In article <b7cb2d49.0402291844.161e6e47[at]posting.google.com> ,
noreplysoccer[at]hotmail.com (Jim) wrote:


You may find that $2,000,000 in savings are not adequate. I don't know
what you spend in a year but it is not unreasonable to think that you
spend $50,000, Certainly if you have a family, a home, and a life with
a few pleasures the $50,000 figure is reasonable. Play that through 35
years with an inflation rate of 4% and your annual cost will rise to
almost $200,000. You would be spending 10% of your saving each year.
Financial planners often suggest that your annual spending should not
exceed 3% to 4% of you savings.

Dick


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wballoon234[at]aol.com (Wballoon234) wrote in message news:<20040226203732.09105.00000375[at]mb-m14.aol.com> ...
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compounds.

For example: I am 31 y/o. Most financial reading I've done suggest I
need 2,000,000 at age 68 to retire comfortably. I have 35k in my 401
k now, if that money gets a 12% return I will reach my goal. If I get
125k in my 401k prior to age 36, I need only an 8% return to hit my
goal. So the goal is I need to save 8k per year in my 401k, and have
some good returns in the next 5 years (so I hit 125k by age 36).

The goal after that is to save enough money to live off of the 37
years the money compounds and experience life at the same time. I
plan on doing this primarily through second jobs like coaching soccer
as a hobby, saving outside my 401k (the above did not account for my
Roth IRA contributions or stock dividends).

So with 250k at age 30, I'd suggest setting 125k aside and letting it
grow until age 65 or so, then living life with the other 125k. 125k
compunded at 8% will be 2,000,000 at age 68, 1,000,000 at age 60. Not
bad...

jim

Thanks everyone for the replies. It helped me get a better understanding of
what is required - wow. I had no idea even if you are rich that the money could
dwindle so quickly. Getting a 7% return on your investments after taxes and
inflation sounds very difficult - it seems you would have to go for only the
most aggressive strategy. Growth? Growth and income? Does anyone know what
health insurance would cost to a healthy person before age 65? Matt

Relaxification wrote:

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What kind of investment strategy would be needed in order to achieve this?

Thanks, Matt

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Matt

I think it is worth mentioning that there is a growing number of Gen X, and
even Gen Y people who are looking at what lies before them, and are having
second thoughts about more than HALF of their productivity, via taxation,
goes to a government that is spending out of control.

I'm 34, and in my peer group, I know half a dozen from my home town -- with
post-graduate degrees, successful businesses, high income careers (i.e.,
over $80,000 per year, while single with no dependents) -- and they have
been asking theirself "Why?"

What are some of them doing? Downsizing early!

Smaller homes, smaller cars, no debt, no credit cards balances, and a LOT of
free time to do other things besides work.

The adventurous types are converting everything to cash, perhaps learning a
new trade, and looking SOUTH -- as in South or Central America. $250,000
today is enough for a person to live off of for life in certain parts of the
world. I've seen a guy with $160,000 in cash get set up in Sau Paulo in a
1,600 sqare foot ranch home, with all the modern amenities, and have enough
left over that he'll never have to work again. Why? House was $16,000, with
no mortgage. Total living expenses, including taxes and insurance, AND hired
help that cooks, cleans, does laundry, iron clothes, buys groceries, and
cooks the meals, for $270 per month. The hired help is only $8 per week.
I've seen pictures of the house -- it is NOT some shack. It looks like
something from Southern California, built up on the side of a small
mountain, overlooking a suburb, within walking or biking distance of
everything he needs. In the states, this house would be a bargain at
$160,000 (in Wichita -- in other areas, add another zero).

One thing this guy noticed, which I find interesting, is the near total
absence of warning labels on everything. Down there, if you lean your metal
step ladder against a power line, and fry to a crisp, they just bury you.
Friviolous litigation is all but totally absent, although it definitely
contributes to the increasing cost of living here in the USA.

