My burn rate will go way down when the kids are out of the house. That will more than offset any increase in leisure spending for me.
Also I think having a number when you’re 45 is a lot different than 60. I just couldn’t imagine myself retiring at 45 and not doing a single thing to try to make money the rest of my life. Maybe some can get completely lost into building ships in bottles or w/e. But I know I’d be bored to tears and I suspect I’m not alone in that.
So for me personally, I’d be cocky enough to think my alternate career/business idea would work out and I wouldn’t need my number to get me to death w/o making another dime. Which is basically where I’m at right now at 51 - if the damn world would go back to normal.
I think one of the most sobering things for me in thinking about retirement was when I realized that every year is not just a chance to save more money, but one year closer to death. So you’re careening toward retirement-level savings at double speed.
The cautionary tales for that approach are stories of people getting laid off at age 54 with no security net and limited job prospects. It can get pretty ugly, marriages don’t survive etc, homes are sold and shabby apartments are rented, etc.
I mean, it’s not the end of the world but its really a waste of privilege. For those of us that have the means to live a comfortable life and save on the side, leaving yourself exposed to losing all that privilege because you want a luxury car and more square footage seems silly to me. For clarity, I dont think thats what you’re saying but it is the mistake a lot of people make. I know you’re smarter than that.
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Yeah, I don’t mean to be discouraging. It all comes down to personal circumstances and risk tolerance and of course how sure you think you are about what’s going to happen in the future. You have to be able to sleep at night.
But I do think some people work too long and oversave based on wanting a 100% level of certainty that they will be able to weather any conceivable storm. I went from 90/10 15 years ago to 50/50 when I stopped working and I’m comfortable there for now. No TIPS and I’m probably overweight in corporate bonds tbh. As an “early retiree” I’m slightly worried about sequence-of-return risk but not that much.
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There is no doubt some of this but the ratio of undersavers to oversavers has got to be 10000-1 or more
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I would go 50:50 with a planned 3% inflation adjusted withdrawal per year, which would give $240k per year in today’s dollars and last essentially forever. I think the only way you end up screwed is some kind of major black swan where you would end up screwed no matter your allocation.
People can rightfully argue that a more aggressive allocation would be better in the vast majority of likely outcomes, but I would sleep comfortably with 50:50 and that means a lot. Plus $240k per year is more than 3x our current annual expenses, so we would likely draw more like 2% instead of 3% and still live more comfortably than we do now. And we live pretty comfortably now.
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Haha, you’re right of course. I’ve spent too much time reading posts by overly cautious bogleheads. 
No I’m saying I couldn’t imagine retiring at 45 w/o plans to make more money with some other career or business, and I’d be cocky enough to think I’ll do it. It has nothing to do with living a luxury lifestyle, which I don’t care about anyway. So I guess retiring is the wrong word. Same for me now. I use “semi-retire”. I know I don’t want another 9-5 office job after I’m done with this one.
But at 60 yeah, I may need to make sure my number accounts for me not making another dime.
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There are people on bogleheads who sincerely argue a 2.5% withdrawal rate is not sustainable. They are certifiably insane, in my opinion.
To me anything by over 95% success on FireCalc is good enough.
A lot of planning rests on how much you care about leaving money to your kids, if you have any.
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Yeah makes sense. If I had my number at age 45 (next year!) I would still work but I would find something to do that I find fun and just not make much money. I’d rather do that than 100% hobbies.
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Yeah, this is my plan as well. When I retire, I’ll probably work the equivalent of 1-2 days a week, so there is no real “retire” for me unless I end up in a really bad health situation where I’m alive but can’t actually do anything.
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People also need to consider if their expenditures are flexible. A model that assumes you can’t reduce your cost of living in a crisis will overstate the risk of ruin.
I haven’t seen this there but those people are nuts. I believe a 3% shows 100% success and 4% like 95%. I’m retiring as soon as we have enough that 5% pays the bills, because then when we make it to SS (and also my wife’s little pension) our required withdrawals (from what we project to have left at that time) will drop to something like 3% or less.
Raises hand.
2.5 is my goal. I figure I’ll be able to sleep at night no matter what at that level.
I do think that 4% (which is what is often thrown around) is too risky for me. I can live with 3, but 2.5 is fuck you money as far as I’m concerned.
It’s also age dependent. If I’m over 65, I’m actually OK with 3.5 or even 4. If I decide to retire in my 40s, then I’d be scared to count on a 4% withdrawal rate.
So maybe I’m not exactly like your crazy boglehead, but I kind of understand where the are coming from.
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Another consideration is that almost all the wealth management clients I’ve met through my company’s investments business want to leave money to their kids. So even when they get to their Number for early ret they decide to keep working to build up an estate.
The two big conundrums - what if I live to be 100? What if I don’t get X%? Also if you semi-retire early - what if I don’t make any more money?
For me personally I’m willing to take the leap with a 90% chance of living a reasonable retirement and 10% chance of living in Honduras off Social Security. I have no problem taking principle out of my IRA after 59.5. And no kids to worry about.
I just can’t live out my days in an expensive place like LA - which I’ve had enough of anyway.
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Real generational wealth seems to do bad things to kids. (At least that’s my excuse for when I check out of the workforce at 55 in a few years.)
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I think what Melkerson may be envisioning is a scenario where a 60 year old woman has what she assumes is enough money to live on, but in her first year in Boca the market crashes, and possibly takes a year or more to recover.
If she doesn’t want to run out of money 20 years down the road she may need to make drastic changes in either her standard of living or in her decision to remain retired in her early 60s.
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So is wealth management a complete scam or what?
Would never sign a deal where they get x% of my portfolio, but would appreciate someone crunching the numbers on how to best pay off my student debt and save for retirement when I got a few weird situations.
I guess one thing that saves me is that I really don’t have much of this desire. Everyone I’ve met with a sizeable trust fund or inheritance is not someone I’d want my kids to turn into.
I’d really like for them to be well off, but I’d like for them to at least kind of get there on their own. Anyone who can afford to leave their kid a fuckton of money can afford to give their kid just about every advantage when growing up. That really ought to be enough.
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