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When to retire?

Xepa777

Member
Aug 1, 2017
232
1,190
California
What's possibly more empowering than retiring is knowing that you can retire at any moment.

That frees you up to do more hobbies, find employment/start something in an area you care about, continue with your curent work but not get stressed out over the environment/promotion/your compensation.

I'm 30 and I can retire today FATfire. But like...it's actually made me appreciate my work even more. To really risk more and be more authentic in my interactions. To not really care about "the game" and just do what I think is the best. And honestly, in a way it's actually made me better at my job. I work in healthcare.
 

goinfraftw

Supporting Member
Supporting Member
Jan 1, 2017
946
7,516
USA
What's possibly more empowering than retiring is knowing that you can retire at any moment.

That frees you up to do more hobbies, find employment/start something in an area you care about, continue with your curent work but not get stressed out over the environment/promotion/your compensation.

I'm 30 and I can retire today FATfire. But like...it's actually made me appreciate my work even more. To really risk more and be more authentic in my interactions. To not really care about "the game" and just do what I think is the best. And honestly, in a way it's actually made me better at my job. I work in healthcare.

Good luck and that's great! I plan to play poker and board games a lot
 

MikeQ

Member
Jun 26, 2017
525
1,334
The Real World
What's possibly more empowering than retiring is knowing that you can retire at any moment.

That frees you up to do more hobbies, find employment/start something in an area you care about, continue with your curent work but not get stressed out over the environment/promotion/your compensation.

I'm 30 and I can retire today FATfire. But like...it's actually made me appreciate my work even more. To really risk more and be more authentic in my interactions. To not really care about "the game" and just do what I think is the best. And honestly, in a way it's actually made me better at my job. I work in healthcare.

This is not what happened to me. In 2018 I decided I'd retire December of 2020. From that point on, I couldn't stand work anymore. Not needing to work made me realize how much I didn't like my job (Engineering). Dragging myself into work became increasingly difficult. I didn't make it to December. I had stock options that vested in August and stuck around for those. Retired September 1st and haven't missed work one bit.
 

RubberToe

Supporting the greater good
Jun 28, 2012
3,133
7,767
El Lay
Interesting thread. A couple prior posters mentioned real estate. I sometimes tell Mrs. Toe that the joke will be on us if the end result of wealth accumulation is that the "wealth" becomes worthless. Tesla and other stock recent runs produce what seems to be "wealth", but is really nothing more than a number on a website that you log into. If you sell your TSLA stock the same website says that your money is now sitting in "cash", something like the FDRXX money market fund. A non-FDIC insured vehicle that attempts to maintain a $1 per share price no matter what. Those with long memories may recall back in 2008 when the financial system almost imploded, with several MM funds "breaking the buck". The national debt back then was about $12 trillion dollars. We are now at $27 trillion and rising.

Don't ignore the black swan of another possible financial crisis. If everyone's MM fund gets a 10% haircut, or our old buddy inflation (circa 1979) decides that your $1 is really only worth $0.90 in purchasing power, then we are in a new realm not seen in a long time. That path never ends well. Of course, you would think that having more "money" puts you in a better position than having less money, no doubt about that. Until the actual value of the money you have comes into question.

I think this is why the Bitcoin rally is taking off. People are starting to question whether fiat currencies are going to be the best method of storing "wealth" given things that are happening now. Hence you get Musk wondering if he can move billions of "dollars" into bitcoin, and how that might work.

Not sure I know all the answers here, but physical assets like real estate offer some level of protection against inflation. Someone renting a house from you will need to pay the going rate for living there, whether that is in inflated dollars, bitcoins, or moonshine (which actually killed one of my grandfathers at 46). Hopefully the current pandemic is the last of the black swans we see for a while, and the next 20-30 years or so let us all play out our retirement fantasies like we are discussing here. I suspect another swan may be closing in.

