How much $ to retire and how to fund your lifestyle in retirement

[TSLA Pilot]

Update:

Yesterday I was talking to a family member that I don't see often, he is a teacher, married and with two kids. He has been always very outdoorsy and sports oriented, he was telling me about his summer break and that he has been going fly fishing everyday and playing tennis tournaments. That sounded awesome to me and make me think "why I am still working?". They don't have much money but they live an awesome life, they don't make a lot of money, they still have a mortgage, debt and both of their kids are at college on scholarships. There house is modest and nice, they garden, they live a really simple life and it seemed great.

Anyway, we are currently sitting at 2.3M in investments and I wanted to wait until 3M but I really don't see the point and it feels like I am wasting time. We took our first step towards retirement and slowing down; my wife last day from work is this Wednesday. I see a lot of people have way bigger goals than I do, do many of you are planning to carry a mortgage? We currently don't have one and I wonder if that makes my goal seem more reasonable.

Frankly, I don't see how 2.3M is remotely close to enough, absent the desire to live in poverty in a few years.

A single major medical event could wipe out more than half, as one example.

Furthermore, we can easily expect to see a downturn of 50% or more--where would that leave you?

Recommend you continue to work, invest more in TSLA on dips (such as todays'), and wait until you're at least at $6m before retiring, but that's just free advice from someone that knows nothing of your spending habits so take it FWIW . . . .

 

[Oil4AsphaultOnly]

Update:

Yesterday I was talking to a family member that I don't see often, he is a teacher, married and with two kids. He has been always very outdoorsy and sports oriented, he was telling me about his summer break and that he has been going fly fishing everyday and playing tennis tournaments. That sounded awesome to me and make me think "why I am still working?". They don't have much money but they live an awesome life, they don't make a lot of money, they still have a mortgage, debt and both of their kids are at college on scholarships. There house is modest and nice, they garden, they live a really simple life and it seemed great.

Anyway, we are currently sitting at 2.3M in investments and I wanted to wait until 3M but I really don't see the point and it feels like I am wasting time. We took our first step towards retirement and slowing down; my wife last day from work is this Wednesday. I see a lot of people have way bigger goals than I do, do many of you are planning to carry a mortgage? We currently don't have one and I wonder if that makes my goal seem more reasonable.

Took the plunge in Q2 with slightly more than you. Don't have a mortgage, because it eases my finances. My wife still works, because she's saving up to go on an extravagant vacation trip (over 6-figures!! - happy wife, happy life situation). Currently waiting for all my rollovers to settle before starting to take rule 72t distributions.

I'm finding that the most difficult thing to do is deciding whether or not to be productive each day. The less productive I am (side projects), the more relaxed I become, the more I don't want to do anything, the worse I feel at the end of the day. 1st world problems.

 

[SageBrush]

I recently retired. We have savings that should easily fund our lifestyle until death, and leave a nice inheritance for our kids. So says my spreadsheet, and I'm confident of the analysis. But corner cases always exist, and without an income stream a little voice in my head won't let me ignore our personal finances or feel comfortable about them.

I'm about 4 years away from taking SS at an FRA level. I imagine that will put a fork in whatever simmering anxiety I harbor.

 

[adiggs]

Anyway, we are currently sitting at 2.3M in investments and I wanted to wait until 3M but I really don't see the point and it feels like I am wasting time. We took our first step towards retirement and slowing down; my wife last day from work is this Wednesday. I see a lot of people have way bigger goals than I do, do many of you are planning to carry a mortgage? We currently don't have one and I wonder if that makes my goal seem more reasonable.

I don't know if this is germane or not, but I've got several years to go for regular access to retirement accounts. That makes the years until then the most "difficult" financially that my wife and I will have. As a result it makes a lot of sense for us to use a mortgage to pay for our house despite a preference for being debt free. Especially with interest rates so low. We are, in effect, postponing paying for our house in full until sometime after the retirement accounts become fully available.

I say this as somebody that has previously paid off a mortgage - I love that feeling of freedom from that monthly payment, even if it isn't / wasn't the very best move financially. There is more in financial decisions than a simple tally of $ and cents.

1st world problems.

These are the very best kinds. Highly recommended.

