We have friends that were able to get their health care insurance through Government retirement, military retirement, teacher retirement. Almost gone are the retirements/golden handshake with company for non-senior executives (friendās DH with government contractor had over 35 years in and was under the prior benefits of incredible health care coverage continuing and pension ā with survivor wife getting 100% of pension) - the company also paid what he would earn on SS at age 65 for the years between his retirement and his turning 65 ā the company had a big layoff, so many who were not at his level and years of service were very much hurting ā some were able to get similar work at other companies. Now after age 65, he gets reimbursed by the company for his and spouse Medicare Part B and all their drug expenses. Huge.
Yes. Government employees usually have good healthcare and a pension.
Few private companies offer retiree healthcare. And even if they were grandfathered into a plan with healthcare for life, some of those plans have language that states it doesnāt guarantee the healthcare benefits and they could be rescinded in the future or the cost of premiums could be raised.
Yes - we totally understand this. DH had a very good employer during the succession of his companyās ownership, but the final owner company eliminated pension (DH had 401k and pension) ā so the final years of his employment he had that āhitā. No ability to move to another company/job at that point with agism. Fortunate for us, I was very good at managing our financial picture (I have two graduate business degrees), and we were parents later (after 15 years of marriage), so we didnāt have the fire burning at both ends of the candle ā due to DHās work travel, I became SAHM when DDs were 3 and 5. I took a sunset career for final 5 years of employment until I was 65. DH turned 65 four months before me, but retired 11 months before me because he could ā he liked the work he should have been doing, but his boss was a huge jerk, and DH was so relieved to leave his two weeksā notice on his bossās desk.
There happened to be mention of FIRE on a podcast that I listened to this morning. For that person, early savings had been aggressive. The author being interviewed had not been able to save enough to retire early, but enough to have some breathing room. She stayed at home after 3rd child was born, switched to a writing career. She had a good point about the FIRE movement encouraging early saving.
It has risks like all things, but there are ways to minimize the risks. Everyone who wants to FIRE should run a Monte Carlo simulation and only retire if comfortable with the risk. Thereās no evidence significant percentages of FiRE retirees are running out of money. Itās not for everyone but I donāt get the hate some have for the movement. It reeks of jealousy.
Early savings is key for MANY, not just FIRE people ā but FIRE people do need to be aggressive to meet their goals to retire very early (or the newer term FatFIRE).
DD1 (age 30) understands this concept of the incremental savings that can be done in younger years - and lead her DH into Dave Ramsey to better understand money; DD2 (age 28) is āgetting thereā - she has learned (some) to slow down on spending to where she has better priorities. Both DDs have challenges with eventually getting into first owned home as well as career āfeedingā (one has to complete final tough exam for PE while the other has to complete a Masterās degree with having demanding job which is āMasterās preferredā and 4 young children, with a DH who also needs to complete a Masterās degree for his career trajectory).
To be able to remain in good health in retirement to see the next generations doing wellā¦
First, how long has FIRE become popular? There has always been people who have retired early before this, but probably not as widespread.
Second, when was the last time we had a real bear market? Covid, financial crisis, dot.com bust? IF we have a prolonged bear market (most bear markets have been sharp but quick), it may catch people off guard.
Third, would we even know if people who retired early started to run out of money? These are just anecdotal stories.
Last. Most people are comfortable with an 80% or higher probability when they run the Monte Carlo analysis. Thereās still a 20% chance it could fail. And Im not sure how many people who retire before 50 have even run a Monte Carlo analysis. Ive run thousands and Im skeptical they are at 80% and above unless they have a ton of money or believe they will spend very little. The people who are usually over 90% are either really wealthy, extremely frugal, or have a pension in which the Monte Carlo only simulates the difference between their pension and the remaining amount they need (ie $50k pension, need $60k per year retirement, only simulate $10k).
I donāt think thereās a ton of āhateā but more skepticism. If someone lives until 90, thatās a lot of retirement years to cover and unfortunately, if you make a mistake later on, you cant just hop back on the employment wagon.
Yes, early savings is critical. Most people want financial freedom, even those who love what they do.
Some common mistakes people make are usually underestimating unanticipated large expenses. I used to work with a doctor and he mentioned that more people are getting dementia because people are living longer. Itās ironic that the healthier you are, the more likely you may encounter large medical bills/assisted living later on.
Itās probably easier to navigate risk for 20-25 years than 40 years in retirement.
But for those who retire early, Im sure some will never run out.
Many people do not understand PV FV concepts; investment cash stream creation; their own risk profile and how to assess risk/return.
Some people may want to spend a lot of time and money on travel in retirement and budget so. Some have grand vacations every year, but if they save appropriately, they may very well have the resources to do so.
