# FIRE at 45



## OrganicRain (Nov 27, 2016)

Details:

Ontario based.

900k invested across index funds within TFSA's, RRSP's and non-registered
Paid for home - value aprox $450k
2 paid for vehicles. (09 Corolla, 2015 Sonata)
Zero debt 

Wife works part time (earns about 20k a year and loves her job with no intention of quitting anytime soon)
We live frugally. 3 kids at home annual burn rate is about 36k.

I am thinking of kicking work to the curb, thoughts?


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## m3s (Apr 3, 2010)

You seem familiar with FIRE terms so you probably already know 4% is the typical SWR goal.

36k is exactly 4% of 900k.. but what about income taxes on the RRSP? 20k income would definitely help lower your SWR to say 3% to either weather the market drops or benefit from growth while wife still works. Could you work part time if you needed more buffer? This sounds like coast FIRE or lean FIRE

This forum doesn't really discuss FIRE that much. Maybe check out r/fican r/leanfire on reddit if you haven't already


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## jargey3000 (Jan 25, 2011)

whats this FIRE anyway?


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## Eclectic12 (Oct 20, 2010)

I suspect it is *F*inancial *I*ndependent *R*etire *E*arly.

https://twocents.lifehacker.com/the-basics-of-fire-financial-independence-and-early-re-1820129768


Cheers


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## jargey3000 (Jan 25, 2011)

Eclectic12 said:


> I suspect it is *F*inancial *I*ndependent *R*etire *E*arly.
> 
> https://twocents.lifehacker.com/the-basics-of-fire-financial-independence-and-early-re-1820129768
> 
> ...


'kew!


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## OnlyMyOpinion (Sep 1, 2013)

m3s said:


> You seem familiar with FIRE terms so you probably already know 4% is the typical SWR goal.
> 
> 36k is exactly 4% of 900k.. but what about income taxes on the RRSP? 20k income would definitely help lower your SWR to say 3% to either weather the market drops or benefit from growth while wife still works. Could you work part time if you needed more buffer? This sounds like coast FIRE or lean FIRE


^+1 Good summary. 
Sounds like a very 'lean' future to me. To each their own I suppose.


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## canew90 (Jul 13, 2016)

OrganicRain said:


> Details:
> 
> Ontario based.
> 
> ...


Personally I don't think your quite there. Index funds do not provide a growing Income and they usually track market performance. There is lots of discussion about a possible correction and should the market drop, stay down, and/or have limited growth, your 4% withdrawal may not meet your needs. What about rising rates due to inflation? At 45 you have 15 to 20 yrs from cpp and oas and what are your life expectancy? Possible but good luck!


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## Thal81 (Sep 5, 2017)

I strive to be you. But I think you should pad yourself a bit more before pulling the trigger. Here's some food for thought:

4% rule is fine but it's for a safe 30 year retirement, which is a bit short for your age. Also 4% is a bit optimistic because it assumes investment returns identical to markets, but in real life investments have fees and your re-balancing and withdrawals timing won't match what they did in the study. Have you tried tools like FireCalc? I also like PortfolioCharts withdrawal rate calculator because it has Canadian data, but that one doesn't account for management fees.

Does $36000 include taxes you might have to pay? Granted, if it's all dividends and capital gains, maybe you can pay no taxes on this.

You have 3 kids and that comes with many unknowns. I doubt you're going to be able to maintain a same level of living adjusted for inflation when competitive sports and college come around.

You have your wife's salary that should help with all this, but if I were you, I'd pad to 3% SWR to be safer, and it also happens to be the theoretical SWR for a 50 year retirement, which is a better fit for your age.


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## Spudd (Oct 11, 2011)

I think it's doable, especially if your wife keeps working, but would be even more doable if you also got a part-time job. If you can bring in 10-20k yourself that pretty much covers all your expenses and I'm sure it would be way less stressful & busy than your current job. 

You will have large upcoming expenses in your life. Does the 36k/year include taxes? Does it include new cars every 10-15 years? Does it include a new furnace and a new roof? Helping kids out with higher education expenses and/or weddings, etc?

So yeah, personally I would think you'll be totally OK to quit your full-time job and do something part-time. But I would feel a bit nervous about just quitting and not bringing in any income. The stock market has been going straight up for almost 10 years now, so it's not unlikely that your 900k might turn into 500k depending on your asset allocation.


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## AlwaysLearning (Dec 8, 2017)

If you are not happy in your job I say go for it! Just don't burn any bridges on your way out.

You have worked very hard to get to where you are financially and you lead a well disciplined lifestyle. 

Obviously this plan has risks but if unhappy at your current work and you have the financial resources to sustain your assumed lifestyle why keep working. You claim you need 36K and your wife will keep working for the foreseeable future. Even at a 3% SWR you have 27k from investments plus her income.

I expect you will end up taking some time off from working until you find something you truly enjoy. What you find will either make money or cost money. If it makes you money then much of the risk from your move is now removed. If it costs money hopefully you didn't burn any bridges on your way out the door. You may want to re-enter the workforce for a few years with a clear goal in mind.

Everyone I have met that went the FIRE route ended up making more many after quitting there day job than they anticipated. I think it is just the nature of the people that pursue this type of path.

AlwaysLearning


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## Longtimeago (Aug 8, 2018)

As someone who fired 29 years ago and with less capital than you currently have, I have a few comments.

First, I do not believe in SWRs at all. There is no such thing as 'safe withdrawal'. It simply makes assumptions I would not want to make. What I do believe in is a 33/33/33% split of income earned from capital. One third living expenses, one third discretionary spending, one third re-invested to increase capital and therefore income. That is what I call 'relatively safe'. 

I see a couple of positives in your description, paid for home and automobiles. A paid for home is a necessity as far as I am concerned. Two vehicles is not. Find a way to make do with one and you will reduce your living costs by a significant number per year.

A possibly major negative of course is 3 children. What about their education and how soon do you anticipate them leaving the nest? Put simply, they are a drain on your income as well. I'm speaking purely from a financial point of course and don't expect you to kick them to the curb tomorrow. LOL But you do have to consider their impact on your plans to FIRE.

You do not say what income your capital can generate for you and you do not say anything about how you plan to protect your income against fluctuations in value, inflation and taxes. In the years just before the Great Recession of 2006, there were people who FIRED using a 4% SWR only to find themselves needing to go back to work after 06 because their 'investments' dropped in value considerably and to the point that 4% of their reduced value was no longer enough to live on. So much for Indexed Funds etc.

You don't say if your wife's income is net after tax or not. I'll assume it is. That's fine as long as it continues, only she can say how long she will want to continue and how 'safe' it is in terms of continuing to be available to her. But regardless, what about after she decides she too wants to quit? How do you plan to replace that $20k of income? What if she decides to quite 2 years from now? 

You have a sound basis on which to start looking at early retirement but your math doesn't really add up *yet*in my opinion. There are too many holes in it at the moment. If you had 900k invested in real estate (as an example) and giving you a real after tax income of 4%, that would be a pretty safe $36k per year. Rental income is pretty safe in terms of being able to increase it to cover inflation and maintain the real buying power of your income. Income derived in other ways needs to include a component that gets re-invested to cover that same inflation. Income that is derived from the stock market is subject to considerable fluctuations regardless of how 'safe' the stocks are that it is invested in. The Great Recession taught a lot of people about that.

A 'safe' retirement is not about capital, it is all about *income*. You must maintain an income that is more than sufficient for your needs. To do that you have two ways to go about it. One is reduce costs and therefore reduce the amount of income you need to generate. The other is to increase return on investments and so increase income from a given amount of capital. It's actually simple to understand but not so simple to do.

Sell the house, downsize and get rid of the kids and a car. That would free up say another $200k of capital that could be invested and reduce your costs by say $15k per year. Now you would have $1.1 mil to invest and costs of $21k per year. Invest the $1.1 mil in industrial and commercial real estate to realize a return of 4% per year which would be $44k. That would put you in a position of being able to consider a split of something like 45/15/40%.  Not ideal but doable at least and as the 40% re-invested compounds, it could be worked up to a better split. Your wife continuing to work for at least the first few years would of course help a lot and is not such a big risk to take vs. expecting her to do so for the next 20 years. You could live without her working if you needed to, from day *one.*

Obviously, you can't just kick the kids to the curb and I use industrial/commercial real estate simply as an example because I am familiar with it but it provides you with a picture of how costs are reduced and income increased from the same starting point to get the math to work out for you. Everyone has to find their own ways of reducing costs and increasing the income generated.

That example would leave you with very little discretionary income (the 15% would be $6600 per year). Besides vacations, that has to cover unexpected expenses like a new roof on your house or a new furnace etc. It wouldn't go far. But there is nothing to stop you from *supplementing* your income just as your wife working would supplement it, by finding something you like doing that was part time. In that regard however I would add one caveat. You don't leave a job paying $100k a year to work part time as a Walmart greeter earning minimum wage. If you are going to do anything to supplement income, it must pay as much as you earned when you left full time work. Otherwise you might as well have just stayed in your job for another couple of years. You are worth what you are worth now, don't work for less.

Interestingly, I found when I retired that when people heard I was retired at such a young age, that they assumed 'you must know something'. Some wanted to find ways to take advantage of 'my knowledge' for their own advantage. Several times over the next decade or so, I took advantage of that perception and turned it to my advantage. If and only if something interested me, I would agree to 'help' them out but only if they paid me enough and only for cash in hand or 'payment in kind'.

For example, I 'fell into' a job in Scotland designing and selling back yard decks for cash in hand. Working about 12 hours per week, I earned around $30k per year. 

