YouBet said:

---

Cyp0111 said:

---

My dad turns 70 next year, he's generally pretty healthy but time take a toll. Knee replacement last year, back coming up soon. Stuff starts breaking and travel less frequent. I really think finding an optimal downshift in the 50s is the ticket.

---

As I turn 50 this year, I wholly agree with this if you can figure it out. My pre-established DNA is kicking in with joints breaking down and whatnot.

I've already had two surgeries (shoulder and back) and I'm very dialed in on maintaining movement and flexibility because it's going to be an issue for me sooner than most as I age. Just luck of the draw, largely.

Got most of my major physical accomplishments done in my 30s so no ragrats there. Just want to make sure I can do moderate stuff going forward.

---

Beyond health, you also start to have things like aging parents that take up significant time and energy. My parents are pretty healthy and mobile for their mid 60s but they have parents they are taking care of.

They don't mind, and I will do the same when it gets to that point, but my mindset is that I need to do as much as I can now and leading up to my older ages as I can.

There is no waiting to enjoy your life and most people have trouble flipping the switching when they get to retirement if they haven't found a good balance previously.

coastalAg said:

---

YouBet said:

---

Cyp0111 said:

---

My dad turns 70 next year, he's generally pretty healthy but time take a toll. Knee replacement last year, back coming up soon. Stuff starts breaking and travel less frequent. I really think finding an optimal downshift in the 50s is the ticket.

---

As I turn 50 this year, I wholly agree with this if you can figure it out. My pre-established DNA is kicking in with joints breaking down and whatnot.

I've already had two surgeries (shoulder and back) and I'm very dialed in on maintaining movement and flexibility because it's going to be an issue for me sooner than most as I age. Just luck of the draw, largely.

Got most of my major physical accomplishments done in my 30s so no ragrats there. Just want to make sure I can do moderate stuff going forward.

---

Beyond health, you also start to have things like aging parents that take up significant time and energy. My parents are pretty healthy and mobile for their mid 60s but they have parents they are taking care of.

They don't mind, and I will do the same when it gets to that point, but my mindset is that I need to do as much as I can now and leading up to my older ages as I can.

There is no waiting to enjoy your life and most people have trouble flipping the switching when they get to retirement if they haven't found a good balance previously.

---

This as well. We spent the last 9 years dealing with my in-laws health issues off and on, as needed. Both have since passed away.

My parents are both still alive and just hit 80. They are mentally sharp as they were at their peak but both are a physical mess. We are approaching some assisted living in the next few years for them, I suspect.

Yeah, my parents were extremely active into their early 70s. And by active I mean climbing CO mountains and doing bike races across the country. But then it screeched to a halt around 72. Mom diagnosed with ovarian cancer and dead at 75. Dad is 81 but his mobility has been extremely limited for 7-8 years due to multiple strokes. He's basically been a shut-in for years now. The man started his 70s biking across Iowa and ended them with a walker and unable to drive a car to the store. And this story seems very common as far as the 70s slowdown.

That said, the lifestyle gets extremely cheap. By 73-74, their Soc Sec check was enough income to cover living. Their annual property taxes and income tax payments on RMDs and SS disbursements were the only thing investments had to cover.

I'm 49, my target is 55, and I'm tracking comfortably toward it.

This is the reason I am leaning towards an early retirement even if Monte Carlo simulations are only in the 75% -85% of success. My wife and were talking a kit a vacation we took 15 years ago and there is no way we could go at the same place today as we did back then. If I wait till my simulations are giving me 96-100% it might not matter bc we won't have enough energy to spend the money we have saved up.

I assume you have factored in the cost of health care?

I'm also looking at 55-57 but won't have access to retirement funds until 59.5.

AW 1880 said:

---

I assume you have factored in the cost of health care?

I'm also looking at 55-57 but won't have access to retirement funds until 59.5.

---

Absolutely. I've built out an extremely detailed budget to factor literally everything including health care and taxes. I also have inflation built into it, including sensitivity analysis for inflation as well as more risky line items like health care. I basically built an entire retirement model for income, taxes, and expenses, with detailed builds of all components. I literally walk everything forward year-by-year from now until we are 100 years old.

I'm a CPA as well as pretty risk averse by nature, so putting this together years ago and continuing to tweak it as needed was very helpful for me. I needed to see the math.

I've been fortunate with my career, and my wife and I are both like-minded on spending. Not super frugal by any means, but we are the types that will drive toyotas forever, etc.

ToddyHill said:

---

Quote:

---

Rollover your 401k into a self directed IRA.

---

That's exactly what I did. Picked one stock (AAPL) and rode it for years. Began to diversify, but I stayed in tech and bought NVDA. I finally diversified, but my diversification consisted of ten stocks.

Schwab did an analysis of our net worth, and simply said, 'you have more than enough to retire.'

Self-directed, for those who can, is the key.

