Savings required to retire at 40?

[MG1912]

Did anyone here say they were offering formal legal, medical, investment, or counseling advice?

 

[JDub]

"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. Big Grin Is it common here (on CRVL) for financial support of relative(s) to be a consideration for "retirement"? "

That reason is why my late wife and I were relentless in being "Tiger Parents" (Hey! I'm half Asian!) towards my son (her stepson) We pushed and pushed hard on him. To be sure, he REALLY resented some of it. There were no excuses and no problems that a little more buckling down couldn't solve. Yeah, we were "those parents". He knew from an early age that at 18 he had 3 choices: Go to school and move out, Get a job and move out, or join the military service of your choice and move out. There was no living in the basement choice. He actually took up options 1 and 3 and paid for his own education as a computer engineer w a 175K scholarship (probably just to get away from us). Harsh? Maybe, same deal I had from my parents. I understand there are ALWAYS exceptions to the rule, in this case it worked out vs so many of his (very well off) peers who are still inhabiting their parent's homes, checkbooks, and court docket dates...

So how are we doing years later (he's 27)? He wrote this to me on my birthday this year. Best present I ever had and made me squall like a baby - still does. I'm really putting it out there by posting this but I truly believe pushing hard (but fairly) on kids yields results and resilient kids who launch successfully and aren't a burden on their aging parents...

"I know you don't really like getting gifts too much and I don't send pictures like you always ask me to so I figured my gift to you could be righting a wrong.

I attached a bunch of photos from my recent trip to Switzerland and Italy. I had been thinking about how lucky I was to get to have that experience. And it wasn't lost on me that I was having that experience because of you and Angelia pushing so hard early on.

No one ever wants to admit to their parent that they were right when they said, "I'm doing this all for a reason," but I guess you really got me here. Everything you did worked. You taught me how to talk to others and put myself out there. How to carry myself like a professional while also being able to hang out with people from all backgrounds. How to learn new things and when to flex the things I already know.

I attribute having the friends that I have to it and I attribute the job that I have to it. Especially as I'm looking to start my dream job soon, I really see more and more how it all came together. I suppose you could say I'm "Successfully Launched" but don't go getting too old on me just yet. I've still got learning to do and I need you there to help me through it as you always have. Even when, at times (or all the time), I don't show that I need it or don't think I need it.

Love you Dad. Everything I have, I have because of you."

Want to retire early? Start by being tough on your kids!

JMHO...

Cheers

 

[SLB_SA]

JDub: Thanks for your story. If your "harsh" policy can prevent medical problems, then sign me up.

 

[user 37446]

Did anyone here say they were offering formal legal, medical, investment, or counseling advice?

It doesn't have to be stated as such, it can be construed. Maybe people are just saying "This is what I did and it is just for me". I was just wanting others to be aware.

That's why some YT people put a disclaimer on their video when they are showing wiring, plumbing etc. They don't want to get in trouble if someone follows what they are putting out there and gets injured or loses $.

Go ahead and follow the 4% rule with your million bucks. Whatever floats your boat.

 

[JDub]

JDub:  Thanks for your story.  If your "harsh" policy can prevent medical problems, then sign me up.

Wouldn't that be wonderful? My sister and her husband are dealing with just that. My niece Wendy was born with major autism and developmental issues. She's in her early 20's now and functions at ~ a 2 year old level and communicates only in grunts and screams... My sister and my mother (who just turned 90) take of her at their home in NJ. She's at the point that she's almost unmanageable but my sister refuses to to allow her to be institutionalized.

This works for now because my BIL is a VP of an enormous Japanese conglomerate and can pay the outside bills for her care (almost 1 million dollars over the last decade - isn't that unbelievable) just to keep her at home. She is outrageously healthy physically - they pay for physical therapy, social workers, and and specialized nutritionists to maintain her at an enormous cost. She will definitely outlive them. What then? Where does she go? My nephew can't take care of her and there's no one else... What's going to happen to her? I totally understand the medical angle - I'm still paying (very painfully) off 25K of 75K in medical bills for my late wife - even w 3 good insurance policies - most of them not in my name but I do so to keep HER good name...

Cheers...

