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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5084  
Subject: Poll: How much do you want to FIRE? Date: 2/1/2005 10:04 AM
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$400,000
$600,000
$800,000
$1,000,000
more than $1,000,000

Click here to see results so far.

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3033 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:12 AM
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About a million would probably do it, I think -- though it would depend on my age. The younger I was, the more I'd need to have to "go for it."

I should also add that my wife starts a new job at a travel agency today, something she's been working toward for over a year now. If she enjoys her job enough to want to keep going, we could probably get by on a bit less than that.

It also depends, of course, on the tax treatment of said nest egg. If I had $750-800K in a Roth, it would be roughly as good as a million in the 401(k) or conventional IRA.

#29

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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3034 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:14 AM
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About a million would probably do it, I think -- though it would depend on my age. The younger I was, the more I'd need to have to "go for it."

I assume this means- draw off 5% a year? Or do you mean something else?

I am 36 and hoping to FIRE in 9 years.. there are some HUGE if's in there but that is my goal.


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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3035 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:24 AM
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>> I assume this means- draw off 5% a year? Or do you mean something else?

I am 36 and hoping to FIRE in 9 years.. there are some HUGE if's in there but that is my goal.
<<

Probably about 4%. The thing is, assuming an 8% return on investments and contributions to my retirement funds at the present rate (plus wage growth/inflation), it would probably take about 15 years to get to that level. But by then, I'd be old enough that I could probably do it on less than a million.

As far as mortgages, yes, I still owe on a mortgage that still has 13+ years to go (at 5.00% interest), but if we FIRE'd we have enough home equity to downsize the house and pay cash on a smaller home in a place where it's more FIRE friendly. (This area isn't bad, thanks to no state income tax, except for property taxes which are positively brutal. I actually would prefer a modest state income tax -- which can be managed by how you derive the funds to live each year -- over no income tax and a hefty property tax.)

Think of two lines superimposed on one time-phased graph -- the first being the value of all my retirement funds (about $320K right now at age 39), and the second being the amount of money I'd need in reserve to FIRE (right now, probably about $1M). The former line should generally rise over time and the latter should fall. At some point they intersect, and at some point after intersection (perhaps erring slightly on the conservative side) is where I feel I could FIRE safely.

The main reason why the second line (cash needed to FIRE) might not fall much, though? Health insurance -- that's the big question. That's the 800 pound gorilla of FIRE, the "wildest" wild-card, and it's what will trip up many who would otherwise easily be able to FIRE securely.

#29

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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3036 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:31 AM
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The main reason why the second line (cash needed to FIRE) might not fall much, though? Health insurance -- that's the big question. That's the 800 pound gorilla of FIRE, the "wildest" wild-card, and it's what will trip up many who would otherwise easily be able to FIRE securely.

Yeah I have only looked into this some, but it looks like you can get a blue cross blue shield plan for around 500 bucks a month, maybe 600. I don't know how fast this rises, but it is around 6000-7000 a year (a big chunk of money, but not insurmountable).

I have gotten some literature on getting into group plans through some sort of co-op.. but I haven't looked into it seriously, maybe I should, that would bring down costs if it is legit.

Yes rate of return on investments is one of the big IF's. But I figure for 320k at a 6% real growth (assuming there is 2% inflation) you get 573 in 10 years- add in extra savings through that time and you should be able to FIRE in 10 years for sure!

Assuming you can get a real 6% of course.



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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3037 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:41 AM
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>> Yes rate of return on investments is one of the big IF's. But I figure for 320k at a 6% real growth (assuming there is 2% inflation) you get 573 in 10 years- add in extra savings through that time and you should be able to FIRE in 10 years for sure! <<

I currently assume an 8% *nominal* rate of return (at least for the first few years) and 3.5% inflation. As I grow older, I gradually reduce the nominal rate assumptions to 7.5% at age 45, and then reduce it by 0.1% per year until it's 5.5% at 65 and beyond to reflect a gradual shift toward income (instead of growth) and reduced volatility.

