Damn it Feels Good to be a Gangsta

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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...

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

@EK
I agree with 7WB5 here. Sure, there is a point of extreme wealth that, maybe, makes a bit of difference. Not enough to be worth it, if it means sacrificing healthy years of your life working, if you'd prefer not to be. Don't believe me? Ask any of those folks in the nursing home if they'd rather be rich or have a year of health back to do as they please. The "laxidasical" care you see is pretty standard, because the staff probably has twice as many patients to take care of as they should. This happens at virtually every facility, no matter how much it costs.

"In between time" is generally a few weeks, not months. Once you've been in a nursing home for six months, you are probably not leaving. Medicare pays for a few weeks each year. I would argue avoiding nursing home care for those few weeks of "in between time" with social capitals is far, far better. This is what people in all the "other countries", who have "cheaper health care with better outcomes", do. Sadly most in the US can not be bothered with elder care. I blame this on the elderly as much as the young as they have set themselves up with this perpetual sad state of affairs as a result of their own lives lead. The happy news is it doesn't have to be you! You can develop a family and a social network that gives a shit about you. You just have to take time away from work occasionally to foster those relationships....and now we have come full circle, yet another reason to semi-retire.
Last edited by classical_Liberal on Wed Aug 28, 2019 10:53 am, edited 2 times in total.

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

wolf wrote:
Wed Aug 28, 2019 8:52 am
Meaningful work can be a pretty stable pillar in life. Why don't use it? Work can provide challenges?
Agreed, but it is very dependant on the type and nature of work. In my opinion, most (ie >90%) of jobs in the US just plain suck in one or more ways. Bad schedule, meaningless work, bad work culture (ie coworkers/boss), hard on you body physically, lack of mental stimulation, lack of freedom, etc. If you are in a goldilocks situation where your full time work provides benefits that offsets these bad, you are an outlier. That's great, use it to your advantage.

I think most intelligent, independent people on this forum will need more on self directed work than standard employment can offer to thrive. IOW, "work" is good, "job" is mostly bad.

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

Post by 7Wannabe5 »

Yeah, but even if you do have good relationships with your kids, you don't necessarily want them to be wasting their good years taking care of you. That's why I have resigned myself to living with grouchy old men even though that means that I can't do exactly what I want project-wise all the time. Old guys are usually pretty good caretakers in a rough competent sort of way, plus it saves me $$ on rent.

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

@7WB5
I didn't say it had to be your kids. Older adult symbiotic relationships are very common, BF/GF, Husband/wife, Friend/Freind, Sibling/Sibling. They are symbiotic in that together they can function independently, alone either would end up in nursing care.

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

classical_Liberal wrote:
Tue Aug 27, 2019 12:37 am
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.
classical_Liberal wrote:
Wed Aug 28, 2019 10:51 am
In my opinion, most (ie >90%) of jobs in the US just plain suck in one or more ways.
I'd like to modify these statements/opinions after some thought and some very good comments over in this thread. I may be stuck in the thought process of someone who has spent too much time in a particular field, hence clouding my judgement. I very much believe it is possible to craft a job to be enjoyable, it's just that priorities have to be different than when crafting a job for maximum wage and/or career advancement in a particular field. So, the real danger is falling victim to the mentality of your particular job/career path (ie bosses, peers, mentors, work culture). IOW, becoming too singularly focused on one thing, like maximizing wage for monetary accumulation, or the often synonymous career advancement.

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

Post by Jin+Guice »

Thanks for all the responses, a lot of interesting discussion and perspectives.

I'm going to make an attempt to respond to both people and topics, so sorry if I don't shout you out directly, it doesn't mean I don't value your contribution and hopefully I address your comments in a response to a topic.

Several responses mentioned the idea of crafting your job so that you like it or at least don't mind it. Other responses mentioned staying in a job you "don't mind" for future benefit.

I'm 100% for crafting your job so you enjoy it. In fact, I think the idea of "early retirement" in the literal sense, that is 100% leaving paid employment in your 30s or 40s, is actually kind of dumb. I'm not saying no one could enjoy this, I just find it hard to believe that, living in our society, many people would. This makes the ability to find employment (which I'll extend to running a business) that you find enjoyable on the best days and tolerable on the worst days an important skill.

Extrapolating "I've crafted my job so it is great" or "My job is o.k., so I don't mind keeping it for future security," why retire ever? I do think frugality, saving money and learning to invest have their own merits, and I know some here don't plan to retire when they hit their number. That's great, but I know there are also many here who dream of pulling the plug the second they cross the finish line.

