View Full Version : Suzie says you need 5 mil to RE
flowerseverywhere
10-4-18, 4:03pm
Interesting article
https://www.marketwatch.com/story/the-biggest-financial-mistake-you-could-ever-make-according-to-suze-orman-2018-10-02?siteid=yhoof2&yptr=yahoo
we retired early fifties and did not have anywhere near that. If you have a paid off home, like to cook instead of going out, read free library books , hike and so on, don’t mind used cars for instance, how much do you really need?
i had two neighbors that lived solely on social security in their modest paid for house. The median income isn’t much more than the mid fifties. There is no way you will amass that much money of you are anywhere close to the median income.
Hogwash.
iris lilies
10-4-18, 4:36pm
That seems silly!
In the article She say that if you have five or 10 or $15 million you can live like her. A comment after the article says “yeah those private planes and yahts are expensive.“
rosarugosa
10-4-18, 4:37pm
Suze is a twit!
No retiree I've ever known has had close to that--yet amazingly, they've all enjoyed perfectly adequate lives post-employment. I guess such BS sells investment vehicles and counseling.
I lost respect for her when she was on late night TV all the time..........one size does not fit all.
goldensmom
10-4-18, 4:55pm
5 mil as in money? I second your Hogwash. I do, however, have 5 mil trash bags. I am retired. We have no investments, we have a small savings account, a mortgage and all of our bills get paid. We are happy with that, do not need more.
That's hilarious. We recently had this discussion on this forum, and to me, FIRE means you can do what you want, not what you have to do. So that translates into being able to take low-wage employment you enjoy or start a small side business. FIRE doesn't mean sitting on your duff for 50-60 years.
I think she was projecting the income needs of a 30-something who retires early--and never works again--and wants to maintain a certain standard of living. As for a regular 50/60 retiree-5M seems totally unnecessary.
Teacher Terry
10-4-18, 5:26pm
I found it funny too.
She was to have a special Monday on OWN but it never aired. I guess I didn't miss anything.
I guess I better go back to work, and have been fooling myself the past 20 years....
Even the people I knew from work who were laid off ("early retirement"; their financial plans altered significantly by no longer working) who didn't have 1M in net worth reported that they did just fine in retirement.
I did see another news article about this statement, tying it to what you'd need to amass to do nothing after age 30, so that's probably where the 5M came from. But it makes a great soundbite, huh?
I guess I better go back to work, and have been fooling myself the past 20 years....
Well Bae, you have been living like a pauper:~)
Well, living on 35% of our income will not get us anywhere near the 3rd deviation of 5 mil. But our financial planner says I can retire at 60 and hubby at 65 (his target) with nothing to worry about because our current standard of living says we can reach age 100 and not be broke.
Gardenarian
10-4-18, 10:46pm
5 million might be right if you were 35 years old and going to keep your money under your mattress.
Most 'early' retirees are in their forties or fifties and have their money invested to give them income.
ToomuchStuff
10-6-18, 1:58am
I know several that have quite a bit more then that. Like her, they tend to have homes in multiple area's of the country, and like her, they travel quite a bit. A lot of it comes down to lifestyle. One gal I am an acquaintance with, stayed at someone we both knows place on the coast, and fell in love so much she looked at what rent was there. She realized she couldn't afford to stay their very long (pretty sure she's just in the 1 million range), as rent was $30,000 a month.
Barring me finding the winning lottery ticket on the ground (since I don't play), the odds of me doing anything, anywhere close to that, is somewhere between zero and 0.1%.
I've watched about as much of her PBS programs that I can take, and she does offer some sound advice. But I think $5 mil is way out of touch with reality for average people. I was in a discussion the other day and looked up some SS figures. The SSA claims that 35% of retired married people over 65 and 45% of single retired people over 65 get all most all of their income from social security. I guess that's the other end of the scale and seems awfully low, but I retired early just after watching the financial meltdown. My savings took a giant hit so I lived pretty frugally for the first few years. It would not be too much of a stretch to say that I lived on about what social security would have been if I were getting SS payments. I'm certainly glad my financial situation has improved, but with house paid off it was not all that bad.
Packratona!
10-6-18, 7:57pm
Read Mr. Money Mustache's last article and the comments after it on his forum. Has to do with this. Here is link: http://www.mrmoneymustache.com/blog/
That was a decent article. I have thought the simple living movement was loosing any popularity it once had and it's good to see fresh revival. Maybe during the financial meltdown people were just glad to have a job. I still prefer the name simple living over FIRE, though maybe they are close enough that the difference is not that much.
