial miscalculation, they will figure it out. People are survivors.
I think starting out planning to quit in 15 years is probably very self limited. Why take a new job, promotion or try a new career when you are just running out the clock until you FIRE. I say focus on FI and get there first, then take a look around and evaluate what you want to do, don't turn in your resignation before, you ever start.This is a personal bias based on my feeling that one of my biggest mistakes was focusing retiring early instead of just focusing on Financial Independence. I got to the age I planned to retire and discovered I didn't want to.
"... they will figure it out. People are survivors"
And you did, Congrats!
I think there is a large difference between FIRE in your 50s and FIRE in your 30s.
I agree. People who “FIRE” in their 30s should probably more think in terms of taking a sabbatical. Or cutting back to part time / contract work as their schedule allows.

latesaver
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Re: $3 million the new rule of thumb?

Post by latesaver » Sun Feb 02, 2020 9:19 pm

stocknoob4111 wrote:
Tue Jan 28, 2020 1:33 pm
Amadis_of_Gaul wrote:
Tue Jan 28, 2020 12:48 pm
Essentially, the financial planner quoted in the article says that retirees should expect to need $120K a year from their retirement savings,
If you are going to enjoy a simple but comfortable life then you can get by easily on $30K/yr.

$3 million is so ridiculous it's not even funny
My property taxes are $17K per year. Internet/cable is another $1500 per year; gas/electric is another 2500 per year. Car and house insurance is another $3000 per year.

That's $24,000 per year before we buy food, toilet paper, gas for our cars, etc. BTW we spend $30,000 per year for 2 toddlers' day care.

So at least for us, where we live and given the age of our kids, we are spending $54,000 before we even pay for food.

I have $3 million invested and if i were to quit working and count on some 3 or 4% rule of thumb it would be downright irresponsible.

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AerialWombat
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Re: $3 million the new rule of thumb?

Post by AerialWombat » Sun Feb 02, 2020 9:35 pm

willthrill81 wrote:
Sun Feb 02, 2020 3:01 pm
MI is the abbreviation for Michigan. Mississippi's is MS.

The abbreviations for the states beginning with 'M' can get confusing. Maine's is probably the most, ME.
D’oh! I can read, I promise I can! :)

chipperd
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Re: $3 million the new rule of thumb?

Post by chipperd » Sun Feb 02, 2020 9:37 pm

Unladen_Swallow wrote:
Sun Feb 02, 2020 5:41 pm
SQRT wrote:
Sun Feb 02, 2020 5:21 pm
I agree. Pretty hard to focus on succeeding in your career when the goal right from the start is to retire at a certain time. I didn’t once think about ER until I was FI and had succeeded in my career goals. That was in my early ‘50’s.
I evolved similarly.

Until my late 30s, my only financial focus was career development and becoming debt free. By 39, we were debt free (paid off home). At that time I turned my mind to financial independence, which in turn led to early retirement planning.

If I hadn't gone down this path, perhaps I would have just assumed that everyone works until 65.
"Begin with the end in mind" S. Covey

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willthrill81
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Re: $3 million the new rule of thumb?

Post by willthrill81 » Sun Feb 02, 2020 9:43 pm

chipperd wrote:
Sun Feb 02, 2020 9:37 pm
Unladen_Swallow wrote:
Sun Feb 02, 2020 5:41 pm
SQRT wrote:
Sun Feb 02, 2020 5:21 pm
I agree. Pretty hard to focus on succeeding in your career when the goal right from the start is to retire at a certain time. I didn’t once think about ER until I was FI and had succeeded in my career goals. That was in my early ‘50’s.
I evolved similarly.

Until my late 30s, my only financial focus was career development and becoming debt free. By 39, we were debt free (paid off home). At that time I turned my mind to financial independence, which in turn led to early retirement planning.

If I hadn't gone down this path, perhaps I would have just assumed that everyone works until 65.
"Begin with the end in mind" S. Covey
Joe Saul-Sehy of the Stacking Benjamins podcast brings that up on a huge percentage of the shows. But it really is true.

"If you don't know where you're going, any road will get you there."
-Lewis Carroll
“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

EddyB
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Re: $3 million the new rule of thumb?

Post by EddyB » Sun Feb 02, 2020 9:50 pm

SQRT wrote:
Sun Feb 02, 2020 5:21 pm
TheTimeLord wrote:
Sun Feb 02, 2020 4:13 pm
chipperd wrote:
Sun Feb 02, 2020 7:06 am
Some threads, this one included, seem to bring out a backlash against FI and FIRE. Not sure why, (and I'm not asking for input as to what the reasons are), but there seems to be a vocal minority of FI/ FIRE naysayers on Bogleheads. Guess it's a more financially conservative crowd.
That said, usually in a discussion, if one has a valid point, that point will typically stand on it's own merit without the need to judge another's lifestyle choice(s).Not sure why some spend their valuable time in this manner.
If one made or makes a financial miscalculation, they will figure it out. People are survivors.
I think starting out planning to quit in 15 years is probably very self limited. Why take a new job, promotion or try a new career when you are just running out the clock until you FIRE. I say focus on FI and get there first, then take a look around and evaluate what you want to do, don't turn in your resignation before, you ever start.This is a personal bias based on my feeling that one of my biggest mistakes was focusing retiring early instead of just focusing on Financial Independence. I got to the age I planned to retire and discovered I didn't want to.
I agree. Pretty hard to focus on succeeding in your career when the goal right from the start is to retire at a certain time. I didn’t once think about ER until I was FI and had succeeded in my career goals. That was in my early ‘50’s.
Career success, or maximum career success, isn’t everyone’s priority. One-dimensional focus on career is no less “self limited,” it just happens to be so in a way that’s widely supported in most western societies.

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CyclingDuo
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Re: $3 million the new rule of thumb?

Post by CyclingDuo » Sun Feb 02, 2020 11:06 pm

AerialWombat wrote:
Sun Feb 02, 2020 12:56 pm
CyclingDuo wrote:
Sun Feb 02, 2020 10:32 am
AerialWombat wrote:
Sat Feb 01, 2020 12:42 pm
Of course, I’d have to live in Bozeman. Darn. No way I could afford Jackson. Those listing Jackson, WY as low cost, it’s not. Housing in particular is approaching Bay Area costs.
Let's see if I can clear this up once and for all.

I chose in my examples the following cities and what I felt they represented in terms of whether or not a nest egg would go equally as far in each of these cost of living locations....

LCOL

Jackson, MS
Toledo, OH

MCOL

Bozeman, MT

HCOL

NY, NY
San Francisco, CA
Seattle, WA

As said in an earlier post upthread, feel free to substitute your choice of city/location for LCOL, MCOL, and HCOL if none of those fit your criteria.

CyclingDuo
LOL, I saw “Bozeman” and “Jackson” listed together and automatically assumed you meant Jackson, Wyoming. The one in Mississippi isn’t even part of my regular thought processes. Perhaps illustrates a difference in where we are from. :beer
That being said, I typed MI instead of MS in haste.

:oops:

You are correct, the one in the deep south in Mississippi is the one I am referring to as a LCOL area. Not Jackson, WY, and not Jackson, MI (or any other Jackson). :beer
"Everywhere is within walking distance if you have the time." ~ Steven Wright

MathIsMyWayr
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Location: CA

Re: $3 million the new rule of thumb?

