How much cash to retire?

[Junk Viking]

Originally Posted by Mike OReilly

We are on the boat about 1/2 of each year (outside of Covid years), and we do land things the other 1/2. In 2019 (last tax year) we spent approximately $26,000 CND each year, which currently translates to about $19,800 USD. This is what we spend because this is all we have. And by we, I mean two adults. We've been doing this since 2015.

. . .

Of course our lifestyle is also quite a bit different than most here. We almost never eat out. We don't pay for entertainment. We don't fly back home. We do almost all our own maintenance and repairs. And we also cruise in areas where costs are a lot less than more popular zones.

. . . .

It is more than possible to live a very comfortable, but financially modest life, on a sailboat. It all comes down to lifestyle, and perhaps more importantly, what you value.

So true, so true.
Cruising is really about what you prioritise, what you dare, and how much you can let go of the tunnel vision, consumerism and fears that society instills in us.

I have met cruisers out there of all sorts, money never determined how happy they were or how much they enjoyed the freedom.

One girl I know got a boat for cheap down in Trinidad after the 2008 bump.
If she has occasional work, she dumps the money into maintaining her boat (materials only).
Daily living is by fishing (she is really good with just a line and a hook) and exchanging fish for greens and veggies with the Trini street vendors.
Her choice, her happiness.

I met another in the opposite end of the spectrum.
He sold his company and got himself a huge (50+ feet I think) band spanking new Hanse, because "He and the gf. agreed they couldn't live in anything smaller"

None seemed happier than the other!!!

[Mike OReilly]

Originally Posted by Junk Viking

So true, so true.
Cruising is really about what you prioritise, what you dare, and how much you can let go of the tunnel vision, consumerism and fears that society instills in us.

I have met cruisers out there of all sorts, money never determined how happy they were or how much they enjoyed the freedom....

No surprise, but I agree.

This is why I always advise people new to the game to get the smallest boat you can live with. Too many new folks approach the cruising choice with an idea to getting the biggest, or fanciest, most comfortable, or best decked-out, boat they can afford. After all, this is how we've all been trained in this consumerist, "(s)he who dies with the most stuff wins," kind of culture.

If you look at the question from the other end -- the smallest -- it forces us to really question and understand what we really value; what we really need.

For some that really might be the 50+ foot Hanse. If so, then great. But many of us will be able to do all we want with something a lot smaller and cheaper. And this makes freedom easier to achieve.

[Yihang]

Nah.....keep buying those 45 foot performance catamarans so I can take them off you in 10 years...

I just noticed a lot of Boreal 44/47s are starting to come onto the market.

[NPCampbell]

Originally Posted by Mike OReilly

According to this official (Social Security) government website, the USA national median wage in 1919 is: $34,248.45. An individual making $48k is considerably over the median. The average income was: $51,916.27.

As the site states:

You are quoting the median income for workers. I was quoting the median income for FULL TIME workers in 2019. The millions of part time workers like high school and college students really skews the numbers. The median income for full time workers in 2020 is now over $50k.

See the Bureau of Labor Statistics web site:
BLS median weekly earnings for FULL TIME workers

[Mike OReilly]

Originally Posted by NPCampbell

You are quoting the median income for workers. I was quoting the median income for FULL TIME workers in 2019. The millions of part time workers like high school and college students really skews the numbers. The median income for full time workers in 2020 is now over $50k.

See the Bureau of Labor Statistics web site:
BLS median weekly earnings for FULL TIME workers

Last time I checked, part time workers are still workers. The median income is as I quoted. If you want to pull out a subset, you can get pretty much any number you want.

The millions of part time workers are not students. The vast majority are low-paid service workers who are purposely kept at below full time wages so the companies can avoid all the responsibilities that comes with having full time employees.

[NPCampbell]

Originally Posted by Mike OReilly

Last time I checked, part time workers are still workers. The median income is as I quoted. If you want to pull out a subset, you can get pretty much any number you want.

I didn't pull out a subset. I stated up front "full time workers" and provided you with the number exactly as was shown by the Bureau of Labor Statistics. If you feel the need to bend the numbers by including 17+ million students and seasonal workers, then knock yourself out. Hell, add in retired grocery store greeters if it makes you feel better.

Originally Posted by Mike OReilly

The millions of part time workers are not students. The vast majority are low-paid service workers who are purposely kept at below full time wages so the companies can avoid all the responsibilities that comes with having full time employees.

Last time I checked, 14 million was still considered millions.

There were 23.6 million part time workers in Q4 of 2019 (compared to 118 million full time workers). There were 14 million high school and college students employed and 3 million seasonal workers.

BLS data for both full time and part time employment

[Jbwh]

Originally Posted by Yihang

Nah.....keep buying those 45 foot performance catamarans so I can take them off you in 10 years...

