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After Tax Monthly Income in Retirement for a Couple

  • Less than $3,000

    Votes: 4 9.3%
  • $3,000 to $5,000

    Votes: 6 14.0%
  • $5,001 to $7,500

    Votes: 8 18.6%
  • $7,501 to $10,000

    Votes: 8 18.6%
  • $10,001 to $12,500

    Votes: 5 11.6%
  • $12,501 to $15,000

    Votes: 5 11.6%
  • $15,000 Plus

    Votes: 7 16.3%
61 - 63 of 63 Posts

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There are many people out there whose investments did amazingly well over the last 2-3 years, and who are extrapolating that and feeling confident about early retirement due to it. I'm somewhat in that camp myself.

Pulling away the punch bowl and draining liquidity out of this system, to knock some sense into everyone, is a very good idea.
Yes ........Now get back to work :cool:

I know more than a few people in that camp of "Rose Coloured Glasses". Unlike you J4B, these guys don't know what they are doing and do not understand the risks they are taking. Any advancement in their net-worth is just luck. The big one these days is housing. Folks think, that their house is up $400K so their off to easy street. This is usually when I ask are you selling your kitchen to travel to Bali--how does that work?
 

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I stayed at a really nice hotel in Bali for $29 a night, including breakfast!

The thing about early retirement and risks is that I strongly believe if you have a sufficient portfolio that 4% covers your spending, the risks are very low. Let's say I spend 50k/year for the sake of argument. Then the stock market crashes 50% and I feel nervous about pulling from my investments. OK, so I get a part time job at Walmart. Easy to get. If I work 20 hours a week at minimum wage (15/hr in Ontario), that's 15k/year additional income. So now I only need to pull 35k/year from my investments.

My initial nest egg was $1.25 million to give me my 50k at 4%. Let's say a 70/30 portfolio if I retired young. That's 875k in stocks. It drops to 437.5k. My 30% in bonds is 375k. Let's take a bad scenario like today for bonds and say my bonds dropped 10%. Now I have 337.5k in bonds. So overall I have 775k now. If I draw 35k, that's a 4.5% draw instead of my original 4%. Not very risky, in my view. If I was concerned, I could try to find a higher paying job or work a few more hours.

I know I'll probably get objections that working at Walmart is a nightmare scenario. But I'm using it as a worst case scenario example. Realistically, with a career behind you, it should be easy to pick up a job paying more than minimum. Or start your own business doing something useful (that also lets you write off some expenses and set your own hours).

I suspect the sort of people who have the discipline to save up enough to retire early are not the sort of people who will have a huge issue with having to go back to work part time, either with the ability to find a job or with the mental hardship of going back to work. And I also feel like going back to work isn't even strictly necessary, but it would help with the stress of seeing your portfolio take a nose dive.
 
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