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Early Retirement (2006)

philip.greenspun.com

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Re: Early Retirement (2006)

#91

Post by dsfgjhkfdgkhj34 »

ryandrake wrote: post #68
marktangotango wrote: post #36

Earlier quoted context omitted.

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…

Will $80k a year be enough for any lifestyle? That's the question I struggle with. It's more than enough in today's dollars. But I have no idea what will happen with inflation and costs between now and retirement day. Maybe by the time I retire, $80k/yr will be poverty level. Maybe health insurance premiums alone will cost $80k/yr. Who knows! What will the value of the dollar be and to what extent will healthcare cos…

There is uncertainty in everything, but your argument about inflation seems vacuous. The $80k figure is supposed to be real dollars, not nominal. A well diversified investment portfolio will include inflation resistant assets (such as REITs, energy stocks, or commodities).

Re: Early Retirement (2006)

#92

Post by showerst »

tejohnso wrote: post #47
showerst wrote: post #34

Earlier quoted context omitted.

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 te…

> It takes wisdom and maturity to realize that you don't need all that stuff

This is _exactly_ what I take issue with. Look, "live below your means and be thoughtful about what spending will make you happier" is great advice. So is "plan for a future where you don't have to work".

"Get a high paying remote job from a young age with no student loans, move somewhere cheap, actually find a partner there, don't dare find someone that makes teacher or non-professional salary or has health problems or student loans, wait until you're retired at 38 to have children, don't dare have kids with health problems or special needs, and lecture everyone else about how easy it is." is perhaps not the wise and mature advice you think it is.

I'm just the right age (37) to have grown up alongside the FIRE thing. I have a number of friends who tried it, some of them to the point of being smarmy about it. 100% of them hit late twenties and realized that the combo of "making a high income while having very low expenses" involves significant trade-offs, and is super hard to keep up. All of my friends eventually abandoned it, but I don't think that's the rule.

Describing FIRE as easy and saying that anyone who fails to do it is somehow less wise or immature is nonsense peddled by a bunch of people who retired early by writing "how to get retire early" blogs.

Re: Early Retirement (2006)

#94

Post by paulpauper »

ryandrake wrote: post #68
marktangotango wrote: post #36

Earlier quoted context omitted.

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…

Will $80k a year be enough for any lifestyle? That's the question I struggle with. It's more than enough in today's dollars. But I have no idea what will happen with inflation and costs between now and retirement day. Maybe by the time I retire, $80k/yr will be poverty level. Maybe health insurance premiums alone will cost $80k/yr. Who knows! What will the value of the dollar be and to what extent will healthcare cos…

Aren't there tons of books and calculators for this?the value of the dollar is irrelevant if you live in the US. Inflation does not concern me much. Real estate and stocks have generally been good hedges.

Re: Early Retirement (2006)

#95

Post by brianwawok »

ok2938 wrote: post #81
2sk21 wrote: post #75

I retired early recently - I am in my mid 50s. It's not anywhere as hard as people seem to think. With a disciplined approach to investing, I think that it's very much possible to reach financial independence with a typical tech salary in the US. I achieved FI without an extraordinarily high salary, stock grants or participating in an IPO. There is a treasure trove of information in the Bogleheads wiki: https://www.b…

My problem is, I'm kind of anti-capitalist, to make it short. Labor and capital and not just production factors, but they constitute a power relationship (and often a quite asymmetric one). I cannot bring myself to "invest" in something or believe that "my money works for me" - that's delusional. Money does not "work". People get all upset about the stance, but all I am saying is that everyone wants to profit off som…

So if you don't invest, do you just save money in a savings account? Over a 50 year career S&P Index Fund vs stuff in a savings account is the different between... having 20k a year to pull from savings, vs having 100k a year to pull from investments. It's a pretty stark portfolio difference.

Re: Early Retirement (2006)

#96

Post by underseacables »

I’m terrified of retirement. I’ve got about 30 years to go, and I’m only just now seriously thinking about saving for retirement. My two greatest fears are that I will retire and have to take a part-time job to make ends meet, or worse, there’s a health crisis that completely wiped us out financially. Our plan is to slowly develop a small real estate portfolio of rental properties to bring in secondary streams of income, as well as some investing, 401(k), and hard assets. But it’s absolutely terrifying.

Aside from 401(k), what are some of the ways that you were saving for retirement? Investments? Stocks? Assets and real estate?

Re: Early Retirement (2006)

#97

Post by flowerlad »

isthis129283 wrote: post #61
flowerlad wrote: post #42

Earlier quoted context omitted.

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

I agree. But a material chunk of the $14M belongs to the government (not available for the individual to spend). If someone takes out a $2M loan at the age of 58, and retires at 59 (before any of it is paid back), do you think that should be money considered in a retirement calculation?

Any growth in the "government's portion" is yours until you sell. Also, if you sell after retirement the tax rate is going to be low if you don't have much non-investment income.

Re: Early Retirement (2006)

#98

Post by neogodless »

2sk21 wrote: post #75

I retired early recently - I am in my mid 50s. It's not anywhere as hard as people seem to think. With a disciplined approach to investing, I think that it's very much possible to reach financial independence with a typical tech salary in the US. I achieved FI without an extraordinarily high salary, stock grants or participating in an IPO. There is a treasure trove of information in the Bogleheads wiki: https://www.b…

Early Retirement communities are kind of a spectrum.

Bogleheads, inspired by Jack Bogle, founder of Vanguard, leans towards topics of investing, having lots of money, and being able to afford the things you want. If you visit the forums, expect to be encouraged to amass a very large fortune to be able to handle anything.

MrMoneyMustache.com has an environmental slant, and tends to attract relatively high earners like software developers, with the message that you don't need to spend every last dollar to find happiness, and some careful allocation of your money can greatly decrease your working career and open up other possibilities for you (while lessening your impact on the planet.) There's a focus on being flexible and resilient, and many people expect to get their annual expenses in the $30k-100k range, trusting the 4% safe withdrawal rate, and thus having an investable net worth of $750k-$2.5m.

EarlyRetirementExtreme.com is geared towards someone who wants to be very self-reliant and capable, massively decreasing your expenses by decreasing consumption and paying for services you could handle yourself. Here the expectation might be that you could live on as little as $10-25k annually.

Re: Early Retirement (2006)

#99

Post by ryandrake »

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.

Disclaimer: I am not a CPA or tax attorney.

As of 2021, a very high income married one-earner household can potentially put away $19.5k/yr pre-tax into a traditional 401(k), $38.5k/yr into a after-tax Roth 401(k) which can be optionally converted to a Roth IRA, plus $6k/yr for both the worker and the spouse into Roth IRAs, plus $7,200/yr into a family HSA (if it's available thru your employer).

That's $19.5k + 38.5k + 6k + 6k + 7.2k = 77.2k tax advantaged. $57.7k of that is not subject to income tax or capital gains upon distribution, as long as you are following the rules. Not too bad.

Re: Early Retirement (2006)

#100

Post by serverholic »

rubicon33 wrote: post #78
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…

As a mid-30s software developer who is trying to save as much as possible, with the hopes of retiring before I'm old and deprecate, this really sucks to read. $2 million in investments AND a payed off mortgage and still, it doesn't pencil out to retire? Seems like over the past decade+ the 'value' of even $1 million has become more and more diluted. To support even just a middle class, to upper middle class lifestyle…

More than likely OP suffers from lifestyle inflation. You should definitely be able to retire with that much money.
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