How much cash to retire?

[valhalla360]

Originally Posted by ol1970

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.

It's also conservative pretty much any 30yr time period you look at.
If you look at the last 12yr market run, you could argue 10-15%...that would be overly optimistic.

Keeping 2-4yrs in a conservative place to ride out a downturn, largely alleviates the sequence of returns risk.

Of course, the 4% rule is pretty silly when taken at face value as it presumes, you keep spending per the plan down to the last dollar. Most sane people will scale back spending if the account balance long before that happens.

[ol1970]

Originally Posted by valhalla360

It's also conservative pretty much any 30yr time period you look at.
If you look at the last 12yr market run, you could argue 10-15%...that would be overly optimistic.

Keeping 2-4yrs in a conservative place to ride out a downturn, largely alleviates the sequence of returns risk.

Of course, the 4% rule is pretty silly when taken at face value as it presumes, you keep spending per the plan down to the last dollar. Most sane people will scale back spending if the account balance long before that happens.

Yes sir, it should really just be used as a rough channel markers to make sure your plan is reasonably on target. Nobody spends exactly 4% each year. I retired at 43 and my spending has been very lumpy. Some years it is under 1% other years it might tick to 5%, just be flexible to adjust. Just because you can spend 4% doesn't mean you have to or should. Especially if a lower withdraw rate meets all of your needs.

I think the best retirement calculator out there is "Rich Broke or Dead". It hits you right in the face that there is a higher probability of you being gone from this earth than there is going broke if you are in the 4% withdraw range. Get busy living!

[BelizeRumRunner]

I see what is happening to my country, the world as a whole with the pandemic, friends dying way before their time and can read the writing on the wall - live life to its fullest before it's too late.
While watching the sailing channel "Project Atticus" which starts with a young couple fixing up a 30 footer to sail around the world with only $2000 in their kitty, I figured if they had the cajones to do that l, what was I waiting for?
I also realized even if I worked till retirement at 65 or so, it would never be enough to live comfortably in America. My plan A and plan B got shot down due to divorce and 2008 fallout. So, I focused on plan C.
I could retire in a 3rd world country, and settled on Belize. An English speaking, democracy with warm waters, beautiful people and an economy tied to the US dollar 2 for 1.
I set a goal to have $100k in a combination of 401k, selling everything we owned and savings and started looking for a boat. We set a limit of 40k for the boat. My wife and I found the boat, a 38' Islander Freeport. We offered 36k for the boat if repairs were made. Ended up paying only $26k but had to do the repairs ourselves. I retired at the age of 61, I took the remaining $ and put it in an Etrade account. It has done very well and has essentially covered our monthly cost of living. So, after 6 months of boat repair and living expenses (we live on the boat in a marina) we still have the same amount that we started with. Actually a little more thanks to Tesla. I also pay for everything with an airline miles credit card first and pay it off monthly which provides us with essentially free air travel. Which we have used a lot in the last 6 months since the boat was in Charleston, SC and we lived in California.
I will start collecting SS at 62 in about 6 months. That will be plenty in itself to sustain a moderate life in Belize, especially if we live off the hook. Belize also has free health care!
I have never really worried about money since the time I was a kid and a gypsy reading my palm said I would always have money. I also believe that if God takes care of his animals, the birds and bees and all that, surely he will provide for the faithful in his flock.
Good luck
Don't worry, be happy!
Life always throws curve balls when you least expect it. Knowing that, just keep an eye out, prepare in the best way you can and swing for the fence.

[chubby]

Originally Posted by GenryHale

Retirement planning is a tricky business, and it's easy to feel unsure about how much is "enough".

i think i attempted an early retirement in my mid to late 30s..


what was enough?

instead of a sum of $$...my focus was just on cash flow.
specifically cash flow from passive investments..
cash flowing being enough to cover the avg monthly expenses..



once cash(net profits) from real estate investment (rentals) was enough for my (land based) expenses.. i started thinking that early retirement could be an option..
..and then once i noticed that income from market investments (conservative option selling) had also exceeded total expenses the previous 12 months.. i thought "gosh, i think i could retire right now if i wanted" ..

so i then sold my business and bought a boat in panama.



i didnt actually have free "cash" at all until that capital gain from getting bought out.. and i don't think that $$ was ever touched.

i get bored easily so i did end up doing a another start up pretty quickly(a bit more ambitious but also set up so i could manage it remotely)

[Terry107]

A lot depends where you are on the life journey.I took up sailing quite late in life and well into my career path.I purchased by yacht many years ago but always had in mind that when I retired I wanted a decent boat.My boat is a Rival 34 not big and not expensive but a capable yacht for what I wanted.
I was an accounts manager for a pharma company, I was made redundant at 69!!!!My military pension and my company pension is not massive about £50K combined.It has been sufficient to allow my to cruise anywhere I wish.I have sufficient to deal with upkeep and updates to the boat.I am capable of doing the majority of work on the boat myself and live a good life on the boat visiting places that interest me.I sail alone and fly home when I need to see the family or they come out and visit me.Happy days

[Mike OReilly]

It all depends on lifestyle, IOW, how one chooses to live. Two of us live in Canada on a very modest pension income, plus equally modest savings ... nowhere near the supposed millions the financial industry tells us is necessary.

But not everyone wants, or is able to live, as frugally as we do. And that's fine with me. Just know, there are other ways to live, and to live well, with a whole lot less.

It all comes down to what is important in life. I prioritized freedom over security. We retired in our late 40s/early 50s. That was eight years ago. Our financial lives are stable, and we're still having the time of our lives.

