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Old 12-13-2018, 06:50 PM
 
1,048 posts, read 512,583 times
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Quote:
Originally Posted by ohio_peasant View Post
If memory serves, this discussion came up in a thread on healthcare options for high-net-worth early-retirees. And if memory serves, in your example, the bulk of your net-worth is in tax-favored accounts (IRA, Roth IRA, 401K, etc.), plus your primary residence. Were your holdings overwhelmingly in plain-Jane taxable accounts, but otherwise the same amount, your options would have been starkly different.

A couple of considerations come to mind. First, one might attain a large portfolio by being a good investor, enjoying a high rate of return. Then, large annual contributions are not necessary. Second, maybe one has been doing this for decades. Here again large contributions aren't necessary, and neither is a prodigious annual rate of return. But we presume that for an early retiree, likely neither of these is true. The portfolio grew because of a decade or so, of very high salary-earnings, which fanatically were plowed into savings. This means that the principal account is probably NOT say a 401K. Our FIRE-candidate maybe has $5M, but $4M are in a taxable account, and only $1M in a 401K. So, when it comes to ACA qualification and calculation of MAGI (modified AGI, not three wise men...), dividends (even if in tax-exempt bonds!) from the taxable account count.
Yes, most of my assets are in non income taxable vehicles. But I do have about 1M in taxable accounts (or at least I did last week:-). This is the only real money that gets touched.

You couldn’t live on 40K from this investment? Paid off house, no medical, relatively small property taxes?

I think there’s lots of people that have 1M investable by 40. It’s the expenses they can’t control.
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Old 12-13-2018, 07:16 PM
 
1,048 posts, read 512,583 times
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Quote:
Originally Posted by eddiehaskell View Post
Clearly having too much money isn’t really a problem with early retirement. The hardest part may be reducing expenses for those that just freely spend (perhaps on a lot of frivolous stuff). Living on $20-30k may be a different world for those accustomed to living on $80k (probably with nice stuff but payments on a lot of it).
Gotta laugh when I read this.

Most people are all ears when they ask about my income generating activities. The minute I point out that lowering expenses is part of the equation, they figuratively cover their ears.

They assume it means lowering standard of living, or “giving up “ things. I haven’t lowered my standard of living, and the only real things I’ve “given up” are mortgage payments, car payments, health care costs and income taxes.
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Old 12-13-2018, 07:50 PM
 
7,895 posts, read 5,024,944 times
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Quote:
Originally Posted by mizzourah2006 View Post
... I could easily imagine a couple putting ~$45k/yr away in 401ks after factoring in matches. ...
My example was that of a single-person. There are tremendous economies-of-scale, when two like-minded, frugal high-earners get together.

Quote:
Originally Posted by Cabound1 View Post
...you always overlook individual non dividend paying stocks and low dividend ETFs. ...For example, SCHB historically pays between 1.00 and 1.25$ per share annually. At the current price of $63, a million dollars invested would produce from 16K - 19K
Indeed. But at around $2.5M in that account, you've blown through your ACA-eligibility limit.

Quote:
Originally Posted by Cabound1 View Post
And your premise regarding taxable versus non taxable assets for early retirees is suspect too. I retired at 42 with most of my assets in retirement vehicles. Granted, I worked in Silicon Valley, and was likely to invest that “trivial” amount in the likes of PSFT, AAPL, etc. perhaps I’m an outlier in that regard.
Your personal achievements are commendable, but I was specifically referring to persons who don't receive stock-options at work, and don't find a sweetheart investment. They just save lots of money and put it into the S&P 500.

For a particular outlier, consider the 2012 presidential campaign, and the public dissection of Mitt Romney's wealth. Mr. Romney was reputed to have $100M in his 401K (or was it his Roth IRA?). The amount is fantastical! How did he do it? Presumably, but being (1) a smart/lucky investor, and (2) using clever allocation-methods. I don't begrudge him his cleverness. But I do mean to regard his case as an outlier.

