Preparing for retirement in mid 30s

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novemberrain
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Re: Preparing for retirement in mid 30s

Post by novemberrain »

mrspock wrote: Wed Sep 16, 2020 7:14 pm
novemberrain wrote: Wed Sep 16, 2020 5:48 pm If the market drops 50% ?
Better question: when you work yourself into the grave, saving every penny so you have 50x expenses to survive two back to back great depressions. What good is the money to you then? Ya that’s what I thought.
I am doing all right :happy
Last edited by novemberrain on Wed Sep 16, 2020 9:03 pm, edited 2 times in total.
runner3081
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Re: Preparing for retirement in mid 30s

Post by runner3081 »

Normchad wrote: Wed Sep 16, 2020 5:48 pm I thought I read someplace, that to get ACA subsidies, there is also a *minimum* income you must have. Can anybody corroborate that or explain that?
Too low of income will put you on state's medicaid.
Katietsu
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Re: Preparing for retirement in mid 30s

Post by Katietsu »

I would look at states that are likely to have ACA and expanded medicaid type options even if the federal government screws it up. Several have already paused legislation to create a seamless transition.
Impatience
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Re: Preparing for retirement in mid 30s

Post by Impatience »

Retiring in your 30’s with a $1.5M portfolio and a solid plan to spend the rest of your life on healthcare intended for the poor. Very classy.
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MP123
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Re: Preparing for retirement in mid 30s

Post by MP123 »

runner3081 wrote: Wed Sep 16, 2020 8:51 pm
Normchad wrote: Wed Sep 16, 2020 5:48 pm I thought I read someplace, that to get ACA subsidies, there is also a *minimum* income you must have. Can anybody corroborate that or explain that?
Too low of income will put you on state's medicaid.
Only in states that expanded their Medicaid programs when ACA went into effect.

In non-expansion states Medicaid is usually only available for children and the disabled. Texas and Florida are big ones but there are many others.

Currently you could buy a non-subsidized ACA plan in those states but that would be your only option for health insurance if your income was too low.
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InvestorNewb
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Re: Preparing for retirement in mid 30s

Post by InvestorNewb »

I have about the same as you but I am one person. It doesn't seem like enough for four people in my opinion.

You say that you enjoy the simple things in life but what if your children have different ideas when they get older? Family trips are nice and surely you will want to splurge on your kids at some point, pay for their hobbies, schooling, etc. Maybe your parents will also need financial assistance as they get older.

45k/year is basically poverty for four people.
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runner540
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Re: Preparing for retirement in mid 30s

Post by runner540 »

AerialWombat wrote: Wed Sep 16, 2020 8:05 pm
Longdog wrote: Wed Sep 16, 2020 7:54 pm Kids are expensive, and get more and more so as they age. Do you not plan to send them to college? I am skeptical that your 45K per year, inflation adjusted, is realistic for 20 years or more, especially with children. Will you have a car to pay for and/or maintain? How often will you require a new one? I think your assumption about getting very low cost health insurance for your family for so long is optimistic and naive. I believe you'd be taking a pretty big risk (especially since you said you can't fail), but the fact that you're 90% in stocks suggests you have a high risk tolerance, which seems inconsistent with your inability to fail.

Go for it and keep us posted. Best of luck!
You do realize that millions of American families with children live just fine on less than $45k per year, right?
Median household income last year was $69k and the average household size is 2.5 people, so 4 people on $45k is definitely tight.
Tingting1013
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Re: Preparing for retirement in mid 30s

Post by Tingting1013 »

InvestorNewb wrote: Wed Sep 16, 2020 9:03 pm 45k/year is basically poverty for four people.
Here is a hot take. OP should live in CA.

I’m talking far Northern California, like Eureka.

Lowest cost of living in the state with the highest benefits for low-earners.
Old Guy
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Re: Preparing for retirement in mid 30s

Post by Old Guy »

You do realize that college tuition and related costs at many public schools could eat up all of your $45,000? How much debt are you willing to burden your children with? What happens if they graduate, like my son did in 2007, in a the middle of a depression?
Havoner
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Re: Preparing for retirement in mid 30s

Post by Havoner »

This is probably more lifestyle advice than numerical accounting advice but I would make sure I was retiring too something and maybe try it for something like 6 months or a year and see if that is something I wanted to do or if I would prefer to have some sort of work even if it wan't some 50 hour a week corporate gig. I think it is fairly easy to explain that you had some money saved and decided to take a career hiatus for a year or two. I think what I would watch out for is when your are 45-50 if all of sudden you are wanting to work again for more fulfillment in life or because of losses in the stock market you can easily be left behind in regards to skills like technology if you have been out of the workforce for 10 years or more. Either way you have worked hard and saved hard and I think you should do what makes you happy. However I am not sure that this idea of early retirement is really that fulfilling to most people so much as reduced work work hours and an overall better work life balance because you don't need the money as much. Best of luck to you and nice work!
SCb&b
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Re: Preparing for retirement in mid 30s

Post by SCb&b »

Old Guy wrote: Wed Sep 16, 2020 9:13 pm What happens if they graduate, like my son did in 2007, in a the middle of a depression?
Dad, is that you?
000
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Re: Preparing for retirement in mid 30s

Post by 000 »

I think there is a modest chance of you hitting a really bad sequence of returns and 3% WR not lasting 70+ years.

