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Old 09-10-2018, 08:38 AM   #11  
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Itís a sneakers/charging bear situation. The $1M doesnít have to last a lifetime; it only has to outlast everyone elseís retirement fund.
I don't know about that... when they all run out of savings, they'll be voting for politicians who plan to seize YOUR savings.

The system is spring-loaded to divert wealth to those who are currently working, and/or those who can muster political power. CA pols were discussing retro-active tax changes at one point as a way to to feed their vast social programs... they would increase the rates on past tax years, and then retro-bill those with the means to pay. That would include folks who have subsequently moved out of state, since they are concerned that when they really start tightening the screws that those with flexible employment situations (ex pilots, work-from-home types) and retirees would leave in droves to protect their assets.

I'll diversify eventually, might even need to go offshore if that can provide legal protections.
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Old 09-10-2018, 09:28 AM   #12  
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Ha, I wish. Already far ahead of the average American.

Sadly itís obvious that retirement is gonna be quite the crisis in the years ahead now that DB pensions are mostly gone and the vast majority saves little to nothing.
Defined benefit plans were never as widespread as believed or as lucrative. Only about a third of the population had anything like a DB plan and many paid little, perhaps 1/4 to 1/2 do social security. And, all DB plans were invested in the same markets as your current 401k, just a bit cheaper fees. Ask the many state retirees with grossly underfunded DB how secure they feel. I know lots of CT retirees wondering if theyíre gonna wind up with a big haircut like the RI retirees got. See Central Falls, RI

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Old 09-10-2018, 02:55 PM   #13  
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$1M can't be anywhere near enough to retire early.
Very true... $2 million is really what's needed to live a fairly upper middle class lifestyle with longevity. That produces an income of $100k/yr which will work for most places.


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If too many people rack up a big nest egg and retire, there will be nobody left to do the work. Inflation and wages will rise, your lawn guy would then charge $100K to mow your lawn, and your employed neighbor who's now making $2M/month could afford it.
This statement shows a gross lack of understanding of economics, human nature, and investments...

1- not enough people will be following the "live beneath your means" plan

2- investments, especially a properly diversified portfolio, will always keep up with inflation... companies have to raise prices too

3- the entire scenario you described is patently absurd.
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Old 09-10-2018, 02:57 PM   #14  
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Increased income yearly is exactly the issue/problem. You cannot index yearly to inflation unless you have returns measurably over and above inflation. While that has been very easy for the last ten years that wonít always be the case. Soon (?) that will flip flop for a time and portfolios will decrease, but your minimum expenses will continue to increase, eating into your principal (unless youíre working some); the boat will take on water faster than you can bail without a bigger bucket (other income). Thatís why the best of the promoters are quick to disclose that itís more about FI than RE.

Yet this is what I worry that many of the younger FIRE folks really donít get, because they havenít lived a couple of market cycles as investors (or even employees). For instance, I can assure you that spending more by converting to a ROTH during my two furloughs was the last thing on my mind, tax savings be damned.
A properly diversified portfolio always makes money over the long term and almost always makes money over the medium term. This is why anything less than $2 million just isn't enough to retire on with a 5% withdrawl.
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Old 09-10-2018, 02:59 PM   #15  
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I don't know about that... when they all run out of savings, they'll be voting for politicians who plan to seize YOUR savings.
Exactly. Notice how a lot of people are moving out of s-holes like NY and LA and Chicago... and they are moving to places like IN, OH, TN, TX, AZ, ID, CO.... and they are voting the exact same way that they did in the cesspool in which they left.

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CA pols were discussing retro-active tax changes at one point as a way to to feed their vast social programs... they would increase the rates on past tax years, and then retro-bill those with the means to pay. That would include folks who have subsequently moved out of state, since they are concerned that when they really start tightening the screws that those with flexible employment situations (ex pilots, work-from-home types) and retirees would leave in droves to protect their assets.
LOL... that would be tossed out in court faster than a New York minute!
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Old 09-11-2018, 08:05 AM   #16  
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Defined benefit plans were never as widespread as believed or as lucrative.

GF
Perhaps, but that was not really the point I was trying to illuminate. No argument on the security of a DB plan (BTDT).

DB plans were at least something for many, designed as a piece of the puzzle (3-legged stool analogy). They were mindless and required no action on the part of the employee. Now, most people still take no action, but the stool only has two legs to begin with. Hard days are coming for them, which will inevitably create a crisis that those of us who have worked hard and sacrificed now to have a secure future will likely be called upon to solve.
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Old 09-12-2018, 08:02 AM   #17  
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" What most people don't realize, or fail to, is that things don't buy happiness, but instead buy burden."

Yup. That is why they are called possessions...they possess you.

And funny, according to my calculations, when I retire I am in danger of leaving WAY to much money to my heirs if I don't start spending more.

1-2M to retire comfortably ?

Man, ya'll must have Crack habits or another Family on the side. (?)

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Old 09-12-2018, 08:35 AM   #18  
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1-2M to retire comfortably ?

Man, ya'll must have Crack habits or another Family on the side. (?)

The discussion is EARLY Retirement, like in your late 20ís or 30's (a typical FIRE goal).

$1-2M would be ok for most of us if retiring after 60 and within 10 years from now or so, AND assuming SS will provide most of what itís supposed to. But trying to do a 4% withdrawal yearly, and keep up with inflation, over a 40-60 year retirement without considerable risk is very unlikely on (at least the low end of) that range imo.

You have to wrap your head around increasing medical expenses; regardless of lifestyle, aging causes problems. Medicare just isnít that great or inexpensive. And Iím factoring that some degree of medical assistance (LTC) will likely be required. Either pay large premiums now for insurance or save additional capital to draw down as needed (capital is my plan for now, as I cannot imagine I can get my spouse covered at any reasonable rate given her Type 1 diabetes and associated issues).

$40-80k/yr is doable, but donít forget some of that will still be taxed. And property taxes, insurance, maintenance and utilities will all continue to increase as well. Tax rates will likely never be lower than today. Etc.
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Old 09-12-2018, 10:06 AM   #19  
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20's and 30's?

Yup...you will need ALL of the 1-2M.



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Old 09-12-2018, 03:47 PM   #20  
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Aw Stimpy, you deleted the stuff I was gonna congratulate you on.

Yes, you are atypical and in a great way. I wish I was as disciplined. Continue to enjoy your apparent FI.

I, otoh, am looking at retirement in 14 years, so I expect today's $1M to be equivalent to about $1.5M at that point. It would throw off about $60k/yr (or $40k/yr in today's dollars) to supplement any SS I might get. While my expenses should definitely decline, I'm also hoping to amass enough to have 100% of my pre-retirement spending in income. Then I can continue to splurge once in a while and to help out the adult kids on occasion.

To be clear though, I won't be retiring in my 30's; more like 65
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