Why wouldn't you retire on $5M?

[Anonymous]

My blue collar dad retired st 62. He's 92 now and mentally still all there. He built himself a power tool with scraps st 87. It just depends.

[Anonymous]

Anonymous wrote:Because I'm a now divorcing single mother of 4, and my underperforming husband is stealing half of the savings/investments I built to run away with his mistress. So, my net worth is cut in half by divorce, and my ongoing family expenses have increased a lot

That’s one of my downside scenarios. Good luck, op.

[Anonymous]

Anonymous wrote:My blue collar dad retired st 62. He's 92 now and mentally still all there. He built himself a power tool with scraps st 87. It just depends.

Yeah the Great Recession "retired" my dad (2008) and he is still functioning on all fronts. He is 79.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:5 million is now the amount to retire on at 65. It is not enough to retire early. Why if we get a big bear market and recession a few years and Fed decides to go back to zero interest you are now liquidating assets at fire sale prices.

I know people who retired in 1999 and 2007 when stocks crash a year later and interest rates fell like a brick their money disappeared way quicker than anticipated.

My BIL semi retired 2007 quit his full time job took a 20 hour a week part time job with no benefits. He was getting great money in stock market and even his CDs and Money Markets paying great interest

By end of 2008 his stocks crashed 38 percent and his money markets, CDs and short term treasuries his "safe side" when interest rates fell like a brick in 2008 they money markets reset to near zero and every CD maturity and bond maturity reset to near zero.

By 2019 he had to sell his his wonderful big home to downsize a tiny home. This time he bought new constuction and got lucky bought at 2019 price in pre-construction and by time he sold old hom in spring 2021 was worth a lot more.

If that man only retired 5 years later he be a very rich man. He would have been pumping up 401ks and retirement funds in 2008-2012 when stocks were super low instead he was selling stocks. By time the 2019 to 2025 bull market came we are in now he had hardly any stocks. He was selling for a decade.

He also took a life time hit on his SS payments.

Might that be the issue? We plan on retiring early but that does not mean we’ll be selling stocks. (We aren’t in “stocks” we’re invested via index funds). We will have money set aside to cover 3 years of living expenses. The rest will stay invested in market with no plan of ever fully leaving market. 4M is our magic number.

So the money you “set aside”, do you plan to spend all the principle and interest generated by that over the 3 years? And then you pull from the index funds for the next 3 years?

Haven’t nailed down exact plan yet but the “set aside” pile will be combination of cash, CDs, Tbills and the like. The “set aside” pile will be flexible in that 3 years is our ideal but it could be 2 or 4 depending on market conditions.

So you have maybe 10% of your portfolio in bonds or cash. That's kind of risky if you end up retiring before a downturn. A bear market could last over 10 years and there might be significant inflation as well.

what? A bear market could last ten years w inflation? It isn't 1973 anymore, and having a bear market while inflation is persistent really doesn't seem possible. Tell me how that could happen? You are looking for possible worst case scenarios, what about technological innovations like AI, which will/may increase productivity and reduce costs/inflation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:5 million is now the amount to retire on at 65. It is not enough to retire early. Why if we get a big bear market and recession a few years and Fed decides to go back to zero interest you are now liquidating assets at fire sale prices.

I know people who retired in 1999 and 2007 when stocks crash a year later and interest rates fell like a brick their money disappeared way quicker than anticipated.

My BIL semi retired 2007 quit his full time job took a 20 hour a week part time job with no benefits. He was getting great money in stock market and even his CDs and Money Markets paying great interest

By end of 2008 his stocks crashed 38 percent and his money markets, CDs and short term treasuries his "safe side" when interest rates fell like a brick in 2008 they money markets reset to near zero and every CD maturity and bond maturity reset to near zero.

By 2019 he had to sell his his wonderful big home to downsize a tiny home. This time he bought new constuction and got lucky bought at 2019 price in pre-construction and by time he sold old hom in spring 2021 was worth a lot more.

If that man only retired 5 years later he be a very rich man. He would have been pumping up 401ks and retirement funds in 2008-2012 when stocks were super low instead he was selling stocks. By time the 2019 to 2025 bull market came we are in now he had hardly any stocks. He was selling for a decade.

He also took a life time hit on his SS payments.

Might that be the issue? We plan on retiring early but that does not mean we’ll be selling stocks. (We aren’t in “stocks” we’re invested via index funds). We will have money set aside to cover 3 years of living expenses. The rest will stay invested in market with no plan of ever fully leaving market. 4M is our magic number.

So the money you “set aside”, do you plan to spend all the principle and interest generated by that over the 3 years? And then you pull from the index funds for the next 3 years?

Haven’t nailed down exact plan yet but the “set aside” pile will be combination of cash, CDs, Tbills and the like. The “set aside” pile will be flexible in that 3 years is our ideal but it could be 2 or 4 depending on market conditions.

So you have maybe 10% of your portfolio in bonds or cash. That's kind of risky if you end up retiring before a downturn. A bear market could last over 10 years and there might be significant inflation as well.

what? A bear market could last ten years w inflation? It isn't 1973 anymore, and having a bear market while inflation is persistent really doesn't seem possible. Tell me how that could happen? You are looking for possible worst case scenarios, what about technological innovations like AI, which will/may increase productivity and reduce costs/inflation.

