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Old 07-12-2019, 12:47 PM
 
1,064 posts, read 517,177 times
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Quote:
Originally Posted by ohio_peasant View Post
Assuming that you're genuinely interested in my opinion, and that I'm not about to be lured into some digital version of ignominious display in the pillory in the town-square, here are some subjective numbers:

1. 40 year old, single, no kids, good investor: >$10M

2. 40 year old, single, no kids, mediocre investor: >$30M

3. 40 year old, has children and/or spouse: I couldn't even begin to comment, but certainly more than the above.
Wow. You sure are cautious. Yes, I am genuinely interested. What percent of people could retire at any age with that degree of trepidation? I admit I would probably be one of them if I had kids.
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Old 07-12-2019, 01:02 PM
 
7,926 posts, read 5,042,332 times
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Quote:
Originally Posted by Cabound1 View Post
Wow. You sure are cautious. Yes, I am genuinely interested. What percent of people could retire at any age with that degree of trepidation? I admit I would probably be one of them if I had kids.
Things simplify enormously as we age. What would be a princely amount at 65, is threadbare at 55 and ludicrously inadequate at 45. I didn't realize this, before I did the calculation myself, but if we examine SWR and so forth, the outcome is very different for a 30-year retirement vs. say a 50-year one. This is because inflation greatly magnifies the nominal annual withdrawal in the outyears.

Old-age is also supported by defined-benefit pension schemes. Middle-age is not, unless one happens to be a retiree from the military. Defined-benefit schemes are by design aimed at rewarding the attainment of age, rather than necessarily long-tenure on the job. A person who starts at 20 and "retires" at 45, working for 25 years, would - given inflation, and age-related stipulations - likely have a smaller pension, than one who starts at 50, and retires at 65. In other words, just "showing up" has more value when we're older, than when we're younger. If I were old enough for Social Security and Medicare, I'd have enough to cover my needs, from those programs alone. A portfolio of $0 would be sufficient.

Likewise in raw matter of longevity. If I had reasonably good assurance that I could be euthanized at say age 70 (this is not a joke), I'd behave far differently, than if I'd potentially be staring at indeterminate decades of geezerhood. If I could base life-expectancy on the actual lifetimes of my parents and grandparents, there wouldn't be any problems. Unfortunately, we have modern medicine etc. The curse of progress levies responsibilities on us. We have to budget for those responsibilities.

Importantly, as we grow more affluent, our responsibilities grow. And I don't mean the "hedonistic treadmill". The vast majority of my expenses is taxes. I say this not to launch into a petulant tirade against "socialism", but to note, that it is precisely the doing of what the FIRE community recommends, that results in a... raising of expenses, if we count taxes as an expense.
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Old 07-12-2019, 02:25 PM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by mathjak107 View Post
money may not by happiness but it sure can buy choices in life ...that can be worth it's weight in gold
Bada Bing! And those choices can create mucho happiness!
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Old 07-12-2019, 02:26 PM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by RationalExpectations View Post
While money can't buy happiness, it CAN buy season ski passes and frequent ski tune-ups. And sushi.
Bada Bing!
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Old 07-12-2019, 02:42 PM
 
2,233 posts, read 545,800 times
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Quote:
Originally Posted by GeoffD View Post
It can also buy you a season pass at a ski area where frequent ski tunes aren't necessary.


I have a season tune at the local shop. $139 and they tune my skis once per week if I want. Ski tuning is a loss leader to get people into the shop to spend money. Sadly, that weekly tune is often needed. I'm not at one of those resorts where sharp edges are unnecessary.


I also have a local's card for half price sushi before 6pm. The earlybird special. LOL
I usually get my skis tuned at Podium Ski Service in Park City; essentially all the local ski racers get their gear done there. A performance tune is about $80 if I recall correctly (the website doesn't say). I don't remember how much a race tune is - more, of course.
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Old 07-12-2019, 02:44 PM
 
13,915 posts, read 7,411,228 times
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Quote:
Originally Posted by ohio_peasant View Post
Things simplify enormously as we age. What would be a princely amount at 65, is threadbare at 55 and ludicrously inadequate at 45. I didn't realize this, before I did the calculation myself

I figured this out at age 50 at the Great Recession when I was unemployed with zero job prospects. I put together a "Geoff never works again" sheet in my personal finances spreadsheet. In 2008, it looked pretty grim. Now at age 61, it's a modest cut in my usual standard of living. I'd like a few more years of high tech wages so I don't have to chop anything out but it would be comfortable if I never work again. As you say, at 65, it becomes much simpler. I don't have to bridge many years to get to that age 70 Social Security check. It becomes far less likely that I could outlive my wealth even faced with big out of pocket long term care expenses.
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Old 07-12-2019, 02:48 PM
 
79,133 posts, read 33,597,768 times
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We are lucky. I am fully aware of that. My wife and I have coverage through where we work. Double coverage (even then we still get stuck with some costs).

We had budgeted starting off $900 a month for insurance. We are not going to reasonably pay for continuing both. I have dental, the wife didn't.

Found out that we can get hers for just under $600 and while I still haven't got my final number, it's supposed to be even less. So our 1.7 figure just got a little lower.

I trust hers to be around longer than mine but we also found out that if something happened to mine, we can still go back and pick hers up.
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Old 07-12-2019, 02:51 PM
 
1,064 posts, read 517,177 times
Reputation: 1819
Quote:
Originally Posted by ohio_peasant View Post
Things simplify enormously as we age. What would be a princely amount at 65, is threadbare at 55 and ludicrously inadequate at 45. I didn't realize this, before I did the calculation myself, but if we examine SWR and so forth, the outcome is very different for a 30-year retirement vs. say a 50-year one. This is because inflation greatly magnifies the nominal annual withdrawal in the outyears.

