How Much Do You think You Need to Retire? What Age Will You/Spouse Retire? General Retirement Issues (Part 2)

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If you like Orman or Ramsay I would tell you to check out Caleb Hammer on youtube. Much better approach because it is individualized to the person he working with. He calls out people’s BS.

As with most things in life the concept is simple. Don’t spend more than you make and set something aside for retirement. But many people get into bad habits or they can’t/won’t adjust actions.

Complaining about things rarely gets you anywhere. I hear people complaining about the cost things these days all the time. For example, people complain about the cost of fast food then just don’t eat it and make something at home. Food at home is almost always cheaper than food out. If certain foods in the grocery store are too high then buy something else. I buy what is on sale almost all the time. Same goes for Daycare. If you can’t afford professional daycare find a different solution. Find someone doing from their home which will always be cheaper. Or start your own in home daycare as that might be your financial solution. Same goes for your job, if you don’t make enough money find a way to make more. Get a different job. Get more skills.

I will get off my soapbox now, but man sometimes we make life too complicated.

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7702

Many moms when I grew up would look at the grocery flyer in the newspaper to plan the meals around the various meat specials (typically the most expensive item) and other ‘specials’ for the week. I do shop at various grocery stores in our area - depending if I am by there. Make up lists.

We get flyers for Burger King and other fast food - and we use those. DH has decided Butter Burgers from Culver’s beats out some of our restaurant hamburgers - we sometimes get a ‘buy one get one free’ coupon.

But besides the control of spending - large and small, it is how one saves and invests. AND takes care of their health.

I saw where if someone started at age 25 saving $100/month, how much they would have at age 65 - it was over $1 M. People that don’t do anything else, if they did this along with having a paid for house/condo, could be OK in retirement.

We have a few realtors in our book club, and we talked about how there are some people that buy a house, then decide on something else, and a few years something else – they don’t realize that with closing costs and growing home loan, that they have probably ‘wasted’ $100,000 easily. Several of us knew people that did that. The only way is if someone really made a mistake in their home and then had to move somewhere better for them.

As they say “death by 1,000 cuts” if having a pattern of spending habits on little things that add up, or a few very major mistakes or mishaps.

I find it a bit humorous when DH thinks something he purchased long ago (or even 6 months ago) is going to cost the same amount, and also realizing the inflation which has hit on a lot of items - general costs and transportation costs going up has to be spread around for retailers to not lose money. A specific generic pain medicine had cost $4/bottle of 100 caplets and now is $4.95. A small bottle of Isopropyl Alcohol (91%) - he remembers buying it for $1, and it was $3.85.

We are fortunate there has been a paradigm shift to where people can navigate investing, with lots of information and resources out there - and also find Financial Advisors to assist.

DH was pleased with our financial statement with stocks doing well - but I told him he needs to print it out again today after the markets close because today is still Feb. Happy Leap Day everyone.

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At our first meeting with a financial advisor, he asked a bunch of questions and one was “What would make you feel rich”. I replied that being able to buy whatever I wanted at the grocery store rather than meal planning and shopping around the sales. He thought we could make that happen and so far it has worked out within our retirement budget. I suppose if we decide there is something else we want to spend money on that’s not in the budget, that’s an area to revisit.

We did stop going to our local burrito joint when the burritos hit $15. I believe they were $6 10 years ago. They do make two meals, but it’s just not worth it for what it is anymore.

I remember my mom saying at one point, “I take what I think something should cost and double it, that gets me close to the real price.” And sometimes I feel exactly like that. Which does make me feel old.

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7704

I triple it and it’s the price. Yeah, we are old.

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7705

When on vacation somewhere (full kitchen rental place) it is nice to ‘choose’ to cook from local fare items available (fish for example in St Lucia - if you can get to the boat right when they land and have not sold out – we haven’t been, but our friends have multiple times and told me all about it) or go to a restaurant. Splurge on special things to do and eat where it works out well. Part of vacation to me is not shopping/cooking all the time, but also bringing food for car travel so having choices with stopping at a restaurant or eating what was brought.

