Early Retirement Extreme progress

[Tyler]

If you retire early and live on a lean budget... what will you do with your parents if for some reason they can't afford to take care of themselves?

Get a job.  ERE is more about flexibility than never working again, and working to support an ailing parent is a helluva lot easier when your own needs are already covered.  In the meantime I will have hopefully enjoyed many years of exploring the world, maximizing life, and spending quality time with said parents at my own pace. 

Broader answer: There are many things that could happen in life to derail the best laid plans.  That includes the plan of working full-time until you're 60.  What if you get sick or injured and can't work any more?  What if you're laid off and cant find new work because your career is obsolete?  IMO, obtaining the financial freedom to make work a personal choice rather than a survival obligation gives you the most flexibility to take what life throws at you and adapt in creative ways.

[frugal]

Where can I get a SIMPLE spreadsheet calculator for ER ?



Tks

[Kriegsspiel]

What do you want to calculate? If you google FIREcalc it gives you the Trinity calculation, to see what your chances are to run out of money.

[frugal]

What do you want to calculate? If you google FIREcalc it gives you the Trinity calculation, to see what your chances are to run out of money.

That is assuming you put all your money in the markets...

Something simpler, no?

[Tyler]

Frugal -- I recommend you read the book "Work Less, Live More" by Robert Clyatt.  It will give you a good place to start thinking about ER, along with helpful guidance on starting a few spreadsheets. 

[dualstow]

What do you want to calculate? If you google FIREcalc it gives you the Trinity calculation, to see what your chances are to run out of money.

Ooh, fireCALC is neat. Thanks for that.

[WiseOne]

What do you want to calculate? If you google FIREcalc it gives you the Trinity calculation, to see what your chances are to run out of money.

Ooh, fireCALC is neat. Thanks for that.

Ah, but realize that without the magic bullet of a cash allocation, it'll give you overly pessimistic results.  You could consider the PP part of your extra portfolio insurance.

Regarding the ailing parent issue:  being ERE would certainly help in that regard, since you will have the option of being the caregiver without worrying about taking time off work.  I've got sort of the same issue myself now.  None of my 3 sibs have full time jobs, so they're alternating flying in for prolonged visits.  In between, I live close enough that I can stay with my parents and help out in the AM and evenings, which fortunately is when my mom is most in need of help.  This arrangement saves us the $6500/month that a full time home health aide costs, if hired through an agency.

The only real issue is that I haven't kept my car in Manhattan due to parking costs ($400-600/month!), but looks like I'll have to deal with it.  I guess that's an example of extra costs that could arise in an extreme situation.  Note, however, that this is a bargain compared to the home health aide.  And I certainly have the option of moving somewhere cheaper to help manage the costs (which is likely to happen even though I refinanced at this fabulous rate just before my dad's stroke...sigh).

[Reub]

WiseOne, I hope that things work out for you. I've been through something similar and it isn't easy.

As far as retirement withdrawal rates go, I've decided to implement the strategy of dividing the number "1" by years of life expectancy. For example, I am 56 and my dad lived to 100. Assuming I am lucky enough to make it to 100, this strategy allows me a withdrawal rate of 1/44 this year, or 2.272%.  Next year I will withdraw 1/43rd, or 2.325%, and so on. This seems to me like a prudent and conservative method of retirement withdrawals.

Best Regards!

[Libertarian666]

WiseOne, I hope that things work out for you. I've been through something similar and it isn't easy.

As far as retirement withdrawal rates go, I've decided to implement the strategy of dividing the number "1" by years of life expectancy. For example, I am 56 and my dad lived to 100. Assuming I am lucky enough to make it to 100, this strategy allows me a withdrawal rate of 1/44 this year, or 2.272%.  Next year I will withdraw 1/43rd, or 2.325%, and so on. This seems to me like a prudent and conservative method of retirement withdrawals.

Best Regards!

Yes, with one correction: divide by your actual life expectancy each year, not the previous year's expectancy minus 1. That is, there is no age when your life expectancy is zero, so long as you are still alive at that age.

[frugal]

Maybe I am repeating the subject, sorry...

What was the SWR for the PP and how do you calculate it?

Thank you!