Old-age is also supported by defined-benefit pension schemes. Middle-age is not, unless one happens to be a retiree from the military. Defined-benefit schemes are by design aimed at rewarding the attainment of age, rather than necessarily long-tenure on the job. A person who starts at 20 and "retires" at 45, working for 25 years, would - given inflation, and age-related stipulations - likely have a smaller pension, than one who starts at 50, and retires at 65. In other words, just "showing up" has more value when we're older, than when we're younger. If I were old enough for Social Security and Medicare, I'd have enough to cover my needs, from those programs alone. A portfolio of $0 would be sufficient.

Likewise in raw matter of longevity. If I had reasonably good assurance that I could be euthanized at say age 70 (this is not a joke), I'd behave far differently, than if I'd potentially be staring at indeterminate decades of geezerhood. If I could base life-expectancy on the actual lifetimes of my parents and grandparents, there wouldn't be any problems. Unfortunately, we have modern medicine etc. The curse of progress levies responsibilities on us. We have to budget for those responsibilities.

Importantly, as we grow more affluent, our responsibilities grow. And I don't mean the "hedonistic treadmill". The vast majority of my expenses is taxes. I say this not to launch into a petulant tirade against "socialism", but to note, that it is precisely the doing of what the FIRE community recommends, that results in a... raising of expenses, if we count taxes as an expense.
You said you could live with $0 portfolio as long as you had SS and Medicare. So I’m assuming age 65. I agree with you there, given you are, I assume, a lifetime high earner as an engineer, and live in a lower cost area.

Yet, you’d need $10M to retire (at least) at age 40? So worst case scenario, $10M blown in 25 years. Or, put in a more colorful way, $400,000 a year pulled out from underneath the mattress every year for 25 years.

This doesn’t make sense. Am I misunderstanding you? I could see $5M, maybe.
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Old 07-12-2019, 02:59 PM
 
1,064 posts, read 517,177 times
Reputation: 1819
Quote:
Originally Posted by GeoffD View Post
I figured this out at age 50 at the Great Recession when I was unemployed with zero job prospects. I put together a "Geoff never works again" sheet in my personal finances spreadsheet. In 2008, it looked pretty grim. Now at age 61, it's a modest cut in my usual standard of living. I'd like a few more years of high tech wages so I don't have to chop anything out but it would be comfortable if I never work again. As you say, at 65, it becomes much simpler. I don't have to bridge many years to get to that age 70 Social Security check. It becomes far less likely that I could outlive my wealth even faced with big out of pocket long term care expenses.
I’m glad you chimed in Geoff, because I immediately thought of you when I was reading ohio’s Post.

While I have a much higher risk tolerance than you appear to, I fully understand your approach to retirement.....get your ass to where SS and Medicare can take you the rest of the way, worst case scenario.

What do you think the number to take yourself from 40 to 65, given you are okay with having $0 portfolio at 65, should be?
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Old 07-12-2019, 03:08 PM
 
1,714 posts, read 613,897 times
Reputation: 1799
Interestingly, at the age of 45, I took into account my spending habits, my conservativeness with money and reluctance to invest (ie, my retirement is based primarily on annuities), and the average inflation over the preceding 75 years, and I came up with a very similar figure, ie, $1.8 million with about half of that paid into layered delayed fixed annuities. Guided by that figure, I semi-retired at 49 (though have worked pretty substantially in some of the subsequent 10 years of "semi-retirement").



With the above plan, I was aiming at securing $30k per year at the age 45 (ie, in 2005), and increasing that by 4% every year - that is what I would have needed if I had only one condo, and lived with my boyfriend between my condo in Boston and his in Europe (he and I were together for 10.5 years - ie, until his death - but at my insistence kept all our finances strictly separate, leaving things in our respective wills to younger family members rather than to each other. I'm the kind of person that wouldn't touch any $ that I haven't earned myself).


Anyway, what happened is that he died (when he was 59 and I was 52, ie, 7 years ago), and I ended up working actually quite hard in some subsequent years, so overshot my retirement funds goal. I also bought 2 more condos, and now live between 3 condos in 3 different cities on the East and West Coast. Taxes, maintenance and utilities for the extra 2 condos cost an extra $14k per year altogether (but also reduce my need to travel to other places, and the condos are appreciating even while having usable value to me, thus serving as an inflation hedge should I need to sell them). At 59, my annual expenses (including taxes) are actually a bit less than $55k per year, ie, about what I projected they would be when I was 45, even though I did not factor buying 2 additional condos into the plan.


So, this retirement-securing figure of $1.7M per person of average needs actually seems realistic at any age, assuming that you spend about half of it on a super-conservative "investment" (ie, layered fixed annuities), because a fixed annuity starting to pay, say, $5,000 per month at, say, the age of 70 costs incomparably less if you buy it at 45 than if you actually buy it at 70. I have been told that retiring on a set of fixed annuities with layered starting times is comparable to retiring on dividend-paying bonds, but I am not sure whether that is true, I never really looked at the comparison.


So again, assuming the most conservative approach to money management (other than simply keeping it in the banks), and assuming average spending patterns for a single person, I think $1.7 M retirement figure actually does seem to be THE figure that most people are asking about when they ask "how much do I need for (either an early or regular) retirement?".
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