Drawbacks? Well, one needs to learn another language, but that's not a bad
thing. Health care is on par in big cities, but it costs a lot less. If
you're overweight, you need to lose it before moving, because if one thinks
fat people get funny looks up here, try living where EVERYONE is lithe. Oh,
and Christmas is in the summer! =)

One of my buddies is just finishing up his Scuba Instructors license, and
he's moving to Belize after the summer. He's giving up a pharmaceutical
sales job that pays him in the mid-70s, and his savings will buy a bigger
house than the already nice house he has here, but he won't have a mortgage
anymore.

There's something to be said about a low stress lifestyle.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

In article <Vv7%b.403020$xy6.2304008[at]attbi_s02> , "cal-lester" <cal-lester[at]comcast.net> wrote:
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That's what I'm aiming for, as soon as possible. To work when I wanted, where
I wanted, take off 3 months if I want, work for a few months when I'm bored...

Yeah, 35 is no good. Maybe I can do it by 33. I'm almost 29 though, so 4
years might not be do-able. j/k I'd love to get to that point as soon as
possible, but I know I'll probably need to pay off my house, and get some good
well rounded investments. I'm saving a lot in my 401k for "retirement", but
that money won't really help for my post rat-race, pre-retirement years. Is
there a better term for that time?

"Richard Cline" <dcline[at]silcom.com> wrote in message
news:dcline-66B199.16374825022004[at]news.silcom.com
In order to live on 17K per year you must be getting room and board at
your parents home. Also, you must be skipping some essentials like
health insurance. Admittedly, you can survive on a low budget but life
is much more rewarding if you really participate.

I am retired with a moderate lifestyle, no outstanding debt, no
expensive hobbies, etc. We find it easy to spend 5 times your quoted
budget.

Dick


My sentimenst EXACTLY.......
Cal Lester

"Tad Borek" <borekfm[at]pacbell.net> wrote in message
news:d4a%b.17241$v65.5557[at]newssvr29.news.prodigy.com
cal-lester wrote:
- quote -

Why not?

Imagine starting at age 20, saving $5k/year for the first five years,
then $10k/year after that. I think those are reasonable savings goals
for a lot of people.

Spend exactly fifteen seconds on investment research & decide on the
Vanguard 500 index fund.

If someone had started that in 1989 at age 20, the total today would be
~$260k, ignoring taxes (which wouldn't be a huge factor). $260k in
accessible dollars at age 35 leaves a lot of options - change of
profession, exit from rat race, etc. And for those who could save more
than $10k/year, it's that much better.

Based on my last visit to Bend, OR it seems there may be a whole
subculture that has done something similar!

-Tad


I repeat, BUT NOT AT AGE 35.................

Life is just beginning. How could one even imagine
RETIREMENT at that age.
New enterprize, new challenges, new occupation,
but NOT RETIRE.
Cal Lester

In order to live on 17K per year you must be getting room and board at
your parents home. Also, you must be skipping some essentials like
health insurance. Admittedly, you can survive on a low budget but life
is much more rewarding if you really participate.

I am retired with a moderate lifestyle, no outstanding debt, no
expensive hobbies, etc. We find it easy to spend 5 times your quoted
budget.

Dick

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cal-lester wrote:
- quote -

Why not?

Imagine starting at age 20, saving $5k/year for the first five years,
then $10k/year after that. I think those are reasonable savings goals
for a lot of people.

Spend exactly fifteen seconds on investment research & decide on the
Vanguard 500 index fund.

If someone had started that in 1989 at age 20, the total today would be
~$260k, ignoring taxes (which wouldn't be a huge factor). $260k in
accessible dollars at age 35 leaves a lot of options - change of
profession, exit from rat race, etc. And for those who could save more
than $10k/year, it's that much better.

Based on my last visit to Bend, OR it seems there may be a whole
subculture that has done something similar!

-Tad

wballoon234[at]aol.com (Wballoon234) wrote in message news:<20040225005652.25147.00000329[at]mb-m07.aol.com> ...
- quote -

You're not going to lead much of a life on 17k per year. That's 8
bucks an hour. If you manage to save 250 k in cash you'll be earning
more than 8 bucks an hour, so to "retire" on 17k per year is going to
require some serious lifestyle adjustments.