5 WHAAT??? That's nutty. We don't all need 3 houses!
I have to say this whole FIRE guru thing is all getting a bit cultish. The math is fairly simple. The planning is fairly straightforward for most people. The required discipline can only come from within. And luck is the province of the gods. Ultimately whatever these people can impart is a tiny fraction at best of any individual’s formula for success.
All these various shamans accusing one another of heresy is becoming a little silly.
I have to say this whole FIRE guru thing is all getting a bit cultish. The math is fairly simple. The planning is fairly straightforward for most people. The required discipline can only come from within. And luck is the province of the gods. Ultimately whatever these people can impart is a tiny fraction at best of any individual’s formula for success.
All these various shamans accusing one another of heresy is becoming a little silly.
They are all accusing each other of heresy to sell their stuff to you be it Dave Ramsey, Suze Orman etc. Unless you are a member of the "lucky sperm club", you are going to have to focus on "FIRE" and do the work. People who ask me about retiring early, I simply as them "how bad do you want it".
Teacher Terry
10-24-18, 11:23am
MM is not in their league. I believe he started his blog to help people and only made 300k last year all of which he donated to charity.
catherine
10-24-18, 11:29am
They are all accusing each other of heresy to sell their stuff to you be it Dave Ramsey, Suze Orman etc. Unless you are a member of the "lucky sperm club", you are going to have to focus on "FIRE" and do the work. People who ask me about retiring early, I simply as them "how bad do you want it".
I agree with TT and MMM, and I have exchanged some of my life energy for the perceived value of Dave Ramsey. I have bought a book on his website ($20--on my debit card). And I paid a few bucks a month to be able to participate in his discussion board (now defunct). I still think he has very solid principles to help people navigate out of debt and create wealth. Of course you have to do the work. You can lead a horse to water...
HappyHiker
10-24-18, 12:06pm
While we have some money in the bank and some other savings, we are far from millionaires. Social Security is our main source of income. We've no debt.
We want for nothing and manage to travel simply and with great joy. As long as I have love, friendship, books, a dry roof overhead and healthy food, I am a "Happy Hiker."
Two books affected our simple living lifestyle: "Living Poor with Style" from long ago and "Your Money or Your Life." Both influenced our relationship with money and materialism. We buy many items used and don't keep up with the Joneses...they're likely in debt up to their ears..
catherine
10-24-18, 1:08pm
While we have some money in the bank and some other savings, we are far from millionaires. Social Security is our main source of income. We've no debt.
We want for nothing and manage to travel simply and with great joy. As long as I have love, friendship, books, a dry roof overhead and healthy food, I am a "Happy Hiker."
Two books affected our simple living lifestyle: "Living Poor with Style" from long ago and "Your Money or Your Life." Both influenced our relationship with money and materialism. We buy many items used and don't keep up with the Joneses...they're likely in debt up to their ears..
One of my "living poor with style"-type books was Possum Living. That was a fun book to read.
I'm encouraged by your post, HappyHiker. SS will be my primary source of income also. I don't worry about it until I read stuff like this Suze Orman crap. If money is only a means of exchange, as my great-uncle used to say, and if ALL other members of the animal kingdom seem to get along fine without it AND if all of the people I admire most--like Thoreau, Jesus, Siddhartha, St. Francis, Peace Pilgrim, William Copethwaite, Suelo, and others have managed to be wise and loving people while being financial minimalists at the same time, I know I'm safe and secure no matter what my financial outcome is in retirement.
Teacher Terry
10-24-18, 1:22pm
We are far from rich. On early retirement forum people in general have a lot more money. They talk about retiring to CCRC’s that have homes, apartments, assisted living and nursing home in one place. Tons of amenities and having to buy in plus your net worth must be double the buy in plus your income twice what the monthly fee is. Totally can’t relate.
HappyHiker
10-24-18, 3:34pm
Sure, there are all kinds of retirements...I avoid the doomsday scenarios of needing millions to do it...we Simple Livers know how to reduce our footprint and be thrifty...that's why we're here sharing our stories...
A Chinese neighbor once told me, "if you compare yourself to those who have more than you, you'll always be dissatisfied. But if you compare yourself to those who have less, you'll be content."