Obviously when I said I'd need about $1M, that's in current, real dollars. In a decade, whatever reduced amount I might need would be offset by inflation, so it could still be a million or more in *nominal* dollars.

Most of my assumptions, at least historically, are pretty conservative and based on slightly pessimistic assumptions. I'd much rather be surprised on the upside than the downside. Assuming health care inflation of 8% per year going forward (a WAG to be sure, and depends on a lot of factors), my spreadsheet tells me I can probably make it by around age 49 to 52.

#29

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3038 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:43 AM
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it looks like you can get a blue cross blue shield plan for around 500 bucks a month, maybe 600. I don't know how fast this rises, but it is around 6000-7000 a year (a big chunk of money, but not insurmountable).

per person? This is one reason I said "more than a million."

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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3039 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:46 AM
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Most of my assumptions, at least historically, are pretty conservative and based on slightly pessimistic assumptions. I'd much rather be surprised on the upside than the downside. Assuming health care inflation of 8% per year going forward (a WAG to be sure, and depends on a lot of factors), my spreadsheet tells me I can probably make it by around age 49 to 52.

Have you though of buying healthcare stocks as a hedge against rising health care costs? If legislation brings down health care costs for prescriptions for example, these stocks will suffer. If the political climate favors them, healthcare costs will rise along with these stocks? If you have some 10% of your port in healthcare it may serve as a hedge and reduce your volatility relative to healthcare costs- one of your major outlays.

It depends on what you want to achieve as well with your expectations. I am thinking it might not be so bad to work on contract jobs on occasion- if finances demanded- for semiretirement earlier than full retirement.

It is interesting because I am contemplating seriously what to do with around 20k in cash- sink it into the mortgage for guaranteed return, or drop it in the market? I think it really comes down to what I want- a higher risk with a potential earlier retirement, or a more secure future with a lower cash flow requirement? I am not sure what I want, but I don't like the overall overvalued market.



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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3040 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:46 AM
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per person? This is one reason I said "more than a million." This was per family, without a pregnancy rider.

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Author: qaddy Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3041 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:48 AM
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>> I am contemplating seriously what to do with around 20k in cash- sink it into the mortgage for guaranteed return, or drop it in the market?


Split it in half.

qaddy


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Author: brewer12345 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3042 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:48 AM
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I voted for a million plus, but that doesn't indicate how much over a million we are talking about. I am hoping to check out in my mid-40s, so we are talking about having to plan for a 50 year withdrawal period. My wife is from a traditionally very long-lived family, so there is a high likelihood that one of us will approach age 100. I also have an 8 month old daughter, and expect to have 1 or 2 additional kids. IOW, living expenses will be higher in the near term, and then I will be on the hook for college costs. So it is very hard to tell what my actual needs will be, but they will be quite large.

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3043 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 10:53 AM
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>> I am not sure what I want, but I don't like the overall overvalued market. <<

Well, this is why I've been following a strict asset allocation model with index funds and ETFs. Between the tendency of asset classes to "mean revert" over time, and holding non-correlated assets that tend to rise and fall separately, you can reduce overall volatility *and*, through periodic rebalancings, sell some of what's "overheated" and use the proceeds buy more of what has been depressed.

For example, I sold about 1/5 of my REIT holdings when I rebalanced on December 31 because they rose from my target 8% of assets to over 10% during 2004. I used the proceeds to buy other asset classes which hadn't performed as well (mostly bonds and large-cap U.S. stocks). So while I'm getting hit by the putrid performance of REITs so far in 2005 (down almost 10% in the first month), by rebalancing I protected -- and took -- a fair amount of the gains off the table, so to speak, and plowed it in other areas which weren't as overpriced (as gauged by performance in the previous year).

It works. The beauty is that when you sell once a year, you're selling the more "expensive" stuff and buying cheaper stuff -- which, given the tendencies of asset classes to mean-revert over time, increases return AND reduces volatility.

#29

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Author: MurrayS Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3044 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 11:36 AM
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I'm gunning for $2M and ~4% withdrawl rate. Most of our investments are in tax deffered accounts so I have to account for taxes and I want to be a bit conservative.

