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Early retirement - Discussion
- Thread starter Neo_X
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Surviving on 6K or something silly like that a month would suck. I enjoy the work I do and yes, having a comfortable amount of money makes life better.
MickeyD
RIP
On that amount I agree. And if it was 40K (increasing annually)?
PS. I doubt if anybody wants to retire early as a pauper.
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Currently I live OK on about 25K a month, so that would be doable. The point for me is if I'm going to become financially independent or retire early, it needs to be very comfortable, rather than just getting by.
MickeyD
RIP
Fully agree.
I want to retire comfortably with my income increasing annually at an inflation linked rate. And like MickeyD says, retirement years need not be miserable. So much to do. If I can retire comfortably, then I would love to travel a bit, especially around Southern Africa.
No point in being bound to four walls and doing nothing stimulating.
No point in being bound to four walls and doing nothing stimulating.
I am sure it can be done I live very modestly myself but there are a few things I would rather work longer for like not having to wait 7years for a hip replacement and being able to enjoy good food and the odd holiday. Also not being a potential burden on others is important to me and having a reliable car in this country is very important as a breakdown in the wrong area can be life and death.
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cerebus
Honorary Master
These people have health insurance, a reliable car, they eat well and they take holidays. The basic standard of living that you describe is attainable at a fairly low level of income. Having good food for instance, is simply a matter of knowing how to cook your own food at home from scratch, and not being either dependent on others to make your food for you, or needing filet mignon every evening to be happy. Going on holiday can also be done on a very manageable budget if you take measures like owning a camper van and preparing your own food. I would never suggest that someone try to retire without being able to have a reliable car, but the definition of that can be as broad as a R1mil Discovery, or a R60000 Accord. And furthermore, I would also plan to have health insurance, but I would also plan to mitigate the need for it by exercising and eating properly throughout my entire adult life so that my hips don't cave in when I'm 70.
However, again, it will come down to what standard of living you're comfortable with. For us, it will be something close to the standard of living that we've cultivated our whole lives, which would always have moderate requirements.
This is my Conundrum at the moment .
My finances are good and if i retire they will be even better and the longer i work the better they will get .
Five years to retirement age .
If i retire i will probably start another business and that will be hectic , i cannot sit and do nothing .
Go or stay ?
My finances are good and if i retire they will be even better and the longer i work the better they will get .
Five years to retirement age .
If i retire i will probably start another business and that will be hectic , i cannot sit and do nothing .
Go or stay ?
cerebus
Honorary Master
Rather than starting another business, can't you conceive of other ways to fill your time productively and satisfyingly? There are a myriad ways to occupy your hours outside of earning money. How is your health currently, and your relationships with your family, and your handyman skills? If I no longer had to work to survive, I'd take up carpentry, volunteer for charities, spend weeks at a time with my kids and (hypothetical) grandkids, build a smoking pit and learn how to smoke and cure meat, create a vegetable garden and aim for self-sufficiency with my veggies, take bicycling holidays and canoe in the mornings, camp out in the Karoo, and generally be cured of the pathological delusion that life ends when work stops.
I've been retired for exactly a year now, I'm enjoying every moment of it.
I've turned down several job offers and one of the big four accounting firms continues to send me mails asking to meet for lunch to talk.
In the past year I've grown to attach more importance to my time than money, and the idea of working a third of the day away everyday just doesn't appeal to me anymore.
I've turned down several job offers and one of the big four accounting firms continues to send me mails asking to meet for lunch to talk.
In the past year I've grown to attach more importance to my time than money, and the idea of working a third of the day away everyday just doesn't appeal to me anymore.
MickeyD
RIP
exactly, everyday is a holiday, and it doesn't get boring
Shayd
Expert Member
I follow the MMM philosophy in most respects and save a good 50% of my nett salary. For me, I will probably never truly give up working but the knowledge that I can be retrenched in a couple of years and my family will be protected and my lifestyle will not be affected makes me happy.
The only real cost is running your finances like you run a business. Do you need that new car? Are you OK with a second hand cell phone? What medical aid do you need? Are you paying the right price for insurance?
It really boils down to aggressive budgeting and making sure you stay away from ego purchases.
The only real cost is running your finances like you run a business. Do you need that new car? Are you OK with a second hand cell phone? What medical aid do you need? Are you paying the right price for insurance?
It really boils down to aggressive budgeting and making sure you stay away from ego purchases.
cerebus
Honorary Master
Do you want to explain that?
There are various articles - the 4% rule is based on retirement age, not retiring now. Say you retire at 40 - thats an extra 25 years you have to live before you even get to "normal" retirement age.
http://today.moneyweb.co.za/article.php?id=815415&cid=2015-02-23#.VRpaWvmUe8o
http://today.moneyweb.co.za/article.php?id=793777&cid=2014-11-20#.VRpaYPmUe8o
cerebus
Honorary Master
All of those calculations make the assumption that you'll need at least 75% of income at the time of retirement to maintain 'standard of living', and preferably up to 90%. That's where they break away completely from frugality based retirement models - which this thread is about. If you're used to living on 50% or less of your income, you can probably even cut that down on retirement and still be comfortable.
Shayd
Expert Member
The 4% rule is based on an eternal income bud. If you are not able to generate inflation plus 4 after costs you need a new financial planner. Dividends alone on the JSE have historically been around this level.
What should be done is you start at a 4 percent level then only increase by inflation each year. This way in the good years you're nett drawdown goes below 4% and in bad years it goes slightly above.
This is what I do with my retired clients and it tends to lead to very consistent incomes.
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