What's your retirement number?

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PDXgal
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Re: What's your retirement number?

Post by PDXgal » Sun Oct 26, 2014 10:14 pm

I'm 59 and reading this blog and the forums have helped me understand I can really retire right now. I'm fairly frugal and have about $920k in retirement accounts. I'll get a very small pension starting at age 65 and social security at 66 and 10m. The question now is whether my sweetie, who is a couple of years younger and without the same resources, can retire shortly after I do. That's a bit more fun, I think. So I need to wrap up a few things at work but am within a few months of 'the date'. I walk around with a grin on my face. I can hardly wait!

JamesR
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Re: What's your retirement number?

Post by JamesR » Sun Oct 26, 2014 11:25 pm

I see some really large numbers here, and I'm worried this is the opposite of ERE. I can understand there's many reasons for this, especially if you're older than 45-50. But it seems horrible to be stuck in work for even longer during one's last prime years.

Here's the thing, if you're between 18-45 years old, then what you should strongly consider is retiring *first* and *then* aim for your high-falutin' retirement numbers. Examples: Jacob - the poor guy retired early, kept building his stash, and landed his dream job out of it. I wouldn't be surprised if he's at a high-falutin' number of 1 million by now.

Also MMM's example - retired then built houses:
http://www.mrmoneymustache.com/2012/05/ ... -get-rich/

What are the chances you are highly habituated to working a regular job and that's stopping you? You know you could ERE but you haven't. You're scared, you find it easy to go with the flow of your habit and avoid your fears. Why not quit for a couple years and then go back to work? You could take a 2-year ERE sabbatical.
---

SimpleLife,
Personally I suspect RE investing is probably a bit more robust than investing in stocks - there's a fairly consistent cashflow you can pretty much count on. But I can see that wanting to diversify a bit more so that you can handle sudden loss of say a house or 1/3 of your RE income, etc.

IlliniDave
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Re: What's your retirement number?

Post by IlliniDave » Mon Oct 27, 2014 5:59 am

JamesR wrote:I see some really large numbers here, and I'm worried this is the opposite of ERE. I can understand there's many reasons for this, especially if you're older than 45-50. But it seems horrible to be stuck in work for even longer during one's last prime years.

Also MMM's example - retired then built houses:
http://www.mrmoneymustache.com/2012/05/ ... -get-rich/

What are the chances you are highly habituated to working a regular job and that's stopping you? You know you could ERE but you haven't. You're scared, you find it easy to go with the flow of your habit and avoid your fears. Why not quit for a couple years and then go back to work? You could take a 2-year ERE sabbatical.
---

Well, I think I threw out the highest number ...

There's a couple things at play. Maybe it's being older, maybe it's a conservative nature, but I can definitely sense that these old bones aren't what they once were, so I don't want to plan on earning income through labor as my primary backup should things go awry. I maintain it as an option, but more for mental/emotional health rather than financial reasons. Similarly, I'm embracing the reality that a lot of stuff I can do for myself now, I may be forced to hire out for at some point down the road.

Also, it's simply a matter of what I want. I'll be maintaining two homes for as long as I can (albeit one is a "cabin"). I have no desire to live in some sort of a group arrangement. I don't want to move overseas, and I've selected areas for my two residences that are upper middle of the pack in terms of cost of living in the US. Those things are important enough to me that giving them up is more painful than working a few extra years at this point.

I am fortunate in that my current job is a pretty good one, and working is not an unpleasant experience. Is it possible that I am highly habituated to working this regular job--the true test of that will come when I leave it. What I believe is keeping my shoulder to the wheel is a very detailed vision of what my intent is right out of the retirement gate, and a lot of careful thought about how to maintain it through bad times as well as good.

I've often said here that I'm ER but not ERE. I don't feel victimized by my current life, but there are some other things I want to do that I can't make coexist with my full-time professional career. There's no aspect of running from or moving away from my current life in this--it's much more about being drawn to and moving towards something different. It comes from a positive place rather than negative.

I don't suggest my way is best or a model approach. It's just what works for me. I don't think there's a standard template. I can understand the appeal for some in the challenge of making the transition at the earliest possible time point, and applaud those who pursue that. It just wouldn't put me in a position to succeed on my terms in the future.

Noedig
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Re: What's your retirement number?

Post by Noedig » Mon Oct 27, 2014 4:37 pm

1m GBP. Have 550k now, at 49. To cover two of us.

More accurately have 750k now, against which is mortgage debt of 200. Terms of the debt mean I won't pay it down before it is due in 15 years, in meantime it's invested.

I realise this will look ERE-very-lite to most. I just don't want to push the ejector until I am sure, and have a safety margin, and am beyond the current high-outgoings-due-to-kids years.