Post by MathIsMyWayr » Sun Feb 02, 2020 11:48 pm

EddyB wrote:
Sun Feb 02, 2020 9:50 pm
SQRT wrote:
Sun Feb 02, 2020 5:21 pm
TheTimeLord wrote:
Sun Feb 02, 2020 4:13 pm
chipperd wrote:
Sun Feb 02, 2020 7:06 am
Some threads, this one included, seem to bring out a backlash against FI and FIRE. Not sure why, (and I'm not asking for input as to what the reasons are), but there seems to be a vocal minority of FI/ FIRE naysayers on Bogleheads. Guess it's a more financially conservative crowd.
That said, usually in a discussion, if one has a valid point, that point will typically stand on it's own merit without the need to judge another's lifestyle choice(s).Not sure why some spend their valuable time in this manner.
If one made or makes a financial miscalculation, they will figure it out. People are survivors.
I think starting out planning to quit in 15 years is probably very self limited. Why take a new job, promotion or try a new career when you are just running out the clock until you FIRE. I say focus on FI and get there first, then take a look around and evaluate what you want to do, don't turn in your resignation before, you ever start.This is a personal bias based on my feeling that one of my biggest mistakes was focusing retiring early instead of just focusing on Financial Independence. I got to the age I planned to retire and discovered I didn't want to.
I agree. Pretty hard to focus on succeeding in your career when the goal right from the start is to retire at a certain time. I didn’t once think about ER until I was FI and had succeeded in my career goals. That was in my early ‘50’s.
Career success, or maximum career success, isn’t everyone’s priority. One-dimensional focus on career is no less “self limited,” it just happens to be so in a way that’s widely supported in most western societies.
"most western societies" only? Did I read it right? Why do we live in the first place? Life is about finding out what you want to do and trying your best to achieve it. Isn't this way Mr. Bogle lived? Was FIRE his life goal? Ever to excel!

EddyB
Posts: 1360
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Re: $3 million the new rule of thumb?

Post by EddyB » Mon Feb 03, 2020 12:23 am

MathIsMyWayr wrote:
Sun Feb 02, 2020 11:48 pm
EddyB wrote:
Sun Feb 02, 2020 9:50 pm
SQRT wrote:
Sun Feb 02, 2020 5:21 pm
TheTimeLord wrote:
Sun Feb 02, 2020 4:13 pm
chipperd wrote:
Sun Feb 02, 2020 7:06 am
Some threads, this one included, seem to bring out a backlash against FI and FIRE. Not sure why, (and I'm not asking for input as to what the reasons are), but there seems to be a vocal minority of FI/ FIRE naysayers on Bogleheads. Guess it's a more financially conservative crowd.
That said, usually in a discussion, if one has a valid point, that point will typically stand on it's own merit without the need to judge another's lifestyle choice(s).Not sure why some spend their valuable time in this manner.
If one made or makes a financial miscalculation, they will figure it out. People are survivors.
I think starting out planning to quit in 15 years is probably very self limited. Why take a new job, promotion or try a new career when you are just running out the clock until you FIRE. I say focus on FI and get there first, then take a look around and evaluate what you want to do, don't turn in your resignation before, you ever start.This is a personal bias based on my feeling that one of my biggest mistakes was focusing retiring early instead of just focusing on Financial Independence. I got to the age I planned to retire and discovered I didn't want to.
I agree. Pretty hard to focus on succeeding in your career when the goal right from the start is to retire at a certain time. I didn’t once think about ER until I was FI and had succeeded in my career goals. That was in my early ‘50’s.
Career success, or maximum career success, isn’t everyone’s priority. One-dimensional focus on career is no less “self limited,” it just happens to be so in a way that’s widely supported in most western societies.
"most western societies" only? Did I read it right? Why do we live in the first place? Life is about finding out what you want to do and trying your best to achieve it. Isn't this way Mr. Bogle lived? Was FIRE his life goal? Ever to excel!
Some people don’t think “career” is what they “want to do,” but accept that some amount of it is necessary, or the best way, to achieve whatever it is they want to do. Why shouldn’t they focus on how to use career only to support their higher priorities?

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HomerJ
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Re: $3 million the new rule of thumb?

Post by HomerJ » Mon Feb 03, 2020 12:55 am

latesaver wrote:
Sun Feb 02, 2020 9:19 pm
stocknoob4111 wrote:
Tue Jan 28, 2020 1:33 pm
Amadis_of_Gaul wrote:
Tue Jan 28, 2020 12:48 pm
Essentially, the financial planner quoted in the article says that retirees should expect to need $120K a year from their retirement savings,
If you are going to enjoy a simple but comfortable life then you can get by easily on $30K/yr.

$3 million is so ridiculous it's not even funny
My property taxes are $17K per year. Internet/cable is another $1500 per year; gas/electric is another 2500 per year. Car and house insurance is another $3000 per year.

That's $24,000 per year before we buy food, toilet paper, gas for our cars, etc. BTW we spend $30,000 per year for 2 toddlers' day care.

So at least for us, where we live and given the age of our kids, we are spending $54,000 before we even pay for food.

I have $3 million invested and if i were to quit working and count on some 3 or 4% rule of thumb it would be downright irresponsible.
$17k for property taxes is very expensive.

The average American pays $3,500 in property taxes.

Only 9 counties (out of 1408) in the country have average property taxes above $10,000.

https://www.attomdata.com/news/market-t ... -analysis/
Among 1,408 U.S. counties with at least 10,000 single family homes, those with the highest average property taxes on single-family homes were largely located in the greater New York metro area, led by Westchester County, New York ($17,392); Rockland County, New York ($12,925); Marin County, California ($12,242); Essex County, New Jersey ($12,161); and Bergen County, New Jersey ($11,771).
$2000 a month covers most people food, utilities, property taxes, and insurance. Not all people. There are certainly people in this thread who can't cover those basics with $24,000 a year.

But most people.

With a paid off house, it's really not that hard to cover basic necessities. $4000 a month, really should cover those base needs plus extra for repairs and maintenance, car stuff, health insurance, etc. for most people with a paid off house. Not all people, but most people. $50,000 a year (with a paid off house) in retirement is pretty solid. Everything after that is for fun. For most people.

And Social Security alone (especially for a couple) gives you a pretty solid chunk of that $50,000 a year.

(FYI - Most people won't have day care for 2 toddlers in retirement, so you don't have to count those expenses)... :)
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grayfox
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Re: $3 million the new rule of thumb?

Post by grayfox » Mon Feb 03, 2020 8:14 am

HomerJ wrote:
Mon Feb 03, 2020 12:55 am

$2000 a month covers most people food, utilities, property taxes, and insurance. Not all people. There are certainly people in this thread who can't cover those basics with $24,000 a year.

But most people.

With a paid off house, it's really not that hard to cover basic necessities. $4000 a month, really should cover those base needs plus extra for repairs and maintenance, car stuff, health insurance, etc. for most people with a paid off house. Not all people, but most people. $50,000 a year (with a paid off house) in retirement is pretty solid. Everything after that is for fun. For most people.

And Social Security alone (especially for a couple) gives you a pretty solid chunk of that $50,000 a year.
I will agree that floor expenses are about $50,000 for average people. And that assumes that you have an asset (house) worth $200K - $2M, depending on where you live.

And floor expenses basically mean you mostly sit at home or do only free things. But what about the upside expenses? Trip overseas every year, new $30,000 vehicles every few years, all the toys for whatever hobbies you have--bass boat, photo gear, etc., outsourcing work like cleaning service, lawn service, instead of DIY. Then $10,000 per year gifts to offspring, or helping with down payment on house, etc. How much will that add per year $20K, $30K, more?

