I had a hunting buddy that retired early a couple of times and he always mentioned hitting this wall that he called "lack of worth". It hit him hard and he would eventually go back to work until retirement did suit him. The lack of worth as he described was a feeling of being left behind or left out, or not being a part of the big picture, or lack of fulfillment, not feeling important, anyway he would feel like he wasn't contributing to society and would get depressed and withdrawn and then he would go back to work and be OK. So it's not the end of the world, if it doesn't work, get a job and earn some more buying power.
Savings required to retire at 40?
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Freelander
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A friend years ago managed some rental property for his Mother-in-law. it was an absolute mess, he had 3 or 4 rentals that moved out in the middle of night after owning a few months rent, and the places were really torn up.
The 1st had a leaky toilet that he was never told about, it rotted the floor out. The rot went underneath the wall in the next room.
The 2nd had so many cock roaches it was barely worth fixing. It took a long time to get rid on them, they were inside the walls.
The 3rd one the carpet little fuzzy stains all over it, we just removed all the carpet completely. He replaced it with tile.
And the list goes on and one of all the problems he had, he finally convinced the MIL to was sell all of them and get out of the business.
Renters have rights and in some states it makes it very hard to evict a renter, and when you do some times that do more damage than its worth.
The 1st had a leaky toilet that he was never told about, it rotted the floor out. The rot went underneath the wall in the next room.
The 2nd had so many cock roaches it was barely worth fixing. It took a long time to get rid on them, they were inside the walls.
The 3rd one the carpet little fuzzy stains all over it, we just removed all the carpet completely. He replaced it with tile.
And the list goes on and one of all the problems he had, he finally convinced the MIL to was sell all of them and get out of the business.
Renters have rights and in some states it makes it very hard to evict a renter, and when you do some times that do more damage than its worth.
OP, you're not going to have $1100 month rental income. You would need to be banking a goodly chunk of that income in order to pay taxes and insurance, make sure you have enough money on hand to pay for a new roof, and cover for the times when you can't find a decent tenant. Or pay a fee to someone to manage the whole shebang for you.
And even if you did have $1100/mo to spend as you wished, you'll be better off with more. Yes, you can squeak by on $1100/mo, but it leaves you with a darn thin margin to pay for upkeep and expenses, and maintain a large enough savings account to cover major vehicle repairs and/or replacement.
You don't say whether you currently have a side hustle that you enjoy and that can be done on the road, but if you don't, my primary advice would be to get one going now. Because, without something like a pension or an inheritance from a rich uncle, you'll need it.
Another thing you could do is start living in whatever vehicle you now have. Nothing like experience to show you how much you can actually save by forgoing paying rent or mortgage. Depending on where you live, that could amount to a chunk of change.
And even if you did have $1100/mo to spend as you wished, you'll be better off with more. Yes, you can squeak by on $1100/mo, but it leaves you with a darn thin margin to pay for upkeep and expenses, and maintain a large enough savings account to cover major vehicle repairs and/or replacement.
You don't say whether you currently have a side hustle that you enjoy and that can be done on the road, but if you don't, my primary advice would be to get one going now. Because, without something like a pension or an inheritance from a rich uncle, you'll need it.
Another thing you could do is start living in whatever vehicle you now have. Nothing like experience to show you how much you can actually save by forgoing paying rent or mortgage. Depending on where you live, that could amount to a chunk of change.
One of my brothers has (hopefully, by now, had) 5-8 rental properties in California. I think he is selling some (all?) of them. Being a landlord is a real pain. One house in Sacto needed $30,000-$50,000 in repairs from the last tenants. On the other hand, retiring early is not an irrevocable decision and you might regret waiting because of concern for money. You can always rejoin the workforce but you can't get back the years you lost. On the road, you might be able to develop "passive" income (is a youtube channel which requires 50-60 hours per week of editing, shooting, etc really "passive") like writing books, composing songs, creating apps, etc. Maybe you could become a great bartender and work off and on. People are offering useful but cautious advice.
