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How have I missed this thread for 5 years?Quote:
Originally Posted by El Chupacabra
I was seeing the light at the end of the tunnel but the complete unknowns of a Trump presidency is leaving me pretty gun-shy. We'd probably be fine if I pulled the plug today but I'm less willing to take a chance now.
Sometimes I wish I could be so certain about how it is for everyone else. But most of the time I'm glad I don't.
I have a few experiences, like a father that loved physics and worked until he was ready to really retire, has a stipend and played tennis everyday he could. He's not rich, but he played his cards in a way that worked for him and some of his peers. Other guys I know who went the jarhead route. Every goal has its joys and its trials.
Me? I'd say about 4m, wisely invested, at least 2m pulling 6% or more. That's the goal. I'm not smug enough to say how far along that road I am.
Having kids really changes up the game, wanting to give them a springboard into their own journeys adds a bit of requirements for cash to blow on education.
Yeah, the good news is that a diversified portfolio is up 2-3% right now (international, bonds, and REIT got hit a little bit while domestic stocks went up). The bad news is the small gain can get wiped out in a morning. I've adjusted my portfolio risk over time to reflect a <10 year time horizon.Quote:
Originally Posted by Undertow
Figure on $3M minimum, but that also assumes putting a kid through college/grad school while retired. It also assumes self-financing a lot of health care while retired and that SS payout will only be 75% of the current projections because Republicans are in charge.
Quote:
Originally Posted by jibij
I somehow missed it too and that's a dam shame because I actually did serious thought and research and am on it. I figure I'm about 4 years away regardless of who is president.
first, you have to figure what type of life you want to live and you have to be realistic and if youre always going to want the new car and new phone and a house on the golf course, it may not happen for you.
second, you gotta save like nobody else you know and not rely on the stock mkt to get you there because it could drop 25% the year youre getting ready to cut all ties.
I highly recommend reading early retirement extreme, this guy and his wife live on about 7k yearly and he retired a long time ago; but they don't live on the golf course or take many trips and another example is mr. money mustache, although his fans just try to live real cheap; the extreme guy totally changed his mindset to abandon consumerism.
Yeah, that's extreme all right!Quote:
Originally Posted by SkiCougar
I don't get the appeal of doing the "extreme" thing. Or maybe I should say, the extreme savings so you can retire early to live a mostly austere lifestyle doesn't sound appealing. I do know some folks that somewhat did this, moving to NZ for a few years while one parent taught, and the other worked odd jobs to stay busy and took care of the kids.Quote:
Originally Posted by SkiCougar
They are both working FT again, and back in the States. I guess in the end everyone has their risk tolerance, and lifestyle wants.
https://www.nytimes.com/2014/04/01/o...lomo.html?_r=0Quote:
Originally Posted by Big Steve
^^re-run but worthwhile
Who here has played around with calculators like these, and what do you think? Am curious if those stating they need $3 or 4 MM have done any calculations to arrive at those numbers.
Firecalc (lets you enter values for future Social Security payments, one-time influx (e.g. sell house + downsize = free up equity):
http://firecalc.com/
Vanguard's Monte Carlo simulator (adjusts for inflation, but that's it -- no SS or other factors):
https://retirementplans.vanguard.com...estEggCalc.jsf
I've done some back of the envelope calculations based on current investment returns and projections concerning health insurance and college costs.Quote:
Originally Posted by El Chupacabra
The number does depend on whether one integrates debt against it.
What are you projecting for health ins + college costs? Health ins to cover date of retirement up to Medicare eligibility? (or are you budgeting for private insurance and not accounting for Medicare?)Quote:
Originally Posted by Buster Highmen
How many kids, and are you funding 100% of undergrad (and post-grad too)?
1k/mo health insurance up to 65, 2 kids, 250k each ed fund.Quote:
Originally Posted by El Chupacabra
if any of you are really into the retire earlier thing, check out reddit.com/r/financialindependence
most anything you can think of has been discussed
Yah, done back of napkin, too. Looked at the Vanguard and AARP calculators to create a goal, and prepared a draft budget based on current dollars.Quote:
Originally Posted by El Chupacabra
Used 4% pre-tax income x $3M portfolio = $120K gross, plus $3K/mo SS (estimated at 75% of current full retirement benefit estimate due to anticipated cuts in SS) totals $156K gross.
Nets close to $10K/mo assuming 23% actual tax rate. Depends on how one handles the income streams.
Further assume costs for travel reduce as health care costs go up and that mortgage disappears by age 67 (which then helps cover inflation and health costs).
Figure 529 Plan gets kid part way there but assume $1K/mo for kid in college/grad school. Total parental college contribution $250K. As that college obligation disappears around age 67, the $1K also helps cover rising costs due to inflation.
