Savings required to retire at 40?

[SLB_SA]

MG1912:  You seem to lump together a lot of nations with a large variety of healthcare systems.  You could probably edit your remarks a bit and criticize nomadic life.  I do agree that living in a foreign nation has difficulties and challenges but living in a different country is probably the right decision for some people.

As for medical care, when I was visiting Taiwan, I met and had breakfast with two nurses from the US who were visiting Taiwan to study their hospitals, clinics, etc. for a national (US) nurses association.  I was told that Taiwan has one of the best healthcare systems in the world.  Taiwan had the best healthcare system in the Revealed: Countries With The Best Health Care Systems, 2019 survey; the US was $30.  In other surveys, Taiwan's ranking varied from #1 to #16; each survey had its own criteria.  Taiwan (especially outside Taipei) is very reasonable in cost and a beautiful nation.  One can get by only speaking english (I did) but knowing some mandarin would make life a bit easier.

Ecuador uses the US dollar for its currency. Ecuador is said to have an good healthcare system; in the survey linked above, Ecuador was #25, ahead of the US.  I have never visited the country but one can find many expats in Ecuador on social media. Speaking spanish would probably be beneficial but reportedly one can stay in expat communities and get along fine only speaking english.

Spain and Portugal are relatively inexpensive places to retire.  English is the official language of Guyana and each G$ is fixed at $0.50 in USD.  Getting USD out of Guyana is difficult but keeping your funds in a US bank and only taking out what you need is apparently easy to do.  If you want to learn about health and poverty problems in different nations, go to  The Borgen Project .

 

[barleyguy]

Well, life is a crapshoot, no matter what you do. You can study your odds, but in the end, you roll your dice and take your chances.

I quit working at 60, and left thousands of dollars on the table. Lived on the money from the sale of my house until I could get SS at 62. 

Why did I quit? I couldn't stand working anymore - nothing in particular wrong with the job itself, nor my co-workers, so it wasn't like I could improve my situation by finding another job. I just couldn't take the demand on my precious time anymore, and I could see I was becoming a person I swore I'd never become - the person in your office who hates working, but won't quit because of money, and takes her misery out on everyone around her.  I was basically working to pay for the Prozac so I could keep on working.

I was just DONE. So I went with what I had. I've done several interesting lives since then. Been in my bare bones van full-time for a year now. No, van life is not perfect. But for whatever reason, the problems I encounter seem manageable, I'm not living in a state of gritted-teeth endurance, and I'm not driving other people and myself nuts with my sour attitude.

So I'm good with my life. I'd SOOOO much rather wake up looking at a desert or mountain sunrise than the four walls of an apartment.

When you're old, you don't only need money - you need good memories too.

I really enjoyed this post. I'm still working the corporate rat race, and many days I hate it. I'm currently 48, and planning to quit by 53 at the absolute latest. That will be either the day firecalc.com says that I have enough money to make it to social security, or the day that they make me angry enough that I tell them to stick it.

One thing that makes it a little more tolerable is that I work remote, so I can be a (currently part time) nomad even while I'm working. Some days that's especially tough though, because the contrast between nature and corporate culture is so striking.

Anyhow, I agree with what you're saying. If someone waits too long to retire, or too long to draw social security, they may never see the benefit.

Side note from another post: IMO Robin Hood should face either prosecution or a class action lawsuit, for two things. 1. Advertising their trades as free when they actually aren't, because they charge margin. 2. Blocking buys but allowing sells on certain stocks, which manipulates the market.

 

[user 37446]

Interesting thread, too bad the OP pulled out so soon. Many of the early responses discussed the false economy of using rental homes to live off of, due to the "gotcha's" that will always occur. (One of the few times using "always" is going to be true.)

"Retiring" at 40 is basically a pipe dream as the guarantied flow of income that is needed won't be coming to almost anyone except for a lottery winner or a paid-off accident victim.

There's nothing wrong with working part-time or temporary full-time and then traveling or relaxing/pursuing hobbies or interests, then going back to some kind of paying job. If you never work then I doubt that you appreciate what relaxation really is. (The song "Taking Care of Business" by BTO has a line: If you ever get annoyed, look at me I'm self-employed, I love to work at nothing all day...") but that's like Hollywood, mostly fake.