I guess I find it hard to believe that if you've crafted your job really well, or are totally cool with your current employment, that you're going to quit as soon as you have $x. I don't think most peoples ideal working situation is showing up where someone else tells them when someone else tells them for 40+ hours a week.



@bsog: Thanks, turning it upside down was why I made the post. It's what I always want to say when I read journals of people dithering on if they have "enough" to leave fulltime work. Do you have "enough" freedom left to burn it working?



I enjoyed the lively debate about old age. I agree with those who said that having some extra cash when you're dying isn't really worth working for today, not the least because it probably won't buy you much. I agree that having social capital, and a feasible plan for deploying it, is much more important.

I want to make another argument though. That argument is for discounting the future. I'm 32 so 87 is 55 years away for me. I'm not saying YOLO, fuck that guy, I'm saying I have no idea what I'm going to want or who I'll be 55 years from now. I also have no idea what the world is going to be like. I think most of the shit that will benefit me in the next 10 years (staying healthy, maintaining important relationships, pursuing interests, etc..) is what will actually benefit me in 55. I think doing the things that make sure that me 1 year from now, 5 years from now and 10 years from now have the money, time, energy and ability to do what I want is the best shot at getting me 55 years from now to have the same thing.

If you're truly concerned with having enough money a super long time from now, steady part-time employment and/or intermittent full-time employment is probably a safer bet than saving a ton of money and retiring for 50 years.


classical_Liberal wrote:
Tue Aug 27, 2019 12:58 am
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.
Ya, I mean, at least 50% of the reason I write this stuff is to remind myself of this.

It's kind of wild to me that we've coupled the idea that you can live for super cheap while saving multiple years worth of expenses with the idea that you must save enough money to retire forever before leaving full-time paid employment for even a little bit.

Like if I have 17 years of expenses saved up and I can live on less money than a full-time minimum wage employee earns, yet have thus far managed to earn 10x minimum wage, it's somehow amazingly dangerous to do anything but work until I have twice as much money.

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

Post by Jin+Guice »

Expected real growth rate under the 3% SWR

@Fish pointed out to me in a previous post that a 3% safe withdrawal rate does not correspond to a 3% compound interest rate, since the principal is assumed to be drawn down to zero under a safe withdrawal rate.

The 3% SWR has always bothered me. 3% is just, like, so low man! At some point, some assumed rate of return isn't worth saving for. This is the same thing as discounting the future (otherwise any return is worth saving for).

Fish's comment got me thinking, what is the actual return rate for a 3% SWR? Answering this question requires assuming the amount of years a retiree retires for.

What we're theoretically attempting to do is create an annuity that pays 3% of it's principal per year, over a fixed time frame. I'm going to use 60 years as my time frame. If you think 3% is a low enough withdrawal rate to last forever (3% permanent withdrawal rate), than this exercise doesn't apply. If you think it's enough to last more than 60 years, than the picture is rosier. If you think it'll last less than 60 years, than the expected return rate is lower.

I tried twice for like an hour to solve the present value of an annuity due formula for the interest variable, but sadly it's beyond my algebraic ability*. Thankfully this calculator exists. Using the old brute force method, I was able to use it to determine that the actual expected rate of return for the 3% SWR rate, assuming a 60 year draw down period, which is... ~2.27%. Yikes!

*If anyone can solve this please post or PM me the solution, as I am still very curious. Show your work!


How does this relate to semi-ERE? I'm not anti-saving money, even for the low low return rate of 0%**. For better or worse, we've set the SWR bar at 3%, and many of us aim to save 33x our annual expenditures. While I understand that this is an over-simplification of the rich philosophy that is ERE, it's still a goal of mine. The assumption that I see implied over and over again in journals and forum posts old and new, is that the wisest and safest course of action is to work at a full-time job until the 3% SWR threshold has been crossed. I read account after account of ERE hopefuls suffering through jobs they don't like, putting off living the life they want, to reach this threshold. We're reaching for a 60-year annuity paying a 2.27% return. I'm not claiming that this is a foolish goal, but there is a trade off, and I find looking at the trade off from different angles useful.

**All return rates in this post are intended to be real, not nominal.

Fish
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Re: Damn it Feels Good to be a Gangsta

Post by Fish »

Jin+Guice wrote:
Sun Sep 15, 2019 6:10 pm
*If anyone can solve this please post or PM me the solution, as I am still very curious. Show your work!
I think what you’re asking is to take Eq. (7.9) or (7.10) from the ERE book and solve it for the required rate of return i presuming that (P0/P) and N are known.