While living in a very nice rental apartment in a busy tourist area in Greece for several years, I lived rent free in return for about 12 hours of my time as a handyman. At the same time, I spent my evenings at a friend's bar as a 'PR' (public relations). My job was to play pool with the customers and let them win (just). In return I got free drinks and pocket money. It was in fact something I would have done anyway as my socializing (I was single at the time). Also at the same time a friend asked me to design and print (using a Desktop Publishing program on my PC) menus for her hotel restaurant. By word of mouth alone I was soon swamped with requests for menus. I was limited only by the amount of pages my printer could print. That 'job' only existed for about 6 weeks at the beginning of the tourist season. By year three I was working full time for those 6 weeks but it was paying me over $30k in cash for those 6 weeks. The actual design time took perhaps 4 hours per menu, the rest was 'hit print' and walk away till the printer stopped. Repeat orders from last year were, change the prices and hit print. During my time living in that particular place, I was actually earning more than I spent. 

Supplementing income can be done in may ways but there is no point in doing any of them unless they are 'fun' from my perspective and as soon as they stop being 'fun' you stop doing them. At no time have I had to do anything as I have always had enough income to do nothing if I chose to, that's called FU money.
http://time.com/money/4187538/f-u-money-defined-how-much-calculator/

You can find many ways to achieve it including an SWR based plan. Even though I don't personally like that approach, it doesn't mean someone else isn't willing to take the reisks associated with it. My point is that there is not just one way to get to the goal and that it is income that matters more than capital. Someone can do it on $250k capital plus a house paid for if they are creative enough.


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## tdiddy (Jan 7, 2015)

Longtimeago said:


> A paid for home is a necessity as far as I am concerned.


I've heard this a lot in FIRE discussions. Is there something about FIRE that differentiates this from the standard rent vs buy discussions? Perhaps the intention is to highlight not retiring with debt rather than saying you must own a home, or is there another aspect that I haven't considered (ie rent correlation wage market or something?)

I agree with your comments about working as a Walmart greeter. I also consider the opportunity costs of working one more year. If this would dramatically increase your networth then probably worth soldering on in most circumstances. 

to the OP, Congrats on meeting your goals so far! When I read about someone like Paul Allen (may he RIP) it really highlights my desire to spend a good portion of my reasonably certain to be alive and healthy years doing what I enjoy instead of being stuck inside watching a beautiful fall day pass me by.


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## OnlyMyOpinion (Sep 1, 2013)

OR, not to judge, but I have to admit I don't understand "FIRE" when a young person has 3 kids age 10-14 years, a wife who intends to keep working, and assets whose retirement sufficiency is debatable. It seems like one is choosing a frugal future for their family with no capacity to help out if need arises. 

I can understand a career change or dialing back work if that is the main issue. I know there are differences of opinion regarding,"Are you retired?" "Yes, but I do work when something interests me - not because I have to." 
I'm not sure that would be the case here though, and working (even odd jobs/part time) because I need to is not what I'd call FIRE.


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## Eder (Feb 16, 2011)

I don't get what the point of a "paid for home" is to a retirement.

I ended up selling my home 2 years into retirement as it wasn't being used, yet was a real drag on our budgets. 

I don't intend at this point to add a home for another 10 years or so...in the mean time my "home" money is generating 5% after tax return rather than paying upkeep & property taxes etc.

btw if you FIRE with 3 kids it would seem to be a selfish act imo. Wait till they have all left home, you need to pay for cars,college,braces,hockey,Disneyland and a lot more for them...about 38k/year.


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## robfordlives (Sep 18, 2014)

How will you spend your free time. If you believe the folks on here you are looking at 20-30K per year in travel costs

Personally I think they're nuts but that will be a big chunk of your discretionary spend possibly. Car replacement? House repairs?

I thought like you that I could retire at $1M mark and here I am well above that and still slogging it out. I need $2 - $2.5 Million especially considering overvalued markets and sequence of return risks


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## Longtimeago (Aug 8, 2018)

How much income someone needs to live on in retirement and how much capital they need to generate that income without having to work at all, varies by individual. If someone says that they 'need' $100k per year in retirement to be happy, I cannot argue that point. At the same time, those suggesting the OP would have a 'lean' retirement are trying to argue the reverse. It is not up to anyone but the OP to decide how much is needed to be happy.

In regards to the real basic necessities of live however we can all agree. You must have food, shelter and clothing. Those are actual necessities we all have. However, no one has an actual 'need' to eat steak. If someone is happy eating Kraft dinner that's their choice. Beyond the basics, it all varies by individual and that should be respected by all, not questioned or called 'nuts' by someone who believes they need $2.5 mil to retire. It is no different than my saying I think anyone who thinks they need $2.5 mil to retire is nuts. Different strokes, leave it at that.

Regarding owning a home when you retire, in most retirement forums, you will find as has been mentioned here, that common denominator. This is because it provides a cushion of cash in the event of something going terribly wrong with someone's retirement plans. It is a fall back of 'last resort'. It's as simple as that. No other place you can park your cash offers you the same safety from loss while at the same time providing you with a reasonable expectation of increase in value above inflation.


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## Longtimeago (Aug 8, 2018)

Eder said:


> I don't get what the point of a "paid for home" is to a retirement.
> 
> I ended up selling my home 2 years into retirement as it wasn't being used, yet was a real drag on our budgets.
> 
> ...


Eder, everyone is free to see owning a home as they wish. You were not living in it (on the road presumably) and so it was simply a cost in your view and I can understand that. However depending on where it was located, your 5% after tax return could easily be less than holding on to your home could have generated after upkeep and property taxes etc. In my small southwestern Ontario town, home prices have gone up almost 100% in the last 5 years. Do you think my return was more or less than 5% in that case?

You chose to increase your income by 5% of the value of the house per year, I had no need for additional income, I had enough already to be happy. That leads to an interesting point worth discussing. How much income is enough? There are plenty of studies that have shown that beyond a certain point, more income does not produce more happiness. Here is one article: https://qz.com/1211957/how-much-money-do-people-need-to-be-happy/

I would also say that it varies by individual. One person may find they are happy at $105k as the article suggests while someone else is just as happy with only a third of that. If I take what you said about the house being a "real drag on our budgets", then what you appear to be saying is that in fact you did not have enough income to be happy on without adding another 5% of the value of the house per year to your income. You did not have 'enough' income in other words. 

If you did have 'enough' income, then the added 5% really doesn't change anything and therefore has no value really. That makes it neither a plus or a minus. Just like the increase in my home's value is neither a plus nor a minus to my happiness.

However, my 'paid for home' will provide a roof over my head pretty much no matter what. Whatever you have your "home" money invested in will not do that. A house can't disappear overnight, I bet your "home" money can. If everything went to hell in a handbasket, I can cut down the trees on my property or scrounge old pallets to burn in my fireplace and stay dry and warm. I can dig up my backyard and plant food to eat. I can grow tobacco and still manage to smoke my pipe or grow cotton and weave my own clothes. What can you do with your "home" money in that scenario? A 'paid for home' is like insurance, it's there for when you really need it but hope you will never be in that position.


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## OnlyMyOpinion (Sep 1, 2013)

I agree LTA, every post we read is just a person's opinion, offered to the OP and readers for consideration. 
My comment wrt 'lean' was based on my experience of raising a family to the point of the kids being grown up and living independently. Your experience in supporting your family and children may be different. I'm not suggesting that low income families can't do well if they are smart about it and are functioning well. Most would not choose to be low income however (in Ontario that would be less than $49,799 total income for a household of 5).

I think the aspect of 'owning a home' relates to not entering retirement with debt, whether a mortgage or loans. It's not considered prudent to switch from earning an income to spending your savings if you are still paying off debts. Obviously if you rent and will continue to, it is moot.
OP has no debt, so in good shape in that regard.


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## CalgaryPotato (Mar 7, 2015)

It sounds like you are in great financial shape... that said, it all seems tight all around if you are talking full retirement.

36K is a very frugal lifestyle for a family of 5 with 2 vehicles and a house to maintain... I really don't know how you do it, but clearly I'm guessing there is very little wiggle room. Needing a new car, (or a major car repair) a minor medical thing (like a new prescription needed or braces), an appliance going, these tiny everyday things that I wouldn't consider things you'd fund from an emergency fund, would add thousands to your budget. 

Also with 3 kids at home, retirement may seem practical now, since life is surely busy... but in a few years when they are out of the house, it could seem like a lot of time to fill. Maybe some sort of a sabbatical makes more sense for you?


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## OrganicRain (Nov 27, 2016)

Thanks for all the comments and suggestions everyone - much appreciated!

To add some more context: 
Currently one car is covered by my work in terms of mileage reimbursement etc. When I stop working, we have no problem going to one car. My wife actually takes public transit to work (she prefers it) + I love biking, which I would run the majority of my local transportation by bike upon early retirement. I am hardcore and ride all year round...

My wife was a stay at home up until 2 years ago, she decided to go back to school and now is in a job she loves with no plans for the next few years to stop working. Her hours may fluctuate and some years she might make significantly more. However, we have agreed that she stays part time for the most part, even then she could end up at 40k gross. The 20k number is very conservative.

In terms of my work, I am in sales management for a megacorp and the pressure is very high. After leaving this role, I would consider going to something part time down the road, or even working in sales for a small mom and pop type business, where pressure is lower and flexibility is higher.. I am not sure yet, but what I do know for sure is that I want out of the megacorp lifestyle for good. I am also open to starting a business online, consulting business or sales contracting etc. Maybe retrain and go back to school.

So in a sense, I want to still be productive but my health is at risk if I stay in the type of environment that I am currently in. My focus is for maximum flexibility in terms of lifestyle and minimum pressure while contributing to something meaningful - money would be secondary. 



Investments, taxes, savings and gov benefits:

The 36k spend is net, take home.

RESP's are at 50k total for the three kiddos. Ages 15, 12, 10. I did not include this in the 900k.
The 15 year old just landed a part-time job near by and will be saving some of her income towards her future. That will be the expectation for all three.

Taxes on investment income would be low, and it would be strategically derived from a combination of RRSP's, TFSA's and non-registered dividends.

Investment mix is 60/40 stocks/bonds. Stocks - XAW, VCN and Bonds are ZAG. If the market dropped I could live a few years off the bonds until it recovered. The dividends alone from this cover half our basic living expenses.

If our income dropped, our various Canada child benefits would go up significantly.


MISC Expenses:

Kids dental braces are 100% covered in a separate fund not included in the 900k.