Also have real estate wild card if we move. Don't like to count on it in these calculations because it's illiquid and real return is variable. Consider it a fall back move.
I hope I'm over-saving. Who the hell knows what will happen?
Well, at least you know your number.
https://www.youtube.com/watch?v=OffZEuZyX9s
Zactly!Quote:
Originally Posted by iceman
Our planning is simpler --
One kid in 2nd year undergrad at state university, one in senior year high school (going to same state U as other). 529 accounts funded sufficiently to cover state U's projected annual cost (so far we are ahead of budget on the kid in sophomore year). Kids are on their own for all post-grad expenses. They can take loans if they want to go to grad school -- we're not funding that.
No debt.
Also projecting SS for me and Mrs. C. at age 70, reduced by 25-33% for margin of safety (guessing that payouts will be reduced by then). Could opt to take SS earlier if needed, but planning on postponing it to age 70 under current projections.
The hard part is medical expense planning for the time period of retirement date up to Medicare eligibility -- Obamacare appears unlikely to continue, but who knows what will be available for health insurance. Mrs. C. has VA coverage that she uses for some things, but would prefer not to use the VA for everything.
A very comfortable number for us would be $2MM liquid (other than kid college expenses), but calculations and projections suggest that something closer to $1.5MM is totally fine for pulling the plug on fulltime work -- and then just do part-time while the investments grow. Part-time with health insurance coverage might be the best way to go.
Good savings withdrawal calculator: http://www.mycalculators.com/ca/retcalc1m.html with realistic inflation and growth of investment.
in the "new normal" 4% is not conservative. from what I understand people running investment funds for defined retirement plans are rethinking their rate returnsQuote:
Originally Posted by Sirshredalot
The way rates are going 4% nominal is right around the corner.
I wonder what a 50-year note would yield.
http://www.marketwatch.com/story/sho...ond-2016-12-13
In 2001 with a budget surplus treasury stopped issuing 30 year bonds. It was restored in 2006 and now we're talking 50 and 100 year offerings?
I'm against it.
Well it doesn't seem like the smartest idea so they'll probably do it.
When you have won the game. Stop
http://whitecoatinvestor.com/bernste...-win-the-game/
Easy to sleep at night. I've seen enough crashes to respect the opinion.
I don't know the number. But I do know I am so fucking far from it that I should be crying right now. Late 40s, with a kid in kindergarten, so I'm pretty much fucked. Only saving grace is that I am working for the state and the pension could save my ass if I work long enough. But I need to stay at the state until my late 60s to make that work.
If "winning the game and stopping" means that you take everything out of stocks (as that link advocates), then you'll need a LOT more $ before you reach that point, or you've got to be older (say, 60+) and closer to SS/ Medicare age. Inflation is going to eat away at savings that don't grow much.Quote:
Originally Posted by 4matic
It says you need 25 times your retirement income in laddered bonds and tips.Quote:
Originally Posted by El Chupacabra
The point of the opinion is that the perceived alpha of equity holdings is not worth the risk close to retirement because you will never make it up.
Yes, age specific.
I've always thought that 20 million would be an appropriate sum.
good piece thank youQuote:
Originally Posted by 4matic
Chup, inflation is going to be pretty much of a non-issue for a long time in my opinion (which ain't worth much but hey). Second, as 4M said, his advice is definitely age-dependent and he doesn't advocate dumping all equities for a person in mid-career, he's suggesting you take some out when they're up and sit when they're down and gradually build a safe platform, hopefully equivalent to 20x your take-home pay, eventually. But more important than that he's saying get going on it now not later.
Vanguard has a risk assessment questionnaire that is helpful. Also, you can go to portfolio allocation models and see:
- avg historical return
- best year's return
- worst year's loss
- # years with a loss in last 90 years
History is no guarantee moving forward, but it's a data point to consider.
See:
https://personal.vanguard.com/us/fun...recommendation
https://personal.vanguard.com/us/ins...io-allocations
An informed setting of the number requires an analysis of anticipated SS payments. Hypothetical example: Married couple has a paid-off residence and no debt. Husband retires at full retirement age (FRA) and can get $2500/mo. SS immediately, but can get $3,200/mo. SS if he delays taking SS at age 70. (Wife, 4 years younger and still working part time, will get similar monthly SS benefits.) Couple has $1,200,000 in savings and retirement. Couple decides to tap $200,000 of savings in next 4 years, supplementing wife's part-time work income to allow husband to take SS at age 70. Fast forward 4 years: Couple has $1,000,000 and elects to start taking SS, total $5,700/mo. ($68,400/year). Paid-off house, no debt and modest frugality allows couple to live comfortably on $68,000/year (subject to future COL increases), drawing on retirement and savings occasionally for a vacation, unexpected circumstances, etc. If savings and retirement are conservatively invested, couple reasonably anticipates that return on savings and retirement will exceed draw downs. Alternatively, less frugal couple annually draws anticipated 3% return on savings and retirement ($30,000/year) for total of $98,400 yearly income. Under either scenario, when husband dies wife gets higher ($3,200/mo.) SS benefit, has a paid-off house and $1,000,000 or more in savings and retirement. For this couple, the $1,000,000 number pencils out if H takes SS at 70 and wife takes SS at FRA.