As far as social security, it only starts at age 70 for most Bogleheads. So if retirement starts at 55, that's 15 years where your portfolio has to cover everything.

And if the money comes from tIRA, it is all taxed as ordinary income. So you have to withdraw more than you spend, to pay the taxes.

And then there is savings. I still save 20% of withdrawal amount, so that when it is time to make a large purchase, I am not making random withdrawals from tIRA account. E.g. I want to buy a $3,000 camera or $3,000 computer or $3,000 Telecaster. If I don't have the cash in savings account, I will not just sell $3,000 worth of Wellesley Income in retirement account, which would be consuming the income-producing assets.

:idea: I very quickly learned that you can't just tap your retirement accounts whenever you want to pay for some unplanned item. That is the road to ruin. You can only withdraw the planned amount, whether it is $3,000 per month, $4,000 or $5,000 whatever. Therefore, you need a savings regimen, even after retired, to build up money for unplanned purchases.
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Re: $3 million the new rule of thumb?

Post by TheTimeLord » Mon Feb 03, 2020 8:31 am

EddyB wrote:
Mon Feb 03, 2020 12:23 am
MathIsMyWayr wrote:
Sun Feb 02, 2020 11:48 pm
EddyB wrote:
Sun Feb 02, 2020 9:50 pm
SQRT wrote:
Sun Feb 02, 2020 5:21 pm
TheTimeLord wrote:
Sun Feb 02, 2020 4:13 pm


I think starting out planning to quit in 15 years is probably very self limited. Why take a new job, promotion or try a new career when you are just running out the clock until you FIRE. I say focus on FI and get there first, then take a look around and evaluate what you want to do, don't turn in your resignation before, you ever start.This is a personal bias based on my feeling that one of my biggest mistakes was focusing retiring early instead of just focusing on Financial Independence. I got to the age I planned to retire and discovered I didn't want to.
I agree. Pretty hard to focus on succeeding in your career when the goal right from the start is to retire at a certain time. I didn’t once think about ER until I was FI and had succeeded in my career goals. That was in my early ‘50’s.
Career success, or maximum career success, isn’t everyone’s priority. One-dimensional focus on career is no less “self limited,” it just happens to be so in a way that’s widely supported in most western societies.
"most western societies" only? Did I read it right? Why do we live in the first place? Life is about finding out what you want to do and trying your best to achieve it. Isn't this way Mr. Bogle lived? Was FIRE his life goal? Ever to excel!
Some people don’t think “career” is what they “want to do,” but accept that some amount of it is necessary, or the best way, to achieve whatever it is they want to do. Why shouldn’t they focus on how to use career only to support their higher priorities?
You probably need to provide an example(s) to help some of us understand exactly what you kind of life you are talking about. The one thing I have learned over my life is for most people what we want changes over the years. It hard for me picturing knowing exactly how I wanted to live and what I wanted to do everyday for the rest of my life in my 20s.
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chipperd
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Re: $3 million the new rule of thumb?

Post by chipperd » Mon Feb 03, 2020 9:14 am

TheTimeLord wrote:
Mon Feb 03, 2020 8:31 am
EddyB wrote:
Mon Feb 03, 2020 12:23 am
MathIsMyWayr wrote:
Sun Feb 02, 2020 11:48 pm
EddyB wrote:
Sun Feb 02, 2020 9:50 pm
SQRT wrote:
Sun Feb 02, 2020 5:21 pm

I agree. Pretty hard to focus on succeeding in your career when the goal right from the start is to retire at a certain time. I didn’t once think about ER until I was FI and had succeeded in my career goals. That was in my early ‘50’s.
Career success, or maximum career success, isn’t everyone’s priority. One-dimensional focus on career is no less “self limited,” it just happens to be so in a way that’s widely supported in most western societies.
"most western societies" only? Did I read it right? Why do we live in the first place? Life is about finding out what you want to do and trying your best to achieve it. Isn't this way Mr. Bogle lived? Was FIRE his life goal? Ever to excel!
Some people don’t think “career” is what they “want to do,” but accept that some amount of it is necessary, or the best way, to achieve whatever it is they want to do. Why shouldn’t they focus on how to use career only to support their higher priorities?
You probably need to provide an example(s) to help some of us understand exactly what you kind of life you are talking about. The one thing I have learned over my life is for most people what we want changes over the years. It hard for me picturing knowing exactly how I wanted to live and what I wanted to do everyday for the rest of my life in my 20s.
My experience(s) have taught me that being F.I. gives one the flexibility to live ones life the way one chooses. Yes, it's possible to walk and chew gum, that is have several short, medium and long term goals and to give 100%, not only to that goal, but to multiple goals at one time. It's this ability we have as humans that allow us to juggle a multitude of activities in the work force, and in other realms, that lead to success, however one defines that word.
For me, success is to leave the world a better place than I found it in any way I can. That lead me to my career (for reasons other than financial: social work is more of a calling than a financial optimization of ones abilities), to volunteer, to give my kids a better life than I had, to be a better husband...all at the same time. Until one day, I ran the numbers ( or rather my son developed a workbook of spread sheets, took our financial data, and showed me that ) I was F.I....
Last edited by chipperd on Mon Feb 03, 2020 9:19 am, edited 1 time in total.

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Re: $3 million the new rule of thumb?

Post by TheTimeLord » Mon Feb 03, 2020 9:18 am

chipperd wrote:
Mon Feb 03, 2020 9:14 am
TheTimeLord wrote:
Mon Feb 03, 2020 8:31 am
EddyB wrote:
Mon Feb 03, 2020 12:23 am
MathIsMyWayr wrote:
Sun Feb 02, 2020 11:48 pm
EddyB wrote:
Sun Feb 02, 2020 9:50 pm


Career success, or maximum career success, isn’t everyone’s priority. One-dimensional focus on career is no less “self limited,” it just happens to be so in a way that’s widely supported in most western societies.
"most western societies" only? Did I read it right? Why do we live in the first place? Life is about finding out what you want to do and trying your best to achieve it. Isn't this way Mr. Bogle lived? Was FIRE his life goal? Ever to excel!
Some people don’t think “career” is what they “want to do,” but accept that some amount of it is necessary, or the best way, to achieve whatever it is they want to do. Why shouldn’t they focus on how to use career only to support their higher priorities?
You probably need to provide an example(s) to help some of us understand exactly what you kind of life you are talking about. The one thing I have learned over my life is for most people what we want changes over the years. It hard for me picturing knowing exactly how I wanted to live and what I wanted to do everyday for the rest of my life in my 20s.
My experience(s) have taught me that being F.I. gives one the flexibility to live ones life the way one chooses. Yes, it's possible to walk and chew gum, that is have a medium to long term goal and give 100%, not only to that goal, but to multiple goals at one time. It's this ability we have as humans that allow us to juggle a multitude of activities in the work force, and in other realms, that lead to success, however one defines that word.
For me, success is to leave the world a better place than I found it in any way I can. That lead me to my career (for reasons other than financial: social work is more of a calling than a financial optimization of ones abilities), to volunteer, to give my kids a better life than I had, to be a better husband...all at the same time. Until one day, I ran the numbers ( or rather my son developed a workbook of spread sheets and showed me that ) I was F.I....
Doesn't sound like you are in your 20s or 30s.
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chipperd
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Re: $3 million the new rule of thumb?

