How rich are you? Does FIRE Make Life Harder? – There is plenty of safety margin in other areas of my calculations (much like Gerard pointed out – your expenses can drop after retirement). You are correct – financial pessimists ARE doomed to mediocrity. I know of two co workers who save upwards of 30% take home pay, eventhough they do this I dont forsee them retiring as they like coming to work. Mr. Money Mustache didn’t retire because he was making so much money from his blog. Also, and to me this was a very pleasant surprise, there are all sorts of things that have popped up that I’m really enjoying. MMM suggests 5% after inflation is a reasonable amount to expect from investment. And again, don’t use the last 10 years as a representative sample – that is just as bad as using 1990-1999 as a sample (20% annual gains or whatever). Just did a number crunch. I currently reside in a state with 7% income tax and no sales tax (though they try to get us to vote in a sales tax every couple years and I’m sure soon they’ll succeed.) And this is after adjusting all of these numbers for inflation, so the amounts will pay for roughly the same lifestyle in the future as they do today. I have still never written any examples like that. No cable TV. Although the ultimate aim is to grow my income by multiples of what it was, it means taking a major cut in salary right now. Yeah, I find that we spent less than $40,000 for our own family of three including some mortgage payments which totaled about $13,000 per year. Thanks in advance. Pencil Stache; Posts: 698; Location: NYC; Re: How much did Mr Money Mustache retire on? This model, though, provides a good way to look at savings and some targets to strive for. You want to preserve your nest egg and never, oh my gosh, ever, touch your principle. In real life, Mr. Money Mustache goes by the name of Peter Adeney. I just bought my first foreclosure and am fixing it up now. But don’t forget, a big item in of most people’s expenses doesn’t go up: your mortgage (assuming a fixed rate product). Did you remember to account for the reinvesting of quarterly dividends of the S&P500 index funds? Mr. Money Mustache January 13, 2012, 7:30 am, Totally agree with you, rjack. So at the end of the year just need to review the online statements for card and bank. very hard to actually have a fixed rate mortgage after 70’s stagflation. In my home country so many people, websites, and blogs bother about life insurances, Rürup, Rieser, direct insurances (all government supported ways of saving for retirement in Germany), ETFs, and fonds, so that it is easy not to see the woods for the trees. My savings percentage has taken a big hit recently. Peter Marteins My problem with retirement calculators (and not for bragging purposes) is that I’m in an old school, (vested) defined benefit pension plan. These savings would have to be invested much more safely due to the need to eat capital in the short term, and any compound interest would be my Safety Margin. Nay sayers always say, “it can’t be done”, when we have discovered a star’s gravity bends light to it’s will, let alone planets of huge mass, and a blackhole completely stops light once it is close enough, let alone pulls in an entire galaxy. That you will be lucky enough to never have to be in assisted living? 2. This means that the average retirement investor tends to buy into the market more when it is up, and less when it is down. If anyone doesn’t believe me, go read the “Safety Margin” article and think carefully about the layer after layer of safety margin that is already built into my assumptions for this table: It’s all getting out of debt or spending less, not even GRS or The Simple Dollar talk about that. One strategy favored by Mr. Money Mustache and other advocates of controlling your own employment destiny is called index investing. If disaster strikes and you lose everything, you’ll still have your home as long as you can cover the property taxes. After confirming that my historical stock market checker is looking up “adjusted close” for the S&P 500 (so dividends are counted), I looked up what my all-time retirement performance would have been had I simply bought the S&P-500 (VFINX) every date I had retirement money to contribute. business clothes, any transportation to and from work, work equipment, costs incurred through social functions necessary to be successful at work, etc. However, we also have a world record i taxation, which makes the savings rate perspective ever so relevant. 5% is a very conservative and reasonable long-term goal. So I’ll give you a quick retirement calculator of my own: a typical adult couple with no kids (or whose children are grown) can live very comfortably on $40,000 per year in retirement. Percent needed to retire (80-120% typically suggested) to maintain your current standard of living. The unstated assumption here is that your cost of living before retirement is satisfactory after retirement. I have the exact same question! No. This doesn’t sound reasonable if inflation is still at 3%. But potential medical expenses do scare me a bit – just wanted to hear your thoughts on that specifically. Fidelity Retirement Income Planner; FireCalc; Optimized Retirement Planner (i-ORP) Social Security Benefits Estimator; Vanguard Life Expectancy Tool I understand the desire to be conservative, but I would still totally disagree with the idea of going for an even lower SWR. Free calculators that help with retirement planning, taking inflation, social security, life expectancy, and many more factors into account. In Denmark today, it is now possible to get a 2% fixed rate loan if you make a 20% down payment, and we have free education up to masters level, free healthcare, and preschool is subsidized by two thirds. I retired from full time work about 18 months ago. Are cable TV and Starbucks worth having two income earners each work an extra eight years for??? we can all do much better with much less and be much happier stewards of our planet! Also as they get older they start developing their own interests ie. FIrst off, I just want to say what a big fan I am of this philosophy and so glad I found the site. Small changes are good, lots and lots of small changes are even better. 