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    #16
    Originally posted by corn18 View Post

    It' a crappy time to retire.
    There’s no such thing. It’s always a good time to retire if you can do it.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

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      #17
      This is the only way I have seen retirement play out in practice. I've always felt this idea that you withdraw your money and make it last X years is just very academic. People who live well below their means during working years will live well below their means during retirement years. Which means they only grow wealthier during retirement.

      My Dad retired completely unexpectedly in mid 50s due to health event, only had about 6x income saved. But... Only lived on 1/3 of his income. Early retirement is very tax efficient. I helped set them up with a 0-tax situation for the rest of their lives (ROTH conversions age 57-70). In the past 12 years my Dad quadrupled his money. (This was last he told me, was maybe after 10 years of retirement). They have never withdrawn a single penny from retirement funds. Withdrawal rate: 0%.

      This is probably about 90% why I decided not to work full-time "until I am ready to retire." There's that, and I feel like most savers work that last decade just to pay more taxes (I felt this way after working in tax for 20 years). It's probably the combo of those experiences, where I just don't see the point of working full-time once we have 25x expenses saved up. (Will work part-time after that and just let our money grow, because we are very conservative financially and I like working).

      My in-laws withdraw only 1%, and that's just to give to their kids and grandkids. They doubled their nest egg in the past 10 years. They are bogged down by an expensive brokerage and literally pay 3% on average. You can consider that a 4% withdrawal rate if their investment advisor and company takes 3% in addition to their 1% withdrawals.

      Note: My in-laws, their parents are still living. They may also inherit some money, which will further grow their nest egg.

      Edit to add: My in-laws are 75 and my parents turn 70 this year.

      This was true with my tax clients and my Grandparents. I am very well aware of the incredible bull market run that has characterized my Dad's retirement. I told him in 2009, "Do a ROTH conversion when stocks drop." It *never* happened. So maybe why I am hyper aware. But my Grandparents grew wealthier in retirement and was the same math for most of my elderly tax clients. I would say the same math works across different generations and scenarios. Living below your means is living below your means.
      Last edited by MonkeyMama; 02-20-2021, 08:09 AM.

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        #18
        Originally posted by disneysteve View Post
        My cousin retired 11 years ago. Two years ago, I sat down with him and reviewed his entire estate because he is terminally ill and I'm his executor.

        In December 2018, his main IRA was worth $372,000.
        He takes a monthly draw of $1,565 from that account, so in the past 24 months he's withdrawn $37,560.

        We sat down the other day to review everything again and update my notes.
        That same IRA today is worth $433,000. It has grown by $61,000 even though he has taken out $37,560.

        Obviously, market performance is a factor, and the market has been hot, but looking back over the 10 years since he moved that account to where it is now, it's grown nearly every year despite his monthly draw down from it.

        I think we tend to gloss over this detail in retirement planning. Well managed, there's a good chance that your money will continue to grow even after you retire as long as your spending is not excessive. And his withdrawal is about 10% of the balance 2 years ago which is a very high rate. Had he been doing the typical 4%, he'd have even more money today than he started with.

        It also shows that it's possible to retire with less than recommended, withdraw more than recommended, and still have things turn out okay. It's riskier that way but it's not automatically doomed to fail.

        I think this ties in well to LAL's Retirement Reality thread and other recent conversations we've been having.
        Good point
        Invested correctly the money will never run out
        Brian

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          #19
          Originally posted by MonkeyMama View Post
          This is the only way I have seen retirement play out in practice. I've always felt this idea that you withdraw your money and make it last X years is just very academic. People who live well below their means during working years will live well below their means during retirement years. Which means they only grow wealthier during retirement.
          You have no idea how very much I appreciate this post.

          The more I delve into serious retirement planning, the more I'm coming around to this viewpoint. I'm really starting to think that I'm being overly conservative.
          Steve

          * Despite the high cost of living, it remains very popular.
          * Why should I pay for my daughter's education when she already knows everything?
          * There are no shortcuts to anywhere worth going.

          Comment


            #20
            This is why I really like Money Mustache. He was the first person I ever saw who talked about this. Or who just explained it very well.

