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The “I want to retire soon” thread (1 Viewer)

lack of clear vision for what retirement “looks like”,
There’s a lot of reasons to be fearful. But this is the most important if you have the finances in place.
One of my former go to podcasts used to say “don’t retire, graduate”. Do you remember leaving college, being full of optimism and excited for the future? That’s the mindset to have imo, The way to get there is to find your purpose. Your purpose might just be to explore and find what fits best for you.

First podcast I listed to today is a good place to start: https://podcasts.apple.com/us/podcast/earn-invest/id1440355498?i=1000658422923

Earn and invest, seven secrets to a happy retirement.
Fritz Gilbert has been retired for years and has not only written a book and blog, but also demonstrated how to live a good life post W2 employment. Today we discuss the seven secrets of a happy retirement. Fritz's wisdom not only is for those wanting to retire, but also for those at the beginning of their career. (Rewind Episode)
 
But…..I can’t figure out what is giving me pause about calling it quits in 22 months. Loss of perceived status (wait — I’m a FBG. Isn’t that status enough?), fear of being stuck in the house with my wife 24/7, lack of clear vision for what retirement “looks like”, worries about running out of money due to a shock loss in the markets, etc etc etc.
These are definitely things you need to work on before retirement. You need to move to something. And not killing your spouse is also high on the list.

They are kind of nuts, but man can they be frugal, some of those people have figured out how to live on 10K or less a year.
:lmao:

I pay 10k a year in insurance. And then another 5k in property/car taxes. It costs me at least 30k a year just to wake up in the morning.
 
Timely podcast episode I listened to this morning. Well timely to me, anyway, as even though it is from last September I've been catching up from Episode 1 after finding this podcast a few months back. "An Exquisite Dissection of the Four Percent Rule".

If you haven't listened to Risk Parity Radio before, pro-tip: his speaking cadence is super slow, so I always listen at 1.5x. He also injects sound bites from movies and tv shows throughout that can be somewhat annoying to some, but his analysis is usually thorough, insightful, and mostly balanced.
I'm giving this a listen, and there's some pretty good information here, but it's a 15-minute podcast padded out to 45 minutes thanks to all the audio effects and movie samples. I think I could have read the transcript in about 5.

Yup, it's why I gave the caveats. He's definitely not everyone's cup of tea, and he can even be kind of an *** on Facebook (he regularly comments in a couple of retirement/FIRE groups). 1.5x speed, "hey siri, skip 2 minutes" at the start for the preamble, and when he's doing the weekly portfolio reviews I usually skip to the end and move on to the next one. So I still have to sit through all the audio effects (some of which actually crack me up on occasion, as I tend to "think" in movie/tv quotes myself), but I've been pretty efficient in pounding through over 300 episodes in just a few months. But I agree with @-OZ- , I've learned so much and he's changed how I think about how to structure a decumulation portfolio to optimize for the highest SWR.
It was definitely helpful to learn that the 4% rule was an answer to a very specific question.
 
:lmao:

I pay 10k a year in insurance. And then another 5k in property/car taxes. It costs me at least 30k a year just to wake up in the morning.
If you live in an unregistered van you don't pay any property or vehicle tax!

I think the gal that wrote Quit Like a Millionaire lived in Canada, but, there was a section on the best countries to travel to to get cheap health care. :loco:

I couldn't figure out how they could travel so cheap until the section about churning travel credit cards to get miles for free flights. Ok, so you don't work any more, but, it's at least a part time job constantly churning credit cards.
 
It was definitely helpful to learn that the 4% rule was an answer to a very specific question.
Exactly! It was never meant to be the guideline for everyone to use as a savings target. That said, it's just fine as a ballpark for people early-mid career to shoot for. But if you end up using that as the actual benchmark for when you can retire, for most people it will end up with them oversaving and/or working longer and dying with a bunch of money left over. Unless we have a repeat of the sequence of returns from 1967 on, in which case you'll be glad you saved for the worst case scenario!

Learning more about monte carlo simulations has been helpful for me, as well. They're a great tool to give you a range of possible outcomes. But as they aren't based on actual historical sequences, rather they just jumble up every period and randomize their order, on the tails you end up with scenarios that have never happened and are pretty unlikely to ever happen. I know some people aren't comfortable until those things say 98-99-100% probability of success, but it really seems unnecessary to target anything above 90%.
 
Need book recommendations.

Ones I've read recently:
All About Asset Allocation
Just Keep Buying
Boglehead's Guide to Retirement Planning
All About Index Funds
The Psychology of Money
One Up on Wall Street
The Simple Path to Wealth
Quit Like a Millionaire
Die With Zero

Up Next:
The Millionaire Next Door

Is Rich Dad Poor Dad any good? Seems like some like it and some hate it.
 
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:lmao:

I pay 10k a year in insurance. And then another 5k in property/car taxes. It costs me at least 30k a year just to wake up in the morning.
If you live in an unregistered van you don't pay any property or vehicle tax!

I think the gal that wrote Quit Like a Millionaire lived in Canada, but, there was a section on the best countries to travel to to get cheap health care. :loco:

I couldn't figure out how they could travel so cheap until the section about churning travel credit cards to get miles for free flights. Ok, so you don't work any more, but, it's at least a part time job constantly churning credit cards.
if you like spreadsheets, it could be a hobby you derive joy from and also get vacations out of

Not a big fan of gatekeeping retirement - like I'll consider myself retired whenever I am no longer working for someone. Once that happens, is it possible I start some sort of business, or maybe a hobby that could also generate some income (say because I like woodworking or metalworking or writing, etc)? Sure. that wouldn't make me less retired IMO.
 