I am thankful every day that these are what I have to deal with

 

[Christine69420]

Anyway, we are currently sitting at 2.3M in investments and I wanted to wait until 3M but I really don't see the point and it feels like I am wasting time. We took our first step towards retirement and slowing down; my wife last day from work is this Wednesday. I see a lot of people have way bigger goals than I do, do many of you are planning to carry a mortgage? We currently don't have one and I wonder if that makes my goal seem more reasonable.

Frankly, I don't see how 2.3M is remotely close to enough, absent the desire to live in poverty in a few years.

A single major medical event could wipe out more than half, as one example.

Furthermore, we can easily expect to see a downturn of 50% or more--where would that leave you?

Recommend you continue to work, invest more in TSLA on dips (such as todays'), and wait until you're at least at $6m before retiring, but that's just free advice from someone that knows nothing of your spending habits so take it FWIW . . . .

There is no answer that fits all:

• Your age when retiring is obviously important. How many years are you financing? 25 or 60 make a big diff!
• Do you plan to leave a fortune to your kids or do you plan to use it all?
• Are you buying a mansion or do you live in a place where you are happy and with no mortgage?
• Do your country have a free health system or do you need to fend for yourself like ie. in the US?
• Are you happy with an average income or do you plan to travel a lot on first class tickets?
• Will you get a pension when you reach a certain age?

 

[Skotty]

I just assume that I will never retire, and then it all works out regardless.

 

[electricar]

I just assume that I will never retire, and then it all works out regardless.

The problem there being that health problems can easily cause a forced retirement - sometimes suddenly.

 

[Skotty]

The problem there being that health problems can easily cause a forced retirement - sometimes suddenly.

I don't know. Stick with me here. Retirement provides time to get out, see the world, hike the trails, swim the oceans, go hang gliding, or whatever. Many of the available health problems you can sign up for in old age will cause you not to be able to do those things, and instead you will be stuck at home using the computer. But as a computer programmer in an age that is going more and more telework, that's what my job is already anyway -- stuck at home using the computer. I'm all set!

I'm joking here, but really, it's only half joking. There's a hint of truth in all this.

 

[SageBrush]

A single major medical event could wipe out more than half [of 2.3M], as one example.

I don't see that risk for people with health insurance. I imagine my high deductible insurance is reasonably typical at having an out of pocket maximum of about $10k a year per person, while Americans aged 65+ are Medicare eligible.

I have debated with myself whether I should put more money into an HSA. My wife and I have around $40k. No pre-existing conditions or risk factors other than our ages, and we have healthy lifestyles.

Disclaimer: I am a physician so I have a pretty good idea of sub-clinical health risks, and we have no wish to drag out health scenarios with poor quality of life.

 

[juanmedina]

I have the same argument in my own head quite often. I'm sitting at net worth a little north of your goal currently. In Feb thanks to Tesla I had hit my magic income replacement number (using 5% rule) but I decided that I wanted a 25% buffer before pulling the trigger. Obviously the downturn added some validation to that idea. That said, I don't really NEED that full income replacement. Life is short and while my job is remote and I don't mind it, I still don't have the freedom I want. Why am I wasting time? Even if I do "retire" I will still be working in some capacity. Perhaps it will be maintaining rental properties or something. Hopefully TSLA moons this year and my internal argument becomes moot. I'm a contract worker so for now I've just let myself take time off when I want which is somewhat of a compromise.

I'm a huge fan of mortgages myself. Low interest rate and tax deductible. You could park that cash in something very safe such as a nice dividend stock or SP500 fund and make yourself a ton of extra money over that 30 year period. I just don't see the point in paying off a home aside from the psychological benefit.

I don't regret paying my mortgages early but I could potentially have more money if I have not done that. I finished paying my house when I was 29. Oh yes Tesla please moon.

Frankly, I don't see how 2.3M is remotely close to enough, absent the desire to live in poverty in a few years.

A single major medical event could wipe out more than half, as one example.

Furthermore, we can easily expect to see a downturn of 50% or more--where would that leave you?

Recommend you continue to work, invest more in TSLA on dips (such as todays'), and wait until you're at least at $6m before retiring, but that's just free advice from someone that knows nothing of your spending habits so take it FWIW . . . .

Like you say it depends on spending habits and where do you live. We live in a really low COLA area and 6-5k a month without a mortgage or debt goes along way IMO... unless you are eating at fancy restaurants everyday.

My understanding is that in case of a downturn I should keep enough cash for a year or maybe two and adjust my expenses and rollovers according to the market performance. If everything turns out really ugly well I just go back to work.

