OldPro wrote:7w5, to compare you have to compare like to like. Two people who both do or do not get regular physical exercise for example with one having little or no money and the other having more than enough money to pay for what they need.
By definition this is not comparing "like to like". At some point the people must have done something different to have such different financial positions. Perhaps one learned how to do DIY instead of spending extra time earning more money at work, leaving them able to maintain their home at a significantly lower cost than the other.
OldPro wrote:
I can do all the things you list AND afford to drink a bottle of expensive wine IF I want to. And please don't tell me you don't need to drink a bottle of expensive wine to be happy, it's an example of something money can buy IF you want it. Discretionary income simply adds to happiness. That really isn't debateable.
https://www.google.ca/search?q=money+bu ... ss&ie=&oe=
That is dangerously close to this
https://www.youtube.com/watch?v=U8Kum8OUTuk
OldPro wrote:
C40, the picture represents the extreme of where piss poor planning can take someone IF their plan has a flaw. It is also a picture of where poor planning actually has taken people. I've met some. I consider anyone who FIREs based on a plan that provides them only the minimum they need financially to survive, has a piss poor plan. It's simply a warning to plan for more than you need. What do you see as your minimum required income to survive and what is the income level at which you plan to FIRE? If the second is double the first, I'd say it's a decent plan. If it's less than that, I'd say it's piss poor planning. I have a feeling though that many here are not planning to FIRE when they can generate a passive income of twice what they think they need to survive. They are leaving themselves with very little wiggle room.
OldPro wrote:
When I FIREd, I hoped to be able to live on less than $12k per year. I hoped to generate an income of $20k per year from a capital of $200k. Those numbers worked out fine initially for me.
Has your own "piss poor plan" worked out (at a 6% withdrawal rate)? If so, why would somebody whose plan requires a 3-4% withdrawal rate work out worse?
OldPro wrote: Nor can you simply plan for a 'spending reduction' if required. You may need a spending increase. Why would you assume you might only need a reduction? Let's suppose the price of heating doubles. You can't heat less, so you will have to spend more. You might be able to 'rob Peter to pay Paul' from some other part of your budget but then again, you might not be able to. I don't know, you don't know. You may simply have to spend more.
Why not? If you have budgeted for luxuries, these can be cut out. We don't need to drink expensive bottles of wine, even though we may have budgeted for them. Plenty of people live with neither heating nor air conditioning.
OldPro wrote:It's really just a question of how big a 'hiccup' you can absorb with your strategy. If you have 10% of your total income as discretionary, you can absorb a small hiccup. But if you hit as an example a 25% hiccup such as I gave as an example above, then you have a real problem, as those who were in that position found out in Spain. Do you think they retired thinking, 'well I know I can't handle a hiccup'? Do you think that such a thing is unusual or unlikely to happen to you? I gave the example I did because I think it shows just how easily and how big a hiccup anyone could encounter. Over a period of 3 years, a 25% increase in the income needed to stand still.
It's a warning C40, that's all. Plan to have more income than you need and the more it is the better, as has been proven by others who have gone before you. I have been retired for a long time and have met a lot of others who have been retired in that time. I have met quite a few who were struggling financially for one reason or another. As I've said, a successful FIREing is not about do you or don't you FIRE, it is in do you continue to be FI over the long haul. So 'what do you want' from the financial viewpoint should be enough to STAY FI.
I really don't know what your issue is with that warning.
Rather than lecturing people on how inadequately they are planning at 3-4% withdrawal rates, how about you tell us what safeguards were in place to provide this cushion with your 6% withdrawal rate (with no healthcare consideration)? Experiences such as your post retirement printing business and bar investments illustrating that post-FI income does not necessarily have to come from savings/investments are invaluable.
Many people on here are planning on retiring with incomes similar to that I currently earn. That is at 3% withdrawal rates (my income, although not massive, is well above the country's average). I doubt I will be able to significantly increase my earnings in the near future, so other methods of providing security in retirement are of great interest to me, and no doubt to others. However, I also do not want to spend much longer than I have to working 40+ hours per week. I think the risk that money gets tight is less serious than the risk of never taking the chance to have more freedom with how I spend my time. THAT is what I want.