I just noticed a lot of Boreal 44/47s are starting to come onto the market.

Yup, not cheap enough for me yet! Hopefully in 5 years when I’m about to go slow the choice will have expanded and the price point lowered..... here’s hoping

[sailorboy1]

Originally Posted by Clipper4730

So question, how much cash do think you want/need to retire and be comfortable. We have several friends in our age bracket 49 me and 39 admiral who have retired completely however they are quite hazy on how much they have in the bank etc. we know their budget but we are curious to know how much is enough. Given the current state of things we are seriously thinking of bailing out and enjoying life. Assume no mortgages or other major debts a million enough 2 million just not sure. Mine is not a job you could leave and come back to at the same pay so the decision would be final. Thoughts? Just spitballing and since we can’t discuss it on the cruisers beach though I would throw it out here.

Cheers

So Clipper4730 I don't think you have made a post since this (I could be wrong but that isn't the point).

Please share what you have decided the answer is for you.

[Briggers]

There is no need to retire just on your pension. I retired as a Fire Officer in 1997 and found almost impossible to exist on my pension. Fortunately I found something that occupied my time and supplemented my pension quite nicely. Best thing is, I can do it anywhere I happen to be.

The opportunities are out there, if you just look for them

[David Chop]

I'm late to the party here, but I'll toss this in anyway.


Here's a quick spreadsheet for spitballing retirement numbers. It's based on the same calcs used to populate compound interest tables. Plug in whatever numbers you like, but I say you folks using 7+% are crazy. For reference, Vanguard uses 4.3%. I use 4.25 and call it conservative. When I'm feeling super optimistic I'll plug in 6.5. YMMV.

[SVsomedaysoon]

This is an old thread, but I’ll throw in since it’s an area of interest for me. The super simplified answer is about 25x your annual expenses assuming it’s invested. There are really great resources available on this at the financial independence subreddit and jlcollinsnh.com

[valhalla360]

Originally Posted by SVsomedaysoon

This is an old thread, but I’ll throw in since it’s an area of interest for me. The super simplified answer is about 25x your annual expenses assuming it’s invested. There are really great resources available on this at the financial independence subreddit and jlcollinsnh.com

That's just another way of saying the 4% rule.

Very conservative unless you assume your investments will return next to nothing.

At 62 an immediate annuity (very conservative approach) will generate around 5%.

If you actually invest (nothing crazy), 5-6% long term if quite reasonable. Just keep 2-4yrs of expense money someplace conservative so you can ride out a market downturn.

[ol1970]

Originally Posted by valhalla360

That's just another way of saying the 4% rule.

Very conservative unless you assume your investments will return next to nothing.

At 62 an immediate annuity (very conservative approach) will generate around 5%.

If you actually invest (nothing crazy), 5-6% long term if quite reasonable. Just keep 2-4yrs of expense money someplace conservative so you can ride out a market downturn.

I agree 4% seems quite conservative these days when we've been on a 12 year bull run. I'm a fan of more of a glidepath where we spend a little less the first 5-10 years then if we have avoided the dreaded sequence of return risks associated with the 4% rule we loosen the purse strings a bit. But we are a little younger than the average retiree.

[SVsomedaysoon]

Yep, it's definitely just the 4% rule. Retirement isn't a one size fits all game though, but I do think its a good starting point to someone who's just starting to think about it. My main point was to direct folks to early retirement focused resources that have LOADS of quality content to help sort through the nuances that might apply to their particular situation. You're right though, it could be too conservative if you're in your 60s and will have SS soon, for others trying to retire in their 40s or earlier it might not be conservative enough.

[ol1970]

Originally Posted by SVsomedaysoon

Yep, it's definitely just the 4% rule. Retirement isn't a one size fits all game though, but I do think its a good starting point to someone who's just starting to think about it. My main point was to direct folks to early retirement focused resources that have LOADS of quality content to help sort through the nuances that might apply to their particular situation. You're right though, it could be too conservative if you're in your 60s and will have SS soon, for others trying to retire in their 40s or earlier it might not be conservative enough.

I really enjoyed reading JLCollins blog for sure. Tons of fantastic information, also need to take stuff with a grain of salt though and make your own decisions. One of his earlier articles (somewhere around 2014) talked about owning vs. renting and came down strongly on the renting side. That point of view didn't quite age well, and now he is owning again instead of renting. That's a minor nitpick though and I think his writing should be mandatory for every graduating high school student. I actually give his book with some cash inside when I'm invited to graduation parties. I even offer to double the gift if they call me back to have a 20 minute conversation about what they learned from it. Sadly nobody has bothered to make a quick extra $100 by calling. Maybe they just don't like me lol!