"Sandra Loosemore" <sandra[at]frogsonice.com> wrote in message
news:m365dvatoo.fsf[at]dartfrog.localdomain
"cal-lester" <cal-lester[at]comcast.net> writes:

- quote -

I used to think that way about retirement, too -- that I'd be bored
silly without useful work to occupy my time. But now that I'm getting
closer to the point where I might actually be able to afford to do it,
I'm thinking of it more as having the financial stability to get out
of the rat race and take up a second career. I'd like to be able to
live where I want to live and be my own boss, instead of having to go
where the money is and be a wage slave into my old age.

But at what age...... surely NOT 35......
Cal

Wballoon234 wrote:
- quote -

Matt,
Some off the cuff rules of thumb:

* if you live off investments valued at 20-25X your annual income need,
you stand a decent chance of having your money outlive you. You need to
keep the money working of course, and low-return years early on blow up
the whole thing, as would high inflation. It's a starting point though.

* you can make that work in all cases if you're willing to reduce the
amount you take out if your investments take a dive. The key to that of
course is saving more than the bare minimum needed to pay for 365 days
of ramen noodles. You can only take out less $ if you don't have a bunch
of big fixed expenses chugging along each month.

* if you save about 20% of your income and invest it, after roughly 30
years your investments could replace your earned income, based on the
above rule of thumb and a reasonable guess for what you might earn from
a balanced mix of stock & bond mutual funds. Put another way, any 20
year old has the potential to retire well by age 50-55. If you're
willing to ratchet down your lifestyle, or work a little
post-retirement, it happens sooner.

Age 35 takes some more creativity. It's not so much "when can you
retire" as "where?" I like Bolivia but my Spanish is lousy - still, it's
a thought. Really though you probably don't want to retire, you'll do
something that earns money after all that free time bores you. I have
some friends living in Mexico, working at an English-speaking school,
and they surf every day. Not retired but certainly out of the rat race.
And there's always Nevada, or one of literally hundreds of remote areas
where $100k represents a huge house. If you take up a portable
profession, all the better.

Regardless if you really want to retire early, the key is to live like a
20 year old as long as possible. The longer you do so, the sooner your
options grow. The majority of money spent by the "average consumer" is
on stupid stuff that everyone can do without, or on a more-expensive
version of something with an identical replacement. Once you get on the
consumption track & let your purchases increase with your income, it's
difficult to go back, and you'll end up posting on MIFP "I calculated
that I need $120,000 in income per year to retire the way I want to" and
you'll be forced into a certain career path, and will delay retirement
that much longer.

There's a big reward for not doing that. I mean, don't turn into a
tightwad...spend enough to enjoy yourself. But little decisions like
forcing yourself to max out retirement savings, and buying a three-year
old car (and driving it into the ground) instead of a new one, will pay
off in spades. Apply that kind of thinking across the board and at 35
you might not be retired, but you'll have a lot of options. It works
because very few people do it.

-Tad

"cal-lester" <cal-lester[at]comcast.net> writes:

- quote -

I used to think that way about retirement, too -- that I'd be bored
silly without useful work to occupy my time. But now that I'm getting
closer to the point where I might actually be able to afford to do it,
I'm thinking of it more as having the financial stability to get out
of the rat race and take up a second career. I'd like to be able to
live where I want to live and be my own boss, instead of having to go
where the money is and be a wage slave into my old age.

Anyway, different strokes for different folks. Retirement doesn't have
to mean spending your time fishing and playing golf.

-Sandra the cynic

This is my first post to the group. I'm 20, and have a hypothetical question.
IF I ever save the following amount by the age of 35 (probably never in my
lifetime, but it's fun to look at the numbers), could I stop working for the
rest of my life?