I personally think that I would need to find something productive to do that contributes to the "greater good" in some manner, for lack of a better phrase. Us baby boomers have had it relatively easy with respect to prior and I believe future generations. Lots of older boomers had good paying blue collar jobs that have only recently been outsourced to countries where labor is much cheaper. Only older boomers have been subject to the "military draft", with the rest of us skating through life knowing that we were not going to be forced to trundle off to fight the bad guys. We also corked off unimaginable quantities of non-renewable resources to make this all happen. That's not going to continue for much longer for a variety of reasons.

Those graduating from college now face a much more uncertain future, that's not even getting into what happens to non-college educated people trying to get by. The pandemic provided a good glimpse of what many futures could be like going forward. So in the sense that society and past generations work provided me the playing field and opportunity to get to a place where I can retire and "do whatever I want", seems like a good time to give some of that back and help others who might not have been provided the same opportunity for a variety of reasons. I'm fine with this, as long as I can drive a Tesla while doing it :p

RT

P.S. Happy and healthy new year to all. Looking forward to getting the shot(s) and a slow return to whatever comes next.

High growth stock 27%
Dividend stock 8%
Real estate (equity) 42%
Cash 23%
 

mspohr

Well-Known Member
Jul 27, 2014
9,927
12,040
California
I "retired" after I sold my business at age 45. However, I continued to do short term consulting work (international health) for aid organizations which I really enjoyed. Got to visit many interesting (mostly third world) countries and work with locals.
Finally stopped this work at age 70.
I've never worried about money regardless of how much I've had. I just adjust my spending accordingly. (Drives my wife crazy.)
 

dmunjal

Active Member
Aug 17, 2012
1,191
1,261
What you're describing is different (I say that knowing "wealth tax" is just a twinkle is someone's eye at this point and we, or at least I, don't know what the reality will be if it gets pushed through). That type of capital gains is just the fund manager selling gainers, holding onto losers and the overall value of the fund going down. It's just like if you own 5 stocks, four of them go down in value and one goes up. You sell the one that went up incurring capital gains on that asset. The others you hold so there is no event.

The wealth tax on the other hand, is a tax on the non-event. You own 100k worth of TSLA, it goes up to 800k and you do not sell any shares. There is no event, but Uncle Sam gives you a tax bill for your increase in wealth. That's a wealth tax if my understanding is correct.

Correct. Also, it would be unconstitutional and require an amendment like income tax did in a 1913.
 

ArcticStation

Supporting Member
Supporting Member
Oct 10, 2018
185
276
Maine
My wife and I have both been retired for almost 20 years. I am in my early 70s and she is in her mid-60s. Here is my perspective on early retirement.

First, if you have the means, do what we did. Fill out your bucket list and do as much as you can as soon as you can, don't wait for some vague day in the future. Ski those black diamonds in British Columbia, climb that mountain in Tibet, dive the Great Barrier Reef. Believe me, by age seventy, those black diamonds are going to be a lot more intimidating than they were at fifty. Face it and plan for it-- after twenty years, your body will no longer work as well as it did when you first retired. Being able to retire while everything still works, and works well, is a gift. Don't squander those early years.

Next, treat retirement like a job. Create an office at home if you don't already have one. Establish goals, rank them and continuously track them. Maintain a working calendar Build and stick to a budget. Take advantage of your spouse's skills (mine is a CPA).

Beware the volunteer trap. It's great to volunteer and it can make a huge difference in your community, plus you will feel a real sense of accomplishment from successful volunteer work. Just know when to pull back. In our case, every worthy non-profit we supported seemed to need the skills of a CPA and an IT specialist. Before we knew what had happened, we were back to working sixty hour weeks, but this time for free! Yikes! It can be very hard to say "no" when your skills can have a very real positive impact on other people's lives, but understand that you must establish a reasonable limit on what you can contribute.

