patrick.net

Glad to hear that 8 is the goal. I'm at about 20 already.

Patrick says

Glad to hear that 8 is the goal. I'm at about 20 already.

I see that running a blog pays well!

No matter what you set for a goal, as soon as you reach it you will think it is not enough.

Eight is woefully inadequate!
And no, I'm not going to subscribe to read the rest of the article.

I’m headed towards the defined benefit pension route. So far I have two pensions and my wife is working on her first (CALPERS). As long as the boomers don’t break all of them we should be fine. Oh and we both have 401k plans.

dumbie10 says

http://online.wsj.com/article/SB10000872396390443493304578034334095447050.html?source=Patrick.net\\&mod=WSJ_PersonalFinance_FamilyFinance

You are working hard to save for a decent retirement. So wouldn't it be nice to have a simple rule of thumb to measure whether you are saving enough? Last month, Fidelity Investments, the nation's largest provider of 401(k) plans, tried to do just that, offering up "eight" as the magic number: Typical wage earners, it said, should aim to save at least eight times their final annual pay to be sure they can afford basic living expenses in retirement.

By this measure, I will never retire.

HeadSet says

I see that running a blog pays well!

Lol, essentially nothing from the blog.

What money I have is entirely from working as a programmer and investing in the stock market for about 25 years.

rocketjoe79 says

By this measure, I will never retire.

What about living somewhere very cheap?

I would think that a dollar figure required to live in Caligulan splendor in perpetuity would be better number to use.

zzyzzx says

I would think that a dollar figure required to live in Caligulan splendor in perpetuity would be better number to use.

I think finding a way to stay occupied and happy is way better than magic numbers. Nothing sadder than seeing a lonely old man even if he has a nice bank account.

To calculate your"magic number" you can make a calculation which is a guess anyway since you may find you want more income for retirement to pay for travel.

You can annuitize your IRA, 401K and will get about 6.5% if you are about 63 years old. If you systematically withdraw your assets, places like Fidelity may suggest a spending rate of 4-5%

Yearly income desired divided by that spending rate=size of nest egg. So, if you want annual income of $50,000 you may want a nest egg of $1 million. if you assume a 5% spending rate. This is not taking taxes into consideration of course. If you assume social security will pay you $2,000/month you can make your magic number smaller if you wish.

My problem is how to maximize my enjoyment before my inevitable physical decline.

Should I spend $150,000 per year or wait until some more capital gains and then spend $175,000 per year? Should I put off social security or just start that annuity payment sooner? Should I wait another year or is this the last year that I have the energy to really have fun?

Having some income however modest is great, something inside me hates the idea of spending savings and investments, it feels strange.

clambo says

Having some income however modest is great, something inside me hates the idea of spending savings and investments, it feels strange.

As I've been telling Patrick, you'll never have enough. You get somewhere, expand your expenses and realize you need more to retire.

The way to retirement is to do a little of everything and not just view one aspect as the end all, be all.

I've been out for about 4 years now, sitting in the tropics, posting while on the beaches. In reality you'll always feel a bit insecure, even if you end up with 10M in the bank, you'll feel you're one bad investment away from having 0, or one bad law change, or a war.. it will always be there. I can understand how beating a drum about "retirement security" works so well with the republicans and their base -- they're always worried.

Get out early if you're not actually helping humanity, wtf. This is your life, don't sit behind a desk forever. I might not have the same amount of income or spending ability had I waited even 2 more years, but so be it. I look back and think "Would I want to trade ALL that time I just spent, for a deskjob and a lot more money now?" For me, the difference would be massive too, and I don't regret it.

Every dollar you spend in a day, you need about $3000 in savings to support it when you retire. Know how to cut back on your retirement needs? Stop spending those dollars. Cutting out even modest expenses can pull back your retirement needs by hundreds of thousands.

If you're a techie or other professional, you can always jump back into the game for a year if you've fucked up your finances, even if it's 5 years down the road. Maybe it won't be a good jump, you might struggle trying to get hired for awhile, or you might take a good pay cut, but someone will hire you, and you'll save like a madman because your expenses, needs and desires will be more focused around enjoying life than chasing the jones.

You don't need to stop earning completely, every dollar per day you bring in helps offset your retirement requirements as well. So cut $30/day in spending and bring in $30/day on a hobby, and suddenly you're talking decent savings. That's like removing nearly $200,000 from your needed savings!