Need book recommendations.

Ones I've read recently:
All About Asset Allocation
Boglehead's Guide to Retirement Planning
All About Index Funds
The Psychology of Money
One Up on Wall Street
The Simple Path to Wealth
Quit Like a Millionaire
Die With Zero

Up Next:
The Millionaire Next Door

Is Rich Day Poor Dad any good? Seems like some like it and some hate it.
I have heard great things about this book. I read a long excerpt a while back and it was very well put together.

 
Need book recommendations.

Ones I've read recently:
All About Asset Allocation
Boglehead's Guide to Retirement Planning
All About Index Funds
The Psychology of Money
One Up on Wall Street
The Simple Path to Wealth
Quit Like a Millionaire
Die With Zero

Up Next:
The Millionaire Next Door

Is Rich Day Poor Dad any good? Seems like some like it and some hate it.

More accumulation focused than for you on the precipice of retirement, but Just Keep Buying by Maggiulli was pretty good.

How Much Money Do I Need to Retire by Tresidder and Retirement Planning Guidebook by Pfau are in my Amazon cart right now. Can't remember where I saw those recs, but dropped them in there when I did. Anybody read either of those?

I also have How to Retire Happy, Wild, and Free by Zelinski and The Algebra of Wealth by Galloway on Audible, haven't started either of those yet. Same with Simple Path to Wealth.

I need to retire so I have time to read/listen to all of these books......
 
It was definitely helpful to learn that the 4% rule was an answer to a very specific question.
Exactly! It was never meant to be the guideline for everyone to use as a savings target. That said, it's just fine as a ballpark for people early-mid career to shoot for. But if you end up using that as the actual benchmark for when you can retire, for most people it will end up with them oversaving and/or working longer and dying with a bunch of money left over. Unless we have a repeat of the sequence of returns from 1967 on, in which case you'll be glad you saved for the worst case scenario!

Learning more about monte carlo simulations has been helpful for me, as well. They're a great tool to give you a range of possible outcomes. But as they aren't based on actual historical sequences, rather they just jumble up every period and randomize their order, on the tails you end up with scenarios that have never happened and are pretty unlikely to ever happen. I know some people aren't comfortable until those things say 98-99-100% probability of success, but it really seems unnecessary to target anything above 90%.
What I've read about it recently:

"My 4% rule was actually based upon a worst-case situation," Bengen said on a Bogleheads live podcast.

Bengen coined the 4% term in 1994 based on decades of statistics. He updated the rule 30 years later to match the current economic climate. Originally, Bengen believed that if retirees adjusted their withdrawals to 4%, they could guarantee their money would last another 30 years. Now, Bengen advises increasing that withdrawal rate — his is now 4.7%
Somewhere in there he said the original only had Big Cap versus Bonds and adding Small Cap lets you expand to 4.7%.

Don't listen to Suze Orman
"It doesn’t work anymore. I think it’s very dangerous," Orman said about the retirement rule. "I would not be using the 4% figure on any level," she said. Instead, Orman feels this number should be lowered to at least 3%, a figure that will differ from person to person.
She also wants you to keep working and delay SS to age 70.
"Stop this: ‘Oh, I’m going to retire at 60. I’m going to start claiming Social Security at 62," she said.

What I don't understand is when they talk about the rule they act like it is what you HAVE to take out of retirement accounts. Contrary to Suze, Dave Ramsey suggests 8% and says you're stupid to take anything less than 6%.
They can play it safer by spending 6%. Either way, they should invest heavily in equities, perhaps even solely, because bonds cannot earn sufficiently high returns. No need to adopt a more conservative approach. Indeed, states Ramsey, settling for the traditionally recommended spending rate of 4% is “stupid.
I mean other than planned rollovers from 401K to Roth in low tax years I'm not planning to take anything out that I don't need. I mean let's keep it tax sheltered. Until RMDs.
 
Need book recommendations.

Ones I've read recently:
All About Asset Allocation
Boglehead's Guide to Retirement Planning
All About Index Funds
The Psychology of Money
One Up on Wall Street
The Simple Path to Wealth
Quit Like a Millionaire
Die With Zero

Up Next:
The Millionaire Next Door

Is Rich Day Poor Dad any good? Seems like some like it and some hate it.

More accumulation focused than for you on the precipice of retirement, but Just Keep Buying by Maggiulli was pretty good.

How Much Money Do I Need to Retire by Tresidder and Retirement Planning Guidebook by Pfau are in my Amazon cart right now. Can't remember where I saw those recs, but dropped them in there when I did. Anybody read either of those?

I also have How to Retire Happy, Wild, and Free by Zelinski and The Algebra of Wealth by Galloway on Audible, haven't started either of those yet. Same with Simple Path to Wealth.

I need to retire so I have time to read/listen to all of these books......
Thanks. I've read Just Keep Buying. I knew I was missing some.
 
FIRE community
what is this?

Financial Independence Retire Early. The stereotype is to just read The Simple Path to Wealth and only invest in a total market index fund, save 50%+ of your earnings, and retire in your 30s or 40s. They also tend to be incredibly frugal, hence the ability to save half or more of what they earn.

There are also various flavors:
Fat FI - having enough savings to generate $100K+ a year
Lean FI - like mentioned above, living off an incredibly small amount of money
Coast FI - saving enough that you could live off or your investments at a certain point in the future, continuing to work, but stopping retirement contributions. Lets you spend more money now.
Barista FI - "retiring" from your career but getting a lower-paid, lower-stress job at Starbucks or Home Depot or something so that you can bring home some income and lower the amount you need to take from your investments

I'm a big fan of the Financial Independence part - get to where you have options because you could live off of your investments. But the frugal flip side isn't so much for me!
 