* $250K, all liquid assets (2004 dollars)
* Annual expenses totalling $17K (2004 dollars)
* No debts (no credit card, car, student loans, etc)
* Assuming an annual 3-4% inflation rate

Perhaps this is just reassurance I'm seeking, but it doesn't look likely. Based
on some stuff I've scanned on the web, a person would need roughly $500K in
order to make a steady income of $17K a year (assuming a 3.5% "safe withdrawal"
rate) without ever dipping into capital (inflation-injusted original value of
investment). Is this true? If so, there is not much hope for the ambitious
saver.

Thanks for any replies,
Matt


Why prey tell, would you even consider retirement at age 35. You would still
have approximately TWICE that number of years to LIVE........
What would you do?????????????
Retirement is for older guys like me (age 75 in 6 weeks)

I can also assure you, that if your current expenses amount to 17K,
then they will INCREASE DRAMATICALLY (regardless of inflation),
primarily due to the EXCESS amount of time on your hands.
People at work DON'T SPEND MONEY, conversly, people NOT
at work spend money.........

Cal Lester CLU

On Wed, 25 Feb 2004 03:49:22 CST, wballoon234[at]aol.com (Wballoon234)
wrote:

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Looking at this from a slightly different angle, you're not far off.
Here's the question:

How much would it cost today to buy a lifetime income (no survivor
benefit) of $17,000/year for a male age 35 and which included a
guaranteed 3% increase annually?

The answer is $528,593 in today's dollars. With only 15 years to go,
I'd suggest you quit fooling around with your PC and get a hell of a
job. <grin
-HW "Skip" Weldon
Columbia, SC

[wballoon234[at]aol.com (Wballoon234)] wrote:
[ 20 lines in misc.invest.financial-plan ]
===================

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Let's say you had $250k now, and was prepared to spend $17k/year. Your
$250k would have to return 6.8% -- after-tax -- yearly to cover your
expenses. Not easy. You mention $500k as another goal -- that would mean
that you need 3.4% after tax. However, what happens in 2005, assuming
inflation at 3%?

Now, your expenses rise to 17.5k/year. This means you will have to reach a
return of 3.5% this year to cover your expenses. In the year following,
expenses increase once again to 18k, requiring a 3.6% return. After 20
years, when you are 55, your expense requirements have risen to almost
31k/year, which requires a 6.2% after-tax return on your capital. This is
quite a bit higher than the risk-free rate of return. And finally, at 75,
your expenses would be nearing 56k/year, and this would require stellar
returns of 11.2% after tax on your capital.

At 4%, it looks quite a bit worse. Your spending needs would be 17k the
first year, 17.7k the second year, 37k at 55 and almost 82k at 75. This
means 500k is nowhere near enough to sustain your current spending
indefinitely. The risk-free rate of return is not that much higher than
inflation. This also assumes your spending habits are constant, which they
most probably will not be (health care expenditures etc may rise faster
than inflation, for example).

Still, most people don't think about this. What you would need is enough
capital to reach returns keeping up with inflation, while drawing out
17k/year. Part of the interest received must thus be reinvested to keep the
capital growing at the pace of inflation.

--
Joakim Persson
M.S. student, CS/CE [at] LTH, Lund, Sweden
Libertarian -- Heavy Metal fanatic
zaladin[at]home.se -- http://www.efd.lth.se/~d00jp

This is my first post to the group. I'm 20, and have a hypothetical question.
IF I ever save the following amount by the age of 35 (probably never in my
lifetime, but it's fun to look at the numbers), could I stop working for the
rest of my life?

* $250K, all liquid assets (2004 dollars)
* Annual expenses totalling $17K (2004 dollars)
* No debts (no credit card, car, student loans, etc)
* Assuming an annual 3-4% inflation rate

Perhaps this is just reassurance I'm seeking, but it doesn't look likely. Based
on some stuff I've scanned on the web, a person would need roughly $500K in
order to make a steady income of $17K a year (assuming a 3.5% "safe withdrawal"
rate) without ever dipping into capital (inflation-injusted original value of
investment). Is this true? If so, there is not much hope for the ambitious
saver.

Thanks for any replies,
Matt