If you need an exact value of i, a numerical solution is required. (The “akratic tables” provide results in a useful range for FIRE.)

Someone wrote a paper to develop closed-form approximations by truncating the binomial expansion of (1+i)^N , i.e. ignoring powers of i^3 or i^4 and higher and checking the result against the exact (numerical) solution. As you might expect, accuracy is best when the values of i and N are small.

If you are ok with some error, you could use Eq. (11) or (12) from the below paper, after validating with some known exact values. (An/R is equivalent to P0/P in jacob-notation.)

K.A. Fayed, “Mathematical Derivation of Annuity Interest Rate and its Application”, International Journal of Experimental Algorithms (2011)
https://www.cscjournals.org/manuscript/ ... JEA-12.pdf

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

Post by Jin+Guice »

Old age, retirement and some more math

In my previous semi-ERE posts the two main voices of opposition have been worries about old-age retirement and concerns about earning a lower salary for part-time work.

Today I'm going to address concerns about old-age retirement. When I say old-age retirement, I'm talking about becoming so old that one can no longer work.

This is a problem for all retirees. When I plan for retirement, I assume I'll live to be 100. Not because I think that I will, but because I fear that I might.

Let's first consider the traditional retiree. If the plan is to live to 100, then even someone who works all their life until age 70 needs to plan for 30 more years of life. The problem is not only saving enough money, but also predicting what the investment and pension landscape will be for 30 years.

This problem is compounded for the early retiree. Someone who retires at 40 now has to plan to live 60 more years. Failure of savings in year 15 is unpleasant. They are forced to return to work at a job they don't like, for less money than they used to make, but failure in year 40 is catastrophic, as now they can no longer return to work.

For the part-time immediate retiree (i.e., has low expenditures, but earns just enough to cover expenses), the problem occurs as soon as one is no longer able to work.

For the semi-early retiree (blending investing and part-time work) the concern is that enough money will not be saved for retirement when work is no longer possible as a supplement. 

I don't have a solution for this problem, my point is that no matter how conservative your path, this problem cannot be completely escaped.
When thinking about this I asked myself, "what would I do if old age retirement was not a requirement." My answer looks a lot more like the part-time immediate retiree than anything else. I wouldn't want to live hand to mouth, but I'd save up ~5 years living expenses and then be happy to earn what I spent*.

*I'll admit that, looking at the 2 potential avenues of income as capital and labor, it is less resilient to forgo either completely, insomuch as one is dependent on income. So maybe semi-ERE would win in this case too.

What about the forgone investment earnings and (assumed) lower wage rate of part-time work though?

The question I became interested in answering is, how many years would the part-time immediate retiree have to work in order to work as much as the early retiree?

I thought it would interesting to look at this in terms of savings rate.

Sorry in advance for the sloppy notation. Please let me know if I've made any errors, I'm batting a bit out of my league here on the mathematics.

The early-retirees working years are determined by savings rate and desired SWR:

(100/SWR)/    =Y        (1)
SR/(1-SR)


The numerator in this case will be the years of annual expenses desired for early retirement (which I'm going to set to 33 from here on out) and the denominator is years of expenses saved for every year worked.

The part-time immediate retiree works:

Y=1-SR    (2)

This just says that the part-time immediate retiree earns only the portion of their salary which they require to live on and then stops working. This model assumes hourly wage rates are equal.

Setting these two equations equal and simplifying yields:  (100/SWR)/SR. Assuming 100/SWR= 33 the equation is: 

Y= 33/SR       (3)

Let's examine some different savings rates using equation (3):

50%: 33/.5= 66    So at the 50% savings rate the immediate retiree works 66 years before the same amount of hours are worked.

66.67% (2/3): 33/(2/3)= 49.5   So at the 66% savings rate the immediate retiree works 49.5 years before working time is equivalent.

75%:33/.75 = 44      So at the 75% savings rate the immediate retiree works 44 years before working time is equivalent.

90%: 33/.9 = 36.67      So at the 90% savings rate the immediate retiree works 36.67 years before working time is equivalent. 