It was definitely helpful to learn that the 4% rule was an answer to a very specific question.
Exactly! It was never meant to be the guideline for everyone to use as a savings target. That said, it's just fine as a ballpark for people early-mid career to shoot for. But if you end up using that as the actual benchmark for when you can retire, for most people it will end up with them oversaving and/or working longer and dying with a bunch of money left over. Unless we have a repeat of the sequence of returns from 1967 on, in which case you'll be glad you saved for the worst case scenario!

Learning more about monte carlo simulations has been helpful for me, as well. They're a great tool to give you a range of possible outcomes. But as they aren't based on actual historical sequences, rather they just jumble up every period and randomize their order, on the tails you end up with scenarios that have never happened and are pretty unlikely to ever happen. I know some people aren't comfortable until those things say 98-99-100% probability of success, but it really seems unnecessary to target anything above 90%.
I think this site uses actual historical data and sequences:
FIRECalc
 
I think this site uses actual historical data and sequences:
FIRECalc

Good call, I think you are right on that one. Some do, some jumble them all up. Good to understand which approach is being used.

ETA: this was the only one I was aware of until the past few months when I've really dug into this topic more. I still think it's a good tool, biggest knock is the lack of options in the "Your Portfolio" section, with pretty limited factors and no alternatives available.
 
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What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
 
Today is my first official day of retirement! Going to tear off some deck boards and start prepping for the delivery of some lumber. Golf planned for later this week … I think I’m going to enjoy this!

CONGRATS!!! I am in the same boat! I am calling this stage - retired"ish" Resigned/retired from full time job. I need to bring in $1-$2K/month for next couple of years per my plan. Might be very few hours doing consulting or I might work up to 16-20 hours/ week. Age is 61. Been a saver all of my life and decided it was the right time. If I have to go back to full time work in a few years (for a few years) that would be ok - but not the plan. Going to enjoy the rest of the year and figure out my retired"ish" life.

I will be posting some questions/topics in the future - to understand what others are doing and hopefully to help others still in planning.
 
"My 4% rule was actually based upon a worst-case situation," Bengen said on a Bogleheads live podcast.

Bengen coined the 4% term in 1994 based on decades of statistics. He updated the rule 30 years later to match the current economic climate. Originally, Bengen believed that if retirees adjusted their withdrawals to 4%, they could guarantee their money would last another 30 years. Now, Bengen advises increasing that withdrawal rate — his is now 4.7%
Somewhere in there he said the original only had Big Cap versus Bonds and adding Small Cap lets you expand to 4.7%.

That certainly has not been the case lately. These macro rules can shift over time. Then again, right now with large caps, one is well over 5% if their performance keeps going.

"It doesn’t work anymore. I think it’s very dangerous," Orman said about the retirement rule. "I would not be using the 4% figure on any level," she said. Instead, Orman feels this number should be lowered to at least 3%, a figure that will differ from person to person.
She also wants you to keep working and delay SS to age 70.
"Stop this: ‘Oh, I’m going to retire at 60. I’m going to start claiming Social Security at 62," she said.

This is so personal - no pithy rules apply to SS. What's right for one person can be very wrong for another - SS actuarily is equivalent for all takers. This actually makes it ripe for optimization for individual circumstances. Folks, if they aren't steeped in the analysis, should absolutely pay for a full view of SS. This goes quadruple if they are married.

Personally I plan, as of now, to take at 70. I'm less concerned with lifetime return than I am with longevity insurance for my wife, who I expect to outlive me. I'd like to kick off knowing that I've done everything I can to make sure she is comfortable at 101.

What I don't understand is when they talk about the rule they act like it is what you HAVE to take out of retirement accounts. Contrary to Suze, Dave Ramsey suggests 8% and says you're stupid to take anything less than 6%.
They can play it safer by spending 6%. Either way, they should invest heavily in equities, perhaps even solely, because bonds cannot earn sufficiently high returns. No need to adopt a more conservative approach. Indeed, states Ramsey, settling for the traditionally recommended spending rate of 4% is “stupid.
I mean other than planned rollovers from 401K to Roth in low tax years I'm not planning to take anything out that I don't need. I mean let's keep it tax sheltered. Until RMDs.

Dave is awesome for helping folks dig out of crippling debt. He's a moron when it comes to investing and retirement.
 
What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.

Great topic. I use 6.8%... This is my most aggressive number in my calculation; everything else is more conservative. I am using/paying a financial advisor. If they can't hit that number, then I will change advisors or do it alone (I sux at it). Just feel based on historicals and our plan that 6.8% should be doable....
 
Today is my first official day of retirement! Going to tear off some deck boards and start prepping for the delivery of some lumber. Golf planned for later this week … I think I’m going to enjoy this!
Congrats! And :finger:. :p

What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
6% returns, 3% inflation - so 3% real returns.
 
What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
The default values in the program my financial advisor uses are 8% pre-retirement and 6% in retirement. They analyzed a bunch of indexes which I assume match in general the asset allocation that I sent them and adjusted the retirement percentage to 6.51% 2.25% interest.

Edit: Actually it's more complicated than that. They put a percentage on each account we have. Most are at 6.51% though because most I've invested to the same some flavor of 55% Stock 20% International 25% Bond.
 
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I think this site uses actual historical data and sequences:
FIRECalc

Good call, I think you are right on that one. Some do, some jumble them all up. Good to understand which approach is being used.