Summary - Instead of trying to not contribute or better society/other's lives, maybe earn a bit and then contribute to others improvement through giving, volunteering etc. If I learn a trade then help others with my acquired knowledge, that will benefit a lot more people than me simply "vegging out".

 

[IGBT]

Couple of things.

1)  The 4% rule accounts for those times when your $1,000,000 portfolio (in the example) drops to $500,000.   You still pull out $40,000, just like you still only pull out $40,000 when it goes up $500,000 in one year because the market is booming.  Over a long period, of say, 30 years, it has been shown to have a very low chance of failure.

2)  SS is not linear.   You may find that retiring at 15 to 20 years before age 62 that you still get a decent percentage of the maximum you would have gotten.  SS has knees where the return for what you have "paid in" is cut severely.

For example, for us, we retired at age 45 and have had zero SS wages the past 5 years.   On the calculator, our benefit when we hit age 62 (or 67) is something like 80% of what it would have been if we had kept paying in from age 45 to 60.

So, say we get $1600 a month instead of getting $2000 a month.   Is working 15 years more worth $400 a month more?

 

[RoamerRV428]

thing is on SS you have to remember too that you ain't getting that 1600 total, medicare pulls, part D pulls and if you buy a supp policy it is minus from your check.....so your 1600 will become, like 1300.

So just saying when calculating what 1300 will support you or not in 15 yrs with costs increasing like crazy, one just has to put it into their financials and see if it works for them.

thing with SS too is alot of people say it is a supplement to your personal retirement savings. So bank up if ya can people

for me I am taking my full SS at 62. I get 3 years of bigger money....then when 65 hits I take medicare and all and my payment drops by about 250 or a bit more so.....but hubby, we need him to hit 65 for that bigger payment, his age 62 benefit is nice, but we can't lose that close to 300 a month from that age 62 check....we need him to get the age 65 benefit to end up with a tad bit more in our wallets.

SS is great but if it is all ya got, it ain't that darn great truly.

 

[IGBT]

I am guessing that in a decade or so medicare will go away and there will be some sort of universal health care paid for by taxes.

But the point of not relying totally on SS if  you can is a good one.

I think you *can* rely on getting something from it, so you can use that in your calculations to check if you will have enough to retire.

Say you were age 50 with $600,000 invested.   You needed $30,000 a year for your retirement, which is a 5% withdrawal rate.  The catch is  you get SS at age 62, providing you with $1500 a month ($18,000 a year) so you only need $12,000 from your nest egg to keep up your retirement income needs.  Thus your withdrawal rate drops to 2% at age 62 and your portfolio might survive assuming there was not a super horrible crash during your first few years of retirement.

 

[bullfrog]

Seasonal work for seven or eight months a year and unemployment the rest so we could see the rest of the country worked well for us. I took early Social Security (a little under $1,000 a month) so we could have more money to travel on during the months off. My spouse ended up getting a permanent job but with a three month furlough that comes with health benefits year round, thrift plan and a very small retirement continuing to work till 66 1/2 when full Social Security kicks in makes sense not to mention Medicare at 65. We may not have been able to travel as much as we wanted but have made a comfortable living for ourselves so far, much better than struggling in a sticks and bricks.

 

[user 37446]

Me thinks that if you can afford to follow the "4% rule" and have $1 mil invested then CRVL is not likely where you are in life. For the overwhelming majority who are here because they have to be, just figuring out how to live on whatever meager amounts they have is tough. Look at the last 50 or so people profiled on BW's videos. How many 4%'ers are there?

Good reading for the high finance types: https://www.snideradvisors.com/wp-content/uploads/2016_4_Percent_Fallacy.pdf
"The 4% Fallacy".

If you have that kind of coin then good for you however it's not that relevant to the vast majority of forum members.
In defense, the thread was entitled "Savings required to retire at 40" which no matter how implausible the scenario is, I suppose someone may be pondering it.

 

[mpruet]

I brought up the 4% rule as a guide, not a strict practice.  By taking what you want for an annual spending limit and dividing by 4%, you get a fairly good target of what you will need in a nest egg assuming that you will live totally on that nest egg.  