Really, every bear market is different, no one can tell what is going to trigger. No on saw the past bear markets, if so, they would not have happened.

At some point in your investment cycle, you need cash flow. I would criticize no one for selling and moving bonds for 5+. This what I am doing, bought my first individual stock in 1990, GE, till hold most of it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:5 million is now the amount to retire on at 65. It is not enough to retire early. Why if we get a big bear market and recession a few years and Fed decides to go back to zero interest you are now liquidating assets at fire sale prices.

I know people who retired in 1999 and 2007 when stocks crash a year later and interest rates fell like a brick their money disappeared way quicker than anticipated.

My BIL semi retired 2007 quit his full time job took a 20 hour a week part time job with no benefits. He was getting great money in stock market and even his CDs and Money Markets paying great interest

By end of 2008 his stocks crashed 38 percent and his money markets, CDs and short term treasuries his "safe side" when interest rates fell like a brick in 2008 they money markets reset to near zero and every CD maturity and bond maturity reset to near zero.

By 2019 he had to sell his his wonderful big home to downsize a tiny home. This time he bought new constuction and got lucky bought at 2019 price in pre-construction and by time he sold old hom in spring 2021 was worth a lot more.

If that man only retired 5 years later he be a very rich man. He would have been pumping up 401ks and retirement funds in 2008-2012 when stocks were super low instead he was selling stocks. By time the 2019 to 2025 bull market came we are in now he had hardly any stocks. He was selling for a decade.

He also took a life time hit on his SS payments.

Might that be the issue? We plan on retiring early but that does not mean we’ll be selling stocks. (We aren’t in “stocks” we’re invested via index funds). We will have money set aside to cover 3 years of living expenses. The rest will stay invested in market with no plan of ever fully leaving market. 4M is our magic number.

So the money you “set aside”, do you plan to spend all the principle and interest generated by that over the 3 years? And then you pull from the index funds for the next 3 years?

Haven’t nailed down exact plan yet but the “set aside” pile will be combination of cash, CDs, Tbills and the like. The “set aside” pile will be flexible in that 3 years is our ideal but it could be 2 or 4 depending on market conditions.

So you have maybe 10% of your portfolio in bonds or cash. That's kind of risky if you end up retiring before a downturn. A bear market could last over 10 years and there might be significant inflation as well.

what? A bear market could last ten years w inflation? It isn't 1973 anymore, and having a bear market while inflation is persistent really doesn't seem possible. Tell me how that could happen? You are looking for possible worst case scenarios, what about technological innovations like AI, which will/may increase productivity and reduce costs/inflation.

Worst possible would actually be much worse than 70's stock market. The whole point of sequence of return risk is to protect yourself from a very bad scenario that plays out at the worst possible time.

Everyone has different goals and different risk tolerance. Nobody is saying that you cant go 100% stocks, especially if you can handle the volatility and potentially lower withdrawal rate. You will likely end up dying with a boat load of money!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s all about what works for you. I went back to work full time a year ago at 58 after almost 30 years as a sahm and PT consultant. What nobody tells you is staying busy and happy and fulfilled takes a lot of work. I wasn’t happy once my kids were grown, parents died and husband returned to the office. Lunching, Yoga, pickleball and travel got old and having my life’s purpose on most days being making dinner walking the dog was honestly depressing. I couldn’t imagine doing just that and volunteering for 30 more years. I love the structure and camaraderie of work and the paycheck. My job is not high stress but it’s interesting. I’d like to work til 65-67. Just my perspective - and we have a little over 5 mil now.

If you need a job to feel important and fulfilled then go for it. But I find it a bit sad that you cannot find ways to fill your day "meaningfully" without a job at age 60

The reality is that most people cannot - which is why people massively cognitively decline after just a few years of retirement.

This. The research is now pretty strong about the cognitive decline after retirement almost regardless of age (after 50). You cannot get it back.

So have a plan and find something meaningful to do to prevent the cognitive decline. I know plenty of people who are doing just fine in retirement. But the solution cannot simply be to continue to work the high powered job until you die.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s all about what works for you. I went back to work full time a year ago at 58 after almost 30 years as a sahm and PT consultant. What nobody tells you is staying busy and happy and fulfilled takes a lot of work. I wasn’t happy once my kids were grown, parents died and husband returned to the office. Lunching, Yoga, pickleball and travel got old and having my life’s purpose on most days being making dinner walking the dog was honestly depressing. I couldn’t imagine doing just that and volunteering for 30 more years. I love the structure and camaraderie of work and the paycheck. My job is not high stress but it’s interesting. I’d like to work til 65-67. Just my perspective - and we have a little over 5 mil now.

If you need a job to feel important and fulfilled then go for it. But I find it a bit sad that you cannot find ways to fill your day "meaningfully" without a job at age 60

The reality is that most people cannot - which is why people massively cognitively decline after just a few years of retirement.