Words to live by? I find it helps end my envy when its ugly head rears itself... envy happens to the best of us...advertisers and marketers make their living selling us stuff due to envy or status or "you deserve" ..fill in the blank. Hogwash!!
MM is not in their league. I believe he started his blog to help people and only made 300k last year all of which he donated to charity.
He strikes me as a bit cultish He reacts so weirdly to disagreement or perceived slights, you get the impression he’s enforcing some kind of dogma and condemning unbelievers. He also speaks for “us” a lot; as if it were his zip code or something.
Teacher Terry
10-24-18, 4:49pm
I think he needed something to make his blog stand out from others and that is how he did it. It doesn't bother me at all. So many people are in debt and over consumers that I think if people only rein in spending somewhat it is a good thing. He gets zealous about things like bike riding which in many places is dangerous. When I rode a bike I purposely would drive it out to a trail so I wouldn't get hit by a car. His followers are really changing and are no longer hardcore. One thing I don't like is his creative accounting. His traveling is not included in his budget because he only travels for business. Bull he also visits family in Canada. His house is paid for which is another reason his budget is so low. I think he used to live on 25k but doesn't any longer. But no one is perfect and I think he is helping people. He is rarely on his blog anymore and it mostly is just a ton of people on the forum.
mschrisgo2
10-24-18, 10:09pm
Suze is way out of touch with reality. In my entire working life, begun at 16 now 67, I have not made $5 MIL, in fact less than half of that.
I'm retired now, and living a very pleasant life, not "rich" with money but with other more important things.
ApatheticNoMore
10-24-18, 10:59pm
If one has a pension they need to calculate how much they would have need to have saved to not have one and have the same amount of money if we are working on dollar figures to compare to people without one.
But most people will retire if they don't die earlier than that, most people won't have 5 million, it may not be early but rather not a day before (at least early) collection of SS kicks in, or the day that one really truly can't ever get hired again or is too sick to work again. But ... it will happen, one can just try to be as prepared as possible.
I was in a friendly discussion recently about whether seniors should get a discount on fishing licenses and state and national parks passes, all of which we get in my state. The issue being that seniors could afford these things and should pay the same share as others.
A figure I looked up from the social security administration said that 45% of single seniors and 20 % of married seniors get 90% or more of their income from social security. And one of their polls said 35% of near retirees thought 90% or more of their retirement income would come from social security. That's a far cry from $5 million in savings and is probably cutting the bean a little thin, but it is how a lot of people are getting by. I suppose if you take early retirement before social security, FIRE is a more significant consideration.
Teacher Terry
10-25-18, 11:05am
Also many people don’t retire by choice. They do so because they cannot find work or too sick to work. Others have to care for a sick spouse. These are also reasons people take it early. My husband lost 600/month on his pension because he had to take it 6 years early. We are grateful that he was able to do so. Many don’t have that option.
The best advice is to seek what gives one the greatest satisfaction, not the greatest assets! I am glad Suzie is squeaking by on $5 million but the previous writers are correct that only a fortunate few are going to accumulate that much. Fortunately, the majority can have a perfectly good quality of life on far less. Dave (Bicyclist)
In fairness to Suze, she was talking about stopping work in your early thirties and needing to weather sixty or seventy years of market caprice and inflationary rot while maintaining a secure and solidly middle class lifestyle. I could see how that would be expensive.
Sure, you can live more cheaply or take on side hustles, but that’s not the argument she was trying to make.
catherine
11-13-18, 9:34am
In fairness to Suze, she was talking about stopping work in your early thirties and needing to weather sixty or seventy years of market caprice and inflationary rot while maintaining a secure and solidly middle class lifestyle. I could see how that would be expensive.
Sure, you can live more cheaply or take on side hustles, but that’s not the argument she was trying to make.
Tell me if I'm wrong, but if you can withdraw the widely-touted conservative 4%/year from a portfolio of $5M, that's $200,000. And the market ups and downs should even themselves out. I still think she has a wildly distorted perspective of the concept of FIRE.
Good point, Catherine. With this latest, Suze seems to have lost touch with financial reality. It's like the line in the Great Gatsby--"Well he's no use to us if Detroit is his idea of a small town."
Tell me if I'm wrong, but if you can withdraw the widely-touted conservative 4%/year from a portfolio of $5M, that's $200,000. And the market ups and downs should even themselves out. I still think she has a wildly distorted perspective of the concept of FIRE.