I also think it will be really hard to re-enter your career (or any high-paying career) after a 10 year retirement hiatus.

Threads like this make me think we are nearing the top of the bubble in stocks.
random_walker_77
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Re: Preparing for retirement in mid 30s

Post by random_walker_77 »

Impatience wrote: Wed Sep 16, 2020 8:55 pm Retiring in your 30’s with a $1.5M portfolio and a solid plan to spend the rest of your life on healthcare intended for the poor. Very classy.
I'm ambivalent about the ACA subsidies, but to be fair
a) it's not just intended for the poor (that'd be medicaid) and
b) to get $1.5M that young, they've been earning a lot and hence paying a lot of taxes. With progressive taxation, I wouldn't be surprised if they've paid as much federal tax as the median family household w/2.1 kids will pay over a 40 year working career.

(Google says the average household income is 63K. After a 24.4K standard deduction, they'd owe $4244 in taxes on 38.6K of taxable income. After tax credits for 2 kids, they'd owe $244/yr in federal taxes. )

OP's budget seems really tight w/ little margin for error. I wouldn't do it. But after they've paid in hundreds of thousands in taxes, I don't think you can justifiably accuse them of not pulling their weight.
retire57
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Re: Preparing for retirement in mid 30s

Post by retire57 »

lecithar wrote: Wed Sep 16, 2020 6:21 pm
awval999 wrote: Wed Sep 16, 2020 5:51 pm My only recommendation would be to buy a small house in cash to limit risk of rent increases.
You can easily have a 3/2 1500 sqft for $150,000 in the Midwest/South.
Yes, I am seriously considering this. It will require working several more years, but it means my family will not be beholden to landlords. And it means I can withdraw less from my portfolio, which will give more favorable tax benefits and a larger margin of error.
You'll actually need to draw more from your savings as your living expenses will climb. Houses are expensive to maintain, insure, and repair. Go to Home Depot sometime and price lawnmowers, weed eaters, paint, lawn furniture, landscape plants, fencing, and a decent set of tools. And that's just exterior stuff.

Next find out what it costs to have a roof replaced. Then take a deep breath and reconsider buying.
Tingting1013
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Re: Preparing for retirement in mid 30s

Post by Tingting1013 »

retire57 wrote: Wed Sep 16, 2020 9:26 pm Next find out what it costs to have a roof replaced. Then take a deep breath and reconsider buying.
$10k once every 20 years?
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2pedals
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Re: Preparing for retirement in mid 30s

Post by 2pedals »

lecithar wrote: Wed Sep 16, 2020 7:33 pm
sailaway wrote: Wed Sep 16, 2020 6:47 pm How realistic is your budget? How long have you been tracking? Have you taken lumpy expenses, like car repairs, into account? What adjustments have you made for the lifestyle change?
I learned an effective budgeting trick in college. Track all of your spending and if you go over your spending level for the month, switch to a stash of rice and beans. Then stop spending until the next month. It requires an emergency fund that you refill periodically during surplus months.
I found out a long time ago that my old college tricks don't work at all when DW, DS or DD is involved.

I wouldn't do it. It might be very difficult to sell yourself if you need to get back into the work force in the 40s or 50s, if 45k is not enough or you find your nest egg shrinking.
Normchad
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Re: Preparing for retirement in mid 30s

Post by Normchad »

Lots of people on these boards, in lots of threads are counting on ACA subsidies.

We are all also fans of back door Roth IRAs, tax avoidance, managing finances to get increased financial aid, low-rate Roth IRA conversions, etc.

I don't consider any of it to be "gaming the system". OP didn't invent the system. We are all just trying to understand the system, understand how it impacts us, and plan accordingly.