This. The research is now pretty strong about the cognitive decline after retirement almost regardless of age (after 50). You cannot get it back.

As usual the research is much more nuanced than a five word description-- really depends on the person and the aspect of cognition your are talking about.

Meanwhile, research also suggests that happiness goes for many retired people.

There has to be some happy medium between working 80 hour weeks and being so stressed and "cognitive decline". Find something to do that make you happy to keep up your brain, but you should find that other than work. It is possible

[Anonymous]

I think humans are designed to work and contribute. Sure, there are other ways to work and contribute without a paying job but I've personally not found volunteering to be satisfying and I've done a fair amount of it (international development, local gov't advisory committees, arts organizations, school boards, community organizations supporting low-income households). So, I work even though I have over $8M and growing with no chance of spending it all. I'm trying to be the "rich aunt" who buys things for my nieces and nephews who are just starting out. I helped my niece buy plates and glasses, pots, knives, sheets, towels, etc. as she moved into her first apartment.

I also travel frequently and don't work more than 45-50 hours a week. I don't judge anyone either way, but this is _why_ I still work.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s all about what works for you. I went back to work full time a year ago at 58 after almost 30 years as a sahm and PT consultant. What nobody tells you is staying busy and happy and fulfilled takes a lot of work. I wasn’t happy once my kids were grown, parents died and husband returned to the office. Lunching, Yoga, pickleball and travel got old and having my life’s purpose on most days being making dinner walking the dog was honestly depressing. I couldn’t imagine doing just that and volunteering for 30 more years. I love the structure and camaraderie of work and the paycheck. My job is not high stress but it’s interesting. I’d like to work til 65-67. Just my perspective - and we have a little over 5 mil now.

If you need a job to feel important and fulfilled then go for it. But I find it a bit sad that you cannot find ways to fill your day "meaningfully" without a job at age 60

The reality is that most people cannot - which is why people massively cognitively decline after just a few years of retirement.

My husband is 63 and has been retired for 5 years. Even though he exercises quite a bit and has zero stress, I've seen the cognitive decline first hand. I plan to continue working until I am 62 or 63 and then volunteering multiple hours each week in a capacity that will use my brain.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s all about what works for you. I went back to work full time a year ago at 58 after almost 30 years as a sahm and PT consultant. What nobody tells you is staying busy and happy and fulfilled takes a lot of work. I wasn’t happy once my kids were grown, parents died and husband returned to the office. Lunching, Yoga, pickleball and travel got old and having my life’s purpose on most days being making dinner walking the dog was honestly depressing. I couldn’t imagine doing just that and volunteering for 30 more years. I love the structure and camaraderie of work and the paycheck. My job is not high stress but it’s interesting. I’d like to work til 65-67. Just my perspective - and we have a little over 5 mil now.

I mean that would depress me too, but there are a lot of things I want to do instead that are unpaid or cost money.

Like what?

[Anonymous]

Anonymous wrote:We retired at 60 with about $6M. Own our $1.5M house and cars- 0 debt. We spend about $20k/month. We spend mostly on travel and have/do everything we could want. Our investments seem to cover our spend so net worth hasn’t gone down and we haven’t started collecting SS yet. I’m pretty sure $5M would be plenty to retire with and have a very nice lifestyle.

With no mortgage, how are you burning through $20K a month?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s all about what works for you. I went back to work full time a year ago at 58 after almost 30 years as a sahm and PT consultant. What nobody tells you is staying busy and happy and fulfilled takes a lot of work. I wasn’t happy once my kids were grown, parents died and husband returned to the office. Lunching, Yoga, pickleball and travel got old and having my life’s purpose on most days being making dinner walking the dog was honestly depressing. I couldn’t imagine doing just that and volunteering for 30 more years. I love the structure and camaraderie of work and the paycheck. My job is not high stress but it’s interesting. I’d like to work til 65-67. Just my perspective - and we have a little over 5 mil now.

If you need a job to feel important and fulfilled then go for it. But I find it a bit sad that you cannot find ways to fill your day "meaningfully" without a job at age 60

lol! Im sorry this choice seems so sad and pathetic to you. But we are likely coming from very different places. After being at home taking care of others for 25 years, and also working from home PT a few hours a week in order to be flexible and available, it has been a treat to go back to work on my own terms and have a nice paycheck even though I don’t really need one. I need purpose and structure and love the camaraderie. If you work currently and are ready for a break, I can see this perspective being unimaginable, or sad for a “60 year old”. But just like working gets old, so does staying home and not working. This is my personal journey; and I absolutely disagree that it is sad. My life feels pretty perfect and fulfilled honestly.

+1. COVID work at home made me never want to retire - until it becomes a physical challenge. There is only so much golf, walk dog, yoga, travel, gardening, etc you can do until you get bored out of your mind. The most successful people I know continue to stay engaged with real work of some sort.

The world is big. There are so many places I want to travel to for months at a time. And I want to do that while I'm young enough to really enjoy it.

If you travel for months at a time, won't you lose touch with your local friends? Between work and raising children, I've never had enough time to spend with my friends. I want to travel but I want to strengthen the bonds in my community.