The much-referenced, often misunderstood 4% rule was aimed at a relatively “safe” risk level over thirty years. It was never intended to cover the length of time a retirement in one’s early thirties would involve. Two or three percent would probably be more realistic for twice that long. And in many parts of the country $100,000 - $200,000 isn’t all that outrageous for a family income, especially if you have no employer provided benefits like health insurance.
For the scenario she was talking about, I don’t think she was all that far off. I know many people live on less, but they are probably not retiring after a ten year career either.
Teacher Terry
11-13-18, 11:12am
I think some of the young people on MM that retired with only between 500-1 million are taking too big a risk. They are constraining themselves to a tight budget forever. Plus they will end up with outdated skills and may end up in crappy jobs if they do need to return to work.
I think some of the young people on MM that retired with only between 500-1 million are taking too big a risk. They are constraining themselves to a tight budget forever. Plus they will end up with outdated skills and may end up in crappy jobs if they do need to return to work.
Let no man call himself wise until he has survived two or three bear markets.
I remember the crash of '89, and I get what you are saying, Terry, but for most of us, 5 million is absurdly out of reach, and I thought she was talking about people my age, 60's and up. For most of us, 5 million is not happening. I'm happy for those who do have 5 million, but it does most of us a real disservice to throw that number out there and say a successful retirement needs 5 million. For most Americans, 500,000 to 1 million is not happening, either. So we need realistic retirement figures and retirement strategies for the rest of us. Just my personal opinion, y'alls mileage may vary. I agree with Catherine on this re Suze.
Teacher Terry
11-13-18, 1:14pm
Tybee, I totally agree. I don’t know anyone with 5 million. I thought she was talking about young retirees in their 30-40’s. Most people I know have either a pension or SS with a 100 or 200k. Some have a paid off house. If you get a pension in NV SS only gives you 40% of your SS due to WEP. Our lifestyle would change if I decided to not work because it brings in 22k/year. I love the work but the money is nice too.
The much-referenced, often misunderstood 4% rule was aimed at a relatively “safe” risk level over thirty years. It was never intended to cover the length of time a retirement in one’s early thirties would involve. Two or three percent would probably be more realistic for twice that long. And in many parts of the country $100,000 - $200,000 isn’t all that outrageous for a family income, especially if you have no employer provided benefits like health insurance.
For the scenario she was talking about, I don’t think she was all that far off. I know many people live on less, but they are probably not retiring after a ten year career either.
Honestly, if someone is hoping to retire for 50-60 years even $5m might be low. Plugging $175k into the BLS inflation calculator and working back 60 years I came up with $20,474. In other words, the person retiring today who expects to live off of $175k per year would be equivalent to someone retiring in 1958 with $20,474 per year income. It would have seemed like a good chunk of money at the time but inflation would have taken a toll over time if the person wasn't able to reinvest at least some of the income every year.
Honestly, if someone is hoping to retire for 50-60 years even $5m might be low. Plugging $175k into the BLS inflation calculator and working back 60 years I came up with $20,474. In other words, the person retiring today who expects to live off of $175k per year would be equivalent to someone retiring in 1958 with $20,474 per year income. It would have seemed like a good chunk of money at the time but inflation would have taken a toll over time if the person wasn't able to reinvest at least some of the income every year.
People talk today about a past golden age of pensions, but most weren’t adjusted for inflation. I remember back in the seventies when people said “I’m on a fixed income” it generally meant “broke”.
Thinking further about my $20,474 example, if one reinvested the inflation rate amount of their income they would theoretically increase their annual income at the same rate as inflation. Also, if we have another 70's style burst of inflation it'll be easy to grow one's "retired" income because even safe investments would pay more than 3-4%. But, yeah, life involves risk no matter what. Unless one wins the megamillions jackpot or whatever.
Teacher Terry
11-14-18, 11:16pm
Thankfully we get yearly raises on our pensions.
JaneV2.0
11-14-18, 11:24pm
I've never gotten a raise in my pension; the company that issues it apparently really needs the money...Kidding, it's the most successful it's ever been.
I don't feel poor, and if I ever get out from under Chez Decay, I'll feel positively wealthy. I don't need much.
I have read that about 6% of American adults have net worths (excluding primary residence) of a million dollars or more. So I would think many of us ordinary folk can aspire to something at that level or have already quietly achieved it.
catherine
11-16-18, 11:30am
I have read that about 6% of American adults have net worths (excluding primary residence) of a million dollars or more. So I would think many of us ordinary folk can aspire to something at that level or have already quietly achieved it.