Of course most of the people in CRVL are not in that category, and the ones able to obtain that nest egg are probably in the RVL group and not the CRVL group... ;-)

Concerning the implementation of the 4% plan — When I retired I split my nest egg into several buckets.  I have one cash bucket containing the money needed for this years expenses. I have a second ‘near cash’ bucket containing the money I’ll need for the next four years.  Then I have an brokerage investment bucket.  And finally I have an IRA/ROTH bucket.  The IRA bucket is used to fund the near cash bucket as I have to take out RMDs in all cases.  I can then supplement with some money from the investment and ROTH accounts, but never exceeding more than about 1/2 of the annual growth of those accounts for that year.  If no growth or a loss, I don’t pull extra money that year.  That way I can still see growth over time and I never have to take out any invested money in a down market.

This plan gives me a huge sense of relief. I don’t have to panic because I’m having to pull money out for living expenses during a recession like what we had in the first part of 2020, or even in 2008.  I can ride a recession out comfortably. 

And I do understand that the majority of the folks following CRVL don’t have that large of a nest egg, but have to have some kind of work to provide income.  But the original topic was how large of a nest egg do you need to be able to retire and live on that nest egg by 40.  And it’s down right shocking to most folks just how large that needs to be and how carefully managed it must be if you will never work another day in your life.

 

[mpruet]

SS is great but if it is all ya got, it ain't that darn great truly.

Not only that, but it doesn’t really keep up with inflation...

 

[IGBT]

Good reading for the high finance types: https://www.snideradvisors.com/wp-content/uploads/2016_4_Percent_Fallacy.pdf
"The 4% Fallacy".

Heh, that reading is essentially a commercial trying to sell you an investment plan lol.

As far as 4%'ers not representing on CRVL, I think there is information to be shared and gained by all walks.   If a person can live cheaply by taking advantage of some of the things on this forum, then maybe they can use the extra money to help others or pursue a hobby (like gold mining, which is a fast way to lose a few bucks!)

 

[rvwandering]

I removed a bunch of off-topic posts. Please stay on topic as much as possible. Thanks!

 

[MG1912]

Me thinks that if you can afford to follow the "4% rule" and have $1 mil invested then CRVL is not likely where you are in life. For the overwhelming majority who are here because they have to be, just figuring out how to live on whatever meager amounts they have is tough. Look at the last 50 or so people profiled on BW's videos. How many 4%'ers are there?

Good reading for the high finance types: https://www.snideradvisors.com/wp-content/uploads/2016_4_Percent_Fallacy.pdf
"The 4% Fallacy".

If you have that kind of coin then good for you however it's not that relevant to the vast majority of forum members.
In defense, the thread was entitled "Savings required to retire at 40" which no matter how implausible the scenario is, I suppose someone may be pondering it.

I must disagree with you on the grounds that there are many young people who come to this forum, and with the way things are going in the world today, I suspect many more young people will come to this forum in the future. When they come here, I'd like them to see these discussions and glean something useful from them. In that regard, I believe this topic is extremely relevant.

 

[RoamerRV428]

you know I find many people on this site have some bucks and I find they also seem very financially smart when it comes to what they earned....I don't feel everyone here is living on, like, nothing per month at all. I find alot of us here are van dweller types in our minds, our way of wanting freedom and more and are wanting out of the rat race etc. come here or into their retirement and want that leave me the hell alone type freedom now. I am not seeing more people having no options but to live in cars/vans. Desperation situations for the newcomers posting. At least that is the feeling I get from this forum.

We want to have this lifestyle more than it is forced on us....but I could be wrong on that, but from people's responses and more when I read this forum, it isn't all forced vans or die type life and no options.

Bob is a massive all in van dweller, is he forced? living on nothing per month? no income at all? no options to get out? doesn't wanna be living in a van? Nope.

Will many be forced into their cars/vans thru economic/etc duress, yes but I also don't find those are the types that come searching out sites like this that want to chat how great on the road lifestyle travel is all about ya know.

And this site provides great info to save some money on the road, learn how to boondock and free camping areas and how to stealth if needed, how to survive on less if you must or want.