What if we impose a penalty for part-time work? I anticipate that many will argue that they earn 4-5x as much in full-time work as they do in part-time work. In future blog posts I hope to make the case that both taxes and the current social security system favor part-time work, but let's ignore these for now. If we assume the part-time worker earns minimum wage, then a full-time hourly wage that is 5 times greater than a part-time wage is believable. However, it is my great experience that there are several part-time jobs available that pay 2-3x as much as minimum wage (~$14-$21/ hour). Additionally, I find it hard to believe that many are earning more than $50/ hour (=$100k/ year, assuming 40 hours/ week and 50 weeks/ year). If you are clearing more than $100k, it is likely that you're working more than 40 hours a week, and thus hourly wages decline. This is all very anecdotal, but I will also argue that if you are sufficiently clever and skilled enough to earn $X per hour full-time, then you are likely sufficiently skilled and clever enough to earn $X/2 per hour hour part-time.

Imposing a penalty of 1/2 pay for part-time work by dividing the above numbers by 2 we get:

50% SWR: 33 years will result in an equivalent amount of work (note this case is basically irrelevant because at half rate the part-time worker must work 40 hours per week, thus working full-time).

66% SWR: 24.75 years will result in an equivalent amount of work.

75% SWR: 22 years will result in an equivalent amount of work

90%: 18.335 years will result in an equivalent amount of work.

I also wanted to impose a penalty on the early retiree for needing to learning to invest. Jacob argues that it's possible to learn to invest in 1,000 hours. He then states that investments must be managed for 100 hours a year. If we assume a 40 h/w*50 w/y work schedule than we get 2000 h/y of working time. Thus the penalty for investment would be 0.5 years +0.05*years of retirement. Years of retirement would be equal to total working years (TWY) - years worked (YW). For the early retiree with an ~3% SWR this would look like [TWY-33/[SR/(1-SR)].
If we assume an 80 year working career (starts at 20 dies at 100) then the total amount of working years for the early retiree is:

1/SR + 0.5 + 0.05{80-33/[SR/(1-SR)} (4)

We can also incorporate the 1/2 salary penalty for part-time work into this by dividing the 1/SR portion of the equation by 2. The results for different SR rates are listed below (part-time penalty rate in parenthesis).

50%: 68.85  (35.85)

66%: 53.175 (28.425)

75%: 47.95 (25.95)

90%: 37.9867 (19.6516) 

So... who cares? I think this is another interesting (to me) way of looking at the trade-off between early retirement and semi-early retirement. Obviously this model incorporates assumptions that some people may not agree with. I've included the equations I used so that other people can mess with them if they are equally intrigued. As usual, I don't presume to present an ironclad argument against working full-time to save money to retire early. I can't say which scenario is better for you personally, and all scenarios will face difficulties when old age retirement is reached. I hope this post illuminates the trade off in a novel light.

horsewoman
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Re: Damn it Feels Good to be a Gangsta

Post by horsewoman »

I'm very interested in this discussion since I've had it many times with my brother and father (me part-time devotee, them regular FT wage slaves in high paying jobs). My brother always shots me down with "but as soon as you can no longer work you will be in trouble!".
Hopefully, I'm gleaning new ammunition for defending my lifestyle. Thanks for the well thought out starting argument, I'd have been way too lazy to tackle the math!

Fish
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Re: Damn it Feels Good to be a Gangsta

Post by Fish »

Jin+Guice wrote:
Sat Sep 21, 2019 10:47 pm
Eq. (3) is correct but the derivation is not. (2) is erroneous because it’s not in units of years (it’s dimensionless, just like SR). It’s not hard to fix:

The “break-even” working years for PT case is equal to FT times the ratio of hours worked per year (HPY):

(F-1) Y_PT = Y_FT * (HPY_FT/HPY_PT)

HPY_FT is simply the full-time income divided by the hourly wage (denoted here by W):

(F-2) HPY_FT = I_FT/W_FT

By definition, the PT worker only earns enough income to cover expenses (which are same for both FT/PT), so:

(F-3) HPY_PT = E/W_PT

Now we can plug these into (F-1) to get:

(F-4) Y_PT = Y_FT * (I_FT/E) * (W_PT/W_FT)

Now replacing Y_FT with your (1) and recognizing that (I_FT/E) = 1/(1-SR), we end up with:

(F-5) Y_PT = (1/SWR) * (1/SR) * (W_PT/W_FT)

Since a long break-even period is “good” from the perspective of the semi-ERE person who goes PT, note that the Y_PT increases as: SWR decreases (lower return on capital), SR decreases (less ability to save), and the ratio (W_PT/W_FT) approaches 1 (reduced earnings penalty for PT labor).

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Ego
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Re: Damn it Feels Good to be a Gangsta

Post by Ego »

To the person in love with math every problem looks like an equation.