Quote:
Originally Posted by Cabound1 View Post
If you drive your expenses low enough, you don’t need $5M to retire.
You are of course right. But maybe I omitted to mention, that working vs. retirement, investing and saving vs. spending, isn't necessarily a raw and unadulterated matter of economics. It's also a vanity project. If one regards oneself as a meat-machine whose lifelong purpose is to accumulate more money, then one can never retire. If one backs off from such hyperbole by saying "enough is enough", then that "enough" is less a matter of expenses and assets, than of psychological feeling, that some number of millions is, well, enough.

After all, feeling comfortable is more than being warm in winter, well-fed, secure in one's house, away from noxious smells or noises, in good health, surrounded by entertaining and stimulating things. It's also about being able to forgive oneself, to mentally relax, to feel less anxious or guilty, to not fret about the stock market or the dollar-euro exchange rate or Brexit or tariffs. Retirement is predicated on psychological composure, as much as on financial resources. But the two intersect!

As Lottamoxie pointed out, my whole thesis, or a large part of it, is that wealth actually makes one more anxious and more guilt-ridden... more aghast over markets and taxes and leaving a legacy. It is in some regard preferable to be breaking rocks in a North Korean labor-camp, teetering on the edge of starvation, in unimaginable penury and degradation, for at least then, one has plausible deniability... that one wasn't profligate or injudicious with one's money, so that if one ends up with nothing, it's because tyrants stole it, or the system is rigged, or some barbarous imposition left one bereft of opportunity. The stress of American life, is precisely the fact that opportunities are so favorable and forthcoming, that any relaxation, any relenting or slowing-down, is facile and foolish, reprehensible, of ill-character and morals. In other words, the Protestant Work Ethic.
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Old 12-13-2018, 08:24 PM
 
18,845 posts, read 13,587,446 times
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Eddie has with great consistency avoided detailing how he amassed the asset base needed for his early retirement. To the point that the detail he has posted in terms of income/expenses has never made any logical path to what he claims exist. He is either dishonest in what is currently reality or how he got there, either way he continues down a path of perpetual bs that he can’t explain
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Old 12-13-2018, 10:43 PM
 
1,048 posts, read 512,583 times
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Quote:
Originally Posted by ohio_peasant View Post
My example was that of a single-person. There are tremendous economies-of-scale, when two like-minded, frugal high-earners get together.



Indeed. But at around $2.5M in that account, you've blown through your ACA-eligibility limit.



Your personal achievements are commendable, but I was specifically referring to persons who don't receive stock-options at work, and don't find a sweetheart investment. They just save lots of money and put it into the S&P 500.

For a particular outlier, consider the 2012 presidential campaign, and the public dissection of Mitt Romney's wealth. Mr. Romney was reputed to have $100M in his 401K (or was it his Roth IRA?). The amount is fantastical! How did he do it? Presumably, but being (1) a smart/lucky investor, and (2) using clever allocation-methods. I don't begrudge him his cleverness. But I do mean to regard his case as an outlier.



You are of course right. But maybe I omitted to mention, that working vs. retirement, investing and saving vs. spending, isn't necessarily a raw and unadulterated matter of economics. It's also a vanity project. If one regards oneself as a meat-machine whose lifelong purpose is to accumulate more money, then one can never retire. If one backs off from such hyperbole by saying "enough is enough", then that "enough" is less a matter of expenses and assets, than of psychological feeling, that some number of millions is, well, enough.

After all, feeling comfortable is more than being warm in winter, well-fed, secure in one's house, away from noxious smells or noises, in good health, surrounded by entertaining and stimulating things. It's also about being able to forgive oneself, to mentally relax, to feel less anxious or guilty, to not fret about the stock market or the dollar-euro exchange rate or Brexit or tariffs. Retirement is predicated on psychological composure, as much as on financial resources. But the two intersect!

As Lottamoxie pointed out, my whole thesis, or a large part of it, is that wealth actually makes one more anxious and more guilt-ridden... more aghast over markets and taxes and leaving a legacy. It is in some regard preferable to be breaking rocks in a North Korean labor-camp, teetering on the edge of starvation, in unimaginable penury and degradation, for at least then, one has plausible deniability... that one wasn't profligate or injudicious with one's money, so that if one ends up with nothing, it's because tyrants stole it, or the system is rigged, or some barbarous imposition left one bereft of opportunity. The stress of American life, is precisely the fact that opportunities are so favorable and forthcoming, that any relaxation, any relenting or slowing-down, is facile and foolish, reprehensible, of ill-character and morals. In other words, the Protestant Work Ethic.
I am not in Romney’s socioeconomic class and never will be.