It's also not the OPs fault that he is required to purchase health insurance when he decides to retire. He's just playing by the rules as they exist.
boogiehead
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Re: Preparing for retirement in mid 30s

Post by boogiehead »

Seems a bit risky with no room for any unexpected expenses... I would probably work a few more years (contribute to trad ira in anticipation of a conversion when you retire) or have a few side gigs in mind when you "retire"
retire57
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Re: Preparing for retirement in mid 30s

Post by retire57 »

Deleted.
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Grt2bOutdoors
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Re: Preparing for retirement in mid 30s

Post by Grt2bOutdoors »

Normchad wrote: Wed Sep 16, 2020 9:27 pm Lots of people on these boards, in lots of threads are counting on ACA subsidies.

We are all also fans of back door Roth IRAs, tax avoidance, managing finances to get increased financial aid, low-rate Roth IRA conversions, etc.

I don't consider any of it to be "gaming the system". OP didn't invent the system. We are all just trying to understand the system, understand how it impacts us, and plan accordingly.

It's also not the OPs fault that he is required to purchase health insurance when he decides to retire. He's just playing by the rules as they exist.
Ya, he’s also banking on the rules not changing either. As history has proven, nothing is set in stone. I think he’s playing with Fire but hey, some skillfully avoid being burned, those who continuously play with it though may find their luck has run out. You don’t want to find yourself in a spot where picking up “odd jobs” no longer works on account of everyone else chasing those same “odd” jobs and not enough to go around as it is.
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lecithar
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Re: Preparing for retirement in mid 30s

Post by lecithar »

Wannaretireearly wrote: Wed Sep 16, 2020 7:55 pm Mind sharing your career background area?
What else do you plan to do? I.e. what hobbies do you have?
I have a software engineering background. Out of college I made low six figures and it steadily increased to 250k/yr. Then several years ago I decided to switch to a lower stress job that pays 180k/yr.

As a single person I saved half of my after-tax income. Now that I have a family (single income) I save a third. I always invested in after-tax brokerage because my work places did not offer matching.

My family expenses are reliably 90k/yr in a VHCOL area (renting). So I think 45k/yr will work for us in a VLCOL area.

My hobby is I like to just think about stuff. Seriously. I want to spend all day thinking about random topics that have caught my attention. This is why I think a job is not ideal for me, because it limits the time I have each day to just think.
Normchad
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Re: Preparing for retirement in mid 30s

Post by Normchad »

Grt2bOutdoors wrote: Wed Sep 16, 2020 10:04 pm
Normchad wrote: Wed Sep 16, 2020 9:27 pm Lots of people on these boards, in lots of threads are counting on ACA subsidies.

We are all also fans of back door Roth IRAs, tax avoidance, managing finances to get increased financial aid, low-rate Roth IRA conversions, etc.

I don't consider any of it to be "gaming the system". OP didn't invent the system. We are all just trying to understand the system, understand how it impacts us, and plan accordingly.

It's also not the OPs fault that he is required to purchase health insurance when he decides to retire. He's just playing by the rules as they exist.
Ya, he’s also banking on the rules not changing either. As history has proven, nothing is set in stone. I think he’s playing with Fire but hey, some skillfully avoid being burned, those who continuously play with it though may find their luck has run out. You don’t want to find yourself in a spot where picking up “odd jobs” no longer works on account of everyone else chasing those same “odd” jobs and not enough to go around as it is.
I agree there is risk, that the rules may change in the future, in a way that is very unfavorable. For almost this reason alone, I keep working. If I felt certain the rules wouldn't change *much* in the future, in this particular area, I too would retire. My other hesitation, is I'm not incredibly confident in how accurate I can be predicting my future expenses.

But we all make important decisions from time to time, and we have to go on the world as it exists at the time. It is prudent to try to look down the road and try to anticipate things are likely to happen, and see how we could deal with it.

For me, this is one of the real perils of the 60 year retirement; so much can change in that time that it's impossible to account for it all. 60 years ago, my parents had not yet seen a television set. So the world could change *that much*. And true, the OP does not have much margin in the plan.

*AND* It is not so easy to snag another 6 figure job if you've been out of the market for a few years. If you've been out 10 or more, it's probably almost impossible.
flyingaway
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Re: Preparing for retirement in mid 30s

Post by flyingaway »

My son wants to retire in his 30s with about $3MM, but I told him to have at least $5MM before considering any retirement.

It is easy for young people with the right talents and skills to make big money these days. Once they retire and later find that they need more money for any reasons, it will be very difficult for them to make any easy money.
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mmmodem
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Re: Preparing for retirement in mid 30s

Post by mmmodem »

OP, you'll be fine with your plan. How do I know? I grew up with 4 siblings and my parents combined made way under $45k inflation adjusted in HCOL California Bay Area. $45k would be downright luxurious to us as it would for millions of Americans today.

