Damn it Feels Good to be a Gangsta

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7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

Obviously, the math changes the older you get. Since it is my intention to cut my spending all the way down to maybe only needing an extra $100/month on top of even early withdrawal S.S., 54 year old me is pretty rationally indifferent to fate of 61 year old me.

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Bankai
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Re: Damn it Feels Good to be a Gangsta

Post by Bankai »

Interesting maths. Many people here assume that while they will be able to pick some random work here and there while retired, it's unlikely to pay as well as their current career. This might change the assumption from 1h of work now Vs 2h at some point in future to 1h now or 3-10h at some point in future since random/part time jobs don't generally pay very well.

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Seppia
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Re: Damn it Feels Good to be a Gangsta

Post by Seppia »

I personally see additional part time work strictly as added margin of safety, coming from a job that I feel is meaningful.
So math is not really the point for me: I’m a slightly above average earner, and jobs that I find meaningful (teaching, volunteering) eran below average.
If math was the only thing that mattered I wouldn’t event entertain the idea.

My point being: I firmly believe that most of the time we underestimate the power our brain has in swinging us towards less than rational behaviors.

Your calculations may be unassailable (egg today Vs chicken tomorrow) but don’t forget you are made of flesh

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

I'm in the camp of looking at things from a YMOYL perspective of life energy. Not just from a time perspective either, because some activities are really just a time sink and take very little energy per se. While others take a lot of energy and provide very little joy/quality of life improvement. OTOH some activities in the right quantities seem to improve vigor/energy, improve quality of life, yet take from the limited time resource. This makes the math so much more difficult. It also makes the balancing of these activities critical to get maximum use of time. IOW all on/all off in energy expenditure is not usually ideal.

What I really like is the idea there is inherent risk in not knowing how much work c_L+20 years will want to do, or c_L+40 years will be able to do. This is my greatest fear (known unknown) and what has driven my accumulation. Even though I reached a point of no longer improving quality of life from my job, I continued to accumulated for another couple of years due to this fear. What changed my mind was the other inherent risks I had not been considering. Namely the 15% chance c_L+20 years would be dead, and the 40% Chance c_L+40 years would be dead. This in combination with unknown, unknowns that could wipe out my accumulated savings. Things like financial crisis, energy crisis, loss of health, and so many more I haven't even considered. Combined these risks, even if unable to mathematically quantify, are pretty big. Probably larger than the risk that c_L+20 years just wants to sit on his ass and watch reruns of Seinfeld to remember his glory days.

So, I guess put another way, Semi-ERE balances out these risks for folks who are in less than ideal situations during accumulation. If the accumulation phase is providing some other gains beyond financial, then I think it wise to be very conservative. OTOH if the accumulation phase has run it's course in other personal gains, I think waay too many stick it out for too long, simply for more money. At some point it's best to reevaluate with financial/capital accumulation being only one consideration of many.

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

@7w5: From the perspective of the equation, the less time you're withdrawing, the less total return you get and the worse the trade off is. However, if you think that expected return goes up based on a shorter time frame (i.e. the 4% rule is valid for a 30-year retirement), then the effect of shortening the time frame is ambiguous (it depends on the magnitude and nature of the increase in returns).

However, I think what you're to something all together different. It's very difficult to predict what kind of returns you'll be getting in 30 years. It's also difficult to predict what you will be like in 30 years, what you'll want to be doing, and what sacrifices you should make for 7w5+30. It's not that difficult to predict what you'll want to be doing or how you'll want to be living in 7 years.

@bigato: It's no mental effort to convince me not to want to have a job right now. I'm ready. 10/10, will not wage-slave again. I'm trying to convince other people. Towards that effort I think the last post is pretty weak. However, I did think it was interesting.

@bankai: I thought about writing something about this, but decided against it because I didn't want to encourage the calculation. If you assume you get paid 5x more/ hour doing full-time or full-time + work (> 40 hours a week), then ya, you're never going to semi-ERE based on this math. Here I'll argue the limitation of the calculation and say that I think working 1-2 days/ week to supplement passive income, doing something that is more enjoyable/ fulfilling/ less stressful than your full-time gig, is categorically different than full-time work.

