Retiring on $1.8 million, as a thought exercise.

Adrian_Thompson (Forum Supporter) said:

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!

Many countries allow dual citizenship, so I think they'd be okay (although I'm clearly no expert.)

There are a lot of places in Europe with excellent healthcare where a person/couple could retire and live well for surprisingly cheap. As in $2K/month cheap. Granted, I understand that European life may not be for everyone, but I think it should be an option people consider. 

In reply to infinitenexus :

So I just looked at the social security website.  And basically you can draw your eligible SS most places, and can draw it overseas permanently for one of 29 listed countries.

https://www.ssa.gov/international/countrylist1.htm#:~:text=If%20you%20are%20a%20U.S.,you%20are%20eligible%20for%20them.

In reply to Adrian_Thompson (Forum Supporter) :

Hrm... of that list, Greece seems like the cheapest/easiest option to bribe an official to grant you papers.

In reply to Beer Baron :

The most annoying thing is the UK berkeleyed up with BREXIT possibly making it harder in the future to live in other European countries.

Amusing side bar about visiting a friend living in Greece (on Crete actually).  I asked why most of the buildings appear to be unfinished with re-bar sticking out of the top as if they were going to put another floor on the top.  It turns out that you don't (or didn't) pay property tax on a building until it was fully finished.  So everyone said the were going to build a building with X floors, and only built X-1 floors and claimed it was perpetually under construction while people lived in the lower floors.

In reply to calteg :

Or Thailand, Portugal, Philippines, Mexico, South America. Pick your favorite low cost of living place with good health care and live well and retire at 50. 

You can keep a US bank account for payments of SSA. Then just transfer to your local bank as needed. It's not that hard. You'll lose a little bit in transfer but you'll still be saving in expenses. 

In reply to bmw88rider :

Before you recommend the Philippines, let me put you in contact with a friend who has lived there - married and raised a family there - for the past 20-30 years.

He likes the people in general, but he has nothing good to say about the available services at all.  He'll be glad to give you the reasons why.

Note:  I've never been to Philippines so I have zero personal experience.

Totally missed this the first time.  Also making quite a hash of the formatting...

Adrian_Thompson (Forum Supporter) said:

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.  

...

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.

Right, that was the point I was making.  If your situation is "I have X amount of money and I have to live off of it", basing decisions off those long term averages is risky.  Totally agree with all your other points - my net worth is off (checks spreadsheet) 13.65% this year as of yesterday but it has no immediate impact on me besides psychological.  The market drop allows me to purchase more for less.  My retired mother is a different story.

In reply to mfennell :

Same for me.  Although my retired mother is fortunate in that she generally doesn't need to draw from her savings to live as her monthly retirement pension can easily cover her living expenses.  I generally assume that my Social Security will cover most of my general bills and my 401k will need to cover the rest, although hopefully there will be a gap between the time I want to retire and when I can apply for S.S.

Whew...  Just printed the 2nd quarter statement - down 14.7% for the year.  But at the same time, these are on-paper losses after a bunch of years of crazy on-paper gains... so in some ways, a bit meaningless. Some kind of correction has been overdue for a while. 

In reply to Ian F (Forum Supporter) :

Just like no military plan survives first contact with the enemy.  Darn  few finical  pans for 1.8 million will survive the first serious  medical or other pressing need. 

In reply to frenchyd :

Oh, if I have any major medical needs, I'll just die.  Mainly since because I never go to the Dr, by the time something severe is caught it'll likely be terminal.  I'm fine with that.

Ian F (Forum Supporter) said:

In reply to mfennell :

Same for me.  Although my retired mother is fortunate in that she generally doesn't need to draw from her savings to live as her monthly retirement pension can easily cover her living expenses.  I generally assume that my Social Security will cover most of my general bills and my 401k will need to cover the rest, although hopefully there will be a gap between the time I want to retire and when I can apply for S.S.

Whew...  Just printed the 2nd quarter statement - down 14.7% for the year.  But at the same time, these are on-paper losses after a bunch of years of crazy on-paper gains... so in some ways, a bit meaningless. Some kind of correction has been overdue for a while. 

The S&P 500 is currently at 3,850 and has a P/E Ratio of 19.46...given the historical average of 15.97, we should see an additional fall of 18% to 3,160.

You're completely correct...we were waaay out in front of our skies on valuations and this correction is well overdue.

Don't focus on valuations, focus on unemployment as that will determine how long and deep the correction will be.

If we can keep it low, we'll be out of this before a lot of people will be forced to start liquidating their assets...if we can't keep it low, a multi-year economic spiral will need to run its course leaving many people in bad shape.

Think of GDP growth as a kind of sponge that soaks up the excessive money that's causing inflation.

People working = GDP growth = contained inflation = supportable P/E ratios = valuation growth.  

So 1.8 million at 60K a year pull down over a fully Monte Carlo sim using the last 100 years of data as a random data set puts you here. Started at 50 years old figured you would live to 100. 

Is 1.8 million enough. Math says yes you have a 96% chance that it is enough money to continually pull 60K a year. Drop it to 50K and it goes to 100%. Mind you this is all cash in the market and not a clean mix of investments. Add in pension and SS and you are more then fine. Go bond/RE/Stock distribution that you feel comfortable with and it will drop again. 

My personal FATFire number is more then this but I have heavy health costs that I would need to cover and I want to travel heavily in my early 50's when I do pull the trigger. All personal preference. 

frenchyd said:

In reply to Ian F (Forum Supporter) :

Just like no military plan survives first contact with the enemy.  Darn  few finical  pans for 1.8 million will survive the first serious  medical or other pressing need. 

Just because you berkeleyed up (and tell us about it every chance you get) doesn't mean no one else's plan will work. Every retirement thread you say the same E36 M3, yet many people manage to retire every day. Some people plan better. 

In reply to Steve_Jones :

But no, he didn't berk up, the world berked him up.

Haven't you finally accepted that yet?

In reply to Steve_Jones :

In my working life I've gone to exactly one retirement party.  Sure some people just quietly slip away and a lot of people accept whatever life deals them.  
       But according to the numbers a very large percentage of people  retire with little more than Social security. 
 

 Just  be honest when you advocate for an investment program.  "All investment involves some risk". 

In reply to frenchyd :

I know plenty of retired people, with plenty of money.

I have not advocated for any investment plan as the only retirement that is my business, is mine.

While it's true that investment involves risk, NOT investing involves MUCH MORE risk.

If you're good at saving, inflation will still eat you alive. Over the last 40 year time period, inflation has increased by 207%.

If you are not good at saving, you may be committing yourself to being a financial ward of your kids or of the state.

Healthy life choices include deciding to invest in a manner that is likely to protect your future.  Retiring with nothing to live on other than Social Security is a really bad choice.