Early Retirement (2006) • Hacker News Board

Re: Early Retirement (2006)

#41

Post by arenaninja » Wed, Aug 04, 2021, 3:20 PM UTC

cfeduke wrote: post #29

The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…

This is why I max out my HSA and don't withdraw since it became available to me (unfortunately this was until my 30s)

Have you considered moving to a country with quality healthcare at cheaper price? Mexico comes to mind

Re: Early Retirement (2006)

#42

Post by flowerlad » Wed, Aug 04, 2021, 3:20 PM UTC

isthis129283 wrote: post #38

flowerlad wrote: post #2

How much money can a Silicon Valley software engineer expect to have at retirement? This article says $7 million: https://www.wealthmeta.com/blog/being-a-doctor-vs-being-a-so... Here's the back-of-the-envelope calculation: Annual salary: $250K (it is much higher at FAANG). Assume 25% tax (effective, not marginal), which leaves us with $187.5K, which is about $15K per month. Assume $5000 in monthly expenses, which lea…

You should subtract capital gains. Unless you know of a way to put $84k/year into a roth account.

If you invest in S&P 500 index fund you don't need to sell until after retirement.

Re: Early Retirement (2006)

#43

Post by jorblumesea » Wed, Aug 04, 2021, 3:20 PM UTC

If you've ever talked to anyone that has done FIRE or just retired a few years early, it's always health insurance. The current US system of healthcare via your employer is a huge blocker to any kind of alternative lifestyle. Have to wait until 65 (or like 68 by the time most of us can retire)

Re: Early Retirement (2006)

#44

Post by flowerlad » Wed, Aug 04, 2021, 3:24 PM UTC

cfeduke wrote: post #29

The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…

> The greatest expense for me in retirement is now health insurance

Obamacare changes that. If you don't have much income you get ACA federal tax credits.

Re: Early Retirement (2006)

#45

Post by lotsofpulp » Wed, Aug 04, 2021, 3:24 PM UTC

marktangotango wrote: post #36

cfeduke wrote: post #29

The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…

This is the reality of the situation; until you're eligible for (edit) medicare, health is a significant expense. When paired with the "hedonistic treadmill" of spending, early retirement takes a lot more investment than many suspect. Even at a safe withdrawal rate of 4%, $2M is "only" $80k a year. You're not driving around in Ferrari's and eating caviar on that (parodying a rich lifestyle here). Of course there are…

Medicare. To be eligible for Medicaid, you have to be quite lacking in assets.

Re: Early Retirement (2006)

#46

Post by occz » Wed, Aug 04, 2021, 3:24 PM UTC

cfeduke wrote: post #29

The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…

I wonder if this fact makes it easier to attain some form of early retirement in countries with more extensive public health care. I guess it would have to be weighed against the (assuming here without numbers) higher earning potential/lower taxes in the U.S.

Re: Early Retirement (2006)

#47

Post by tejohnso » Wed, Aug 04, 2021, 3:24 PM UTC

showerst wrote: post #34

bloaf wrote: post #18

Earlier quoted context omitted.

If you do a little algebra and make some simple assumptions, it turns out that "years of work required for retirement" is a function of your savings ratio only, that is savings/take-home pay. https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...

I like MMR, but like many people in that genre these over-simplified calculations only really work for a very narrow set of circumstances. What happens if you want to buy a condo in a competitive market that requires a 200k downpayment? Or have a medium-sized wedding? Or have two kids in day-care? I understand that the FIRE response would be that you don't _have_ to buy into all that stuff, but saying that it's just…

> unless you want to live like a single 24 year old your whole life.

Controlling expenses and living a humble life style is pretty much the opposite of living like a single 24 year old. At least for me and most of the single 24 year olds I knew back then.

It takes wisdom and maturity to realize that you don't need all that stuff. And if you can find a partner with the same outlook, you can certainly avoid spending tens of thousands on a wedding, or buying a condo in a competitive market. And there should be no need for day care if you're retired.

Re: Early Retirement (2006)

#48

Post by snek_case » Wed, Aug 04, 2021, 3:25 PM UTC

marktangotango wrote: post #36

cfeduke wrote: post #29

The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…

This is the reality of the situation; until you're eligible for (edit) medicare, health is a significant expense. When paired with the "hedonistic treadmill" of spending, early retirement takes a lot more investment than many suspect. Even at a safe withdrawal rate of 4%, $2M is "only" $80k a year. You're not driving around in Ferrari's and eating caviar on that (parodying a rich lifestyle here). Of course there are…

I feel like I'd be happy enough just maintaining my current lifestyle more or less, but yes, we as software developers tend to be paid relatively well, so just matching that can be quite expensive. I also feel kind of uncomfortable with the idea of retiring without a little bit of extra safety margin in case of economic turmoil. If 2M is enough to retire, I'd probably want 2.5 just to be extra safe.

My current job pays well but is very stressful, and that had me thinking more about FIRE (Financial Independence, Retire Early), but then I realized that on anything less than 120K a year (also have a mortgage to pay), I couldn't afford the therapist I'm seeing right now, and I'd be on the hook for dental cleaning, every other expense. My current plan is to save enough that I could technically almost retire on it, and then start prioritizing low stress jobs over income. Let the nest egg grow on its own even if I don't contribute as much with a lower paying job, and still get some benefits.

Re: Early Retirement (2006)

#49

Post by cyberlurker » Wed, Aug 04, 2021, 3:25 PM UTC

cfeduke wrote: post #29

The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…

Do people in countries with universal healthcare not have this problem?

What are the types of products and services that are so significant? Surely we aren’t talking about things like Netflix and utilities?

Re: Early Retirement (2006)

#50

Post by city41 » Wed, Aug 04, 2021, 3:26 PM UTC

flowerlad wrote: post #44

cfeduke wrote: post #29

The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…

> The greatest expense for me in retirement is now health insurance Obamacare changes that. If you don't have much income you get ACA federal tax credits.

And the covid relief bill increased the credits. If your income is low, you can get surprisingly decent insurance for not much money. "Surprisingly decent" is in the context of American health insurance.