Maybe because I'm not in the million dollar club (far from it) I have an instinct to push back on this wisdom. I'm not arguing that people shouldn't save, and if you can live off of interest without touching principal, great. But to me, it's a bit of fear mongering to suggest that we HAVE to have that to have a decent quality of life. My MIL slaved away at Macy's for decades after she became a widow. When she retired she had no debt. She had $160k in annuities, and $60k in another Chase account and a monthly $3k/month income based on Social Security, her Macy pension and a small British pension. In my mind, she didn't lack for anything, and I never heard her complaining about not enough money.
My mother lost everything at age 50, and after she lost everything she was the most cheerful, peaceful version of herself I had ever seen.
I guess one thing for sure: it's great for the beneficiaries of those who have managed to save and leave behind 1-5M dollars in untouched principal.
I don’t think its necessarily fear-mongering to say that if you want a standard middle class lifestyle for half a century or do without working, you need a tidy sum to finance it. A million bucks is probably not enough for a youthful FIRE family. It’s just math.
Of course you can live on less and be fine. But if you aspire to more, I think you need to be realistic. It is possible, however.
catherine
11-16-18, 11:43am
I don’t think its necessarily fear-mongering to say that if you want a standard middle class lifestyle for half a century or do without working, you need a tidy sum to finance it. It’s just math.
I totally agree. I guess people just differ on what you need for a "standard middle class lifestyle". If only 6% of the population have managed to amass this number to sustain the lifestyle to which they have been accustomed, 94% people are in deep s**t. I challenge that idea.
I totally agree. I guess people just differ on what you need for a "standard middle class lifestyle". If only 6% of the population have managed to amass this number to sustain the lifestyle to which they have been accustomed, 94% people are in deep s**t. I challenge that idea.
You’re not in deep anything if you’re not in the two comma club. You’re just not in the two comma club. There is much to be said for living within your means. But there is also much to be said for having ample means.
I couldn’t retire at thirty with five million. But I can at sixty with something north of one million. That’s not some bare minimum. But it will allow for a measure of security we wouldn’t have otherwise had.
To me, retire always meant to stop working after a period of long working. So someone at 30 would not be retired by my definition. Independently wealthy, I guess, but not retired. It sounds like FIRE has given retired a new meaning. I went back and looked at Suze Orman article that OP linked and I guess I agree with her somewhat, that stopping working very early and living on your stash has some major drawbacks. You definitely need good luck. I never had health that was good enough to do that, ironically enough--we had too many health expenses and needed work for health insurance.
catherine
11-16-18, 12:14pm
You’re not in deep anything if you’re not in the two comma club. You’re just not in the two comma club. There is much to be said for living within your means. But there is also much to be said for having ample means.
I couldn’t retire at thirty with five million. But I can at sixty with something north of one million. That’s not some bare minimum. But it will allow for a measure of security we wouldn’t have otherwise had.
This is certainly a philosophical debate, and I'm sure nearly everyone on this forum would side with you. For some reason I've never been able to see money as "real" or to have confidence in the "security" we get from it. Maybe that's why I've been too cavalier with it in some ways. But I've seen the money pendulum swing wildly in my family's life, so I know that it doesn't necessarily guarantee security, no matter how much you have.
When I think of aligning myself with the natural order of things, I realize that squirrels hoard nuts for the winter and that's reasonable. But in general, why have we give so much power to a simple means of exchange?
This is certainly a philosophical debate, and I'm sure nearly everyone on this forum would side with you. For some reason I've never been able to see money as "real" or to have confidence in the "security" we get from it. Maybe that's why I've been too cavalier with it in some ways. But I've seen the money pendulum swing wildly in my family's life, so I know that it doesn't necessarily guarantee security, no matter how much you have.
When I think of aligning myself with the natural order of things, I realize that squirrels hoard nuts for the winter and that's reasonable. But in general, why have we give so much power to a simple means of exchange?
I don’t think money guarantees security any more than learning to swim guarantees you’Il never drown. But I think it can be worth the effort to improve the odds. I have people (and a dog) i’m responsible for, so I lean a little more heavily toward security than I might if it was just me. Everybody has to make their own calculations of risk and reward, and there are probably unhealthy extremes at both ends of the spectrum.