How old are you now? Trying to read between the lines, it sounds like you are close to retirement age because you talk about having 401k savings and SS and wanting to know how much cash savings (combined with rental income) would be necessary to bridge the gap between now and 62. But the title of your thread states that you want to retire at 40.
If your intention is to live off of your 401k and SS at retirement age (62, in most cases), then does that mean you currently have enough invested in your 401k already, such that you have calculated that your 401k will be sufficient at age 62 to complement SS and provide for all of your living expenses? Do you have a benefit estimate from SSA? Or do you intend to live off of your 401k savings from the ages of 40 to 62, as well? That requires very careful planning to avoid running afoul of tax laws… How much is in your 401k now? How about your other accounts?
How many houses do you have? You wrote that you wanted to sell your house, but you also wrote that you intended to keep the $1,100/month rental income. That suggests that you have at least two properties. Do you own your own house (or houses) free and clear? What is it (they) worth?
“… selling my home and most of my belongings and exchanging them for an RV and never working again.” If you are under 40 and intend to never work again, your “home and most of belongings” should be worth a ton of money… in excess of $500,000, probably.
“… try to live as cheaply as possible so that you can leave the majority of your money invested” If you intend to live off your portfolio and also have that portfolio last a lifetime, it takes a ton of money…
You’ve received excellent advice on rental income. It *can* work out well. It *often* does not, especially if you are an absentee landlord.
As far as I know (and I am not certain), I’m the only person on this forum I know of that actually did what you are proposing: retire at 40 and live off savings. I retired at 39. I am currently 41. I do not intend to work again. I can tell you that at various points in my working life, I considered buying rental properties, but I always decided against it for all the reasons that others have mentioned in this thread. I have never regretted that decision.
You asked about numbers. As others have said, that is entirely subjective. If you have a gas- or diesel-guzzler and you like to travel a lot, your budget could be double what it otherwise would be if you just stayed on BLM land and moved 25 miles every 2 weeks. For me, I was happy with a general budget of about $1,000/month while I was living nomadically, but I found that “one off” stuff happened all the time, so to feel safe, I’d probably want to raise that to $1,500. I would want at least $3,000 (preferably $5,000) in savings to cover unexpected repairs to the rig. So, say $23,000/year ($1,500 x 12 months + $5,000 emergency fund). There are members of this forum living on much less than that. I ran the numbers once and decided that it was possible to be happy on the road with $800/month, but I’d want more because I don’t like living that close to the edge if I can avoid it.
Your budget for your rig matters a lot, too. You can spend anything you want on a rig. There are members here who report having spent only $3,000 or so on their rigs and being very happy. My rig was about $50,000 but that’s because I had a nice truck and slide-in camper. In the year I was living nomadically, it never broke down or gave me any headaches. That’s what I wanted, and I was willing to pay for it. If I were to do it again, I might get a van in good shape for $10,000, and put another $10,000 or so into the build, for a total of $20,000. Knowing myself, that would probably be the lower limit of what I’d be happy with.
It’s impossible to say much more than that since I don’t know how much you currently have, what the situation is with your property/ies, how old you are, etc. I can say that the kind of savings we are talking about, regardless of the details of your situation, is in the mid-six figures, probably.
I believe that that’s an amount that lies firmly in the realm of fantasy for 99% of people to save over the course of a lifetime; to achieve that by age 40 is outside the realm of reality for probably 99.9% of people. I have done it myself, and so I know what it takes. A lot of stars have to align for you to save that kind of money that young: high income, low expenses, low or no debt, and no wife or kids. Change any of those factors (lower the income, up the expenses, add the wife and kids, add crushing debt, etc.), and the chances of making it happen drop precipitously unless you compensate in another area.
If your intention is to live off of your 401k and SS at retirement age (62, in most cases), then does that mean you currently have enough invested in your 401k already, such that you have calculated that your 401k will be sufficient at age 62 to complement SS and provide for all of your living expenses? Do you have a benefit estimate from SSA? Or do you intend to live off of your 401k savings from the ages of 40 to 62, as well? That requires very careful planning to avoid running afoul of tax laws… How much is in your 401k now? How about your other accounts?