[Pointedstick]

What was the SWR for the PP

4-5%.

and how do you calculate it?

http://gyroscopicinvesting.com/forum/ot ... or-a-myth/

[Pointedstick]

Thought it might be interesting to give an update after a few years. Here was March:

Food: $450 ($400 groceries/$50 eating out & fast food)
Health insurance: $300
Happy-wife-happy-life fund: $300
Utilities $85 (Natural gas $38 / Electricity $21 / Water: $26)
Internet: $53
Homeowner's insurance: $51
Home improvement/maintenance/repairs: $49
Pets: $41 (bulk frontline, an anti-flea product)
Home supplies: $28
Car gas: $24
Netflix & Amazon Prime: $16
Video games: $8

Total: $1405

There are a few irregular expenses not accounted for here (property taxes, car insurance, etc.) that add about another $100 a month).


In terms of price movements not attributable to dramatic personal decisions (e.g. moving to another state, buying a house) here has been what I've experienced:

Cost went up:
- Health insurance, doctor's visit co-pay costs

Cost went down:
- Car insurance
- Car gas

Cost stayed more or less the same in nominal terms:
- Everything else

[WiseOne]

Same question as MangoMan!  $21 is quite an accomplishment, unless electricity is cheap where you are.  Electricity costs me about 3x the national average that gets quoted on those yellow energy cost tags on major appliances. 

There are enough things left out of that budget though, that you'd have to account for during retirement and that could add up to more than you realize.  I started using YNAB this year and its been incredibly helpful.  Outside of the big mortgage and maintenance bills, my fixed & "everyday" expenses total about $500.  The place where things get interesting is the "rainy day" funds, which handle irregular or yearly expenses.  Here's my list of categories:

Homeowner insurance
Subscriptions (i.e. Amazon Prime & Dropbox)
Home repairs & improvements
Computer, repairs, software etc
Christmas and gifts
Clothes/personal care
Medical expenses (outside of health insurance)
Veterinarian
Vacation/travel

I allocate about $1000 a month between these categories.  The money is stashed into the savings account, but it does not go to the PP as I consider it all as future spending.  The $1K is based on my estimates of past spending, but it's just a starting point.

[MachineGhost]

Cost stayed more or less the same in nominal terms:
- Everything else

Really?  Well, then there was no point in moving to the desert boonies in NM then.   The tangible benefits -- if any -- aren't financial.

[Tyler]

How do you have an average cost of $21/month for electricity?

Note that the $21 was for March. That's still impressively low, but I wager it will go up during the summer.

Thanks for the update, PS.  You inspired me to go check Mint for my own ERE expenses.  My average all-in expenses for January-March of this year are not much higher than yours.  I think the spending may pick up a little with the nice weather, but honestly there's still room to cut as well. 

So far I'm surprised how little money is required for a happy life when the time constraints of a day job are taken off the table.  "Convenience" carries a major price premium.

[Pointedstick]

Same question as MangoMan!  $21 is quite an accomplishment, unless electricity is cheap where you are.  Electricity costs me about 3x the national average that gets quoted on those yellow energy cost tags on major appliances.

$0.11/kwh + no TV + LEDs for all lights in the house + swamp cooler instead of AC in the summer + gas water heater + gas range. The bill goes up about $5-10/mo in summer. This does include an electric crock pot, teakettle, and toaster oven. Those are the major electricity hog appliances. It's to the point where I'm seriously considering going off-grid with batteries and panels at a very steep angle rather than getting a grid-tied system and dealing with the utility politics (they want to get rid of net metering and impose a monthly service fee on new solar customers).

In terms of kWh, our monthly usage has ranged from 83 to 185 kWh over the time we've lived here.

There are enough things left out of that budget though, that you'd have to account for during retirement and that could add up to more than you realize.

[...]

Homeowner insurance
Subscriptions (i.e. Amazon Prime & Dropbox)

Included in the above budget.

Computer, repairs, software etc.

Maybe an amortized cost of $3/mo. Computers are my field of professional expertise; I can keep a computer running forever, refurbish old free machines given to me by friends and family, and spend basically no money on new software. This number used to be much higher than I treated it as an expensive hobby and bought a lot of gadgets, but I've managed to wean myself off that.