Post by chipperd » Mon Feb 03, 2020 9:20 am

TheTimeLord wrote:
Mon Feb 03, 2020 9:18 am
chipperd wrote:
Mon Feb 03, 2020 9:14 am
TheTimeLord wrote:
Mon Feb 03, 2020 8:31 am
EddyB wrote:
Mon Feb 03, 2020 12:23 am
MathIsMyWayr wrote:
Sun Feb 02, 2020 11:48 pm

"most western societies" only? Did I read it right? Why do we live in the first place? Life is about finding out what you want to do and trying your best to achieve it. Isn't this way Mr. Bogle lived? Was FIRE his life goal? Ever to excel!
Some people don’t think “career” is what they “want to do,” but accept that some amount of it is necessary, or the best way, to achieve whatever it is they want to do. Why shouldn’t they focus on how to use career only to support their higher priorities?
You probably need to provide an example(s) to help some of us understand exactly what you kind of life you are talking about. The one thing I have learned over my life is for most people what we want changes over the years. It hard for me picturing knowing exactly how I wanted to live and what I wanted to do everyday for the rest of my life in my 20s.
My experience(s) have taught me that being F.I. gives one the flexibility to live ones life the way one chooses. Yes, it's possible to walk and chew gum, that is have a medium to long term goal and give 100%, not only to that goal, but to multiple goals at one time. It's this ability we have as humans that allow us to juggle a multitude of activities in the work force, and in other realms, that lead to success, however one defines that word.
For me, success is to leave the world a better place than I found it in any way I can. That lead me to my career (for reasons other than financial: social work is more of a calling than a financial optimization of ones abilities), to volunteer, to give my kids a better life than I had, to be a better husband...all at the same time. Until one day, I ran the numbers ( or rather my son developed a workbook of spread sheets and showed me that ) I was F.I....
Doesn't sound like you are in your 20s or 30s.
Not at the moment. What is the relevance of that comment to my post?

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Re: $3 million the new rule of thumb?

Post by stoptothink » Mon Feb 03, 2020 9:29 am

grayfox wrote:
Mon Feb 03, 2020 8:14 am
HomerJ wrote:
Mon Feb 03, 2020 12:55 am

$2000 a month covers most people food, utilities, property taxes, and insurance. Not all people. There are certainly people in this thread who can't cover those basics with $24,000 a year.

But most people.

With a paid off house, it's really not that hard to cover basic necessities. $4000 a month, really should cover those base needs plus extra for repairs and maintenance, car stuff, health insurance, etc. for most people with a paid off house. Not all people, but most people. $50,000 a year (with a paid off house) in retirement is pretty solid. Everything after that is for fun. For most people.

And Social Security alone (especially for a couple) gives you a pretty solid chunk of that $50,000 a year.
I will agree that floor expenses are about $50,000 for average people. And that assumes that you have an asset (house) worth $200K - $2M, depending on where you live.

And floor expenses basically mean you mostly sit at home or do only free things. But what about the upside expenses? Trip overseas every year, new $30,000 vehicles every few years, all the toys for whatever hobbies you have--bass boat, photo gear, etc., outsourcing work like cleaning service, lawn service, instead of DIY. Then $10,000 per year gifts to offspring, or helping with down payment on house, etc. How much will that add per year $20K, $30K, more?

As far as social security, it only starts at age 70 for most Bogleheads. So if retirement starts at 55, that's 15 years where your portfolio has to cover everything.

And if the money comes from tIRA, it is all taxed as ordinary income. So you have to withdraw more than you spend, to pay the taxes.

And then there is savings. I still save 20% of withdrawal amount, so that when it is time to make a large purchase, I am not making random withdrawals from tIRA account. E.g. I want to buy a $3,000 camera or $3,000 computer or $3,000 Telecaster. If I don't have the cash in savings account, I will not just sell $3,000 worth of Wellesley Income in retirement account, which would be consuming the income-producing assets.

:idea: I very quickly learned that you can't just tap your retirement accounts whenever you want to pay for some unplanned item. That is the road to ruin. You can only withdraw the planned amount, whether it is $3,000 per month, $4,000 or $5,000 whatever. Therefore, you need a savings regimen, even after retired, to build up money for unplanned purchases.
Just our +1: property taxes ~$2k/yr, HOA ~3600/yr, utilities ~$800/yr, food ~$3600/yr, car insurance $590/yr...family of 4 in MCOL area. We're currently <$45k/yr in spending with one child in full-time daycare, mortgage, and wife in school full-time. All 3 of those bills are gone by the end of this year. We have extremely active lives and (IMO) have a very high quality of life, but...

"trip overseas every year, new $30,000 vehicles every few years, all the toys for whatever hobbies you have--bass boat, photo gear, etc., outsourcing work like cleaning service, lawn service, instead of DIY. Then $10,000 per year gifts to offspring, or helping with down payment on house, etc. How much will that add per year $20K, $30K, more?

...are not part of it. As someone earlier said, your "needs" are my "wants"; in fact, I don't want any of those "upside" expenses you mentioned. FWIW, we are in our mid-30's and ~2yrs from $1M+ in liquid assets and a paid off home (kids college is covered by 529s already), we have no interest in FIRE (maybe in 15yrs) but pretty confident we could do it now if that was our desire. Without a mortgage we could easily live off <$3k/month, we are easily doing it now.

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Re: $3 million the new rule of thumb?

Post by TheTimeLord » Mon Feb 03, 2020 9:34 am

chipperd wrote:
Mon Feb 03, 2020 9:20 am
TheTimeLord wrote:
Mon Feb 03, 2020 9:18 am
chipperd wrote:
Mon Feb 03, 2020 9:14 am
TheTimeLord wrote:
Mon Feb 03, 2020 8:31 am
EddyB wrote:
Mon Feb 03, 2020 12:23 am


Some people don’t think “career” is what they “want to do,” but accept that some amount of it is necessary, or the best way, to achieve whatever it is they want to do. Why shouldn’t they focus on how to use career only to support their higher priorities?
You probably need to provide an example(s) to help some of us understand exactly what you kind of life you are talking about. The one thing I have learned over my life is for most people what we want changes over the years. It hard for me picturing knowing exactly how I wanted to live and what I wanted to do everyday for the rest of my life in my 20s.
My experience(s) have taught me that being F.I. gives one the flexibility to live ones life the way one chooses. Yes, it's possible to walk and chew gum, that is have a medium to long term goal and give 100%, not only to that goal, but to multiple goals at one time. It's this ability we have as humans that allow us to juggle a multitude of activities in the work force, and in other realms, that lead to success, however one defines that word.
For me, success is to leave the world a better place than I found it in any way I can. That lead me to my career (for reasons other than financial: social work is more of a calling than a financial optimization of ones abilities), to volunteer, to give my kids a better life than I had, to be a better husband...all at the same time. Until one day, I ran the numbers ( or rather my son developed a workbook of spread sheets and showed me that ) I was F.I....
Doesn't sound like you are in your 20s or 30s.
Not at the moment. What is the relevance of that comment to my post?
A large part of the discussion was around the difference in FIRE in one's 20s and 30s versus say their 50s.
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Admiral
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Re: $3 million the new rule of thumb?

Post by Admiral » Mon Feb 03, 2020 10:19 am

Just to add:

In terms of baseline expenses, there is a lot of variability based on geography. For example, if you live in NJ or CT, you might have a paid off house but your taxes could be 20-25k per year. Live in the burbs: you need a car, so that has a price/cost.