How many houses do you have? You wrote that you wanted to sell your house, but you also wrote that you intended to keep the $1,100/month rental income. That suggests that you have at least two properties. Do you own your own house (or houses) free and clear? What is it (they) worth?
“… selling my home and most of my belongings and exchanging them for an RV and never working again.” If you are under 40 and intend to never work again, your “home and most of belongings” should be worth a ton of money… in excess of $500,000, probably.
“… try to live as cheaply as possible so that you can leave the majority of your money invested” If you intend to live off your portfolio and also have that portfolio last a lifetime, it takes a ton of money…
You’ve received excellent advice on rental income. It *can* work out well. It *often* does not, especially if you are an absentee landlord.
As far as I know (and I am not certain), I’m the only person on this forum I know of that actually did what you are proposing: retire at 40 and live off savings. I retired at 39. I am currently 41. I do not intend to work again. I can tell you that at various points in my working life, I considered buying rental properties, but I always decided against it for all the reasons that others have mentioned in this thread. I have never regretted that decision.
You asked about numbers. As others have said, that is entirely subjective. If you have a gas- or diesel-guzzler and you like to travel a lot, your budget could be double what it otherwise would be if you just stayed on BLM land and moved 25 miles every 2 weeks. For me, I was happy with a general budget of about $1,000/month while I was living nomadically, but I found that “one off” stuff happened all the time, so to feel safe, I’d probably want to raise that to $1,500. I would want at least $3,000 (preferably $5,000) in savings to cover unexpected repairs to the rig. So, say $23,000/year ($1,500 x 12 months + $5,000 emergency fund). There are members of this forum living on much less than that. I ran the numbers once and decided that it was possible to be happy on the road with $800/month, but I’d want more because I don’t like living that close to the edge if I can avoid it.
Your budget for your rig matters a lot, too. You can spend anything you want on a rig. There are members here who report having spent only $3,000 or so on their rigs and being very happy. My rig was about $50,000 but that’s because I had a nice truck and slide-in camper. In the year I was living nomadically, it never broke down or gave me any headaches. That’s what I wanted, and I was willing to pay for it. If I were to do it again, I might get a van in good shape for $10,000, and put another $10,000 or so into the build, for a total of $20,000. Knowing myself, that would probably be the lower limit of what I’d be happy with.
It’s impossible to say much more than that since I don’t know how much you currently have, what the situation is with your property/ies, how old you are, etc. I can say that the kind of savings we are talking about, regardless of the details of your situation, is in the mid-six figures, probably.
I believe that that’s an amount that lies firmly in the realm of fantasy for 99% of people to save over the course of a lifetime; to achieve that by age 40 is outside the realm of reality for probably 99.9% of people. I have done it myself, and so I know what it takes. A lot of stars have to align for you to save that kind of money that young: high income, low expenses, low or no debt, and no wife or kids. Change any of those factors (lower the income, up the expenses, add the wife and kids, add crushing debt, etc.), and the chances of making it happen drop precipitously unless you compensate in another area.
highdesertranger
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I deleted a couple posts, may I remind everyone,
NO POLITICS
and don't respond to a political post
Highdesertranger
NO POLITICS
and don't respond to a political post
Highdesertranger
At a certain age, when life expectancy grows short, it's not only okay to draw down your principal, in my opinion, but you'd be crazy not to. That said...
At age forty you're still a long, long, _long_ way from there. Given the inherent dangers of our world and the near-certainty of all sorts of personal, national and even global disasters on a long enough timeline, I'd not even _consider_ retiring at forty without a net worth of at least a million. (The older you get, the lower that number can become. Otherwise, in practical terms almost no one could ever retire at all.) Even a million would make me nervous, that young.
