Let's talk about the F.I.R.E. movement (Financially Independent, Retire Early).

[mesha]

Good info and insight here guys!

A couple of questions for the sake of discussion (obviously playing devils advocate here), does building memories with your family and/or friends require spending much (if any) money? Do you think you could build stronger memories and relationships if you had more time to dedicate to your family and friends (as a result of not working so much)?

This is the line we are all, hopefully, trying to walk. I worked more this summer than I ever have. I built a ton of jeeps and made good money. I didn't get out with my family as much as I usually do. Since I am a teacher we usually play hard all summer. With The whole Covid thing many of the trips we had planned we cancelled so I worked. The money was nice, but I really missed the time we usually spend. One of my favorite things about being a teacher is the time I get with my kids. This year I squandered much of that. I still spent more time with my family than most of my friends, but I could do better.

I don't think you need to be rich to make memories, but it does take money. Doing stuff, even camping requires money.

 

[DesertRam]

I doubt that I'll get FIREd, but this thread did just prompt me to increase contributions to my 401(k) to the max allowable, so some good has come from it! Coupled with post-tax retirement savings and the wife's pension (she gets to retire from her first career in a few years in her late 40s), we should be in good shape to retire in our early to mid-60s, which is about all I have ever really hoped for.

As to the other part of this conversation, we are mixed. Early on in life, I was horrible with money. I got new vehicles frequently and didn't understand (or care) that unsecured debt was bad. That's a hard lesson learned. Now we live in a modest home, drive paid-for vehicles (mine with many miles), and don't really live extravagantly. Like others have reported in this threat, we spend a fair amount on family experiences. We do a lot in the outdoors - hunting, fishing, hiking, Scouting, etc. We have a fairly substantial investment in that lifestyle, including a fifth wheel that's probably nicer than our house! But we made that decision consciously knowing that we were likely to reap the benefits of quality family time over the years. I believe we have succeeded, and continue to meet that goal. It probably cost us five years on retirement, but I consider it trade well made.

 

[Spork]

As soon as I get enough money I'm going to retire...

Current retirement schedule is to work until noon the day of the funeral...

 

[Cody]

And contrary to one persons opinion here, you can do anything at 60 that you can do at 40.

Maybe you can, but that's not a guarantee. Some of us have beat the living shit out of our bodies, and I can tell you right now that the things that I could do comfortably at 20, or at 30, are not the same now at 40. At 20, I'd have no problem going inverted on a 60 foot table top. At 30, I'd probably hit that 60 footer, but I'm not going upside down. At 40, no thanks. At 60, I'll be thankful if I'm still walking ha ha. My Mom at 40 could go on a hike and was very active. At 60 she could barely walk anymore. At 68 she's one step from being in a wheelchair.

My Dad died 11 years ago. He lived pretty frugal most of his life, maxed out his 401k etc. He always talked about buying a motorcycle at some point, or driving across the country on a road trip. When he was diagnosed terminal, the hardest thing for him wasn't facing his own death, it was that his entire life he had put everything off for "one day". One day he wanted to get that motorcycle. One day he wanted to drive across the country. I think putting off the things you want to do and betting that "one day" you'll be able to do them, is a fools errand. Do I regret spending myself into debt in my 20's to spend 100 days per year in Moab with my buggy and friends? Hell no. And you know what, that time and place will never come again no matter how much time money may eventually buy me. Moab will never be that way again. Rockcrawling and the "newness" of it, being a part of that, will never be the same. And no amount of money will ever be able to purchase that. Literally zero regrets. Those experiences made me who I am.

I'm trying to structure my finances less around savings or "investing" and more towards building something that will continue to provide for me without as much of my attention somewhere down the road. I could invest more into the market, but I'm less confident in my ability to yield long term double digit returns on investments in other people's companies, than I am in my own ability to find better returns building my own company(ies).

Besides, even if I won the lottery tomorrow, I'd get bored pretty quickly. I think no matter where I'm at financially in life, I'll always have that drive to build and create something. To a greater degree, that is what I identify with and that drive will likely always stay with me. But what I want is the financial freedom to be able to choose what to do with my time, and for me that will have to come from my own business income.

 

[UNSTUCK]

So assuming I do retire in 20 years, and assuming I go into it with no debt at all, anyone have a good idea of how much money I need to have saved to live off of? I know that's a loaded question, but what do you think the inflation will be like? Is $5k today going to be $20k in 20 years? We always talk of inflation, but in the last 20 years I can't say I've really noticed a lot of difference. At least a Costco hotdog and drink are still $1.50.

