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How much is enough to FIRE in San Francisco?

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Re: How much is enough to FIRE in San Francisco?

#71

Post by subsubzero »

A few things you can do to reduce costs, my family does this and hope it helps others.

- Gardening/yardwork - We do all this ourselves, its exercise and gets you outside, plus you have made something better in the physical world(I work in software so get extreme satisfaction from this!): savings per month/year ($240/$2880)

- Cleaning - We also do not have cleaners, our house is not particularly messy and we clean as we go, this saves us money by not hiring a expensive house cleaner: savings per month/year ($200/$2400)

- Shop around for home/car insurance, our home insurance rate was jumping to $5600 a year, we looked around and were able to bundle with a well known company and got it to $2600 a year. Also its cheaper to pay in full, plus if you are a engineer or manager you get a discount: savings per month/year ($250/$3000)

- Switch to lower cost cell phone plans, went with Tmobile over Verizon on a family plan and saved a decent amount: savings per month/year ($60/$720)

- Avoid doordash and other takeout services, they tack on a huge fee with every transaction(ie. 25-30%) that saves you money if you either head out to get food or just make it at home, assuming 5-6 dashes per month and cost per dash being $100: savings per month/year ($150/$1800)

- Make your food at home, kind of obvious but food eaten out is usually 2-3x cost of making the same thing at home. When we do eat out I have been getting 1 glass of an alcoholic beverage as its usually the most expensive thing on the menu, also avoid appetizers. Those two things usually cuts the bill down by 30%. Assuming eating out 10 times a month and average bill is $100(very conservative for a big city) you end up with: savings per month/year ($250/$3000)

- Avoid Cable and other high cost entertainment packages, they are usually over $100 a month and are mostly commercials anyways. if you like sports I usually get peacock as its quite cheap, also HBOgo(or max) has live sports now and both are around/under $10 a month. savings per month/year ($100/$1200)

These things don't add a huge burden to your life and when added up allow you to save more money. All of these cost savings are what my family actually did and it saved us roughly $15k a year and in general are all more healthy alternatives to what would cost money.

Re: How much is enough to FIRE in San Francisco?

#72

Post by diob »

rzmmm wrote: post #19
diob wrote: post #11

Earlier quoted context omitted.

Presumably their investments would inflate as well. Unfortunately, the asset owning class is protected by inflation in that way. It's the lower / middle class who have cash savings that get wrecked by inflation.

Depends on the asset, but usually salaries follow inflation more closely than investments.

This doesn't address what I said though. Salaries may follow, but their cash savings do not.

Re: How much is enough to FIRE in San Francisco?

#73

Post by briffle »

koolba wrote: post #33
starttoaster wrote: post #18

Earlier quoted context omitted.

Not sure how it works in every state, but my property taxes are liable to increase year to year, for a home I own. Are you saying this is not the case in California? They just true up property taxes for a property upon next sale?

CA assessed value for property tax calculations is capped at 2% growth per year. So if you bought a house in the 1970s you’re never selling that thing as the tax hit on any new property annually would be much more. If anything, you keep the property, rent it out, and never do any major renovation that would trigger a full reassessment.

Oregon passed a ballot measure in the early 90's that is essentially the same.

A mile away I have a literal mansion that is on the market for $8m. looking up the property taxes, the house has been owned by a trust since the late 80's, and they pay less in property taxes on the mansion and 15 acres than I do for my regular house in the suburbs..

I'm don't know them, but have heard its the kids that live in the house now, but the trust didn't sell or change so taxes have been kept the same.

Also have a house down the street that has been completely vacant for 2 years now, in the middle of a housing crisis in my area. The owner passed away, and the family couldn't decide what to do with her stuff. I talked to one of them, he said the taxes are only $500/year on the place, and utilities are less than $100/month, and pretty cheap to have a crew mow the lawn weekly, till they decide what to do.

Re: How much is enough to FIRE in San Francisco?

#74

Post by beambot »

tunesmith wrote: post #55

I think any time you string together a series of worst case scenarios all being true at the same time, you're going to end up with something ridiculous. It's silly to ignore social security since at the bare minimum, if congress does nothing, people will still get roughly 75% of the benefit. One tool I like better than the online calculators is the spreadsheet at https://earlyretirementnow.com/safe-withdrawal-rate-se…

FireCalc is also great - https://firecalc.com/. Just put in spending, portfolio & years (tiny box on right), and it does back testing analysis over investment windows going back to 1871.

For $4M and $140k annual spend:

> FIRECalc looked at the 124 possible 30 year periods in the available data, starting with a portfolio of $4,000,000 and spending your specified amounts each year thereafter.

> Here is how your portfolio would have fared in each of the 124 cycles. The lowest and highest portfolio balance at the end of your retirement was $348,731 to $24,529,049, with an average at the end of $9,233,594. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

> For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.

Re: How much is enough to FIRE in San Francisco?