House is fully renovated, new 50 year roof put on this year. HVAC system is 5 years old.

Car wear and gas would be minimized. (lower than average)

Vacations - we enjoy simple camping and low cost airbnb vacations.


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## robfordlives (Sep 18, 2014)

Longtimeago said:


> How much income someone needs to live on in retirement and how much capital they need to generate that income without having to work at all, varies by individual. If someone says that they 'need' $100k per year in retirement to be happy, I cannot argue that point. At the same time, those suggesting the OP would have a 'lean' retirement are trying to argue the reverse. It is not up to anyone but the OP to decide how much is needed to be happy.
> 
> In regards to the real basic necessities of live however we can all agree. You must have food, shelter and clothing. Those are actual necessities we all have. However, no one has an actual 'need' to eat steak. If someone is happy eating Kraft dinner that's their choice. Beyond the basics, it all varies by individual and that should be respected by all, not questioned or called 'nuts' by someone who believes they need $2.5 mil to retire. It is no different than my saying I think anyone who thinks they need $2.5 mil to retire is nuts. Different strokes, leave it at that.
> 
> Regarding owning a home when you retire, in most retirement forums, you will find as has been mentioned here, that common denominator. This is because it provides a cushion of cash in the event of something going terribly wrong with someone's retirement plans. It is a fall back of 'last resort'. It's as simple as that. No other place you can park your cash offers you the same safety from loss while at the same time providing you with a reasonable expectation of increase in value above inflation.



Yes BUT with a lean fire it becomes extremely difficult to cut back if you run into sequence of returns risk. What, is the family going to go from Kraft Mac & Cheese to Walmart brand, then finally SPAM when the money starts running low? Whereas on what I'd argue is a FAT fire of 100K there would be room to cut back. This is I think the biggest flaw in this new FIRE movement.


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## m3s (Apr 3, 2010)

OrganicRain said:


> Vacations - we enjoy simple camping and low cost airbnb vacations.


Uh oh that is a trigger word around here

There are so many ways to make easy money when you have the flexibility of time that FIRE gives you. I imagine you may still want to do something productive with part of your time anyways

Personally I don't intend to own a house because it would give me the flexibility in time and location to make money doing interesting things of opportunity for part of the year, if I so chose and depending on the opportunities that arise. A house requires maintenance, property taxes, insurance, renovations etc etc and anchors you to a location most of the year. If you intend to travel a lot it doesn't really make sense to keep a house imo

Houses don't go up 20%/year forever.. I personally would rather have equity investments but I can see how either or can work if you have a good plan and the lifestyle for it.


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## CalgaryPotato (Mar 7, 2015)

Thanks for the added details...

I definitely think you are in a position where you have the flexibility that you shouldn't have to be in a job that is causing you that much stress. With the added information, it's definitely a little safer for your to retire fully and if you're wife keeps working that'll help a lot as that'll cover most of your basic expenses allowing your savings to grow for a few more years before you fully have to rely on them.

I think handing in your notice, and finding something that is lower stress that can provide you some more satisfaction is probably your best bet.


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## Longtimeago (Aug 8, 2018)

robfordlives said:


> Yes BUT with a lean fire it becomes extremely difficult to cut back if you run into sequence of returns risk. What, is the family going to go from Kraft Mac & Cheese to Walmart brand, then finally SPAM when the money starts running low? Whereas on what I'd argue is a FAT fire of 100K there would be room to cut back. This is I think the biggest flaw in this new FIRE movement.


Yes but, earlier you wrote, "especially considering overvalued markets and sequence of return risks" as if that was the only way to earn an income. The OP has clarified that in fact that they are invested in stocks and bonds, just like the majority of people do and as you are thinking. From my perspective, that is the flaw in thinking. 

If you remove 'sequence of return' entirely form the equation, you remove that risk. As I wrote earlier, I do not believe in depending on a supposed SWR to fund retirement. I believe in protecting and growing the capital at least in line with inflation and living only on the income derived from that capital. As I wrote, I favour if possible a 33/33/33% split over living costs, discretionary income and savings/re-investing. Where is the risk of a 'lean' FIRE going wrong in that scenario? My scenario gives you a 66% cushion to work with if things go wrong.

Where the issue comes in is that you cannot get that kind of return in 'safe' stocks and bonds. If the OP needs $36K for living costs then they would need to be generating $108k from the $900k capital. Or as I suggested, reduce the living costs to $20k and only need to generate $60k in income. Either one gives a 66% cushion but it isn't likely to be done if the only thing someone can think of to invest in is stocks and bonds. Just as I believe in NEVER touching the capital, I also believe that the stock market is a GAMBLE. I don't gamble on anything other than sure things. It's worked for me for 29 years. I saw those who were gambling on stocks and an SWR go down in flames after the 2006 Great Recession because of the issues you raise. I felt nothing, in fact my income went up as some pension money came into the equation starting in 2006.

Nothing is as constant as change and yet it seems to be a common belief that if someone decides to FIRE, that they have to come up with a plan that will work until they die. I say that is nonsense. They have only to come up with a plan that will work in year one. It may not work at all in year 2 if things change. In that case, they must come up with a new plan that will work. Or a plan may be working but a new opportunity presents itself because of some change that occurs and you then need to decide whether to stay with the existing working plan or change to take advantage of the new opportunity.

Let me give you an example. I started out invested in industrial and commercial real estate. It has advantages over residential real estate in that you never have any of the responsibilities of being a landlord; occupancy rates remain relatively constant; returns also remain fairly constant over inflation. Worked fine for me for several years. But then, while living in a country in Europe, I had an opportunity to buy government bonds in that country that could be bought and HELD (no currency fluctuation concerns) in foreign currency and paid a return of 21% per year. Yes, 21%, that's not a typo. I moved the bulk of my capital to those bonds. Over the course of the next 4 years, the return dropped each year till it was down to 15%. 

Then I chose to move countries and move my capital out of those bonds into (managed) residential real estate in another European country. After 6 years, my capital had grown by just over 100%. 

Currently, I am into healthcare real estate. Why? Because I am a Baby Boomer and recognize that since the first Baby Boomer hit age 65 in 2011, there is a guaranteed growing market there for the next 30 or so years, in everything that an aging BB will need or want. What are the chances do you think that a company making 'mobility scooters' will see their market disappear anytime soon? Or that the number of 'nursing homes' needed will drop? Or that the number of doctor's practices offices will decline?

My point is that when you FIRE or just simply retire at the usual 60-65, life does not freeze in place in any way, shape or form. Things change and you must change with them including how you invest your money and derive your income. But as a saying I really like goes, 'you cannot see there from here'. You cannot always see what is coming in the future, you can guess, you can 'hedge', etc. but changes will happen and some will be unexpected, some expected. To me, it seems obvious that trying to plan how you will derive your income over the course of say the next 30-40 years (as SWR plans are supposed to do) is ridiculous. As ridiculous as asking a 20 year old to plan how they will derive their income at age 50-60. Did you have a clue of how you would be doing that at age 20?


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## Longtimeago (Aug 8, 2018)

OrganicRain said:


> Thanks for all the comments and suggestions everyone - much appreciated!
> 
> To add some more context:
> Currently one car is covered by my work in terms of mileage reimbursement etc. When I stop working, we have no problem going to one car. My wife actually takes public transit to work (she prefers it) + I love biking, which I would run the majority of my local transportation by bike upon early retirement. I am hardcore and ride all year round...
> ...


Huh, some real similarities in our backgrounds OrganicRain. When I retired the 'first' time, I was a national sales manager for a large corporation. I actually gave the company President one year's notice. He thought I was kidding and when at the end of that year I told him I was going to leave, he was in a panic. LOL So I negotiated that I would stay for one additional year as a 'consultant' working for an average of 3 days per week (my choice of when I worked, some weeks 5 days, some 1, some none). Registered a company name, billed my time and earned as much in that year as the previous full time year, as well as having some perks of being self-employed.

After retiring the 'second time' and while waiting for my wife to be ready to pack it in, I was approached by a consulting company to act as a Managing Partner (think like a law firm) for the group of independent consultants who worked under the 'umbrella' of the company. I got a percentage of all sales. After 3 years, I said enough is enough and retired for the 'third' and final time. That was when I first discovered the 'you must know something' aspect of how people can perceive someone who retires at a relatively early age. 

So to be honest, I can say I retired at age 42, 43 and 46. LOL


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## tdiddy (Jan 7, 2015)

m3s said:


> Uh oh that is a trigger word around here
> 
> There are so many ways to make easy money when you have the flexibility of time that FIRE gives you. I imagine you may still want to do something productive with part of your time anyways
> 
> ...


That makes sense. I get the idea of having the home ownership as a last safety net of sorts as well to an extent. However, here in greater Vancouver, similarly in Toronto, the idea of owning a paid off house and FIRE don't really go together all that well with the staggering home costs.


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## OrganicRain (Nov 27, 2016)

tdiddy said:


> That makes sense. I get the idea of having the home ownership as a last safety net of sorts as well to an extent. However, here in greater Vancouver, similarly in Toronto, the idea of owning a paid off house and FIRE don't really go together all that well with the staggering home costs.


My modest house is worth 450k and I am not in one of those major cities. I completely get what you are saying, but let's say I earn 5% (and paying taxon it) on the 450k. Still have to pay rent - looking at 2000k a month rent for enough space. Might as well keep the house?


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## OrganicRain (Nov 27, 2016)

Longtimeago said:


> Huh, some real similarities in our backgrounds OrganicRain. When I retired the 'first' time, I was a national sales manager for a large corporation. I actually gave the company President one year's notice. He thought I was kidding and when at the end of that year I told him I was going to leave, he was in a panic. LOL So I negotiated that I would stay for one additional year as a 'consultant' working for an average of 3 days per week (my choice of when I worked, some weeks 5 days, some 1, some none). Registered a company name, billed my time and earned as much in that year as the previous full time year, as well as having some perks of being self-employed.
> 
> After retiring the 'second time' and while waiting for my wife to be ready to pack it in, I was approached by a consulting company to act as a Managing Partner (think like a law firm) for the group of independent consultants who worked under the 'umbrella' of the company. I got a percentage of all sales. After 3 years, I said enough is enough and retired for the 'third' and final time. That was when I first discovered the 'you must know something' aspect of how people can perceive someone who retires at a relatively early age.
> 
> So to be honest, I can say I retired at age 42, 43 and 46. LOL


Thanks for sharing that experience.