I'll note that a lot of people here live or are retired on _far_ less than that. Good for them-- they and their frugal, independent spirits are what attracted me here in the first place. They're very much my kind of people; I admire them greatly. But there are enormous risks even in everyday, normal life that should not be discounted. My personal approach is that it's much less worrisome to live cheap and light with money to fall back on in the event of a medical disaster or something than to live cheap and light without such a backup. For example, in 2005 or so I was involved in a motorbike wreck at a speed of well under 15MPH that somehow managed to completely cripple me for about six months. And in about 2010 I had a heart attack that generated one single medical bill-- among many others also in the four and five digit range-- that ran over $40k.
I mean... What if you decide to retire when you've barely enough to scrape by, then run out due to factors beyond your control at age 60? What skills would still be current? What manual labor could you still do, if you're one of the unlucky ones (like me, frankly) that doesn't age well? Where would you go? What would you do? Who will hire you? Have you ever noticed how many elderly there are among the homeless? This is a big part of why.
The bottom line is that at some point retiring early becomes a one-way journey, in the financial sense. Be _damn_ sure your ducks are absolutely, positively in a row first. There's little to no forgiveness for mistakes on this one.
And, as an aside, I retired at 54 partly due to failing health, partly thanks to a small pension I was already eligible for, and mostly due to having saved early and often. So to a degree I've been there, done that. Even though I've done pretty well so far financially and will be sixty in a few weeks without much expectation of seeing seventy, I'm _still_ scared of running out. If I'm smart, I'll never stop being scared. The consequences are terrible.
At age forty you're still a long, long, _long_ way from there. Given the inherent dangers of our world and the near-certainty of all sorts of personal, national and even global disasters on a long enough timeline, I'd not even _consider_ retiring at forty without a net worth of at least a million. (The older you get, the lower that number can become. Otherwise, in practical terms almost no one could ever retire at all.) Even a million would make me nervous, that young.
I'll note that a lot of people here live or are retired on _far_ less than that. Good for them-- they and their frugal, independent spirits are what attracted me here in the first place. They're very much my kind of people; I admire them greatly. But there are enormous risks even in everyday, normal life that should not be discounted. My personal approach is that it's much less worrisome to live cheap and light with money to fall back on in the event of a medical disaster or something than to live cheap and light without such a backup. For example, in 2005 or so I was involved in a motorbike wreck at a speed of well under 15MPH that somehow managed to completely cripple me for about six months. And in about 2010 I had a heart attack that generated one single medical bill-- among many others also in the four and five digit range-- that ran over $40k.
I mean... What if you decide to retire when you've barely enough to scrape by, then run out due to factors beyond your control at age 60? What skills would still be current? What manual labor could you still do, if you're one of the unlucky ones (like me, frankly) that doesn't age well? Where would you go? What would you do? Who will hire you? Have you ever noticed how many elderly there are among the homeless? This is a big part of why.
The bottom line is that at some point retiring early becomes a one-way journey, in the financial sense. Be _damn_ sure your ducks are absolutely, positively in a row first. There's little to no forgiveness for mistakes on this one.
And, as an aside, I retired at 54 partly due to failing health, partly thanks to a small pension I was already eligible for, and mostly due to having saved early and often. So to a degree I've been there, done that. Even though I've done pretty well so far financially and will be sixty in a few weeks without much expectation of seeing seventy, I'm _still_ scared of running out. If I'm smart, I'll never stop being scared. The consequences are terrible.
I sort of retired at 53 but kept working doing things I enjoyed having enough pension and savings to get by for several years as well as health insurance and life insurance for my family. This year I turn 70 so it has luckily worked out well so far. Big concern now is what happens if I need assisted living or nursing home. My family is a big comfort to me now. What was once a liability has become an asset as far as the possibility of assisted living. There are tools such as trusts (as long as you do it 5 years before applying for Medicaid) to deal with what remains of my savings and property which in the case of a nursing home would need to go away to qualify for Medicaid as basically they give you $40 a month and pay for the nursing home while taking everything else. The cost of even assisted living is over $3,000 an month probably closer to $4,000 and the nursing homes are over $6,000 a month in my experience dealing with my parents. My father and I were both veterans during war time so the benefits are substantial but not near enough to cover all costs. Having a pension over $2,200 a month requires most all of it go to medical expenses to qualify in many cases so it is basically a wash. Lots of things to consider if you plan to leave this earth the way you came with nothing. I’m really not afraid of much any more as it just won’t matter much longer and I plan to continue to enjoy life as much as I can.