In 20 years my calculator says I should have about $2 mil if the stock market stays consistent. I have no idea what to do with the money at that point. Keep it there? Put it in a savings account? What is a safe return? 3%, 5%, 8%? $2 mil at 3% should give me $5000 a month plus another 2-3k with SS. If I remember right, my mother locked in an 8% annuity when she pulled all her money out. That seemed to work well for her. She never touched her original investment. 8% would give me $13K per month plus SS. That sounds more fun.

 

[N-Smooth]

Insurance is the x factor, as Davy mentioned. My mom and dad are paying for their own insurance for a couple years before they're retirement age and it's pretty gnarly.

 

[spaggyroe]

So assuming I do retire in 20 years, and assuming I go into it with no debt at all, anyone have a good idea of how much money I need to have saved to live off of? I know that's a loaded question, but what do you think the inflation will be like? Is $5k today going to be $20k in 20 years? We always talk of inflation, but in the last 20 years I can't say I've really noticed a lot of difference. At least a Costco hotdog and drink are still $1.50.

In 20 years my calculator says I should have about $2 mil if the stock market stays consistent. I have no idea what to do with the money at that point. Keep it there? Put it in a savings account? What is a safe return? 3%, 5%, 8%? $2 mil at 3% should give me $5000 a month plus another 2-3k with SS. If I remember right, my mother locked in an 8% annuity when she pulled all her money out. That seemed to work well for her. She never touched her original investment. 8% would give me $13K per month plus SS. That sounds more fun.

The rule of thumb (take it for what it's worth) is that safe withdrawal rate is approx 4%.
I don't have the references off hand, but it's based on obtaining an average return in the market... and being hit annually with an average amount of inflation. The difference between the two being 4%

Another way of looking at it, is that you need 25x your annual spend $ invested in order to sustain your initial investment indefinitely.

2 mil invested = 80k annual safe withdrawal (using this rule of thumb).

 

[spaggyroe]

Insurance is the x factor, as Davy mentioned. My mom and dad are paying for their own insurance for a couple years before they're retirement age and it's pretty gnarly.

My parents are both gone now, but I remember them saying that their entire SS check went to cover insurance.

 

[Greg]

So what's considered an 'early' retirement these days? Isn't 66-67 pretty much the standard age for Social Security? Seems like it keeps going up.... eff that.

With my job and retirement, the qualifications are that I need to have 30 yrs of service and be at least 60 yrs old to draw on retirement. Lucky for me, I'll have 30 yrs in at 57 yrs old (12 yrs away!!). But can't draw until 60, so I'll work till then and let my retirement accounts grow a little more.

I was never one to worry about retirement thru my 20's... I literally did ZERO planning or saving, because it seemed so far off. I also didn't start making 'good' money until I was in my mid-30's, so any chance of setting myself up for a early retirement wasn't even on my radar. I had some great examples of what not to do thanks to my Dad, who due to poor planning, was working at Walmart as a checker into his early 70's just to make ends meet (long story, but he barely gets by). I had another coworker that had the foresight to put a chunk of money into a IRA early on, planning to draw that at retirement to pay for his and his wife's medical costs.

That same coworker got pretty panicked when it was his time to retire and he was worried that money would be tight with a limited income. He always had the latest & greatest, didn't want for much and bought a new vehicle every couple years. They even bought a big home on some land, right before retiring and while the old home was paid off, had to take out a loan on the new house. They had to adjust big time and it wasn't easy.... ended up selling the 'new' home and relocating to somewhere more affordable.

Both my wife and I have good jobs, make decent money and have nice vehicles. Hopefully our home will be paid off in 10 yrs and we can start dumping even more into retirement, if needed. We both will have our own retirement accounts and we both have secondary investment/retirement accounts. I'm putting a pretty decent amount towards my secondary retirement fund and if it keeps growing at it's current pace, we will be very well setup for the future. We are trying to set ourselves up so that when we do retire (somewhat early), we can do the traveling that we missed out on, due to our careers. Not saying that we don't travel, but we currently don't take month long vacations to Europe.

I agree that not having a mortgage is huge, as well as not buying a new vehicle & having a big payment once you are on a fixed income. Planning ahead is the key and (as mentioned elsewhere) saving and using compound interest to your advantage is huge.

