- This topic has 183 replies, 18 voices, and was last updated 13 years, 2 months ago by scaredyclassic.
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August 29, 2011 at 9:43 PM #727216August 29, 2011 at 9:44 PM #726007ice9Participant
I appreciate the comments/feedback earlyretirement.
It’s very useful to hear the thoughts from someone who has spent a lot of time thinking about this, and even done it.
Maybe it’s splitting hairs, but I don’t think of myself as having debt. I have a mortgage, yes, but there is 100K equity in the house. No student loans, credit card debt, etc.
Given the tax deduction on mortgage interest, I feel more comfortable having money earning dividends (that are taxed at 10% currently) than sitting in home equity.
August 29, 2011 at 9:44 PM #726094ice9ParticipantI appreciate the comments/feedback earlyretirement.
It’s very useful to hear the thoughts from someone who has spent a lot of time thinking about this, and even done it.
Maybe it’s splitting hairs, but I don’t think of myself as having debt. I have a mortgage, yes, but there is 100K equity in the house. No student loans, credit card debt, etc.
Given the tax deduction on mortgage interest, I feel more comfortable having money earning dividends (that are taxed at 10% currently) than sitting in home equity.
August 29, 2011 at 9:44 PM #726693ice9ParticipantI appreciate the comments/feedback earlyretirement.
It’s very useful to hear the thoughts from someone who has spent a lot of time thinking about this, and even done it.
Maybe it’s splitting hairs, but I don’t think of myself as having debt. I have a mortgage, yes, but there is 100K equity in the house. No student loans, credit card debt, etc.
Given the tax deduction on mortgage interest, I feel more comfortable having money earning dividends (that are taxed at 10% currently) than sitting in home equity.
August 29, 2011 at 9:44 PM #726851ice9ParticipantI appreciate the comments/feedback earlyretirement.
It’s very useful to hear the thoughts from someone who has spent a lot of time thinking about this, and even done it.
Maybe it’s splitting hairs, but I don’t think of myself as having debt. I have a mortgage, yes, but there is 100K equity in the house. No student loans, credit card debt, etc.
Given the tax deduction on mortgage interest, I feel more comfortable having money earning dividends (that are taxed at 10% currently) than sitting in home equity.
August 29, 2011 at 9:44 PM #727221ice9ParticipantI appreciate the comments/feedback earlyretirement.
It’s very useful to hear the thoughts from someone who has spent a lot of time thinking about this, and even done it.
Maybe it’s splitting hairs, but I don’t think of myself as having debt. I have a mortgage, yes, but there is 100K equity in the house. No student loans, credit card debt, etc.
Given the tax deduction on mortgage interest, I feel more comfortable having money earning dividends (that are taxed at 10% currently) than sitting in home equity.
August 29, 2011 at 9:46 PM #726027ice9ParticipantFREEDOM MANIFESTO eh? I will check it out, thanks.
August 29, 2011 at 9:46 PM #726113ice9ParticipantFREEDOM MANIFESTO eh? I will check it out, thanks.
August 29, 2011 at 9:46 PM #726711ice9ParticipantFREEDOM MANIFESTO eh? I will check it out, thanks.
August 29, 2011 at 9:46 PM #726872ice9ParticipantFREEDOM MANIFESTO eh? I will check it out, thanks.
August 29, 2011 at 9:46 PM #727241ice9ParticipantFREEDOM MANIFESTO eh? I will check it out, thanks.
August 29, 2011 at 9:48 PM #726017(former)FormerSanDieganParticipant[quote=ice9]
You’re probably right about the 5.5% yield being difficult to achieve. Apparently a 4% withdrawal rate is “safe”. [/quote]
The 4% “safe” withdrawal rate is for typical retirees who have 25 years of living expenses ahead of them and the benefit of medicare, not someone who is 40 and has to plan for 50 years of expenses.
I think that the number of uncertainties over the next 40 years is too wide to plan to retire in your early 40’s. You would need a pretty decent nest egg to hedge against multiple outcomes over that period. Inflation could wipe you out in a decade. The most important hedge against inflation is to maintain your ability to work. You already hit on a key compnent of that (maintaining health care coverage).
I empathize with you, however.
Perhaps a better approach is to try to downsize your work hours or shift into a new phase. Turn a passion (real estate?) or hobby into a second career. Try some part time work.I think you are too young and the financial world is too cruel to allow you to retire at 40 or even 45 on 1.5 Million …
Unless…
you could live on 35 K a year (before taxes and any early withdrawal penalties)Here’s how it might work:
Work a few more years to get a nest egg in the 1.5 Mil range, say at age 45.Put aside $1 Million of that to be invested for your “real” retirement at age 60-65. Hopefully that chunk would grow to at least $3 Mil over a 20-year period.
Could you make it 15 to 20 years on the income from the other 500K ?
If you made a rate of return of 3% and withdraw 30-35 K per year, you could.
Problem is, what will that 35K get you 15 years from now after inflation ?