#75

Post by diob »

whimsicalism wrote: post #42
diob wrote: post #11

Earlier quoted context omitted.

Presumably their investments would inflate as well. Unfortunately, the asset owning class is protected by inflation in that way. It's the lower / middle class who have cash savings that get wrecked by inflation.

usually inflation helps the lower class - this has been the case historically and also the case for the most recent inflation

Data?

https://www.forbes.com/sites/jackkelly/2024/04/08/how-inflat...

Inflation is absolutely a way to steal the already meager savings of the working class.

The only way it wouldn't be is if that "new money" actually entered their local economy, which I'd love to see.

Re: How much is enough to FIRE in San Francisco?

#76

Post by creer »

generic92034 wrote: post #13
dataflow wrote: post #4

Doesn't this depend heavily on inflation? With the ballooning US debt, how do people imagine the government will continue to pay interest without massive inflation in a few decades?

The same as always? Pay old debt with new debt. Other countries might run into issues with exchange rates this way, but the status of the USD is dampening such effects.

Even assuming there are always people, institutions and countries eager to buy the new debt, the government must still pay the ongoing interest on the debt. The concern is when that interest becomes a significant part of the annual budget. Then there is no money left to pay for the essentials - like, /s - government workers' salaries and retirement and military.

Re: How much is enough to FIRE in San Francisco?

#77

Post by whimsicalism »

diob wrote: post #75
whimsicalism wrote: post #42

Earlier quoted context omitted.

usually inflation helps the lower class - this has been the case historically and also the case for the most recent inflation

Data? https://www.forbes.com/sites/jackkelly/2024/04/08/how-inflat... Inflation is absolutely a way to steal the already meager savings of the working class. The only way it wouldn't be is if that "new money" actually entered their local economy, which I'd love to see.

> Data?

Sure [0]. You can also look at historical US rebellions, such as Shays' rebellion - where a principle demand of the working class rebels was that the US government print more money.

> Inflation is absolutely a way to steal the already meager savings of the working class.

Exactly why inflation is generally beneficial to the working class, generally their savings are insignificant while their wages are very important - it raises their wages while reducing the value of savings & debt, which hurts people who have lots of savings and helps people who are living off of their wages.

[0]: https://realtimeinequality.org/?id=wealth&wealthend=03012023...

Re: How much is enough to FIRE in San Francisco?

#78

Post by creer »

harmmonica wrote: post #31
thefaux wrote: post #2

The funny thing is that I just plucked 5MM out of a hat for my number 5 or so years ago when asked and I guess this analysis supports my intuition. The one big problem with renting is instability. If the owner decides to sell the property, it may be difficult to find something equivalent on your terms or you may be forced to hop around a few times before settling.

A buyout, as sibling mentioned, could happen, but would likely not be enough to make up for losing your rent-controlled apartment. In SF, most apartment rentals are covered by rent control so you can more or less predict how much rent you'll be paying years into the future (the annual rent increases are capped by the city and though they are supposed to be tied to inflation the allowable rent increases are likely, pr…

> most apartment rentals are covered by rent control

For a rather loose definition of "most". Depends on type of building and when they were built or renovated.

Re: How much is enough to FIRE in San Francisco?

#79

Post by sceptical »

asdfman123 wrote: post #59

I've spent years thinking about and pursuing early retirement. My thoughts: 1) You should never stop working. Humans need purpose . It may be worthwhile to think of it instead as saving money so you can transition to a more meaningful job . Maybe one that doesn't pay anything at all, like child rearing, or volunteering. This conclusion implies that if you CAN already do something meaningful, it's probably better to d…

I retired three years ago at the age of 49. I was rather successful as a software engineer and is content with what I achieved. My response to your thoughts.

1) I have not missed work at all for the last three years. Not a single day. I have not done any programming since I retired. Instead I spend my time on other hobbies and travelling. I try to take two week-long trips every month to new locations. That is plenty meaningful for me. I have nothing to prove, I already did that. My job now is to see the world while I still can.

2) Initially it was daunting to start living on savings / investments. Especially with an initial ~20% market correction and high inflation. However I am spending less than I expected, only around 2% withdrawal rate and I could reduce that by almost 50% if needed and still live rather comfortably.

3) Financial independence is nice. But you also have to spend the money, while you still can.

Re: How much is enough to FIRE in San Francisco?

#80

Post by creer »

thefaux wrote: post #2

The funny thing is that I just plucked 5MM out of a hat for my number 5 or so years ago when asked and I guess this analysis supports my intuition. The one big problem with renting is instability. If the owner decides to sell the property, it may be difficult to find something equivalent on your terms or you may be forced to hop around a few times before settling.

These calculations do not commit you to a course. They are statistical reassurance. You can and should remain aware that you can course correct. For example, California weather and your friends might be your preference in San Francisco, but you can still fall back to something far less expensive.
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