As to how much is needed: http://theescapeartist.me/2014/10/22/ho ... is-enough/
Last edited by Noedig on Mon Oct 27, 2014 6:53 pm, edited 1 time in total.

I(E)reland
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Re: What's your retirement number?

Post by I(E)reland » Mon Oct 27, 2014 4:53 pm

Need to be clear on what's counted...paid off house, state benefits etc..but do think this is a great thread.

Matty
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Re: What's your retirement number?

Post by Matty » Mon Oct 27, 2014 7:57 pm

@JamesR

I’m from the semi-ERE camp as well.

I’m currently 24 with AU$85k. Ultimately I’m probably looking at $500k for a 3%WR of $12k a year. That gives me $280 a week which would just cover a room in a sharehouse, food and utilities. To spend the rest of my 20s and some of my 30s (7-10 years) in my well-paying but shit current job seems crazy and depressing.

With Semi-ERE I can leave whenever I like but I’m aiming for a minimum of $100k before leaving. From there I can be creative in living as cheaply as possible while making the most of my time. Seasonal work, full-time contracts, part-time jobs, self-employment or extremely low expenses are all options for me while I slowly add to my net worth. I just can’t bear to consider the alternative of working 7-10 years, I’d rather take the risk of the unknown. Full-ERE has its own set of risks, namely: significant capital susceptible to theft, taxation, inflation or economic crisis, dying before reaching FI and becoming institutionalised/depressed along the journey.

So my answer is somewhere between AU$100-150k for semi-ERE depending on how long I can hold out!

workathome
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Re: What's your retirement number?

Post by workathome » Mon Oct 27, 2014 8:52 pm

Wow, 85k at 24 is awesome. I think I was like negative 30k or so, lol.

susswein
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Re: What's your retirement number?

Post by susswein » Mon Oct 27, 2014 10:58 pm

I've been fully ER'ed now for 10 years (no income other than investments), living VERY comfortably on $18K/year (no housing expenses). By very comfortably I mean that that number supports owning a newish car, a 4wd camper van, a sailboat on the mexican riviera, and regular international travel. In fact, I had lobster for dinner tonight, so I'm definitely not hurting :-)

Depending on what you believe a safe SWR is that translates to around $500K in investments plus either a fully paid off house or a downpayment on a 4-plex or the like.

almostthere
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Re: What's your retirement number?

Post by almostthere » Tue Oct 28, 2014 7:10 am

I am 42 and in the +1mn category. It's been a year with no work, but it's too early to tell for me if that is 'enough' because I have two small children who will need education etc. I would like to add that having more than needed allows unspent cash from investments to build up in a very comforting way. I have way more cash one year after no work, and it gives me quite a pleasant feeling. I am actually much less stressed about spending now than when I was working.

@Susswein, I like your style. I am going to go back and read more of your posts.

Spartan_Warrior
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Re: What's your retirement number?

Post by Spartan_Warrior » Tue Oct 28, 2014 8:06 am

Also see this thread: viewtopic.php?f=3&t=5061

I enjoy getting these perspectives, but IMO the number is only half the picture. I also like hearing about the details of what kind of lifestyle each number affords. It helps me put my own plans into perspective. For instance, it's eye opening to see that many others here plan to retire on amounts substantially lower than what I already have, and how they manage to arrange their lifestyle to achieve that.

My own ideal* number is about $700k total, with $450k in investments and my SFH in Maryland paid off with an estimated value of $250k. This would afford me $18k/yr at a withdrawal rate of 4%. My current expenses have been about $18k-20k/yr for the past couple years, and that includes about $6k/yr in mortgage interest that wouldn't exist in this ideal circumstance.

*I say ideal because I strongly doubt I will make it the 7 more years that this plan would require. Rather, I see myself either quitting or being fired from my current job within the next year or two at the latest, at which point I'll probably work odd jobs for minimum wage until such time as another obvious, blood-in-the-streets market crash offers me a fortuitous time to move my nest-egg to predominantly stocks, which I hope will make me truly independent from investment income. If that doesn't happen, it will be permanent semi-ERE or extreme frugal living unless I find and subject myself to another high-paying corporate gig, which may be beyond my ability to do.

It's also worth noting that my primary hobby is writing and self-publishing fiction, which, again, in an ideal world, will eventually yield yet another safety net of small monthly income. Even a few hundred a month would make an incredible difference in my security.

jacob
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Re: What's your retirement number?