ETA: this was the only one I was aware of until the past few months when I've really dug into this topic more. I still think it's a good tool, biggest knock is the lack of options in the "Your Portfolio" section, with pretty limited factors and no alternatives available.

Playing around with that "Your Portfolio" section a bit....if I leave it at the default "FIRECalc assumes your retirement portfolio is invested in a "couch potato" portfolio of 75% stock index and 25% bond funds, with a 0.18% fee to the fund.", I get a 60% chance of success. Change that to 35% S&P500, 35% small cap value, 25% LT treasuries, 5% 1 month Treasury, and upping expense ratio to 0.3% and the success rate is 90%!

Speaks to how much the makeup of your decumulation portfolio can make a huge difference.

Diversification across un/lower-correlated assets with regular rebalancing ftw. (I'm unclear if/how firecalc figures in rebalancing, anyone know?)

ETA: Looks like it does take this into account.
Does the model assume annual rebalancing?

Yes, it assumes you maintain the same ratio between equities and fixed income investments by rebalancing at the time of each annual withdrawal.
 
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Is Rich Day Poor Dad any good? Seems like some like it and some hate it.
It was fine when written but I’d pass on it now.
What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.

Back of the napkin math, I use the rule of 72 and 115, as I have about 13 years left. 72 is to double, 115 to triple. With 13 years, if I get 8.8% our current investments will triple. If we get 5.5%, they’ll double. Not including contributions.

More technical and objectively better, use https://www.portfoliovisualizer.com/
 
The old guy I bought my cottage from used 3” nails instead of deck screws. Thank God my wife works a hard as I do! We just got the last of the boards off, cut up and dropped off at the dump. Lumber arrives Thursday. I’m freaking beat. I’m not used to working this hard (been an office jockey for over 30 years and puttering isn’t the same as real work!).
 
I think I’m one of the few Canadians in this thread and been fortunate to work for the government for my whole career. Made a very decent living and have a pension that pays me 2/3 of my salary moving forward and it’s indexed for inflation. I might work some casual work back with the feds this winter, but really doing it mostly to ease the transition. I had/have all of the same worries APK mentioned above so I’m hoping the eased transition into retirement will help.

My retired friends say not to worry about it too much and I’ll figure it out as I go. I think it is different for everyone but agree that still having some passion and purpose is a must for the A type personalities out there.
 
Today is my first official day of retirement! Going to tear off some deck boards and start prepping for the delivery of some lumber. Golf planned for later this week … I think I’m going to enjoy this!
Congrats! And :finger:. :p

What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
6% returns, 3% inflation - so 3% real returns.
I don’t get the 6% - 3% = 3% return. If I have $1M in the bank, I get $60k return with 6%. I’m not spending $1M every year to have 3% inflation be $30k each year. If my expenses are $40k per year (just using simple 4%/*25) then my real inflation is $1200. My return would be $60k - $1200 or $58,800, way above $30k.
 
Today is my first official day of retirement! Going to tear off some deck boards and start prepping for the delivery of some lumber. Golf planned for later this week … I think I’m going to enjoy this!
Congrats! And :finger:. :p

What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
6% returns, 3% inflation - so 3% real returns.
I don’t get the 6% - 3% = 3% return. If I have $1M in the bank, I get $60k return with 6%. I’m not spending $1M every year to have 3% inflation be $30k each year. If my expenses are $40k per year (just using simple 4%/*25) then my real inflation is $1200. My return would be $60k - $1200 or $58,800, way above $30k.
It's not what you spend, it's your buying power. What cost you $40,000 last year cost you $41,200 this year. Or for $80,000 you have to spend $82,400. Or for $1,000,000 you'd have to spend $1,030,000. Your overall buying power goes down with inflation whether you spend it or not. You have to regularly outperform inflation or you're loosing money.
 
120K with costs at 40K, zero inflation zero returns lasts you exactly 3 years.

120K with costs at 40K, 3% inflation and zero returns lasts you 2.92 years.

120K with costs at 40K, zero inflation and 6% returns last you 3.19 years.

120k with costs at 40K, 3% inflation and 6% returns lasts you the same as 0% inflation and 3% returns: 3.10 years.
 
Today is my first official day of retirement! Going to tear off some deck boards and start prepping for the delivery of some lumber. Golf planned for later this week … I think I’m going to enjoy this!
Congrats! And :finger:. :p

What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
6% returns, 3% inflation - so 3% real returns.
I don’t get the 6% - 3% = 3% return. If I have $1M in the bank, I get $60k return with 6%. I’m not spending $1M every year to have 3% inflation be $30k each year. If my expenses are $40k per year (just using simple 4%/*25) then my real inflation is $1200. My return would be $60k - $1200 or $58,800, way above $30k.
It's not what you spend, it's your buying power. What cost you $40,000 last year cost you $41,200 this year. Or for $80,000 you have to spend $82,400. Or for $1,000,000 you'd have to spend $1,030,000. Your overall buying power goes down with inflation whether you spend it or not. You have to regularly outperform inflation or you're loosing money.
Umm, I get inflation. Read my question again. IMHO, the returns should be on all of the nest egg and the inflation applies to your spend. The nest egg and your spend are not the same number. @Sand posted that the 6% return is halved by 3% inflation. If I have $1M and my normal spend is $40k then his 3% real return would mean I have $990k left at the end of the year after earning $30k and spending $40k. Using $41,200 (normal plus 3% inflation) with the 6% return, I’d actually have $1,018,800 left at the end of the year.

My question was that I don’t understand how you can get a 3% total return because the return % is based off of you entire investment portfolio and inflation hits your spend which in the 4% case is 1/25th of that investment portfolio. The return is based on 25/25ths of the same portfolio.
 