If you don't already live there, find and move to the perfect place to settle. The area where we chose to settle houses the state's flagship university and our public schools (we still had school age children when we retired) are second to none . We have an outstanding medical center, housing is affordable and our air is the cleanest within the continental US. We have a symphony orchestra and two venues for live theatre. A national park is within an hour's drive and I can be skiing black diamonds--lots of them--after a two hour drive. And if I want to immerse myself in a culture where everyone around me is speaking French (important to me because that's what I spoke at home growing up), in a little over four hours I can be in Quebec City.

So if you do decide to retire early, treat it like the dream job you've always wanted and enjoy the ride.
 

mongo

Well-Known Member
May 3, 2017
13,324
40,775
Michigan
An update on this, specific to my own research and situation. It looks like I will be using the RMD (required minimum distribution) method for determining how much I can take out each year. There are 2 other options that use annuity type tables, and yield a fixed amount per year, while the RMD method adjust each year (it's a fixed % of account balance, and since the account balance is constantly changing, then the annual withdrawal changes as well).

When I've looked at this previously, you could get a noticeably higher amount of money in fixed form using one of the other 2 options.

But in this low interest rate environment, I can get a fixed amount that is 5-8% higher than the amount I can get via the RMD method. And the RMD method changes each year (it's a % of the account balance each year). This is important to me as I expect my retirement accounts to expand rather rapidly due to the TSLA shares I have in them. So first year will be lower, but there's a reasonable chance that year 2 and beyond will be higher, and either way they're close enough that I see no advantage in the fixed withdrawals.

Note that I'm also more trying to figure out how to get money out of my retirement accounts for the next 8 years before I reach age 60, than I am about total maximum earnings / portfolio. (So my situation and context is likely different from yours, and these details matter).


Still not advice, and I'm not a financial planner or other sort of financial expert. Just a random internet stranger trying to figure this out for myself due to an active need to understand it well enough that I can use this myself.
In case you didn't see this aspect, you can make a one time change from amortized or annuity to RMD. Retirement Plans FAQs regarding Substantially Equal Periodic Payments | Internal Revenue Service
 
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Unpilot

Sell order in at $5999.99
Supporting Member
Dec 2, 2017
5,106
40,636
A Coast
Hmm interesting thread. I only found it since the investor thread was locked.

I retired at 65 in late August. When I was working I maxed out my 401k for almost 20 years. During that time it grew to "just" about 500k.

When I "discovered " Tesla I went all in (well almost..440k worth) That number has now grown to 4.4 mil.

Not a bad ROI!

Now my first world problem is how to tap into this new wealth. Part of me says just sell some stock...pay the damn tax and live.
Another part says if the POTUS can pay 750 in taxes...why can't I?

I have looked into asset backed loans but since the bulk of mine is in a IRA that does not seem available...at least at first glance.

I am sure there are vehicles to tap into IRA funds without selling the Stock...I just don't know what they are called...yet.
 

kcveins

delivery 2/7/13
Jul 24, 2012
425
711
Chicagoland
Looking through this.. lots of interesting stories
In medicine and burning out
TSLA is definitely going to let me retire early (will be able to cut back to 3 days a week this spring), but the biggest issue is to still be able to get health care here in the US for me and the family as I am only 52..
 

jbcarioca

Well-Known Member
Supporting Member
Feb 3, 2015
5,628
29,935
There seem to be a very wide array of approaches to 'retirement'.
I have always loved what I was doing at a given time so I never thought exactly in those terms. As a serial entrepreneur it was always unclear anyway. I do, over several decades, do consulting for other entities. Sometime about a decade ago I just stopped doing work for other entities and at more or less the same time sold off the assets fo my last firm.

Therefore it seems that I retired roughly a decade ago, soon after reaching the age of 65. It was not a conscious decision. It was just that I became very busy doing investments that appeal to my ethical outlook. That meant I spent more fo my time on renewables and doing research on evolving medical and energy technologies. That led me to, among other things TSLA.