-murray

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Author: prometheuss Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3045 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 11:50 AM
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Assuming you own your property outright (mortgage debt completely paid off), how much money do you want to have to FIRE?

Nuanced responses would be a nice bonus. Such as- you expect to draw off 4% and you are planning on spending $25,000 a year which is 625,000. (and you know the taxes will only be 100 a month) Or you may be planning on spending 5% a year and supplementing the early years with extra work if the market is bearish in those years, bringing you down to $500,000.


First, I do not own. I rent and treat that as an expense. I might buy something after I retire. Second, I have a military retirement that would be sufficient for me to retire now if I wanted to move to a low cost area and otherwise adjust my spending habits. I do not consider myself FI, yet, because I spend more than that retirement and plan to do that when I do RE. My goal is $400,000 in retirement savings by the time I do declare myself fully FIRE. I expect to generate at least $16,000 per year in additional income from retirement investments. I will probably take more out when the market is good and less when it is not.

A better question might be to ask for the combined net present value of retirement income and investments. That would be $1,500,000 for me using a back of the envelope calculation of 4% withdrawal from investments and 25 times retirement income streams. So retirement income of $60,000 is my goal. I could retire on much less than that. Also, that does not include social security.

Regards,
Prometheuss


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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3046 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 12:20 PM
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Well, I *will* have my property paid off before I retire.

But I deliberately bought something inexpensive enough that giving it away when I retire is cheaper than renting an apartment in the meantime. (I would prefer to sell it, of course.)

We plan to buy a motorhome. So we need some big bucks.

On the other hand, I'll be drawing a pension that will probably be enough to live on, with the possible exception of paying medical-insurance premiums. Motorhome living can be pretty inexpensive, if you stay away from the resort parks and the two-thousand-mile-a-week trips (retirees shouldn't often be in that much of a hurry). So we don't need all that much.

I'd like to have a million in addition to my pension. But I'll be okay if I don't have to finance the RV.

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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3047 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 1:01 PM
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>> I am contemplating seriously what to do with around 20k in cash- sink it into the mortgage for guaranteed return, or drop it in the market?


Split it in half.


And send one half to me. ;-)

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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3048 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 1:05 PM
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Between the tendency of asset classes to "mean revert" over time, and holding non-correlated assets that tend to rise and fall separately,

Warning: a couple years ago I was able to do some examination of this in regard to a group of sector funds, and arrived at the conclusion that there wasn't significant mean reversion among sectors over the past 17 years.

(However, that doesn't necessarily apply to asset classes or to growth-versus-value.)

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3049 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 1:08 PM
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>> (However, that doesn't necessarily apply to asset classes or to growth-versus-value.) <<

Well, yeah. I can believe that -- and I was talking about asset classes (including growth/value distinctions), not so much stock market "sectors" in terms of the type of business. I'm not sure the airlines are going to "mean revert" back upward any time soon, nor did the buggy whip makers after 1900 or the vacuum-tube makers after 1970. :-)

#29


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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3050 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 1:13 PM
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Well, yeah. I can believe that -- and I was talking about asset classes (including growth/value distinctions), not so much stock market "sectors" in terms of the type of business. I'm not sure the airlines are going to "mean revert" back upward any time soon, nor did the buggy whip makers after 1900 or the vacuum-tube makers after 1970. :-)

The lack of mean-reversion among sectors was deeper than that. Different sectors in industries that routinely turn a profit (unlike airlines) and routinely grow in absolute terms (unlike buggy whips and vacuum-tubes) didn't mean-revert either, over the 17 years I was able to examine.

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Author: BattleAxes Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3051 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 1:39 PM
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I am 36 and hoping to FIRE in 9 years.. there are some HUGE if's in there but that is my goal.

Me, too. Personally, though, I plan to do some work after retiring.

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Author: Rhodnius Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3052 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 2:53 PM
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I voted $1M, but I wouldn't be comfortable with any less, and preferably about $1.5M.

This is mostly to allow for inflation. I'm 20+ years away from FIRE; I'm only 26 with a net worth of about $40K so far. So I need to allow substantial headroom for inflation.