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## m3s (Apr 3, 2010)

OrganicRain said:


> My modest house is worth 450k and I am not in one of those major cities. I completely get what you are saying, but let's say I earn 5% (and paying taxon it) on the 450k. Still have to pay rent - looking at 2000k a month rent for enough space. Might as well keep the house?


If you don't need to live near a major city for work.. 450k gives you a lot of flexibility to move to a lower cost of living region (with less traffic, nicer scenery, more activities or whatever you prefer) 250k buys a very nice house in LCOL regions of Canada that would be more enjoyable during FIRE imho but lack the corporate jobs (and associated traffic, noise, pollution, crime etc).. or you could buy a very nice RV to travel and not pay property taxes/maint. A house is a lifestyle choice not an investment imo


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## robfordlives (Sep 18, 2014)

Longtimeago said:


> Yes but, earlier you wrote, "especially considering overvalued markets and sequence of return risks" as if that was the only way to earn an income. The OP has clarified that in fact that they are invested in stocks and bonds, just like the majority of people do and as you are thinking. From my perspective, that is the flaw in thinking.
> 
> If you remove 'sequence of return' entirely form the equation, you remove that risk. As I wrote earlier, I do not believe in depending on a supposed SWR to fund retirement. I believe in protecting and growing the capital at least in line with inflation and living only on the income derived from that capital. As I wrote, I favour if possible a 33/33/33% split over living costs, discretionary income and savings/re-investing. Where is the risk of a 'lean' FIRE going wrong in that scenario? My scenario gives you a 66% cushion to work with if things go wrong.
> 
> ...



Most early retiree's especially those with a family will not have such a laissez faire attitude such as yourself. Do you think those 21% bonds came with no risk of failure? Try explaining losing a huge chunk of your retirement to the wife after losing it all in Bulgarian bonds or whatever such nonsense worked out for you. I agree with alot of what you are saying but I think it's easier said than done. 

I think in alot of cases the mindset of an early retiree does not match a go getter personality. Rather than climbing that corporate ladder they are deciding to check out because it is easier, safer, whatever. I'm in the early retirement camp as well (hoping to at 50) and see this trait in myself. I just don't have the appetite for the BS to keep climbing up the never ending ladder. So in my case I better be damn sure I have the capital to sustain my wife and I for 40-50 years otherwise i"m likely looking at pulling some shifts at Best Buy

I"m also putting alot more faith in the multiple SWR studies done by experts in the field than some ad hoc system you (or anyone else) has created.


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## OrganicRain (Nov 27, 2016)

Longtimeago said:


> Yes but, earlier you wrote, "especially considering overvalued markets and sequence of return risks" as if that was the only way to earn an income. The OP has clarified that in fact that they are invested in stocks and bonds, just like the majority of people do and as you are thinking. From my perspective, that is the flaw in thinking.
> 
> If you remove 'sequence of return' entirely form the equation, you remove that risk. As I wrote earlier, I do not believe in depending on a supposed SWR to fund retirement. I believe in protecting and growing the capital at least in line with inflation and living only on the income derived from that capital. As I wrote, I favour if possible a 33/33/33% split over living costs, discretionary income and savings/re-investing. Where is the risk of a 'lean' FIRE going wrong in that scenario? My scenario gives you a 66% cushion to work with if things go wrong.
> 
> ...


Honestly, I have no interest in investing any differently than I do now, which is an ultra low cost globally balance portfolio consisting of 1000's of stocks and bonds within ETF's - rebalancing once a year regardless of what the markets are doing. I have been reading about investing for 20 years, and for me this is the best approach and the only approach I will entertain for the long term. Drawing down combination of capital growth and dividends is not a concern. Also, I have zero interest in being a landlord of any type.


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## My Own Advisor (Sep 24, 2012)

Some comments, for someone who wants some sort of FIRE myself:

1) 900k invested across index funds within TFSA's, RRSP's and non-registered. Very well done. That should deliver about $30-$35k per year in income without fail. As long as you are only spending the dividends/distributions for the first ~5 years or so in early retirement you should be good to go.
2) Paid for home - value aprox $450k. Awesome, you have to live somewhere.
3) 2 paid for vehicles. (09 Corolla, 2015 Sonata). We done, no debt.
4) Zero debt - awesome.

*This is the key: * I think as long as your expenses stay the same for many years on end, AND, your wife is working for many years to come to give you a buffer - then you're good to go.

I know for us, we've calculated a $1 M investment portfolio (churning out $40k or so per year) + workplace pensions (~ $500k churning out $20k or so by our 60s) + cash wedge buffer of at least one-year-worth of expenses (about $50k) + debt free = semi-retirement for us.

That's no kids.

We will still work at something given we want to stay active so we're looking at the semi-FIRE and not the full blown FIRE or bonFIRE 

I wouldn't sell the house at all. You have to live somewhere. Selling will also incur costs and renting has pros and cons. 

I guess if you can live off $36k per year (after taxes) but you have income around $50k or so per year (after taxes) that gives you a cushion to keep capital intact for the early years. That's key to avoid any sequence of risk and longevity issues and/or unexpected issues.

Good luck!!


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## Longtimeago (Aug 8, 2018)

robfordlives said:


> Most early retiree's especially those with a family will not have such a laissez faire attitude such as yourself. Do you think those 21% bonds came with no risk of failure? Try explaining losing a huge chunk of your retirement to the wife after losing it all in Bulgarian bonds or whatever such nonsense worked out for you. I agree with alot of what you are saying but I think it's easier said than done.
> 
> I think in alot of cases the mindset of an early retiree does not match a go getter personality. Rather than climbing that corporate ladder they are deciding to check out because it is easier, safer, whatever. I'm in the early retirement camp as well (hoping to at 50) and see this trait in myself. I just don't have the appetite for the BS to keep climbing up the never ending ladder. So in my case I better be damn sure I have the capital to sustain my wife and I for 40-50 years otherwise i"m likely looking at pulling some shifts at Best Buy
> 
> I"m also putting alot more faith in the multiple SWR studies done by experts in the field than some ad hoc system you (or anyone else) has created.


Nothing is without risk of some kind robfordlives, but again, ask those who had to go back to work after the Great Recession how their SWR plan worked out for them. Or, try to find anyone who retired 20-40 years ago with an SWR based plan, how it is working for them. SWR studies are all find and dandy but try finding examples of them having worked over time. There are lots of things that work in theory but not in the real world. Not all 'experts' in the field agree on SWRs and what is 'safe' or not.
https://www.valuewalk.com/2017/09/safe-withdrawal-rate/


Be careful where you put your 'faith'. That's what some of those Walmart greeters you see when you walk in did and had to explain to their wives how their SWR resulted in them both having to go back to work. I put my faith in ME and no one else.


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## Longtimeago (Aug 8, 2018)

My Own Advisor said:


> Some comments, for someone who wants some sort of FIRE myself:
> 
> 1) 900k invested across index funds within TFSA's, RRSP's and non-registered. Very well done. That should deliver about $30-$35k per year in income without fail. As long as you are only spending the dividends/distributions for the first ~5 years or so in early retirement you should be good to go.
> 2) Paid for home - value aprox $450k. Awesome, you have to live somewhere.
> ...


Your plan sounds fine to me My Own Advisor, as it does not involve drawing down the capital, only living on the income from the capital. That to me is the key. Unfortunately, from my perspective far too many are counting on drawing down the capital and that of course is when 'sequence of risk' comes into play. If you read the link I included in my last response above, you will see that in fact the SWR calculated for someone who retired in 2000 turns out to be 1.6% and that is something those looking at SWR don't want to hear or acknowledge. That a 4% SWR for someone retiring in that year only had a 30% chance of surviving is hardly a 'safe' plan.

My concern is that some people seem to believe that they can come up with a plan that will work for the rest of their lives. Whether someone invests in the stock market or generates income in some other way is up to every individual. We can all agree to disagree on how to invest our capital. But I believe that people should remain more flexible in how the think about their 'plan'. As I wrote above, a plan should work for the next year. Beyond that, it may or may not need to change. Those that understand that and are quick to change do not end up as Walmart greeters. Those that stubbornly stick to their 'plan' may become Walmart greeters or working at MickeyD's for 9 months to be able to afford their winter trailer park in Florida.

I like this article, the author refers to it as standing in the road with a tractor trailer headed your way.
https://thinksaveretire.com/do-retirees-need-to-rethink-trinity-4-swr-rule/ 
He is pro SWR but admits it is not cast in concrete and you have to be prepared to change/adapt to conditions as they exist. That's fine by me, but I disagree with his belief that everyone is smart enough to know you have to move out of the road if a truck is headed your way.

What I advocate is live on income (not capital) and change your means of deriving income as often as you need to. Do not rely on any 'plan' to work for decades into the future.


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## Pluto (Sep 12, 2013)

Quit your job. Let the wife cover living expenses with the job she loves. (She won't be "equal" until she has the opportunity to spend all her money on her family.) Money isn't everything. Free up your time to do something you enjoy. Its sad that people work at jobs they dislike just for the money. After being off work for a while you might find a paid occupation that you like so much it doesn't seem like work.


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## OrganicRain (Nov 27, 2016)

In regards to sequence of returns risk - and risk in general.

I understand the term fully and don't think its an issue in my case as I will have at least 2 sources of income coming in to supplement or even cover most/all my living expenses. Wife's income + CCB.

Life is about risk's, I have taken many and its gotten me far. There is also risk of dying while still working - never fully realizing the freedom of ER.

Google "regrets of the dying" - one of the top listed regrets are "wish I hadn't worked so hard/long" - and spent more time on relationships and being true to oneself.