Maybe you want to travel to a few places, keep an eye out for the best deals and take whatever comes your way, thailand, mexico, or poland. Don't get fixated on something you MUST have, be flexible. Instead of spending 2 weeks at a resort, spend 6 months by renting an apartment. Not only will it cost you next to nothing, you can probably rent your place out back home, and your $30/day income might even grow your savings, because you might end up spending next to nothing, and the temporary rental might be more than you need. Or perhaps someone offers to rent your place and you have no where to go. Find somewhere, take the opportunity, don't turn it down because none of your current wish list places are too expensive, add one that isn't.

pkennedy says

Get out early if you're not actually helping humanity, wtf. This is your life, don't sit behind a desk forever.

I agree, and have taken off a few years at a time before. But then after a long break I find that I kind of miss working. It's fun to have projects and co-workers. Then again, after working for a few years I find myself wanting time off again. Maybe it's just human nature to go back and forth.

komputodo says

I think finding a way to stay occupied and happy is way better than magic numbers. Nothing sadder than seeing a lonely old man even if he has a nice bank account.

The main thing is to have a good social network of friends and relatives you physically see frequently (not just online), and neighbors that you are happy to run into. That sense of belonging is more important to happiness than having a lot of money, imho. Though lack of money can make you pretty stressed and miserable.

I'm with pkennedy on his comment. And a mix of Patrick's comment. Life is too short. Go have fun while your body still can. People that wait to retire till their old and useless has never made sense to me. I don't think I could take an entire year off, but I'm on month 2 right now of taking some time off work. Got back into playing drums again, spending a boatload more time with my younger kids and went on about 10-12 days of vacation in that time.

I'd like to do it even sooner if possible, but my wife and I will be quitting full time work at age 48 (outside of catastrophic financial collapse - like nuclear war). We'll still work doing shit part time, but even then we won't have to. The biggest thing I've noticed over the last 2 months, and it's going to sound pompous, is the jealousy of other people. It has led to some awkward conversations with friends and family. And it brings out other peoples absolute insecurities about themselves and their lives. I'm enjoying myself, but do feel sad for the people that don't have the option. Most of them made their own bed though with their financial decisions and frankly they're just not skilled enough to make the best money. Pompous over.

Patrick says

I agree, and have taken off a few years at a time before. But then after a long break I find that I kind of miss working. It's fun to have projects and co-workers. Then again, after working for a few years I find myself wanting time off again. Maybe it's just human nature to go back and forth.

You were semi trapped because of kids and a wife that worked, and you are sitting in the mecca of tech, so it's hard to get away from it, and there is always something interesting right around the corner so it's tempting to be lured back in. That I get, I would probably do the same thing.

I'm in Brazil now, and that gave me a huge breather from a few things. News is a big one. Good lord is the news in the US negative. Everyone is out to kill you. Every single story is about how someone is going to kill you, or your family, or your country, or steal your shit, or take your shit, or take your freedom somehow.

More importantly is the consumerism aspect. Simply not having a constant and aggressive push to buy or compete with someone. It's not that they don't try, but the advertisements are for dollar store goods at macy's prices and I just think "I'll grab that on my next trip for 90% less, no big deal"

Which leaves you with time to fill. Which means having multiple hobbies, and expanding on those hobbies when you see something new come along. Also doing some volunteer work, and hosting parties and events. You have to make your own entertainment. And if you don't learn how to do that, you're going to start spending money to have others entertain you (movies, resorts, restaurants, etc).

A lot of people don't fully understand how to make their own entertainment either because they've either never had the skill or lost it. Inviting people over is a lot of work, and some timing is required. All our lives we've just invited people to go to a restaurant and then a movie or something else we're going to pay for. Doing it yourself and setting the ambience and everything else takes some skill and it takes some patience and work.

WookieMan says

I'd like to do it even sooner if possible, but my wife and I will be quitting full time work at age 48

Really, it's all about adjusting spending. Once you realize you don't need all that crap in your life, it's easy to unload it and ignore it.

If the majority of people could do it, and were able to save/make changes, other aspects of our economy would change to block it. You can't have everyone madly saving -- that money needs to go back into the economy to help grow it. If people are madly saving, they don't need to be paid as much. If they are madly saving, someone is going to outbid you on a house. Someone who deems a nicer house is more important than retiring, which is a cascading effect and suddenly you need to increase bids to avoid losing your "economic neighbourhood". Clearly you don't live in the ghetto,but if everyone else raised their prices, you need to raise yours to avoid the ghetto, and push one of those ghetto people back to the ghetto.

So if everyone COULD do it, the economy would change to where they couldn't do it. You're living outside the rules of society, it's fine but you'll get backlash for it. Of course sitting on a beach is nice, and you'll soon forget those people.

I don't know how many years 48 puts you off, but unless it's 1-2 away, you could probably cut it way back, since I'm assuming you're looking for more money than is necessary. Cut $30/day of spending out of your day, and you're down 100K in your necessary savings.

pkennedy says

If the majority of people could do it, and were able to save/make changes, other aspects of our economy would change to block it.

