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

[dakh]

MMM works very hard.
Ignore all the FIRE talk, too much going around.
Look at the numbers, mull things over, decide for yourself.
FIRE is a big turning point, you will have to live with the decision.

Around here, single family rental homes can be had for maybe 100,000, rent for 1000 a month. Do the math for your area.
2M buys 20 homes, monthly income 20K. Add in a reasonable error factor, isn't that possible? Again, do the math for your area.
But this is not true retirement, but it is being your own boss. Taxes, insurance, and transaction fees affect this.

Too much 4% and SP500 talk.
SP500 is a managed fund, perhaps there are others? Perhaps a total stock market, not so managed fund?
4% is simplistic, again, do the research on your own, learn what others do.

We plan on about 5% (and increasing) of portfolio balance each year.

Sorry I can't parse most of what you said. MMM works very hard? That is his choice, he's not working for money, how is that relevant here? Why should I ignore FIRE talk? Just to start..

 

[dakh]

Somehow, I expect medical tourism to also be a part of my future

I consider the US health care system to be seriously borked. Making medical bills be a huge source of bankruptcy puts everybody that isn't at least a decamillionare at risk of a financially devastating medical situation (at least without medical insurance that will cover those catastrophic medical expenses).

Similar idea - something I read about 20 years ago said that ~everybody, whatever their age, was going to need short term disability at some point in their life. I don't know why, but that resonated with me and we signed up for the short term disability insurance at work at the next opportunity.

Maybe 3 or 5 years later, I had my need arise despite otherwise excellent health. As somebody dependent on my job / paycheck, that short term disability made the difference between 3 or 5 months of 0 income (and that stress), and just a focus on recovering (no particular financial stress).


Anyway, I'll try to stay off of that soapbox. I do agree that there are additional options. I also think of insurance as protection from catastrophic financial events, and I don't consider $6-10K / year in medical expenses to be catastrophic financial events. So I don't want to spend money for insurance for those things.

I also take the highest available deductible on my house and car insurance for the same reason.

Which is yet ANOTHER topic I'll try not to get into any further!

Yea and my understanding is that ACA is now preventing one from getting a catastrophic-only health insurance. There are minimum levels of coverage that force them to cover very munch non-catastrophic stuff. But this "short-term insurance" that Trump's administration made legal is looking pretty promising actually. I didn't know it existed.

Edit: eh, not really solving much. Not available in a lot of states one would want to live in for any reasonable duration.

 

[MikeQ]

Isn't this just short-term insurance or can you carry it indefinitely?

It's a one year at a time policy. You can renew each year. If you want something longer, you can get a tri-term plan that locks in your rates for 3 years but for us that was about $200 a month more and didn't really offer much more except a couple well visits a year.

I've had a High Deductible plan with an HSA for years through my employer. What I have now through Golden Rule is very close to that except the deductible is higher.

With my work plan, it was rare that I ever hit my deductible so I was paying 100% out of pocket most years. My current plan will be the same unless something catastrophic happens.

I maintain an HSA that I max out so at least my medical expenses are tax free.

 

[TheTalkingMule]

I maintain an HSA that I max out so at least my medical expenses are tax free.

My HSA was converted over to entirely TSLA shares last fall. Now I can live a much more dangerous lifestyle.

 

[riverFox]

My HSA was converted over to entirely TSLA shares last fall. Now I can live a much more dangerous lifestyle.

I did the same. It was the stupidest, most genius thing I've ever done. I've since diversified it a bit with some ARKG.

 

[juanmedina]

MMM works very hard.
Ignore all the FIRE talk, too much going around.
Look at the numbers, mull things over, decide for yourself.
FIRE is a big turning point, you will have to live with the decision.

Around here, single family rental homes can be had for maybe 100,000, rent for 1000 a month. Do the math for your area.
2M buys 20 homes, monthly income 20K. Add in a reasonable error factor, isn't that possible? Again, do the math for your area.
But this is not true retirement, but it is being your own boss. Taxes, insurance, and transaction fees affect this.

Too much 4% and SP500 talk.
SP500 is a managed fund, perhaps there are others? Perhaps a total stock market, not so managed fund?
4% is simplistic, again, do the research on your own, learn what others do.

We plan on about 5% (and increasing) of portfolio balance each year.

I wish I could a get house for 100k in my area and I live in South Carolina. I can only find homes for 150k and I can only rent them for $1200 but I have to pay $5000 in property taxes. Back in 2016 I was able to get a rental for 45k but at the time I didn't have much disposable income to do more deals.

The 4% rule also depends on age IMO. I am 35 so I think I might only pull 3.5% however with my Tesla investment the 3.5% might become way more than what I need.