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## OnlyMyOpinion (Sep 1, 2013)

OrganicRain said:


> ... Google "regrets of the dying" - one of the top listed regrets are "wish I hadn't worked so hard/long" - and spent more time on relationships and being true to oneself.


Very true. It's great if your numbers will allow you to retire. I think most would agree that you're not likely (on your deathbed) to feel that you worked too long if you have retired at 45, or even 50, 55 or 60. Particularly if stats tell us that peple are living longer.

On the numbers, I don't agree with LTA's insistence that people should be trying to 'Never touch the capital'. Gradual and planned decumulation (including capital) is what a person wants (it also requires less total capital). Since as we know. the other important adage is that 'you can't take it with you'.


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## Thal81 (Sep 5, 2017)

Longtimeago said:


> If you read the link I included in my last response above, you will see that in fact the SWR calculated for someone who retired in 2000 turns out to be 1.6% and that is something those looking at SWR don't want to hear or acknowledge.


Actually, this is a bit too early to tell since the 4% rule is for a 30 year retirement and we're only about 18 years in. So any study has to make up data for the next ~12 years, which may or may not end up being what happens.

This is also a concern of mine, so I've built a simulation in my portfolio worksheets for that exact scenario, using the total returns of the index funds I use in my portfolio (so it includes fund fees and all) and real canadian inflation data for those years. For a starting 60/40 couch potato type portfolio of 1 million at the beginning of year 2000, withdrawing at 4% per year and rebalancing at the beginning of each year, we started 2018 with a balance of 823k. Because of inflation, the current withdrawal amount is 54.1k, which is about 6.6% of the remaining portfolio. Looking at the trend, we're clearly heading towards portfolio failure in the long term, however, I seriously doubt it's going to happen before year 30.

Also, I do that exercise with various stock/bond allocations. So far the portfolios with higher bond allocations are doing a lot better.


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## Longtimeago (Aug 8, 2018)

OnlyMyOpinion said:


> Very true. It's great if your numbers will allow you to retire. I think most would agree that you're not likely (on your deathbed) to feel that you worked too long if you have retired at 45, or even 50, 55 or 60. Particularly if stats tell us that peple are living longer.
> 
> On the numbers, I don't agree with LTA's insistence that people should be trying to 'Never touch the capital'. Gradual and planned decumulation (including capital) is what a person wants (it also requires less total capital). Since as we know. the other important adage is that 'you can't take it with you'.


I would be perfectly happy spending my last dollar on my last day OnlyMyOpinion, but at the same time, I do not want to spend it before my last day. Should I then plan on having something on hand (a little blue pill maybe?) to take and insure when I get to the last dollar I make it my last day? 

Take a look at what Thal81 is telling us using real numbers. "clearly heading towards portfolio failure in the long term, however, I seriously doubt it's going to happen before year 30." 

Someone retiring at 45 however hopes to live longer than 30 years obviously. So the 'seriously doubt' and 30 years is of no comfort in that case. The only way I know of to eliminate that concern is to live off income, not capital. And grow the capital by at least the rate of inflation each year. I don't think anyone would try and argue that that would not be a better way to reduce the risk of running out of money before you die. The problem is that when people look at living off income alone, they see it as meaning they need a lot more capital before they can retire as you yourself see it.

I disagree that more capital is needed. My answer is to get more income from the capital you have and/or reduce your living costs. There are 3 numbers we all have to work with. Capital, income and living costs. But I think you would agree that most people tend to focus on only the first number, capital and make 'assumptions' about income from that capital and their living costs. Most approach the 'can I afford it' from that viewpoint. If they don't think they have enough capital yet they see the only answer as to wait till they have more capital.

Why did you jump automatically to saying, "it also requires less total capital" rather than saying, living off income alone EITHER requires more capital OR increasing income from your capital and/or reducing your living costs? 

Why should $900k only be able to provide $36k income and why should living costs have to require $36k income? Is there a law that says so? Why could $900k not provide $90k income? Or living costs not be reduced to $30k without reducing a person's happiness with their life? Why ignore those possibilities?

Let me give a simple example. We pay property taxes, they are a necessary living cost. I happen to live in a small town with relatively low property tax vs. a large city. What's more, our house is the first house outside of the town boundary. To look, you would say we live 'in the town'(it's a 5 minute walk to 'downtown') but by the distance of one property, we pay 25% less property tax as a 'rural' property than our next door neighbour on the 'town' side of the boundary. Our property taxes this year were $2400. What was your property tax this year?

It is easy to reduce annual living costs by several thousand dollars with no affect whatsoever on our happiness with where we live or our lifestyle. But ONLY if you approach the equation looking for it. And you don't even necessarily have to move to a small town to do that. Take a look at the differences in property taxes on the average home in the Toronto GTA area. https://www.zoocasa.com/blog/the-gta-cities-with-the-highest-property-tax-infographic/ Someone living in an 'average' home in the GTA could save several thousand dollars a year on property tax simply by moving a mile or two. Move from Halton Hills to Milton which have similar average house prices and save $1000 in property taxes per year.

Property taxes in my opinion do not get enough attention from people when they are looking at their living costs and especially in retirement whether early or not. When you are working for a living, you have much less flexibility in where you can live than you do in retirement. Property taxes are an ongoing annual cost you cannot avoid. But unlike say groceries, you have far more room to maneuver in how much they will cost you per year.

And we could then look at how much capital we could free up to invest and produce more income by simply moving from one GTA area into another looking at that same link. My Brother sold a one bedroom condo at Harbourfront in Toronto and bought a 2 bedroom rancher in a small town for 1/3 of what he got for the condo. That's 2/3 of the condo value freed up to invest and produce more income while actually taking a step UP in his housing!

If you approach the question of 'can I afford to retire' by starting with, 'I have $900k capital, a home paid for worth X and no debt and I want to retire on the income I can generate and not touch my capital', you will take a very different path in your thinking as to how to achieve that goal. You will start looking at things like, 'my house is worth $500k where can I buy an equivalent house for $250k and free up another $250k to invest and produce income? My property taxes are $5k, where can I pay only $2.5k? My $900k is only producing a 4% return, where can I invest my money equally as safely at least and earn 5%?

When you start from the point of 'I cannot eat the capital' it must by necessity change how you think about the entire package of capital, income and living costs.


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## james4beach (Nov 15, 2012)

I'm really enjoying reading through this thread. Lots of interesting ideas being discussed. Longtimeago, I agree with you that the stock market is a gamble. It provides no assurances and as you point out, outcomes are extremely sensitive to the start date. I agree with your philosophy that one shouldn't be overconfident about multi-decade retirement plans based on projections being made today.

I especially like your advice to remain flexible, both in plans and lifestyle. Others in this forum have pointed this out before and I think it's worth repeating. There's so much uncertainty over long periods like 20+ years.


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## OnlyMyOpinion (Sep 1, 2013)

Interesting perspective LTA. Yes, the well worn question is 'do I have enough to retire', or 'how much do I need'. 
But I don't agree that _"most people tend to focus on capital"_ at the expense of income and living costs. Obviously a person has to have examined and made assumptions about portfolio returns and living costs (as well as other inputs) to decide the question of capital sufficiency. 

I think what you are suggesting is that most people don't choose to seriously consider 'changing the dial' on those assumptions. That is probably true, particularly at conventional retirement ages (60-65?). Where you live and your spending may be more 'entrenched', and less in need of changing anyway. On the other hand, I suspect someone trying to decide if they can retire at a very young age is more likely willing (and needing to) make lifestyle changes so they can 'pull the plug'.

As to investment returns, why _"could $900k not provide $90k income?"_ You'll have to expand on that one. I'm sure there are isolated, anecdotal examples that exist, but that level of annual spending without encroaching on the capital is not achievable on a widespread, recurring, long term basis without incurring substantial risk of failure.

Blue pill? With changes last year, more likely to be a red pill, 'ruby slippers' or 'seccies' as they're known.

Property tax. We pay $2600/yr. We live in a mature suburb in a large city, cul de sac, lovely view, park across the road, a walk or couple minutes drive from everything we need. Same house we bought when married. Renovated top-bottom 8yrs ago. Currently appreciating the ease of visiting rehab twice a week at the nearby hospital.


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## james4beach (Nov 15, 2012)

OrganicRain said:


> In terms of my work, I am in sales management for a megacorp and the pressure is very high . . . So in a sense, I want to still be productive but *my health is at risk if I stay* in the type of environment that I am currently in.


If I was in your position, I would not stay with this job. You can keep working in other capacities elsewhere, but health should never be compromised for a paycheque. It's not worth it, even mathematically. A healthy and happy person has much higher income earning potential over the long term.

You might even be able to shift your scenario to put things more on your own terms. One idea would be to quit the current company, but approach them and ask if they could use your services as a consultant. See if they would be willing to pay you $X for Y amount of work, for which you will invoice them on a bi-weekly or monthly basis. Calculate the value of various benefits you would no longer be getting, roll them into your hourly rate, and see if the company wants your services. (As a rough guideline this number should be over $100/hr). This kind of arrangement might let you work fewer hours in total, have better control of the situation, and also open the doors to you doing similar services for any other company, at your own discretion, on your own terms, when you want to.

Plus, if you don't feel like working for a year or two, you just stop working and take time off. This is what I plan on doing (I'm in my 30s). I expect that I will work for the next 40 to 50 years, but if I am going to remain healthy and happy that long, I am going to have to take many breaks and leave lots of time for fun & games. At times... perhaps next year... this means that my employment income drops to $0. No big deal.


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## OrganicRain (Nov 27, 2016)

james4beach said:


> I'm really enjoying reading through this thread. Lots of interesting ideas being discussed. Longtimeago, I agree with you that the stock market is a gamble. It provides no assurances and as you point out, outcomes are extremely sensitive to the start date. I agree with your philosophy that one shouldn't be overconfident about multi-decade retirement plans based on projections being made today.
> 
> I especially like your advice to remain flexible, both in plans and lifestyle. Others in this forum have pointed this out before and I think it's worth repeating. There's so much uncertainty over long periods like 20+ years.


