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Your posts come across as pretty aggro but not like... venomous or directed at anyone in particular or anything, as far as I noticed
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Nov 29, 2021 03:35
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I'm saying I really think your take is wrong with a bunch of emphasis on how wrong I think it is, that in addition to disagreeing I also think that stuff you're complaining about isn't tied to leanfire but instead just about risk, and that your language felt overly emphatic and aggressive for the subject matter, which was weird to me.
surc fucked around with this message at 04:55 on Nov 29, 2021 |
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Nov 29, 2021 04:45
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he's mentioned having an english instructor so there might be nuances in language being lost. i'm picturing an eastern european computer toucher for some reason
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Nov 29, 2021 04:59
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SlyFrog posted:I have no idea what you're trying to say, so I can't really respond to it, sorry. SlyFrog posted:I think people generally don't think through the ease of "I'd just go back to work." To me, that's a young person thing to think would be easy. it is dismissive and rude. We've had this conversation before, in this thread, and yet you are implying here that anyone who doesn't agree with your perspective hasn't thought about it enough or is too young and dumb to reach your conclusions. I generally enjoy your contributions to the thread, but these are areas where there is legitimate room for disagreement, where you are dismissing the other side in an unfair way. If you don't intend this, I would suggest rereading before you post, as it obviously comes off as aggressive to most readers in here.
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Nov 29, 2021 05:11
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shrike82 posted:he's mentioned having an english instructor so there might be nuances in language being lost. i'm picturing an eastern european computer toucher for some reason Accurate. moana posted:yet you are implying here that anyone who doesn't agree with your perspective hasn't thought about it enough or is too young and dumb to reach your conclusions. No, I'm not. I'm suggesting that a lot of people are drastically underestimating the ease of just returning to work at a later point in life after a very long absence, particularly given the other factors that may likely be in play at such time. I have a hard time saying that without saying they're drastically underestimating that. Likewise, that people conflate lifestyle with having a sufficient safety buffer in terms of assets to retire (more or less) safely. Then, if asked for the reasons behind that, I will give them. It's hard to say I think a lot of people perhaps haven't seen quite enough or experienced things like age discrimination or skills atrophying or the difference between a 55 year old body and a 30 year old body without, you know, essentially saying they are young and inexperienced. I'm stating some things I do think a great deal of people miss on this topic. I think there are things on this topic where people are (broadly) off base. I'm not going to apologize for that. I'm also not going to be bashful about it because it makes people feel dumb or like I'm saying they are inexperienced, because the latter is exactly what I do see and think for some of the people who give their theories. There's nothing wrong with that - a lot of people in this space (by that I mean FIRE discussions, not SA) don't have a ton of experience - by definition, they can't. It's not like they are bad people for missing it. And hey, if people really aren't missing those things and they are right, then great, I'm wrong about it, and that's fine too. Finally, even if I am right, it doesn't mean people are dumb. I'm wrong all the time - it doesn't mean I'm dumb, it just means I was wrong. (Sometimes it meant I was dumb, but I won't go into that.) These are also things that people may miss that never come back to haunt them; that doesn't mean it was a wise decision, it just means they got lucky. Odds are like that - often just a question of how many bullets are you comfortable leaving in the gun when you play Russian roulette. Though I said "wrong" and "right" earlier, this is a space where there aren't clear bright lines as to these things, because we are mostly talking about playing the odds. But at the same time, as people who go to Vegas or play Russian roulette know, playing the odds doesn't mean that there aren't more and less wise decisions to be made. It's just conjecture - all I