To me, retire always meant to stop working after a period of long working. So someone at 30 would not be retired by my definition. Independently wealthy, I guess, but not retired. It sounds like FIRE has given retired a new meaning. I went back and looked at Suze Orman article that OP linked and I guess I agree with her somewhat, that stopping working very early and living on your stash has some major drawbacks. You definitely need good luck. I never had health that was good enough to do that, ironically enough--we had too many health expenses and needed work for health insurance.
I think that’s very true. Self-insuring your health and income against reasonable risks can require some pretty large reserves, even if you are lucky enough to never need them. Some of the more extreme FIRE enthusiasts may come to learn that lesson the hard way.
catherine
11-16-18, 1:40pm
I have people (and a dog) i’m responsible for, so I lean a little more heavily toward security than I might if it was just me.
I understand. I was very ambitious to the extent that I wanted to work to feed, clothe and educate my kids, but that's where my grand plans for building wealth end. DH and I are going to embark on an experiment next year and see if we could meet our expenses living on SS. On paper, we can. We'll see.
I understand. I was very ambitious to the extent that I wanted to work to feed, clothe and educate my kids, but that's where my grand plans for building wealth end. DH and I are going to embark on an experiment next year and see if we could meet our expenses living on SS. On paper, we can. We'll see.
I think it makes a great deal of sense to plan your living expenses around fairly stable and regular income sources. We will be living off pension and Social Security monthly payments, and letting investments alone except in the case of extraordinary need.
This is because:
It’s simpler and easier; and generally safer if my cognitive abilities decline.
My investment portfolio seems to prosper best when I don’t mess around with it
I have no problem leaving money on the table for my heirs. In fact, I kind of like the idea of making their life a little easier than a “die broke” strategy would allow.
If my regular income becomes insufficient in the future, I can annuitize some of the investment balance at a later age when we’ll get a larger mortality credit.
I think it makes a great deal of sense to plan your living expenses around fairly stable and regular income sources. We will be living off pension and Social Security monthly payments, and letting investments alone except in the case of extraordinary need.
This is because:
It’s simpler and easier; and generally safer if my cognitive abilities decline.
My investment portfolio seems to prosper best when I don’t mess around with it
I have no problem leaving money on the table for my heirs. In fact, I kind of like the idea of making their life a little easier than a “die broke” strategy would allow.
If my regular income becomes insufficient in the future, I can annuitize some of the investment balance at a later age when we’ll get a larger mortality credit.
I really like this strategy, and I like Catherine's strategy of living on ss for a year and seeing how it goes. I think we are heading in this direction, too, to plan around ss income only, as both of us have health issues and it would be nice to feel that we could get by on ss if we lost our jobs--it will require some tough decisions, but better to make them now than later!
I think the “trial retirement” exercise has a lot of merit as both a confidence builder and test of planned income adequacy. I am currently trying to make reasonable assumptions about what will change in terms of work expenses, retirement contributions, lost benefits, etc when the employment ends. It’s a little complicated by the fact that we are moving to a lower cost of living area, so modeling the future on a spreadsheet is a little problematic.
Teacher Terry
11-19-18, 1:26pm
We did that for one year. Together we get 40k/ pension and HI took 10k of it. Even with a paid off home and cars it was not a fun year. We didn’t vacation or go out. We have found that our perfect spending level is between 60-70k. This allows us to spend 10k taking 2 nice vacations each year. Everyone needs to find their comfort level. Right now it’s important for us to travel while we both still can.
We did that for one year. Together we get 40k/ pension and HI took 10k of it. Even with a paid off home and cars it was not a fun year. We didn’t vacation or go out. We have found that our perfect spending level is between 60-70k. This allows us to spend 10k taking 2 nice vacations each year. Everyone needs to find their comfort level. Right now it’s important for us to travel while we both still can.
Smart. Testing it by lived experience while you were still in a position to make adjustments.
Was there anything you found particularly surprising?
Teacher Terry
11-20-18, 12:53pm
To make it work we had to make cuts in most areas of our lives. We could no longer afford our cell phone plan for instance. The one cheap enough only worked in cities. We had to be on a strict grocery budget. Gone were eating out and going to events. HC taking a fourth of our before tax income was too much. If we ever have to cut back the vacations would go before giving up local events, etc. We could also take our RV for a few weeks a state away and stay in one spot to save money versus cruising or doing long car trips. I thought it was going to be easier than what it was. We stuck it out for a year to get the real feeling.
iris lilies
11-20-18, 2:36pm
I wanted to do the “live on your income a year before you retire” experiment, but not badly enough to sctually do it.haha
Our income in retirement has been $30,000.