Historically, the 4% rule is very safe 95%+ of the time. More often than not, one will end up with way more money at the end of their life than what they began with. This has been studied to death...

In my case, if I have to go back to work - I go back to work. Not the end of the world either... Maybe I'll go to chef's school to jump back in....lol.


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## humble_pie (Jun 7, 2009)

Rain the impression your posts convey to me is that you're not really looking to retire, instead you are looking for a radically different new life.

it's true the thread has devolved into analytic $$ discussions of does-he-have-enuf-to-retire-why-doesn't-he-sellthehouse-cutdownexpenses-sellthekids-etc.

but me i think you do have enuf, financially speaking. Meanwhile your wife seems to be setting a fine example. IE she took a while to reflect & choose a new path in life, she even went to school to prepare for change, now you say she's happy & loving the part-time career.

perhaps you might consider a one or two-year window for similar reflection. Even if you end up serving megaCorp for yet a few more months or years, just knowing you have set your course towards the Exit door could possibly ease some of the stress.


.


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## james4beach (Nov 15, 2012)

Regarding Longtimeago's comments, one thing I'd like to point out is that though Longtimeago is criticizing dependence on stock market returns (as a gamble, uncertain) he himself appears to have made other gambles himself that just _happened_ to work out. For example, investing in real estate, owning a home, etc. Well Canada has been in a 27 year real estate bull market, but that wasn't a guarantee either. For all we know, RE could decline for the next 20 years.

Longtimeago posted about investing in treasury bonds in another country where yields were double digits. Again, that's a total gamble. It worked out well for him, but the foreign currency could have equally well crashed and he could have been wiped out in that investment.

The reason I'm bringing this up is that any way you cut the problem, investment involves risk. Longtimeago may not approve of the risk and uncertainty in stocks, but his own risk-taking in real estate and sovereign bonds is not any fundamentally better or safer.


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## OrganicRain (Nov 27, 2016)

humble_pie said:


> Rain the impression your posts convey to me is that you're not really looking to retire, instead you are looking for a radically different new life.
> 
> it's true the thread has devolved into analytic $$ discussions of does-he-have-enuf-to-retire-why-doesn't-he-sellthehouse-cutdownexpenses-sellthekids-etc.
> 
> ...


True, she is setting a fine example. I have kinda fallen into my career path early one, it paid the bills - so I went with it....


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## OrganicRain (Nov 27, 2016)

james4beach said:


> If I was in your position, I would not stay with this job. You can keep working in other capacities elsewhere, but health should never be compromised for a paycheque. It's not worth it, even mathematically. A healthy and happy person has much higher income earning potential over the long term.
> 
> You might even be able to shift your scenario to put things more on your own terms. One idea would be to quit the current company, but approach them and ask if they could use your services as a consultant. See if they would be willing to pay you $X for Y amount of work, for which you will invoice them on a bi-weekly or monthly basis. Calculate the value of various benefits you would no longer be getting, roll them into your hourly rate, and see if the company wants your services. (As a rough guideline this number should be over $100/hr). This kind of arrangement might let you work fewer hours in total, have better control of the situation, and also open the doors to you doing similar services for any other company, at your own discretion, on your own terms, when you want to.
> 
> Plus, if you don't feel like working for a year or two, you just stop working and take time off. This is what I plan on doing (I'm in my 30s). I expect that I will work for the next 40 to 50 years, but if I am going to remain healthy and happy that long, I am going to have to take many breaks and leave lots of time for fun & games. At times... perhaps next year... this means that my employment income drops to $0. No big deal.


Good points, I agree and healthy and happy person is far more productive. That has to be number #1.


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## kcowan (Jul 1, 2010)

humble_pie said:


> Even if you end up serving megaCorp for yet a few more months or years, just knowing you have set your course towards the Exit door could possibly ease some of the stress...


When I was offered a golden handshake from MegaCorp, they gave three months to decide. I talked it over with family and friends and told them in a week. After that I was free and the load lifted from my shoulders. Also they told me I was not on their target list and would I reconsider. I told them I would work for 2 extra months to ease them with the transition. Those were the best 4 months. No BS meetings and no reports.


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## peterk (May 16, 2010)

I would just like to point out that it's easy to jump on the "my health is at risk so I should quit this job " bandwagon, without deeply reflecting on whether the "stress at work" that is leading to the poor health is self inflicted or not.

Surely there are other people around your workplace who have great health and much less stress than yourself. Why?

Many people are committed to delivering the best for their employer - The stress comes from assigning personal accountability to yourself for the _outcome_ of the decisions you make at work. This is all fine when you are young and made to feel that learning the right things making the right decisions will rocket you to financial success. Surely by 45 though you can come to realize though that you are just a piece of a puzzle for whatever venture your employer is in the business of. 

Getting worked up about corporate BS, meetings, reports, side projects, etc. that distract you from your main purpose at work can be frustrating, but you can learn to accept that this what the megaCorp wants, for better or worse (certainly worse), and that it's _not your problem_. 

You can choose to provide the best input you can, at the time, and learn to detach yourself from taking on the responsibility for the outcome. Whether this leads to a "lesser" position in the company over the years of having such an attitude is unclear, I suppose it could in some cases - The point is, why would you care about that? You are already 45 and have a bare minimum for early retirement and the rest is gravy. If your position at work is ultimately compromised so what. Leave.

Just consider that instead blowing up your current place for a radical new life, you could maybe first try going to work with a radical new attitude.



humble_pie said:


> perhaps you might consider a one or two-year window for similar reflection. Even if you end up serving megaCorp for yet a few more months or years, just knowing you have set your course towards the Exit door could possibly ease some of the stress.





kcowan said:


> I told them I would work for 2 extra months to ease them with the transition. Those were the best 4 months. No BS meetings and no reports.


Perhaps one can learn to act like this for all their career.


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## Longtimeago (Aug 8, 2018)

OnlyMyOpinion said:


> Interesting perspective LTA. Yes, the well worn question is 'do I have enough to retire', or 'how much do I need'.
> But I don't agree that _"most people tend to focus on capital"_ at the expense of income and living costs. Obviously a person has to have examined and made assumptions about portfolio returns and living costs (as well as other inputs) to decide the question of capital sufficiency.
> 
> I think what you are suggesting is that most people don't choose to seriously consider 'changing the dial' on those assumptions. That is probably true, particularly at conventional retirement ages (60-65?). Where you live and your spending may be more 'entrenched', and less in need of changing anyway. On the other hand, I suspect someone trying to decide if they can retire at a very young age is more likely willing (and needing to) make lifestyle changes so they can 'pull the plug'.
> ...


Well I think at this point, all aspects of the question have been covered for OrganicRain to consider. We are now approaching that point of simply going around in circles. What is important is that those interested in this topic have different viewpoints put forth and that they consider those different viewpoints for themselves. We each have to make our own decisions.

Regarding not considering, 'changing the dial', yes, I agree that is what generally happens and all I am suggesting is that they give it more serious consideration. I think people tend to forget that just like the saying, 'work expands to fill time available', 'wants expand to fill income available.' We all have few real needs but a lot of wants and often don't really know which actually impact our happiness in life or not. We tend to forget that there are a lot of people in this country living on considerably less income than you or I might have and yet who are perfectly happy with their life. If you went through the student living in a shared house and eating Kraft dinner and 'barley sandwiches' (beer) phase, it was probably one of the happiest times in your life. You didn't need a $100k of income. The problem is that the more we have, the more we get used to it and don't want to do without it. But like anything else, it's mostly just about habits and habits can be changed, it just take some time and perseverance to get to the point where we don't 'miss' some things anymore. You could equate a 'higher spending lifestyle' to an addiction.

If you look at early retirement sites like Money Mustache, you will find younger people planning on extremely early retirements and consciously not allowing themselves to start increasing their lifestyle costs. They recognize the 'dependency' that develops. They are all about living on less income.

Regarding $900k providing $90k, that was of course just a case of example numbers. The point being that if you expect more, you look for where that expectation can be met. If you expect less, you don't look beyond satisfying that expectation, why would you? Rather than simply assuming expecting 10% must incur 'substantial risk of failure' over expecting less, why not do some research and see if that holds true or not?

How much more risk would you see incurring if you invested in REITs for example? They average 10% return currently. They also remove the simple objection people bring up of 'I don't want to be a landlord' as if everyone who invests in real estate must be a landlord and that's the end of that discussion. REITs are traded just like stocks. Investing in real estate is not just about buying a house or condo and becoming a landlord.

I currently connect real estate to the Baby Boomers. Did you know that Canada has the largest percentage of population in the Baby Boom generation of any country? Perhaps some later generations do not realize that the BB generation is not just the name of an earlier generation, the word 'Boom' refers to a significant bulge in population, not seen before or since. It represents a huge and aging market. In terms of real estate the obvious connection is to medical office needs and seniors homes. Here is an article on it that also connects REITs.
https://www.theglobeandmail.com/rep...tor-offers-great-opportunity/article35539209/

How much more risk do you see incurring if you invest in that market? I am not endorsing or not endorsing the REIT mentioned in the article by the way. You can see the past performance of office and retirement properties here and compare to stock market returns: https://www.realestateforums.com/co...forums/2018/portal-reports/CIBCREITreport.pdf

Also keep in mind that I am not advocating a long term plan. No doubt sometime around 30 years from now, someone will look at the demographics which will show a decline coming up in the over 80 population and say, 'hey time to sell my retirement home investments, the market is decreasing.' But that won't happen in the next few years and that is about as far as we should be looking ahead. Remaining flexible and open to changing entirely how we derive our income is what I am advocating, not looking for a '30 year plan'.

Regarding property tax, again it was an example of reducing living costs. You obviously are not living in the GTA OnlyMyOpinion. Also, please don't suggest/imply that you must live in a city to be near a good hospital. That is another common false belief that often gets trotted out for why live in a city vs a small town with lower living costs. Some of the hospital ratings on the following link might surprise some people as to where the highest rated are found. 
https://www.cbc.ca/news2/health/features/ratemyhospital/hospitalratings.html Click on the individual hospital to see more details.