Those people may have baseline expenses of 40-50k: i.e. that's how much they need to live, even with a paid off house. I could easily picture this family needing another 30-50k for other things (travel, adult kid support, hobbies). So now you're at 70-100k. If they retire early, then could have that expense with no SS helping for 15 years.

They will need more than $1m. Not $3m. But not $1m, unless they are comfortable spending down most of their portfolio before SS kicks in.

I, for one, am not.
Last edited by Admiral on Mon Feb 03, 2020 10:26 am, edited 1 time in total.

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Re: $3 million the new rule of thumb?

Post by grayfox » Mon Feb 03, 2020 10:22 am

stoptothink wrote:
Mon Feb 03, 2020 9:29 am

"trip overseas every year, new $30,000 vehicles every few years, all the toys for whatever hobbies you have--bass boat, photo gear, etc., outsourcing work like cleaning service, lawn service, instead of DIY. Then $10,000 per year gifts to offspring, or helping with down payment on house, etc. How much will that add per year $20K, $30K, more?

...are not part of it. As someone earlier said, your "needs" are my "wants"; in fact, I don't want any of those "upside" expenses you mentioned. FWIW, we are in our mid-30's and ~2yrs from $1M+ in liquid assets and a paid off home (kids college is covered by 529s already), we have no interest in FIRE (maybe in 15yrs) but pretty confident we could do it now if that was our desire. Without a mortgage we could easily live off <$3k/month, we are easily doing it now.
Anyone can live on <$3K per month. But why would you want to?
That one extreme guy says he lives on $7,000 per year. Again, why would anyone want to?

If you want to be stick in the mud, don't go anywhere, don't do anything. You can probably do that on $1,000 per month.

Confuscious wrote: It’s Better to Travel 10,000 Miles Than Read 10,000 Books.

I have been taking extended overseas travel every year for at least a dozen years. By extended travel, I mean 3-9 months. My longest trip was about 2 years overseas. Confuscious was right. I've learned more about the world on those trips than all my schooling, book reading, and media watching combined. Whenever something shows up on the news, I can say, "Oh, yeah, I know exactly where that is, and the news guy doesn't know what he's talking about."

It costs money to travel--tansportation, accommodation, etc. I would not retire without having the budget to do that.
Last edited by grayfox on Mon Feb 03, 2020 10:25 am, edited 1 time in total.
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Admiral
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Re: $3 million the new rule of thumb?

Post by Admiral » Mon Feb 03, 2020 10:24 am

grayfox wrote:
Mon Feb 03, 2020 10:22 am
stoptothink wrote:
Mon Feb 03, 2020 9:29 am

"trip overseas every year, new $30,000 vehicles every few years, all the toys for whatever hobbies you have--bass boat, photo gear, etc., outsourcing work like cleaning service, lawn service, instead of DIY. Then $10,000 per year gifts to offspring, or helping with down payment on house, etc. How much will that add per year $20K, $30K, more?

...are not part of it. As someone earlier said, your "needs" are my "wants"; in fact, I don't want any of those "upside" expenses you mentioned. FWIW, we are in our mid-30's and ~2yrs from $1M+ in liquid assets and a paid off home (kids college is covered by 529s already), we have no interest in FIRE (maybe in 15yrs) but pretty confident we could do it now if that was our desire. Without a mortgage we could easily live off <$3k/month, we are easily doing it now.
Anyone can live on <$3K per month. But why would you want to?
That one extreme guy says he lives on $7,000 per year. Again, why would anyone want to?

Confuscious wrote: It’s Better to Travel 10,000 Miles Than Read 10,000 Books.

I have been taking extended overseas travel every year for at least a dozen years. By extended travel, I mean 3-9 months. My longest trip was about 2 years overseas. Confuscious was right. I've learned more about the world on those trips than all my schooling, book reading, and media watching combined. Whenever something shows up on the news, I can say, "Oh, yeah, I know exactly where that is, and the news guy doesn't know what he's talking about."

It costs money to travel--tansportation, accommodation, etc. I would not retire without having the budget to do that.
Your wants are not applicable to what others want, though. I am like you. But plenty of people don't like to travel oversees. Or they prefer a cruise or seeing their grandkids two states over. Others like to hike, which costs nothing.

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Re: $3 million the new rule of thumb?

Post by grayfox » Mon Feb 03, 2020 10:35 am

Admiral wrote:
Mon Feb 03, 2020 10:24 am

Your wants are not applicable to what others want, though. I am like you. But plenty of people don't like to travel oversees. Or they prefer a cruise or seeing their grandkids two states over. Others like to hike, which costs nothing.
True, hiking is mostly free. But only in your own neck of the woods. Last year, I was hiking in the Alps. I was in Salzburg, Innsbruck and other places.
I'm interested in history and I was hiking around Berchtesgaden and exploring the Eagle's Nest.

I'm a budget traveler, but it still costs money above floor living expenses.
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stoptothink
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Re: $3 million the new rule of thumb?

Post by stoptothink » Mon Feb 03, 2020 10:36 am

grayfox wrote:
Mon Feb 03, 2020 10:22 am
stoptothink wrote:
Mon Feb 03, 2020 9:29 am

"trip overseas every year, new $30,000 vehicles every few years, all the toys for whatever hobbies you have--bass boat, photo gear, etc., outsourcing work like cleaning service, lawn service, instead of DIY. Then $10,000 per year gifts to offspring, or helping with down payment on house, etc. How much will that add per year $20K, $30K, more?

...are not part of it. As someone earlier said, your "needs" are my "wants"; in fact, I don't want any of those "upside" expenses you mentioned. FWIW, we are in our mid-30's and ~2yrs from $1M+ in liquid assets and a paid off home (kids college is covered by 529s already), we have no interest in FIRE (maybe in 15yrs) but pretty confident we could do it now if that was our desire. Without a mortgage we could easily live off <$3k/month, we are easily doing it now.
Anyone can live on <$3K per month. But why would you want to?
That one extreme guy says he lives on $7,000 per year. Again, why would anyone want to?

If you want to be stick in the mud, don't go anywhere, don't do anything. You can probably do that on $1,000 per month.

Confuscious wrote: It’s Better to Travel 10,000 Miles Than Read 10,000 Books.

I have been taking extended overseas travel every year for at least a dozen years. By extended travel, I mean 3-9 months. My longest trip was about 2 years overseas. Confuscious was right. I've learned more about the world on those trips than all my schooling, book reading, and media watching combined. Whenever something shows up on the news, I can say, "Oh, yeah, I know exactly where that is, and the news guy doesn't know what he's talking about."

It costs money to travel--tansportation, accommodation, etc. I would not retire without having the budget to do that.
We live a <$4k/month lifestyle - with a mortgage, college tuition, and childcare - and it is fabulous. My quality of life is higher than I ever thought it could be. I have less than zero interest in traveling 3-9 months a year when there is more natural wonders within a days driving distance of my home than I could truly explore in my lifetime. Believe it or not, perpetual international travel isn't a "want" for a lot of people. We're going to hit this $3M mark probably within the next decade, in our mid-40's, and I don't have a ton of interest in FIRE (at least at the moment) so we'll have the resources to do all those things, but I don't see us suddenly increasing our spending on things that we aren't really interested in just because we can.
Last edited by stoptothink on Mon Feb 03, 2020 10:48 am, edited 1 time in total.

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Re: $3 million the new rule of thumb?