Before we retired, I figured we would spend $45,000-$ 55,000 annually
We actually spend closer to $70,000, but some of those are big expenses for COBRA or trip to Europe
When we turn on the Soc Security spigots we will have income of nearly $70,000. We will be double plus fine until/unless one of us goes to a nursing home, then that event will require serious rejiggering of our resources.
I guess my income/expense ratio is low because we don't have the desire to do expensive trips. Our retirement income is around $55K (we took early SS) but our expenses thus far are well under $25K annually. My logic tin taking SS early was that I have seen too many friends and others either get sick or die well before full SS age. The pension brings it to an income we can work with. We did not have professional careers so we don't have a huge nest egg. I sock away quite a bit every month. It helps too that the house and car are paid for and that prop tax here is so low.
Over the past 53 months (when I started tracking) my average spending excluding payroll deductions is between what I would get from Social Security at age 67 and what I would get at age 70, much closer to the 70 number. But that's a big exclusion because my payroll deductions include medical insurance which I would have to cover myself through a Medigap policy. So I am not comparing apples to apples. Early retirement at 62 is fantasyland for me. My SS benefit would be almost cut in half from what it would be at 70.
I think being in a single income household makes a huge difference. Most of the people who report retiring early come from two income families.
iris lilies
11-20-18, 10:24pm
Over the past 53 months (when I started tracking) my average spending excluding payroll deductions is between what I would get from Social Security at age 67 and what I would get at age 70, much closer to the 70 number. But that's a big exclusion because my payroll deductions include medical insurance which I would have to cover myself through a Medigap policy. So I am not comparing apples to apples. Early retirement at 62 is fantasyland for me. My SS benefit would be almost cut in half from what it would be at 70.
I think being in a single income household makes a huge difference. Most of the people who report retiring early come from two income families.
Even Mr. Money Mustache struggles with the finances of a single person. Rumor has it that he is divoced and is buying out his wife’s half of their commercial building, and is seeking out extra income for that.
Teacher Terry
11-21-18, 3:13am
IL, yes he is divorced.
Teacher Terry
11-21-18, 3:15am
PT, so I am curious how your spending is so low. I am guessing that your health insurance is cheap. So no vacations, going out to dinner, festivals, concerts, etc. What do you guys do for fun?
I don’t think the 5 million number is out of line for someone who is 30, that’s a long time to fund ones life. I retired 11 years ago at 50, my wife is younger. We spend around 120k a year, this does not include taxes or big ticket items like cars. We could live on less, but health insurance alone is 18k.
We are spending much less than we made when we were working, but our spending has increased. And our net worth is higher now than it was 11 years ago by a large amount, so we are doing fine.
On the other end my dad is living in assisted living, it cost $4000 a month. He retired at 57. His SS is $1200, but his insurance supplement cost $300. He can live were he is without any problem, but if it gets where he needs more assistance the cost could go to $6000. He would be able to afford that without any problems but due to his poor choice in girlfriend ,and his dementia ,much of his wealth has gone missing. So even good plans can have unforeseen events.
pinkytoe
11-21-18, 10:33am
Our expenditures are low because...our health insurance is low ($250 a month for DH) and we have had few medical expenditures. Medicare kicks in next year so not sure just yet how costs will rise. We own only one car. For fun, we try new places to eat out. Take hikes in new places. Local festivals. Art classes. Cooking new recipes from scratch. Extensive gardening. Field trips with volunteer groups. Our last big trip (to British Columbia) was two years ago so it's time for another.
catherine
11-21-18, 11:10am
Our expenditures are low because...our health insurance is low ($250 a month for DH) and we have had few medical expenditures. Medicare kicks in next year so not sure just yet how costs will rise. We own only one car. For fun, we try new places to eat out. Take hikes in new places. Local festivals. Art classes. Cooking new recipes from scratch. Extensive gardening. Field trips with volunteer groups. Our last big trip (to British Columbia) was two years ago so it's time for another.
I admire you! Sounds like we could aspire to that type of life. As we get older I see DH being a little more "set in his ways." He truly can't see the reason for going off the island AT ALL. I'll say, "let's go to Burlington and see a movie." And he'll say, "Why? I don't want to leave my wee hoose." He doesn't mind if I venture into town to see the kids or go shopping, but he's not interested. I've said, "Next summer we should go for a weekend in Southern Vermont." (We have friends and tons of memories in Southern Vermont.). And he said, "Why?"