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## Longtimeago (Aug 8, 2018)

I would like to add an alternative to early retirement that can suit some people.

I have an acquaintance (happens to be in Australia) who is a Psychologist. A few years after opening her own practice, she went to a 3 day work week. She is now in her late 50s and has no plans to 'retire' as such. She has maintained very good insurance coverage against 'loss of income' due to actual inability to work (accident or illness) which she has never had to rely on so far but that has been her safety net in that regard. She has also has some savings but nowhere near a million. She owns a lovely home outright. She plans to work until she is actually no longer physically able. She loves her work still and that is probably down to having that incredible balance of 3 days work and 4 days off every 'normal work' week. She takes a couple of vacations of 2 or 3 weeks duration each, per year. Her home is a 5 minute walk (she doesn't own a car) to shopping, her favourite sidewalk cafe and her office.

She made the decision early on to maintain a balance in her life and not let pursuing the almighty dollar her focus. In some ways, I think she might have had the best idea of all.


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## kcowan (Jul 1, 2010)

peterk said:


> Perhaps one can learn to act like this for all their career.


Well we did stop distributing management reports until they were requested. If no one requested them through a cycle, we stopped producing them.

Afterward as CEO, I changed the reports to be meaningful and eliminated all the useless ones that could not lead to actions.


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## james4beach (Nov 15, 2012)

peterk said:


> I would just like to point out that it's easy to jump on the "my health is at risk so I should quit this job " bandwagon, without deeply reflecting on whether the "stress at work" that is leading to the poor health is self inflicted or not.
> 
> Surely there are other people around your workplace who have great health and much less stress than yourself. Why?


Don't discount the possibility that other people also hate working, but put on a brave face. Trying to compare yourself to others is quite tricky, whether it's on Facebook or in the office. Sometimes you don't really know what others are thinking, or how they really feel.

But I agree with you peterk that it's important to think about this question and reflect on it. I can think of a few different reasons for being tired/stressed/sick of work. This is not an exhaustive list, just off the top of my head

1. The demands from bosses are too much, too fast
2. The overall organization is too fast, hurried, stressed
3. Coworkers/bosses are unpleasant or abusive
4. You aren't doing well at managing your workload and pushing back
5. You're taking work too seriously or too intensely, when you don't have to
6. You don't like doing this particular kind of work
7. You simply don't like spending all day in an office when you could be doing other things
8. You've spent a long time there and grown tired of it, want to change things up
9. You don't like being busy all the time

In my own situation, my office is actually quite nice. The coworkers are nice, the pace is great, there is no stressful push for speed. But I am thinking of quitting, partly for reasons # 6-8

The core of my complaint is #7, that I don't want to spend my time like this. This has especially dawned on me as I get older, seeing my "best years" slipping away from me. I have many other things I'd like to be doing instead, while I'm still able to do them. And because I've saved a lot, I don't particularly need the money.

At the same time, I understand that my coworkers may not feel the same way at all. I've heard people say they "can't imagine what they'd be doing with their time" if they had a month or year off. Everyone is different, and some people are comfortable with the routine of coming to work each day and spending all daylight hours (0800-1800) inside.

The same goes for being busy #9. Some people like being busy all the time, it energizes them. Others don't. Sometimes, you just get tired of doing the same thing for too long #8. Every individual is different ... what tires and stresses one worker, may energize another.


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## OrganicRain (Nov 27, 2016)

peterk said:


> I would just like to point out that it's easy to jump on the "my health is at risk so I should quit this job " bandwagon, without deeply reflecting on whether the "stress at work" that is leading to the poor health is self inflicted or not.
> 
> Surely there are other people around your workplace who have great health and much less stress than yourself. Why?


Look around, heart disease IS the NUMBER #1 killer in North America. Stress + sitting at a desk all day doing mind numbing work is one of the big reasons for it.


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## My Own Advisor (Sep 24, 2012)

"Getting worked up about corporate BS, meetings, reports, side projects, etc. that distract you from your main purpose at work can be frustrating, but you can learn to accept that this what the megaCorp wants, for better or worse (certainly worse), and that it's not your problem. 

You can choose to provide the best input you can, at the time, and learn to detach yourself from taking on the responsibility for the outcome."

This is good advice to reduce stress...

"You are already 45 and have a bare minimum for early retirement and the rest is gravy. If your position at work is ultimately compromised so what. Leave."

Seems like the right thing to do for the OP.


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## Forebiz (May 31, 2018)

The topic thread intrigued me as my hope is to also try and call it quits by 45. 

Although I think you are already better off then the majority of Canadians I wouldn't want to retire on what you have. That being said my burn rate with 3 kids is probably about $70K after I take away savings for retirement and kids education. I looked at my family budget and I can see getting to 36K and still be ok, but that would require cuts to current living standards the family has become accustom to. I like to think that I'd be a healthier/happier person if I wasn't working but I do worry that somehow the opposite will happen. I'm also a pessimist when it comes to returns and feel that if you are planning a long retirement that perhaps 3% is a better return to count on. 

My mother and father split households and assets at retirement age and I can tell you while they were financially good together they struggle on their own to the point that they both had to move out of the city to small towns where housing was less expensive so that they had more assets to last through retirement. One of them has since made a friend and moved in together to further stretch finances while the other will likely end up in a fully subsidized home (If such a thing exists) when they can no longer care for themselves. 

All this being said I hope you do it and things go well, It would be a great forum topic to see in a money diary for myself and others.


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## Longtimeago (Aug 8, 2018)

Forebiz said:


> The topic thread intrigued me as my hope is to also try and call it quits by 45.
> 
> Although I think you are already better off then the majority of Canadians I wouldn't want to retire on what you have. That being said my burn rate with 3 kids is probably about $70K after I take away savings for retirement and kids education. I looked at my family budget and I can see getting to 36K and still be ok, but that would require cuts to current living standards the family has become accustom to. I like to think that I'd be a healthier/happier person if I wasn't working but I do worry that somehow the opposite will happen. I'm also a pessimist when it comes to returns and feel that if you are planning a long retirement that perhaps 3% is a better return to count on.
> 
> ...


Forebiz, I don't think you can really talk about retirement and kids in the same sentence. Retirement kinda assumes the kids are gone and you only have to consider yourself as far as financial needs are concerned. While someone might manage to FIRE and still support kids, that is a far harder goal to achieve than supporting only yourselves.

At what age (your age) do you envision the kids having 'flown the nest'? That might give you a more realistic goal to aim for. It will also change your thinking in terms of 'current living standards the family has become accustomed to'. The family will only be you and your spouse, not the kids.


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## m3s (Apr 3, 2010)

FIRE has been covered a lot in the news this year (BBC, Wall Street Journal, NY magazine etc)

Minimalism (anti-consumerism) is trending with the young generation probably because the reality today is very different from what previous generations experienced.

Trailer for a FIRE documentary


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## Forebiz (May 31, 2018)

Longtimeago said:


> At what age (your age) do you envision the kids having 'flown the nest'?


60. There is an extremely low chance of me working that long in my current career. I may continue to do something simply so the kids don't get the impression that you can kick back and money just appears.


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## Longtimeago (Aug 8, 2018)

Forebiz said:


> 60. There is an extremely low chance of me working that long in my current career. I may continue to do something simply so the kids don't get the impression that you can kick back and money just appears.


Well, I don't think most people who have FIREd would consider 60 as qualifying. That's just a normal retirement age. FIRE in my opinion has to be at least under age 50-55. I FIREd at 43 and that's nowhere near a record low age for retiring. 

But take heart, it could be worse. One of my son's FIREd at around the same age as I did and then got married and had twins. So back to work he had to go and he will be an old man before he can consider retiring a second time.


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## Forebiz (May 31, 2018)

Longtimeago said:


> Well, I don't think most people who have FIREd would consider 60 as qualifying. That's just a normal retirement age. FIRE in my opinion has to be at least under age 50-55.


I was answering the question of what age I'll be when kids have flown nest. I believe I can be financially independent with kids still at home. After about age 22, I expect them to either be out of house or at very least not a drain on me financially.


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## fire161007 (Jun 6, 2018)

I retired a couple years ago in my mid-40's with 2 pre-teens. It was the best decision I could make after 20 years at a high stress job with megacorp. I targeted a 3% withdrawal based on annual spend, not including our house. I do have a buffer as my SO continues to work and that covers our annual expenses. However, our investment yield also covers our annual expenses, so my SO does not need to continue working.

I would be a bit concerned with the OP's annual spend of 36K and a 4% SWR as it does seem tight, esp with 3 kids. However, if he can make it work with the wife still working, it's a great opportunity to spend more time with the kids at this age. I know personally, I am cherishing my time with my kids now while they still want to be with me. 

Regarding other comments: I would agree that you don't want to have debt in retirement. However, I disagree that your kids need to have left the nest to retire, as long as you have budgeted properly. We have $200K in the kids RESP's that I don't include as part of our nest egg.

As we have seen a steep decline in the markets at the end of last year, and a steep bounce back, I'm wondering if the OP's thought on early retirement have changed. If they were spooked by the 10% drop at the end of 2018, it may provide a reality check on whether they are able to handle these swings.

I would also recommend looking at www.firecalc.com. Plugging in annual spend of 36000, portfolio of 900000 and years of 50 (assuming life expectancy to 95), it gives 79.6% success rate. I ensured a 100% success rate before I was comfortable retiring early.


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## Longtimeago (Aug 8, 2018)

Yes I agree it is *possible* to retire while kids are still in the picture fire161007, just that much harder. I was making a general statement in saying that being debt (including mortgage) free and with no kids is the ideal situation. But needs must and as you indicate, you have done it with kids and 'so far, so good'.