Post by jacob » Tue Oct 28, 2014 10:13 am

@SW - I find it hard to compare "lifestyles" because I find it hard to define "lifestyle". Consider the following:

Landscaping/lawn service: $50/week
Motorized lawn mower that breaks every two years and gets replaced with a new one + rake from building center: $100/year + time to mow
Pushmower + rake from building center: $150
Used motorized and rake: $50/year
Motorized + some mechanical skill to extend lifetime by 3x: $30/year
Used pushmower + mech skill + used rake: $100/lifetime

All of these result in the same lawn. Now is the nice lawn the "lifestyle", that is, "the nice lawn lifestyle". Or is the lifestyle the different ways of achieving the same outcome?

If you have lawn service, you're not getting free exercise, so you'd probably have to pay for that as well. If you don't have mech skills, you'll be paying for repairs a lot or spending time organizing other people to do those repairs. If you don't have building skills, you won't be able to repurpose things when you're no longer using them (e.g. turning the rake into a flag pole) and would thus have to rely on your ability to buy and sell on the secondary market.

My point with all this is that my $$ amount allows for a renaissance approach with results that LOOK like a middle class lifestyle costing 4x as much in that the lawn looks the same, the home looks the same, the activities look the same, the experiences look the same, ... however these end goals are all achieved in a very different way. My $$ with a consumer approach would look like poverty.

The difference is that for a consumer outsource a lot more to the economy where it gets registered as dollars which is then seen as a "higher standard of living", whereas I see this outsourcing as a kind of broken window fallacy. Just because some people are less efficient with their dollars doesn't mean that their standard of living is higher. It just means they waste more money.

Spartan_Warrior
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Re: What's your retirement number?

Post by Spartan_Warrior » Tue Oct 28, 2014 11:15 am

@Jacob, right, I get that (and I knew as I typed it that "the type of lifestyle each number affords" might meet pushback ;) ), but I think "the different ways of achieving the same outcome" is actually more or less what I meant. In particular, what would be most interesting/useful to me would be geographic location, housing type, other (non-investment) income, skills, hobbies, etc. Sort of like what I outlined above for myself. Not so much to compare lifestyles as to correlate "ways of achieving the same outcome" to different levels of assets. Like I said, it mainly interests me to know what all those other strategies are (e.g. off-grid housing, world travel, etc) so I can visualize how my asset requirements would change if I implemented such strategies myself. The most eye-opening for me so far is the folks who intend to live off-grid in the west on $1XX,XXX total assets.

jacob
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Re: What's your retirement number?

Post by jacob » Tue Oct 28, 2014 11:59 am

@SW - My point was that this correlation between "outcome" and "assets" doesn't exist. It's an artifact of consumerism.

We have [in new math]

money + skills = outcome

Now, if skills = 0, then money = outcome, so with the assumption of zero skills, we can talk about standard of living as a pure function of income. This holds for most specialists.

For my outcomes, it's 25% money and 75% skills. For the outcomes of most people it's 95% money and 5% skills.

More importantly, once the skill component becomes substantially larger than the money component the limiting factor is not the money. It's the skills. All the money in the world can't buy me connections, ability, invitations, ... the things I can't do aren't for the lack of money.

Basically, you only need money for things like RE taxes, insurance, ... things that you can't fix no matter how skillful. The rest is just a question of which balance you want in the money + skill ... and what kind of outcome you're seeking. Personally, I'm happy with middle class outcomes (house, vehicle, boat,..). I don't desire a castle, private air planes, rented suites at the stadium, ... but I figure I could accomplish some/most of that for $20k/year (~3-4x what I spend) if I wanted to.

PS: If you go west, you're getting out of the insane RE taxes we pay in the east/midwest (almost half my budget goes to that). They pay almost nothing. Off-grid then gets rid of the connection fees and various rent-seeking taxes that make up most of my utility bills, unlike, say, actual usage. Off-grid implies maybe a small home that doesn't cost many assets, unlike e.g. The Rocky Mountain Institute. So now you have about $100k left which throws off $3k/year in perpetuity. That's enough to cover health insurance for one person plus parts and supplies given that you have made your activities at least money-neutral (buy and sell tools for net-zero).

IlliniDave
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Re: What's your retirement number?

Post by IlliniDave » Tue Oct 28, 2014 12:16 pm

Spartan_Warrior wrote:Also see this thread: viewtopic.php?f=3&t=5061

I enjoy getting these perspectives, but IMO the number is only half the picture. I also like hearing about the details of what kind of lifestyle each number affords. It helps me put my own plans into perspective. For instance, it's eye opening to see that many others here plan to retire on amounts substantially lower than what I already have, and how they manage to arrange their lifestyle to achieve that.
Counting everything I'm planning for the income available to me to average about $50K pre-tax, maybe in the ballpark of 42-43 post-tax. I'll be debt-free. Most likely I'll be living alone (in property I own). I'm going to split my time between two locations (hometown in winter, edge of the BWCA in summer). So I'll have costs associated with two residences (a proper house and a cabin). I don't plan to travel a whole lot, I prefer regional exploring to worldwide touring. Early on I intend to try out some hands-on projects--repair, remodeling, woodworking, landscaping, etc., for some of my leisure time. Also will be taking forays into the "wilderness" (which starts a few hundred yards outside my new door). TV? Probably not. Internet? Probably. Vehicles? Simple, utilitarian, and used. I will have some lawn care expense for my winter home while I'm away for the warm seasons, but I can do my own snow removal in the winter. I'll eat out occasionally, same as now.

