What's Your Number?

[sussle]

A co-worker who retired early at 56 just came back to work, part time, after 3 years. Just 2-4 hours day 3 times a week.

She was golfing daily, taking some college course on topics that interested her, self taught herself to knit, going to gym, etc. Doesn't need the money (has a paid off condo, million plus in retirement, and probably $250K in the bank), has no kids mooching off her or a soul/money draining spouse.

Asked her why and she said, "Easy money, can work from home in the afternoon a few times a week, and knowing I can bail whenever I like makes dealing with the crap/management a breeze."

I think the latter part, having a sense of control in one's life, is a major component to happiness. Would say that having the idea that accepting that 'control is an illusion' is like having a 'sense of control' as well (maybe just the other side of the same coin).

So for her, coming back to work is like having a mental hobby.

Am of the firm belief that another component to happiness is to both mental and physical hobbies. These can take many forms. I recommend starting young on developing these. And not expensive ones! (she is a wallflower/bookworm type of personality and only seemed to blossom in her late 40s, and seems to still be figuring out what passion is like, which may explain why the things she'd done in retirement haven't really taken root and use up more of her time/energy...or she has found a good balance for her)

Oh, another co-worker retired 4 yrs ago. He left at age 58. He hasn't returned to work. Another bookworm, non-physical type. He has embraced fishing and hiking and small/easy mountain hiking. (We made it to the top of Mt Shasta about 8 yrs back. Now he is on his 3rd attempt to get to top of Mt. Adams....actually, that was about a month back, haven't heard him brag that he made it, so maybe next summer will be 4th attempt.)

Some other co-workers/friends have asked me what i would do if/when I retire. My answer: Same thing I do now, except more of it and not work. This could be me deluding myself, but I sure hope not.

I have the skills, credentials, resume etc to pick up an IT job in a heart beat.... But I don't ever want to have a job again. I like money coming in, I like working, I just don't want a job. Have ample opportunities to generate a few billable hours per day of work, at my leisure and the luxury of being able to do so without actually having to put on pants and shoes and go be an adult in the nearest metropolitan area. The idea that I need $3 million or even $1 million to enjoy the rest of my life is nonsense - in fact, I'm pretty sure that this idea is pimped by the financial services industry, to create an artificial demand for their services so they can reap the management fees thereof. Cut your living expenses down to a sensible level, take a long look at SSI and whatever pension you have accrued, and then decide how much of your 401k/IRA you really have to tap to every year to make your nut. I'll wager it's less than you think and more doable than you realize.

edit: wrote that late last night when i was babbling - to be clear: $1-$3 million would be great but i don't see it as essential and do not think it is worth staying in the workforce any longer than i have to attain. i know of multiple people who stayed working longer than they had to - late 60's or beyond - and then died within a year or two of retiring. i do not want to be one of those people. ymmv.

 

[Muscles]

My goal is to never have to touch my roth IRA and 401K. I'd like to let it grow until required distributions. Hopefully, I'll be able to pass most of it on to my kids.

I should retire with a very nice pension and covered medical for me and my wife. I don't spend a lot and am not really interested in expensive things. So that should make it pretty easy to cut out early and enjoy life.

 

[hammies]

People need to think seriously about what kind of lifestyle they want to be living when they have all that free time on their hands, it influences how much coin you need to have. Travel costs $$ Remodel your house costs $$. Medical insurance costs $$$$, and even with Medicare you still need part B and D and that's still $$. Buying toys like a boat costs $$$. Sitting around doesn't cost much but it gets boring fast. Being a retired Bon Vivant is expensive.

 

[sussle]

My goal is to never have to touch my roth IRA and 401K. I'd like to let it grow until required distributions. Hopefully, I'll be able to pass most of it on to my kids.

I should retire with a very nice pension and covered medical for me and my wife. I don't spend a lot and am not really interested in expensive things. So that should make it pretty easy to cut out early and enjoy life.

See, I don't see it that way all. My goal is to exhaust my 401k/IRA/Roth, hopefully just in time for my demise. My kids can get the house - that's a nice chunk right there. The rest of it was put aside for this time of life and I hope to spend it all, because it provided me me with the opportunity to check out somewhat early and enjoy this time to the fullest.

 

[waxfoot]

I spent too much time in my life wandering aimlessly and not saving, so I'll probably be working until I can't anymore, and I'm OK with that lot in life.

Have an amazing house that's gone up in value by a staggering amount in the 6 years I've owned it, and live in a fantastic area, so have little to complain about.

 

[silentbutdeadly]

It's funny to read where the average american is with savings, then come to this thread and it appears we're among the .00001 percent

 

[McHatin]

If I could do it today, I would say I can make it work on $2-3M (current Dollars). In reality, if I continue to do what I’m doing now, I may be looking at just half of that amount when I’m eligible to retire. I think I’ll need to leave the US for most of the year. Surf/Travel is something I didn’t get to do enough of.

What I really do wish for is to be healthy enough, fit enough, to be able to do the fun things that I enjoy to fill up all that free time

 

[bluemarlin04]

My goal is to never have to touch my roth IRA and 401K. I'd like to let it grow until required distributions. Hopefully, I'll be able to pass most of it on to my kids.

I should retire with a very nice pension and covered medical for me and my wife. I don't spend a lot and am not really interested in expensive things. So that should make it pretty easy to cut out early and enjoy life.

Not too be morbid but have you considered what happens if you pass before your wife?