Yes @pkennedy this is an excellent point.

The whole system requires masses of obedient workers and without that obedience and that work, the rich would no longer be rich. Since the rich make our laws, they will absolutely find ways to force work out of the masses no matter what.

Currently it's done in the "nice" way of pushing people into student loan debt, mortgage debt, credit card debt, car debt, etc, so the rich can blame the workers for their own situation. But if the workers were to refuse to be enslaved by debt, they would be enslaved by other means.

Aside from a few people/families, who have probably had money for generations, they don't even know this. They're just as delusional as the rest of the crowd.

It's not a deliberate act on anyone's part, it's just each cog in the wheel is doing the best they can, and maybe they're screwing over people with their cog, or maybe they could be a bit more honest, but they're just having fun trying to beat expectations or they want to grow their company just a little faster and really there are bigger cogs doing worse and the system as a whole works... Work hard and someone else could replace them in that cog...

There is no one at the top coming up with these student loan debts or mortgage debt ideas, it's just how the system builds itself as a whole. There is no deliberate intentions by those at the top, they believe they're playing the whole economic game the same way anyone else is, they're just better at it.

Everyone wants to believe they are doing good, not "really" causing harm, and are doing a good job of it.

$5 million in 3% Treasuries could do it, with sound sleep, especially if you lived in a bang-for-the buck country or region of the USA.

pkennedy says

Everyone wants to believe they are doing good, not "really" causing harm, and are doing a good job of it.

Yes, people have an almost infinite capacity to rationalize their own behavior as good, no matter what they are doing.

pkennedy says

There is no one at the top coming up with these student loan debts or mortgage debt ideas, it's just how the system builds itself as a whole.

I'm not so sure about that. I think the Chamber of Commerce in particular deliberately comes up with and proposes laws and policies designed to give businesses more power over employees.

Patrick has a lot right. My parents retired...for private industry folks...relatively early. The financial side is fine...we lived frugally going up and by the time retirement came....they are set. From the social aspect, they were worried. They needed not be. They live close to family, joined a couple social/charitable groups, and are heavily involved in their church. Arguably they are busier than when they worked. Dad has been retired 11 years now and still going very strong. Mom 16 and aside of age related physical issues, she’s also strong and happy.

The other aspect is reducing living expenses. For me, it cannot be done living in CA. I have a very good targeted retirement income as well as a substantial 457. I am not factoring in inheritance at all, and hope my parents outlive me. So the plan at retirement is to move somewhere cheaper than California to buy a home(wife is several years younger than me and I should retire by 57, meaning a home/townhome purchase on a 15 year mortgage is probably a good idea if the price is affordable). A no income tax state like Nevada is a monster bonus. Moving to Las Vegas and doing a 15 year mortgage will cost us right about $12k less per year than California.

We’ve also thought about Hawaii. Anything less than Oahu is probably too sleepy for us. But even in Oahu there are houses and townhomes in the $350-500k range. No savings on the state income tax, and the mortgage will be the same as rent in CA, but the entertainment costs are waaaay less (usually free) and the living conditions cannot be beat.

Another country isn’t a realistic option for us. I have a history of very bad health and outstanding healthcare available is mandatory. I know some of you are snickering that Kaiser is outstanding healthcare, but it is. I love the western culture and lifestyle, in particular the United States. I don’t want to leave. And our family and friends are here and are a really important part of our life. I wouldn’t want to live the distant life that living in another nation entails.

Anyway I can make do on $50k a year in retirement in a low state tax/low cost of living state. With $100k a year, I’m a king in that environment. So without a retirement, I guess I’d need $1.5 million, and to account for future inflation probably more like $2.5 million. And prefer more like $6 million. If I worked private industry I think I would have been able to get to $1.5 million by age 60 or so and probably worked until 65-70. As it’s stands now, I need one more promotion to retire in my late 50’s and I’m in my mid 40’s now. Without the promotion I have to work 5 additional years I think.

Patrick says

Though lack of money can make you pretty stressed and miserable.

When a person goes "third world" and lives among the natives for a long enough period of time, he learns certain things that weren't obvious to him by watching primetime tv in the usa. 1, the natives are generally happier and less stressed than the average american. 2, They are definitively more social and spend more "face time" time together. 3. Their main focus in life isn't about earning money and investing and saving, it's about living life in the moment. 4. With family and friends, they have a support system to help them through any crisis. 5. They are not concerned about magic numbers.
Lack of money can make you pretty stressed and miserable in the usa because you are comparing yourself to people whom you imagine to have more than you. That's the media fucking with your mind. If you live in a place where it's unusual that someone would have $1000 USD saved and you have $10,000 USD, you will feel very well off.

