What's your retirement nut?

[zimmer879]

[ QUOTE ]

ANy of you guys students of the markets? Do you realize that between 1966 and 1982 (that is almost a lifetime for many on these boards) the dow was FLAT in nominal terms and DOWN 40% in real terms? That is was down 90% (yes, that is not a typo) from 1929-1933? That the NDX was down 80% 00-mid 03? That long bonds were down 20-25% in 1994? Anyone here actually had to manage a portfolio and LIVE on it? Models don't pay bills. And drawdowns are MAJOR problems when you are living off the cash flow. Retiring and NEEDING 8% per year to hit your spending is insane. And people are way underreserving for inflation -- its at least 3% of whatever return you are getting. Education and healthcare, 2 major expenses, have gone up much faster than that for years.

[/ QUOTE ]

First of all he was referring to 8% returns during his earnings years so settle down.

Secondly there are studies that incorporate safe withdrawal rates for both the 1929- and 1966- 1982 periods. I linked to the page earlier but this site has a lot of good info and here's an article referring to 1929: http://www.retireearlyhomepage.com/restud1.html

Also note that this article and all articles on this site are using inflation adjusted withdrawal rates.

What this comes down to is how safe is safe when it comes to determining withdrawal rates for retirement. If you want a 100% guaranteed risk free retirement nut, wait until you have $20 mill in the bank and invest in munis like Scorpion says. If you are willing to add just a modicum of risk to your portfolio then you can benefit from the far superior returns of the stock market and still be 99% sure that your nut will remain intact. Also rememebr that the biggest risk to your retirement savings comes the first few years after you retire, so you'll know relatively quickly whether you're in trouble or not. Some people will be comfortable with the idea of getting to retire years earlier knowing that if within the first few years the stock market drops 90%, they might have to go back to work. Or if they're maintaining the same lifestyle they had when working, they can choose to reduce their expenses instead. Point being, there are a lot of options for people when it comes to retirement if they choose to consider them.

[scotchnrocks]

Something to keep in mind is housing costs may be simply property taxes and bills in retirement.

Also, why does everyone want to retire so early? Find a job/profession you enjoy, there are very well off folks at the firm I work for who still come in part time in their 70's and I know they don't need the money.

What is there to do when you retire? I can't imagine being much fun. Traveling gets old. I guess you have more time to knit sweaters and surf the forums.

[Thremp]

scotch,

You seem like a boring person if you can not imagine how one with complete financial independence can't pass their time. I'm not out of college, but am positive with complete financial independence I would have very full and satisfying days if I had to start tomorrow.

[BradleyT]

[ QUOTE ]
I spend over $15k on healthcare insurance alone. $4k for aut0 insurance. $10k for property taxes and that is only because i bot the house a decade ago - it would be $20k if i bought it today. And its not a big deal house - its 3700 sq ft on a half acre. Something goes wrong with the house that costs $15k pretty much every year. Vacations? Even just flying Jetblue home to see the parents a couple times a year with the kid scosts $5k.

[/ QUOTE ]

Those costs are pretty ridiculous to most of the USA outside CALI and NY.

[scotchnrocks]

[ QUOTE ]
scotch,

You seem like a boring person if you can not imagine how one with complete financial independence can't pass their time. I'm not out of college, but am positive with complete financial independence I would have very full and satisfying days if I had to start tomorrow.

[/ QUOTE ]

Hey nutsack, I appreciate the personal attack. You did nothing as far as responding to my conjecture. You seem like someone with few real friends.

FYI, I'm one of those hot boys who owns a high rise condo, breaks bread with his crew 3 nights a week, whips an M3, and provides service to the community at my satisfying engineering job. Don't holla.

[Thremp]

[ QUOTE ]
I can't imagine being much fun. Traveling gets old.

[/ QUOTE ]

Umm... Great. Maybe a life of work, "breaking bread" with your "crew", and driving your M3 is awesome. I think I'll take a life of no work, travel, and doing whatever the [censored] I want whenever the [censored] I want to.

[scotchnrocks]

[ QUOTE ]

I think I'll take a life of no work, travel, and doing whatever the [censored] I want whenever the [censored] I want to.

[/ QUOTE ]

Thremp,

I know how dense you are, so this is the last comment I'll bounce off your head.

In general you want to contribute little to your community, think you'll enjoy traveling 25 years in a row seizing the day, and will be able to find something to do everyday not involving watching TV or a computer when you're 55-60+? Why wait until you're 55 when you can just play poker for a living your whole life and start retiring right now? You will have already accomplished all of your goals.

[Thremp]

Scotch,

We will see how long I can keep myself satisfied with this lifestyle. It starts in May.

[maxtower]

This arugment has come up before on the board, and it usually ends up the same way, a squabble between rich people who can't imagine living on less than 100k/yr, and more modest people who know that will NEVER be a reality for them.

Retirement is easy. If you need X amount per year, then just do the 4% thing if you have about 25-30 years left.

Inflation of REAL costs, like food, energy, and housing have gone up more than 3% per year. Those are things the gov't doesn't really figure in to their equations, and they are also the only things I consume on a daily basis. Weird huh?

Just to add flames to the fire, you rich guys are aware that most of the people you meet each day will never have $2.5 million (what you consider a modest retirement)? They probably will never have $1 million either. Some of them still manage to stop working.

It is possible to retire early with less. You just need to think a little more creatively. Costs in this country are too high. Fortunately, there are really cheap places with great weather for half the cost. You'll also have to really think about what is important to you. Spending $4,000 a year on auto insurance is a little ridiculous to me and probably unnecessary for most retirees.

[Scorpion Man]

A lot of this comes down to what people are really asking on this board. If you are talking about geezer, no choice, rural nebraska retirement at age 67, its different. And the things we dont bring up here at all are(1) social security and (2) Medicare. These help an enormous amount for that crowd.

The question I am answering (whether it was the one asked or not) is when you can just QUIT and ANY age because you have enough. Since everyone on this board is like 20 years old and seems to be asking it in a practical way (i.e....if I save enough playing poker am I done) I am answering it from the practical standpoint of a young person, with kids probably in their future (not their past), with healthcare to be taken care of (not Medicare), with aspirations to live in a nice (not extravagant, nice) house, wherever they happen to live or want to live (not to have to move in your wonderful retirment away from friends and family).

As you point out, the car insurance piece is a choice. The rest of them are, for where I live, very run of the mill numbers.

What, are people really going to "retire" to an apartment at age 35 with a kid on the way? I thought that was what most people here are talking about.

My grandfather has zero money, other than what I give him and social security. Father in law has like $500k. But one is 91 and one is 76. That is very different than trying to outlast that money when you are in your 30s/40s and have no social security. I don't want to have to live like these people live at that age, and neither will you or most of the people on these boards.

Retirement at an early age is a joy. Making it a coupon clipping prison in your own home for lack of financial flexibility would suck.