AARP calculator factors in anticipated SS payments.
The file and suspend strategy for married couples is no longer available. But the 70/FRA strategy is still the best play for a married couple with sufficient liquid assets such that the older spouse can draw on savings and retirement to delay taking SS until age 70.
So they aren't going to accrue any interest on that $1,000,000+ over four years?Quote:
Originally Posted by Big Steve
They should and that'd be nice, although it doesn't materially change the point of the hypothetical, i.e., that $1,000,000 at retirement is a reasonable number for that hypothetical couple per 70/FRA SS strategy.Quote:
Originally Posted by The AD
But, you've seen the market bounce back after all those crashes, right? Or, a simple way to look at it is, just don't panic and sell when times get tough, just cut back on spending. Don't do that trip to Italy when the market's down, and live with whatever ski quiver you have.Quote:
Originally Posted by 4matic
We're up, what, over 150% since '08? Now we have this Trump bump, of all things, at the same time those "safe" bonds tanked a bit. Won't last, but, who the fuck can predict these things? Just split it up 60/40 or 50/50 in a low cost fund provider and go skiing.
Inflation should be pretty non existent for years, I'm guessing, but, again, who the fuck can predict the future? After all, Rick Perry is going to run the energy department. Oopsy!
Are you talking about general inflation or sector inflation? Big difference. Some sectors are flat or deflating, e.g., some commodities, fuel, stuff made by cheap labor, but there is and likely will be significant inflation in sectors that are most important to retirees, i.e., food, pharmaceuticals and medical care. If Trump triggers a trade war, more sectors could inflate. Furthermore, re general inflation, Trump's proposals -- specifically big tax breaks for the wealthy and big spending on infrastructure jobs (likely to be crony capitalism siphoned through private sector contractors) -- are inflationary.Quote:
Originally Posted by Benny Profane
I just can't believe that you'd need to continue working till your 70 if you've got over one million dollars in retirement savings.Quote:
Originally Posted by Big Steve
I really don't like any backward looking predictors. I've read that the best predictor is forward returns. With 30y risk free at 3.1% that is your best predictor of future returns.Quote:
Originally Posted by 54-46
Go back and look at 30y bond rates and see the forward return. As they have trended lower for 35 years so have forward returns.
No, I didn't say that. You're conflating retirement age with SS start age. In my hypothetical the husband stops working at 66 (FRA) but delays taking SS until age 70. You get 8% for each year you delay taking SS. Here are some real numbers:Quote:
Originally Posted by The AD
-- take SS at age 62: $1,849/mo.
-- take SS at 66 years, 4 months (FRA for a 60 y.o. guy today): $2,583
-- take SS at age 70: $3,364
ETA: You and I agree that the numbers most people are posting on this thread are high.
I concur that many couples get by just fine with considerably less than my hypothetical couple. I recently talked with the hubby of a retired couple 71/68 with paid-off house, no debt, $500,000 savings & retirement and getting combined SS of $4,000/mo. ($2,800 him, $1200 her). They drew down on their retirement so that he could delay taking SS until 70 so that the surviving spouse will get $2,800/mo.
A different hypothetical: Single guy has $500,000 at age 62, house paid off, no debt, same SS numbers as above, has had it with The Man, decides to retire. Unless he has very good reason to believe that he will die before predicted life expectancy (c. 79) his best play is to draw down on his principal (say, $45K/year) and delay taking SS until age 70. Even if that leaves him with, say, only $200,000 at age 70 he'll be better off waiting to take $3364/mo. starting at age 70 than taking lesser amounts earlier because taking SS at 70 is the better hedge against living past age 79.
That strategy is doubly in play for a married couple with liquid assets sufficient to delay taking SS until age 70 (even if he or she retires earlier) because the surviving spouse takes the higher benefit of the two, and odds are that at least one of the two will live past their forecasted life expectancy.
General rule: If you've got the money, single individual or older spouse should take SS at age 70 as best hedge against running out of money if you outlive your forecasted life expectancy.
Quote:
Originally Posted by The AD
If you assume real interest rates near zero you aren't earning any interest. A 4 or an 8 year draw has a real effect.Quote:
Originally Posted by The AD