Nice ‘small luxury’ to eat at home what one wants, or go to a restaurant and eat what one wants. Having the finances to not have to worry about the incremental differences because as a retiree, you are in a bit of ‘spend down’ mode – although with good investments, we are not really spending down with investments doing well.

Your mom was ‘on target’ with mark ups to cover overhead and profit.

We have two new pieces of furniture - one coming today (a leather loveseat that is ‘Stressless’ ) and new recliner ‘Stressless’ and ottoman arriving in 4 - 6 weeks. Old Stressless recliner and ottoman will go in upstairs TV area. Excited about this. DH has been wanting a new recliner, and when he mentioned it last week, I said “let’s go” - the recliner/ottoman was on 10% sale which I knew about. DH just had to be in the right mood to get in the store and get it ordered. The loveseat is in the same leather color and was showroom closeout - and we definitely can use it to replace the sectional piece we were using in the upstairs TV area. I was thinking the recliner and ottoman would be closer to $3K and it was $2K, so a nice surprise.

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7706

I still do! But my budget is much tighter than most adults here.

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7707

I absolutely purchase items where I can get the best bang for my buck with the things we want to eat. We geographically live within a radius of the stores, so depending on the direction I have other things to do, I pick up items.

Lifestyles are different in different areas of the country. Dual FT workers DD1/SIL with 4 children under 5 1/2 have a very large grocery store chain in their state which she orders most of everything on line and he has scheduled grocery pick up. SIL/BIL - she has groceries delivered due to her physical limitations, Sam’s, and gets pretty much what they need/want.

I like to save in areas where it is easy for me.

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Typically I don’t have any dinner menus planned when we go to the store. (I just write “entrees” on the shopping list). I pick what meats look appealing (by price and freshness) and work from there. If there is a really good deal on meat, I get extra for the freezer.

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We use Quickbooks and credit card info gets imported. We only categorize categories that matter. All tax deductible categories, plus things I like to know. The rest is undifferentiated. I look at an itemized category report every six months, I think.

I find it hard to get a clear sense of our spending at times because a) we have been doing a renovation; and b) we have business related expenditures for both of our businesses.

We also have Rocket Money, which periodically suggests that I (or it) renegotiate various subscriptions, and alerts me to large expenditures.

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7710

And then there’s one of the few homework assignments I kept that is a record of what my mom bought at the grocery store and how much it cost… from the late sixties or early seventies. Quite eye opening…

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I don’t think it would really be that hard because you could tag renovation expenditures and business related. Or you could use separate credit card for business related expenditures.

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At one time, and probably tucked away, is a list of what groceries and some other things cost the year I was born. I believe a loaf a bread was like 11 cents.

I remember when dad would get gas in the mid 1960’s, 25 cents a gallon, and also buy a pack of cigarettes, 25 cents was what a pack of cigarettes cost at that time.

When minimum wage was $ 0.65 and went up to $ 0.90 and then jumped to
$ 1.10 - late 60’s/early 70’s. DH and I with our post college jobs in 1978, making just under $17,000 a year each (BSN nurse, and ECE engineer) - but his salary climbed a bit quicker, and I sought out additional education for job expansion/opportunities.

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Some/many couples grocery shop together - not us! If we happen to be riding together, he will almost always sit in the car while I pick up some grocery items, just like I usually stay in the car when he stops at Home Depot. I stock the frig and pantry with what he wants, and sometimes he asks me to pick something up or put something on the shopping list.

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Good thought, @oldfort. We do use those categories (and many others). With renovation, the question is what kind of expenses would we have during a normal (non-renovation) year? Would we replace an appliance or put in a more efficient window for one whose seal is shot? Or would we have chosen to wait a year. With respect to business expense, The question is what is the counterfactual. If subtracted out all renovation expenses, we would underestimate our true level of expenses.