can go by is what I see people write, how they appear to think about things, and whether it seems realistic or not. People are having no problem telling me where I am wrong, and have repeatedly here, including through deliberately snide language. Just like some people told me and my friends that the market had not reached some new "post-history period" where it wouldn't crash anymore back in 2000 or 2007. I'm not being snide, and I'm not attacking anyone specifically, however. I think that some things stated in the FIRE community commonly are offbase, and separately that people tend to jumble together different concepts (e.g. living frugally and having a sufficient safety margin of assets before retiring), and I'm saying that. SlyFrog fucked around with this message at 15:52 on Nov 29, 2021 |
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Nov 29, 2021 14:28
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Well for what it's worth I also find what you write pretty condescending. BFC in general is a super chilled place with pretty sensible posters* and it would be a good idea to take onboard if there's a consensus about your posting. * not me ofc
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Nov 29, 2021 16:00
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knox_harrington posted:Well for what it's worth I also find what you write pretty condescending. Why? I will need more than a blanket statement to understand why it is condescending and change it. Specifically, I need you to differentiate disagreeing with a common thought on a topic and explaining why I think it is misguided (including due to inexperience) versus being condescending. SlyFrog fucked around with this message at 16:13 on Nov 29, 2021 |
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Nov 29, 2021 16:07
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SlyFrog posted:Accurate. If it was legitimately a parsing problem no worries it was an awkward post, my points were basically: Paragraph 1) Leanfire is generally considered to be about spending amount in retirement rather than saving amount, and I also ask the question: Even if it does require more risk tolerance than you due to lower savings, what makes that inherently bad? (This is a sincere ask, not having a reason you can articulate isn't a 'gotcha' to me but if you do I'd love to hear it) Paragraph 2) I think leanfire is actually cool and good, and I find the examples you used misrepresentative of leanfire as a whole, as they're basically people either failing at leanfire or coming to leanfire to ask about low budget viability with too low a savings amount. Also what you dismiss in your second line as "just needing less in retirement from low cost of living" as though that disqualifies it from being leanfire, is literally what leanfire is. It may not be impressive but it doesn't need to be. Paragraph 3) Your complaints mainly seem to be about risk tolerance itself, which is not tied to just leanfire, rather than people doing leanfire. I state explicitly that I disagree with your premise that higher risk tolerance is inherently bad. Also, tone stuff which wasn't meant to be the thrust of the post just a heads up, internet tone is hard and you don't know if people don't tell you, but I guess I unearthed something so my bad if the thread is now about that. After sleeping on it I realize it bugs me because it comes across as you (hopefully unintentionally) punching down at people with less money, and since the examples you're describing insultingly also seem misrepresentative of leanfire, it seems extra problematic. Especially the $100,000 example comes across like that, because the majority of people I see asking about that kind of thing in fire communities are people that are not high earning tech kids, they're people making significantly less and also being really dissatisfied with work, which is normal and fine. The high earning tech kids are generally like "okay I'm 26 and I just got a $200,000 a year job and have $150,000 saved up so far am I gonna be okay if I want to retire in 10 years?????" E: The decisions being stupid hinges on the assumption that risk tolerance differing from yours is always stupid, which without providing any justification for why comes across as real egoistic. surc fucked around with this message at 16:35 on Nov 29, 2021 |
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Nov 29, 2021 16:15
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"Everyone is telling me I'm being dismissive; it must be everyone else that is wrong." I'm telling you to cut it out with poo poo like calling the entirety of the leanfire crowd stupid and desperate, or saying people who disagree with you "haven't thought about it enough". You can argue your points without being aggressive or dismissive.