I am thinking about pulling the trigger on ER next year. I like my job but I would rather spend time with my wife, kids and my parents before they get older. What are you guys planning about doing about your jobs? Have you guys thought about asking to get laid off? Getting laid off ? In my case I have worked many years with my company so the severance package could be sizeable and I also have some stock options that my company might be willing to exersice.

 

[Oil4AsphaultOnly]

I wish I could a get house for 100k in my area and I live in South Carolina. I can only find homes for 150k and I can only rent them for $1200 but I have to pay $5000 in property taxes. Back in 2016 I was able to get a rental for 45k but at the time I didn't have much disposable income to do more deals.

The 4% rule also depends on age IMO. I am 35 so I think I might only pull 3.5% however with my Tesla investment the 3.5% might become way more than what I need.

I am thinking about pulling the trigger on ER next year. I like my job but I would rather spend time with my wife, kids and my parents before they get older. What are you guys planning about doing about your jobs? Have you guys thought about asking to get laid off? Getting laid off ? In my case I have worked many years with my company so the severance package could be sizeable and I also have some stock options that my company might be willing to exersice.

"asking to be laid off" ... now that's an interesting idea! I never factored in the severance package! Was just going to give notice and let them decide how long they'd need me to stick around and train my replacement. But a severance package sounds much nicer!

Yeah, at 35, you're going to need a bigger retirement fund, since you'll be old much later in life where inflation would've had a longer impact on your living expenses and thus cost-of-living would be much higher in your golden years. Plus, you'll have the additional concern of being 55 in 2040 (still retired and thus not employable) and Elon decides that he's ready to step down from Tesla to move to mars. Would your retirement still be large enough for all that change?

 

[Mokuzai]

Have you guys thought about asking to get laid off?

Well this may happen to me without asking...my company is going through a "joint venture" which really feels like a takeover so have a feeling my decision won't be to retire early but whether to bother looking for another job.

Leaning towards the former and think I could swing it but a lot of that is in TSLA. At current prices and my expected future prices it's definitely doable...just being able to tolerate the roller coaster may get iffy and don't want to sell now.

Don't know...nothing has happened quite yet so I'll see how this plays out.

 

[MABMAB]

I wish I could a get house for 100k in my area and I live in South Carolina. I can only find homes for 150k and I can only rent them for $1200 but I have to pay $5000 in property taxes. Back in 2016 I was able to get a rental for 45k but at the time I didn't have much disposable income to do more deals.

The 4% rule also depends on age IMO. I am 35 so I think I might only pull 3.5% however with my Tesla investment the 3.5% might become way more than what I need.

I am thinking about pulling the trigger on ER next year. I like my job but I would rather spend time with my wife, kids and my parents before they get older. What are you guys planning about doing about your jobs? Have you guys thought about asking to get laid off? Getting laid off ? In my case I have worked many years with my company so the severance package could be sizeable and I also have some stock options that my company might be willing to exersice.

So if you run the math for RE in your area, what could you earn per annum on 2M?

4% is an ok rule to begin the process of ER with but more is possible. Anyone look at the tables here? Variable percentage withdrawal - Bogleheads

Seriously, before deciding on any one set rule, one should go read on various methods and decide what they are comfortable with.
>=5% here!!!

 

[Christine69420]

I have looked at the Variable percentage withdrawal method and for me it makes a lot of sense. I like the idea of being able to withdraw more when your investments are having a great year. And I'm OK with smaller amounts when needed. Just as long as the smaller amount is still enough for the necessities.

Some of us may have another income like a pension that will cover our basic needs from some point in time. Then we can risk a larger withdrawal from our investment. And be OK if the VPW method give some leaner years now and then.

 

[juanmedina]

"asking to be laid off" ... now that's an interesting idea! I never factored in the severance package! Was just going to give notice and let them decide how long they'd need me to stick around and train my replacement. But a severance package sounds much nicer!

Yeah, at 35, you're going to need a bigger retirement fund, since you'll be old much later in life where inflation would've had a longer impact on your living expenses and thus cost-of-living would be much higher in your golden years. Plus, you'll have the additional concern of being 55 in 2040 (still retired and thus not employable) and Elon decides that he's ready to step down from Tesla to move to mars. Would your retirement still be large enough for all that change?

The current value of Tesla puts me at more than what I need for my minimalistic kind of retirement. As of right now 65% of my core expenses should be covered by my 401Ks and rental income at 4% return so I am not that worry about a big Tesla down swing. Eventually I will sell some Tesla shares to cover 100% of my core expenses and just move it do index funds to not have to worry about and let the rest ride the wave.

So if you run the math for RE in your area, what could you earn per annum on 2M?