Home repairs & improvements

Okay ya got me here; I've been spending a lot on this but I don't count it since I'm buying "lifetime" versions of everything that needs to be done, e.g. really nice windows & doors that will never need replacing again. I'm sincerely hoping that once I'm done I'm not going to fall prey to home renovation madness syndrome and want to tear up my kitchen every 5 years. If I know myself, eventually home improvement and rehabbing will stop being a hobby and I'll use my skills to keep the cost of any required work low, similar to how I am with computers now.

Christmas and gifts

$200/yr, maybe. The best gifts don't cost much money. Misc entertainment might be another $200/yr.

Clothes/personal care

Clothes is basically $20 a year for all of us. Seriously. Every few years I buy a couple of $4 shirts from a place like shirtsinbulk.com, and my wife gets a ton of free clothes from female friends and family members who are inexplicably getting rid of their own clothes more or less constantly. Kid's clothes are similar, and I'll admit that the grandparents can't resist buying an enormous amount of clothes!

Personal care runs about $15/mo (counted as home supplies in the above budget, e.g. toilet paper, floss, etc).

Medical expenses (outside of health insurance)

Thankfully we're pretty healthy. If I amortize, maybe another $20-30/mo for copays.

Veterinarian

Dog's pretty healthy too. Hasn't needed to visit a vet in years and she's doing great. Amortized cost of maybe $10/mo. Dog food runs about $8/mo with the gigantic Costco bags.

Vacation/travel

This comes to about $1-2k a year.

Cost stayed more or less the same in nominal terms:
- Everything else

Really?  Well, then there was no point in moving to the desert boonies in NM then.   The tangible benefits -- if any -- aren't financial

I was talking about inflation, not the cost savings from moving to NM from CA. The financial benefits of that were enormous, with the major cost advantage being housing. A comparable house to the one I own in NM would have cost me eight times as much back in CA--I know this because a friend of mine who still lives there happened to buy a house that's pretty similar to the one I bought (smaller and in worse condition, actually) 6 months after I bought mine and he paid eight times what I did. No, I am not kidding.

Car gas is quite a bit cheaper, that that's not very relevant since we barely drive, and of course taxes of all sorts are lower. Utility costs are a lot cheaper too. Having a septic system instead of an ongoing sewer bill is nice too and while that's more common here, I suppose it would be possible back in CA. My internet is actually faster here that it was in silicon valley, for the same price. Food health care, and other things cost about the same.

[Pointedstick]

Dog's pretty healthy too. Hasn't needed to visit a vet in years and she's doing great. Amortized cost of maybe $10/mo. Dog food runs about $8/mo with the gigantic Costco bags.

No annual vaccines for rabies, parvo, distemper, etc? Dog license for you local municipality?

No license, and I was told that the vaccines are multi-year affairs. They didn't cost much anyway, but we keep them current. It's just not really that expensive. I know people who own animals with significant health problems that require frequent surgery, hospitalization, the works--now THAT's expensive. They're paying the premium for not being able to let go and admit that they're paying to prolong more suffering than happiness.

[MachineGhost]

very steep angle rather than getting a grid-tied system and dealing with the utility politics (they want to get rid of net metering and impose a monthly service fee on new solar customers).

I was going to post about that, but figured you'd find out about it either way.  NM is one of three states where the utilities are ostriches and can't compete with solar, so in the usual game of crony capitalism, they are going to tax and penalize utility customers that dare use solar to reduce their burden on the grid, courtesy of their bought and paid for political stooges in the legislatures.  What a joke.

[Pointedstick]

very steep angle rather than getting a grid-tied system and dealing with the utility politics (they want to get rid of net metering and impose a monthly service fee on new solar customers).

I was going to post about that, but figured you'd find out about it either way.  NM is one of three states where the utilities are ostriches and can't compete with solar, so in the usual game of crony capitalism, they are going to tax and penalize utility customers that dare use solar to reduce their burden on the grid, courtesy of their bought and paid for political stooges in the legislatures.  What a joke.

It's everywhere now. Even utilities in cloudy states like Wisconsin are trying these shenanigans. The electric companies will simply need to adapt or die, whether death means being replaced with firms that are more like "energy banks" or pseudo-nationalization as they're purchased by cities and states and turned into electric co-ops. This has already happened in Colorado, I believe.