ACA didn't exist back then but other low cost healthcare existed. As far as I know, I went to the doctor and dentist when I got sick. I got new glasses every 2 years. We qualified for low income housing, free school lunches, food stamps and on and on. What did we do for college? All of us went to low cost community colleges or state universities. We received maximum financial aid and took minimum loans. I never needed student loans but I think one of my siblings paid theirs off by 35. If anything poverty taught us we needed to work hard in school to avoid passing it on to the next generation.

You've paid plenty of taxes to amass $1.5m so you've paid into the system. I would not let anyone let you feel guilty taking advantage of low income programs you've personally funded.
student
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Re: Preparing for retirement in mid 30s

Post by student »

BolderBoy wrote: Wed Sep 16, 2020 5:49 pm
lecithar wrote: Wed Sep 16, 2020 5:40 pmDo you see any big problems with our plan? We do not have wealthy family to fall back on, so we cannot fail. FIRECalc says we have 0% chance of failure even if we live to age 100.
Sorry but I find it very hard to believe that firecalc reported a 0% chance of failure through age 100. Did you use wildly optimistic numbers? I've had friends with larger portfolios, somewhat higher spending and starting at age 55 who couldn't get a 0% failure rate.

I'd be very careful in accepting that result when you are in your mid-30s with the financials you provided.
It may be due to sample size. Suppose there are 100 years of data. If one wants to retire for 20 years, then one can look at the cases by starting at year 1, year 2,..., year 81 to simulate retirement for 20 years. On the other hand, if one wants to retire for 100 years, there is only one sample.
playtothebeat
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Re: Preparing for retirement in mid 30s

Post by playtothebeat »

I think 45k is tight. Assuming your kids want to do some sort of sports or other activities, that can easily cost a few hundred a month.

Also what will your social circle look like as a retired couple in your mid 30s? Most of your peers are working..
tj
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Re: Preparing for retirement in mid 30s

Post by tj »

lecithar wrote: Wed Sep 16, 2020 10:08 pm
Wannaretireearly wrote: Wed Sep 16, 2020 7:55 pm Mind sharing your career background area?
What else do you plan to do? I.e. what hobbies do you have?
I have a software engineering background. Out of college I made low six figures and it steadily increased to 250k/yr. Then several years ago I decided to switch to a lower stress job that pays 180k/yr.

As a single person I saved half of my after-tax income. Now that I have a family (single income) I save a third. I always invested in after-tax brokerage because my work places did not offer matching.

My family expenses are reliably 90k/yr in a VHCOL area (renting). So I think 45k/yr will work for us in a VLCOL area.

My hobby is I like to just think about stuff. Seriously. I want to spend all day thinking about random topics that have caught my attention. This is why I think a job is not ideal for me, because it limits the time I have each day to just think.

Did you work at least 10 full years to qualify for social security benefits?
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lecithar
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Re: Preparing for retirement in mid 30s

Post by lecithar »

tj wrote: Wed Sep 16, 2020 11:32 pm Did you work at least 10 full years to qualify for social security benefits?
Yes. According to ssa.tools I will receive 22k/yr at normal retirement age (67) if I retire today. I think my wife would get to claim half this amount (not sure), so that would add another 11k/yr. We are not counting on this income in our retirement planning but it is nice to know it is available as a margin of error.
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jjunk
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Re: Preparing for retirement in mid 30s

Post by jjunk »

Impatience wrote: Wed Sep 16, 2020 8:55 pm Retiring in your 30’s with a $1.5M portfolio and a solid plan to spend the rest of your life on healthcare intended for the poor. Very classy.
You do realize the ACA was created for people without insurance correct? While that definitely includes lower income individuals it also includes the self-employed, early retirees, etc. I know several people in their 50's and 60's who worked a good portion of their lives and use the ACA (and end up paying quite a bit for insurance because of it).
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kramer
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Re: Preparing for retirement in mid 30s

Post by kramer »

I retired 13 years ago at age 41, single. OP, I honestly think you are cutting it too close here, with the 90/10 portfolio (and all US equities, also) but especially the part about relying on health care subsidies for the next 30 years when you have a family. Not to mention the, say, 25% chance of divorce for a random couple or whatever over that time period. And you are also starting the period with negative real interest rates. Personally, I wouldn't pull the plug until I could pay the estimated health care unsubsidized and with some margin beyond that, also. You don't mention basic things like leisure travel. Honestly, your plan sounds really incomplete.

