Retiring early - how much $ would be enough?

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Originally Posted By: Turk
Originally Posted By: 99Saturn
JMO - but even retiring early, I'd still be inclined to carry the debt and invest the cash that would go to paying off a home. I can see the logic versus risk aversion, I guess I'm just having trouble with the interest rate + tax benefit versus return available out there. Maybe I'm way off.



Paying interest is just like putting down your car window and throwing your money out the window.

Example: Would you rather pay $210,000 for a house or 265,000 for the same house?

I'll pay the $210,000. Any day.

You think I am able to retire early at 52 by paying massive $$$$$ in interest???

This is why sooooooooo many Americans are in Debt & live paycheck to paycheck!!
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I think his point is, if your mortgage interest (with tax deduction) is less than what you can get earning interest, you're better off using any money you could use to pay off your mortgage early, and let it earn income while continuing mortgage payments.
 
Originally Posted By: hattaresguy
...I don't trust the stock markets I like assets you can see and touch, I'm very simple with my money.


Yep, it's called real property for good reason.
 
Originally Posted By: hattaresguy
I love dirt and buildings, I don't own a single stock.


Nothing wrong with that!
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$210,000 today, 4% return compounded annually = $655,000 in 30 years.

$210,000 mortgage @ 4.5% interest rate 30 year fixed rate mortgage is a payment of $1064 a month, 360 payments = total payment of $383,000 over 30 years.

That's my point. Yes, we would need to factor in the capital gains on that annual return, the tax benefit of carrying a mortgage, the risk of possible poor investment performance, the peace of mind of having no monthly payment on a home, the peace of mind of having a nest egg of $210K invested, devaluation of compounded interest and initial investment due to inflation. I'm sure we can add to the list.

Being willing to be leveraged doesn't automatically mean someone is living paycheck to paycheck, it does mean they have to have the discipline to save and invest that money and to not run out and spend that $210,000 on something else.
 
I like the landlord idea. You could also do consulting part time or a mall santa. Maybe the old guy at every election who puts the ballots in the boxes. Bring in a little cash and it's virtually tax free.
 
Depends.
What does your current home cost you in insurance, utilities and maintenance?
What's your lifestyle?
What do you like to do?
If sitting around reading and surfing floats your boat, then you'll need less money than you would if you want to travel on a regular basis.
How conservative or extravagant are you?
If you think carefully when looking at packages of chicken legs when grocery shopping, then you'll need less money than you would if that package of New York strips just flies into your cart.
Do you need new cars and new clothes all of the time, or does that eight year old Accord seem fine to you and do you still like those vintage Ralph shirts?
Once you figure out what it costs you to live as you do, then you'll have a better idea of how much money you'll need.
To the guy who posted that he was debt free at 52, we achieved the same the year I turned forty, and we did so by merely being reasonable, not really cheap.
Getting out from under a mortgage is like adding a decent part-time income, although, as others have noted, it does make sense to keep really low cost debt.
That's why we financed the '12 Accord, after having paid cash for the previous three cars that we bought new.
I can always do better than the .9% it cost to finance the car.
 
Question that I have is will they let many of us retire with savings ?

Oz has been "playing" superannuation now for 25 years or thereabouts, and now they are talking of taxing "excessive" savings ($1M and over), and there's the prospect of negative interest rates to flush savings back into the economy.
 
my dad retired with no savings at age 48. he gets an early retirement post office pension and a little of Social security. oh, and a VA disability check from being in the US Navy. he's 69 now, but he lives very cheaply to make his money last month to month.
 
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Originally Posted By: Pop_Rivit


Personally, I've never understood the allure of "retirement". It's too much fun being productive and making money.



Kinda agree with that....I do not want to be bored.....

If I retire I'd go nuts....
 
Originally Posted By: Pop_Rivit


Personally, I've never understood the allure of "retirement". It's too much fun being productive and making money.


I was fortunate enough to "retire" in my late 30's, at least from "having to work". 10 years later, I'm busier now than when I was "working". There's a key difference though--I have the flexibility to do (or not do) what I want to do, and I can stop "working" if I feel like it. That, to me at least, is "retirement". For about 2 years, though, I did absolutely nothing productive! It eventually got old, even though I have plenty of time-consuming hobbies. So, I justed ended up turning those hobbies into things that produced some income.

I know a few other folks who've retired around the same age. Those that haven't kept doing something reasonably productive seem to be pretty miserable.
 
I'll need about $4k per month at today's money at least, and assuming they are from rental properties that'll mean it would be about 1.5-2M to be self sustaining.
 