I love this thread. It gives me so much hope! :)


Mrs APK and I have been working through retirement planning for awhile now. The situation is pretty simple — we are 49 years old, with twin kids who will be juniors in high school this fall. All the math would say that we can simply be done somewhere around age 51-53, if not today.

I’m highly risk averse financially, and have strong incentives to stay in my current job another 2 years (April 2026), which lines up well with kids going to college. So nothing will happen before then.

But…..I can’t figure out what is giving me pause about calling it quits in 22 months. Loss of perceived status (wait — I’m a FBG. Isn’t that status enough?), fear of being stuck in the house with my wife 24/7, lack of clear vision for what retirement “looks like”, worries about running out of money due to a shock loss in the markets, etc etc etc.

Anyway, that’s where I’m at. This thread is amazing and really is helping me process all this stuff. Thanks to everyone in here.
I can definitely see how retiring at the same time the nest is emptying is a daunting prospect. There is a phrase out there in FI that is something like "build the life you want and then save for it". Seems like you've saved for it, but maybe need to think more about what you want it to be.

22 months is a lot of time to explore what should take up your time. New or expanded hobbies and community activities you could be interested in. Also plenty of time to plan a pretty epic graduation trip for the family.

The risk of a big shock to the market in these simulations is usually from one that happens in the first few years. I'd imagine you could easily pick up some work in your late 50s if you get hit with a big shock in your 50s.
 
Today is my first official day of retirement! Going to tear off some deck boards and start prepping for the delivery of some lumber. Golf planned for later this week … I think I’m going to enjoy this!
Congrats! And :finger:. :p

What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
6% returns, 3% inflation - so 3% real returns.
I don’t get the 6% - 3% = 3% return. If I have $1M in the bank, I get $60k return with 6%. I’m not spending $1M every year to have 3% inflation be $30k each year. If my expenses are $40k per year (just using simple 4%/*25) then my real inflation is $1200. My return would be $60k - $1200 or $58,800, way above $30k.
It's not what you spend, it's your buying power. What cost you $40,000 last year cost you $41,200 this year. Or for $80,000 you have to spend $82,400. Or for $1,000,000 you'd have to spend $1,030,000. Your overall buying power goes down with inflation whether you spend it or not. You have to regularly outperform inflation or you're loosing money.
Umm, I get inflation. Read my question again. IMHO, the returns should be on all of the nest egg and the inflation applies to your spend. The nest egg and your spend are not the same number. @Sand posted that the 6% return is halved by 3% inflation. If I have $1M and my normal spend is $40k then his 3% real return would mean I have $990k left at the end of the year after earning $30k and spending $40k. Using $41,200 (normal plus 3% inflation) with the 6% return, I’d actually have $1,018,800 left at the end of the year.

My question was that I don’t understand how you can get a 3% total return because the return % is based off of you entire investment portfolio and inflation hits your spend which in the 4% case is 1/25th of that investment portfolio. The return is based on 25/25ths of the same portfolio.
Your buying power (value of money) goes down whether you spend it or not. I don't know how to say it any simpler. See the 3 year example I posted above, its all about how long you can make the money last and it doesn't last as long when the buying power keeps getting eaten away by inflation. All cash flow analysis take into account inflation.

Put another way, when you finally do spend that money 10 or 20 years from now it will feel the effects of 10 or 20 years of inflation.
 
What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
@stbugs
Here is the original question about investment returns. If you just want to just talk about returns then sure, ignore inflation. When looking at AAPL versus AMZN that's an ok comparison because theoretically both feel the same effect from inflation and you can ignore it.

But when talking about how much money and when (time) you are able to retire you can't plug into the analysis the returns and only apply inflation to what you spend. All the money feels the effects of inflation and you have to discount it every year.

Edit: Maybe we are saying the same thing. I realize the bold above isn't quite right. You want to only apply inflation to your spend, which is true:

$40,000 year 1
$41,200 year 2
$42,436 year 3
Etc.
Etc.

But if your spending plan also includes $50,000 for a car in year 10 you have ask yourself what you mean by that.
A - Do you mean you want to buy a similar car that costs $50,000 today? If so then you'd need to add on 10 years of projected inflation.
B - Or do you mean you are only going to spend $50,000 for whatever car that much can buy in year 10.
 
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Today is my first official day of retirement! Going to tear off some deck boards and start prepping for the delivery of some lumber. Golf planned for later this week … I think I’m going to enjoy this!
Congrats! And :finger:. :p

What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
6% returns, 3% inflation - so 3% real returns.
I don’t get the 6% - 3% = 3% return. If I have $1M in the bank, I get $60k return with 6%. I’m not spending $1M every year to have 3% inflation be $30k each year. If my expenses are $40k per year (just using simple 4%/*25) then my real inflation is $1200. My return would be $60k - $1200 or $58,800, way above $30k.
It's not what you spend, it's your buying power. What cost you $40,000 last year cost you $41,200 this year. Or for $80,000 you have to spend $82,400. Or for $1,000,000 you'd have to spend $1,030,000. Your overall buying power goes down with inflation whether you spend it or not. You have to regularly outperform inflation or you're loosing money.
Umm, I get inflation. Read my question again. IMHO, the returns should be on all of the nest egg and the inflation applies to your spend. The nest egg and your spend are not the same number. @Sand posted that the 6% return is halved by 3% inflation. If I have $1M and my normal spend is $40k then his 3% real return would mean I have $990k left at the end of the year after earning $30k and spending $40k. Using $41,200 (normal plus 3% inflation) with the 6% return, I’d actually have $1,018,800 left at the end of the year.