[AKA-None]

I retired at mid 30,s and was a house husband
A cool years later someone offered me a huge sum of money to come back
It’s been ok and my retirement fund is waaaay more than it would have been
Life’s been ok so far

[unlimited]

Originally Posted by AKA-None

I retired at mid 30,s and was a house husband
A cool years later someone offered me a huge sum of money to come back
It’s been ok and my retirement fund is waaaay more than it would have been
Life’s been ok so far

@AKA-None what career did you have before retiring in your mid 30s? I just turned 30 and would also like to do the same, however I feel like it's a struggle to get there as I don't have a passive income stream built up. Hope to learn from your experience!

[letsgetsailing3]

Originally Posted by unlimited

@AKA-None what career did you have before retiring in your mid 30s? I just turned 30 and would also like to do the same, however I feel like it's a struggle to get there as I don't have a passive income stream built up. Hope to learn from your experience!

He said in his post, "house husband".

So, marry rich!

Better yet, build a career and maximize your income/savings/retirement funds during your peak income-earning years. Money = control.

[chubby]

Originally Posted by unlimited

@AKA-None what career did you have before retiring in your mid 30s? I just turned 30 and would also like to do the same, however I feel like it's a struggle to get there as I don't have a passive income stream built up. Hope to learn from your experience!

i think many times we only look at 1 side of the equation.. (the money coming in)
..but money going out part is equally important.


just think about it.. if you can reduce your expenses to 25%-30% of your after tax income.. then each year working will pay for 3-4 of living. (and you use your savings to invest)

imo, i think early retirement is doable in the united states with a income of 50-60k (easier in low cost of living areas..but if you are in a high cost of living area...why are you even living there there? (move) )


in my case i was a student until ~30.. and naturally super tight with the pennies.

no kids..but big student loan debts...and since there was the female, there was the pressure to add that big mortgage chain.

so even though the income did increase....the expenses didn't until they could be covered by monies coming in .
meaning i could aggressively save/invest.. with resulted in being able to leave the game in ~7 years.



it is difficult(at least for me) to make money without money.. so having "Savings" is helpful obviously.
this book covers the math and nuts/bolts (and was super helpful to me)












this book was great in terms of removing emotion from investment equations and learning to understand "risk".

[Mike OReilly]

Nice post Chubby, you beat me to what I was going to say. Most people only focus on one side of the balance sheet; the revenue. Few seem to put serious thought into the other side; the expenditures.

Increasing your bottom line can be achieved both ways, and for many (like me), it's far easier to reduce costs than increase income. It also has that added benefit of freeing up more time to go cruising.

This does require a different mindset than the one drilled into all of us in our consumer societies. And it also means managing your life to limit costs; kids being a big one. Mortgages (i.e houses) are another. Heck, just having a job is expensive. Gotta pay for extra clothes, shoes, cars, childcare, professional fees, etc. And we haven't even talked about the cost of education, which can put people into insane debt even before then get out of the gate.

I've said this many times before, but my spouse and I 'retired'* when we were late 40s/early 50s. We have a very modest nest egg, and one of us is receiving an equally modest pension which we basically live on. We've managed to live -- and live well -- since moving to this boat life** in 2015. And we live below the poverty line here in Canada.

In Canada, the financial leaches are now saying people need something like $1.5 Million in savings to retire. Utter self-serving BS!! Cut your costs, stay out of debt. Enjoy life. It's that simple.




* I've always been self-employed, so I don't really know what retirement means in my world. I still take on the occasional contract -- but not very much.

** We spend about 1/2 the year on our boat, and the other 1/2 doing land things; mostly house sitting.

[MicHughV]

Most people have this backwards.

I had a play now...work later plan.

Cruising is for the young at heart. I don't think I held a steady job till I was 45 or so.
Prior to that, I went to see the world. Managed to do so with only a fistful of dollars.
Back in the day, if I had $10 in my pocket, I considered myself rich.

These days, retired folk buy the million dollar boat, outfit it with every toy imaginable, but never leave the dock.

Money does not buy happiness or good health.

As Mike pointed out above....reduce costs rather than try to increase income.

Many people manage to do lot with little.

[Sailorman97]

If your Canadian, and you get full CPP & OAS and are retiring at 65, 400 k in an RRSP invested in good dividend growth stocks can see you with 70-80k CDN from 65 to 78 After that you have to cut back to 50-60k. But what are you spending it on at 80?

You of corse are spending down principle but who cares really? I certainly don't

[wingssail]

Originally Posted by Sailorman97

If your Canadian, and you get full CPP & OAS and are retiring at 65, 400 k in an RRSP invested in good dividend growth stocks can see you with 70-80k CDN from 65 to 78 After that you have to cut back to 50-60k. But what are you spending it on at 80?

You of corse are spending down principle but who cares really? I certainly don't

The problem with that concept is that:
(a) we don't know how long we'll live
(b) we don't know what major (medical) expenses will arise
(c) at 80 I will still be cruising and racing and I don't feel like I will be ready for the retirement home.

So protect your principle, built it up if possible, and live on the income.

If you don't have enough principle to do that, work a bit longer.

[Mike OReilly]

Originally Posted by Sailorman97

If your Canadian, and you get full CPP & OAS and are retiring at 65, 400 k in an RRSP invested in good dividend growth stocks can see you with 70-80k CDN from 65 to 78 After that you have to cut back to 50-60k. But what are you spending it on at 80?

You of corse are spending down principle but who cares really? I certainly don't

Full CPP & OAS!?! I wish.