In reply to frenchyd :
no I didn't forget income taxes. Your inability to comprehend written word is shining through again.
In reply to frenchyd :
no I didn't forget income taxes. Your inability to comprehend written word is shining through again.
My plan now is to retire on 3-6M at around 60ish. But healthcare is the concern.
I think itlL never be enough.
In reply to RxReven' & ProDarwin :
I like the simplicity of the calculator posted by RxReven and the flexibility of FireCalc (which I think somebody on here posted a while back and got me onto it).
I've looked into "early" retirement several times in the past 3 years since my wife passed and was told by "experts" and my own analysis that I could retire at this point. I just don't think I want to. I currently have no debt and greater retirement assets than the OP's proposed number. I plan to retire in about 10 yrs (mainly for health insurance both actual and to keep me from killing my self with bad habits 
). At that point I'll have a partial pension and an annuity which I purchased (I know, not effective use of $, but it gives me a level of comfort so I can sleep at night knowing everything else is in equities and will remain so.) that will replace 80% of my current income (considering I won't be contributing over 30% of my gross to my retirement funding any more at that point, I should be pretty close to living on the same amount before using any $ from my investments). I should end up with a lot of $ to give away once I croak, but if I retired now I'd live like a monk due to worries about health insurance and/or running out of money when I'm 98...nobody's gonna want to hire me when I'm 98.
Of course all of this is subject to change if I win the lottery or have a serious health issue...
Adrian_Thompson (Forum Supporter) said:Not sure of your age, but with a young kid I'm guessing you're still in your 20's/30's.
He is early 40s from a previous post.
Adrian_Thompson (Forum Supporter) said:Not sure of your age, but with a young kid I'm guessing you're still in your 20's/30's. That's just too long to rely on that size of nest egg. Imagine if this discussion was happening at the end of 2019 or early 2008. In either case you would be in a world of hurt 2 years later. IF this is your final nest egg and you're (for the sake of argument) 30, now you have to pull out a higher % of your capitol and can never really catch up. At 60's it's the same situation, but while painful not the end of they world as you are so much closer to the end of your 'needs' the loss of capitol would be less serious.
Note that 4% rule results in a pretty high chance of never drawing down the principal. At 95% stock, 5% bonds, 98% of runs result in a >$0 over 30 years. 92% results in having more money than you started with.
What I'm saying is that 4% is basically a forever rule. If you see stuff sliding and it concerns you, alter your spending or your income (especially when young).
If this discussion was happening at the end of 2019 and 2 years later the OP was in a "world of hurt" (he wouldn't be, really), he could pick up a part time job. Even a small shift in expenses or income would get him back on track.
Also note that scenarios like 2008 and 2019 are included in those calculators.
In reply to ProDarwin :
In terms of not drawing down the principle, we need to pick between absolute value or inflation adjusted value.
In terms of the inflation adjusted value, using the most common estimate of 3% annual inflation, the value will double every 24 years and the standard 30 year retirement will require a multiple of 2.43.
Fun fact, you can use 72 as the numerator to determine when something will double in value...72 / 3 = 24.
infinitenexus said:Without rambling on with a lengthy backstory, my wife and I were talking yesterday about what we would do if we somehow came into $1.8 million. We talked about two options:
1) spend $500K to buy a house and car, pay off all bills, and have no debt. Invest the remaining $1.3 million and use the dividends as income along with my military retirement. No debt is the big plus here, but the nest egg is smaller.
2) Invest the full $1.8 million and use the dividends to pay monthly payments on a house/car/pay off bills. There is debt, but the nest egg is larger.
What would you do? I thought about buying rental properties but I don't think I would enjoy being a landlord.
Edit: I want to emphasize that I do not have $1.8 million, this is just a thought exercise. We arrive at that specific number for a certain (unimportant) reason.
Are you Google or something? This is almost to the penny the same question my wife & I have been wrestling over for the last few months.
But first, we are of retirement age, but don't want to. I'd go crazy and my hobbies would be so expensive I'd need a job to support them.
Also healthcare isn't as big an issue as many would have you think. I have been amazed at how good Medicare has been.
Here's what we have tentatively decided we'll do.
Buy acreage in a growth path, 15-50 acres is probably all we'll be able to afford realistically. Build a home cash and build 2-4 little Air BnBs on the property away from the home that will double as places for the kids to stay when they come over and should pay for the insurance and taxes on the property so it will remain a no cost dwelling. It could actually cash flow as we will be in the middle of 4 large lakes and a couple of race tracks.
We will pay off what little debt we have and invest the balance. The where on the investments seems to change weekly.
Real estate is good where we are and never in my life time has it been bad. In the 80's it wasn't quite as good for a short while, but we've never lost money. The last home profited enough that we were able to put down over 50% on the new build and now there's another huge profit from that house when it sells. Real estate is a great investment here!
We have 5500 square feet now because we needed room for kids and grands to stay when they visit, doing it this way will allow us to drop to 3,500ish square feet. This gives us something great to sell as it will be a size and style that will appeal to the maximum number of buyers when the time comes to sell.