My dad paid very high premiums for health care before age 65 as he closed his primary business and sold the equipment and buildings; mom had much lower premiums. Dad died 2 days before age 64, while mom lived to be 77. Dad didnāt mind the high insurance premiums because it protected him from the risk of high medical bills and he could easily afford the premiums. They had a solid cash stream from the 3 apartment buildings owned outright. My parents did a good bit of traveling in their 50ās with another wealthier couple who they had known since their early 20ās and also were immigrants from home country Switzerland.
Longer life often may mean neurological problems (dementia is one of those brain issues), also heart problems where meds can only do so much (Congestive Heart Failure, people are living longer with more medical interventions). Some people never get heart screening and suddenly die at early 60ās of a heart attack (several of men I have known actually might have had heart attack/stroke while exercising and were not overweight) and were later found by their wives. People who smoke (still) have their lungs fail or have āruinedā their lungs; they get COPD and maybe lung cancer with a lot of dead air space (Emphysema) in their lungs ā the lung cannot get the ājunkā out. People do not adjust their diet or get some exercise, and do not manage Diabetes. Circulation decreases with aging. Have the meds to help with lipids and with BP, but people still have unmonitored/uncontrolled BP and have stroke risks from a variety of causes. Many people donāt know what they potentially should know; they may not obtain proper medical care and may not pull out of their health care provider useful information. Cancer in later years, may not have the core body strength (or other factors) to āendureā full treatment.
Often with aging, will have aches and pains, and not āfeel wellā. I saw a recent clip of a movie of two 90+ YO women and how they made each day happy/bright and putting up with their aches/pains/not feeling well.
Social isolation. Covid in late 2021 had FIL not want to fight Covid, and Hospitalist talked him into ācomfort careā w/o family there. āYou can make your own health care decisions, canāt you?ā was the hook. FIL was 92. Never had a chance w/o treatment.
MIL developed some dementia after about age 88 (she also died at age 92); she had Hypertensive Heart Disease, and the meds stopped working for her.
Right now we are the āsafety netā for young grandchildrenās care when parents need assistance due to one being away, or both not able to take the days off which are needed for their school age kids on the longer breaks (Christmas through New Yearās for example). At some point, one or both DDs will potentially be directing care for DH and/or me.
Right now, one of Duaneās saintly cousins goes every weekend from her home 1 hour drive away, to her parentsā home and does all the laundry/cleaning/cooking/cooking meals ahead for her 96 YO dad/97 YO mom. Her brother and his wife that lives in town does NOTHING for them.
And then thereās me ā¦ I āneedā a 100% probability through age 99. I could never FIRE! Fortunately, though, having lived below our means has allowed me to have less worry in retirement.
What do you think someone upper-middle class needs in savings/investable assets to hit the 90+% retiring at say 55, factoring in the possibility of bear markets?
This is us (well, 58 and 95%), but our number is our number, not helpful to anyone else. It all depends on your intended lifesytyle, how much you plan to spend/leave, and how long you plan to live (aye, thereās the rub).
Yep, understood it depends on lifestyle. Thatās why I used āupper-middle-classā as a generalized proxy since we could dive into the particulars of spending for pages. Try it this way ā continue living in a high tax state near (suburb) of a major urban market (LA, SF, NYC, etc.), vacation at least 4-6 times a year, staying exclusively in 4+ star hotels, traveling commercial business class, eating out 3 nights a week on average (but not typically at expensive places). So property taxes high, income tax on interest and dividends high, insurance costs high. But not private planes, six-figure cars, expensive hobbies, etc.
You can get one done where you invest your money or can do it yourself. For example, a lot of people use the Fidelity calculator. I cant speak to how accurate it is.
Some firms have their own propietary software and others use industry software from third parties, the most common being Money Guide Pro, eMoney, or Right Capital.
I think Ive said this before but Im not a financial advisor so Im not always aware of the latest resources they use.
Your description sounds more like someone moderately wealthy, not upper-middle-class. A couple making 100-150k/yr isnāt flying business class and staying in 4-star hotels 4-6 times per year. Unless you were thinking of purely domestic travel that is, but even so that seems like a stretch on that budget.
Thatās probably a fair assumption. And thatās why I suggested they get a plan done from their advisor or wherever they invest their money.
At that level of wealth, they usually have access to private wealth managers through their bank or somewhere like Fidelity, work with an advisor, or have enough enough assets for some level of financial planning.
If you are spending that type of money and ask about retiring at 55 with 95% Monte Carlo, you have to have a lot of assets. I have a good idea but Iām not going to speculate on any particulars of someoneās individual financial situation.
It all depends on the monthly income (after tax) that youāll wantā¦ beyond pension (if any) and SS income. From that starting point you can start playing around with numbers.
Not sure if this is the same scenario as San Fran or Boston, but our suburban county (just outside of DC) is investigating the placement of accessory dwelling units (ADU) on land zoned for single-family residential use. Our infrastructure is already stretched - roads/traffic, parking in the neighborhood, schools, etc.