My question was that I don’t understand how you can get a 3% total return because the return % is based off of you entire investment portfolio and inflation hits your spend which in the 4% case is 1/25th of that investment portfolio. The return is based on 25/25ths of the same portfolio.
The nest egg is what gets hit the hardest. At 3% inflation with no returns, no expenses your $1,000,000 is worth 412k at year 30 without you doing a darn thing. 60% of your stash is just *poof* gone.

In your example you spend 40k from 1M. At the end of the year you have 960k before returns/inflation. With 6% returns, 3% inflation you have a stash worth 988.8k at the end of the year.
 
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6% returns, 3% inflation - so 3% real returns.

You are one pessimistic/conservative dude! Since 1950 a (arguably non-optimized) standard 60/40 portfolio has a CAGR of over 9%. Since '95, closer to 10%. Are you in like 40% cash? Do you just think forward returns for the next 30-40 years won't resemble anything like what we've seen in the past 70 years (so every financial disclaimer)? Or do you just like your job and are happy to keep working longer than you maybe need to and are cool being over-conservative and it'll help you sleep at night (which is tooootally understandable)? Not calling you out at all, I'm just super interested in the psychology of all of this.
 
Today is my first official day of retirement! Going to tear off some deck boards and start prepping for the delivery of some lumber. Golf planned for later this week … I think I’m going to enjoy this!
Congrats! And :finger:. :p

What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
6% returns, 3% inflation - so 3% real returns.
I don’t get the 6% - 3% = 3% return. If I have $1M in the bank, I get $60k return with 6%. I’m not spending $1M every year to have 3% inflation be $30k each year. If my expenses are $40k per year (just using simple 4%/*25) then my real inflation is $1200. My return would be $60k - $1200 or $58,800, way above $30k.
It's not what you spend, it's your buying power. What cost you $40,000 last year cost you $41,200 this year. Or for $80,000 you have to spend $82,400. Or for $1,000,000 you'd have to spend $1,030,000. Your overall buying power goes down with inflation whether you spend it or not. You have to regularly outperform inflation or you're loosing money.
Umm, I get inflation. Read my question again. IMHO, the returns should be on all of the nest egg and the inflation applies to your spend. The nest egg and your spend are not the same number. @Sand posted that the 6% return is halved by 3% inflation. If I have $1M and my normal spend is $40k then his 3% real return would mean I have $990k left at the end of the year after earning $30k and spending $40k. Using $41,200 (normal plus 3% inflation) with the 6% return, I’d actually have $1,018,800 left at the end of the year.

My question was that I don’t understand how you can get a 3% total return because the return % is based off of you entire investment portfolio and inflation hits your spend which in the 4% case is 1/25th of that investment portfolio. The return is based on 25/25ths of the same portfolio.
Your buying power (value of money) goes down whether you spend it or not. I don't know how to say it any simpler. See the 3 year example I posted above, its all about how long you can make the money last and it doesn't last as long when the buying power keeps getting eaten away by inflation. All cash flow analysis take into account inflation.
I'm
Put another way, when you finally do spend that money 10 or 20 years from now it will feel the effects of 10 or 20 years of inflation.
The first few years of retirement went smooth and our financial advisor keep telling us we need to spend more money or we would have more left than we started with. So we did by buying a house on the water and taking more trips. The last three years because of inflation we have needed to draw more out just to cover every day expenses. Inflation is like a huge tax on retirees.
 
So, I havnt read through the 100s of threads or this thread very well.... I will though...

I plan or working part time making $60-$70K forever. Son will eventually run business and I plan on keeping salary.

To live on $10K a month (take home), how much do I need saved? assuming caution investments, like american funds.... ((I know Im know for my gambling in stocks and crypto, but assuming not that))

number 1 thing is health care. I think due to great employment/retire stuff, we can get that for under$500 a month.

Like 1.5MM?
 
120K with costs at 40K, zero inflation zero returns lasts you exactly 3 years.

120K with costs at 40K, 3% inflation and zero returns lasts you 2.92 years.

120K with costs at 40K, zero inflation and 6% returns last you 3.19 years.

120k with costs at 40K, 3% inflation and 6% returns lasts you the same as 0% inflation and 3% returns: 3.10 years.

The returns aren’t linear.

So let’s say you start with $1 million and take your annual budget out on January 1st and put it in a checking account. (Yeah I’m ignoring the possible interest in a HYSA right now)

Year 1. Spend $40k in year one, which happens to coincide with a 20% down market. $1 million - $40k - $192,000 (20% loss) = $768,000.

Year 2. 3% inflation, so spend $41,200. Your portfolio is flat this year. $768,000 - $41,200 + no gain = $736,800.

Year 3. Another year of 3% inflation, so spend $42,436. Great news, your portfolio increases 38% this year! $736,800 - $42,436 + $263,858 = $958,222.

Your returns averaged +6%. But you have less money than you started with. Now imagine a couple years of negative returns.
 
So, I havnt read through the 100s of threads or this thread very well.... I will though...

I plan or working part time making $60-$70K forever. Son will eventually run business and I plan on keeping salary.

To live on $10K a month (take home), how much do I need saved? assuming caution investments, like american funds.... ((I know Im know for my gambling in stocks and crypto, but assuming not that))

number 1 thing is health care. I think due to great employment/retire stuff, we can get that for under$500 a month.

Like 1.5MM?
Really depends on returns. But the “4% rule” means 25x annual expenses, or 300x monthly expenses. So if you’re following the general idea, you’d need $3 million to last 30 years in the worst case scenario in the last 100 years. (It’s more complicated but that’s the general idea).
 