The land will be picturesque or we won't buy it. I'm looking now and where I am in N. Texas I am having no trouble finding resort type of properties. With water, trees and hills. We want to be convenient to the city (and Walmarts) but we go by travel times not distances. We have a very active social life with live music at least 3 nights a week so we don't want to jeopardize that.
We originally wanted to retire to Florida, but nixed that due to the crush of people, taxes and other costs. We can better afford some trips when we are jonesing to dive or just hit the Caribbean.
Decades ago someone said to plant a grove of oak trees that will mature in 20-30 years .
Not sure how that works out today ?
Steve_Jones said:Adrian_Thompson (Forum Supporter) said:Not sure of your age, but with a young kid I'm guessing you're still in your 20's/30's.
He is early 40s from a previous post.
I think he's around my age. Between 30-35.
I bought a Centennial Farm from my wife's family fora good price. More than what I wanted to pay or what I felt it was worth. It's a nice property but as large as the house is it needs a small addition on the rear to make it functional for our five children and five grandchildren. We recently started shopping design build firms for a 1000sf addition. The lowest quote is $180k. That's not even putting a bigger garage on it!
With $1.8m I might be able to maintain and improve my house for the next 30 years.
yupididit said:Steve_Jones said:Adrian_Thompson (Forum Supporter) said:Not sure of your age, but with a young kid I'm guessing you're still in your 20's/30's.
He is early 40s from a previous post.
I think he's around my age. Between 30-35.
In either the parent blow up thread or the moving thread he said he was 39 and having his first kid, and that was at least a year ago.
RX Reven' said:In reply to ProDarwin :
In terms of not drawing down the principle, we need to pick between absolute value or inflation adjusted value.
Good call, my comment should read "92% results in having more [inflation adjusted] money than you started with".
I believe the default for that calculator is to use CPI
I think some of y'all are taking this a bit too seriously, so I would like to reiterate a few things.
First, I'm 40. I'm also retired Army, so I have healthcare taken care of as well as a small retirement.
Second, I want to emphasize that I do not have $1.8 million dollars. This was a hypothetical number my wife and I came at while talking about this, because it's fun. Also, while $1.8 million is an absolute ton of money, when you do the math it's not as easy to retire on as you'd think. That's kinda how this came about.
I don't mean for this thread to be necessarily "give me advice on how to retire on $1.8 million", which is I think how some have taken it (I am grateful for the advice though, good financial advice is always welcome.) It was a hypothetical situation my wife and I came up with, and we were debating those two options listed in the initial post. Of course they're over simplified and there are other factors, but sometimes it's nice to just think about things with broad strokes.
Moving to a different state could/would also be an absolute game-changer. We both can't stand Cleveland. We would love to move to Colorado! $1.8 million isn't enough to buy a house, invest the rest, and live on the dividends though, unless you live somewhere very rural. Moving somewhere like the Tampa area would be the opposite, although checking real quick on realtor.com shows me that the housing market spike is quite bad there. A house that was $180K two years ago is now $300K+. Oof.
In reply to carguy123 :
Your idea of buying land is something we've considered (in actuality, not just a hypothetical). Houses are insane right now. If we could get land for a good price, that might be something to consider, assuming the cost of lumber and building materials will go down in the future.
Sometimes the financial aspect of this stuff is nuts, I've received two raises in the past 15 months and I feel like I've barely kept up with inflation. At this rate, in a couple years $1.8 million might buy me a nice doublewide trailer in Wakulla county, hahaha.
A mix is always good. We've got a couple of rental properties, one a duplex that we use half as an annual, and half as an Airbnb. By the time we're retired all real estate will be paid off and providing a source of income in addition to savings and SS.
I'd like to hear ideas for cost effective health care from 60-65 until Medicare kicks in.
Adrian_Thompson (Forum Supporter) said:I'd like to hear ideas for cost effective health care from 60-65 until Medicare kicks in.
Looks like you can find health insurance in the $200-400/mo range pretty easily.
If you're retired, your income may be low enough to qualify for subsidies too.
calteg said:Retire to Spain. A 500,000 Euro home in Spain gets you a golden visa which means you don't need to be a student or have a work visa to stay there long term. It also fast tracks you to "permanent resident" status within 5 years.
Assuming you spend $50k in moving expenses, immigration lawyers and ancillary expenses, that leaves you with $1,250,000. A couple can live very well on $1200/mo in Spain. I'm not sure how old you are, but assuming you just live off the remaining money and it earns 0% interest, that buys you a little over 86 years of retirement. If you want to be ballin, spend $2400/mo and you still have 43 years.
So, I did some more looking into this and it seems like a top idea for a person that wants to expatriate. Spain is beautiful and has great food and lots of auto racing, and their economy being it a bit of a slump means it's very inexpensive to live there. If a person had a small monthly retirement (like me) plus a large sum of money like $1.8M, they could indeed live very, very well there.
I imagine life in Málaga would be a bit better than Cleveland, haha. Most European countries also have national healthcare, which takes care of that issue that some have. In Spain (accord to a quick google search) you pay a small amount each month. A healthy person in their 50s pays around $55/month and that covers your healthcare and dental insurance, with only small premiums.