… Maybe it’s better to get work doing something you enjoy than to check out of the work force completely.
August 29, 2011 at 9:48 PM #726104(former)FormerSanDieganParticipant[quote=ice9]
You’re probably right about the 5.5% yield being difficult to achieve. Apparently a 4% withdrawal rate is “safe”. [/quote]
The 4% “safe” withdrawal rate is for typical retirees who have 25 years of living expenses ahead of them and the benefit of medicare, not someone who is 40 and has to plan for 50 years of expenses.
I think that the number of uncertainties over the next 40 years is too wide to plan to retire in your early 40’s. You would need a pretty decent nest egg to hedge against multiple outcomes over that period. Inflation could wipe you out in a decade. The most important hedge against inflation is to maintain your ability to work. You already hit on a key compnent of that (maintaining health care coverage).
I empathize with you, however.
Perhaps a better approach is to try to downsize your work hours or shift into a new phase. Turn a passion (real estate?) or hobby into a second career. Try some part time work.I think you are too young and the financial world is too cruel to allow you to retire at 40 or even 45 on 1.5 Million …
Unless…
you could live on 35 K a year (before taxes and any early withdrawal penalties)Here’s how it might work:
Work a few more years to get a nest egg in the 1.5 Mil range, say at age 45.Put aside $1 Million of that to be invested for your “real” retirement at age 60-65. Hopefully that chunk would grow to at least $3 Mil over a 20-year period.
Could you make it 15 to 20 years on the income from the other 500K ?
If you made a rate of return of 3% and withdraw 30-35 K per year, you could.
Problem is, what will that 35K get you 15 years from now after inflation ?
… Maybe it’s better to get work doing something you enjoy than to check out of the work force completely.
August 29, 2011 at 9:48 PM #726702(former)FormerSanDieganParticipant[quote=ice9]
You’re probably right about the 5.5% yield being difficult to achieve. Apparently a 4% withdrawal rate is “safe”. [/quote]
The 4% “safe” withdrawal rate is for typical retirees who have 25 years of living expenses ahead of them and the benefit of medicare, not someone who is 40 and has to plan for 50 years of expenses.
I think that the number of uncertainties over the next 40 years is too wide to plan to retire in your early 40’s. You would need a pretty decent nest egg to hedge against multiple outcomes over that period. Inflation could wipe you out in a decade. The most important hedge against inflation is to maintain your ability to work. You already hit on a key compnent of that (maintaining health care coverage).
I empathize with you, however.
Perhaps a better approach is to try to downsize your work hours or shift into a new phase. Turn a passion (real estate?) or hobby into a second career. Try some part time work.I think you are too young and the financial world is too cruel to allow you to retire at 40 or even 45 on 1.5 Million …
Unless…
you could live on 35 K a year (before taxes and any early withdrawal penalties)Here’s how it might work:
Work a few more years to get a nest egg in the 1.5 Mil range, say at age 45.Put aside $1 Million of that to be invested for your “real” retirement at age 60-65. Hopefully that chunk would grow to at least $3 Mil over a 20-year period.
Could you make it 15 to 20 years on the income from the other 500K ?
If you made a rate of return of 3% and withdraw 30-35 K per year, you could.
Problem is, what will that 35K get you 15 years from now after inflation ?
… Maybe it’s better to get work doing something you enjoy than to check out of the work force completely.
August 29, 2011 at 9:48 PM #726860(former)FormerSanDieganParticipant[quote=ice9]
You’re probably right about the 5.5% yield being difficult to achieve. Apparently a 4% withdrawal rate is “safe”. [/quote]
The 4% “safe” withdrawal rate is for typical retirees who have 25 years of living expenses ahead of them and the benefit of medicare, not someone who is 40 and has to plan for 50 years of expenses.
I think that the number of uncertainties over the next 40 years is too wide to plan to retire in your early 40’s. You would need a pretty decent nest egg to hedge against multiple outcomes over that period. Inflation could wipe you out in a decade. The most important hedge against inflation is to maintain your ability to work. You already hit on a key compnent of that (maintaining health care coverage).
I empathize with you, however.
Perhaps a better approach is to try to downsize your work hours or shift into a new phase. Turn a passion (real estate?) or hobby into a second career. Try some part time work.I think you are too young and the financial world is too cruel to allow you to retire at 40 or even 45 on 1.5 Million …
Unless…
you could live on 35 K a year (before taxes and any early withdrawal penalties)Here’s how it might work:
Work a few more years to get a nest egg in the 1.5 Mil range, say at age 45.Put aside $1 Million of that to be invested for your “real” retirement at age 60-65. Hopefully that chunk would grow to at least $3 Mil over a 20-year period.
Could you make it 15 to 20 years on the income from the other 500K ?
If you made a rate of return of 3% and withdraw 30-35 K per year, you could.
Problem is, what will that 35K get you 15 years from now after inflation ?
… Maybe it’s better to get work doing something you enjoy than to check out of the work force completely.
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