Life insurance is really labor insurance in most cases. If someone is financially dependent on your labor income or costs averted through your labor (e.g. unpaid labor for stay at home parents or those managing complex personal/household investments), then you may need life insurance. Disability insurance is similar, though the amount needed may be greater (if disabled, you become an additional dependent).
Retirees living off of their simple investments should not need life insurance. However, if there are dependents who depend on the retiree’s pension or annuity income that ends on death, then there may be a need – but life insurance for older people can get really expensive.
I signed up for a life insurance policy when my wife became first became pregnant, over 20 years ago. It was a 30 year term policy. Even though we no longer “need” it, I still pay it because it is a now a low cost relative to the possible benefit (i.e. fixed rates mean expensive for a 20-something person, but cheap for a 50-something person). And my wife hasn’t poisoned me yet.
And separately, she signed up for a life insurance policy when I cosigned for her 7-figure business loan. After repaying that loan, we stopped paying that insurance policy.
Some of us do own individual stocks, among other things, in our financial portfolios. Fortunately, most stocks if chosen wisely don’t become worthless.
I’ve owned all my stocks less than 10 years. Their returns range from close to 1,000% to a little less than 10% with the vast majority being over 100% returns. And the dismal sub 10% is a blue chip paying over 6% per year in dividends. There have been a few dogs I’ve jettisoned. It’s not dumb in all circumstances to own individual stocks.
We are self-insured and what stage of life you’re in is definitely a factor. Our kids…and luckily our remaining parents…are not financially dependent on us…now or in the foreseeable future. Both were considerations prior to our early retirement.
Something we don’t take for granted is that our parents trusted us enough to disclose their finances. We know several people dealing with this now. In one instance the “kids” (in a similar stage of life as us…in their 50s) are completely in the dark. To top it off we heard their parents say their kids will take care of them since they paid for expensive schools. My response…yikes!!
Right now my DH and I oversee and help our aging parents. But they planned so they would not be a burden, financially and otherwise. We’re doing the same for our kids and we talk openly about all the issues that have arisen with their grandparents and extended family. There are no guarantees, but communication does lessen the stress for us.
For the vast majority of investors, picking individual stocks is a losing proposition relative to the rest of the market.
Mr. Buffet also bet $500k that index funds would outperform a collection of hedge funds, and was right. His investing advice is to “just buy a cross-section of America [S&P 500] and then never listen to people like me or read the papers or do anything subsequently.”
I FIRE’d at a youngish age and have read several of the blogs about it.
We generally do not have a budget or live necessarily frugally. Instead, we track every expense on an irregular basis to see how much we spend so we have an idea of where the money goes. We have tracked expenses as often as four times a year or as little as once a year. I calculate our net worth, excluding housing monthly. As long as our net worth equals or exceeds what we had when we retired we continue to spend as we want. Wife is very frugal by nature and I am also frugal, just not to the extent she is…once we get kids through college, we hope to downsize and travel quite a bit more often.
I have some stocks and invest occasionally in options but overall I have index funds with an allocation that approximates age in bonds/fixed income with the rest in stocks being split between US/Intl at 60/40.
Overall, I was able to FIRE as I was paid very well and we always lived well below our means.
For what it is worth, there were probably fifteen to twenty people within the company that had similar opportunities and the ones that are financially secure lived below their means, the one’s who did not have done well but still have mortgages, car payments, etc.
“Overall, I was able to FIRE as I was paid very well and we always lived well below our means.”
I doubt that without the former you would have been able to call it quits so early. That is the missing part from many blogs the thread title refers to, and that is the void the blogs featured in the article are trying to fill. How does an average Jane achieve financial independence while making substantially below “very well.”
I definitely would not have been able to retire as early as I did without the pay. That being said, I retired 10 years ago and I know quite a few that were in almost the exact same situation as me and they are still working and pretty heavily in debt.
@yearstogo you sound like my husband…only our youngest just graduated and we don’t plan on downsizing anytime soon.
I also think you make an excellent point about LBYM and peers. We see it too and have talked about it with our children. They can do as they wish with their lives, but we’ve shown them how you can increase your chance for FI…and a big part of it is delaying gratification and starting a saving strategy early.
Some of The Millionaire Next Door examples do not have that high income (although there are also examples of high income people who have little savings due to high spending levels).
However, it is easier to save money quickly and join the capitalist class early if you have high income but spending level typical of middle or lower income people.