Post by AerialWombat » Mon Feb 03, 2020 10:47 am

grayfox wrote:
Mon Feb 03, 2020 10:35 am
Admiral wrote:
Mon Feb 03, 2020 10:24 am

Your wants are not applicable to what others want, though. I am like you. But plenty of people don't like to travel oversees. Or they prefer a cruise or seeing their grandkids two states over. Others like to hike, which costs nothing.
True, hiking is mostly free. But only in your own neck of the woods. Last year, I was hiking in the Alps. I was in Salzburg, Innsbruck and other places.
I'm interested in history and I was hiking around Berchtesgaden and exploring the Eagle's Nest.

I'm a budget traveler, but it still costs money above floor living expenses.
You are projecting your lifestyle onto others. Many others do not want what you want.

I spent several years traveling around the world in my 30’s. It was great. But now, I could spend the rest of my life never leaving Kalispell, MT or Forks, WA or Alpine, WY or any other number of similar LCOL western US towns.

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Re: $3 million the new rule of thumb?

Post by CyclingDuo » Mon Feb 03, 2020 10:59 am

grayfox wrote:
Mon Feb 03, 2020 8:14 am
HomerJ wrote:
Mon Feb 03, 2020 12:55 am

$2000 a month covers most people food, utilities, property taxes, and insurance. Not all people. There are certainly people in this thread who can't cover those basics with $24,000 a year.

But most people.

With a paid off house, it's really not that hard to cover basic necessities. $4000 a month, really should cover those base needs plus extra for repairs and maintenance, car stuff, health insurance, etc. for most people with a paid off house. Not all people, but most people. $50,000 a year (with a paid off house) in retirement is pretty solid. Everything after that is for fun. For most people.

And Social Security alone (especially for a couple) gives you a pretty solid chunk of that $50,000 a year.
I will agree that floor expenses are about $50,000 for average people. And that assumes that you have an asset (house) worth $200K - $2M, depending on where you live.

And floor expenses basically mean you mostly sit at home or do only free things. But what about the upside expenses? Trip overseas every year, new $30,000 vehicles every few years, all the toys for whatever hobbies you have--bass boat, photo gear, etc., outsourcing work like cleaning service, lawn service, instead of DIY. Then $10,000 per year gifts to offspring, or helping with down payment on house, etc. How much will that add per year $20K, $30K, more?

As far as social security, it only starts at age 70 for most Bogleheads. So if retirement starts at 55, that's 15 years where your portfolio has to cover everything.

And if the money comes from tIRA, it is all taxed as ordinary income. So you have to withdraw more than you spend, to pay the taxes.

And then there is savings. I still save 20% of withdrawal amount, so that when it is time to make a large purchase, I am not making random withdrawals from tIRA account. E.g. I want to buy a $3,000 camera or $3,000 computer or $3,000 Telecaster. If I don't have the cash in savings account, I will not just sell $3,000 worth of Wellesley Income in retirement account, which would be consuming the income-producing assets.

:idea: I very quickly learned that you can't just tap your retirement accounts whenever you want to pay for some unplanned item. That is the road to ruin. You can only withdraw the planned amount, whether it is $3,000 per month, $4,000 or $5,000 whatever. Therefore, you need a savings regimen, even after retired, to build up money for unplanned purchases.
Image
https://www.investors.com/etfs-and-fund ... yptr=yahoo

No doubt as everyone has mentioned in this thread, the cost of living location dictates how much annual spend a person or couple needs in retirement. I cannot see us getting by in our current lifestyle on only $50K per year as that is only $137 per day (we spend about $182-$192 per day from net income on our household expenses of needs/wants/variables). At our current rate of spend where we live, to adjust for cost of living we would need $163,297 - $170K living in New York City - or at least $447 per day. Puts the OP's link to the article of a $3M nest egg to support $120K per year into perspective if we lived in a HCOL area.

Plug your own numbers and choice of location into the calculators here:

https://www.bankrate.com/calculators/sa ... lator.aspx
https://www.nerdwallet.com/cost-of-living-calculator

We like the concept of focusing on average daily spend. If our PI of the mortgage was gone (PITI), it only trims our daily spend by $23. The remainder of the housing expense (TI, utilities, maintenance, repair) will continue on just as it always has until we move out, or pass.

Image

Image

Adjust the daily spend for those that live in upper end MCOL areas and for all the HCOL areas to understand that your choice of location (cost of living index) dictates what the nest egg size along with other streams of income needs to be in order to finance the years in retirement.

Honolulu, Manhattan, San Francisco, Seattle, Hong Kong, Brooklyn, Zurich, Boston, D.C., San Jose, Paris, Singapore, Los Angeles, San Diego, etc... may just be out for many of us outside of a visit. 8-)

CyclingDuo
"Everywhere is within walking distance if you have the time." ~ Steven Wright

H-Town
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Re: $3 million the new rule of thumb?

Post by H-Town » Mon Feb 03, 2020 11:02 am

AerialWombat wrote:
Mon Feb 03, 2020 10:47 am
grayfox wrote:
Mon Feb 03, 2020 10:35 am
Admiral wrote:
Mon Feb 03, 2020 10:24 am

Your wants are not applicable to what others want, though. I am like you. But plenty of people don't like to travel oversees. Or they prefer a cruise or seeing their grandkids two states over. Others like to hike, which costs nothing.
True, hiking is mostly free. But only in your own neck of the woods. Last year, I was hiking in the Alps. I was in Salzburg, Innsbruck and other places.
I'm interested in history and I was hiking around Berchtesgaden and exploring the Eagle's Nest.

I'm a budget traveler, but it still costs money above floor living expenses.
You are projecting your lifestyle onto others. Many others do not want what you want.

I spent several years traveling around the world in my 30’s. It was great. But now, I could spend the rest of my life never leaving Kalispell, MT or Forks, WA or Alpine, WY or any other number of similar LCOL western US towns.
You don't feel the urge to get some sunlight? I love Forks and Alpine. But in the winter, I'd visit Miami or San Diego.

SQRT
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Re: $3 million the new rule of thumb?

Post by SQRT » Mon Feb 03, 2020 11:03 am

AerialWombat wrote:
Mon Feb 03, 2020 10:47 am
grayfox wrote:
Mon Feb 03, 2020 10:35 am
Admiral wrote:
Mon Feb 03, 2020 10:24 am

Your wants are not applicable to what others want, though. I am like you. But plenty of people don't like to travel oversees. Or they prefer a cruise or seeing their grandkids two states over. Others like to hike, which costs nothing.
True, hiking is mostly free. But only in your own neck of the woods. Last year, I was hiking in the Alps. I was in Salzburg, Innsbruck and other places.
I'm interested in history and I was hiking around Berchtesgaden and exploring the Eagle's Nest.

I'm a budget traveler, but it still costs money above floor living expenses.
You are projecting your lifestyle onto others. Many others do not want what you want.

I spent several years traveling around the world in my 30’s. It was great. But now, I could spend the rest of my life never leaving Kalispell, MT or Forks, WA or Alpine, WY or any other number of similar LCOL western US towns.
Right. Agree. But with more money, you get more choices. In the end, if you don’t want to spend your assets you can enjoy giving them away.

Hard to see the downside of a higher net worth that results from a career you enjoyed. But, as this thread has proven, everyone is different and the diversity of attitudes and means is quite remarkable. I am humbled.

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Re: $3 million the new rule of thumb?

Post by Stormbringer » Mon Feb 03, 2020 11:06 am

Quite a few of my friends are upper middle class suburbanites with two income families making 200k+ per year. They all have expensive lifestyles: nice houses, new cars every few years, boats and toys, vacation homes, kids attending expensive colleges, etc. I often wonder how they will fare in retirement. $3 million seems like it would be living on the edge for many of them.
"Compound interest is the most powerful force in the universe." - Albert Einstein

chipperd
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Re: $3 million the new rule of thumb?