3,2,1, soon – independent! (which is still 17-20 years away, or retiring at age 50-53 but I thought I was going to have to retire at 67 like my social security statement says). Quite futuristic. To increase the savings rate to 21%, you could increase your income by $1,265 (holding spending constant) or decrease spending by $1,000 (holding income constant). To increase the savings rate to 81%, you could increase your income by $5,263 (holding spending constant) or decrease spending by $1,000 (holding income constant). I wouldn’t be worrying about total return. The 3 Best Free Retirement Calculators (173,434) The Best Retirement Calculators (160,520) Choosing a Compact RV or Camper for Retirement Travel (109,741) Hello, I’m Not Mr. Money Mustache (69,560) Getting a Mortgage When You Have Assets But No Income (52,651) One Solution for Cheaper Retirement Travel: A Small RV (49,825) 4 Things I Gave Up to Retire Early (47,453) My … Even if you start taking money out with the penalty it’s 10% + 10% (20%). So that is 9% additional savings, but in my mind does not correlate to my take-home pay. It came out of research (the “Trinity Study”) into safe withdrawal rates for a traditional 30 year retirement. I can only imagine what the fees are at higher balances, but with fees like that coming out already my real rate of return will take a HUGE hit over the next 10 – 15 years before I retire! Ensure that the income is inflation protected. For people part way through right now, I would say, “If you are in the US, use the low interest rates to lock in a profitable (10%+ gross annual rent) rental property and manage it yourself”. That’s the problem with draw-down. The first question that jumps to mind, are you comfortable chasing a 5% (is this inflation adjusted?) Where ‘ln’ is the natural logarithm. This is the exact quandary I find myself currently in. This is a good post. The concept and principles, I do all the time. This gives me such inspiration! I am currently 35 years old. Now when you are working, you may not have much opportunity for having coffee. Since retiring as an engineer, Mr. Money Mustache has developed a massively successful blog. For some young guns with a lot of variables before retirement, it can be impossible to guess what the future holds. So I just redid my budget the other day and was unsuccessful at getting my expenses below 50% of my take home pay. In 2010, I saved 47% of my take home pay. At your response, I double-checked my library, and… it is using the non-adjusted close now. I’m not defending our system, and I agree that you shouldn’t underestimate the cost savings for healthcare, but don’t overestimate it either. It’s extremely motivating!!! Like I always say about Dave Ramsey, wish I’d found MMM long ago. December 20, 2012, 10:27 am, “Or if it does, people will be too busy complaining about how it can’t be done, rather than figuring out how to do it”. In addition, the Internet presents us with retirement calculators, competing opinions from a million financial advisors and financial doomsayers, unpredictable inflation, and a wide distribution of income and spending patterns between readers. November 4, 2011, 1:29 pm, Hey MMM, Many of us have discovered that a simple life, with a few luxuries here and there, is far better than wasting cash on lattes and cable TV. Fishingmn We must learn his ways. It’s just that we’re getting very close (if not already there) where our income thrown off from our investments pays all expenses plus a little cushion to keep up with inflation. Good point on the ratio while in the saving phase. Okay, I had a quick go of seeing how long $500k could last at $25k per year spending plus inflation of 2%. Do the banks make so much off of extra hidden fees, that they are actually making the equivalent of 8% on the mortgages? You might remember Mr. Money Mustache, the man who retired at 30. I’m trying to find one, but there seems to be nothing about that on the site. Found MMM via Tim Ferriss and am loving this site! (I was already 80% sure I was going to do this anyway but…) I am going to take this time to pursue some passions and raise my baby girl – that is optimal living for me right now! There’s no point in making yourself miserable so you can retire a few years earlier so you can continue to live in misery. “HEY! Many stock market cynics do calculations like this based on the quote price of the index itself, while neglecting the real reason we own stocks: the flow of cash they provide in the form of dividends. Taking tabs on the market in well into a long bull run always results in lower forecast growth. I watched my Vanguard Allocation Fund lose 45% of it’s value. Also, if you are in the accumulation phase, 2008 did not matter because you were not selling shares, you were buying them as aggressively as possible right? The house itself is an asset, worth whatever the current market value might be. (Man, I should write one of those calculators myself using the publicly available data, it could be a great magnet for potential new readers searching on Google!). I’ve lived in the Philippines all my life. I guess that means save more than you think you will need and spend less than you think you can. And this doesn’t even account for the fact that you could still do part time work or start a business or do side jobs for entertainment that may very well make money. I would disagree and suggest that 4% is still not all that far off the mark. Where and how should I be investing that money sitting in my savings? And maybe even just take the 10% hit on early withdrawals (“ahead” implies you can afford the loss). January 19, 2013, 5:28 pm. Bullseye Author Topic: Investment/retirement calculations (Read 1955 times) Alf91. If I preserve my principle, I limit my income. I have run multiple retirement calculators and have maxxed contributions for as long as I can remember. I stumbled onto your blog via Early Retirement Extreme. If I plan the fund for 30 years, that $60K becomes $102K. 20 years x $25k/year is $500k. 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