 

[SLB_SA]

JDub: I'm really sorry that your niece has these extremely serious disabilities and your mother, sister and brother-in-law have to take care of her. One of my uncles, a year older than me, had Down Syndrome and, in the language of the time, was "trainable." He was a friendly person who loved to go bowling and lived to be 60 years old. He lived with my grandfather until he (my grandfather) was about 90 and then lived in a group home, which he loved. The responsibility to care for or arrange for the care of a disabled relative is a difficult and consequential issue. I am lucky that my older daughter "only" has UC (a serious flare up of which caused her to drop out of a nursing program and have high student loans) and my son "only" has constant pain; they are both extremely smart, independent people.

 

[mpruet]

Go ahead and follow the 4% rule with your million bucks. Whatever floats your boat.

The 4% rule is based on two basic trends.  1) Inflation happens and 2) over the long term the market tends to grow by approximately 8%.  Both of these two trends have been occurring since the capitalistic market was founded.  The only exception was in 1929, but if you mark the growth patterns from 1930 on, the two trends still seem to apply. 

So by planning on a nest-egg based on (annual_expenses divided by 0.04) or (annual_expenses times 25), you get a target which can give you a base on which you can live without working again IF you manage that nest egg carefully.  And that means that you avoid withdrawing more than your growth.  By leaving some of your growth invested you make it possible to manage inflation because your base has increased.  

It has absolutely nothing to do with the size of your nest egg.  It has everything to do with how you manage what resources you have.  If you consistently withdraw more than your growth, then you will deplete your nest egg - and I don’t care how large your nest egg was originally.  That’s why quite a few of the folks that won the lottery are broke within a few years.  The same is true with some star athletes and show folks as well.  What is important is how you manage what resources you have - period. 

Let’s say that you are in your early 60s, have retired and getting a pension of $1000 a month.  Let’s say that you sign up for social security at 62 and are getting an additional $500 a month from that.  But you need to push that up to $2000 a month.  So you sell your sticks and bricks for $300K and decide to buy an RV.  Well now you have a nest egg that could be $300K large.  That could bring in $12,000 a year, but then you couldn’t get that RV.  But you only need $500 a month or $6000 a year.  Following a 4% plan, you can determine that $6000 divided by 0.04 is $150,000 which would mean that you have $150K that you could use to buy that RV and still have enough left to bring in additional $500 per month to take your monthly income up to the $2000 level that you wanted.  Your nest egg is not in the millions, but it is large enough to take you to the $2000/month level. 

One other consideration.  SS barely keeps up with inflation, and most pensions don’t even try.  That means that the only hedge you have against inflation is the growth of your nest egg.

 

[RoamerRV428]

JDub, that was wonderful to read!

financials per person are just 'ever so personal' on our life experiences and so much attribute to how our financials happen for sure. So while some here easily are fine, others got situations they face and more.....so let everyone have their say and don't freak anyone out over some common smart sense financial issues being chatted about become some kind of 'bad thing'....it is not. More ya know the better off you might be able to become.

 

[MG1912]

Go ahead and follow the 4% rule with your million bucks. Whatever floats your boat.

I never stated that I followed the 4% rule. I simply noted that it was mentioned in this thread, and then I added my observations on the strategy. My actual withdrawal strategy is less than 4%, as my expenses are less than $40k (closer to $24k). This is due to a conservative view of the future market environment, assuming 2% real growth (4% growth and 2% inflation) moving forward indefinitely. I don't actually believe the future market environment, over time, will be that bleak, but my investment philosophy is to be overly-cautious where possible. My actual strategy is to draw from "buckets" over time in various accounts, including a 401(k), Roth IRA, and taxable account, so it's not anything like a straight 4% withdrawal plan. I will collect (touch wood) SS and a federal pension at 62, which helps ensure my portfolio will survive over time. In reality, I'll probably end up very rich when I'm that age, as I think historical averages are still a real possibility moving forward, but nobody knows what the market will do in the future.

 

[IGBT]

It doesn't have to be stated as such, it can be construed. Maybe people are just saying "This is what I did and it is just for me". I was just wanting others to be aware.

That's why some YT people put a disclaimer on their video when they are showing wiring, plumbing etc. They don't want to get in trouble if someone follows what they are putting out there and gets injured or loses $.

Go ahead and follow the 4% rule with your million bucks. Whatever floats your boat.

You have to be getting compensation for advice before there can be any legal issue at all. 


Someone saying "I put half my money in total stock market and half in bonds" is not going to get you in trouble on any forum lol.   You might as well be worried about recommending Ford vs Chevy and someone suing you because their Ford ended up blowing a head gasket.

Now if you private messaged somebody on the forum and offered to invest their money for a fee, then you could be in deep doodoo.