Originally Posted by
swaayze
I find this topic quite entertaining and motivating. Came across MMM a couple of years ago and love his attitude. Listen to a couple of podcasts and read random blogs as twitter feeds them to me.
Our situation is such that my “RE” will happen at 65, since I’m already 51 with twins about to start college and a non-working spouse with health issues so we need the good insurance if nothing else. And, I still like my job.
Spent most of my 26 year career so far at the regionals, with very little time even collecting left seat pay; so I’m not anywhere near where I thought I’d be net-worth-wise at this point, but I did start early and save to the company match, and it has served me well. With my ability now to (relatively easily) max the 401k, and stretching to also max Roth IRAs, we should be in good shape. Though I’ve been pretty money smart, I wish I’d had the mindset that 50% savings is a legitimate target before recently.
That doesn’t change the mindset now though. BUT... I’m far from what I would call frugal, though I generally don’t spend much on stuff (took many years for me to splurge on a 1080TV, and that was many years ago with no upgrade planned; newest car is a 2007 and I do the vast majority of reasonable auto and home maintenance; usually shop for clothes at Target, WM, even GW; etc.) but we do blow our money eating out since neither of us likes to cook. Though it is hard to resist finally spending for what I’ve long dreamed: a house on an acre with a huge shop now that I can now arguably afford.....
The gotcha here is that the young folks that think $1M is a lot of money are likely to find that they don’t have enough somewhere down the line. Trying to fund a 40+ year retirement on that will prove quite difficult, because even at 4% returns (I suspect this is a reasonable long term return moving forward, if invested somewhat conservatively as it should be to live off of, imo) the principal will only be worth today’s $250k in about 50 years. The movement is hot now due to a long, prosperous market, but that too shall ebb and flow and unless that $1M can throw off 4% AND grow by that much each year on average, then money will get tight. Stuff happens and expenses rise significantly; moreso if you have kids as they get older. Healthcare costs often increase, no matter how healthy your lifestyle. And so on.
Still a very worthy knowledge base to have and existence to aspire to imo. Time is finite (and means everything) and money is but a (renewable) tool to make living easy. This much I’ve learned.
Hi and thanks for your comments. First keep in mind the 4% SWR is indexed to inflation. In other words year two you withdraw 4% plus a 3% bump for inflation. FireCalc says you should be fine with a standard asset allocation. This is becuse historical returns are roughly 6% after inflation.
What most people don't realize, or fail to, is that things don't buy happiness, but instead buy burden. Your acre lot with shop for example, while it sounds nice especially as you get older it becomes a burden as that yard must be mowed, landscaped, watered, etc and many "things" pile up in that workshop. The costs in both time and money are quite high.
I'm not advocating for living in a box but you see this around Dallas quite a bit - 3000 to 4000 sq ft homes etc. These homes are filled with things no one ever uses or rooms rarely ever visited.
Hedonic adaptation causes humans to quickly become accustomed to increased standards of living. Your new car is nice and makes you happy for a few months, but then you want something newer and better.
A high savings rate is a very different way of living but it could serve pilots well. When you get furloughed you could use the lowered income to convert your traditional 401k dollars to Roth for example. Also I think pilots have a unique ability to keep expenses low especially the younger ones. We don't need expensive suits, or a nice car, etc. since we are provided a uniform and we only put a few thousand miles a year on our cars, they will last several decades.