Post by chipperd » Mon Feb 03, 2020 11:16 am

CyclingDuo wrote:
Mon Feb 03, 2020 10:59 am
grayfox wrote:
Mon Feb 03, 2020 8:14 am
HomerJ wrote:
Mon Feb 03, 2020 12:55 am

$2000 a month covers most people food, utilities, property taxes, and insurance. Not all people. There are certainly people in this thread who can't cover those basics with $24,000 a year.

But most people.

With a paid off house, it's really not that hard to cover basic necessities. $4000 a month, really should cover those base needs plus extra for repairs and maintenance, car stuff, health insurance, etc. for most people with a paid off house. Not all people, but most people. $50,000 a year (with a paid off house) in retirement is pretty solid. Everything after that is for fun. For most people.

And Social Security alone (especially for a couple) gives you a pretty solid chunk of that $50,000 a year.
I will agree that floor expenses are about $50,000 for average people. And that assumes that you have an asset (house) worth $200K - $2M, depending on where you live.

And floor expenses basically mean you mostly sit at home or do only free things. But what about the upside expenses? Trip overseas every year, new $30,000 vehicles every few years, all the toys for whatever hobbies you have--bass boat, photo gear, etc., outsourcing work like cleaning service, lawn service, instead of DIY. Then $10,000 per year gifts to offspring, or helping with down payment on house, etc. How much will that add per year $20K, $30K, more?

As far as social security, it only starts at age 70 for most Bogleheads. So if retirement starts at 55, that's 15 years where your portfolio has to cover everything.

And if the money comes from tIRA, it is all taxed as ordinary income. So you have to withdraw more than you spend, to pay the taxes.

And then there is savings. I still save 20% of withdrawal amount, so that when it is time to make a large purchase, I am not making random withdrawals from tIRA account. E.g. I want to buy a $3,000 camera or $3,000 computer or $3,000 Telecaster. If I don't have the cash in savings account, I will not just sell $3,000 worth of Wellesley Income in retirement account, which would be consuming the income-producing assets.

:idea: I very quickly learned that you can't just tap your retirement accounts whenever you want to pay for some unplanned item. That is the road to ruin. You can only withdraw the planned amount, whether it is $3,000 per month, $4,000 or $5,000 whatever. Therefore, you need a savings regimen, even after retired, to build up money for unplanned purchases.
Image
https://www.investors.com/etfs-and-fund ... yptr=yahoo

No doubt as everyone has mentioned in this thread, the cost of living location dictates how much annual spend a person or couple needs in retirement. I cannot see us getting by in our current lifestyle on only $50K per year as that is only $137 per day (we spend about $182-$192 per day from net income on our household expenses of needs/wants/variables). At our current rate of spend where we live, to adjust for cost of living we would need $163,297 - $170K living in New York City - or at least $447 per day. Puts the OP's link to the article of a $3M nest egg to support $120K per year into perspective if we lived in a HCOL area.

Plug your own numbers and choice of location into the calculators here:

https://www.bankrate.com/calculators/sa ... lator.aspx
https://www.nerdwallet.com/cost-of-living-calculator

We like the concept of focusing on average daily spend. If our PI of the mortgage was gone (PITI), it only trims our daily spend by $23. The remainder of the housing expense (TI, utilities, maintenance, repair) will continue on just as it always has until we move out, or pass.

Image

Image

Adjust the daily spend for those that live in upper end MCOL areas and for all the HCOL areas to understand that your choice of location (cost of living index) dictates what the nest egg size along with other streams of income needs to be in order to finance the years in retirement.

Honolulu, Manhattan, San Francisco, Seattle, Hong Kong, Brooklyn, Zurich, Boston, D.C., San Jose, Paris, Singapore, Los Angeles, San Diego, etc... may just be out for many of us outside of a visit. 8-)

CyclingDuo
Wow, when I first looked at that I actually said outloud "There is no way we spend $200/day!". But yup, we do, more than that actually. And as one pointed out we have the equivalent of 1.5 million. No where near 3 million. I wonder who would benefit from most thinking an average citizen needs 3 million to retire and then working until they reach that number? Hmmm....
At any rate, I certainly appreciate the efforts of those who fall in that category.

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Re: $3 million the new rule of thumb?

Post by AerialWombat » Mon Feb 03, 2020 12:10 pm

H-Town wrote:
Mon Feb 03, 2020 11:02 am
You don't feel the urge to get some sunlight? I love Forks and Alpine. But in the winter, I'd visit Miami or San Diego.
No. Even when I was traveling abroad, I chased the cold/wet seasons.

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Re: $3 million the new rule of thumb?

Post by AerialWombat » Mon Feb 03, 2020 12:16 pm

SQRT wrote:
Mon Feb 03, 2020 11:03 am
Right. Agree. But with more money, you get more choices. In the end, if you don’t want to spend your assets you can enjoy giving them away.

Hard to see the downside of a higher net worth that results from a career you enjoyed. But, as this thread has proven, everyone is different and the diversity of attitudes and means is quite remarkable. I am humbled.
This will forever be the great divide in these discussions. It is incomprehensible to me that somebody would have any desire to continue working once they are FI. I just don’t understand that thinking, and never will. Others will never comprehend how I can’t understand their desire to work.

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Re: $3 million the new rule of thumb?

Post by Admiral » Mon Feb 03, 2020 12:18 pm

AerialWombat wrote:
Mon Feb 03, 2020 12:16 pm
SQRT wrote:
Mon Feb 03, 2020 11:03 am
Right. Agree. But with more money, you get more choices. In the end, if you don’t want to spend your assets you can enjoy giving them away.

Hard to see the downside of a higher net worth that results from a career you enjoyed. But, as this thread has proven, everyone is different and the diversity of attitudes and means is quite remarkable. I am humbled.
This will forever be the great divide in these discussions. It is incomprehensible to me that somebody would have any desire to continue working once they are FI. I just don’t understand that thinking, and never will. Others will never comprehend how I can’t understand their desire to work.
You cannot comprehend that there are people who find meaning and value in their work and would do it if they were paid zero?

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AerialWombat
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Re: $3 million the new rule of thumb?

Post by AerialWombat » Mon Feb 03, 2020 12:20 pm

Admiral wrote:
Mon Feb 03, 2020 12:18 pm
You cannot comprehend that there are people who find meaning and value in their work and would do it if they were paid zero?
Correct. What you just wrote is the height of ridiculousness to me. I can’t fathom somebody actually doing that.

Edit: To be clear, I’m only talking about the work they did to accumulate their wealth. Doing something else for charity is a different conversation, in my mind.

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Re: $3 million the new rule of thumb?

Post by TheTimeLord » Mon Feb 03, 2020 12:22 pm

AerialWombat wrote:
Mon Feb 03, 2020 12:16 pm
SQRT wrote:
Mon Feb 03, 2020 11:03 am
Right. Agree. But with more money, you get more choices. In the end, if you don’t want to spend your assets you can enjoy giving them away.