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Nov 29, 2021 16:32
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moana posted:I'm telling you to cut it out with poo poo like calling the entirety of the leanfire crowd stupid and desperate, or saying people who disagree with you "haven't thought about it enough". You can argue your points without being aggressive or dismissive. I didn't do the former, you made that up as a strawman and are attacking me, and are frankly being incredibly hostile to me while claiming I am being rude. Or please show me where I said "the entirety of the leanfire crowd is stupid and desperate." The second, I believe a lot of people who disagree with me on this topic have not thought about it enough. There's nothing wrong with that, it's not aggressive or dismissive. I think people often don't think things through. Many people also believe I don't think things through. Sometimes I haven't. There have been plenty of times when I've discovered later that I hadn't really thought something through. Again, that's pretty much being human. surc posted:If it was legitimately a parsing problem no worries it was an awkward post, my points were basically: No worries - to me, this discussion is an interesting one, because I think it just intertwines with so many things - what society values, the pressure from society regarding work, people viewing discussions about these things as attacks on them as people because of how intertwined wealth and work are with self-value, people's fears of aging and not "living life" (whatever that means), people's fear of mortality, etc. surc posted:Paragraph 1)[/b] Leanfire is generally considered to be about spending amount in retirement rather than saving amount, and I also ask the question: Even if it does require more risk tolerance than you due to lower savings, what makes that inherently bad? (This is a sincere ask, not having a reason you can articulate isn't a 'gotcha' to me but if you do I'd love to hear it) I don't really agree with that, because if that were the case, you could "LeanFIRE" with $100 million, and I don't really think that's what anyone is talking about when they say LeanFIRE. Instead, I would say LeanFIRE is more about intentionally minimizing your spending amount in retirement so that you can retire with a much smaller amount of savings than normal. I think that is the red herring. I think people think LeanFIRE is about the spending, but I think that gets things in the wrong order - people are generally focused on the spending, because keeping that low is necessary to permit retirement with low savings. (When I say "low" here, I'm obviously talking in relative terms - even people retiring with a few hundred thousand are obviously at a wealth level that is privileged in much of the world.) Or stated in a different way - you can have a ton of money and live minimalist. I don't think many people put that in a special category of retirement. It's the savings you have that really defines it, in my opinion. I also think we have plenty of ways to describe just living in a minimalist way. As I said before, I could live in a minimalist way and continue to work. The reason it ties in with FIRE is when people live that way to retire with less saved. I don't think we say someone who has a ton of money but lives a spartan life is "LeanFIRE". surc posted:Paragraph 2)[/b] I think leanfire is actually cool and good, and I find the examples you used misrepresentative of leanfire as a whole, as they're basically people either failing at leanfire or coming to leanfire to ask about low budget viability with too low a savings amount. Also what you dismiss in your second line as "just needing less in retirement from low cost of living" as though that disqualifies it from being leanfire, is literally what leanfire is. It may not be impressive but it doesn't need to be. I think we just disagree about this. I do agree that living with a smaller footprint, spending less on things we don't need or really want, and focusing more on people and life rather than buying things is pretty cool. I'm not always great at doing it myself, but I love the idea of it. surc posted:Paragraph 3)[/b] Your complaints mainly seem to be about risk tolerance itself, which is not tied to just leanfire, rather than people doing leanfire. I state explicitly that I disagree with your premise that higher risk tolerance is inherently bad. Higher risk tolerance isn't inherently bad, I agree. There generally reaches a cross-over point, however, where people are being foolhardy. As I said previously, I fully admit that one of the problems with something that is inherently based on odds as opposed to bright lines is that it is nearly impossible to say exactly where something crosses over into foolhardy. The same applies in the other direction, as well. I see people who have staggering amounts of money who are worried whether they're able to retire. That's a risk tolerance issue in the other direction. If you have $20 million dollars, and don't want to keep doing what you're doing, but are afraid that it might not be enough (and you're not spending staggering amounts of money every year), you're probably overly concerned about risk. But again, of course everything could devastatingly collapse and you could somehow lose everything, but there reaches a point in the other direction where it's just kind of being silly - at some point, you can reasonably pull the trigger and say "I have enough." It's just hard to pick a bright line for where that is. surc posted:Also, tone stuff which wasn't meant to be the thrust of the post just a heads up, internet tone is hard and you don't know if people don't tell you, but I guess I unearthed something so my bad if the thread is now about that. After sleeping on it I realize it bugs me because it comes across as you (hopefully unintentionally) punching down at people with less money, and since the examples you're describing