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The two groups of retired that seem to be doing well are Public Safety/Military and those with an independent income stream from investments... those that I know just about always have rental property in the mix...
One lady owns a 3 unit building in Alameda and has lived in one unit for 40 years... the rent from the other 2 supplement her Social Security...
My second job as a teen was working in a shop that restored Antique Cars... lots of the customers were generous in answering questions from a kid... most, meaning about 90% had invested in Real Estate... some owned the property where they ran their business and later sold the business and lease the land... others, just had a couple of rentals... very few were from wealth... although there were two that could be called trust fund kids...
I bought my first rental in college, while working 3 jobs... Posted about it before. It was dump that my family thought would have been better to walk away from... that didn't deter me and over the course of a year living there and repairing it, it turning into a nice little 780 square feet cottage on a postage sized 25 x 100 lot... still own it today and in all the years only have had two renters...
As others have said... it is a great feeling to know you have options...
Helped a couple of my friends do the same thing... instead of buing their first traditional home... they bought a duplex or even a 4-plex... don't know a better way to build equity for those willing to put in the time...
The landlord route was taken by our first ever landlords. They bought a small house and garage and converted it to a 3 unit apartment with sweat equity. We lived in the garage apartment for a year. Then they moved to a slightly larger four plex in the same neighborhood and kept doing this while keeping the others. He was a fantastic landlord and each tenant found the next tenant so he almost never had a vacancy. His whole family lived in one big apartment in the last building he built but it was still a fourplex. He did this in Anchorage, Alaska.
He did not live in a fancy place but they got a little nicer and better built each time. So not only did they gradually build equity but they lived in one of the apartments the whole time. No money invested in a big fancy place just for them. In no way did they try and keep up with the Jones. Interesting family.
I am not splitting hairs at all! Many people overlook the cost of healthcare when planning an early retirement.
This is true. Conversely, though. Many people overlook the fact that most cases of high blood pressure, heart disease, and diabetes are preventable through a healthy diet and moderate regular exercise. Unfortunately, insurance hides the true cost of unhealthy lifestyles.
This is true. Conversely, though. Many people overlook the fact that most cases of high blood pressure, heart disease, and diabetes are preventable through a healthy diet and moderate regular exercise. Unfortunately, insurance hides the true cost of unhealthy lifestyles.
yah, i was planning on a healthy diet and exercise to keep my healthcare costs low. $1,000 a month? i might have to move to canada when i get older.
Like a couple others I'm in awe at those who believe not being required to get up at a certain hour and hit rush hour to report to work equates to sitting somewhere rotting.
If you retire at 50, you can go back to work if you want except choose to pursue whatever you want instead of what pays the bills. Or you can volunteer at something you like. Bottom line = no matter how much math you show me on total hours of weekends and vacations I can state from life experience they are not enough. When Monday morning comes I'm like "aw ****" and when I know I'm in the last few days of a vacation I can feel it with a sense of dread, and I know I'm not atypical given the attitudes of everyone else at the office... you know thank god its Friday, damn its Monday.
We're still on track to retire in our 40s using the formula of dual income good jobs, no kids, and living way under our means. Who knows what will happen in the next few years but it sure is possible, and for most quite desirable.
interesting article but the results werent surprising.
i think kitces was the guy who a few years ago also had the theory you needed to adjust your swr based on stock valuations the first 15 years in order to make the swr work.
im not 100% sure it was but i think it was.
if it was then i seem to remember him having more theories then my wife has shoes.
my question though is what happened if you lived longer then 30 years with his worst case scenerio thinking?
"if the client actually lives through one of those historical worst case scenarios, the withdrawal rate is just low enough to sustain withdrawals for the time period."
we also had time frames which were worse starting points which while included in his time frame were not 15 year starting points.
the beginning 15 year period 1964-1969 was negative returns.
i do agree with the articles point that average returns over 30 years doesnt matter. more important are the early years and the order of those gains and losses.
interesting that according to kitces what happens the first 15 years determines the fate of the rest of the retirement period. the ray lucia system of buckets i use protects the first 15 years with buckets 1 and 2.
"the reality is that what drove the worst safe withdrawal rates in history were especially poor real returns over the first half of retirement; whether driven by low returns and low inflation, or high returns and high inflation, if the compound inflation-adjusted return of the portfolio was weak, so was the safe withdrawal rate.
"
2 potential flaws in his study in my opinon is that he based it on 60/40 mixes which today are not the norm for most retirees. according to fidelity most retiree mixes seem to be under 40% equities.
along with that issue is the fact that as you get more conservative the odds of failure become greater.
the other flaw i see is volatility has been increased since 2000 by 2 to 3x. the swings in that 60/40 mix would have resulted today in far greater worst case scenerios.
a 50/50 mix according to the barclays aggregate mix would have seen a typical 8-10% swing prior to 2000. today it runs 2 to 3x that.
im not smart enough to analyze the results but i think it may matter.
also there was no provisions for how cash would effect the outcome, retirees can have big cash positions as much as 20-25% of a portfolio . that surely would effect the outcome.
personaly when it comes to my own bacon on the line i dont count to much on driving and looking in the rear view mirror. i bet over the next few months we will see plenty of articles disputing alot of that articles findings although i do agree with his facts as they were..
Last edited by mathjak107; 08-30-2012 at 04:17 AM..
figuring in cash as a position too how do you think those who retired in 2000 will conform at the end of their 15 year period?
my opinon? not good.
Last edited by mathjak107; 08-30-2012 at 04:55 AM..
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