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Early retirement - Discussion
- Thread starter Neo_X
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akescpt
Honorary Master
100k/month *faints* I would have retired ages ago :twisted:
I think there is a lot to learn from mickeyd as well. im not interested in money figures. just the how to. the challenges. buy-in from the HO. investment opportunites/types of investments. % saved.
im almost 40 so im a bit late to the party. ive kept my expenses down but there is fat to trim. the American websites are good but some hands on experience from our local guys would be invaluable. to me at least.
I prefer realist - these articles are not written by me - and I certainly don't want to be on the wrong side of money when it comes to retirement.
You under estimate what you'd need when you reach the age of not being able to do tasks for yourself, someone will need to do those tasks for you, and that someone will need a salary, do you want that person to be earning minimum wage?
I am sure there are fine middle ground area's - but I'd like more - say a pool, and various other activities, the majority of the time, you move into the place before you need frail care, etc...
Like I said, each to their own - you look at the way the country has been going, and if you think it'll get better - then great for you... I'm already looking at overseas retirement.
cerebus
Honorary Master
Every pessimist does, yes.
Does that mean you shouldn't question their assumptions?
Neither do I. But you've provided two very extreme examples - living on 3000 a month would also be untenable for me. That's called penury and anyone should do all they can to avoid it from happening to them, and unfortunately South Africa has a disproportionate rate of penurious retirees which is why it's such a bad place to retire. It's one of the world's worst places to retire if you must be state supported at all.
The amount that I've pegged would be very comfortable for us since it's derived from our current cost of living, minus expenses that we no longer have such as children. If I had a 100k salary, I wouldn't foresee that cost of living going up by very much either, as the income would be funneled into enabling a shorter time to retirement, and I'm already perfectly comfortable within my budget. It's based on a lifestyle that is enjoyable and fulfilling. It's not realistic for us to think that we'd need a 50k salary to be happy. I can fill a list of activities that I want to engage in as a retiree, and none of them are expensive, and mostly involve getting all the reading and nature and time with family in that I'm missing now as a full time worker.
So so pessimistic.
Yes you'd like more, but what you originally said is that 10mil would be NEEDED to retire on. You don't NEED more, you would like it - it's a nice to have you've earmarked as a necessity.
You guys forget that you will have kids (well, most of you), that when you're in your 90's, they won't mind shelling out a few bucks to help you. My gran has survived on a small retirement income since my grandad died in 1995 till now. She only recently had to go to a home with frail care and people who can help 24/7. My dad and uncles all contribute a small amount each month (my dad is retired as well) and that keeps her going. It really doesn't take much to live on if you're THAT old and in need of care.
+1 to cerebus. I'd love a place to garden and grow my own wee--vegetables...
+1 to cerebus. I'd love a place to garden and grow my own wee--vegetables...
http://www.nytimes.com/2013/05/15/b...irement-withdrawals-may-be-outdated.html?_r=0
"The rule was created in 1993 by Bill Bengen, owner of Bengen Financial Services in San Diego, who examined every 30-year retirement period since 1926, reconstructing market conditions and inflation. He identified 1969 as the worst year for retirees because a combination of low returns and high inflation had eroded the value of savings. Using that as his worst case, Mr. Bengen tested different withdrawal percentages to see which one would allow savings to last 30 years. At first 4 percent worked, he says, based on a portfolio with a 60/40 split between large-cap stocks and intermediate-term government bonds."
So no it does not apply in perpetuity, it is the maximum safe withdrawal rate for a 30 year period based on US data.
People find this hard to understand as 4% real returns seem a reasonable long term expectation based on history. The key is to understand 'sequence of returns risk':
http://retirementresearcher.com/sequence-risk-vs-investment-risk/
Ok sure - one day when you retire in the real world, we can talk...
cerebus
Honorary Master
Well you know we won't because I'll be too busy digging weeds and you'll be too busy being served martinis by a bikini clad hostess around a Malibu swimming pool.
You guys forget that you will have kids (well, most of you), that when you're in your 90's, they won't mind shelling out a few bucks to help you. My gran has survived on a small retirement income since my grandad died in 1995 till now. She only recently had to go to a home with frail care and people who can help 24/7. My dad and uncles all contribute a small amount each month (my dad is retired as well) and that keeps her going. It really doesn't take much to live on if you're THAT old and in need of care.
+1 to cerebus. I'd love a place to garden and grow my own wee--vegetables...