insultingly also seem misrepresentative of leanfire, it seems extra problematic. Especially the $100,000 example comes across like that, because the majority of people I see asking about that kind of thing in fire communities are people that are not high earning tech kids, they're people making significantly less and also being really dissatisfied with work, which is normal and fine. The high earning tech kids are generally like "okay I'm 26 and I just got a $200,000 a year job and have $150,000 saved up so far am I gonna be okay if I want to retire in 10 years?????" That's not my intent. But I see a lot of people really desperate to stop working (which I completely understand) where I think their desperation crosses over into creating a sort of wishful thinking, or excessive optimism that things will just work out. That's also perfectly normal, I think we all do it. That doesn't mean, however, that when we want something really badly, it doesn't create blindspots where we perhaps make some decisions that aren't the wisest in the long run. I don't think it can all be written off to "different risk tolerances." My son is in his early 20s. If he came to me and said, "Dad, I hit it in crypto - I've got $500,000 - I'm going to retire and drop out of the job market, because I can live on $15,000 a year," there would be a lot of discussions on what that really means, how feasible it really is, the possibly irreparable damage it could do to his career, what happens if he is at some point 40 and decides he actually likes the good life and wants that path and working as a Walmart greeter isn't going to get him there, etc. I think part of the problem here is that people think I'm accusing people of not thinking things through, of being desperate, of letting emotions and pain from working cloud their judgment. And I am. The thing is, I don't think that makes them weak, or bad people, or stupid. I think we all do things like that, and I don't think it's some elitist or horrible thing to point out that it might be happening. An example: I'm not a big believer in needing to be "productive" or having some grand "meaning." I pretty much bum around. Yet I see repeatedly in this thread from different posters the implied notion that there's probably something wrong with that (in fact, the notion of how could you retire, you have to be around people, you have to feel like you're doing something, etc., with a subtext there is probably something wrong with you if you don't feel this way, is part of what started this whole thing off) . So many people who talk about how they would have to be doing something, or "accomplishing" things - is that a value judgment against me if I don't agree with it? Is it being dismissive, or saying there is something wrong with me? It's not a value judgment. If you want something that's more age appropriate for me, it's not really any different than telling someone who is 50 that even though they absolutely know they're not having a mid-life crisis, the sports car and hitting on 20 year olds starter set they've recently developed means they're having a mid-life crisis, and it probably isn't going to end well, even though they've really thought it through and they know that's the direction they want to take and everything is really fine and Christina's really okay with opening the marriage. SlyFrog fucked around with this message at 17:41 on Nov 29, 2021 |
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Nov 29, 2021 17:02
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Well that sure is a post
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Nov 29, 2021 18:23
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Sir this is an Edward Jones
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Nov 29, 2021 18:25
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SlyFrog posted:I didn't do the former, you made that up as a strawman and are attacking me, and are frankly being incredibly hostile to me while claiming I am being rude. Or please show me where I said "the entirety of the leanfire crowd is stupid and desperate." SlyFrog posted:I cannot ever imagine doing "LeanFIRE", which is just a stupid way of saying retiring before you are able to securely do so.
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Nov 29, 2021 18:32
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SlyFrog posted:An example: I'm not a big believer in needing to be "productive" or having some grand "meaning." I pretty much bum around. Yet I see repeatedly in this thread from different posters the implied notion that there's probably something wrong with that (in fact, the notion of how could you retire, you have to be around people, you have to feel like you're doing something, etc., with a subtext there is probably something wrong with you if you don't feel this way, is part of what started this whole thing off) . So many people who talk about how they would have to be doing something, or "accomplishing" things - is that a value judgment against me if I don't agree with it? Is it being dismissive, or saying there is something wrong with me? Yes. That's what a subtext implying something is wrong with you for disagreeing is. A lot of people talk in overly dismissive and derisive ways about productivity especially if the word "Retirement" gets involved and make weird angry value judgement comments. It's lame! In addressing that, you make posts talking about people simplifying and reducing complex stuff to buzzwords/acronyms/phrases which is 100% true, but then also you're reducing leanfire as an approach to just the things you don't like about leanfire and rebutting any attempt to use the term leanfire to describe stuff beyond the things you don't like with tautology. You say things are not leanfire because you don't consider them leanfire, but don't provide any justification for why that is, besides "because that's not what leanfire is". It's real frustrating and hard to continue a real discussion against. SlyFrog posted:
The first bold is literally what leanfire requires (I'd argue frugal a better term than minimalist though), and leanfire is presumably a special category of retirement, so people *are* putting it in a special category of retirement just by the term "leanfire" existing. The second bold, people do say this. All the time. This was the top result for me googling "leanfire nest egg": https://www.reddit.com/r/leanfire/comments/cs1nek/what_is_everyones_target_nest_egg/. This is one example to demonstrate. You are welcome to google for more, of which there are definitely enough to qualify as "many people" if that thread doesn't convince you, I'm not doing that legwork. You're projecting your usage of leanfire onto everybody who talks about leanfire, which is largely "leanfire communities" I would imagine you don't consider yourself a part of. You're really digging in in defense of the stance and I can't understand why. I think there's still a terminology disconnect that I'm not gonna be able to argue past just saying no to your points, so I'll put out some examples of what I would consider to be reasonable and viable "leanfire". Would you consider these leanfire? If so, all or which ones? -Somebody with ~$500,000 invested (/25 = 20,000 annual budget) planning to expatriate and go live in SE Asia or South America or any of the other go-to US expat spots who has actually lived in that region for a year+ and budgeted expenses there and has some level of language skills for the area, or owns a fully paid off house in the US somewhere and really fine living frugal. -Somebody with ~$650,000 invested (/25 = 26,000 annual budget) already owns a house somewhere within the USA that is not a coast, with reasonable mortage. Has lived in that situation for a year+ and budgeted expenses there. -Somebody with ~$750,000 invested (/25 = 30,000 annual budget) who somehow managed to wrangle a house purchase or rents in a stupid loving market on a coast goddamn loving ugh. They've lived in situation for year and budgeted. -Somebody with >$1mil invested but whose annual budget is below $40,000. budget expenses E: these are all individual numbers, although I'd consider the >$1mil thing to be pretty much viable for a household depending on their spending, situation, and number of kids. Kids increase the numbers a lot. surc fucked around with this message at 20:13 on Nov 29, 2021 |
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Nov 29, 2021 19:55
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shrike82 posted:, I'm more curious about the soft stuff - are people able to find fulfilment given our social conditioning around seeing work as an intrinsic part of our life? Maybe I'm just well indoctrinated, but I don't see "never working again" as all that desirable. Not *having* to work ever again, sure, but that's different. I enjoy screwing off as much as the next guy, but I also want to participate in a community and/or long term project. I want to be a part of something larger, put my shoulder to an endeavor. When I depart my career, if I am still blessed with able body, mind, and financial security, I imagine I will ramp up volunteering, or get active with a church, or maybe politics. I have hobbies of course, but the times I've spent between jobs they lost their sparkle pretty quick. Diversions are only enjoyable when you have something to divert from. Everyone in here is probably familiar with diversifying financial assets. I find myself diversifying my life path options as well. Career is one avenue for fulfillment, but no guarantees it remains viable. So, I pursue family paths (maybe stay at home parent belongs in the career category?), bike and ski communities, and if I become physically disabled I'll probably pick up music again. Gotta have options for engagement, even if you don't need options for employment.
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Nov 29, 2021 21:00
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Yeah I'd love the financial independence to only do the more fun stuff for work. It's not for the money but I've had a second job for years, first training as a long range recon patrols soldier* alongside my main career, and now ski instructing with a small amount of military teaching when I can get back to the UK. I consider myself a pretty lazy person but I really get a lot from doing those things in a work context, you have to do them to a higher standard. I have a real love/hate relationship with work, lots of things about it suck but I really wouldn't have pushed myself as hard left to my own devices, and consequently wouldn't have developed personally and cognitively. Still, can't wait to not need to do it. *this one did come with an all expenses paid trip to Helmand so maybe not the best idea
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Nov 29, 2021 21:44
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Epitope posted:Maybe I'm just well indoctrinated, but I don't see "never working again" as all that desirable. Not *having* to work ever again, sure, but that's different. Yep, once you have enough money, you can quit your job, but you don't necessarily have to label yourself as early-retired. About 7 years ago, I quit my job and knew that I would likely want to work again someday. And sure enough, 4 years later, I got a new job and still at the same job. I like what I do and would quit in a heart beat if I stopped enjoying it. After having done it once, I already feel different about work and life, and that's the best part of it.
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Nov 29, 2021 23:26
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One thing I've noticed as I'm getting closer to retirement goals is that there aren't really a lot of alternatives to full-time work for certain kinds of projects, especially if it's the kind of thing that can't exist without the scale of corporate resources.
