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  #51  
Old 03-16-2014, 03:43 PM
Scherzo Scherzo is offline
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You don't need money to retire. Obama will take care of you. What does obamacare do to pension retirement assumptions?
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  #52  
Old 03-16-2014, 03:44 PM
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Death and taxes. Retire early, enjoy life.
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  #53  
Old 03-23-2014, 04:04 PM
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Agreed, that's my plan. Just sort of ease into retirement a little at a time. Should be relatively easy to do in consulting if I just pass off a few clients every year.

I know a guy who takes 3-4 months off every year, like every May-September....I think he's into boating. I know someone else who went to a 4 day work week recently. I think his plan is to go to 3 day weeks in a year or two.
When I get to around $1M, my goal is to reduce my work week to 4 days a week. I live pretty simply and in a relatively low COL area. I'd like to do something like MMM, but not that extreme, and I find work relatively interesting so I think a 3 or 4 day week would hit the sweet spot. I'm glad I realized early on that spending money /= happiness.
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  #54  
Old 03-24-2014, 09:53 AM
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When I get to around $1M, my goal is to reduce my work week to 4 days a week. I live pretty simply and in a relatively low COL area. I'd like to do something like MMM, but not that extreme, and I find work relatively interesting so I think a 3 or 4 day week would hit the sweet spot. I'm glad I realized early on that spending money /= happiness.
You might find that $1M doesn't seem like that much when you get there. Especially if some of it is your house and retirement accounts.
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  #55  
Old 03-24-2014, 10:34 AM
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You might find that $1M doesn't seem like that much when you get there. Especially if some of it is your house and retirement accounts.


The more of it that's in home equity the less impact it has, because housing spending generally correlates with a lot of other expenses (more electronics, maintenance, utilities, etc.). So going from a $200k house to a $500k house (which a lot of people would like to do) is typically going to mean increased, not decreased, household spending even when both houses are fully paid off - despite having $300k more in net worth, and the imputed income that supposedly comes with that.

Now if you're happy with the $200k house and sock that $300k away, then you might be getting somewhere. The real takeaway is that the key to slowing down is contentment, not hitting a magic number.
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  #56  
Old 03-24-2014, 11:26 AM
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You might find that $1M doesn't seem like that much when you get there. Especially if some of it is your house and retirement accounts.
Yes.

10 years ago I had a different notion of how much was enough to retire. One of the biggest factors changing my opinion in the interim is the historically low interest rate environment.
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  #57  
Old 03-24-2014, 01:16 PM
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the key to slowing down is contentment, not hitting a magic number.
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  #58  
Old 03-24-2014, 02:08 PM
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Now if you're happy with the $200k house and sock that $300k away, then you might be getting somewhere. The real takeaway is that the key to slowing down is contentment, not hitting a magic number.
I agree, and I'm the type of person that will be more than content with a $200k house. I'd rather slow down my career and work a bit less and have less stress in my life than have a $500k house and nice cars. Like you say, contentment is the key. As for $1M, just an arbitrary benchmark.
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  #59  
Old 06-25-2014, 11:28 AM
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Originally Posted by bananadotcom View Post
You need 33 X current annual expenses. Mr Money Mustache says X 25 is enough, but to me, that is too risky.

$10M is ridiculous. No wonder people get trapped into donkeydom with thoughts like that.
I have decided on my formula being = max(25, 1500/{your_age at retirement})


So the 25 to 33 number is in the correct ballpark.
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  #60  
Old 06-25-2014, 11:37 AM
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I think it depends on how you define "retirement". If you want to travel from one tropical island to the other, you will need more assets.

I've been thinking a lot about early retirement, I'd like to do it but in more of the MMM fashion. The theory is once your invested assets can produce enough passive income to cover your living expenses you are good to go. The variable that you have the most control over is living expenses. If you need $80,000 per year you might need close to $3M in assets. If you only need $20,000 per year that number is closer to $700,000.

We are currently working on aggressively paying off our mortgage. Once that's done, our annual living expenses are below $24,000. I'd rather have free time to pursue other interests, spend time with family and volunteer, rather than having to report to work 5 days a week. I can guarantee that I won't be bored. Right now, after working all week, I'm too exhausted to want to do anything else.

There's some insight here, but it needs refinement.

Your passive income now not only needs to feed your current living expenses, it needs to feed the growth in your asset base to cover future inflation of your current living expenses.

Secondly, why the heck would you pay off your mortgage early? The stock market will return much more that the 3 to 5 percent at which you can borrow mortgage money these days. Also, and this is important, the biggest hedge against inflation that most people have access to is a fixed rate mortgage. If and when inflation increases (and it really cannot go down any further) then owing dollars at the pre-inflation fixed rate is like free money added to your personal balance sheet.

Let's say your mortgage balance is 100k. It is better to own the house, owe 100k on it and have 100k in the bank than to own the house, owe nothing, and have an empty account.
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