Overall, plain and simple. Probably not exciting from the outside looking in, but from the inside looking out I think it will be pretty cool.

JamesR
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Re: What's your retirement number?

Post by JamesR » Tue Oct 28, 2014 12:47 pm

What's with the paid off house fetish among retirees? Forget about that, and don't include it in your retirement number. Instead, just include the monthly cost of shelter in your living expenses and use that to derive your retirement number.

theanimal
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Re: What's your retirement number?

Post by theanimal » Tue Oct 28, 2014 12:49 pm

jacob wrote: PS: If you go west, you're getting out of the insane RE taxes we pay in the east/midwest (almost half my budget goes to that). They pay almost nothing. Off-grid then gets rid of the connection fees and various rent-seeking taxes that make up most of my utility builds, unlike, say, actual usage. Off-grid implies maybe a small home that doesn't cost many assets, unlike e.g. The Rocky Mountain Institute. So now you have about $100k left which throws off $3k/year in perpetuity. That's enough to cover health insurance for one person plus parts and supplies given that you have made your activities at least money-neutral (buy and sell tools for net-zero).

Yep, this explains my number range.

SW- Go west!!!

JohnnyH
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Re: What's your retirement number?

Post by JohnnyH » Tue Oct 28, 2014 1:24 pm

Property taxes out west aren't that low, and areas that have seen growth have created governments that expect aggressive tax increases... That said, after calling their BS, I got mine down from almost $1000 to ~$450 annually. Some property owners kept up on ridiculous "market value" appraisals and disputed with each new valuation. These properties have reasonable taxes. Most property owners never took the time and after 4-8 uncontested appraisals the "market value" imposed for taxes is 2-4x the actual market value. Worse you have to really fight to get these down into reality and these uncontested houses see their resale value depressed because of looming tax liability.

Median property tax map:
http://interactive.taxfoundation.org/pr ... 59prop.png

I think the cheapest living in the county is to be found in places like OK and AR. But they have been experiences ridiculous growth recently (secret is out) and this may no longer be the case.

Spartan_Warrior
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Re: What's your retirement number?

Post by Spartan_Warrior » Tue Oct 28, 2014 1:33 pm

@Jacob, again, I think I understand your point, but I also think in this case we're debating semantics. For instance, you estimate your lifestyle outcomes as comprising 25% money and 75% skills. Would you be more comfortable if I had used the phrase, "what percentage of skills vs. money are you relying on to achieve your particular lifestyle outcome?" Or perhaps, "what skills/strategies* make up the 'skill' component of your lifestyle equation?" That's the general idea of what I meant. Simply put, different people are able to make the same amount of money stretch further than others, and I'm curious about the specific underlying factors that make that possible. FTR, how one approaches lawn care is definitely an example of what I meant.

*I say "strategies" in order to encompass activities like achieving low household costs, etc., which might not necessarily constitute "skill" so much as making efficient choices.

Basically, I think we agree (but if not, I won't belabor the point); in terms of your new math equation, I'm just curious about the "skills" and "outcome" variables, because the "money" part alone doesn't give a full picture to me. That's all.

Tyler9000
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Re: What's your retirement number?

Post by Tyler9000 » Tue Oct 28, 2014 2:02 pm

JamesR wrote:What's with the paid off house fetish among retirees? Forget about that, and don't include it in your retirement number. Instead, just include the monthly cost of shelter in your living expenses and use that to derive your retirement number.
I personally see my paid off house fetish as an extension of Jacob's money + skills equation. I prefer to improve my house upkeep skills rather than pay a landlord to take care of them. It's not simply a financial decision, though -- I'm a mechanical engineer and enjoy working with my hands. For others, the alternative method of renting and including that in your costs is just fine, too.

George the original one
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Re: What's your retirement number?

Post by George the original one » Tue Oct 28, 2014 2:49 pm

The paid off house is a capital expense that should lower the monthly cost in retirement. However, due to the size of the sum required to pay off a house, it is a hurdle that adds significantly to "the number".

Renters choose to keep that sum in reserve and have it already built into their "number".

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