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Nov 29, 2021 23:42
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I like to think of it as having gently caress you money. I'm not financially bound to my current job. If I start to hate it, company goes under, I get fired, etc. I'm completely fine for a good long while. Maybe someday that's an early retirement or sabbatical, I don't know. It's nice to have options and security. Putting labels on it isn't the point.
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Nov 29, 2021 23:59
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knox_harrington posted:but I've had a second job for years, first training as a long range recon patrols soldier* And, now you know how to earn a free trip to The Hague as well! SpelledBackwards fucked around with this message at 06:25 on Nov 30, 2021 |
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Nov 30, 2021 02:31
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surc posted:-Somebody with ~$500,000 invested (/25 = 20,000 annual budget) planning to expatriate and go live in SE Asia or South America or any of the other go-to US expat spots who has actually lived in that region for a year+ and budgeted expenses there and has some level of language skills for the area, or owns a fully paid off house in the US somewhere and really fine living frugal. i'm struggling to make sense of the numbers. is the /25 the number of years? it doesn't seem to take into account inflation, bad investment years, or even longevity. and i don't think 500K guarantees you a long-term visa even in SE Asia these days. i wouldn't go so far as slyfrog but if those are representative of leanfire plans, i'd be skeptical of the movement.
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Nov 30, 2021 04:13
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shrike82 posted:i'm struggling to make sense of the numbers. is the /25 the number of years? it doesn't seem to take into account inflation, bad investment years, or even longevity. 4% safe withdrawal rate is a pretty common assumption for retirement savings. SpelledBackwards posted:And, now you know how to earn a free trip to The Hague as well! Thanks for the CSPAM hot take.
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Nov 30, 2021 04:23
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it's a vague rule of thumb and probably not applicable for people trying to retire early and for longer periods of time
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Nov 30, 2021 04:32
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Well that's a different point, but you were "struggling to make sense of the numbers".
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Nov 30, 2021 04:37
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shrike82 posted:it's a vague rule of thumb and probably not applicable for people trying to retire early and for longer periods of time The idea of a safe withdrawal rate is that it will last indefinitely, yes. SWR is the foundation of any FIRE analysis. Some would feel that 4% is too high to be a SWR, though.
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Nov 30, 2021 04:38
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GoGoGadgetChris posted:The idea of a safe withdrawal rate is that it will last indefinitely, yes. SWR is the foundation of any FIRE analysis. That’s not true. SWR’s always assume a finite withdrawal period.
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Nov 30, 2021 04:52
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in any case, it's healthy to re-examine these assumptions once in a while my other thought about retirement has been it currently being a seller's market for labor in the US. at least within my social circle, my sense is that people are getting more money for less work and i'm not sure how long this situation is going to last. might not be a bad thing to push off retirement for a while longer and bank more money especially given inflation being a thing too
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Nov 30, 2021 05:04
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80k posted:That’s not true. SWR’s always assume a finite withdrawal period. In the context of FIRE, really? I never see those people talking about their life expectancy or plans to return to work at 75... Maybe it's just inherent to any SWR that it will last a finite, greater than remaining life expectancy period, like 50 years or whatever
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Nov 30, 2021 05:20
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4% was a number based on studies of 30 year economic windows in US history, and it's designed specifically for a conventional retirement window from 60ish to 90ish. If the money only needs to last 15 years you can have a more aggressive SWR and if it needs to last 45 you need to be more conservative. If you Google around you can find info on different circumstances because this issue comes up a lot. There's a lot of other studies done based on different timetables. It's not uncommon to retire early and need the money to last 45 years or have a brokerage account that needs to last from age 45 to 59 1/2 when you can withdraw retirement assets without penalty.
