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Old 03-01-2017, 05:52 PM
 
Location: Paranoid State
13,047 posts, read 10,434,659 times
Reputation: 15678

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Quote:
Originally Posted by Vision67 View Post
So, can you retire at 55? If the ACA gets repealed and the states go back to those high risk pools, and you or your wife get significantly sick, you could go bust.
^^^ This ^^^

i've read President Trump wants to keep the "pre-existing condition" ban and also keep the "keep your kids on your plan 'til 25 (or whatever)" features of Obamacare.
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Old 03-01-2017, 06:47 PM
 
Location: SoCal
13,224 posts, read 6,320,879 times
Reputation: 9827
Quote:
Originally Posted by SportyandMisty View Post
^^^ This ^^^

i've read President Trump wants to keep the "pre-existing condition" ban and also keep the "keep your kids on your plan 'til 25 (or whatever)" features of Obamacare.
Yes, it was mentioned on CNBC.
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Old 03-01-2017, 07:01 PM
 
Location: Silicon Valley
3,612 posts, read 1,626,860 times
Reputation: 6132
Quote:
Originally Posted by ihatetodust View Post
Assume no mortgage or other debts and no spouse.
25x salary? 40x? How much does a (small) pension reduce that number? I have seen lots of things about safe w/d rates but they seem to assume you are starting at an older age.

The thing that is mostly prompting this question is an older friend (64) wants to retire and was advised he "can't". He has a pension of sorts, which I think is fairly generous. No idea what he has for debt or other assets. But heck if 64 is too young what about the rest of us?

Income is a number many wage earners know. Which is the only reason why it is used. The number you need to project on is expenditures. When you earn money, you can either spend it or not spend it. So the quick and dirty way is to look at your net cash deposits that went into your bank for the year. Not your gross. That's your wages cash in. Now look at your bank statement at the beginning of the year. Get that balance. Now look at your bank statement at the end of the year, get that balance.

So if Beginning balance + deposit - expenditures = ending balance

Then

Beginning Balance + deposits - ending balance = expenditures.

That's how much money you spent. Now look at that money you spent. Maybe some was for installment debt. Will it go away eventually? If so, that will reduce your expenditures. Will you take more on later? If so, that will increase your expenditures.

To make it easy, let's assume you have no debt. If I retire early, I would imagine I will not see my expenditure level fall much, but each person can reset their number based on the lifestyle they plan on leaving. the spoiler is that your should then increase that number by an inflationary amount each year. So if you retire at 55 and live to 85, you may easily be paying double for everything that you consume now.

Now look at your income side. You could have a pension, social security, investment income, rents etc. Add it together. Are you positive? Great. Are you negative....uh-oh. How about the following year. Your expenses keep going up, did your income? Or is you income fixed.

To me, that's what makes rentals nice to have in retirement. Rent and inflation rate should go up about the same. It's also what scares me about annuities and fixed pensions. What seems like an adequate amount today may not be later on.

So I'd run the number with a couple situations. If I'm going early I would not bank on social security and see if I can still afford it...because if I'm tired today, I'm really going to be tired when I'm 75.
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Old 03-01-2017, 07:11 PM
 
Location: Florida
4,361 posts, read 3,696,311 times
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Quote:
Originally Posted by ihatetodust View Post
Assume no mortgage or other debts and no spouse.
25x salary? 40x? How much does a (small) pension reduce that number? I have seen lots of things about safe w/d rates but they seem to assume you are starting at an older age.

The thing that is mostly prompting this question is an older friend (64) wants to retire and was advised he "can't". He has a pension of sorts, which I think is fairly generous. No idea what he has for debt or other assets. But heck if 64 is too young what about the rest of us?
You need to total up what you will spend each year.
Then you need to figure out how much money you need to invest to give you the money you need.

After you do this then start to refine for inflation, health care costs, taxes etc.

Might be best to hire an hourly planning person for some help.

For example if you need 50,000 a year and invest your money in a safe goverment bond paying 2% interest you will need 2.5 million dollars to generate the 50,000 income.
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Old 03-01-2017, 07:55 PM
 
656 posts, read 309,648 times
Reputation: 1225
Thanks to all who commented I found the stories/advice interesting!
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Old 03-01-2017, 09:56 PM
 
590 posts, read 294,468 times
Reputation: 881
I know Australia makes noncitizen "retirees" post a $1 mil. bond just to live there - they don't want folks that did not pay into the "free healthcare" (via HIGH TAXES) to get any of that benefit. If you get sick it is up to YOU.

Kind of makes a lot of sense and is the opposite of the U.S. - "Bring us your sick....."

I am a veteran (not retired) in the same situation - does anyone know if the Veterans Administration would help the 55 year old be able to retire and NOT worry about health care (or bridge the gap to 65)?

I know how bad "some" VA centers are from the news but if a person is in good health maybe in an emergency it may prevent bankruptcy.
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Old 03-02-2017, 04:03 AM
 
Location: Copenhagen, Denmark
10,511 posts, read 8,758,289 times
Reputation: 12192
Wealth at age 55 x Expected minimum annual rate of return => Expected maximum annual cash outflow is the safest approach I can think of. But it will be a big number.
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Old 03-02-2017, 12:30 PM
 
Location: Copenhagen, Denmark
10,511 posts, read 8,758,289 times
Reputation: 12192
Quote:
Originally Posted by Frihed89 View Post
Wealth at age 55 x Expected minimum annual rate of return => Expected maximum annual cash outflow is the safest approach I can think of. But it will be a big number.
You could also make a spreadsheet with more detail over time, starting at age 55 (t=0) for the rest of your expected life.

Future value of wealth wealth(t+1) = wealth(t)* (1+real annual rate of return on wealth) - annual expenditure(t).

Where the real annual rate of return = (1+nominal annual rate of return on investment)/(1+ annual expected rate of inflation) which can be approximated by nominal annual rate of return on investment - annual expected rate of inflation, if both are small.

But even this is pretty simple, too.
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Old 03-04-2017, 07:57 AM
 
Location: Spring, Texas
136 posts, read 65,326 times
Reputation: 272
These are good sites for OP to read and study.

FIRECalc: A different kind of retirement calculator

https://www.bogleheads.org
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Old 03-04-2017, 08:35 AM
 
Location: Central IL
15,222 posts, read 8,518,332 times
Reputation: 35617
Quote:
Originally Posted by SportyandMisty View Post
^^^ This ^^^

i've read President Trump wants to keep the "pre-existing condition" ban and also keep the "keep your kids on your plan 'til 25 (or whatever)" features of Obamacare.
I won't believe it until I see it....and I hear the planning is all "top secret" in a basement with guards to ensure the details don't get leaked until it's voted on. That's what I like - blind government with the public let in on their fate when it is too late to do anything. Everyone needs to keep the pressure on to ensure quality, reasonable healthcare is available for all.
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