For each additional year you work now, there is a huge long term payoff (higher savings, one year shorter retirement, more Social Security) so that you will quickly move from marginal to safe in a short time which should make your retirement more enjoyable, secure, flexible, and comfortable. You already took a better lower paying job, so that should help you keep going for awhile longer.
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Re: Preparing for retirement in mid 30s

Post by AerialWombat »

runner540 wrote: Wed Sep 16, 2020 9:06 pm
AerialWombat wrote: Wed Sep 16, 2020 8:05 pm
Longdog wrote: Wed Sep 16, 2020 7:54 pm Kids are expensive, and get more and more so as they age. Do you not plan to send them to college? I am skeptical that your 45K per year, inflation adjusted, is realistic for 20 years or more, especially with children. Will you have a car to pay for and/or maintain? How often will you require a new one? I think your assumption about getting very low cost health insurance for your family for so long is optimistic and naive. I believe you'd be taking a pretty big risk (especially since you said you can't fail), but the fact that you're 90% in stocks suggests you have a high risk tolerance, which seems inconsistent with your inability to fail.

Go for it and keep us posted. Best of luck!
You do realize that millions of American families with children live just fine on less than $45k per year, right?
Median household income last year was $69k and the average household size is 2.5 people, so 4 people on $45k is definitely tight.
Sure, it’s tight, but millions are doing it. If one were so inclined, they could get a rough estimate of the tally by perusing IRS filing data by income band, filing status, and other parameters—

https://www.irs.gov/statistics/soi-tax- ... ete-report
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lecithar
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Re: Preparing for retirement in mid 30s

Post by lecithar »

Watty wrote: Wed Sep 16, 2020 8:27 pm You could greatly improve your odds if you found part time or seasonal work to bring in a little bit of money. For example if you each found jobs that you enjoyed that paid $500 a month, that would be $6,000 a year each or $12,000 a year combined. That could be a quarter to a third of your budget, depending on what you decide to do about renting or buying a house. There are jobs like umpiring high school sports, being a paid church organist, etc that do not pay a lot but people enjoy doing that and it brings in a little bit of money.
Part-time work is always an option but I am not counting on it in my plan. If my plan is not solid enough to stand on its own, I would rather work more years now while my skills are still marketable. The difficult part is deciding where to draw the line. I used to think 1M would be enough to retire. Now I'm at 1.5M and have not pulled the trigger yet. Each year that passes is another year that I will never get back. The only guarantee in life is that time will pass and we will die.
quantAndHold
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Re: Preparing for retirement in mid 30s

Post by quantAndHold »

lecithar wrote: Wed Sep 16, 2020 7:41 pm
TxAg wrote: Wed Sep 16, 2020 7:28 pm What about college costs for your kids?
Public colleges are fine. Besides, with the extra time I will have in retirement, I can give them a head start on education that is likely to be superior to any private school in the world.
Have you actually checked the price of public college? It sounds like you think it’s free.

Does your budget include taxes? College? Healthcare? Car? Insurance?

How much Social Security will you qualify for? Will you have worked enough to qualify for Medicare?

I think the bottom line is that you might be able to pull off a budget of $45k, at least for awhile, and you might get to the finish line without running out of money if you can stick to a $45k budget. But there’s a lot of uncertainty in a 60+ year retirement, especially with kids, and you’re leaving yourself no margin for error. Planning on a $75k budget, and the cutting down to $45k if things go south is different than starting on a $45k budget and then just failing if a kid or your wife gets sick or something.

I also can’t imagine raising a family with kids, and living on $45k by choice, if I had the ability to make a decent living. I mean, what’s the point of that? Cutting back, quitting my corporate job, starting my own business, changing to something I like better even though it doesn’t pay as well....I get that. Totally. You’ve done a good job saving, you can do any of those things. But just...nothing? For 2/3 of your life? Human beings aren’t really meant to live perpetual lives of leisure. And if you’re just barely making ends meet, what’s that leisure going to be? Watching TV?
Yes, I’m really that pedantic.
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Re: Preparing for retirement in mid 30s

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snowox
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Re: Preparing for retirement in mid 30s

Post by snowox »

I think you would be fine BUT if I were in your shoe's as others mentioned I would have a plan in place if things went to crap for awhile. At your age in 10 years you should know if the plan is going to workout or not and if not you can still find plenty of work if not at minimum wage. I'd go for it and keep my eyes open for something that I can do as little as possible for to get Healthcare and make a few side bucks. Having the confidence that you can find a gig like that is all I would need.
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Artful Dodger
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Re: Preparing for retirement in mid 30s

Post by Artful Dodger »

lecithar wrote: Wed Sep 16, 2020 7:27 pm
sailaway wrote: Wed Sep 16, 2020 6:47 pm The biggest flaw I see is your ability to control your taxable income and how that may affect your plans for medical. You are in danger of too little for ACA subsidies, but too many assets for Medicaid.
Good point about ACA. I will need to figure out how the ACA system works. Maybe dividend and bond income is enough to qualify. If not I can realize some capital gains. I have been very good at performing tax-loss harvesting, for example I have never had to pay tax on capital gains.
Here’s the skinny on the ACA. It depends on the state you’re in, and whether it did or did not expand Medicaid under the ACA. I believe to date about 35 have with 3 in process of adoption. Subsidies are based on your income relative to the federal poverty rate. The 2020 federal poverty rate for a family of 4 is $26,200.