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Nov 30, 2021 07:18
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Yeah yeah the Bengen study for conventional retirement... I figured the early retirement community would view safe withdrawal rates through a different lens compared to old people. I chose my rate because I want to preserve 100% of principal without any incentive for me to die, and maybe even to pass it on for generations to come, but I guess that's not necessarily tied to FIRE. There are probably just as many people in the community that want to bounce their last check from the death bed and plan accordingly
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Nov 30, 2021 07:58
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The safe withdrawal figure is also based on the worst events in financial history (great depression, endless stagnation) happening at the worst possible time (right as you retire). Everyone has to judge their own risk levels and tolerances but if there's any point you're happy to take a risk it should probably be right as you retire, get through that ok and the growth should make any future (none apocolyptic) events meaningless. The problem with these models is it's very hard to build one that takes into account the human being a human and taking different actions at different points. Like getting a part time job for a while, taking advantage of a short or one time government layout, lowering spending. Not to say you don't need to do the math, but for all the people saying 4% isn't a safe long term withdrawal rate, how many of those scenarios were in a good position after 5 years and then ran out? That is not, fund got blown up in the first 5 and the model drags it out a couple more until it runs dry, but fund is at or over starting amount. Edit - not saying 4% is always safe or you should retire the second you hit that marker. Just pointing out you should look beyond model says no and when your backup plan needs to kick in matters as much as what it is.
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Nov 30, 2021 09:12
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i don't think it's overly conservative to question the 4% rule when people differ on basic questions such as whether it's meant for a 30 year horizon or to run longer/indefinitely the other issue specifically with leanfire plans is that absolute dollar spend starts mattering more. when you have a sub-30K annual budget, you really don't have much room to maneuvre if you need to suppress spending during a bad sequence-of-returns event
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Nov 30, 2021 09:47
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Vanguard has a paper about the 4% rule and FIRE: https://personal.vanguard.com/pdf/ISGFIRE.pdf The TLDR is that yeah, the 4% rule is based on 30 years and since FIRE is likely to need it for longer you might want to use a dynamic withdrawal rate and diversify more than Bengen assumed. Also of note: quote:Since Bengen’s 1994 publication, the author has updated his research, suggesting an alternative withdrawal strategy that would allow for flexibility in withdrawing from the portfolio based on market conditions (Bengen, 2001). More recently, he proposed that a 4.5% withdrawal rate would be feasible if investors added small-capitalization stocks to their portfolio (Bengen, 2006). Despite these updates, the 4% rule remains ubiquitous in financial planning, especially in the F.I.R.E. community. For this reason, this paper focuses on how the assumptions behind the 4% rule may not be optimal for retirement savers, particularly F.I.R.E. investors. Of course, the 4% rate also is based around preserving your capital, if you are fine dying broke then you have a bit more freedom. I like Vanguard's dynamic withdrawal rate in general, not just for FIRE - https://investor.vanguard.com/investing/investor-series/setting-a-strategy-for-retirement-withdrawals (There's a link to a more detailed PDF in there too) quote:Best of all, dynamic spending can mean greater spending levels throughout retirement. For example, our historical research showed that a retiree with a portfolio that was 50% stocks/50% bonds could withdraw 4.3% a year with 85% confidence that the portfolio would last through 35 years of retirement. But by incorporating dynamic spending, with a 1.5% floor/5% ceiling, that retiree could withdraw 5% a year and have the same level of confidence.
