Would your FIRE plan work had your journey started 1965?

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Clever_Username
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Re: Would your FIRE plan work had your journey started 1965?

Post by Clever_Username » Thu Jan 10, 2019 9:11 pm

KlangFool wrote:
Thu Jan 10, 2019 5:18 pm
The answer is simple.

A) My target number is I can FI at my current location. If I use other numbers, I can LIE to myself easily.

B) My current annual expense is a lot more accurate than any forecast.
Thank you! This makes a lot of sense. I am thinking maybe I should do the same for measurement purposes.
HomerJ wrote:
Thu Jan 10, 2019 6:40 pm
Clever_Username wrote:
Thu Jan 10, 2019 5:07 pm
Why are you using current annual expense?
When you're close to retirement, one's current annual expense should pretty close to what you want in retirement.

At least, it's a great starting point.

You may have to adjust it if you plan to downsize. You may have to adjust it for health insurance. You may have to adjust it if you plan to take more vacations.

But where else would one start?

If you are 35, with two kids, in starter home with a mortgage, your current expenses may not be a very accurate estimate of retirement expenses.

But if you're 55, kids are gone, house is paid off, I would think your current expenses would be a pretty accurate place to start.
This also makes a lot of sense. Thank you!
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.


KlangFool
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Re: Would your FIRE plan work had your journey started 1965?

Post by KlangFool » Sun Jan 13, 2019 8:33 am

stocknoob4111 wrote:
Sun Jan 13, 2019 12:04 am
The 4% Myth:

https://www.youtube.com/watch?v=jMqFkK9u270
stocknoob4111,

If you do not comment on why we should check out the link that you posted, I would assume that it is click bait.

KlangFool

3-20Characters
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Joined: Tue Jun 19, 2018 2:20 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by 3-20Characters » Sun Jan 13, 2019 8:42 am

KlangFool wrote:
Sun Jan 13, 2019 8:33 am
stocknoob4111 wrote:
Sun Jan 13, 2019 12:04 am
The 4% Myth:

https://www.youtube.com/watch?v=jMqFkK9u270
stocknoob4111,

If you do not comment on why we should check out the link that you posted, I would assume that it is click bait.

KlangFool
It’s basicslly a veiled advertisement.

KlangFool
Posts: 11109
Joined: Sat Oct 11, 2008 12:35 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by KlangFool » Sun Jan 13, 2019 8:53 am

3-20Characters wrote:
Sun Jan 13, 2019 8:42 am
KlangFool wrote:
Sun Jan 13, 2019 8:33 am
stocknoob4111 wrote:
Sun Jan 13, 2019 12:04 am
The 4% Myth:

https://www.youtube.com/watch?v=jMqFkK9u270
stocknoob4111,

If you do not comment on why we should check out the link that you posted, I would assume that it is click bait.

KlangFool
It’s basicslly a veiled advertisement.
Thanks.

KlangFool

Jags4186
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Joined: Wed Jun 18, 2014 7:12 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by Jags4186 » Sun Jan 13, 2019 8:59 am

KlangFool wrote:
Wed Jan 09, 2019 12:54 am
fire4fun,

1) No, I am not from China. China average gross saving rate is higher at 40+%.
That’s not true. The Chinese are savers but the number is under 30%. The 40%+ number includes their version of social security contributions. If you’re going to include that then everyone with a middle class income in the United States is already saving 15+% by virtue of mandatory contributions.

flyingaway
Posts: 1949
Joined: Fri Jan 17, 2014 10:19 am

Re: Would your FIRE plan work had your journey started 1965?

Post by flyingaway » Sun Jan 13, 2019 9:04 am

KlangFool wrote:
Thu Jan 10, 2019 5:18 pm

Clever_Username,

The answer is simple.

A) My target number is I can FI at my current location. If I use other numbers, I can LIE to myself easily.

B) My current annual expense is a lot more accurate than any forecast.

KlangFool
This is important. I think some people at MMM site just cut their expenses to the bones and claim to be FIREed. They may just lie to themselves.

JJP88
Posts: 19
Joined: Sun Apr 22, 2018 4:41 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by JJP88 » Sun Jan 13, 2019 9:22 am

Still very new at this, but hypothetically shouldn’t people have their AAs close to where they can whether the storm if they are retiring inf the next 5-10 years?

Me being 37 years out from retirement (age 30) for one would think an extended bear market would good for me personally.

KlangFool
Posts: 11109
Joined: Sat Oct 11, 2008 12:35 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by KlangFool » Sun Jan 13, 2019 9:35 am

Jags4186 wrote:
Sun Jan 13, 2019 8:59 am
KlangFool wrote:
Wed Jan 09, 2019 12:54 am
fire4fun,

1) No, I am not from China. China average gross saving rate is higher at 40+%.
That’s not true. The Chinese are savers but the number is under 30%. The 40%+ number includes their version of social security contributions. If you’re going to include that then everyone with a middle class income in the United States is already saving 15+% by virtue of mandatory contributions.
Jags4186,

A) In the USA, it is a defined benefit plan. In other countries, it is a defined contribution plan.