6% returns, 3% inflation - so 3% real returns.

You are one pessimistic/conservative dude! Since 1950 a (arguably non-optimized) standard 60/40 portfolio has a CAGR of over 9%. Since '95, closer to 10%. Are you in like 40% cash? Do you just think forward returns for the next 30-40 years won't resemble anything like what we've seen in the past 70 years (so every financial disclaimer)? Or do you just like your job and are happy to keep working longer than you maybe need to and are cool being over-conservative and it'll help you sleep at night (which is tooootally understandable)? Not calling you out at all, I'm just super interested in the psychology of all of this.
That number is purposefully conservative. I expect more like 5% real returns, which is in line with historical. Debasement of our currency is very real and makes the prospect of high sticky inflation the baseline for the rest of my life. SORR is real, unknowable, and the main reason to choose a conservative expected return for future returns. Once I retire there is no going back. It will be closing a door, so things have to be solid when that is done.

The last thirty years was anything but typical and should not be used for future projections - we came off a massive high in bond rates that juiced bond returns. That ain't happening again unless we reelect Carter. :p


As far as bonds I'm about 3% cash, 10ish percent fixed rate bonds/CDs, the rest medium term ETFs like IEF. The returns on some of the fixed rate bonds I grabbed is pretty compelling (close to 6% for A rated) and are a function of opportunity rather than a structured plan. Total a bit more than 30% bonds. I try to get that higher but bonds have sucked and equities have been great so it has drifted despite my best efforts. I'd ultimately like to be half IEF and half fixed rate instruments in allocation.
 
I have not tracked it closely in many years but this thread encouraged me to do a full tracking of a years worth of expenses.

I counted every penny spent and compared to our nest egg. Our total savings (not including house) is now at a comfortable 62x yearly expenses.

While this number may appear high, it is not since we are not just caring for ourselves financially but also for our daughters whole life as she will be under our care for as long as we live and then everything passes to her.

We have one more opportunity to add some lump to our savings and that will be when we downsize the house in a few years.

We still have not yet determined the best time to take social security. I can see pros and cons to all choices.
 
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What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
@stbugs
Here is the original question about investment returns. If you just want to just talk about returns then sure, ignore inflation. When looking at AAPL versus AMZN that's an ok comparison because theoretically both feel the same effect from inflation and you can ignore it.

But when talking about how much money and when (time) you are able to retire you can't plug into the analysis the returns and only apply inflation to what you spend. All the money feels the effects of inflation and you have to discount it every year.

Edit: Maybe we are saying the same thing. I realize the bold above isn't quite right. You want to only apply inflation to your spend, which is true:

$40,000 year 1
$41,200 year 2
$42,436 year 3
Etc.
Etc.

But if your spending plan also includes $50,000 for a car in year 10 you have ask yourself what you mean by that.
A - Do you mean you want to buy a similar car that costs $50,000 today? If so then you'd need to add on 10 years of projected inflation.
B - Or do you mean you are only going to spend $50,000 for whatever car that much can buy in year 10.
I think we are saying the same thing but I don’t agree with 6% return goes to 3% real return with 3% inflation. I get that my buying power goes down but a real return means that’s what I end up with after the end of the year.

Using the 4% spend on $1M, my return is $60k (6%) and my spend is $41,200 (3% inflation). My money at the end of that year is $1,018,800. If my real return was 3% after accounting for 3% inflation, my money after the end of the year is $990k because I gained $30k in return (includes inflation) and spent $40k.

I get that inflation compounds and my yearly spend goes up 40k to 41,200…, but calling it a 3% yearly return (6 - 3) doesn’t take into account that the $50k that I plan to spend is going up 6% a year since I haven’t spent it. I’ll have $89,542.38 after 10 years. The cost will be $67,195.82 so I have about $22,350 left. If I just calculate a real return of 3%, the extra return (over inflation) on the $50k would be $17,195.82, but I actually have about $5100 more, about 30% more total return after 10 years on that $50k car.

Anyway, that’s also assuming I’m spending everything as well. I get that buying power decreases every year but my ideal retirement scenario is that my yearly cost is covered solely by SS plus investment income/appreciation. Best case, there’s money leftover and the nest egg grows so if we want to buy an even cooler car, we can.
 
So, I havnt read through the 100s of threads or this thread very well.... I will though...

I plan or working part time making $60-$70K forever. Son will eventually run business and I plan on keeping salary.

To live on $10K a month (take home), how much do I need saved? assuming caution investments, like american funds.... ((I know Im know for my gambling in stocks and crypto, but assuming not that))

number 1 thing is health care. I think due to great employment/retire stuff, we can get that for under$500 a month.

Like 1.5MM?
Really depends on returns. But the “4% rule” means 25x annual expenses, or 300x monthly expenses. So if you’re following the general idea, you’d need $3 million to last 30 years in the worst case scenario in the last 100 years. (It’s more complicated but that’s the general idea).
I think you missed his part time income. Or maybe I missed that he wants 10K/mo on top of his income. Depends on his tax situation, but if it's 10k total, it's closer to 1.5M.
 
So, I havnt read through the 100s of threads or this thread very well.... I will though...

I plan or working part time making $60-$70K forever. Son will eventually run business and I plan on keeping salary.

To live on $10K a month (take home), how much do I need saved? assuming caution investments, like american funds.... ((I know Im know for my gambling in stocks and crypto, but assuming not that))

number 1 thing is health care. I think due to great employment/retire stuff, we can get that for under$500 a month.

Like 1.5MM?

