Retirement: The 4% Rule

I got a great long term care ins policy years ago. In fact, they won't even sell policies with the benefits I got anymore. When I think of all the money I've sunk into it for the past 25 years I just shake my head.

 

Looking at the way things are nowadays, I can understand where you're coming from. But don't give up hope. A little here and there is better than nothing at all. Never too late to start.

Good luck!

 

If you are healthy (or relatively healthy), start social security at age 70.

That avoids a lot of problems.

 

Bet more?

 

With all that back yard I hope you made a map.

 

I’m retired, but we’ve never tested any particular withdrawal philosophy or percentage. We have more than we need and we’ve downsized to a lifestyle we can carry on forever, I hope. The amount I now need to take out (RMD) of some funds to avoid tax penalties is more than I need, or want, so I picked some worthy charities. We rescue a lot of kids and dogs. We give scholarship money. I hate taxes. Only one of our kids needs money and we help him occasionally right up to the point of being a disincentive. I retired 25 years ago and we’ve never touched a penny of the principal I retired with. So far I’ve actually made more money in retirement than I ever did working thanks to relatively modest living and a few lucky investments. Our living would not have looked modest to many, but compared to our income it certainly was. We are debt free. I noted with approval that my biggest expense last year after income tax and charity was Las Vegas! That’s my measure of complete retirement success.

When I look back my retirement formula then was completely based on receiving high interest rates from safe investments. I wound up with really crappy interest income and high returns from mutual funds and a couple of spectacular stocks. Almost everything we’ve blundered into has made money. Not a damn thing about my finances over the past thirty years has worked out like I planned, but the result was fine. I always started out thinking how smart I was being and then realized the outcomes were more, “lucky idiot.” The only thing I ever did right and knew to do was follow my mother’s advice, “Pay yourself first. Save ten percent of everything you make and don’t touch it except to save your life. Invest in companies that make things or render services you use yourself.”

For those of you younger VMBers reading this, my mother was really smart-you could do worse than follow her advice.

Additional observation: I never had a professional money manager who out-performed the market. I fired both of them.

 

rule number one! if I don't have it taken off the top, it is gone when it hits my checking account.
I have squandered quite a bit of money and I hate myself for it. I have done a few things right, such as putting a good amount into 401k for as long as I can recall. many years ago, I refinanced my (small) mortgage from a 30 year to a 15 year. I have been mortgage free for about 2 years now, but my condo is not worth much.
I feel like I am in the category of doing better than most for my future retirement. however, it should have been a lot more.
even today, I feel like they don't teach enough in the schools about economics.

 

I'd like to think that at age 63, when I retire, that I will live as good as I do now.

I started my 401K at age 24, 19 years ago. 10% of every paycheck, without fail. My job offers a decent pension, coupled with SS and 401k - life should be good. But who knows what will happen in the next 20 years? Tax changes? Company goes belly-up? Nursing home?

 

for most of us that want to retire early, say age 55-65, we are probably ok with money / income part of the equation. we have worked hard and planned.
the elephant in the room of course is medical insurance.

 

We were conservative before retirement and still are. No pain involved in this. The only thing that isn’t conservative is how fast time flies by. Don’t wait too long to retire.

 

Right on oldschoolvegas that's the one thing that can really devastate any financial plan for the majority of retirees. Bankrupted my wife's mom who lived 5 years in one. Did the same to my mom who is currently living in one on Medicaid. So sad, my mother lived so frugally most of her life, always going without, and lost it all in 1 1/2years of nursing home. It's obscene what they charged for things on her monthly bill until she ran out of money. DAILY rack rate is now up to $350. Of course she can now only sign over her monthly ss and tiny pension towards that amount which covers less than one week of the monthly rate.

 

Retire
Who will take care of the Oompa Loompas,
when i'm gone? >3.30

 

Having no children certainly helps but the no debt principle remains the same. Less debt (not living a lifestyle that keeps up with the Jones'), live simply and then enjoy retiring early.

Our kids are 24 and 25 now and even though our main family vacations when they were young were camping (to keep within budget), they appreciate those memories just as much as the one time we flew to Hawaii.

When they were young, they wondered why we didn't fly to exotic places every year like their friends or spend money with abandon when we went to a fair or festival. We explained to them we were living within our means and two $3 lemonades weren't really necessary.

Now that they are older, they get it. And they are starting to realize that retirement planning starts early. I'm pretty proud of them for realizing at a young age that they are responsible for their old age income.

 

Absolutely, you see a lot of people who will think nothing of spending $5 a day on a Starbucks. Do that 5 days a week and that’s $1,300. That’s quite a lot of money, however it was only when I learned about compound interest that this really amazed me!

 

Hard to live by a 4% rule when my wife shops at a 20% rule.

 

I'll bite. What problems?

 

I am assuming the higher monthly pay-out from waiting till age 70 to collect, will offset more expenses in the later years and if you are healthy and live much longer than the average your total take from social security will be more.

 

In the spirit of this thread:

https://www.fool.com/retirement/2019/07/14/study-older-workers-are-setting-themselves-up-for.aspx

 

I'm not a lawyer but I play one on the internet. From what I have read, which is mostly California law and thus may not apply to you, if you are not married your assets are very likely to be probated if you don't have a will and/or trust. So a lot of whatever assets you have may end up going to pay for legal expenses. Also, I have no doubt your nieces and nephews are wonderful but what happens if one of them might end up marrying someone who isn't, and thinks that uncle Makiki Boy loved them more than their cousins and is entitled to ... etc. at which time it might be much harder for you to make difficult decisions.

But look who's talking. I need to do the exact same thing and I haven't.

 

So here's a question I have often thought about regarding this subject: How many people are really able to retire in their early or mid sixties based only on assets in a 401k/IRA, if they have never received a pension or had a business to sell, and they don't want to begin drawing from social security until after 70? Nowadays defined-benefit pensions are pretty much only available to government employees, career military, and a very small percentage of private-sector employees.

It seems to me that you would need at least $2.5 to 3 million in a 401k/IRA to be able to retire without any other sources of income for 8 years or so, and then supplement with social security for the remainder of your life. According to this study, about 350,000 Fidelity customers had over $1 million in retirement assets earlier this year (probably a little higher now due to the stock market), which is something like 0.1% of people with Fidelity accounts. I haven't found any other studies but I imagine that is somewhat representative of the working population.

I suppose if you were to take a job after "retirement" you wouldn't have to draw down savings, but that isn't technically retirement.