            I think probably other early retirement bloggers talked about this but I found them insufferable. MMM also probably just more jives with my life view and experiences. & I don't worship at the altar of whoever. I do often send MMM's blog to friends who come to me for financial help, but tell them, "If you do 25% Money Mustache, you will be a million times better off. Clearly I don't take it to this extreme." But there's still something to learn and take away.
            This is the blog post that shows you how to be wealthy enough to retire in ten years. Here at Mr. Money Mustache, we talk about all sorts of fancy stuff li

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              #21
              Originally posted by MonkeyMama View Post
              My Dad retired completely unexpectedly in mid 50s due to health event, only had about 6x income saved.
              Right now, today, we have over 20x expenses (not accounting for taxes). We have about 7x gross income. We save 40% of gross so we have about 12x the income we actually live on.

              I anticipate that the inheritance I'll get this year will put us at 28x expenses, 10x gross, and 16x the income we live on.

              ETA: None of this includes SS either.
              Last edited by disneysteve; 02-20-2021, 09:25 AM.
              Steve

              * Despite the high cost of living, it remains very popular.
              * Why should I pay for my daughter's education when she already knows everything?
              * There are no shortcuts to anywhere worth going.

              Comment


                #22
                Originally posted by disneysteve View Post

                Right now, today, we have over 20x expenses (not accounting for taxes). We have about 7x gross income. We save 40% of gross so we have about 12x the income we actually live on.

                I anticipate that the inheritance I'll get this year will put us at 28x expenses, 10x gross, and 16x the income we live on.
                Because of my Dad's health (and my mom's health) they took social security at 62. Is what they live on. Had savings, disability, unemployment up to that point. This is a no-brainer given their health issues (and complete lack of income), but worked out pretty well staying invested during that stock market run. My parents also had the safety net of a house that had appreciated seven figures and long been paid off. Just to temper this with some reality. I think they would have *freaked* if it wasn't for the house, but felt like they had a safety net.

                It is kind of ridiculous how quickly they went from "freaking out" to "more money than they will ever know what to do with." The line is kind of thin, I guess. The one mistake my Dad made was planning retirement around income. His goal was to save 25x income. Though he can literally live on 1/3 his income with a no-tax retirement. & then I swooped in with a lot of tax knowledge.

                Anyway, I share because you have to work out if you want to save social security until 70, which would mean drawing down some money in the interim? That is completely outside of my experience. Most my tax clients worked for the State and had pensions. My parents did not have a pension, but took social security early. (My in-laws do have pensions, which is why they don't need their retirement nest egg).

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                  #23
                  DS, I posted the wrong link before. This was this one I meant to share.
                  If you’ve ever told a non-Mustachian about your plans to become a very early retiree, you’ve probably had to deal with a volley of skeptical questions. “Ho

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                    #24
                    Originally posted by MonkeyMama View Post
                    DS, I posted the wrong link before. This was this one I meant to share.
                    Good article. The one thing that struck me, though, is that it doesn't mention health insurance. I've read a number of posts from people who are paying 20-25K for their coverage. I'm not sure how hypothetical Jill was living on 15-20K total unless she had coverage somehow.

                    I've heard of MMM over the years but never dove into his content. I think now is the time to start reading up on him. Thanks for sharing.
                    Steve

                    * Despite the high cost of living, it remains very popular.
                    * Why should I pay for my daughter's education when she already knows everything?
                    * There are no shortcuts to anywhere worth going.

                    Comment


                      #25
                      Originally posted by disneysteve View Post

                      You have no idea how very much I appreciate this post.

                      The more I delve into serious retirement planning, the more I'm coming around to this viewpoint. I'm really starting to think that I'm being overly conservative.
                      It probably means that you can walk away from full time employment much sooner than you originally thought
                      Brian

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                        #26
                        Originally posted by bjl584 View Post

                        It probably means that you can walk away from full time employment much sooner than you originally thought
                        Exactly.

                        Right now. We are dealing with my dying cousin. I know better than to make any major life decisions in the midst of that. I’ll give myself 6 months or so after he passes, take time to grieve, and get his estate settled. Then it will be time to really sit down and see where things stand and make a decision about my work going forward.
                        Steve

                        * Despite the high cost of living, it remains very popular.
                        * Why should I pay for my daughter's education when she already knows everything?
                        * There are no shortcuts to anywhere worth going.

                        Comment


                          #27
                          Originally posted by disneysteve View Post

                          Good article. The one thing that struck me, though, is that it doesn't mention health insurance. I've read a number of posts from people who are paying 20-25K for their coverage. I'm not sure how hypothetical Jill was living on 15-20K total unless she had coverage somehow.