Do you need the $120k a year on top of the 60-70k you will earn in retirement or does the $120k include the 60-70k?
 
So, I havnt read through the 100s of threads or this thread very well.... I will though...

I plan or working part time making $60-$70K forever. Son will eventually run business and I plan on keeping salary.

To live on $10K a month (take home), how much do I need saved? assuming caution investments, like american funds.... ((I know Im know for my gambling in stocks and crypto, but assuming not that))

number 1 thing is health care. I think due to great employment/retire stuff, we can get that for under$500 a month.

Like 1.5MM?

Do you need the $120k a year on top of the 60-70k you will earn in retirement or does the $120k include the 60-70k?
And is that on top of SS?
 
What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when I hope to retire or retire sooner.
@stbugs
Here is the original question about investment returns. If you just want to just talk about returns then sure, ignore inflation. When looking at AAPL versus AMZN that's an ok comparison because theoretically both feel the same effect from inflation and you can ignore it.

But when talking about how much money and when (time) you are able to retire you can't plug into the analysis the returns and only apply inflation to what you spend. All the money feels the effects of inflation and you have to discount it every year.

Edit: Maybe we are saying the same thing. I realize the bold above isn't quite right. You want to only apply inflation to your spend, which is true:

$40,000 year 1
$41,200 year 2
$42,436 year 3
Etc.
Etc.

But if your spending plan also includes $50,000 for a car in year 10 you have ask yourself what you mean by that.
A - Do you mean you want to buy a similar car that costs $50,000 today? If so then you'd need to add on 10 years of projected inflation.
B - Or do you mean you are only going to spend $50,000 for whatever car that much can buy in year 10.
I think we are saying the same thing but I don’t agree with 6% return goes to 3% real return with 3% inflation. I get that my buying power goes down but a real return means that’s what I end up with after the end of the year.

Using the 4% spend on $1M, my return is $60k (6%) and my spend is $41,200 (3% inflation). My money at the end of that year is $1,018,800. If my real return was 3% after accounting for 3% inflation, my money after the end of the year is $990k because I gained $30k in return (includes inflation) and spent $40k.

I get that inflation compounds and my yearly spend goes up 40k to 41,200…, but calling it a 3% yearly return (6 - 3) doesn’t take into account that the $50k that I plan to spend is going up 6% a year since I haven’t spent it. I’ll have $89,542.38 after 10 years. The cost will be $67,195.82 so I have about $22,350 left. If I just calculate a real return of 3%, the extra return (over inflation) on the $50k would be $17,195.82, but I actually have about $5100 more, about 30% more total return after 10 years on that $50k car.

Anyway, that’s also assuming I’m spending everything as well. I get that buying power decreases every year but my ideal retirement scenario is that my yearly cost is covered solely by SS plus investment income/appreciation. Best case, there’s money leftover and the nest egg grows so if we want to buy an even cooler car, we can.
The way I do it is that I just have an inflation multiplier that I apply to my projected expenses. So next year, its 1.03, the following 1.06, 1.09, 1.13 and so on. Then for any year, my actual inflation adjusted expenses are just expenses in today's dollars times the multiplier for that year. I think that makes the most sense.
 
So, I havnt read through the 100s of threads or this thread very well.... I will though...

I plan or working part time making $60-$70K forever. Son will eventually run business and I plan on keeping salary.

To live on $10K a month (take home), how much do I need saved? assuming caution investments, like american funds.... ((I know Im know for my gambling in stocks and crypto, but assuming not that))

number 1 thing is health care. I think due to great employment/retire stuff, we can get that for under$500 a month.

Like 1.5MM?

Do you need the $120k a year on top of the 60-70k you will earn in retirement or does the $120k include the 60-70k?
And is that on top of SS?
I am confused by the rules of social security in this specific case. How much SS will he be able to receive if he is earning $60 to $70k a year in retirement? I had assumed SS would be reduced in a case like this but I am unsure how much.
 
All this talk about inflation - I get it in theory. At least I think I do. But looking at my own expenses, far and away the largest expense is my mortgage (which I think would be pretty common). That is a fixed cost. It doesn’t go up, and won’t for the next ~25ish years (refinanced at 2.5%, so no point in paying off early). And at that point, it doesn’t go up - it actually goes away. We don’t plan on moving.

So the last ~10 years of that will likely be during retirement, but it wont feel any impact of inflation.

One of my next highest expenses is gas honestly (2 driver household). A planned future expense will likely be a EV when we need one replaced - so a hopeful monthly cost reduction. So while the cost of gas may go up, my cost for gas should go down (partially offset by electric cost, understood).

I get that food and travel and healthcare and other items will have inflationary price increases, but my single largest expense won’t. Should I still plan on 3% inflation for my expenses, or some lesser amount?
 
So, I havnt read through the 100s of threads or this thread very well.... I will though...

I plan or working part time making $60-$70K forever. Son will eventually run business and I plan on keeping salary.

To live on $10K a month (take home), how much do I need saved? assuming caution investments, like american funds.... ((I know Im know for my gambling in stocks and crypto, but assuming not that))

number 1 thing is health care. I think due to great employment/retire stuff, we can get that for under$500 a month.

Like 1.5MM?

Do you need the $120k a year on top of the 60-70k you will earn in retirement or does the $120k include the 60-70k?
And is that on top of SS?
I am confused by the rules of social security in this specific case. How much SS will he be able to receive if he is earning $60 to $70k a year in retirement? I had assumed SS would be reduced in a case like this but I am unsure how much.
If collecting at full retirement age, he can still receive his full SS amount. You’re only reduced if you take benefits early and are still working (and earning over a yearly earnings limit).
 

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