I also think that most assumptions about how much will/ can be made in retirement are way off. Doing calculations with minimum wage is useful as a lower bound, but like, if you made more than the median income, maintained a savings rate of 50% or greater AND lived on less than half of median household expenditures, are you really going to be manning the fucking fries at McDonalds in retirement?

It's still an important part of the conversation/ calculation and I'm glad you brought it up.


@Seppia: I'm not sure I understand what you're getting at. What I'm trying to get at it is the trade off between having to work in the future vs. working and saving money now. Like, if you think that future you might conservatively be interested in earning $18,200 teaching in retirement, you could save $10,000 less doing corporate work now.

@c_L: I agree with you about the importance of using YMOYL hours. You also give a really great description of why it's difficult to calculate actual YMOYL hours that I completely agree with.

The rest of what you wrote is extremely important and highlights my overall thesis much more than my post does. I plan to write more about the topics you are touching on in the future.

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

Sequence of Retirement Risk:

Most of us are familiar with the dreaded sequence of returns risk. This is the risk that you will retire into a bear market, draw down your account by an irrecoverable amount, and run out of money before you and your finances are bailed out by the fiscally benevolent inevitability of your own death.

Sequence of retirement risk is the opposite. It's the risk that you will work for too long, save too much money and suffer needlessly for extra money that you'll never need. You retire wealthy in pieces of paper, but impoverished in spirit.

If the point of financial independence is to maximize the time you are free from the constraints of work, then sequence of retirement risk is very important!

If you retire too early there is a ?% chance that you will run out of money and be forced to go back to work.

When you work today there is a 100% chance that you will experience one less day of freedom.

Terrifyingly sequence of retirement risk is increased when you accidentally earn money during your 60+ year retirement, unexpectedly retire into a bull market, receive SS or other defined benefit payments, experience better than expected investment returns or inherit money.

Thankfully, unlike sequence of returns risk, the primary factor driving sequence of retirement risk is completely within your control.

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Bankai
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Re: Damn it Feels Good to be a Gangsta

Post by Bankai »

I agree people who suffer at work should retire sooner rather than later. On the other hand, why suffer in the first place - why not instead craft your work to suit your needs and be not only bearable but pleasant? Quite a few people here did just that and they continue working without any/much negative feelings. Having said that, many also stay in misery and would likely benefit from quitting earlier.

7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

I think the problem is that freedom gained or lost can really only be measured in terms of competing interests for your time or life-energy. Therefore, it might be helpful to make a completely out of control judgement free bucket list and then figure out if time or money is most scarce factor. Since the total amount of initial money I need for all of my projects rarely totals more than rolling $5000, I know that some mix of interest, vigor, time, and gonads is biggest hindrance beyond bare survival for me. Vigor X gonads likely most lacking.

black_son_of_gray
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Re: Damn it Feels Good to be a Gangsta

Post by black_son_of_gray »

I like how you've turned things upside down to show that the opposite is also important.

I'm sure this has already been said in many journals, but the same flipping can be done with another consideration: the relativity of "failure". Run some monte carlo (e.g. FireCalc) simulations or something like that, and you get the historical failure rate of a withdrawal strategy—with results that say something like "2 out of 50 simulated periods ran out of money". But if one of those failures was "running out of money 5 years after retirement" and the other was "running out of money 42 years after retirement", they are both failures but not equal failures. To quote Asimov:
[W]hen people thought the earth was flat, they were wrong. When people thought the earth was spherical, they were wrong. But if you think that thinking the earth is spherical is just as wrong as thinking the earth is flat, then your view is wronger than both of them put together. Source: The Relativity of Wrong
Similarly, and relating to the Sequence of Retirement Risk, not every case of returning to gainful employment or "working for money" (whatever you want to call it) is an equal "failure". As Jacob and others have pointed out, if you work at a hobby you enjoy long enough, there is a decent chance somewhere down the line that someone will want to pay you for it without you even really planning on it. So, if you think that scenario is the same as having to go back to work 40+ hours a week working a handful of mind-numbing minimum wage jobs with no benefits, then you're—as Asimov would say—wronger than wrong. Or you just need better hobbies! :D

