Author Topic: At what age do you want to retire?  (Read 17756 times)

ergophobe

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Re: At what age do you want to retire?
« Reply #60 on: September 12, 2020, 02:30:29 PM »
I've been wondering how all that affects the so-called 4% rule. The 4% rule should work if you plan to die in 20 years, but what about all the FI people retiring at 35?

The reality is, though, that the gross net assets of the bottom 50% of Americans is slightly less than zero. Way less than 1% will retire with $8,000,000. A friend in his 70s is retired on social security and $6,000 in savings. That's scary.

rcjordan

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Re: At what age do you want to retire?
« Reply #61 on: September 12, 2020, 02:38:27 PM »
In many ways, it is still about local cost of living.  In rural NC, with the mortgage paid off, we could live ok on Social Security (though our SS is on the higher end).  This assumes that Medicare and supplemental health insurance is covering the medical bills.

ergophobe

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Re: At what age do you want to retire?
« Reply #62 on: September 12, 2020, 05:39:50 PM »
Well, I wasn't going to get into it, but in this case, he was self-employed most of his life and did not declare all his earnings, so his SS payment is low.

rcjordan

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Re: At what age do you want to retire?
« Reply #63 on: September 12, 2020, 06:08:42 PM »
>did not declare all his earnings

Yeah, you can't have it both ways.  Low SS will come back to bite you. 

For the last decade or so, about half of my income was classified as self-employed. I mostly did it to avoid the reporting hassle and bookkeeping costs of a single-person payroll.  I reported everything to be sure I was bumping my SS, but -man- that self-employment tax takes a bite.

ergophobe

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Re: At what age do you want to retire?
« Reply #64 on: September 12, 2020, 08:22:03 PM »
>>man- that self-employment tax takes a bite

Yeah. My wife switched over halfway through 2019 and we were not close on our estimated taxes. We got hit with a $14,000 tax bill (and, the same week, an $8K homeowner's policy and $2K fridge replacement). Some of the $14,000 was getting ahead of things on our 2020 estimated tax, but yeah, it hurts. If Social Security were like a lot of defined pension plans where your payout is based on your three highest years, I would go a few years where I would skip all the deductions.

gm66

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Re: At what age do you want to retire?
« Reply #65 on: September 12, 2020, 11:45:21 PM »
I'm going to retire at the age of one hundred and eleventy one.
Civilisation is a race between disaster and education ...

ergophobe

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Re: At what age do you want to retire?
« Reply #66 on: September 13, 2020, 04:09:46 PM »
Will you vanish at your retirement party, then?

buckworks

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Re: At what age do you want to retire?
« Reply #67 on: September 13, 2020, 06:29:28 PM »
>> and, the same week

File that under OUCH!

ergophobe

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Re: At what age do you want to retire?
« Reply #68 on: September 13, 2020, 09:29:24 PM »
File that under OUCH!

Life. We've avoided the Big Ds. We're not destitute, divorced, dead, disabled or even depressed yet! Most everything else can be overcome by buying more ice cream.

rcjordan

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Re: At what age do you want to retire?
« Reply #69 on: September 13, 2020, 10:57:36 PM »
>Big Ds

Just ran across this headline:

Virus America, six months in: Disarray, dismay, disconnect
https://apnews.com/706587be1d93d2672087a0ad99459462

BoL

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Re: At what age do you want to retire?
« Reply #70 on: September 14, 2020, 08:25:52 AM »
>tax

Been grumbling about that too of late. Bought a new house and managed to get the deposit from my current place. Apparently if you own more than one house on the day you acquire the new one, you pay 4% of the purchase price as tax. You do get it back if you sell your other property within 27 months though.

So the plan was to rent it out the old place for 2 years or maybe forever more, but if you do the property then becomes subject to capital gains tax after selling it. It's the closest I've ever been to looking for professional financial advice.

Ideally the old home could've been a pension from the rent but probably not to be. Didn't like the idea of being a landlord anyway.

Found out that even though I'm 40 next year, banks are happy to do 30 year mortgages. Hopefully it's paid off by then.

buckworks

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Re: At what age do you want to retire?
« Reply #71 on: September 14, 2020, 01:55:04 PM »
>> 30 year mortgages

My approach: set up a mortgage with the lowest monthly payment available, <and> also make sure there's provision to pay ahead without penalty.

Then, make extra payments as part of your regular financial routine.

That plan would give more wiggle room in a lean month than if you just took out a shorter mortgage with higher payments required.

If you analyze how much of an ordinary mortgage payment goes to interest, especially in the early stages, you'd likely be surprised at how small an extra payment would need to be to shorten your mortgage by a month.

Biweekly payments instead of monthly will also help the cause a bit.

ergophobe

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Re: At what age do you want to retire?
« Reply #72 on: September 14, 2020, 04:16:14 PM »
>>I'm 40 next year, banks are happy to do 30 year mortgages.

Swiss mortgages were commonly 100 years when I lived there. They don't expect you to pay off the loan until you sell the house.

>>early stages

On a 30-year, $300K mortgage at 4% your first payment is $1432, of which $1000 is interest. If you had the cash to double that payment, you shorten the loan by about 3.3 months. Whereas if you do the same thing 20 years into the loan, that extra payment shaves off less than a month and a half.

I'm sure a financial person would point out that since we paid down our 4.5% loan fast during a bull market, we're actually a lot poorer than we would be had we invested it. But debt stresses me out, so it was worth it to me. People who are less stressed by debt would take another strategy.  It's a combination of what makes sense financially and what makes sense emotionally.

BoL

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Re: At what age do you want to retire?
« Reply #73 on: September 14, 2020, 06:02:50 PM »
>pay ahead without penalty.

Yeah, where I stand is if I sell the old place I'll incure a 2% hit on 60% of the house value, on the new place I can pay 10% of the total outstanding mortgage without a charge. I'll be on a 2 year mortgage. Idea is to pay up 10% for each of those years and I'll end up with a mortgage <3 years my wages which by today's standards ain't too bad. I'd probably overpay after the 2 years anyways. Hate interest, would rather fork out than pay it.

Interest over the 2 years is 1.34% so probably the cheapest money I'll ever borrow apart from a student loan.

The upside is I get a new room to exclusively work in.

Planned to retire at 40 (in my dreams) but it doesn't work out like that does it. Anyways I//we are fairly low maintenance so this is the last hurdle really. All about our life ambitions in the end. For me it is simply to get a hot tub in a back garden that is fairly private. If I sell the old place I'll have the means for that so I guess I'll have to figure out a new goal. Beer, hot tub, world cup seems like things worked out alright. There could be worse positions to be in, financially or health so I'm alright with it.

« Last Edit: September 14, 2020, 06:05:12 PM by BoL »

gm66

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Re: At what age do you want to retire?
« Reply #74 on: September 14, 2020, 09:41:15 PM »
Will you vanish at your retirement party, then?

Yes, up my ring ;+}
Civilisation is a race between disaster and education ...