The business expenses are simpler but not always. ShawD takes a trip to the Venice Biennale and then travels around Italy taking pictures of beautiful spots or seeing art in churches. Some of these filter into her work – we spent a week in Giulin in China and it showed up in some paintings that are going to be shown in the spring in a museum. Would she have taken a vacation anyway? I go on some of these trips. We segregate some costs (e.g., transportation) but we don’t compare to the counterfactual.

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If we go back to the example earlier in the thread of the FIRE guy who had income of $390K that dropped to $230K when he bought his house, then assuming he was taking a 4% yield, he would have had about $10M in assets before buying a $4M house.

It’s clearly not enough for him to live on in an expensive market like SF, with kids in private school, and of course he’d be full pay for college too, so that’s more that will come out of his assets.

Even after the kids have left home in his 50s, he might well need $10M+ in total assets to live an upper middle class lifestyle in SF if $4M of that is tied up in a home. That’s not atypical amongst the Silicon Valley people we know who’ve retired early. And some have a lot more.

So with reference to Suze Orman’s statement, I doubt she lives in a cheap market with low income taxes. I assume she lives in NY/SF/LA where $20M isn’t going to go that far. $4M is not that nice a house in those cities nowadays, she’d probably need to spend $6M to $10M minimum in the best suburbs. As F Scott Fitzgerald said, the rich “are different from you and me.”

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7716

I think the assumption with FIRE is generally to live really frugally… ha, not the case with that guy.

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7717

There is no frugality requirement to FIRE. It only requires that you save enough to retire early. How one gets there is largely dependent on income and lifestyle.

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7718

Maybe I am over simplifying it or maybe my life is just not as complicated.
I would set aside $x amount for BAU type of upkeep for your house. I don’t think it would be that hard to estimate.
I travel for work as an employee and there are times when I may arrive early or leave few days later or I may even get together privately while on a business trip. I normally would just charge those expenses on my private credit card. I don’t think it would be that different if you work for yourself, unless you commingle your fund.
As an example, if you were to go to Tokyo for a business trip. It’s reasonable to assume your business class round trip tickets to Tokyo and all room/board would be business expenses. If you should take a trip to Kyoto over a weekend while you were there then all expenses associated with the trip would be personal.
I think you know all that. The catch here is when people try to justify that the trip to Kyoto is also business.

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7719

Ha ha - I remember the gas crisis in the summer of 73 when my parents rented a Winebago to drive from Dallas to Colorado for 2-3 weeks in the mountains. Gas “soared” to $0.42 /gallon and mom had to call ahead gas stations along the way to reserve gas. I think minimum wage was something like $2.xx an hour.

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Yes, income and lifestyle - but one would usually need to live way below on lifestyle to ‘retire’ at a ridiculously young age and also keep their lifestyle relatively modest to have the nest egg not run out. Retiring young also means budgeting for purchased health insurance (unless they are moving out of the country and managing with health care there). With the FIRE dude that was having himself/wife go back to work after being out 10 years - he obviously didn’t consider how much more things would cost with children or that they would have an upgrade on their primary residence in a very expensive city where the wife has specifics on the needs for the children.

One cannot count on not having set backs with the stock market or investments. Look at the real estate set backs with natural disasters or fires - if properties for income, even if fully insured for replacement cost, you are going to have maybe a year or more w/o the passive income from that specific property.

Yes a big cushion of money can be good to achieve FIRE.

It would be interesting to hear from people on this thread who have retired younger than 59 1/2. My parent’s generation (they were born in 1931 and 1933), they had some friends that retired by 55. My dad, for health reasons and a bit on economic reasons, sold his main business at age 60 - he found a buyer for the business complex, and found jobs for all his employers except his recently hired right hand man who had an inflated opinion of himself and left bitter.

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