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Author: workwayless 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 1498  
Subject: What it takes to escape work??? Date: 5/14/2004 5:49 PM
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Scott Burns thinks one would need to generate at least $65k a year to be able to stop working and live off your nest egg. While I usually like Burns' articles, I totally disagree with him--you can live comfortably for a lot less.



http://moneycentral.msn.com/content/Retirementandwills/Escapetheratrace/P79750.asp

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Author: andrew61 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 554 of 1498
Subject: Re: What it takes to escape work??? Date: 5/14/2004 8:13 PM
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Heck, I doubt that most working Americans are living on anything close to $65K a year.



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Author: chooey98 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 556 of 1498
Subject: Re: What it takes to escape work??? Date: 5/15/2004 10:38 AM
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The problem I have with this article is that it only addresses yields... both bond yields and dividend yields on stocks have both gone down, sure, but stock prices have risen dramatically during the time period he mentioned.

Also, I didn't see if the $65K recommended applied to a family of four, a retired couple or a single person. A retired single person could live like a millionaire on $65K. (I could).

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Author: moxiepal Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 557 of 1498
Subject: Re: What it takes to escape work??? Date: 5/16/2004 1:24 PM
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The article also doesn't talk about expenses. $65K while you are paying down a mortgage is one thing. $65K after eliminating all debt ("good" and bad) is another. We live on a fraction of $65K now after you deduct mortage payments (we re-financed to pay off in 10 years), maxing out two 401ks, maxing out Roths, paying off student loans AND investing every month in our taxable account. Subtract all that and $65K is a fortune!

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Author: decath Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 558 of 1498
Subject: Re: What it takes to escape work??? Date: 5/17/2004 10:51 AM
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chooey98:
Also, I didn't see if the $65K recommended applied to a family of four, a retired couple or a single person. A retired single person could live like a millionaire on $65K. (I could).


With FIRE on the horizon of 7-9 years, my wife and often find ourselves observing the lifestyles of those in my neighborhood, while comparing their's to ours.

For example:
Cars: Us - 9 YO Honda Civic for me; 4 YO Honda CRV (both paid off); HS son uses my car occasionally; college age daughter is paying for her own 8 YO Honda civic
Them - SUV's; new 20k+ cars every 3 or 4 years; each 16 YO up has at least a 10k+ car or pickup

Home: US - Not exactly LBYM but because of making extra payments on our home, we are around 50% equity with a pretty small P&I payment of $715 per month on a home valued at 270k.
Them - 300k - 600k homes all around us; enormous payments of $2000+. My neighbor next door paid $2800 in P&I and he is a fireman and his wife is a school teacher. He spends his off hours doing side jobs as a gutter installer just so he can make his 4 car payments and the house payment
consumer debt Us - none!
Them - The few I've talk to have continuous large credit card payments each month. They give my puzzled looks when I tell them we pay off our CC balance each month
Furniture and play things: Us - look for used and do the refurbishing ourselves. Bought 2 $500 mountain bikes for me and my wife and we use them almost every week.
Them - buy brand new on the CC. The playthings (boats, ATVs etc..) get used occasionally but for the most part sit in the garage since the owners are working all the time to pay for everything.

I could continue but you get my point. My neighbor and extended family lifestyle's eat up 67k per year plus some. My family with a SAHM & kids, by living frugally and spending money on the things that matter the most to us, am able to save around 30% to FIRE investments and another 12% to my E-Fund off of just my annual income.

decath


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Author: VesperLynd Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 560 of 1498
Subject: Re: What it takes to escape work??? Date: 5/20/2004 5:59 AM
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It also doesn't take into account future income streams that are independent of your nest egg - pensions, etc.


VL

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Author: rainphakir Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 561 of 1498
Subject: Re: What it takes to escape work??? Date: 5/20/2004 4:17 PM
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Almost ALL articles about 'retirement' or 'saving' use figures that are unrealistic for 'average' income. The talking head articles are always about some 'family' with an income of 80K or more.

from the 2000 Census you can see that even the states with the highest MEDIAN household income do not fit the premise of the articles (even with 65K as the threshold)

http://doe.state.wy.us/lmi/0201/g1a1.htm

and, I believe these numbers are pretax.

Since most FAMILY incomes are far less than what is described in most talking head articles, I think many folks cannot visualize themselves being self-made FIREs

so they aren't.

JMO
Ralph


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Author: gig101 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 641 of 1498
Subject: Re: What it takes to escape work??? Date: 6/16/2004 1:10 PM
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My mother is 89 and did not actually touch her capital until she was 84 and needed to move to a retirement home and out of her apartment.She loves her new life and I am so glad that I don't have to fund it or move her to a less nice facility. However, because of watching her, I will probably work longer than I might need to. It scares me when I see friends who are 62 and retired dipping into their capital not just living off the income it produces. If they live into their 80's which their parents have, they run the risk of being broke. They live frugal, bare-bones lifestyles but medical/house expenses keep cropping up. I think that it is less stressful to work a little longer now than worry about money later. I am lucky in that I like my job but do work hard. I'm not sure that when I'm 65 I will want to be running around in a busy hospital. I will have to see how I feel as the time gets closer. When I get tired of my job I try to think of the things about it I like and it helps moderate my feelings.

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Author: workwayless Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 642 of 1498
Subject: Re: What it takes to escape work??? Date: 6/16/2004 2:16 PM
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gig101 said,

My mother is 89 and did not actually touch her capital until she was 84 and needed to move to a retirement home and out of her apartment.She loves her new life and I am so glad that I don't have to fund it or move her to a less nice facility. However, because of watching her, I will probably work longer than I might need to. It scares me when I see friends who are 62 and retired dipping into their capital not just living off the income it produces. If they live into their 80's which their parents have, they run the risk of being broke. They live frugal, bare-bones lifestyles but medical/house expenses keep cropping up. I think that it is less stressful to work a little longer now than worry about money later. I am lucky in that I like my job but do work hard. I'm not sure that when I'm 65 I will want to be running around in a busy hospital. I will have to see how I feel as the time gets closer. When I get tired of my job I try to think of the things about it I like and it helps moderate my feelings.


I agree that it makes more sense to work a little longer while you are young than to have to stress in your later years.

However I believe that to avoid touching the principal after retirement is not a good approach. For one thing, it could dictate that your spending patterns would need to change from year to year. I have found that a much better approach is to determine a safe withdrawal amount (safe = low probability of running out of money) and then withdraw that amount of money every year, adjusting the rate for inflation.

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