RoamerRV428
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yea we lived by the work like hell when younger and rest on your money stack when older but like Rabbit mentions even a stack of money ain't guaranteed, health issues and whatever can bleed thru money fast.
We knew we had health to work and bank. Older ya get, again like Rabbit said, your not guaranteed anything like when you got that younger chance on your side so?
My hubby retired at 50 from his 12 hr shift job and we shut down the farm which was for profit and alot of backbreaking work and he is now driving vehicles for a dealership for some income to help support our lifestyle, which is frugal cause we are that type but that extra farm land we bought, long ago and paid on all those years, yea we sold it and now got a nice big cash dump and we got that invested to make more.
So around 40 for early retirement I would be sure I did have some bucks, not low bucks either, you can't go wrong with more
Usually in the 'early 50s' is a true 'early type retirement' thought by most people. So 40 kinda, unless true med issues and more you have to say screw it, I need to live NOW, if you have time, hmmm, a bit more working and banking for retirement is not a bad thing.
But ya know, in the bitter end, it truly is a crapshoot if you decide to change up your life at any time when you want. Many of us went thru lots of changes to get where we are, some thru good and hard work and ?? and some thru bad times and financial issues and more??
So in the end, kinda think hard what you want, and if you decide to do XYZ...then do it Hell life is to be lived on your personal terms right? Do what you think best! Do that you will be ok
We knew we had health to work and bank. Older ya get, again like Rabbit said, your not guaranteed anything like when you got that younger chance on your side so?
My hubby retired at 50 from his 12 hr shift job and we shut down the farm which was for profit and alot of backbreaking work and he is now driving vehicles for a dealership for some income to help support our lifestyle, which is frugal cause we are that type but that extra farm land we bought, long ago and paid on all those years, yea we sold it and now got a nice big cash dump and we got that invested to make more.
So around 40 for early retirement I would be sure I did have some bucks, not low bucks either, you can't go wrong with more
Usually in the 'early 50s' is a true 'early type retirement' thought by most people. So 40 kinda, unless true med issues and more you have to say screw it, I need to live NOW, if you have time, hmmm, a bit more working and banking for retirement is not a bad thing.But ya know, in the bitter end, it truly is a crapshoot if you decide to change up your life at any time when you want. Many of us went thru lots of changes to get where we are, some thru good and hard work and ?? and some thru bad times and financial issues and more??
So in the end, kinda think hard what you want, and if you decide to do XYZ...then do it
Hell life is to be lived on your personal terms right? Do what you think best! Do that you will be ok
Freelander
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I made a few decisions early in life concerning retirement.
About 35 years ago, I was looking at retiring with just SS, I knew that wasn’t enough to live on, SS was never designed for that. I had gotten out of the Army a few years earlier, and joined the Reserves. I decided I would stay in long enough to retire after 20 years. The Retention NCO gave me a piece of advise, ‘If you are going to stay until retirement, don’t let your enlistment run out at 18 years, take at least a 2 year reenlistment now, and then take two 6 year reenlistments later. You don’t want to try to reenlist at 18 years, you never know what will happen’. That was some of the best advise I ever received.
And then the Gulf War started, while I tried to go, I didn’t try real hard. After the War was over the Government, started shutting down a lot of Reserve Units and making it very easy to kick people out and for Soldiers to get out on their own. My unit was one of the units shutdown. I had to decide if I was going to give them 16 years, or if I was going to do my last 4 and retire. I decided to stay, the unit I transferred was 90 miles away, and was a worthless unit. So I found another unit about 60 miles away, and joined that one. And I finished my time in Jan 1998 with 20 years and 6 months service. But I had to wait until I turned 60 to draw my money. That happened in Oct of 2019, I now was able to enjoy those 20 years I spent, and have full Retired Military benefits. It’s not a lot, but it’s better than no money at all.