 

[bullfrog]

It really is a strange time to be alive. Everything in this country seems to be all or nothing in every aspect. With so many people just a $500 emergency away from bankruptcy people are starting to consider cheaper and better ways while they still have the means. Years ago when my wife and I lived in a sticks and bricks house with 3 kids I realized it didn’t matter if I ended up the day before payday with a dollar in my wallet or $100, as long as there was something left life was good. I remember sitting in my car at a red light trying to figure out how I was going to pay a $400 medical bill that was past due when I got rear ended by someone. The car’s body was damaged but still functioned. Drove it to the estimator and bingo $400 damage repair check was handed to me. I felt like I had won the lottery. We had every penny we made invested in property and struggled 20 years that way in order to build equity and have a stable home in which to raise our kids. We were just like thousands of our other neighbors. Only when we had a traumatic medical situation did it finally force us into bankruptcy thank goodness! It made us consider how we wanted to spend the rest of our lives. There can be such a drastic difference in the costs of different ways of living and we found our answer to living within our means, even saving money and stumbled into new careers in places we only dreamed of living as well as a much better retirement situation financially by selling the house and traveling in an RV once our kids were grown and gone. There was so much equity in the property compared to what we needed at first we lived well but later we needed to find work and eventually because we didn’t have huge obligations and lots of flexibility due to living in an RV, were able to pick and choose jobs and locations found one just right for us. Life is not only good but really pretty easy as well once you learn to live simply and cheaply.

 

[RoamerRV428]

great post bullfrog

and you are right, it does seem like everyone is now 'that $500' away from total financial destruction.
seems wild in some ways all the crazy has caught up to us and covid is the financial nail in the coffin for many right now.

 

[SLB_SA]

Me thinks that if you can afford to follow the "4% rule" and have $1 mil invested then CRVL is not likely where you are in life.
Good reading for the high finance types: https://www.snideradvisors.com/wp-content/uploads/2016_4_Percent_Fallacy.pdf
"The 4% Fallacy".  If you have that kind of coin then good for you however it's not that relevant to the vast majority of forum members.

I'm going for the 0% rule by waiting until I turn 70 to start collecting SS.  This requires me to draw down my retirement accounts and I didn't start anywhere near $1M in these accounts but I am surviving.  In my case, the $40K per year SS I will get by waiting until 70 should cover all of my expenses but my retirement accounts are taking a real beating right now.  Waiting until 70 isn't for everyone but the difference between taking SS at 62 and waiting until 70 can make a huge difference in your monthly income once you turn 70.  Another advantage of SS is that it is adjusted for inflation (but poorly) and, for many, tax free.  With luck, once I turn 70 I will never pay (state or federal) income tax again.

 

[IGBT]

Our retirement accounts have been doing pretty well...what are you invested in?   I put 70% of ours in the S&P500 and 30% in cash and have been seeing double digit returns over the past year even with COVID.   I figured the market would do ok since the govt just pumps in more money whenever stocks look like they might fall.

 

[SLB_SA]

Our retirement accounts have been doing pretty well...what are you invested in?   I put 70% of ours in the S&P500 and 30% in cash and have been seeing double digit returns over the past year even with COVID.   I figured the market would do ok since the govt just pumps in more money whenever stocks look like they might fall.

If not for two kids (in their 30s now) who have medical problems and require some (or a lot of) financial support, my retirement accounts would be doing great.  Imagine a full bucket where one pint per hour pours in but two pints per hour leak out.
I am invested in equities (30% of portfolio), "available cash" (10% of portfolio, 2% annual interest earned) and "bond like" funds (60% of portfolio, 4% annual interest earned).  The "bond like" funds are illiquid and would take almost a decade to fully move to equities or withdraw as cash distributions; I have started this process.  The equities are doing great and one (actively managed) mutual fund has an average (over ten years) annual return of 16%; of course, "Past performance is no guarantee of future results" and the entry cost is too high at the moment to move more money into that fund in my humble opinion.  The "available cash" can be moved into mutual funds (within the retirement accounts) if the price drops enough; since mutual funds are worth their NAV, this requires the (correct sectors of) the stock market to drop (and so decreases my account balances).  I am well diversified and so the whole market needs to crash. 

In response to IGBT's comment "gold mining, which is a fast way to lose a few bucks!" let me add that kids can be a much faster and more effective way to lose a few bucks.   Is it common here (on CRVL) for financial support of relative(s) to be a consideration for "retirement"?

 

[user 37446]

Sorry for offending the well-off members here who are looking for some financial/investment/retirement advice.

I was under the mistaken impression that most members and BW video subjects were actually living pretty low because they had to, but now I see that for some, this investment advice is more information for them to mull over at night while checking their stock account balances.

There could be millionaires among us living in cargo vans, tis' true. I for one am hiding my wealth so well that not even I can find it!

Just remember that giving legal, medical, investment or even counseling advice is likely not legal (unless you are licensed to do so) or a responsible thing to do.