I obviously am 'retired' since I do not generate earned income. I am actually generating more income every year than I did while 'working'. Now, though, I never do anything I do not have a personal vested interest driving me. Perhaps that is retirement.

If so, great! Life is good! Now if I could ignore politics...
 

MikeQ

Member
Jun 26, 2017
525
1,334
The Real World
In case you didn't see this aspect, you can make a one time change from amortized or annuity to RMD. Retirement Plans FAQs regarding Substantially Equal Periodic Payments | Internal Revenue Service

My goal has been to move as much out of my IRA as possible so that

1) I can move it into non-ira accounts, reinvest and from that point on pay only capital gains rates instead of income rates.

2) bring my IRA balance down so that by the time I'm 72, I'm not hit with insanely high required minimum distributions.

I started out with the annuity method on my 72t since it produce the highest distribution. Now that my balance has grown substantially, I will switch to the RMD method this year.
 

dgpcolorado

high altitude member
Apr 25, 2015
2,655
3,936
The Western Slope, Colorado
Some people enjoy their work and can't really see retiring early. I wasn't like that. Early on in my career I focused on saving like mad so that I could retire young. Towards the end, I was saving close to 50% of my modest $47k salary. After recovering from several financial reverses, I finally got downsized at age 45. Several months later I had pulled together my résumé but hadn't floated it yet. Then I came across a quirk in the tax law that allowed me to take more out of my IRA without penalty (SEPP, using an amortization schedule) than I had thought possible. Ran some numbers on a retirement projection spreadsheet that I had written and realized that I was retired, at age 45. Retiring young, with only a small nest egg, required being thrifty, but that's how I accumulated my modest savings and investments in the first place, so not difficult. (It helps that I have no expensive hobbies, such as foreign travel — that would require a lot more money. )

Several weeks later I began site preparation and house design work on the lot in the mountains that I had purchased for retirement years earlier. A month after that I moved three hundred miles to my new rural county so that I could declutter my old house to prepare it for sale.

For me early retirement, and the big move, was "Ready, Set, GO!"

I agree with the OP's take on the subject of early retirement. Being retired meant being able to do want I want, rather than what I must. I wanted to retire while I was still young enough to enjoy it.

Prior to retiring, I gave a lot of thought to what I term the "guilt factor" of no longer being a productive member of society. The obvious solution was volunteer work — I started volunteering while still working and found that I enjoyed the work and the people I worked with. Problem solved. (Being single, volunteer work also helps me keep socialized, something that my job took care of before.)

Now, twenty-two years later, I am still at it. The nice thing about volunteer work is that I can do it when I want, if I want, and there is (relatively) little stress or pressure. Some of my volunteer jobs are fairly structured, others are so obscure that few people even know about them — the work needs doing, in my judgment, so I make it happen.

If I croak now, no regrets — I've had a good run! However, with nonagenarian parents, I may have some years to go.

Model S and San Juan Mountains1600edcropsf 3-8-16.jpg
^ My car on a county road leading to my mountain house. No city, no traffic, no noise — just mountain vistas and wildlife as neighbors. That's what I wanted, YMMV.
 
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MikeQ

Member
Jun 26, 2017
525
1,334
The Real World
Then I came across a quirk in the tax law that allowed me to take more out of my IRA without penalty (SEPP, using an amortization schedule) than I had thought possible.

An interesting note on the 72t (SEPP). The wording that outlines how you can take money out only speaks of 3 methods RMD, annuity and amortized. However, if you read closely, those are just examples. You can come up with your own method but will need to run it by the IRS.

I was thinking of doing this when I started my 72t because it was right after Covid hit and the mid term AFR rate used for two of the calculation method had dropped from something like 2.26% to .52%. I was considering using the 2.26% rate and explaining to the IRS that this AFR rate collapse was a short term occurrence and would resolve itself. In the end I decided not to go this route because I figured it would delay my retirement. In the end it really doesn't matter since I'll be switching to RMD this year.
 
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