I don't trust inflation to remain low in the near future. It's remained low in recent years only because of tremendous price pressure in shifting manufacturing and jobs to poorer countries. (I've read that Wal-Mart alone is responsible for holding inflation back by a percentage point per year.) There's a limit to how far that can go, and we'll hit it before I'm ready to FIRE.

Our government is racking up massive deficits to fund a war, and energy prices are spiraling upwards. Both those factors historically always result in inflation. TIPS will be a worthwhile investment in the near future...

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Author: AliFool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3053 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 3:20 PM
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Just wanted to say I've really been enjoying Ziggy29's posts lately.

Hey Zig, did you read The Four Pillars?

--AF

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3054 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 3:29 PM
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>> Just wanted to say I've really been enjoying Ziggy29's posts lately. <<

Thank you!

>> Hey Zig, did you read The Four Pillars? <<

Absolutely. In fact, it was reading The Intelligent Asset Allocator in 2000 which sold me on the concept. And at the start of 2001, I implemented the strategy in my rollover IRA (which is the largest individual account), and suffice it to say, I've been very happy with the results and I slept very well at night even when the S&P 500 was losing 22% in 2002. :-)

#29

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Author: nmckay Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3055 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/1/2005 3:39 PM
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I've always said that if I get to $2M, I'm punching out.

I think the challenge is going to be staying frugal as DW and I get closer to that goal. What tends to happen is that all those toys, trips, and goodies that were out of reach suddenly become more affordable. Not letting expenses ratchet up along with the nest egg will be the big challenge over the next ten years. So far I've noticed that our vacations are much more expensive than they used to be.

nmckay

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Author: l0ngterm One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3056 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/2/2005 4:49 PM
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I am aiming for greater than $2 million. Not that I'm greedy, but I see it within reach given my historically high earnings and LBYM values and the desire to have some 'L' once I quit working. My desire to FIRE is not necessarily as early as a lot of folks. As long as I'm 'FI' by 52-55 years old, I will be satisfied. I like my work life and don't see that changing.

I also enjoy myself and my family enough outside of work that I'm not stressing out. FI is the real goal with a reasonable RE date to enjoy a bit more L before I kick off.

I'm 15 years away and reasonably sure I'll get there.

l0ngterm

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Author: RV2000 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3057 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/2/2005 4:58 PM
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My desire to FIRE is not necessarily as early as a lot of folks. As long as I'm 'FI' by 52-55 years old, I will be satisfied. I like my work life and don't see that changing.

I also enjoy myself and my family enough outside of work that I'm not stressing out. FI is the real goal with a reasonable RE date to enjoy a bit more L before I kick off.


Very good perspective l0term.....can't get much more to-the-point work/life balance than that. Well said.

(Where is that "add to my favorites" button?....)

Rick

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Author: mazske Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3059 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/2/2005 8:22 PM
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Hey, this is the FIRE Wannabee board. None of us are FIRE'd yet, are we? 13 years to go for this young man.

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Author: lowstudent Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3060 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 2/3/2005 11:39 AM
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"I am not sure what I want, but I don't like the overall overvalued market. "

Then wouldn't it make more sense to pay off the mortgage and dollar cost average back into the market, bulding up you mortgage payments into big enough pieces to invest or Drip-ing in. When you are uncertain about a market or expect a choppy market averaging takes away a little of the pain IMO.




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Author: SalientSubtlety Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3175 of 5084
Subject: Re: Poll: How much do you want to FIRE? Date: 4/6/2005 7:01 PM
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At around $800,000 I'll start being able to handle my current non-housing expenses plus a little allocation for Health Care (haven't dug deep enough yet), at a 5% withdrawal rate. I intend to use a semi-variable rate strategy, because with housing taken care of, much of my expensese are things which are really optional and which I can live without from time to time.

I expect I'll quit working as soon as I cross that line, and then after I have had a chance to see how I spend my work-free time, go back to pad things out a bit depending on what I really look like I'll want to spend, which I'm guessing will take me to 1.2-1.4M or so.

-Salient

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