It is despicable for an able bodied adult to premise their retirement plan on the idea that they can just sponge off their children one day.
cerebus
Honorary Master
Yeah envo's grandmother, what a despicable piece of human garbage.
Billy
Expert Member
It's a lottery. Die before 90, kids inherit. Live beyond 90, kids lose out and have to pay out.
Life, is not an exact science. If you know the answer to "How long will I live?" you will have a chance in predicting how much money you will need in your retirement.
Soylent Green had the solution to that question as well as World Hunger.
atomcrusher
Expert Member
I retired at 60 years old.
During the last 10 years or so of my working career I had made sure that I had no debt at all (e.g. mortgage / car repayment, etc.) on the day I retired. Up until recently I also received rental income from 2 x investment properties I bought over the years before retirement.
I am now comfortable financially in retirement, but of course the big unknown (1)"how long will I live, and (2) "will my various investments be able to pay me an inflation-adjusted income until I die" still concern me, particularly as our fickle government has so much influence over things like ZAR value vs major currencies exchange rates.
The high SA inflation (relative to other developed countries), as well as a fall in the Rand vs. major currencies is probably my biggest concern. Hyper-inflation would shrink the value of my Rand investments, even though I have some (not enough) offshore-currency exposure.
In retrospect I would have invested more funds in off-shore investments. But government bank regulations made that difficult for many of the years that I was trying to fund my retirement
I have to repeat this ... ensure that you have NO DEBT when you retire.
During the last 10 years or so of my working career I had made sure that I had no debt at all (e.g. mortgage / car repayment, etc.) on the day I retired. Up until recently I also received rental income from 2 x investment properties I bought over the years before retirement.
I am now comfortable financially in retirement, but of course the big unknown (1)"how long will I live, and (2) "will my various investments be able to pay me an inflation-adjusted income until I die" still concern me, particularly as our fickle government has so much influence over things like ZAR value vs major currencies exchange rates.
The high SA inflation (relative to other developed countries), as well as a fall in the Rand vs. major currencies is probably my biggest concern. Hyper-inflation would shrink the value of my Rand investments, even though I have some (not enough) offshore-currency exposure.
In retrospect I would have invested more funds in off-shore investments. But government bank regulations made that difficult for many of the years that I was trying to fund my retirement
I have to repeat this ... ensure that you have NO DEBT when you retire.
MickeyD
RIP
I will also repeat that!!
yes I agree, I laugh when people feel the need to tell me about their R2m house thats nearly paid up and two cars that they have, with one paid up.
supersunbird
Honorary Master
Maybe its classic investment grade cars... you know anything about those? Hehe
Anyway, I assume you mean retired people that have the need to tell you those things?
supersunbird
Honorary Master
Thanks for the input.
I am maxing out my 25% foreign Regulation 28 limit on my retirement savings but the returns are still in Rs, but at least that's something.
Neo_X
Expert Member
exactly my thought behind this thread
cant hurt to share some experiences and minor pointers to point people in the right direction.
As to some of the points mentioned :
*retiring in SA - yes, it does look bad depending on your perspective, but we have many beautiful towns where you can move to once the need to work is no longer there... eg no more 45 minutes rushes to get to the shops on a friggin Saturday. Yes Centurion is a crappy place to retire :/
*rand to dollar - this part is bothering me a bit, especially when coupled with the retire in SA part above. comparing property prices for example ,with many other countries shows that selling and moving abroad will kill your investment much much quicker
*plan is to save/budget for 120K per year travel - and partially keep that as a buffer should things go upside down. every extra 100k on the initial investment changes the salary you can draw drastically....
*Rental income - although a good way to keep an income without too much hassle, investing into property ETF's is much cheaper, and easier to sell if you need to jump ship.
i will try to scratch through some MMM articles which will give some more fuel to the fire - some of them i remember being related to the 4% rule.
Saturnz, cudo's to you going financially free - it must feel awesome having all that time to spend on family/ friends / hobbies!!
Edit
Found the 4% rule from MMM. Very interesting read -remember comments / links he adds.
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no, people on this forum
HavocXphere
Honorary Master
Busy trying to fix the currency aspect...and with the Euro looking a touch flakey as well thanks to the Greek crisis I'm starting to think one currency isn't enough even if it is a solid one. Its proving rather difficult though...the banking products suitable for a proper global portfolio are out of my reach from what I can tell. As soon as you want it denominated in a different currency from the banks default then its half or one bar minimum. Which won't be a problem in the long run...but I want to spread the risk now...before wall street has another hiccup.