[MachineGhost]

Car gas is quite a bit cheaper, that that's not very relevant since we barely drive, and of course taxes of all sorts are lower. Utility costs are a lot cheaper too. Having a septic system instead of an ongoing sewer bill is nice too and while that's more common here, I suppose it would be possible back in CA. My internet is actually faster here that it was in silicon valley, for the same price. Food health care, and other things cost about the same.

How much does it cost to have the poop truck come out and suck your septic system dry and how often is it required?

[Pointedstick]

Car gas is quite a bit cheaper, that that's not very relevant since we barely drive, and of course taxes of all sorts are lower. Utility costs are a lot cheaper too. Having a septic system instead of an ongoing sewer bill is nice too and while that's more common here, I suppose it would be possible back in CA. My internet is actually faster here that it was in silicon valley, for the same price. Food health care, and other things cost about the same.

How much does it cost to have the poop truck come out and suck your septic system dry and how often is it required?

Depends on usage, but I'm thinking about once every five years, as ours is very low. Prices seem to be about $150 a visit (read: only 3-6x the average monthly sewer bill).

Also, my septic tank is aerated and has a user-cleanable filter, which I'm told reduces the required frequency of pumping.

[Pointedstick]

That's great, Pointedstick, thanks for sharing. 

I'm sitting here wondering what's in that "happy wife" outlay though...

No idea! I just deposit it into her bank account every month and things are good. I suspect she actually saves most of it. She's like me.

[WiseOne]

Same question as MangoMan!  $21 is quite an accomplishment, unless electricity is cheap where you are.  Electricity costs me about 3x the national average that gets quoted on those yellow energy cost tags on major appliances.

$0.11/kwh + no TV + LEDs for all lights in the house + swamp cooler instead of AC in the summer + gas water heater + gas range. The bill goes up about $5-10/mo in summer.

Consider this a dividend of your move to NM!!!!  That figure made my eyes bug out, and on top of that you can use a swamp cooler.  I pay 28 cents/kwH total including state surcharges, plus a 4.5% sales tax, plus $21 in fixed fees per month.  So energy conservation has a relatively small impact on the electric bill which somewhat reduces the motivation.

Few other items for your budget, which aren't included in mine:

car insurance
car replacement fund
car repairs
property tax

but it sounds like you're likely to come in safely under $2K.  Very nice.  How far away from retirement do you figure you are?

[I Shrugged]

If you research it, you'll find the conventional wisdom is that annual home upkeep costs 3% or more of the home's value.  My own estimates as a 3 time homeowner for 30+ years is that it is at least 1-2%.  And we had good materials too.  Things break, things wear out, weather away, etc.  Some years the expenses are nil, other years make up for that.

[Pointedstick]

Same question as MangoMan!  $21 is quite an accomplishment, unless electricity is cheap where you are.  Electricity costs me about 3x the national average that gets quoted on those yellow energy cost tags on major appliances.

$0.11/kwh + no TV + LEDs for all lights in the house + swamp cooler instead of AC in the summer + gas water heater + gas range. The bill goes up about $5-10/mo in summer.

Consider this a dividend of your move to NM!!!!  That figure made my eyes bug out, and on top of that you can use a swamp cooler.  I pay 28 cents/kwH total including state surcharges, plus a 4.5% sales tax, plus $21 in fixed fees per month.  So energy conservation has a relatively small impact on the electric bill which somewhat reduces the motivation.

Few other items for your budget, which aren't included in mine:

car insurance
car replacement fund
car repairs
property tax

but it sounds like you're likely to come in safely under $2K.  Very nice.  How far away from retirement do you figure you are?

Oh, a coupla years I think.

Property tax is about $100/mo, amortized. Car insurance is $34/mo amortized. Car repairs have been about 15 or 20 a month, amortized. The car repair fund is something I know I should probably have but right now my plan is to just pay for the next one of of PP cash and then direct new contributions there while I'm still working.

This month has been a bit low, but if I look at the last 12 months in mint, the monthly average--including fixer-upper home improvement expenses--is about $2.5k. Excluding home improvement expenses, and it's more like $1,650. But the big projects are getting out of the way so again I really hope it's not going to be like this forever.

And honestly, I'm not planning to retire. If anything I'm hoping my next venture will be very lucrative... I just want to make sure my family's expenses are taken care of before jumping back into the risky world of entrepreneurship.