I would like a little more in the way of fun, although I can't say I'd be totally unhappy not doing much more. But to the point of the living on SS/pension, if I were to comply with DH, I could definitely do it. As for myself, I would like to travel a little more--even venturing off the island might be something to aspire to at this point.
SteveinMN
11-21-18, 12:33pm
As we get older I see DH being a little more "set in his ways." He truly can't see the reason for going off the island AT ALL. I'll say, "let's go to Burlington and see a movie." And he'll say, "Why? I don't want to leave my wee hoose." He doesn't mind if I venture into town to see the kids or go shopping, but he's not interested. I've said, "Next summer we should go for a weekend in Southern Vermont." (We have friends and tons of memories in Southern Vermont.). And he said, "Why?"
That simply may be his reaction to your move and impending relocation. For some people, it doesn't feel like you're setting roots if you don't stop in one place for a while. When I left Corporate America I became a real homebody for a little while as I adjusted to my new circumstances. Maybe DH is (at least a little) the same.
iris lilies
11-21-18, 1:16pm
I admire you! Sounds like we could aspire to that type of life. As we get older I see DH being a little more "set in his ways." He truly can't see the reason for going off the island AT ALL. I'll say, "let's go to Burlington and see a movie." And he'll say, "Why? I don't want to leave my wee hoose." He doesn't mind if I venture into town to see the kids or go shopping, but he's not interested. I've said, "Next summer we should go for a weekend in Southern Vermont." (We have friends and tons of memories in Southern Vermont.). And he said, "Why?"
I would like a little more in the way of fun, although I can't say I'd be totally unhappy not doing much more. But to the point of the living on SS/pension, if I were to comply with DH, I could definitely do it. As for myself, I would like to travel a little more--even venturing off the island might be something to aspire to at this point.
c’mon, two years ago your DH could see no reason to sell your NJ house, he wasnt gonna budge. Now he isnt gonna budge from The Vermont island? That is kinda cute and kinda funny and a little bit annoying. But he CAN be moved at some point.
I@: glad he has taken so thoroughly to the island!
Teacher Terry
11-21-18, 2:19pm
This is one of the few times our HI didn’t go up. I go on Medicare in July but because DH is on my insurance and is 5 years younger we have to keep the expensive insurance.
catherine
11-21-18, 3:48pm
c’mon, two years ago your DH could see no reason to sell your NJ house, he wasnt gonna budge. Now he isnt gonna budge from The Vermont island? That is kinda cute and kinda funny and a little bit annoying. But he CAN be moved at some point.
I@: glad he has taken so thoroughly to the island!
Yeah, he's a pain in the butt :).
But it's all falling into place now.
Steve, thanks, for that perspective as well.
To make it work we had to make cuts in most areas of our lives. We could no longer afford our cell phone plan for instance. The one cheap enough only worked in cities. We had to be on a strict grocery budget. Gone were eating out and going to events. HC taking a fourth of our before tax income was too much. If we ever have to cut back the vacations would go before giving up local events, etc. We could also take our RV for a few weeks a state away and stay in one spot to save money versus cruising or doing long car trips. I thought it was going to be easier than what it was. We stuck it out for a year to get the real feeling.
..so, Teacher Terry, if your income is $40k and your comfort level is 60-70k, not sure what your solution is? You achieved living on $40k for a year, found that it pinched a bit (I would feel the same) and so--are you continuing to work full time? I think I thought you were in fact already retired? Just not sure what the strategy is for bringing in the extra money to make the 60-70k lifestyle possible? These are exactly the issues I'm trying to figure out now in what might or might not be my last year before retirement, so I appreciate any insight you can share.
Teacher Terry
12-9-18, 11:43am
I teach a online college class and make 22k/year and another 3-5k consulting so mostly don’t have to touch our savings. My husband picks up some consulting gigs when he finds them.
I teach a online college class and make 22k/year and another 3-5k consulting so mostly don’t have to touch our savings. My husband picks up some consulting gigs when he finds them.
I have a nostalgic fondness for online classes; my internship was spent editing/rewriting coursework.
I teach a online college class and make 22k/year and another 3-5k consulting so mostly don’t have to touch our savings. My husband picks up some consulting gigs when he finds them.
Got it! Good for you you!!! You have a terrific strategy. I'm looking into similar.
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