B) Could you withdraw that 15+% mandatory contribution if you are unemployed? If not, how could you call that as savings?

KlangFool

BlueGreenSkies
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Re: Would your FIRE plan work had your journey started 1965?

Post by BlueGreenSkies » Sun Jan 13, 2019 10:06 am

This site goes over things like the 4% and more conservative rates of withdrawal for FIRE (having more years to live means you need more years of money to spend). The series of withdrawal rates starts here:
https://earlyretirementnow.com/2016/12/ ... t-1-intro/

I find the analysis on withdrawal rates for early retirees interesting, especially as it relates to sequence of return. Part 14 has some interesting stuff. To answer your question most directly I think you would find part 15 particularly relevant as he talks about the 1968-1998 scenario in detail. There may have been somewhere else in the series that he talks about 1965 directly, but if so I forgot where.

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TheTimeLord
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Re: Would your FIRE plan work had your journey started 1965?

Post by TheTimeLord » Sun Jan 13, 2019 10:14 am

Jags4186 wrote:
Sun Jan 13, 2019 8:59 am
KlangFool wrote:
Wed Jan 09, 2019 12:54 am
fire4fun,

1) No, I am not from China. China average gross saving rate is higher at 40+%.
That’s not true. The Chinese are savers but the number is under 30%. The 40%+ number includes their version of social security contributions. If you’re going to include that then everyone with a middle class income in the United States is already saving 15+% by virtue of mandatory contributions.
https://www.bloomberg.com/opinion/artic ... se-economy
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

Jags4186
Posts: 2762
Joined: Wed Jun 18, 2014 7:12 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by Jags4186 » Sun Jan 13, 2019 10:18 am

KlangFool wrote:
Sun Jan 13, 2019 9:35 am
Jags4186 wrote:
Sun Jan 13, 2019 8:59 am
KlangFool wrote:
Wed Jan 09, 2019 12:54 am
fire4fun,

1) No, I am not from China. China average gross saving rate is higher at 40+%.
That’s not true. The Chinese are savers but the number is under 30%. The 40%+ number includes their version of social security contributions. If you’re going to include that then everyone with a middle class income in the United States is already saving 15+% by virtue of mandatory contributions.
Jags4186,

A) In the USA, it is a defined benefit plan. In other countries, it is a defined contribution plan.

B) Could you withdraw that 15+% mandatory contribution if you are unemployed? If not, how could you call that as savings?

KlangFool
No but I collect uninsurance benefits if I were to lose my job. Something the Chinese don’t get. You’ll find that as countries have more social safety nets saving rates drop. While the United States has a poor savings rates, so do rich countries like Norway.

Jags4186
Posts: 2762
Joined: Wed Jun 18, 2014 7:12 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by Jags4186 » Sun Jan 13, 2019 10:22 am

OP,

The facts are that the SP500 returned a positive real 0.48% CAGR over the 17 year period from 1965-1982. Pretty awful to be sure, but keep in mind that overall inflation rates are not necessarily equivalent to personal inflation rates. For example, one of the biggest increases was in costs was housing. If you owned your house outright in 1965 your personal impact of inflation was limited to your increased property taxes and the cost of services.

KlangFool
Posts: 11109
Joined: Sat Oct 11, 2008 12:35 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by KlangFool » Sun Jan 13, 2019 10:29 am

Jags4186 wrote:
Sun Jan 13, 2019 10:18 am
KlangFool wrote:
Sun Jan 13, 2019 9:35 am
Jags4186 wrote:
Sun Jan 13, 2019 8:59 am
KlangFool wrote:
Wed Jan 09, 2019 12:54 am
fire4fun,

1) No, I am not from China. China average gross saving rate is higher at 40+%.
That’s not true. The Chinese are savers but the number is under 30%. The 40%+ number includes their version of social security contributions. If you’re going to include that then everyone with a middle class income in the United States is already saving 15+% by virtue of mandatory contributions.
Jags4186,

A) In the USA, it is a defined benefit plan. In other countries, it is a defined contribution plan.

B) Could you withdraw that 15+% mandatory contribution if you are unemployed? If not, how could you call that as savings?

KlangFool
No but I collect uninsurance benefits if I were to lose my job. Something the Chinese don’t get. You’ll find that as countries have more social safety nets saving rates drop. While the United States has a poor savings rates, so do rich countries like Norway.
Jags4186,

It is another defined benefit plan. It does not have any direct relationship to your 15+% mandatory contribution.