For the next 20 years I worked for the VA, and now have 2 more retirement funds I am drawing. I retired for good in May, and took an early retirement, at age 60. If I had waited another year I could have drawn a full retirement, but it would only have gotten me about another $100 a month, it just wasn’t worth it to me.
So When I hit age 62, I plan to start drawing my SS and since I am retired Military, they will pay me slightly more when I apply.
My house is payed for, my car is payed for, I still own on the RV, and I can pay that off anytime I want to. And probably next year I will sell the house, I already for a buyer for it, I can give him a call and tell him to write me a check.
I starting planning for this at least 35 years ago, and so far it has worked out for me. I will have enough left to live comfortably for the left years of my life.
You need to plan for retirement years in advance, get some good advice and don’t make any quick decisions. Plan ahead, and make sure you can afford to retire at the right time.
About 35 years ago, I was looking at retiring with just SS, I knew that wasn’t enough to live on, SS was never designed for that. I had gotten out of the Army a few years earlier, and joined the Reserves. I decided I would stay in long enough to retire after 20 years. The Retention NCO gave me a piece of advise, ‘If you are going to stay until retirement, don’t let your enlistment run out at 18 years, take at least a 2 year reenlistment now, and then take two 6 year reenlistments later. You don’t want to try to reenlist at 18 years, you never know what will happen’. That was some of the best advise I ever received.
And then the Gulf War started, while I tried to go, I didn’t try real hard. After the War was over the Government, started shutting down a lot of Reserve Units and making it very easy to kick people out and for Soldiers to get out on their own. My unit was one of the units shutdown. I had to decide if I was going to give them 16 years, or if I was going to do my last 4 and retire. I decided to stay, the unit I transferred was 90 miles away, and was a worthless unit. So I found another unit about 60 miles away, and joined that one. And I finished my time in Jan 1998 with 20 years and 6 months service. But I had to wait until I turned 60 to draw my money. That happened in Oct of 2019, I now was able to enjoy those 20 years I spent, and have full Retired Military benefits. It’s not a lot, but it’s better than no money at all.
For the next 20 years I worked for the VA, and now have 2 more retirement funds I am drawing. I retired for good in May, and took an early retirement, at age 60. If I had waited another year I could have drawn a full retirement, but it would only have gotten me about another $100 a month, it just wasn’t worth it to me.
So When I hit age 62, I plan to start drawing my SS and since I am retired Military, they will pay me slightly more when I apply.
My house is payed for, my car is payed for, I still own on the RV, and I can pay that off anytime I want to. And probably next year I will sell the house, I already for a buyer for it, I can give him a call and tell him to write me a check.
I starting planning for this at least 35 years ago, and so far it has worked out for me. I will have enough left to live comfortably for the left years of my life.
You need to plan for retirement years in advance, get some good advice and don’t make any quick decisions. Plan ahead, and make sure you can afford to retire at the right time.
These are GREAT posts and much needed voices on this forum. I realize now that I didn't dare add that I wasn't certain about my financial future because that could be seen as tone deaf when many are struggling just to survive.
But the truth is the truth, so I guess we should just go ahead and state it. My financial planner is VERY worried for my future. He understands my goals, and we have worked out a plan that should be robust enough under a variety of market conditions, but he'd very much prefer that I keep working. His worries cause me to worry. And I know I should worry. So even if you are able to save a million dollars by age 40, you can't rest easy, as someone else mentioned above.
Using the 4% rule (mentioned above), you get $40k from a million dollar portfolio. That's great. If your portfolio is worth $500k next year, suddenly you are only getting $20k. That can wreak havoc on a family's budget. You can compensate in a future market environment of uncertain (and projected low) returns by lowering your withdrawal rate. Say, to 2%. Now you're safer, but you're only pulling $20k. That's great. What if I want to get married and have children in the future? I'm still young enough for that. Either I would have to resolve for my family to live poor forever... or I would have to go back to work. I likely wouldn't be able to return to my old industry, so I'd just be a guy looking for a job.