To quality for a subsidized ACA plan in a state that has expanded Medicaid, your income must be greater than 138% of poverty, or for you roughly $36,500. So, if your MAGI is over that you’ll get a good ACA plan with a substantial premium subsidy. If you’re in one of the states that did not expand Medicaid, you’re eligible for a subsidized ACA plan if your income is greater than 100% of poverty or the current $26,200 level.

If you live in one of the expansion states and MAGI is less than 138% of poverty you’ll be eligible for Medicaid at no cost. The main downside to Medicaid is in many states you have a more limited choice of providers compared to a traditional insurance plan. There is no assets test for Medicaid under the ACA expansion, so your $1.5M won’t hinder your enrollment.

If you live in one of the states that didn’t expand Medicaid, and your income falls below $26,200 MAGI, you’re not eligible for ACA credits and Medicaid Is tricky because benefits for adults are more limited. you’ll possibly qualify under one of the pre ACA plans like AFDC. Your kids likely will qualify. There are a few weird twists depending on which state you’re in. For example Wisconsin didn’t expand Medicaid but has coverage for those below 100% of poverty.
Last edited by Artful Dodger on Thu Sep 17, 2020 4:31 am, edited 1 time in total.
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

TheTimeLord wrote: Wed Sep 16, 2020 6:05 pm
Tingting1013 wrote: Wed Sep 16, 2020 6:01 pm
TheTimeLord wrote: Wed Sep 16, 2020 6:00 pm
BolderBoy wrote: Wed Sep 16, 2020 5:49 pm
lecithar wrote: Wed Sep 16, 2020 5:40 pmDo you see any big problems with our plan? We do not have wealthy family to fall back on, so we cannot fail. FIRECalc says we have 0% chance of failure even if we live to age 100.
Sorry but I find it very hard to believe that firecalc reported a 0% chance of failure through age 100. Did you use wildly optimistic numbers? I've had friends with larger portfolios, somewhat higher spending and starting at age 55 who couldn't get a 0% failure rate.

I'd be very careful in accepting that result when you are in your mid-30s with the financials you provided.
I just ran the numbers in Firecalc. $1,5000,000 portfolio, 90/10 AA for 65 year retirement and here is what I got (much to my surprise I might add). People feel free to double-check.
A spending level of $51,965 provided a success rate of 100.0% (85 total cycles, of which 0 failed). This spending level is 3.46% of your starting portfolio.
I assume OP has some SS coming to them so it’s probably even better than that
It gets weirder. I keep thinking I must be doing something wrong but if I am I don't see it.
FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 85 possible 65 year periods in the available data, starting with a portfolio of $1,500,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 85 cycles. The lowest and highest portfolio balance at the end of your retirement was $1,500,000 to $83,169,968, with an average at the end of $35,437,211. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 65 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.
Input Data for this model
Withdrawals 45,000
Plan End 65
95% Rule from WorkLess, Live More*
Percentage used for 95% Rule* 0
Bernicke Spending Reductions*
Current Age (for scheduling Bernicke spending reductions)* 48
Starting Portfolio 1,500,000
Percent in Stocks 90%
Expense Ratio 0.03%
Retirement Year* 2020
Contributions until then* 0
Social Security* 0
Starting in* 2033
Spouse Social Security* 0
Starting in* 2035
Other withdrawal change* +0
Starting in* 2023
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2025
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2029
Inflation adjusted* yes
Lump sum change to portfolio* +0
In year 2023
Lump sum change to portfolio* +0
In year * 2033
Lump sum change to portfolio* +0
In year * 2038
Inflation Rate selected* CPI
Fixed income model * T5
Override start year* 1871
Terminal Value* 0
US Micro Cap** 10
US Small** 10
US Small Value** 10
S&P 500** 40
US Large Value** 40
US LT Treasury** 10
LT Corporate Bond** 15
1 Month Treasury** 5
* - Used in Advanced FIRECalc
What do you find weird? 45k/1.5m = 3% WR. For US equities that has essentially been the perpetual withdrawal rate.
So, FireCalc seems to be providing reasonable answers.