4% is an ok rule to begin the process of ER with but more is possible. Anyone look at the tables here? Variable percentage withdrawal - Bogleheads

Seriously, before deciding on any one set rule, one should go read on various methods and decide what they are comfortable with.
>=5% here!!!

With 2M I could buy 13 house at $150K a piece that I could rent for $1200. -10% ($120 per month) for repairs and vacancy, -$70 a month, -$3500 a year for property taxes (if the property is assessed at $150K by the county), $1300 for insurance. $7320 a month or $87,840 a year. If I buy an older house that hopefully is assessed at $90-80k property taxes would be around $1500.

 

[MABMAB]

The current value of Tesla puts me at more than what I need for my minimalistic kind of retirement. As of right now 65% of my core expenses should be covered by my 401Ks and rental income at 4% return so I am not that worry about a big Tesla down swing. Eventually I will sell some Tesla shares to cover 100% of my core expenses and just move it do index funds to not have to worry about and let the rest ride the wave.



With 2M I could buy 13 house at $150K a piece that I could rent for $1200. -10% ($120 per month) for repairs and vacancy, -$70 a month, -$3500 a year for property taxes (if the property is assessed at $150K by the county), $1300 for insurance. $7320 a month or $87,840 a year. If I buy an older house that hopefully is assessed at $90-80k property taxes would be around $1500.

not enough rent to make that appealing to me
I checked local market and supply is low at high dollar

 

[ZeApelido]

Have you guys thought about asking to get laid off? Getting laid off ? In my case I have worked many years with my company so the severance package could be sizeable and I also have some stock options that my company might be willing to exersice.

 

[Nocturnal]

With Obamacare health insurance wouldn’t be too bad, at least in my area.

And why sell all of your TSLA, wouldn’t want to pull much more than $100,000 per year to live on if you want it to last.

of course if TSLA keeps going up substantially like everyone here predicts, you would be able to spend a lot more.

I'm dreading that myself. I'm 40 and my garbage insurance is $500 a month, just for myself.

 

[OrthoSurg]

I wish I could a get house for 100k in my area and I live in South Carolina. I can only find homes for 150k and I can only rent them for $1200 but I have to pay $5000 in property taxes. Back in 2016 I was able to get a rental for 45k but at the time I didn't have much disposable income to do more deals.

The 4% rule also depends on age IMO. I am 35 so I think I might only pull 3.5% however with my Tesla investment the 3.5% might become way more than what I need.

I am thinking about pulling the trigger on ER next year. I like my job but I would rather spend time with my wife, kids and my parents before they get older. What are you guys planning about doing about your jobs? Have you guys thought about asking to get laid off? Getting laid off ? In my case I have worked many years with my company so the severance package could be sizeable and I also have some stock options that my company might be willing to exersice.

I’m 33 and was thinking about retiring early as soon as I hit 2M. However, if you are patient enough and retire when you have 5M. If you average 5% interest rate on a conservative ETFs portfolio, you make $250k annually in interest, reinvest $125k and live on $125k annualy. This way you can have the house you want. I have my corporation since 2016 so I can’t ask to be laid off but as a consultant, I decide about my schedule and can work 2 days a week during the summer and now 4 days a week when it’s raining every day during automn.

My Tesla portfolio is the way to reach financial freedom sooner. Aim high, compounded interest is awesome.

 

[dmvevguy]

I’m 33 and was thinking about retiring early as soon as I hit 2M. However, if you are patient enough and retire when you have 5M. If you average 5% interest rate on a conservative ETFs portfolio, you make $250k annually in interest, reinvest $125k and live on $125k annualy. This way you can have the house you want. I have my corporation since 2016 so I can’t ask to be laid off but as a consultant, I decide about my schedule and can work 2 days a week during the summer and now 4 days a week when it’s raining every day during automn.

My Tesla portfolio is the way to reach financial freedom sooner. Aim high, compounded interest is awesome.

I'm 36, and in the same boat. Net worth is approaching 4M. My biggest concern is boredom. Hobbies are not enough in life, you need to have purpose. Maybe I could do a PhD, but I'd rather be somewhat productive. I'm working on a few tech patents on the side, but I have the freedom to tell my clients F.U. at anytime, but I just can't fathom doing that because I also genuinely enjoy my work. Oh, btw, 1M of the networth has been with some gains from long term hold of TSLA stock, and I still have a few hundred k riding forever .

We are truly blessed, lucky and fortunate to have these first world problems!