---

Worth highlighting this post. Did the same thing. Starting investing in AAPL, NVDA and BRKB and my net worth flew over the last 8 years. Buy great companies and let Tim Cook, Warren Buffett and other great leaders manage your money.

Read Die with Zero by Bill Perkins.

Recently read it and it very much changed my outlook on all things "what is your number" related.

Ok what way did it change your outlook

I've read the book, i prefer "Rich Life" concept by Remit Sethi.

I think the possible confusion with "What is you number" is that it requires one to sacrifice heavily to get to that number. I have an opposite view, spend now on things you heavily enjoy, be mindful of expenses but build towards providing yourself optionality with how you spend time.

For me there is a balance struck, mathematically, between the level I spend at today, the level I spend at in the future, the amount of "self insurance" or overfunding I hold, and how long I work for money.

There is no perfect answer. Everyone's preferences in the trade off are different. And there are certain probabilities/risks that can only be managed not controlled.


My own projected balance of those 4 factors have me spending at my current levels through my 60's, and then scaling down modestly. They have me giving up my income between 50 and 54. They have me approximately 100% overfunded relative to historic market performance.


Honestly most of these books and models are just assessments and reflections meant to challenge and affirm one's own beliefs about the trade offs

I've been reading this thread and haven't seen bonds mentioned at all. I never thought of them until my FIL was big into them and we've been earning over 6% on them.

Situation:
51 years old
$2.1M in investments ($1M in bonds, $1.1M in retirements/investment accounts)

I'm currently earning over $65K a year on bond income.

Why not put everything in bonds in retirement and simply live off of that income?

$2M should equate to over $120K in yearly income and you aren't taking cash out unless you have to.
Any thoughts on this approach?

I hope to retire in 5-6 years with $2.5 to $3M in total savings/investments.

Bonds are fine. Just don't fool yourself into thinking they are "set-and-forget" or extremely low risk. You are trading off market risk (equities) against interest rate risk. Most people don't hold them all the way to maturity, so you run a risk that the real market value of the bond decreases when you want to sell. So there's some liquidity risk if not held to maturity, along with reinvestment risk. Both bonds and stocks, of course, have default risk, as well.

All that said, bonds are great vehicles, and you might investigate a strategy known as laddered bonds, which can mitigate some of these issues.

Good luck!

check long bond returns the last few years...

Not sure what the right balance is as far as accumulated assets. We're quickly approaching a mid-seven figure as far as net worth, but I'm only 50. I worked with a fellow who retired at 52 because his father passed at 52 and he, to quote him, "didn't want to spend the rest of his life doing this." We work(ed) for a major.

I've known people who sacrificed their entire lives for a grand retirement only to die a mere month or two after they retired. My folks are 78 and 74 but are still extremely active and sharp. My parents have never had a heart attack or a stroke. We have no cancer in the family that I'm aware of. My grandmother lived to 98, but she never had a heart attack or stroke either. I am a Type 1 Diabetic so who knows what the future holds for me. Some folks live large while they have their health and have insufficient for their needs in the event that they do live to be 98. Some folks scrimp and save and die shortly after retiring. There's a balance there, but I'm not sure what it is.

I continue to work and save like crazy. I fully fund an HSA (for which we never reimburse ourselves for expenses), my 401K (believe this year you can throw $66,000 in there) and a couple of back-door Roths which we throw the full amount to every year. I still have ample left over to live and meet my family obligations.

Could I retire now? Maybe, but I'll continue to work as long as they'll have me. Ideally, I'll get a few more years under my belt and all the associated savings that come with it.

401k maximum contribution this year is $22,500, not $66,000…FYI

Not if you're self-employed.

What are you planning to do for insurance if you retire in the next decade? I'm type 1 as well (as we've discussed on H&F board), but only 35. I'd love to retire in between 55-62, but who knows what insurance will be like in 20 years.

Throwout said:

---

Not if you're self-employed.

---

Or if your employer has a mega-backdoor Roth option.

Quinn said:

---

What are you planning to do for insurance if you retire in the next decade? I'm type 1 as well (as we've discussed on H&F board), but only 35. I'd love to retire in between 55-62, but who knows what insurance will be like in 20 years.

---

Good chance we will have UHC for the less well to do and concierge cash service for the well to do.

I expect in the next 10-15 we will be single payer

The max personal contribution for 2023 is $22,500, but the Defined Contribution limit for 2023 is $66,000. I get a pretty healthy match from my employer plus I contribute to the after-tax supplemental in my 401k and roll that over into a jumbo Roth IRA at the end of the year. I usually have to pay a small capital gains tax, but it's manageable. Point is, I'll hit it this year as I do every year for about the last 8 or so.

Now that I hit 50 I think I'm allowed an additional $7500 to throw even more in the 401k than the $22,500 limit.

Even if my insurance is super expensive, I'm slated to have sufficient to pay for that if needs be. My plan at this point is to continue to work as long as I can, but when you work O&G, sometimes you're shown the door sooner than when you'd like. In the event that contingency plays out, I'd like to just take a job at Costco and get their insurance to keep myself busy.