 

[mesha]

So assuming I do retire in 20 years, and assuming I go into it with no debt at all, anyone have a good idea of how much money I need to have saved to live off of? I know that's a loaded question, but what do you think the inflation will be like? Is $5k today going to be $20k in 20 years? We always talk of inflation, but in the last 20 years I can't say I've really noticed a lot of difference. At least a Costco hotdog and drink are still $1.50.

In 20 years my calculator says I should have about $2 mil if the stock market stays consistent. I have no idea what to do with the money at that point. Keep it there? Put it in a savings account? What is a safe return? 3%, 5%, 8%? $2 mil at 3% should give me $5000 a month plus another 2-3k with SS. If I remember right, my mother locked in an 8% annuity when she pulled all her money out. That seemed to work well for her. She never touched her original investment. 8% would give me $13K per month plus SS. That sounds more fun.

Smart asset predicts that 5k now will be 8300 in 20 years.

How much you need to live on in retirement is based on HOW you want to live. My plan in retirement is to make just shy of double what I make now. That should cover insurance, medical, and inflation while allowing me to visit my grandkids wherever they live

 

[spaggyroe]

I could invest more into the market, but I'm less confident in my ability to yield long term double digit returns on investments in other people's companies, than I am in my own ability to find better returns building my own company(ies).

That's good, because double digit long term returns in the market are extraordinarily hard to find. I'm sure people can find them in hindsight, but to try and pick stocks or funds going forward.... that's a pretty tall order...

Besides, even if I won the lottery tomorrow, I'd get bored pretty quickly. I think no matter where I'm at financially in life, I'll always have that drive to build and create something. To a greater degree, that is what I identify with and that drive will likely always stay with me. But what I want is the financial freedom to be able to choose what to do with my time

Whole heartedly agree with this.

 

[Cody]

Luckily my wife is young and seems to have way better earning potential than I do anyway, so I'm just waiting for the day I can be a kept man and make my exotic car demolition derby dream into a reality. Now that's FIRE!

 

[N-Smooth]

I'm just waiting for the day I can be a kept man

Preach! That's my real long term strategy. I keep telling my wife that when our youngest is in school 5 years from now I'm done working.

 

[Stephen]

...that time and place will never come again no matter how much time money may eventually buy me.

This right here.
When my wife and I decided to drive the PCH this summer I had so many people try to talk me out of it because of the 'VID's, travel restrictions, etc, etc. We did it, it was amazing, and to say that I drove the whole PCH in the summer of 2020 during the middle of the pandemic is a story and an experience that I will never have the opportunity to have again.

 

[Noahfecks]

Wait, retiring as soon as possible with enough money to do the things you want is now a movement? Is there anyone who isn't in this movement?

 

[N-Smooth]

Wait, retiring as soon as possible with enough money to do the things you want is now a movement? Is there anyone who isn't in this movement?

Yes. My FIL is 75 and still getting on roofs.

 

[Noahfecks]

Yes. My FIL is 75 and still getting on roofs.

Because he has to or because he wants to?

 

[N-Smooth]

Because he has to or because he wants to?

Mainly the second one. I’ve also worked with quite a few different people that have retired and then come back to work almost immediately. It’s weird but it happens

 

[Spork]

Mainly the second one. I’ve also worked with quite a few different people that have retired and then come back to work almost immediately. It’s weird but it happens

Let's just say not all women approaching 70 are pleasant to be with 24/7/365 or can't tolerate some old guy full time. Lack of hobbies or outside activity can make a guy think about where he's appreciated or wanted... I totally understand someone going back. It's been interesting working from home since March, if I weren't pulling in $ and occupying my time I'd imagine my wife wouldn't like it either.

 

[cruiseroutfit]

Now that I've done it, I wouldn't change a thing. And contrary to one persons opinion here, you can do anything at 60 that you can do at 40. The hardest part of it all has been health insurance, which we were well aware of that from the start, but it is a huge expense so plan accordingly.

I'm assuming your referring to my comment above? I'll reply as such.

Sorry, I just don't believe that many of the opportunities, offers and ambitions presented to a 25-45yo me are the same as those that will be presented to a 60+ year old version of me. Perhaps specific to the things I like to do or want to do that will be limited by physical ability and/or the physical ability of those friends around me. Desert Racing, dirt bikes, global travel, extreme hunts, etc. Again not that folks can't/don't/haven't done many of those items at retirement age... Just exponentially less likely.