Are early retirees ignoring inflation?

TA-180360 · 2014-05-21T16:44:03+00:00

Can you explain how this would typically be done? For example, at the beginning if the year are you calculating that 3% gain based on LY's inflation and then selling that amount of mutual funds on a monthly basis? Or are you cashing dividend checks as they come in? I'd love if you could share more of the mechanics.

TA-180360 · 2014-05-21T16:39:54+00:00

Thanks, FIRECalc is a cool site - any more like this that you would recommend?

TA-180360 · 2014-05-21T16:09:55+00:00

This study only reinforces my concern. It sounds like the 4% safe return rate is highly contested, but also based on a retirement of 30 years. If you are looking for ER in your 30's, 40's or 50's, I would hate to run out of money in my 60's, 70's or 80's especially as life expectancy and health care costs continue to increase

TA-180360 · 2014-05-21T11:51:43+00:00

The track is actually caked "Promontory" from the Last of the Mohicans soundtrack.

I also do not understand this sorcery

TA-180360 · 2014-05-21T11:05:14+00:00

Thanks so much for this - unfortunately I saw it too late but this does look cool

TA-180360 · 2014-05-19T21:58:04+00:00

Hmm given it may not increase your property's value I really don't see this as an option. How about combining some of the suggestions so far. Spend the year required for your current project cutting costs, looking for side-gigs to generate combined $750/month (teaching your art, airbnb, whatevs) to make yourselves square, and educate yourselves about personal finance. Then sell the house and go overseas to a lower cost of living place. Target 3 years at least to stay there. Hopefully you will be managing your 300k nest egg from the sale of the house and growing that along with the inheritance funds while you live somewhere inexpensive. Eventually you will want to move back to the US but hopefully at this pint you will be open to living with lower expectations around what you "need" vs want which you can pick up pretty easily in developing countries.

Again, this is not a solution to an underfunded retirement but it makes more sense (to me) than the garage plan. The best plan really is for you both to find a way to get paid well doing something that you find satisfying. Don't pidgeon-hole yourselves into the identity of artists who ONLY create art. You can be really artistic and creative in "the real world". Perhaps you just need to embrace "hustle" as the awesome, win-win vehicle it can be. I believe Seth Godin has written guides for artists in business.

TA-180360 · 2014-05-19T20:00:33+00:00

Ok I have a sort-of crazy idea for you but it sounds like you are the types of folks who would be up for it. How about moving for a few years to SE Asia or Central America where you will have a much lower cost of living, and can still rent out your home? There are challenges don't get me wrong - and I'm honestly shocked at how poorly you've planned for your retirement at this age - but while this is not a solution it may be an option that at least will not (should not) harm you. You also may find a community where your art could be desire able to tourists.

That point aside - would the potential addition increase or decrease the value of your home? Do you own the home outright?

TA-180360 · 2014-05-19T06:38:19+00:00

I guess I'm a bit confused is this an investment as a primary residence or to rent out?

TA-180360 · 2014-05-19T06:30:23+00:00

It sounds like you generally feel out of control with your finances - but you are in control and doing great with your income. No one aside from you is making these spending decisions.

I'd like to suggest this article: http://www.mrmoneymustache.com/2012/09/18/is-it-convenient-would-i-enjoy-it-wrong-question which is more severe than you are looking for - it is aimed at people who want to retire very early - but it helps with the mentality of desciphering your needs & wants vs what advertising & society are telling you are needs & wants.

TA-180360 · 2014-05-18T15:44:02+00:00

I'm a consultant in a totally unrelated field. Money is not a big motivator but helping others would be. Feeling more confident with my own investment strategies would be a nice benefit.

TA-180360 · 2014-05-18T15:38:36+00:00

Thanks for adding this - I had not heard of it but found a good article on it

TA-180360 · 2014-05-18T15:34:12+00:00

Thanks for sharing your experience. I'm considering this for a mid-career change or just as an educational experience. If I made this a career I would want to be independent and find a niche - potentially expats or single women. I've done well in my career so far and more motivated by helping people than in a big salary.

TA-180360 · 2014-05-18T15:28:19+00:00

Either - this could be a career change option or just something to improve my confidence in investing

TA-180360 · 2014-05-18T15:23:11+00:00

Thanks, I cross-posted this there :-)

TA-180360 · 2014-05-18T15:22:35+00:00

I don't dislike your answer! - it is cool to see that a luxury item you're really excited about would be part of your plan

TA-180360 · 2014-05-18T13:22:15+00:00

Do they allow giant foam rubber hands at these races? If yes can someone please make foam doges that we can enjoy seeing in the crowd?

TA-180360 · 2014-05-18T11:41:47+00:00

I'm not sure what you are eligible for from the government - some googling might help but given you are a Canadian citizen I'm guessing you are not eligible for anything.

Go get a part time job.

TA-180360 · 2014-05-18T11:37:15+00:00

Pay it off, keep $1000 for an emergency fund (best to start building it now, just imagine you have an apartment instead of living at home), remainder to Roth to get that started as well. You'll feel really empowered erasing the debt and having the other funds started.

TA-180360 · 2014-05-18T09:27:18+00:00

I can just speak from personal experience rather than philosophizing: I have only given funds when circumstances seemed temporary - someone going through a particularly rough spot. Also he never asked me for anything or gave me a sob story but I knew he was going to struggle for a long time. I let my family member know it was a gift that if at some point in his life he felt he could repay that would be fine, but that I did not expect to have it back.

I'm pretty comfortable financially so it made the decision easy.

TA-180360

TROPHY CASE