Originally Posted By: JOD
Those that haven't kept doing something reasonably productive seem to be pretty miserable.


Completely agree. I still work almost every day as I quickly become bored without a challenge.

If you're not growing you're rotting...
 
Originally Posted By: JHZR2
Originally Posted By: Pop_Rivit


At the very minimum, I suggest $1,000,000 in savings/investment that can supply you with a return of about 10%. More is always better.



Not sure that's reasonable, primarily because 10% return isn't ensured year by year. Sure over the long run it may average out that way, but over the long run there are also no dividend payers that will remain that high (there are currently), and a year with a big drop will equate to highly irregular distributions or excessive removal of principal.

IMO it needs to be sufficiently high that in a major down year, if principal must be removed, its a very small amount. I think one ought to be 2-5x that amount to ensure a 100k-ish pull out without a big issue of principal.

The alternate risk is insufficient return in later years. With people living longer and by extension staying active longer, this becomes a bigger and bigger concern given market irregularities and dips and rises.


If that's all I would have said you might be right. But you cherry picked a only part of what I said, and didn't quote the part that contained "It depends on your age and retirement plans".

The original poster didn't give us any information to work with, we don't know his standard of living, his age, if he's a hermit or world traveler, married or single. For anyone, the bare minimum would be $1,000,000. For someone who is younger, plans to spend more money or doesn't have a plan to supplement their income then indeed, they'll need additional savings and investments.
 
Originally Posted By: Shannow
Question that I have is will they let many of us retire with savings ?

Oz has been "playing" superannuation now for 25 years or thereabouts, and now they are talking of taxing "excessive" savings ($1M and over), and there's the prospect of negative interest rates to flush savings back into the economy.


This is my worry. Vilification of those who have saved and planned for their future.

There are few pensions left. Everyone now is on some form of deferred salary savings (401(k) in the US) if anything at all.

A reasonable planning factor for calculating rate of withdrawal for savings is 4%. I.e. If you withdraw 4% of your assets per year, and your assets are reasonably invested, you have a reasonable chance of your retirement fund lasting through your retirement, including the chance of ups & downs in the market.

Average household income in the US for a family of 4 is about $48,000/yr (makes the math easy) so to retire, that person/couple would need about $1.2 M to replace 100% of their income. So, suddenly, what should be a middle class aspiration, $1 M in retirement savings, is now characterized as "excessive"...someone who has carefully saved over a 40+ year work history is now "rich" and vilified instead of being praised for their discipline and achievement.

Remember Aesop's fable about the ant and the grasshopper? We used to consider the ant's preparation for winter to be praiseworthy, while the grasshopper suffered the consequences of his poor summer decisions once winter came.

Now the grasshoppers are the majority, and they are eyeing the ant's stores with envy instead of learning the lesson of the ant's foresight and preparation.
 
I see most everyone seems to be answering the OP's question with a dollar amount for a lump sum. There is another way to look at this and it's how much MONTHLY income will you need to retire comfortably. In my case, I will have a lump sum of only between $100K-$200K, but my monthly income that will come from my military pension, my civil service pension, social security, VA disability, and the interest I'll be drawing from the above mentioned lump sum will give me approx. 75-80% of the income I make working. So it's quite possible to be able to live quite comfortably in retirement without having a huge lump sum tucked away somewhere....the other thing is getting rid of all of your debt before retiring...the less debt you have the more net income you have...
 
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Originally Posted By: Astro14
There are few pensions left. Everyone now is on some form of deferred salary savings (401(k) in the US) if anything at all.
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Remember Aesop's fable about the ant and the grasshopper? We used to consider the ant's preparation for winter to be praiseworthy, while the grasshopper suffered the consequences of his poor summer decisions once winter came.

Now the grasshoppers are the majority, and they are eyeing the ant's stores with envy instead of learning the lesson of the ant's foresight and preparation.


Exactly my fears Astro...they are also talking about forcing this "dead" money back into the economy by making retirement funds build roads etc.

When the grasshoppers are running the show, you get stuff such as this happening
http://www.dailytelegraph.com.au/news/fe...q-1226761659197
 
You're right.
Those who've lived below their means during their working lives and have accrured some savings are somehow now considered wealthy?
We should as a society punish them for not having spent every dime they got as they earned it?
Seems a little unfair, as well as an inducement to shelter savings offshore in a jurisdiction where our authorities can't look.
There are many such places, but as an American, I shouldn't have to worry about hiding the proceeds of my thrift.
 
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