<<so do rich countries like Norway.>>

https://www.ceicdata.com/en/indicator/n ... vings-rate
<<Norway's Gross Savings Rate was measured at 31.7 % in Jun 2018, compared with 33.8 % in the previous quarter. Norway Gross Savings Rate is updated quarterly, available from Mar 1978 to Jun 2018, with an average rate of 33.1 %. The data reached an all-time high of 43.8 % in Mar 2008 and a record low of 26.5 % in Dec 1992. >>

KlangFool

Jags4186
Posts: 2762
Joined: Wed Jun 18, 2014 7:12 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by Jags4186 » Sun Jan 13, 2019 10:33 am

KlangFool wrote:
Sun Jan 13, 2019 10:29 am
Jags4186 wrote:
Sun Jan 13, 2019 10:18 am
KlangFool wrote:
Sun Jan 13, 2019 9:35 am
Jags4186 wrote:
Sun Jan 13, 2019 8:59 am
KlangFool wrote:
Wed Jan 09, 2019 12:54 am
fire4fun,

1) No, I am not from China. China average gross saving rate is higher at 40+%.
That’s not true. The Chinese are savers but the number is under 30%. The 40%+ number includes their version of social security contributions. If you’re going to include that then everyone with a middle class income in the United States is already saving 15+% by virtue of mandatory contributions.
Jags4186,

A) In the USA, it is a defined benefit plan. In other countries, it is a defined contribution plan.

B) Could you withdraw that 15+% mandatory contribution if you are unemployed? If not, how could you call that as savings?

KlangFool
No but I collect uninsurance benefits if I were to lose my job. Something the Chinese don’t get. You’ll find that as countries have more social safety nets saving rates drop. While the United States has a poor savings rates, so do rich countries like Norway.
Jags4186,

It is another defined benefit plan. It does not have any direct relationship to your 15+% mandatory contribution.

<<so do rich countries like Norway.>>

https://www.ceicdata.com/en/indicator/n ... vings-rate
<<Norway's Gross Savings Rate was measured at 31.7 % in Jun 2018, compared with 33.8 % in the previous quarter. Norway Gross Savings Rate is updated quarterly, available from Mar 1978 to Jun 2018, with an average rate of 33.1 %. The data reached an all-time high of 43.8 % in Mar 2008 and a record low of 26.5 % in Dec 1992. >>

KlangFool
Gross savings rates are not household savings rates. Norway as a national entity has massive surpluses.

https://data.oecd.org/hha/household-savings.htm

KlangFool
Posts: 11109
Joined: Sat Oct 11, 2008 12:35 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by KlangFool » Sun Jan 13, 2019 12:31 pm

Jags4186 wrote:
Sun Jan 13, 2019 10:33 am
KlangFool wrote:
Sun Jan 13, 2019 10:29 am
Jags4186 wrote:
Sun Jan 13, 2019 10:18 am
KlangFool wrote:
Sun Jan 13, 2019 9:35 am
Jags4186 wrote:
Sun Jan 13, 2019 8:59 am


That’s not true. The Chinese are savers but the number is under 30%. The 40%+ number includes their version of social security contributions. If you’re going to include that then everyone with a middle class income in the United States is already saving 15+% by virtue of mandatory contributions.
Jags4186,

A) In the USA, it is a defined benefit plan. In other countries, it is a defined contribution plan.

B) Could you withdraw that 15+% mandatory contribution if you are unemployed? If not, how could you call that as savings?

KlangFool
No but I collect uninsurance benefits if I were to lose my job. Something the Chinese don’t get. You’ll find that as countries have more social safety nets saving rates drop. While the United States has a poor savings rates, so do rich countries like Norway.
Jags4186,

It is another defined benefit plan. It does not have any direct relationship to your 15+% mandatory contribution.

<<so do rich countries like Norway.>>

https://www.ceicdata.com/en/indicator/n ... vings-rate
<<Norway's Gross Savings Rate was measured at 31.7 % in Jun 2018, compared with 33.8 % in the previous quarter. Norway Gross Savings Rate is updated quarterly, available from Mar 1978 to Jun 2018, with an average rate of 33.1 %. The data reached an all-time high of 43.8 % in Mar 2008 and a record low of 26.5 % in Dec 1992. >>

KlangFool
Gross savings rates are not household savings rates. Norway as a national entity has massive surpluses.

https://data.oecd.org/hha/household-savings.htm
Jags4186,

For Virginia, the maximum unemployment benefit is around 10K. This is independent of your mandatory contribution. It is not a saving.

KlangFool

Jags4186
Posts: 2762
Joined: Wed Jun 18, 2014 7:12 pm

Re: Would your FIRE plan work had your journey started 1965?

Post by Jags4186 » Sun Jan 13, 2019 1:27 pm

I didn’t say unemployment was savings. You said the USA has a defined benefit plan therefore the government mandated Social Security contribution isn’t savings while in China government mandated savings is a defined contribution plan that you can withdraw from in case of unemployment. If I become employed I receive unemployment benefits and don’t need to raid any savings.

In NJ the maximum unemployment benefit is $18,096 which I would qualify for.

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