 

[juanmedina]

I’m 33 and was thinking about retiring early as soon as I hit 2M. However, if you are patient enough and retire when you have 5M. If you average 5% interest rate on a conservative ETFs portfolio, you make $250k annually in interest, reinvest $125k and live on $125k annualy. This way you can have the house you want. I have my corporation since 2016 so I can’t ask to be laid off but as a consultant, I decide about my schedule and can work 2 days a week during the summer and now 4 days a week when it’s raining every day during automn.

My Tesla portfolio is the way to reach financial freedom sooner. Aim high, compounded interest is awesome.

For some reason the more money I have the less I care about work. Also, for me to wait for 5M is not worth it and I will probably hit 5-4M eventually even after retirement because of Tesla. I have two kids that keep me busy and I could be in TMC full time .

 

[adiggs]

For some reason the more money I have the less I care about work. Also, for me to wait for 5M is not worth it and I will probably hit 5-4M eventually even after retirement because of Tesla. I have two kids that keep me busy and I could be in TMC full time .

If your investment hypothesis includes a $2000 share price by 2030 (as mine does), then you're probably already looking at a portfolio where you won't be able to spend it as fast as it's growing.

I'm 36, and in the same boat. Net worth is approaching 4M. My biggest concern is boredom. Hobbies are not enough in life, you need to have purpose. Maybe I could do a PhD, but I'd rather be somewhat productive. I'm working on a few tech patents on the side, but I have the freedom to tell my clients F.U. at anytime, but I just can't fathom doing that because I also genuinely enjoy my work. Oh, btw, 1M of the networth has been with some gains from long term hold of TSLA stock, and I still have a few hundred k riding forever .

We are truly blessed, lucky and fortunate to have these first world problems!

Definitely a first world problem.

it also sounds like you've already got the financial freedom of buying back your time that others here (such as myself) are still working towards. To me, it's not about doing nothing and/or not working - it's about the freedom from the need to do something I enjoy but don't have the option not to do.

I COULD keep the job and the paycheck, financially, if I wanted to. Or I can take a 6 month / year break. Or I can work on some patents. Or I can donate my time to some charities, applying my skills that otherwise make me too expensive for the charities to hire me. Or I can do back to back cruises around the world. Or learn to surf (kind of cold here in Oregon, and yet there IS a surfing community). Or ...

I'm just about in the same position as @juanmedina - continuing to work to keep the pile growing isn't a priority. Finding out the new adventure in life is my new priority.

(I also don't have the 'problem' of figuring out life at 36 without a job )

/first world problems; the best kind

 

[OrthoSurg]

I'm 36, and in the same boat. Net worth is approaching 4M. My biggest concern is boredom. Hobbies are not enough in life, you need to have purpose. Maybe I could do a PhD, but I'd rather be somewhat productive. I'm working on a few tech patents on the side, but I have the freedom to tell my clients F.U. at anytime, but I just can't fathom doing that because I also genuinely enjoy my work. Oh, btw, 1M of the networth has been with some gains from long term hold of TSLA stock, and I still have a few hundred k riding forever .

We are truly blessed, lucky and fortunate to have these first world problems!

I was lucky enough to have a financial advisor who got my 500k invested in airline companies and lost 450 grands.
I invested 100k in tsla at that moment and compensated for this investment disaster.
So I am lucky enough to bit have the choice to retire now
If I had invested 500k in TSLA December 2017. I would have 5M and be on the brink of becoming useless to society with my early retirement

 

[dmvevguy]

If your investment hypothesis includes a $2000 share price by 2030 (as mine does), then you're probably already looking at a portfolio where you won't be able to spend it as fast as it's growing.



Definitely a first world problem.

it also sounds like you've already got the financial freedom of buying back your time that others here (such as myself) are still working towards. To me, it's not about doing nothing and/or not working - it's about the freedom from the need to do something I enjoy but don't have the option not to do.

I COULD keep the job and the paycheck, financially, if I wanted to. Or I can take a 6 month / year break. Or I can work on some patents. Or I can donate my time to some charities, applying my skills that otherwise make me too expensive for the charities to hire me. Or I can do back to back cruises around the world. Or learn to surf (kind of cold here in Oregon, and yet there IS a surfing community). Or ...

I'm just about in the same position as @juanmedina - continuing to work to keep the pile growing isn't a priority. Finding out the new adventure in life is my new priority.

(I also don't have the 'problem' of figuring out life at 36 without a job )

/first world problems; the best kind

Totally agreed! Yes, you get to be more free to choose. Actually, I've had some clients come back to me asking for some more 'help' with some of tech consulting I've done before, but I rejected them b/c I didn't like working with them. Outside of work, you get to choose who you want to work with.

There are times I think I could just FU to it all, and make my work day reading this forum as it's seriously educational and entertaining, but there's something nice about making $!

Best of luck to you, and I'm sure you'll get there soon!!!