Hard to see the downside of a higher net worth that results from a career you enjoyed. But, as this thread has proven, everyone is different and the diversity of attitudes and means is quite remarkable. I am humbled.
This will forever be the great divide in these discussions. It is incomprehensible to me that somebody would have any desire to continue working once they are FI. I just don’t understand that thinking, and never will. Others will never comprehend how I can’t understand their desire to work.
I totally understand your desire. I would imagine you would be in the majority. And in the right circumstances or time it will be my decision. Until then work is the more attractive option for me. For me being FI has made work easier and more fun, dwelling on daily on when I should RE just ground down my soul. So now I am just trying to let RE happen organically instead of setting a date or a number while enjoying my FI enhanced work.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

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Re: $3 million the new rule of thumb?

Post by Admiral » Mon Feb 03, 2020 12:25 pm

AerialWombat wrote:
Mon Feb 03, 2020 12:20 pm
Admiral wrote:
Mon Feb 03, 2020 12:18 pm
You cannot comprehend that there are people who find meaning and value in their work and would do it if they were paid zero?
Correct. What you just wrote is the height of ridiculousness to me. I can’t fathom somebody actually doing that.
Perhaps you need more exposure to different types of jobs and careers? Many, many people find meaning in helping others achieve their own goals (whatever those might be).

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Re: $3 million the new rule of thumb?

Post by Admiral » Mon Feb 03, 2020 12:27 pm

AerialWombat wrote:
Mon Feb 03, 2020 12:20 pm
Admiral wrote:
Mon Feb 03, 2020 12:18 pm
You cannot comprehend that there are people who find meaning and value in their work and would do it if they were paid zero?
Correct. What you just wrote is the height of ridiculousness to me. I can’t fathom somebody actually doing that.

Edit: To be clear, I’m only talking about the work they did to accumulate their wealth. Doing something else for charity is a different conversation, in my mind.
Do you think a pediatric cardiologist who has $10m at age 55 is necessarily working to accumulate more money? Some might be, but I'd wager not all.

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Re: $3 million the new rule of thumb?

Post by TheTimeLord » Mon Feb 03, 2020 12:28 pm

Admiral wrote:
Mon Feb 03, 2020 12:27 pm
AerialWombat wrote:
Mon Feb 03, 2020 12:20 pm
Admiral wrote:
Mon Feb 03, 2020 12:18 pm
You cannot comprehend that there are people who find meaning and value in their work and would do it if they were paid zero?
Correct. What you just wrote is the height of ridiculousness to me. I can’t fathom somebody actually doing that.

Edit: To be clear, I’m only talking about the work they did to accumulate their wealth. Doing something else for charity is a different conversation, in my mind.
Do you think a pediatric cardiologist who has $10m at age 55 is necessarily working to accumulate more money? Some might be, but I'd wager not all.
How I wish we could get Tom Brady to contribute to this thread.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

NJdad6
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Re: $3 million the new rule of thumb?

Post by NJdad6 » Mon Feb 03, 2020 12:30 pm

Admiral wrote:
Mon Feb 03, 2020 10:19 am
Just to add:

In terms of baseline expenses, there is a lot of variability based on geography. For example, if you live in NJ or CT, you might have a paid off house but your taxes could be 20-25k per year. Live in the burbs: you need a car, so that has a price/cost.

Those people may have baseline expenses of 40-50k: i.e. that's how much they need to live, even with a paid off house. I could easily picture this family needing another 30-50k for other things (travel, adult kid support, hobbies). So now you're at 70-100k. If they retire early, then could have that expense with no SS helping for 15 years.

They will need more than $1m. Not $3m. But not $1m, unless they are comfortable spending down most of their portfolio before SS kicks in.

I, for one, am not.
100% accurate!

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Re: $3 million the new rule of thumb?

Post by AerialWombat » Mon Feb 03, 2020 12:35 pm

Admiral wrote:
Mon Feb 03, 2020 12:27 pm
AerialWombat wrote:
Mon Feb 03, 2020 12:20 pm
Admiral wrote:
Mon Feb 03, 2020 12:18 pm
You cannot comprehend that there are people who find meaning and value in their work and would do it if they were paid zero?
Correct. What you just wrote is the height of ridiculousness to me. I can’t fathom somebody actually doing that.

Edit: To be clear, I’m only talking about the work they did to accumulate their wealth. Doing something else for charity is a different conversation, in my mind.
Do you think a pediatric cardiologist who has $10m at age 55 is necessarily working to accumulate more money? Some might be, but I'd wager not all.
It's really funny that you mention cardiologists. I used to run a training program for one tiny aspect of cardiology board certification, so I met a couple hundred such docs over about a one year period. There were many financial conversations with these docs, and every single one of them I talked to couldn't wait to cash in their chips and transition to a different area of medicine or retire entirely. The high stress and high rates of malpractice suits were frequently mentioned. This was a number of years ago, so maybe things have changed, and maybe they weren't truly representative. This is just my anecdotal experience.

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Re: $3 million the new rule of thumb?

Post by SQRT » Mon Feb 03, 2020 12:35 pm

AerialWombat wrote:
Mon Feb 03, 2020 12:16 pm
SQRT wrote:
Mon Feb 03, 2020 11:03 am
Right. Agree. But with more money, you get more choices. In the end, if you don’t want to spend your assets you can enjoy giving them away.

Hard to see the downside of a higher net worth that results from a career you enjoyed. But, as this thread has proven, everyone is different and the diversity of attitudes and means is quite remarkable. I am humbled.
This will forever be the great divide in these discussions. It is incomprehensible to me that somebody would have any desire to continue working once they are FI. I just don’t understand that thinking, and never will. Others will never comprehend how I can’t understand their desire to work.
I understand. I loved my job until around the time I became FI. It started to get tiresome then. I don’t understand the people who start out hating their job and planning ER as soon as they start. I know there are people like this and I think it is too bad they couldn’t have found a job they enjoyed.

They other “great divide” in many of these discussions is the huge disparity in lifestyles. I think this fosters an inability in many people to understand people who spend a lot more (or less) then they do. I’m as guilty as most in this regard.

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Re: $3 million the new rule of thumb?

Post by Admiral » Mon Feb 03, 2020 12:41 pm

AerialWombat wrote:
Mon Feb 03, 2020 12:35 pm
Admiral wrote:
Mon Feb 03, 2020 12:27 pm
AerialWombat wrote:
Mon Feb 03, 2020 12:20 pm
Admiral wrote:
Mon Feb 03, 2020 12:18 pm
You cannot comprehend that there are people who find meaning and value in their work and would do it if they were paid zero?
Correct. What you just wrote is the height of ridiculousness to me. I can’t fathom somebody actually doing that.

Edit: To be clear, I’m only talking about the work they did to accumulate their wealth. Doing something else for charity is a different conversation, in my mind.
Do you think a pediatric cardiologist who has $10m at age 55 is necessarily working to accumulate more money? Some might be, but I'd wager not all.
It's really funny that you mention cardiologists. I used to run a training program for one tiny aspect of cardiology board certification, so I met a couple hundred such docs over about a one year period. There were many financial conversations with these docs, and every single one of them I talked to couldn't wait to cash in their chips and transition to a different area of medicine or retire entirely. The high stress and high rates of malpractice suits were frequently mentioned. This was a number of years ago, so maybe things have changed, and maybe they weren't truly representative. This is just my anecdotal experience.
Yes, well, your experience notwithstanding that was just an example of the kind of work that can be imbued with meaning. The larger point is that some people enjoy what they do and might continue to do it once they reach FI; that there are people who's self worth and or identity is tied to their job (for better or worse); and there are people who are easily bored when they are not working; and that there are people who believe they were put on this earth to help others.

None of those may apply to you, I just find in odd that you cannot even imagine those types of people.

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