It's a fundamentally different mindset to think about balancing out the risks of over- and under-saving over time, rather than just solving for one variable in a single equation (The AnswerTM). In the balancing approach, you'll be more prone to failure—but the overall consequences of those failures might still be preferable. For example, I'd take several instances where I relied on a monetized hobby for a year or two to make up budget deficits rather than risk an irreplaceable loss of time like spending a decade sitting at a cubicle for money I don't need. People worry about underfitting the curve, so they overfit it. But both are errors and failure is inevitable either way because the curve is constantly changing anyway, so just keep re-fitting it as it changes. Fail smaller, more often. Side effect: fitting the curve becomes easier and less scary the more you do it. Granted, that's just like, my opinion man 8-) , and it requires an orientation of being willing to embrace some amount of uncertainty. Of course, the uncertainty is there regardless—the universe is indifferent to our opinions about it.

God, each one of my posts turns into a manifesto. :roll:

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

7Wannabe5 wrote:
Mon Aug 26, 2019 1:59 pm
Therefore, it might be helpful to make a completely out of control judgement free bucket list and then figure out if time or money is most scarce factor.
This is a great idea with a large problem. This calculation is made based on present-self wheaton level. For example. Off the top of my head I would rank my wheaton level in the following five areas of financial expenditure (together they encompass all spending):

Housing- 6
Food- 3.5
Transportation- 4
Healthcare- 6
Entertainment/Hobby/Travel- 3

Now obviously as one approaches wheaton 6+to7+ in overall life design it would become increasingly difficult to separate into categories, as this is basically the definition of higher wheaton levels. Personally, I have a few individual activities which breach categories and may be considered a level 7 activity, but not enough to truly feel impact... yet. However this doesn't negate my point. Which is, at this moment in time, money seems like a limiting factor in my lower wheaton level areas. However, this may or may not change in the future with advancement. The problem is someone at my wheaton level in the Entertainment/Travel/Hobby realm has very little ability to imagine what a level 6 person does to minimize monetary expenditure. So how can I calculate whether time or money will be the limiting factor in two years? in ten years? This becomes the centerpiece of the argument wrt whether or not it's smarter to trade time for money in the most efficient way possible today.

I actually have several more thoughts about J+G post and the following comments, but have run out of time ( :lol: hint hint) at the moment. I will try to post again later overnight at work.

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Seppia
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Re: Damn it Feels Good to be a Gangsta

Post by Seppia »

@bsog “it is better to be approximately right than precisely wrong”. I agree we obsess way too much about minor shit and forget the big picture is what matters

Slightly related: people should read Kahneman

Very related @J+G: you’re in my opinion underestimating the amount of potential suffering from being old with no money.
1 year or additional work in a job I don’t dislike doesn’t have equal weight than one year of misery because I have terminal cancer at 87yo and can’t pay for painkillers.

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Jean
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Re: Damn it Feels Good to be a Gangsta

Post by Jean »

But you can Always end it.

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

Seppia wrote:
Mon Aug 26, 2019 6:22 pm
Very related @J+G: you’re in my opinion underestimating the amount of potential suffering from being old with no money.
1 year or additional work in a job I don’t dislike doesn’t have equal weight than one year of misery because I have terminal cancer at 87yo and can’t pay for painkillers.
I think most people over estimate what money will do for you in end of life care. In the US at least, no one will go without pain medications for their cancer. Medicaid will cover that. True that money can buy you into a "nicer" care facility, but at the end of your life it's just a shit sandwich, putting whipped cream on top of it doesn't make it taste much better. OTOH, social capital is extremely important for quality of life at end of life. This is what you should be investing in if it's a concern, as that's what will keep you away from care facilities for the longest possible time.

I do agree that running out of money when relatively healthy at, say, 75 is an issue. Money can really enhance quality of life if your healthy. It's generally not easy to generate money at that age if you run out.
Bankai wrote:
Mon Aug 26, 2019 1:01 pm
I why not instead craft your work to suit your needs and be not only bearable but pleasant? Quite a few people here did just that and they continue working without any/much negative feelings.
This makes sense, but it's not always possible depending on the beginning circumstance. I think the idea of knowing one's audience is important here. Many folks that show up already miserable and want out ASAP. Doubling down on career often times makes life worse in that making more money to get out ASAP often worsens the situation as more BS is piled on at higher levels competency and skill. I think technology workers are the exception this rule because their skills are so in demand, hence many technology workers overestimate the ease at which a median earner can craft their job and still make similar amounts of money. Not that it's impossible, just difficult in many fields. Also, once the effort has been put into career, the idea of sunk costs comes into play. Many get trapped in bad circumstances with golden handcuffs of high pay/savings rates, always grasping for just a few more years of misery to reach FI.