With just a 'couple of years' and 'wife still working' though, I am reminded of the joke about the guy who jumped off a high rise building and as he fell, people on various floors could hear him saying, 'so far, so good, so far, so good.' :cocksure:

I do not believe in SWR at all. I know of no way to ensure a 100% success rate' if someone is using one. I believe you only get 100% ensured if your income from investments/pensions/etc. exceeds your needs and is inflation proof, WITHOUT touching your capital. If you are eating capital, it is not 100%.

My strategy is simple and employs the Rule of 3s. That says plan on 1/3 of income to cover living costs; 1/3 to discretionary spending; 1/3 to continued savings/investing. Of course most people look at that formula and say, 'but you would need a lot more capital to be able to do that.' Not so. What you need is a lot lower expense side of the ledger to be able to do that and a lot higher rate of return on investment, in the beginning.

This year will be my 30th year of retirement and throughout those 30 years, my net worth has risen as have my expenses and income. In the early years, my income available only supported a very modest lifestyle using that formula. As years have gone on however the lifestyle I have been able to support has increased, JUST LIKE it does for most people during the 'normal' working life cycle, because I have continued to accumulate more net worth. Why should that be any different in early retirement?

Most people seem to see retirement as the beginning of 'counting down' and they bet on dying before the money runs out. That's fine if you win that bet. But I would rather not bet on my own death as a solution to anything. I also don't buy life insurance for that same reason. I would much rather work on living to be 100, maybe even 120. 
The SWR assumption is that you will DIE within the average ages. It makes no allowance whatsoever for you outliving the averages. Yet the number of centenarians is continuing to grow. http://www.pewresearch.org/fact-tan...pulation-projected-to-grow-eightfold-by-2050/ 

How will SWR work if that happens to be the case for you? Oops.

I am now in my early 70s and in excellent health. Our family doctor refers to my wife and myself as 'extraordinary'. What she means by that is that we are outside the norm for our ages in that neither of us takes any kind of medication whatsoever. That apparently these days qualifies as 'extraordinary'. Apparently, 83% of those aged 65-79 are on medication and 70% in that age group are on more than one medication.

So I guess what I would say is, 'so far, so good, so far, so good' in regards to the chances of my making it to 100 and if I do, I don't want to be saying, 'oops, my SWR plan ran out of money.' Try plugging in age 120 to your FIRE calculator site and see what it gets you.


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## My Own Advisor (Sep 24, 2012)

@longtimeago "I do not believe in SWR at all. I know of no way to ensure a 100% success rate' if someone is using one. I believe you only get 100% ensured if your income from investments/pensions/etc. exceeds your needs and is inflation proof, WITHOUT touching your capital. If you are eating capital, it is not 100%."

Totally agree and because, I assume, of your cautious nature......you are proof that focusing on income is always > expenses is really all that matters in retirement. No 3% rule or 4% rule or 5% rule or whatever. 

Cycles come and go.

I think folks are fine to follow some assumptions about the 4% rule but also be mindful of the VPW (Variable % Withdrawal) method to guide the cycles.

"I am now in my early 70s and in excellent health. Our family doctor refers to my wife and myself as 'extraordinary'. What she means by that is that we are outside the norm for our ages in that neither of us takes any kind of medication whatsoever. That apparently these days qualifies as 'extraordinary'. Apparently, 83% of those aged 65-79 are on medication and 70% in that age group are on more than one medication."

Crazy good and kudos.


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## fire161007 (Jun 6, 2018)

My Own Advisor said:


> @longtimeago "I do not believe in SWR at all. I know of no way to ensure a 100% success rate' if someone is using one. I believe you only get 100% ensured if your income from investments/pensions/etc. exceeds your needs and is inflation proof, WITHOUT touching your capital. If you are eating capital, it is not 100%."


My view on SWR is not to depreciate capital. When I aimed for a 3% SWR, it was because I was confident that I would realistically attain a 3% dividend / interest income from my nest egg. My goal as well is to preserve the capital. In fact since I retired 2 years ago, my nest egg has grown about 20%.

While still in the workforce, I also had a rule of 3. From my gross income, 1/3 went to the government in the form of taxes, 1/3 went to spending and 1/3 sent to savings. For me this was the simple rule that allowed for early retirement. If you save a dollar for every dollar spent, after one year, you have 1 year's worth of savings. After 20 years you have 20 years worth of savings. If you can manage a 5% return on your 20 years of savings, that covers your annual spend and you can retire. This doesn't even include any appreciation and compound interest during those 20 years working. If you factor that in and are lucky with your investments like me, you might only need a 4% or 3% return.

Simple rule to state, not so easy to follow.


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## Longtimeago (Aug 8, 2018)

fire161007 said:


> My view on SWR is not to depreciate capital. When I aimed for a 3% SWR, it was because I was confident that I would realistically attain a 3% dividend / interest income from my nest egg. My goal as well is to preserve the capital. In fact since I retired 2 years ago, my nest egg has grown about 20%.
> 
> While still in the workforce, I also had a rule of 3. From my gross income, 1/3 went to the government in the form of taxes, 1/3 went to spending and 1/3 sent to savings. For me this was the simple rule that allowed for early retirement. If you save a dollar for every dollar spent, after one year, you have 1 year's worth of savings. After 20 years you have 20 years worth of savings. If you can manage a 5% return on your 20 years of savings, that covers your annual spend and you can retire. This doesn't even include any appreciation and compound interest during those 20 years working. If you factor that in and are lucky with your investments like me, you might only need a 4% or 3% return.
> 
> Simple rule to state, not so easy to follow.


Ah, then you are in fact NOT using an SWR approach fire161007. The SWR method is intended to result in having $0 on the day you die. It is intended to draw down capital. What you are saying is that you want to live on the income from investments. That is not SWR at all.

https://www.investopedia.com/terms/s/safe-withdrawal-rate-swr-method.asp

As for simple and easy rules, yes it's simple. I always tell people that to retire early, all you have to do is spend less than you earn and invest the difference wisely. Simple to understand but not easy to do and the 'wisely' part is where a lot of early retirees run aground.

My issue with any kind of income based on equities however applies to both SWR and an income based on equity performance such as you are describing. If you read the following article, you will see that it shows even those who retired just in front of the 2008 recession are doing well in terms of performance that is similar to or even better than other successful SWR retirement years. https://www.kitces.com/blog/how-has...he-tech-bubble-and-the-2008-financial-crisis/

But what it fails to take into account is human nature. When the 2008 retirees saw their capital plunge in value what did they do? How many do you think said, 'oh, it's a blip. I need $40k per year for expenses and now that my $1 Million of capital that I started out with is only worth $800,000 this week and so will not provide me with $40k at a SWR of 4%, I will just have to withdraw 5% this year and wait for the market to go back to recover capital above my initial $1 mil and let me get back to a 4% withdrawal rate and die on time.'

What in fact happened is that not many did that. I'm sure you can guess, some went into panic mode and sold at a loss ending up with a reduced amount of capital for which SWR would no longer work even on paper. Some stayed with their 4% SWR and went out and got part time jobs as Walmart greeters etc. to supplement their income in order to have enough to live on. None I'm sure just sat back and said, 'doesn't matter to me what the market does.'

What do you think your own reaction would be fire161007 if instead of your capital increasing by 20% as it has, it had decreased by 20% since you retired 2 years ago? Human nature does not follow logic or 'past performance' that predicts you will be OK in the longer run and people ACT based on their human nature, not anything else. SWR does not allow for human nature.

My Own Advisor suggests I may have a 'cautious nature'. Well, I would say yes and no. I'm cautious in that I don't believe in gambling with my capital. That means that for me, the stock market is entirely out. I don't care what anyone says, if you buy a stock you are gambling. Anything that can go up or down is a gamble obviously. I can see buying ONE stock in a business you believe has little risk of not doing well in the next year but buying a portfolio of stock and 'parking' the money, never.

On the other hand, I am not and never have been 'risk adverse'. Many would say that is a contradiction. But I don't see it that way. I see early retirement as a risk. I accept that risk. I must continue to earn more than I spend. But those looking to things like SWR are in fact attempting to REMOVE the risk, they are the ones who are TRYING to be cautious. I just accept that the same risk of my not earning as much as I need to spend exists in retirement as it did when I was working for a living. After all, just ask the GM employees about losing your job overnight. There are no guarantees when you are working, why would anyone think they can get one when they retire?

I look at each year of retirement as a new page. At the beginning of each year I decide how I am going to earn my income for the following year. I have X amount of capital to work with and I need Y amount of income from it. It would make no sense to me whatsoever to 'park' my money and expect it to provide the same income every year. Over the years of my retirement, I have invested my capital in quite a few different ways. Initially, in commercial and industrial real estate. No being a landlord, low turnover of tenants, decent ROI, good capital growth given the old saying, 'land, they ain't making any more of it', etc. 

At one time I moved my money into Greek government bonds that paid 21%, with tax free income and they could be held and redeemed in a foreign currency which eliminated any concern over currency fluctuations. The only 'risk' was that if the government went bankrupt, you are left with nothing. But that was back in the late 90s and that risk was insignificant. Would I buy Greek government bonds today, obviously not given their recent economic crisis.

I have put money into business start ups as an active or silent partner. In for a while and then out at a profit. Is there risk in that, of course there is but with far more control over the outcome and obviously only if it looks like the business has a better than average chance of success to begin with. 

At other times, I have gone heavily into simple GIC type investments in several countries when rates were good. After all, a GIC guarantees you a given income for a specified period of time. Remember, I don't look to 'park' my money forever, I look at how will I earn my income THIS year. I accept the risk just as I did when working, that next year I may or may not earn enough to live on. That is contrary to how most people see retirement. As I said earlier, most see retirement as a 'count down', the evidence of that being things like SWR. 

I see it no differently than earning a living when I was 30. That requires an entire paradigm shift in how you see retirement.

Then go back to my Rule of 3s. I only need to earn 1/3 of the amount I aim for. I aim for a 2/3 cushion. So if I have a bad year and earn less than expected, life goes on exactly the same as before. That is also contrary to how many approach retirement. That's why many of those 2008 retirees ended up as Walmart greeters. They needed their 4% withdrawal in order to LIVE on, they allowed for little or no cushion.


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