I think more Americans should consider expatriating in their retirement, personally. There's a lot of fantastic options out there.
In reply to STM317 :
Thanks, but I'm interested in what is really covered, we've already heard up thread, or the moving to Canada thread I forget now, about people even with health insurance going home to die from curable cancer due to coverage limits, I bet for that price it's not going to be great for emergencies like that.
In reply to infinitenexus :
About expatriating, for most people social security is still going to be an important source of income. What happens to your SS income if you emigrate? I've been told before that you can still draw it, but you never get any cost of living increase, you just get what you start with until you pass. I also don't know about survivors benefits etc. Sorry to bring unknowns into this thread, but I think they are important questions to be answered, just not by me!
I noticed several people taking stock market average returns as kind of a fixed number. I'd like to point out that the S&P500 is down 18% this year. Cherry picking years, it's easy to come up with 10 year stretches where the growth was ZERO. Not a big deal if you have a long view, more problematic if you're trying to live off the money, which is why you end up with 4% or 3.3 or whatever as the safe number to draw down. You can't be fully exposed to the market.
In reply to mfennell :
Agreed, the date you retire is a discrete event and as such lacks statistical smoothing.
In plain English, exactly half of us will retire at a less optimal time than average and even over the course of a thirty+ year retirement, the effects will still be significant.
Loading up on bonds and/or annuities is a very expensive way to address this and for many (most) will result in their being on the right side of the "retired too soon / retired too late" intersection. In other words, they'll work too long (to save enough to be comfortable despite the low yield investments) and later regret having less time / less health in retirement.
As others have mentioned, an alternative is to be flexible with your retirement budget (must haves vs nice to haves) and be open to getting a little retirement job if the economy goes south shortly after you retire.
Added later...
Perhaps this deserves its own thread but as Adrian mentioned, more information on personal health insurance plans would be greatly appreciated.
I turned 58 today and I'd like to retire at 60 but my wife is seven years younger than I and my youngest daughter is only fourteen. So, even though I recently paid off my mortgage, I'll have college expenses for the next eight years which will force me to sell stocks which will put me into too high of income bracket to be eligible for ACA discounts. Do I have this wrong, is investment income treated differently or something?
I've started and stopped replies to mfennell a number of times. I get what you're saying but don't full agree. The 10% figure is a reasonable averaging over a long period of time. Also noone should have all their money in one index or fund. Even if you split your money 1/4 each to S&P, DOW, NASDAQ and any generic overseas fund you should be reasonably well protected from any one index having a long hard down period. Yup all indices tend to go up and down somewhat in sync, but if you look at a 5-10-15 year period one or two of them tend to recover faster, so even if one fund has a 10 year 0% gain, you should still do better than that.
But as you mentioned the S&P, let's look at the average 40 year return (average ish working life if like many people you don't start saving at first) for various start dates and these were the returns. These are all January to January 40 years later:
Year Average annual return
So honestly I don't see 10% as being a bad general average. The real issue comes for people who heading into needing to start drawing down their funds at times like this where things are going down. That's a double hit as they not only have to take our more now, there's conversely fewer shares to increase in value when things get better so it's a double hit.
In reply to Adrian_Thompson (Forum Supporter) :
These look like the before inflation numbers. I think the after inflation numbers is right around 7%.
In reply to mtn :
True, I just went hunting after I read mfennels post. He does have an excellent point though as it's really your last 10 years that matter the most as a) you've already saved, and built, most of your investment. And b) you're probably in your peak earning years.
Depending on what you consider to be the inception point of the S&P 500 (1923 and 1957 are two common dates), it has averaged about a 10.5% annualized return.
Economist typically plug in 3% for the average rate of inflation so adjusting for that, we get 7.5% and using the rule of 72 we get an inflation adjusted doubling of value every 9.6 years which I just round to 10 years even.
I tell my daughters "every dollar you save at the beginning of your career will be worth around twenty dollars after adjusting for inflation when you retire" 
Adrian_Thompson (Forum Supporter) said:In reply to STM317 :
Thanks, but I'm interested in what is really covered, we've already heard up thread, or the moving to Canada thread I forget now, about people even with health insurance going home to die from curable cancer due to coverage limits, I bet for that price it's not going to be great for emergencies like that.
In reply to infinitenexus :
About expatriating, for most people social security is still going to be an important source of income. What happens to your SS income if you emigrate? I've been told before that you can still draw it, but you never get any cost of living increase, you just get what you start with until you pass. I also don't know about survivors benefits etc. Sorry to bring unknowns into this thread, but I think they are important questions to be answered, just not by me!
The part that I bolded is a bigger issue than cost. You (the general you) really need to understand what is and isn't covered. Your "affordable" healthcare plan becomes a disaster when you wind up with a condition that isn't covered. I'm going to work tomorrow entirely because I have two family members with expensive health issues that none of the plans on "the exchanges" cover. Once I can purchase my employer's expensive-but-worth-it healthcare as a retiree, I'm done.
And with regard to an appropriate withdrawal percentage, 3% is my sleep soundly number. YMMV
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