I do tend to think many would do better improving their work situation, even if it means a substantial decrease in pay once basic financial solvency (ie a couple years of expenses saved) is established.

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

black_son_of_gray wrote:
Mon Aug 26, 2019 2:16 pm
But if one of those failures was "running out of money 5 years after retirement" and the other was "running out of money 42 years after retirement", they are both failures but not equal failures.
I made this exact argument in a financial thread not to long ago. I think it's super relevant!
black_son_of_gray wrote:
Mon Aug 26, 2019 2:16 pm
People worry about underfitting the curve, so they overfit it...
Lets not forget that overfiting the curve has more repercussions than simply working longer. There are the standard arguments like heath consequences, or missing out on an important phase of life (like young kids or whatever). But here's one I rarely read about around here. Saving money and/or financial security is super addictive! If c_L 4 years ago would have had the resources I have now, almost 18 years of expenses, plus highly paid part-time work, he would have thought "Holy shit! this is great, I'm free and never have to worry about money again!". However, c_L six months ago was on the path to work two or three more years to reach 100% on some monte carlo calculator, because "it's the only way to know I'm really financially secure". Changing the goals posts a bit in just a few years.

I abso-fucking-lutely guarantee that if I stick it out to that 100%, I'll STILL think I need more "to be sure". I mean after all, look at market valuations, and the political climate. What I really need is dividends only! so 40X expenses... when does it end? At some point enough has to be enough. If the goal is ERE, financial capital is only a back up anyway. Sometimes one has to walk away for awhile to see how obsessive "the number" or desire for "total security" can become.

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Jean
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Re: Damn it Feels Good to be a Gangsta

Post by Jean »

Being poor isn't as Bad as it looks.

EdithKeeler
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Re: Damn it Feels Good to be a Gangsta

Post by EdithKeeler »

I think most people over estimate what money will do for you in end of life care. In the US at least, no one will go without pain medications for their cancer. Medicaid will cover that. True that money can buy you into a "nicer" care facility, but at the end of your life it's just a shit sandwich, putting whipped cream on top of it doesn't make it taste much better. OTOH, social capital is extremely important for quality of life at end of life. This is what you should be investing in if it's a concern, as that's what will keep you away from care facilities for the longest possible time.
After being involved with my mom who is currently in a nursing home, I disagree a little bit. The facility is pretty decent, but “care” is a bit.... I can’t say bad, I can’t say poor, but maybe lackadaisical is the best word for it. I keep picturing myself there.... and it spurs me to keep working and saving for now.

Yeah, you’ll probably get some kind of pain meds.... but the “home” doctor kept cutting her back, cutting her back. And the nurses don’t alway bring it timely. My mom went to the ortho and he was dismayed at how LITTLE pain meds she is getting and immediately upped her dose. If she didn’t have me to do her laundry and make sure she has clean clothes, she’d wear the same clothes a couple of times before they were washed. Not good when there’s an incontinence issue. If she gets to go home, she’s going to need help bathing, getting lunch, etc, which Medicare doesn’t pay for.

Of course, at some point, if you live long enough, I suppose you get past all that and you probably don’t care if you’re in a room and get your meals and a bath every so often. But from my own personal observations, there are a lot of things that can happen to a person that aren’t “Lifestyle” issues—Parkinson’s, as far as anyone can tell right now is just a bad lottery ticket—and breaking a shoulder at 82, with Parkinson’s, and not being able to get around, sucks, and is expensive. And social capital is important... but when you get older, your peers die, people get busy with other stuff.... and you’re still home alone.

I think it’s that in-between possibility that really scares me—not the time of life when you’re almost dead from cancer or have lost your marbles and are in the lock-down Alz ward—but that time when you could be mentally pretty ok, but physically failing in one way or another and can’t do for yourself. Maybe you’re blind, or can’t get around to shop or get to the doctor, etc.