Survivor benefit plans are extremely expensive.

And for feds- you pay 10 percent of your pension and when you pass they only get 50% of your retirement from then on out.

For reserves is 6.5 % for 55% of base pay.

Thats garbage. Add tax on the pensions and you are getting hosed.

Mo betta you save your money yourself and stash away a retirement nest egg and those are play money.

 

[kane]

The key is to have your house paid off and send your young wife to work. Cock will be ready for her after she mows the lawn and showers after getting home from work.

 

[freeride76]

I spent too much time in my life wandering aimlessly and not saving, so I'll probably be working until I can't anymore, and I'm OK with that lot in life.

Have an amazing house that's gone up in value by a staggering amount in the 6 years I've owned it, and live in a fantastic area, so have little to complain about.

Yeah, I started working life with retirement and spent most of my 20's and half of my 30's travelling the world chasing barrelling lefts and pussy.
That was fukn awesome, having that free time and the vitality and wherewithal to make the most of it.

Happy now to work into retirement and beyond, no point in having free time as a geezer anyhow.....too old to do anything with it.

 

[waxfoot]

Yeah, I started working life with retirement and spent most of my 20's and half of my 30's travelling the world chasing barrelling lefts and pussy.
That was fukn awesome, having that free time and the vitality and wherewithal to make the most of it.

Happy now to work into retirement and beyond, no point in having free time as a geezer anyhow.....too old to do anything with it.

Very similar story to me, though I spent a fair bit of time away from the ocean and some of that time in the 20's can be considered totally wasted from the outside, but I've learned a lot about myself so I wouldn't change a thing.

 

[freeride76]

Retiring when you are old never made sense to me.

Even as a young kid, I thought the time to utilise free time was when you were young and virile.

Can't remember what surf movie I saw as a teen, but as soon as I did, I thought, "yep, thats me".
I wanna travel the world and surf.

So I pursued that goal with single minded passion.

Only working long enough to get me to the next destination.

Pipe, Gnaraloo, Indo, Fiji, Teahupoo. Seen 'em all from the inside out.

Happy to potter around in old man waves when the time comes.

 

[kane]

Also if I had to do it over again I would have just put in my 20 years via military or law enforcement and been content on that for the rest of my life.

 

[potato-nator]

no number...

house paid off? check.
car? check.
kids education? check.

thats enuf paying. gonna go surfing (while i can...)...

 

[JeffRSpicoli]

The 4 percent rule is a good starting point to figure out your number.

Just echoing what hammies posted as it seems to have been overlooked.

Back into your "Number" using 4% as your withdrawal rate and calibrate/recalibrate from there.

As a rule of thumb, the research shows that when looking at all past domestic equity market scenarios, if your withdrawal rate is calculated at 4% for a 30 year life expectancy, I think the number is really 4.23%, you would never erode any of your principal.

-so if you have $1,000,000 and can live on $40,000 there is you number [excluding taxes for simplicity sake, but would be a marginal rate for an individual of 12% federally] and for this hypothetical client based on that withdrawal rate alone would advise a diversified approach, as an asset allocation example 60%equity/30%bond/10% cash for this withdrawal rate.

The rule is clearly not a guarantee, but backtesting withdrawal rates has led to this metric and in the end If you don't care about having money left when you die, have the potential for a shorter withdrawal timeframe or aren't that averse to the risk principal erosion take more; most people do want to leave a legacy to the next generation, but up to the individual.

 

[ElOgro]

Not too be morbid but have you considered what happens if you pass before your wife?

I haven’t but my wife has.

 

[sussle]

Just echoing what hammies posted as it seems to have been overlooked.

Back into your "Number" using 4% as your withdrawal rate and calibrate/recalibrate from there.

As a rule of thumb, the research shows that when looking at all past domestic equity market scenarios, if your withdrawal rate is calculated at 4% for a 30 year life expectancy, I think the number is really 4.23%, you would never erode any of your principal.

-so if you have $1,000,000 and can live on $40,000 there is you number [excluding taxes for simplicity sake, but would be a marginal rate for an individual of 12% federally] and for this hypothetical client based on that withdrawal rate alone would advise a diversified approach, as an asset allocation example 60%equity/30%bond/10% cash for this withdrawal rate.

The rule is clearly not a guarantee, but backtesting withdrawal rates has led to this metric and in the end If you don't care about having money left when you die, have the potential for a shorter withdrawal timeframe or aren't that averse to the risk principal erosion take more; most people do want to leave a legacy to the next generation, but up to the individual.

agree but i always wonder why SSI is never part of this calculation. depending on how much you made in your life, you can get away with a lot less than $1 million, imo.

 

[JeffRSpicoli]

agree but i always wonder why SSI is never part of this calculation. depending on how much you made in your life, you can get away with a lot less than $1 million, imo.

I would say it is, in the sense you are just trying to tie it to the 4%, so in the aforementioned example of you need your savings to generate $40,000, because your cost of living is say $60,000, and SSI is $20,000.
-I guess a presumption on my part that you are looking for what you need to contribute (net) vs. other your other sources of income: SSI, Pensions, that big Trust Fund ha!

 

[SurfFuerteventura]

I haven’t but my wife has.

That way you needn't worry bout poisoned frijloes tho.

 

[SurfFuerteventura]

@JeffRSpicoli really? What happened to the Vans upside your noggin "I'm soooo stoooned!" Speach?



Mr. Hand sure got to you in Mathematics, not just History, huh?