I Would be more concerned about estimated expenses, kids can get expensive.
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

runner3081 wrote: Wed Sep 16, 2020 8:51 pm
Normchad wrote: Wed Sep 16, 2020 5:48 pm I thought I read someplace, that to get ACA subsidies, there is also a *minimum* income you must have. Can anybody corroborate that or explain that?
Too low of income will put you on state's medicaid.
May not help much.
Depends on state. Some have work requirements, others have gap between kicked off ACA and eligible of Medicaid.
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

Impatience wrote: Wed Sep 16, 2020 8:55 pm Retiring in your 30’s with a $1.5M portfolio and a solid plan to spend the rest of your life on healthcare intended for the poor. Very classy.
Can you cite a reference that says the ACA is "intended for the poor"?
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

retire57 wrote: Wed Sep 16, 2020 9:26 pm
lecithar wrote: Wed Sep 16, 2020 6:21 pm
awval999 wrote: Wed Sep 16, 2020 5:51 pm My only recommendation would be to buy a small house in cash to limit risk of rent increases.
You can easily have a 3/2 1500 sqft for $150,000 in the Midwest/South.
Yes, I am seriously considering this. It will require working several more years, but it means my family will not be beholden to landlords. And it means I can withdraw less from my portfolio, which will give more favorable tax benefits and a larger margin of error.
You'll actually need to draw more from your savings as your living expenses will climb. Houses are expensive to maintain, insure, and repair. Go to Home Depot sometime and price lawnmowers, weed eaters, paint, lawn furniture, landscape plants, fencing, and a decent set of tools. And that's just exterior stuff.

Next find out what it costs to have a roof replaced. Then take a deep breath and reconsider buying.
If this were true, landlords would not exist. When you rent, you are paying for all of those things in your rent.
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

lecithar wrote: Wed Sep 16, 2020 10:08 pm
Wannaretireearly wrote: Wed Sep 16, 2020 7:55 pm Mind sharing your career background area?
What else do you plan to do? I.e. what hobbies do you have?
I have a software engineering background. Out of college I made low six figures and it steadily increased to 250k/yr. Then several years ago I decided to switch to a lower stress job that pays 180k/yr.

As a single person I saved half of my after-tax income. Now that I have a family (single income) I save a third. I always invested in after-tax brokerage because my work places did not offer matching.

My family expenses are reliably 90k/yr in a VHCOL area (renting). So I think 45k/yr will work for us in a VLCOL area.

My hobby is I like to just think about stuff. Seriously. I want to spend all day thinking about random topics that have caught my attention. This is why I think a job is not ideal for me, because it limits the time I have each day to just think.
I generally support well thought out early retirement plans.

A few things concern me.

With two young kids, you may be under estimating your expenses going forward.

You don't seem to have a reasonably well thought out plan for healthcare, it can be a huge expense, or not, depending on how it is managed.

You paid taxes on your earnings (at what 20%+ tax rate?) while you will likely be withdrawing it at close to 0% tax rate just because you did not get matching dollars?!?

You might want to spend some that thinking time on how to manage your finances.
Retiring early and living on a low income can be made to work, one thing that increases your likelihood of success is efficiently managing your investments. If you skipped doing 401k /IRA in your tax bracket, you missed a golden opportunity to do that.
Once in a while you get shown the light, in the strangest of places if you look at it right.
yohac
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Re: Preparing for retirement in mid 30s

Post by yohac »

lecithar wrote: Wed Sep 16, 2020 10:08 pm My hobby is I like to just think about stuff. Seriously. I want to spend all day thinking about random topics that have caught my attention. This is why I think a job is not ideal for me, because it limits the time I have each day to just think.
Respectfully, I think you should keep renting. Home maintenance presents the same limitation.

Just an observation, I knew many people who spent all day just thinking random thoughts, and yet somehow managed to keep collecting a full-time pay check.
runner540
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Re: Preparing for retirement in mid 30s

Post by runner540 »

marcopolo wrote: Thu Sep 17, 2020 4:54 am
lecithar wrote: Wed Sep 16, 2020 10:08 pm
Wannaretireearly wrote: Wed Sep 16, 2020 7:55 pm Mind sharing your career background area?
What else do you plan to do? I.e. what hobbies do you have?
I have a software engineering background. Out of college I made low six figures and it steadily increased to 250k/yr. Then several years ago I decided to switch to a lower stress job that pays 180k/yr.

As a single person I saved half of my after-tax income. Now that I have a family (single income) I save a third. I always invested in after-tax brokerage because my work places did not offer matching.

My family expenses are reliably 90k/yr in a VHCOL area (renting). So I think 45k/yr will work for us in a VLCOL area.

My hobby is I like to just think about stuff. Seriously. I want to spend all day thinking about random topics that have caught my attention. This is why I think a job is not ideal for me, because it limits the time I have each day to just think.
I generally support well thought out early retirement plans.