Patrick says

pkennedy says

Everyone wants to believe they are doing good, not "really" causing harm, and are doing a good job of it.

Yes, people have an almost infinite capacity to rationalize their own behavior as good, no matter what they are doing.

pkennedy says

There is no one at the top coming up with these student loan debts or mortgage debt ideas, it's just how the system builds itself as a whole.

I'm not so sure about that. I think the Chamber of Commerce in particular deliberately comes up with and proposes laws and policies designed to give businesses more power over employees.

I more attribute it to stupidity and short sightedness. I’ve posted repeatedly that by going to a jc for two years and a Cal state for two-three years, one could take loans for everything including books, fees, parking, etc, and finish a four year degree in a instantly employable field with debt totaling $20-25k....less than the average price of a new car. Easily affordable. However people are self deluded into going to way more expensive private schools and/or taking a really stupid course of study. So lol 10’s of thousands of dollars in debt learning to be an SJW. I’m at a loss to explain why the govt should be loaning money for any of that or why we should forgive people for extraordinary acts of stupidity committed as an adult.

CovfefeButDeadly says

If I worked private industry I think I would have been able to get to $1.5 million by age 60 or so and probably worked until 65-70. As it’s stands now, I need one more promotion to retire in my late 50’s and I’m in my mid 40’s now. Without the promotion I have to work 5 additional years I think.

5 years is a long time. If your health isn't great, then those 5 years mean a lot.

60 to 65 is one thing, 65-70 and most people start really slowing down, and over 70, the majority are really slow down and/or so set in their ways they can't take advantage of retirement.

We all like to think we'll be the hip retired people, doing all the hip crap. But the majority of people seem to just sit at home, watching tv and doing little.

So getting out at 57 instead of 60, means a big deal in my thought process. You're gaining 3 solid years on someone who is getting only 5 years of the good stuff.

Getting out at 55 to me, means doubling your good years of retirement.

Having 2.5M in your bank account when you're 70 doesn't mean a lot (to most). They simply don't have the health/wellness to use it.

Patrick says

HeadSet says

I see that running a blog pays well!

Lol, essentially nothing from the blog.

What money I have is entirely from working as a programmer and investing in the stock market for about 25 years.

rocketjoe79 says

By this measure, I will never retire.

What about living somewhere very cheap?

My wife would prefer to live in the expensive Peoples Republic of California. I must admit I love the weather. I can accept a slightly lower quality of life in my dotage.

True. The value of money depends a lot on having the remaining time and health to enjoy it.

How does everyone afford health care before 62-1/2?
That's my biggest variable - anyone have a ballpark for a monthly cost?
I'll have a pension and a smallish (<$400K) 401K plan and SSI, but maybe I'll work part time somewhere close 3 days a week. I'm 61 in September so not too long anyway...

rocketjoe79 says

How does everyone afford health care before 62-1/2?

I got out before obama care kicked in, but I believe it's dependent on your earned/waged income, so using your 401/investments for living off of, or renting out your house will show you're making $0 and some free health care.

I have private health care I pay for in Brazil, but one of the reasons I wouldn't stick with the US, it's just not possible to live without healthcare and it's not affordable on your own. Obamacare changes that though...

Although that requires someone with intimate knowledge on the subject, this only 2nd hand knowledge.

Once healthcare is covered, wee! Especially at 61...

Do married guys factor in divorce and paying alimony and supporting the ex in the lifestyle they were used to for evah?

rocketjoe79 says

How does everyone afford health care before 62-1/2?

Don't you really mean 63.5?

One piece of advice I'll give to people here:

-- You'll never have enough money
-- No time will be perfect
-- You'll spend less than you expect (assuming you don't get bored and take up shopping as a hobby)
-- You'll never feel secure in your retirement, because not working and living off savings/investments will always feel akward
-- A greedy man will never be rich
-- You can always go back to work (part time, hobby, or old position) for a short period to correct your mistakes.

-- Quitting will be the hardest thing you do, it's not going to be some relaxing process and might take you a year or two to get used to.

lostand confused says

Do married guys factor in divorce and paying alimony and supporting the ex in the lifestyle they were used to for evah?

.

Clearly they don't, or they would not get married!

rocketjoe79 says

How does everyone afford health care before 62-1/2?
That's my biggest variable - anyone have a ballpark for a monthly cost?

The only "affordable" version of health insurance at that age is COBRA. Otherwise expect to pay around $1500/ month in today's dollars for insurance that is basically catastrophic.