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Nov 30, 2021 10:58
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shrike82 posted:i don't think it's overly conservative to question the 4% rule when people differ on basic questions such as whether it's meant for a 30 year horizon or to run longer/indefinitely That's kind of like saying it's not overly conservative to question getting the vaccine when people differ on basic questions such as whether or not it stops you from getting sick. The condition for the study was that there needed to be money left after a 30 year period. That's a fact. Peoples opinions about the 4% rule don't matter if they are just repeating incomplete information that they got through word of mouth. The rule is a perfectly fine guideline and tool if you know the context of where that number came from and you can think critically about how it relates to your situation specifically. You're right that it does make you particularly vulnerable to sequence of return risk since it's more likely that you're in a position where you can't cut your expenses much if your income is that low. But lets look at a scenario where there's someone retiring today at 60 with a 30 year time horizon and $600k in the bank. Per the 4% rule they'd be able to withdraw $24k per year, adjusting for inflation each year moving forward over the next 30 years. Over the course of this week however, the market drops 40%. Their portfolio is now $360k, and the market doesn't go up for the next year. If they withdrew $24k out of that $360k this year, it would seriously impact their retirement picture, but if they withdrew $14,400 from that $360k, then that is an equivalent withdrawal to pulling $24k out of $600k. That's a shortfall of less than $10k. Obviously the market crashing tends to make the job market worse, but even so pulling in $10k in a year doesn't seem like that daunting of a task, and if they could do it, then the crash didn't impact their overall financial picture or their budget. Somebody who's portfolio dropped from $2m to $1.2m would have to drop their spending from $80k to $48k, and would have a shortfall of $32,000. Maybe they could just cut their expenses to $48k and be fine. Maybe they were living off of over $100k when they were working and just getting to $80k was a struggle. It's going to vary from case to case. That's a big haircut, and it's probably harder to make up that amount of money as a retiree if they can't cut those expenses in year 1. There's been a lot said about the cons of leanFIRE, so I'd like to add some major pros. The long term capital gains tax rate for someone making less than $40k a year or a married couple making less than $80k is 0%. Meaning a taxable brokerage account for a single person who has leanFIRE'd at a budget well under $40k is functionally a Roth IRA with no contribution limits, no RMD's, and no penalties for early withdrawal. It's very easy to plan with a tool like this. You can do cool things like pull out $40k worth of capital gains from a brokerage account in a year where you aren't working, pay no taxes on it, live off of (going off of the previous example) $24k, and then put the excess $16k back into your brokerage account where it will go right back to growing tax free. Then if you decide to return to work and make more money later, or if social security, pensions, or RMD's from retirement plans bump your income up, you've already realized the gains on that $40k and you won't have to pay taxes on it later. This represents a tax savings of at least $6,000 annually for a single person and $12,000 for a married couple for as many years as they have $40k/$80k worth of long term cap gains to harvest, and that $40k/$80k bracket will likely go up over the years to reflect inflation. Additionally, if a 60 year old today was living off of $24k in income, they would be in the 12% income tax bracket, with a sizable portion of their income in the 10% bracket. If they had $40k+ in traditional retirement assets, they could pull out $40k, pay $4,600 in taxes, live off $24k, and put the remaining $11,400 into a taxable brokerage account where it would presumably grow tax free. They could use a similar strategy with an HSA to lower their tax bill for non-qualified expenses after age 65, although the HSA is still most effective when used for medical expenses. Combined, these tools can open up doors to delaying social security and getting a larger benefit later when you've realized most of your gains and paid little or no taxes on them already. So in some regards, there's added flexibility for people who have leanFIRE'd vs normies. acidx fucked around with this message at 12:57 on Nov 30, 2021 |
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Nov 30, 2021 11:57
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Hi thread! I came into this thread years ago and learned how to save + had a high income job + lived a frugal lifestyle. So, when the pandemic hit and I realized my job was unfulfilling, I looked at my $750K in the bank and decided to take a job at a cool nonprofit for a significant salary cut. I’m currently 37 years old. The way I see it, the new job pays for my current lifestyle, and if I don’t save another dollar, my retirement accounts will be more than enough for me to “retire” when that time comes. Anyway, I don’t consider myself retired, but I do consider myself some sort of “FI”, since as long as I continue to live a simple life, I *should* be good!
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Nov 30, 2021 18:49
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dexter6 posted:Hi thread! You're doing BaristaFIRE. One of the biggest benefits of going for FIRE is that you get the flexibility to make certain tradeoffs along the way. In your case, you may not achieve true FI until slightly later, but you get to enjoy the journey a little bit more instead.
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Nov 30, 2021 21:07
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the need to label all of this stuff is super off putting to me as someone who probably has FIRE adjacent goals
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Nov 30, 2021 21:08
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Plus it's totally CoastFIRE 
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Nov 30, 2021 21:09
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job at a cool nonprofit = barista
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Nov 30, 2021 21:11
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i plan to work as a volunteer fireman after retiring early subscribe to my podcast to hear more about my new retirement plan - FIREFIRE
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Nov 30, 2021 21:36
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