A few things concern me.

With two young kids, you may be under estimating your expenses going forward.

You don't seem to have a reasonably well thought out plan for healthcare, it can be a huge expense, or not, depending on how it is managed.

You paid taxes on your earnings (at what 20%+ tax rate?) while you will likely be withdrawing it at close to 0% tax rate just because you did not get matching dollars?!?

You might want to spend some that thinking time on how to manage your finances.
Retiring early and living on a low income can be made to work, one thing that increases your likelihood of success is efficiently managing your investments. If you skipped doing 401k /IRA in your tax bracket, you missed a golden opportunity to do that.
+1
OP, what does your spouse think of this plan? You should move to a “VLCOL” area and actually live on $45k for a year, call it a sabbatical or something, before you completely pull the plug. Test out the budget, lifestyle change and location change will work for your whole family.
SchruteB&B
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Re: Preparing for retirement in mid 30s

Post by SchruteB&B »

This is essentially what this blogger did: https://rootofgood.com/

Retired in 30s with 3 kids in a LCOL area on a $40k per year budget. He goes into a lot of detail on ACA subsidies.
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Re: Preparing for retirement in mid 30s

Post by tibbitts »

For me there would be too many unknowns that will occur over such a long retirement timeframe that I'd want more cushion, and given the new "lower stress job" the OP has, I don't understand the rush. Once you step out of your employment situation for some time, unless you have extraordinary skills or qualifications that are (still) in demand, you might need to work five or more years to earn what you can now in one, in less desirable conditions.

I think you'd be more likely to succeed doing this if you were single, but I just don't see this working out for a family. While you seem to take pleasure out of doing nothing but "thinking", the rest of the family might not share your enthusiasm.
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MrBobcat
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Re: Preparing for retirement in mid 30s

Post by MrBobcat »

drk wrote: Wed Sep 16, 2020 6:16 pm Two things that make this riskier:

1. Young kids
2. No income outside of investments
3. Relying that the ACA/Expanded Medicaid will be available for healthcare for the next 30+ years in it's current form.
tibbitts
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Re: Preparing for retirement in mid 30s

Post by tibbitts »

runner540 wrote: Thu Sep 17, 2020 6:51 am ...call it a sabbatical or something, before you completely pull the plug. Test out the budget, lifestyle change and location change will work for your whole family.
You can call it anything you want but you employer will likely call it "resignation." Very, very few employers have any kind of provision for anything approaching a "sabbatical." So in effect you are completely pulling the plug.
bltn
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Re: Preparing for retirement in mid 30s

Post by bltn »

I believe that a family of four can get by on 45,000 a year. Will that be comfortable? Doubtful. Will there be financial security over the next 50 years? Not likely.

What is more stressful? Working a job, even part time, or retiring and spending considerable effort to live within a tight budget? What about the so called “lumpy expenses” that will occur?

Depending on the government to fund your family s health care for the rest of your lives is very risky. Considering that free health care is generally intended for people with few means , you ll have to stay in that class. Maybe food stamps will be available if things get tight.
Taking advantage of government subsidies to fund an early retirement is living on the financial edge.

One final thought. What about the role model you ll be for your children? Your actions in life are very important in influencing their development of values.

One second final thought. You ve been blessed with the ability to earn a fine living. Why would you give that up for extra free time? Certainly you could find a less demanding job in terms of time and/or effort that would allow you some increased financial flexibility and more free time.

The phrase used around her a lot is “stay the course”. At least to some degree. But if that is too stressful, then you can probably get by with early retirement. It won t be easy.
tibbitts
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Re: Preparing for retirement in mid 30s

Post by tibbitts »

quantAndHold wrote: Thu Sep 17, 2020 1:54 am Have you actually checked the price of public college? It sounds like you think it’s free.
Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range. In my state any of the public universities would be tuition-free, and I believe some have fee assistance plans. Of course there are academic and other requirements for admission. And you would presumably want to select a location to live where it would be possible to commute for education - although for all we know by then virtually all education will be online.
supersecretname
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Re: Preparing for retirement in mid 30s

Post by supersecretname »

I think you are cutting it close. I say this as an MMM devotee who is also planning to retire around age 40.

My biggest concern would be generating enough income to fall into ACA and not medicaid. I'm planning on doing Roth conversions. You could tax gain harvest, but don't know if that will last you 30 years.

Kids are expensive (I have two). Yours are young, and you are probably not budgeting teenager expenses. You can't assume your kids will turn out like you.

Do you have a side-gig? Having one will 1) let you generate income when needed 2) keep you mentally stimulated 3) get you out of the house. Even a part-time job near minimum wage can fill that role.
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