This one has so many confounding factors it is impossible to make a useful calculation without eliminating the most important variables, the disordered messiness of real life.

It is much more useful to actually look at the people you know and see how these things play out.

What happens to the person who runs out of money after they can no longer work? What about the person who gets low on funds a few years before becoming incapacitated?

ERE homework assignment: find an old person who is still working, tell them you are trying to plan for your own retirement and ask them a few imprudent questions about their situation. I think you might find that their answers have almost nothing to do with the math or finances of retirement.

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Re: Damn it Feels Good to be a Gangsta

Post by jacob »

You'd definitely need to bring some "compounding" into those equations to acknowledge the time-value of accumulating early. The more you have invested, the more you have other people working for you so you don't have to do it yourself.

Like the linked example where everybody is presumed to spend the same amount of time managing their investments/living an hyperefficient lifestyle, but some started earlier and some started in the hole. The linear equations don't reflect that.

http://earlyretirementextreme.com/updat ... ation.html

Ceteris paribus, semi-ERE will ultimately end up spending more time at work totally (recall that they also have to spend time investing on top of spending time working). The trade-off is that semi-ERE comes with more flexibility.

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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

@Fish: Thanks for pointing out my error and fixing the derivation. I had a feeling mine was incorrect, but when I had eq. (3) I tested it numerically (am I using that term correctly?) and it worked. Also, thanks for your response on the previous post about solving the annuity equation for interest and thanks in general for kindly poking holes in my shoddy mathematics.

@horsewoman: I think these are my weakest arguments because, as Jacob points out, due to interest, a non-investor will always work more. Stronger arguments are yet to come though...

Also, I'm interested in your particular situation, if you don't mind sharing. How long have you worked part-time for? Do you have any savings? Any investments? What do you do with the extra time?

@Ego: I agree that math is not the best way to look at these questions, though someone more skilled than I am could probably approach more usefulness with equations (as Jacob does in the book). One of my areas of interest is learning how to use math to build models using equations. So now all of you have to suffer through my haphazard attempts...

This post is perhaps confusing because the math doesn't address what I started out talking about. Attempting to plan for what you'll want/ need when you're 90 when you're currently 30 is not something you're going to be able to model. Optimizing solely for money in old age is as unwise as completely ignoring it. I do think that math can be used to look at the trade off in non-retirement between saving all of your money in one go and saving it slowly over time. What I was attempting to do with the math here is look at a simplified and extreme case of a situation of no savings vs. extreme savings, ignoring the loss of ability to work.


@jacob: I thought about trying to bring in some compounding, but how to do it? As in, it will take me awhile to work out the mathematical mechanics, and also, what return do I use? How do I account for skill?

One of the things that's lead me towards working part-time is moving from a mindset of "the stock market is a savings account with x% real return," to "I need to spend time learning about investing before I dive in, and no return is guaranteed." If I thought I could get a 4-5% return, I'd have a much greater incentive to pursue money making activities right now. Instead I have the incentive to study up so I can start down the path to make some return.

As long as a positive investment return is made, semi-ERE has to spend more time working. I've been discussing this trade off in the last few posts, because it is semi-EREs weakest aspect. I just don't feel like the <3% return rate implied by a 3% SWR is that sweet. After looking at it a few different ways it's honestly a little better than I thought it was, but it's still not good enough for me to want to pursue full FI as quickly as possible. What I'm trying to say is, if you are suffering through your job just to reach FI, do you think the payoff is worth it? Have you considered that there is another slower way to do it, that, while you will work more, might be more enjoyable?

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Re: Damn it Feels Good to be a Gangsta

Post by jacob »

I suggest a spreadsheet with different case studies. You can do a full FI, semi-retirement at different percentages going up to 100% full-work, keeping track of the lifetime number of work-hours. Assume that the required income in the same in all cases. Hourly wage, interest rates, inflation, etc. can be set as parameters.

There's no way you can get a closed solution for what you're asking. Even the end-result in the ERE book required a numerical solution.

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Re: Damn it Feels Good to be a Gangsta

Post by Fish »

@J+G: Here are the results for the compounding case. Solving ERE equation (7.14) for years to accumulate (1/SWR) gives us:

(F-6) Y_FT = (1/log(1+i)) * log((i/SWR)*((1-SR)/SR)+1)

Now recomputing the break-even years including this compounding effect:

(F-7) Y_PT = (1/log(1+i)) * (log((i/SWR)*((1-SR)/SR)+1)/(1-SR)) * (W_PT/W_FT)

And for the special case where i=SWR, this simplifies somewhat:

(F-8) Y_PT = (1/log(1+SWR)) * (log(1/SR)/(1-SR)) * (W_PT/W_FT)

This doesn’t offer more insight but it does improve the accuracy of the result. For i=SWR=0.03 and SR=0.5 the breakeven with compounding is 46.9 years instead of 66 neglecting it.