Money will make that period way, way easier. You can pay someone to take care of your house so you can stay home longer (DBF’s parents are filthy rich and in their mid-90’s. His mom has Parkinson’s, too. They have 24/7 live-in help for bathing, meds, etc, a maid who comes 2x a week, an administrator to pay bills, etc. I’d much rather be them in my dotage than my mom).

7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

@Edith:

Based on my own current similar problems with mother, I somewhat agree with your take, but I would also point to the fact that "filthy rich" is the level you need to achieve to transcend such difficulties with money alone. Simple math is that not being able to provide yourself with basic physical care is going to cost $25/hr to replace = $146,000/year at 16 hrs/day = saving $3,650,000 @ 4% withdrawal rate if applied to that purpose alone OR depletion of 10 X $146,000 = 1,460,000 if you just consider depletion of capital applied to 10 years of such infirmity.

Therefore, unless you wish to devote decades of your working life simply to saving money towards covering this possibility for your last years, I think it makes more sense to plan on offing yourself before it gets that bad in order to maximize overall quality of life over lifetime. Obviously, if you get to that point and continuing to live in such a state seems preferable to offing yourself then you would be even further ahead on lifetime average quality of life.

wolf
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Re: Damn it Feels Good to be a Gangsta

Post by wolf »

Over the past few years I learned that "work" is not the enemy. Maybe my view on that is biased, because I started with a good baseline. As the same with life overall, work is changing all the time. And I'd like to view work as an area in life, that can develop too. On the other hand there are things one can change, in order to get a better working environment or job situation. When I started my journey, I focused on FIRE-ideals, such as stopping to work asap. But as many of you know, I developed another relationship with work. Nowadays work is quite different to what I thought of a few years ago. Work is a means to satisfy needs, such as relationships, community, structure, achievements, purpose and of course income. I have to say, that not every work day is good, there are also bad days, but overall I'm much more happier with work, because I guess I view work not as the enemy in life anymore. A good deal of that is influenced by the fact, that I'm more independent of work, but I don't underestimate the mental shift from "I have to work" to "I work in order to..."
Meaningful work can be a pretty stable pillar in life. Why don't use it? Work can provide challenges? And I learned from Daniel Kahneman's "Thinking Fast, thinking slow" that setting and achieving goals can have a tremendous positive influence on life satisfaction. Work can be a part of that. I just don't like to view work as good or bad. It's much more complex. If work is integrated in one's web-of-goal, and if the person is satisfied with that, I don't view that kind of work as a risk, but as a potential area of growth and development and a means to satisfy needs.

7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

@wolf:

Yes, but not working is so much more fun!

EdithKeeler
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Re: Damn it Feels Good to be a Gangsta

Post by EdithKeeler »

Based on my own current similar problems with mother, I somewhat agree with your take, but I would also point to the fact that "filthy rich" is the level you need to achieve to transcend such difficulties with money alone. Simple math is that not being able to provide yourself with basic physical care is going to cost $25/hr to replace = $146,000/year at 16 hrs/day = saving $3,650,000 @ 4% withdrawal rate if applied to that purpose alone OR depletion of 10 X $146,000 = 1,460,000 if you just consider depletion of capital applied to 10 years of such infirmity.

Therefore, unless you wish to devote decades of your working life simply to saving money towards covering this possibility for your last years, I think it makes more sense to plan on offing yourself before it gets that bad in order to maximize overall quality of life over lifetime. Obviously, if you get to that point and continuing to live in such a state seems preferable to offing yourself then you would be even further ahead on lifetime average quality of life.
I agree... but again, it's that's "in-between" time that is more concerning than getting to the point where you need someone in for 16 hours a day. If I'm so infirm that I need that kind of care at that point, just shove me in the home if it's a halfway decent one or leave me enough oxy so that I can just off myself. If I have to have someone change my diaper and feed me . But it's the scenario when you need that care for say, 6 months, and then you can be back your feet again--it's good to have some money set aside. Of course if you have minimal assets, Medicaid will pay, and apparently more and more, Medicaid will pay for in-home services, because it's cheaper. Then again, we get what we pay for, I think, but I don't think any options for that kind of help are that great, again, based only on my personal observations.

Anyway. Didn't mean to hijack J and G's journal with my personal angst...

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