I'm not denying that a million dollars is a lot of money. It is. But the term "millionaire" derives its cachet from a bygone era when men wore hats and drove buggies, and a haircut and shave cost six bits... and we used "bits." Today, it is not hard to burn through a million dollars, and it is not a sum of money that sets you up for a luxurious life forever. With careful planning, it might be enough to live frugally forever. I don't owe any debts, and I own my home and car free and clear. So I'm not too, too worried, but... I am certainly not swimming gleefully in a vault of gold coins like Scrooge McDuck... and I'm still young enough to have many decades of uncertainty in front of me to worry about. I agree with the above poster. #StayWorried #neverYOLO!
But the truth is the truth, so I guess we should just go ahead and state it. My financial planner is VERY worried for my future. He understands my goals, and we have worked out a plan that should be robust enough under a variety of market conditions, but he'd very much prefer that I keep working. His worries cause me to worry. And I know I should worry. So even if you are able to save a million dollars by age 40, you can't rest easy, as someone else mentioned above.
Using the 4% rule (mentioned above), you get $40k from a million dollar portfolio. That's great. If your portfolio is worth $500k next year, suddenly you are only getting $20k. That can wreak havoc on a family's budget. You can compensate in a future market environment of uncertain (and projected low) returns by lowering your withdrawal rate. Say, to 2%. Now you're safer, but you're only pulling $20k. That's great. What if I want to get married and have children in the future? I'm still young enough for that. Either I would have to resolve for my family to live poor forever... or I would have to go back to work. I likely wouldn't be able to return to my old industry, so I'd just be a guy looking for a job.
I'm not denying that a million dollars is a lot of money. It is. But the term "millionaire" derives its cachet from a bygone era when men wore hats and drove buggies, and a haircut and shave cost six bits... and we used "bits." Today, it is not hard to burn through a million dollars, and it is not a sum of money that sets you up for a luxurious life forever. With careful planning, it might be enough to live frugally forever. I don't owe any debts, and I own my home and car free and clear. So I'm not too, too worried, but... I am certainly not swimming gleefully in a vault of gold coins like Scrooge McDuck... and I'm still young enough to have many decades of uncertainty in front of me to worry about. I agree with the above poster. #StayWorried #neverYOLO!
Freelander
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With the proper planning you can retire and be debt free, just have to look way ahead.
I mentioned I can pay off the RV at any time, but you have to have at least 1 loan out to maintain a decent credit score, if I payed it off my credit score will go down.
You get penalized for living within your means.
I mentioned I can pay off the RV at any time, but you have to have at least 1 loan out to maintain a decent credit score, if I payed it off my credit score will go down.
You get penalized for living within your means.
mpruet
Well-known member
Freelander said:
Not wanting to disagree, but I have to disagree... ;-)
My current credit score is 805 and I haven’t had a loan in over 30 years. I use my credit card which I totally pay off every month.
Freelander
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I stand corrected Credit Card usage is another way to raise your Credit score.
I didn't have a Loan or a Credit card for a few years, and it did hit my credit score, it but was for the best, because I couldn't run up any big bills.
Now that I do have a CC I pay it off every month.
I didn't have a Loan or a Credit card for a few years, and it did hit my credit score, it but was for the best, because I couldn't run up any big bills.
Now that I do have a CC I pay it off every month.
mpruet
Well-known member
About using my credit card for most of my purchases. Yes, I know that Dave Ramsey considers a credit card to be of the devil, but then...
I use the free app “Mint” as my budget tool and Mint is able to automatically record all expenses on my Credit Card, Debit Card, and checks as they are processed. What it is not able to record are cash expenses. So actually I found it to be easier to just open Mint once a day to see what expenses have been recorded. If I paid cash, then I would have to manually record it, which is much more difficult. This make it much easer to keep track of my expenses over the month.