I get what you are saying about the psychology of money.

For me personally, the net worth thingy was big until I encountered “real life” issues like heart disease and cancer in my immediate circle. Since then, let’s get real.... who cares what my net worth is.
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Old 12-13-2018, 11:34 PM
 
Location: Exeter, NH
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Engineers have been worked to death in my generation -- 80 hour weeks and calls at home in the middle of the night -- while never getting past the "paying dues" stage because the Robber Baron CEOs not only stole all the company's money, but also constantly cut staff more and more and never hired new ones to get them in the pipeline. Engineers are unfortunately such overachievers that many work until they come down with some major health problem in their early 50s. The large company my spouse used to work for is now desperate, since there is nobody to replace the engineers they literally worked to death.
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Old 12-14-2018, 04:19 AM
 
71,463 posts, read 71,652,652 times
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Quote:
Originally Posted by Lowexpectations View Post
Eddie has with great consistency avoided detailing how he amassed the asset base needed for his early retirement. To the point that the detail he has posted in terms of income/expenses has never made any logical path to what he claims exist. He is either dishonest in what is currently reality or how he got there, either way he continues down a path of perpetual bs that he can’t explain
yes , eddie has avoided the details now forever . there is more to his story than he was a financial success on his own at a young age .
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Old 12-14-2018, 04:23 AM
 
71,463 posts, read 71,652,652 times
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Quote:
Originally Posted by Cabound1 View Post
Gotta laugh when I read this.

Most people are all ears when they ask about my income generating activities. The minute I point out that lowering expenses is part of the equation, they figuratively cover their ears.

They assume it means lowering standard of living, or “giving up “ things. I haven’t lowered my standard of living, and the only real things I’ve “given up” are mortgage payments, car payments, health care costs and income taxes.
the flip side is true too .

that is many confuse growing income and investing with cutting costs and think investing is not important so it can wait . or they concentrate on paying off a house with any extra money rather then put it towards growing income .

they only appear a like until you run out of things to cut and expenses keep rising .

you need to cut costs , but you also need to concentrate on growing income and to many don't . they channel way to much extra money in to reducing the mortgage and then put extreme pressure later on , on any investing they do because now their time frame has less time to turn out okay. the less time you give yourself the greater the pressure becomes that your time frame has to be above average or worse can't be a lost decade .

Last edited by mathjak107; 12-14-2018 at 04:31 AM..
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Old 12-14-2018, 09:44 AM
 
1,048 posts, read 512,583 times
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Quote:
Originally Posted by mathjak107 View Post
the flip side is true too .

that is many confuse growing income and investing with cutting costs and think investing is not important so it can wait . or they concentrate on paying off a house with any extra money rather then put it towards growing income .

they only appear a like until you run out of things to cut and expenses keep rising .

you need to cut costs , but you also need to concentrate on growing income and to many don't . they channel way to much extra money in to reducing the mortgage and then put extreme pressure later on , on any investing they do because now their time frame has less time to turn out okay. the less time you give yourself the greater the pressure becomes that your time frame has to be above average or worse can't be a lost decade .
Agreed.

The risk averse people will have the hardest time retiring early imo. The worst are the ones that are both spenders and risk averse. Im trying to help an older friend who falls into this category. There’s just not much I can help him with.
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Old 12-14-2018, 11:26 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
5,434 posts, read 4,083,759 times
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Quote:
Originally Posted by Lowexpectations View Post
Eddie has with great consistency avoided detailing how he amassed the asset base needed for his early retirement. To the point that the detail he has posted in terms of income/expenses has never made any logical path to what he claims exist. He is either dishonest in what is currently reality or how he got there, either way he continues down a path of perpetual bs that he can’t explain
I was going to bring this up as he had that long thread but would never divulge where he got the cash to buy the house that has gone up or the cash to make investments that have made money.
Yep, some of us have been around here long enough not to just accept he made smart investments then retired.
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