RWC, my plan is to land at Home Depot in 3 years. I'm 52, been in sales/BD for 30 years. Self directed IRA is the way forward. I just don't want to get bored. What am I going to do all day?

Pacifico said:

---

RWC, my plan is to land at Home Depot in 3 years. I'm 52, been in sales/BD for 30 years. Self directed IRA is the way forward. I just don't want to get bored. What am I going to do all day?

---

Www.TexAgs.com

Pacifico said:

---

RWC, my plan is to land at Home Depot in 3 years. I'm 52, been in sales/BD for 30 years. Self directed IRA is the way forward. I just don't want to get bored. What am I going to do all day?

---

Drink Pacifico all day… duh

I unofficially retired at age 45 in 2019 a couple of years shy of where I really wanted to be for early retirement due to compounding stress from my job. I stayed busy with fun things for a few months before getting a grocery store job that carried me through the pandemic nicely. I left that in 2021 for some travel, but have now settled down in a new city close to my family. Now I'm getting bored and feeling worthless and have no idea how to spend the next 30+ years. I don't want the stress of my old job, but don't want to do manual labor stuff for minimum wage, either. Anyway..just a cautionary tale of sorts for those looking to retire early that don't have a solid side gig lined up.

RightWingConspirator said:

---

The max personal contribution for 2023 is $22,500, but the Defined Contribution limit for 2023 is $66,000. I get a pretty healthy match from my employer plus I contribute to the after-tax supplemental in my 401k and roll that over into a jumbo Roth IRA at the end of the year. I usually have to pay a small capital gains tax, but it's manageable. Point is, I'll hit it this year as I do every year for about the last 8 or so.

Now that I hit 50 I think I'm allowed an additional $7500 to throw even more in the 401k than the $22,500 limit.

---

Those catch up dollars will need be Roth 401k starting in 2024 for those that earn over $145k

My perpetuity target rate is 3.6%

= Long term, moderate risk portfolio nominal return is 6.5%

Minus 2% for long term inflation (if this number rises nominal long term nominal returns should as well)

Times 80%, to account for taxes on gains and dividends


So, my desired living expenses divided by 3.6% is my retirement number.

For cushion, I'm on track to retire at my desired age about 150% overfunded of that target.

CC09LawAg said:

---

This is one of the first things I read when starting to contemplate this concept:

The 4% Rule: The Easy Answer to "How Much Do I Need for Retirement?" (mrmoneymustache.com)

I am sure it is not the end all be all, but found it to be helpful framework and reference when studying more and reading discussions.

---

again- the 4% rule is designed to ensure that the principal balance never goes down.

that if you have one million dollars you should be living off of $40,000 a year and believing the rate of growth of your account will be 4%

so that you are always at one million dollars.

but what if you don't want to die with a million dollars?

am I missing something here?

what if I want to pass with 10 dollars in my accounts?

doesn't that then allow one to then take out 5% or 6% a year from a million dollar account?

LMCane said:

---

CC09LawAg said:

---

This is one of the first things I read when starting to contemplate this concept:

The 4% Rule: The Easy Answer to "How Much Do I Need for Retirement?" (mrmoneymustache.com)

I am sure it is not the end all be all, but found it to be helpful framework and reference when studying more and reading discussions.

---

again- the 4% rule is designed to ensure that the principal balance never goes down.

that if you have one million dollars you should be living off of $40,000 a year and believing the rate of growth of your account will be 4%

so that you are always at one million dollars.

but what if you don't want to die with a million dollars?

am I missing something here?

what if I want to pass with 10 dollars in my accounts?

doesn't that then allow one to then take out 5% or 6% a year from a million dollar account?

---

This is inaccurate. The "4% rule" is NOT designed to preserve principal. It is the result of a study that demonstrated a 95% chance of a 60/40 (equities/bonds) portfolio lasting at least 30 years before running out of money. The study specifically references timeframes (historically) where the initial principal was almost halved sometime in the initial 30 year period, but then recovered such that funds were not completely depleted by the time the 30-year period ended. All of this (i.e. 4% rule) is easily confirmed by googling/reading the study, known as the Trinity Study.

Thank you for this. Was not aware.

Similar to the points made above, is there a relatively simple financial calculator that would let me plug in funds I currently have invested, a dollar amount I would want to leave in my estate, and give me a reasonable amount of funds that I could take out yearly in order to preserve that residual? Hope this makes sense. I don't want to leave my entire savings intact, and I don't want to burn everything down to zero. Thanks in advance

Correct - it's close, but I believe 4% spending will draw down your principle very slowly (30-40 years). I believe mid 3% spending rate is perpetual for a mostly equity portfolio.

And if perpetual is the goal I'm not sure why you'd hedge volatility by going 40% fixed income.

Agree. I keep going back and forth on a safe withdraw between 3-3.5%. I may base off of 3% at end of day and hopefully provide a fat cushion.