                          I've heard of MMM over the years but never dove into his content. I think now is the time to start reading up on him. Thanks for sharing.
                          So you have to live as cheaply as MMM to not have to pay for health insurance. If you are below the Obamacare then you get subsidized health insurance. The $20-25k you hear is for people living on a more normal say $50k/year income. SS Is taxed. They have some savings. Probably closer to 60-80k combined. Also MMM does not pay for health insurance anymore. He's in his 40s and because he's a multi-millionaire from the blog he is choosing to self insure. Personally not my cup of tea. But I guess if you can afford it.
                          LivingAlmostLarge Blog

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                            #28
                            Originally posted by MonkeyMama View Post

                            Because of my Dad's health (and my mom's health) they took social security at 62. Is what they live on. Had savings, disability, unemployment up to that point. This is a no-brainer given their health issues (and complete lack of income), but worked out pretty well staying invested during that stock market run. My parents also had the safety net of a house that had appreciated seven figures and long been paid off. Just to temper this with some reality. I think they would have *freaked* if it wasn't for the house, but felt like they had a safety net.

                            It is kind of ridiculous how quickly they went from "freaking out" to "more money than they will ever know what to do with." The line is kind of thin, I guess. The one mistake my Dad made was planning retirement around income. His goal was to save 25x income. Though he can literally live on 1/3 his income with a no-tax retirement. & then I swooped in with a lot of tax knowledge.

                            Anyway, I share because you have to work out if you want to save social security until 70, which would mean drawing down some money in the interim? That is completely outside of my experience. Most my tax clients worked for the State and had pensions. My parents did not have a pension, but took social security early. (My in-laws do have pensions, which is why they don't need their retirement nest egg).
                            I've seen this happen with my parents mostly because of the pension. But I'm unsure how it happens when you don't have the pension? I mean when you actually have to tap your retirement savings? I think my aunt's can retire but unlike my mom and MIL who retired at 55 they do not have monthly money coming in. My mom just has a lot of money coming in. I'm not even sure how much but a lot. Considering she doesn't even know what she makes tells you how it's going. And they HAVE pretty much $0 invested in the stock market.

                            They have missed out on the greatest bull run of the past decade and still are. We aren't even talking about investing in 25% stocks and bonds. We are talking about my dad has an annuity in his IRA, they have Roth IRA sitting in money markets, they have $300k sitting in a checking account. We are not talking savvy. If anything unsavvy and terrible with money.

                            My dad is 90 and my mom is 69. The likelyhood of them increasing it after my dad dies? 100%. I'll take over and reconfigure my mom's account and have her living super lavishly. But until then it can't be done. They have a very nice pension after taxes it's about $4500/month, $1500/month RMD, $3300 SS Dad, $2000 SS mom and my mom has only $13k in regular ira which she won't take RMD. No debts. They are hauling in $10k/month right now after taxes. FWIW, being stupid is not a problem when you have a pension. Did I mention they have free medical supplement for life with the state? And they get reimbursed for their medicare premiums along with double coverage for medical, prescriptions, etc. So it's all covered. It's not insignificant and they are only drawing the RMD because they have too. They aren't even invested.
                            LivingAlmostLarge Blog

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                              #29
                              Originally posted by LivingAlmostLarge View Post

                              my dad has an annuity in his IRA
                              Ouch. I haven't heard about crap like that for a while thankfully. It used to be really common. Putting an annuity in a tax-sheltered account is a horrible thing.

                              My cousin has a small pension ($410/mo) but most of his income comes from his portfolio.
                              Steve

                              * Despite the high cost of living, it remains very popular.
                              * Why should I pay for my daughter's education when she already knows everything?
                              * There are no shortcuts to anywhere worth going.

                              Comment


                                #30
                                Originally posted by disneysteve View Post

                                Ouch. I haven't heard about crap like that for a while thankfully. It used to be really common. Putting an annuity in a tax-sheltered account is a horrible thing.

                                My cousin has a small pension ($410/mo) but most of his income comes from his portfolio.
                                So like i said my parents have been ripped off for years. I don't mean figuratively but literally as well. I mean censured "financial planner" from merrill lynch who was kicked out by SEC. But it's really hard to talk to your parents about money. They never get over treating you like a child. They never actually respect what their children think or do no matter your career or experience.
                                LivingAlmostLarge Blog

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