Jason
Posts: 2707
Joined: Mon Jan 30, 2017 8:37 am

Re: Damn it Feels Good to be a Gangsta

Post by Jason »

Jin+Guice wrote:
Sun Sep 22, 2019 10:12 am
This post is perhaps confusing because the math doesn't address what I started out talking about. Attempting to plan for what you'll want/ need when you're 90 when you're currently 30 is not something you're going to be able to model.
90? Flossie Dickey gangstad till 110.

https://www.youtube.com/watch?v=OAUn3A4QtaI

Jin+Guice
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Joined: Sat Jun 30, 2018 8:15 am

Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

@jacob: Thanks, a spreadsheet to do a case study is a great idea.

@Fish: Thanks for working out the math for me.

Jin+Guice
Posts: 688
Joined: Sat Jun 30, 2018 8:15 am

Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

Personal Update:

It's become clear to me from the Yields and Flows thread that I need to change my approach to semi-ERE. I am officially retiring from consciously trying to retire early. I had pretty much given up on this, but I've still been running numbers in my head.

My assumption (for planning) is that I will retire at 65 (though currently I hope to never retire). I plan as though I will live to 100 and I have 0 proven investment returns, so I'll need to save 35 years of expenses by that point. I have 32.5 years until this happens and 10-10.5 years of expenses saved, so a <50% savings rate would get me there. However, I think it's likely that I'll, collect some SS, inherit some money when my parents die, work full-time for at least 1 year per decade, be able gain the skills and confidence to earn some return on my stash, and gain some more skills so I can further lower expenses. I think it's likely that I'll accidentally end up with enough money and skills to retire well before I reach 65.

So I'm giving myself permission to take some more risks with the money. I'm interested in learning about investment in the stock and bond sense, but I'd also like to explore real estate, running a small business and other passive income streams.


I think my life will be drastically improved if I stop thinking/ doing from the optimizing for $$/ early retirement standpoint and start viewing things from the yield and flow standpoint. I need to figure out what my web of goals is and how those activities are going to reinforce each other. I need to figure out how to earn money in a way which furthers my web of goals instead of hindering it. I don't expect this to be easy and I think it will take a long time, but I look forward doing it. Getting to the optimizer stage was easy and didn't require a shift in mind set. Getting to the next stage will be more challenging and interesting.



The biggest challenge I currently face is getting my music work under control. I've been working 4-6 days a week since the beginning of July finishing projects that I'd taken on over the last two years. I should finally be done these projects by the end of October. After that I'm going to take a 1 week "staycation" (I'll still work my $$ job though, which is 1-2 days/ week) and then I need to reset and figure out what music work serves me and my goals and what is me serving my ego and old ideas that I need to give up.

The next biggest challenge will be sorting out how I can earn money in more interesting/ beneficial ways. I'm not sure how soon I'll quit my current job. The old problem of making too much money for too little time. Due to some scheduling issues, I was in crisis with this job a few months ago, but my boss contacted me (he may have noticed me searching for other jobs while at work, heh) and it has been o.k. since then. This work is definitely not 100% consistent with my web of goals, so I will eventually need to leave it. Currently, I'll keep my plan to quit by my 36th birthday at the latest.

The next challenge will be figuring out a way to live harmoniously with nature and in a way that benefits others. This is a significant challenge and I'm not sure if I'll ever reach this goal. So much of our culture is destructive towards nature and each other. "Beneficial towards others" is also a loaded term that can be dangerous if idealized or pursued in the wrong way. To achieve this I'll need to drastically up my own philosophical understanding and my interpersonal skills along with a lot of other stuff.

I think I'll be able to achieve the first two goals by the end of 2021. A concrete goal is to have at least one new income stream by the end of 2021. This could be a new job or a new form of passive income. It should come from an area of interest that I don't currently earn money in. I'm willing to sacrifice this goal (particularly the time element of it) as long as my web of goals is strengthened by the sacrifice.

I plan to document this journey here in my journal as well as continue my semi-ERE blog. Hopefully I'll be able to add some semi-ERE stuff from the yield and flow perspective as I move into it, but I have some posts planned that are from the optimizer standpoint that I still plan on writing.

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