I agree with @SageBrush as long as I have insurance I should be fine. My father has Trigeminal Neuralgia and he has had about 6 surgeries and 2 of them were essentially brain surgeries. They had insurance through ACA and they just paid their deductible and some out of pocket expenses and it was fine.

At least I have a little more than this people haha:

I don't know if this is germane or not, but I've got several years to go for regular access to retirement accounts. That makes the years until then the most "difficult" financially that my wife and I will have. As a result it makes a lot of sense for us to use a mortgage to pay for our house despite a preference for being debt free. Especially with interest rates so low. We are, in effect, postponing paying for our house in full until sometime after the retirement accounts become fully available.

I say this as somebody that has previously paid off a mortgage - I love that feeling of freedom from that monthly payment, even if it isn't / wasn't the very best move financially. There is more in financial decisions than a simple tally of $ and cents.


These are the very best kinds. Highly recommended.

I am thankful every day that these are what I have to deal with

I have that problem since I am 36 but I have enough in my after tax account and with my rental to cover me for about 10 years while do the rollovers.

There is no answer that fits all:

• Your age when retiring is obviously important. How many years are you financing? 25 or 60 make a big diff!
• Do you plan to leave a fortune to your kids or do you plan to use it all?
• Are you buying a mansion or do you live in a place where you are happy and with no mortgage?
• Do your country have a free health system or do you need to fend for yourself like ie. in the US?
• Are you happy with an average income or do you plan to travel a lot on first class tickets?
• Will you get a pension when you reach a certain age?

• 36-37
• no
• no I am happy where I am
• USA
• I am happy with my income and we save maybe 50% of it. I have no idea on how to spend it other than a Model S Plaid. I want to something like David Lee is doing; go camping a lot with my kids all over the country.
• no

 

[Nocturnal]

Semi related, but can anyone recommend a self directed IRA? Most of my wealth is tied up into my Roth and traditional IRA but I'd like to add some real estate to my holdings. Apparently some self directed IRAs allow this.

 

[SageBrush]

Semi related, but can anyone recommend a self directed IRA? Most of my wealth is tied up into my Roth and traditional IRA but I'd like to add some real estate to my holdings. Apparently some self directed IRAs allow this.

My self-directed IRA is at Schwab. My wife is a firm believer in slow and steady and I like some diversification so I invest some of our money in a Schwab Real Estate ETF named SCHH. I presume similar ETFs can be found at the major brokerages. Or if you want a real estate ETF with a different Real Estate focus, it probably exists.

It is also possible to get granular with Real Estate, up to the point of using your IRA money to buy homes that you landlord. Think hard before you jump though since they are lots of ways to end up unhappy, the regulatory requirements are burdensome and expensive, and errors are a nightmare.

 

[Nocturnal]

My self-directed IRA is at Schwab. My wife is a firm believer in slow and steady and I like some diversification so I invest some of our money in a Schwab Real Estate ETF named SCHH. I presume similar ETFs can be found at the major brokerages. Or if you want a real estate ETF with a different Real Estate focus, it probably exists.

It is also possible to get granular with Real Estate, up to the point of using your IRA money to buy homes that you landlord. Think hard before you jump though since they are lots of ways to end up unhappy, the regulatory requirements are burdensome and expensive, and errors are a nightmare.

I'm in the early stages. One thing I'm not liking is how rigid the rules are. Far worse than just owning a property yourself. I didn't realize you had to treat it as an entirely different entity. I.e. you can't fix something yourself and just pay for materials. My IRAs are with vanguard and I can pick pretty much whatever equities I want (which is why I actually made money on Tesla) but considering other options.

 

[SageBrush]

We live in a really low COLA area and 6-5k a month without a mortgage or debt goes along way IMO... unless you are eating at fancy restaurants everyday.

Yep.

My wife continues to be surprised at our personal finances in retirement. I pull about $50k a year from our IRA**, and unless we look for ways to spend money it just piles up in our checking account. This happens because we do not have debt obligations, a mortgage, car payments etc. I've estimated for her that a young family needs a gross income from work of the better part of $100k to have our standard of living on $3,000 a month.

I agree with others that over time mortgage + investments will come out on top of paying off the mortgage, but a base modest standard of living is its own type of diversification that reduces the effect, not to mention the angst when retired, that comes with market volatility.