I use the free app “Mint” as my budget tool and Mint is able to automatically record all expenses on my Credit Card, Debit Card, and checks as they are processed. What it is not able to record are cash expenses. So actually I found it to be easier to just open Mint once a day to see what expenses have been recorded. If I paid cash, then I would have to manually record it, which is much more difficult. This make it much easer to keep track of my expenses over the month.
mpruet
Well-known member
MG1912 said:
When you retire you need to be focusing on strategy and not so much on how to get ‘x’ growth in a year.
First of all, you should be investing in broad index funds. This way you are highly diversified and have very low risk of a large 50% decrease in nest egg size.
Secondly, it is wise to have ‘x’ amount of your nest egg in cash or near cash such as muni bonds or CDs. This is the money that will be used to fund your expenses for the next ‘x’ years. The rest you leave in broad index investments. Then once a year, you transfer money to your ‘spending bucket’.
I have three main buckets. A - investments/Roth/IRA/etc. B - 4 years of expenses invested in a muni bond ladder. C - cash in a money market which will be used to fund this years expenses. D - my checking account at the bank. Each bucket is a separate account with my broker (TDAmeritrade). At the start of the month I have an automatic transfer from bucket C to my checking account. At the end of the year I move cash from B to C and then re-fund bucket B from A (RMD and other funds). If in a recession, I might defer refunding B until recovery.
The advantage of having 4 years of expenses in bucket B is that when a recession hits, I have a 4 year buffer before the recession hits me. Generally a recession only lasts 5 months, so I can easily ride that out. So if the value of bucket A drops significantly, you still have the cash to maintain your current standard of living.
When you next speak with your advisor ask him about the ‘bucket’ strategy and bond ladders.
Sofisintown
Well-known member
I use credit cards for virtually all purchases. I pay them off before they are due and I don't carry balances.
It keeps my credit score very high, in case I ever need it.
Needless to say, I never buy anything I can't afford to pay in cash.
It keeps my credit score very high, in case I ever need it.
Needless to say, I never buy anything I can't afford to pay in cash.
I also use a credit card for almost everything, paying it off in full each month.
I like the double points with Capitol One, which you can use via their “purchase eraser” to erase any eligible charge directly from your balance.
I like the double points with Capitol One, which you can use via their “purchase eraser” to erase any eligible charge directly from your balance.
Spaceman Spiff
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Same here: I haven't used cash much this year and I have my credit card on autopay (forgetful).
My credit card is cash back; I got $175 back last year.
My credit card is cash back; I got $175 back last year.
Well since I am older and came from a very poor poverty stricken part of the country where it was difficult to survive my values may be a little different based on my view point. First off my salvation was joining the military and with the skills I had prior to joining was able to work several jobs and use my saved and invested reenlistment bonus to be able to go to college get a teaching job, get married and start a family. As noted previously a wife, three kids and a mortgage payment (VA benefits allowed me to buy more house than I could afford but gave us the space needed to start a business) caused me when the business failed to declare bankruptcy. Fortunately on the small business administration advice I had used credit cards to establish the business. Credit card companies had no problem encouraging me to extend my credit beyond my capabilities to pay it off. Apparently many small and large businesses use this ploy to through bankruptcy to build up facilities and equipment as no one wants it back and the courts only required I repay 10% and I only had to pay that because I had too much equity in my house. After years of working several jobs and struggling I was tired. My oldest child was in military service and my two youngest had gotten full scholarships. By selling the house I was able to buy retirement time based on my military service and an old refurbished motor home and my wife and I set out. Things have just gotten better since then but I decided that I would never hesitate to use credit cards if necessary even if it meant going bankrupt again as big business, corporations, and the very rich use the banks, Wall Street and our government to game the system regularly. Just to give you an example my credit score is over 800 and I could borrow more than I could pay back in two lifetimes just on credit cards. That just doesn’t make sense to me and shouldn’t to them. I pay my cards off each month but I plan not to own anything and have absolutely nothing when I die. My kids already have been given anything of real value I owned and I am totally happy to let them deal with it. As long as I have clothes on my back, food in my tummy and a roof over my head (even if it is an RV or whatever) I am good, no actually great!