** Calculated to reduce our ACA premium to ~ zero

 

[SageBrush]

Somewhat off topic, but I want to recommend 'thefinancebuff.com' blog for an excellent education of many personal finance matters. His focus is not on suggesting a particular lifestyle or money approach, but rather on giving the reader a a reasonably deep understanding of money, economic, and policy matters that affect people. 'Roth Vs IRa' is a gem**, and representative of his brand of analysis and writing. I also highly recommend his writings on the HSA.

** Or maybe I just like it because I came to similar conclusions back when I had to make that decision.

 

[jbcarioca]

I have never really thought of myself as retired. At 75 I no longer do most of my more expensive habits from when I was younger. I also never really ‘saved’ for retirement. i have been lucky in that my most serious obsessions have ended out making money too. We do maintain dual residences and are taxpayers in two countries. Still when keeping track of expenditures my two major ones are travel and property taxes, excluding the odd realized capital gain.

The idea of retiring early never had any appeal for me and still does not. Now though I work only on subjects I really like, pretty much what I’ve done almost all my life. I’m convinced most times that works well.

Realistically both my spouse and I might have major medical expenses sometime. We have had a couple major events, paid almost all by health insurance. Certainly such might eventually be expensive.

Perhaps I should plan more. I do not know why since I have more than I can use and have planned for disposition when I die. The thing most people fail to understand is how much expenses decline once you’re no longer acquiring. In later years few people remain big spenders.

 

[goinfraftw]

Hi Q - When Tesla ran up in 2020, I paid off all of my debt first (a mortgage and the Model 3 loan) and I’m diversifying towards a 80-20 portfolio strategy (supplemented with real estate and passive index fund investing) after it being 92-8.

Does this sound like a good strategy from an investment portfolio allocation perspective?

 

[Oil4AsphaultOnly]

Hi Q - When Tesla ran up in 2020, I paid off all of my debt first (a mortgage and the Model 3 loan) and I’m diversifying towards a 80-20 portfolio strategy (supplemented with real estate and passive index fund investing) after it being 92-8.

Does this sound like a good strategy from an investment portfolio allocation perspective?

Who knows? If you asked a financial analyst, then diversification is their mantra, since it's "safer". And I'm pretty sure they'll say that even 50% in only 1 asset is way too risky. If you ask the WSB degenerates, then they'll say you've just capped your potential returns and limit your future growth.

But since you've asked the retirement thread, I think the answer lies in whether or not you currently have enough to retire on?

E.g. I made my retirement decision on my current spending versus my current assets. If it grows further (as I expect it to), then that's gravy. If it drops, then I have contingency plans to hold me over until the stock recovers (and thus my IRA assets recover).

So whether or not 80-20 is a good strategy versus a 92-8 asset allocation is up to what kind of an investor are you and whether or not you can sleep well with your decisions.

 

[goinfraftw]

Who knows? If you asked a financial analyst, then diversification is their mantra, since it's "safer". And I'm pretty sure they'll say that even 50% in only 1 asset is way too risky. If you ask the WSB degenerates, then they'll say you've just capped your potential returns and limit your future growth.

But since you've asked the retirement thread, I think the answer lies in whether or not you currently have enough to retire on?

E.g. I made my retirement decision on my current spending versus my current assets. If it grows further (as I expect it to), then that's gravy. If it drops, then I have contingency plans to hold me over until the stock recovers (and thus my IRA assets recover).

So whether or not 80-20 is a good strategy versus a 92-8 asset allocation is up to what kind of an investor are you and whether or not you can sleep well with your decisions.

Thanks! Sounds good, I ask because this feels way over my head. Do ask my financial advisor as well as my tax person too (now needed), but the aspect of having multiple opinions is helpful IMO.

 

[roblab]

Both my wife and I worked at good jobs in healthcare, earning about as much as nurses make, and as I enjoyed what I was doing I kept working until I was 70. My brother, on the other hand, was the only worker in his marriage and retired at age 59 (!), and now they have virtually nothing, live poor, while Milli and I buy new Teslas and take road trips and live in a beautiful older home overlooking Napa Valley. You HAVE to think about when to retire and how you're going to live when you do so. Wildly spending money on vacations will suck your savings down in a few years, while living simply leaves you happy for years. Especially if "simply" means only owning ONE Model S at a time....