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Cicero posted:Keep in mind this assumes that you'll continue living off of the same amount of money after FI that you have been before FI. An easy way to break this assumption in your favor is to simply move to a lower cost-of-living area once you have enough money. That's what I plan to do; all the good, high-paying software engineering jobs are in expensive metro areas (NYC, SF Bay, Seattle, etc.), so that's where I'll be when working a regular job, but I'm fine with moving to somewhere cheaper if it means endless free time. I think the bigger issue is using average market returns for post-retirement asset returns. Sequence of returns has a huge impact on your ability to draw down on your retirement assets without consuming them prior to death.
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Jul 17, 2013 20:51
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baquerd posted:With liquid savings, good diversification and the ability to choose which asset classes you are disbursing from, there's no reason you have to cash out unfavorably. We might be talking past each other but my point is independent of asset allocation. Given any portfolio, even if it returns its historical average over the long-term, if it does poorly in the initial years, it curtails your ability to draw down on it.
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Jul 17, 2013 21:34
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enraged_camel posted:A $10k trip to Europe? Do you actually have a family? $10K for a family of 4 isn't going to be a decadent vacation once you add in flight, stay, and touristy expenses.
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Jul 19, 2013 15:47
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When you talk about early retirement at age 35, 40, 45 etc., I think it's important to remind yourself that your investment planning is going to be probabilistic. Think in terms of confidence levels (50%, 75%, 90%) for avoiding risk of ruin. You're talking about an investment horizon of 50-60 years so it's going to be virtually impossible to nail down a full-proof plan unless you have a portfolio in the 8 figures.
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Jul 19, 2013 20:25
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No Wave posted:And keep in mind - 4% average return is highly conservative. Maybe other people known something I don't, but then again, I'm not retired yet so it doesn't matter - the strategy remains the same. People really need to read up on sequence of returns... https://www2.blackrock.com/webcore/...ContentID=40492
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Jul 19, 2013 20:59
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Cicero posted:
No offense but your breakdown looks pretty ludicrous considering that you're budgeting $200 a month for raising 2 kids, and $400 for healthcare.
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Jul 31, 2013 11:45
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Cicero posted:1. That's for raising 2 kids aside from whatever kid-related costs are covered in other areas. Over the last 6 months for our one kid we're actually slightly under that at $588, although that number is volatile month-to-month and doesn't include babysitting (right now we have a regular babysitter to give my wife a chance to practice her music, which we wouldn't need during FI since I'd be home much more). My mom loves buying stuff for her grandkids, so we rely on that some. How old are your kids right now? You should set aside money for their education (college most of all).
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Jul 31, 2013 16:33
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My previous employer used to give $5000 annually to every single employee to be donated to their charity of choice anywhere in the world which I thought was pretty awesome. I try to make it a habit to donate ~$500 a month to IRC.
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May 8, 2014 22:54
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Doing an MBA's really brought home how financial (in)dependence distorts people's incentives and emotions. A top tier 2-year MBA costs 200 grand including living expenses and potentially half a million once you include the opportunity cost of foregone salary. With most of the students leveraged to varying degrees, there's a lot of pressure to seek out high paying jobs regardless of their personal interest in the field. I honestly don't get the point of going back to school to get a job you hate.
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Apr 18, 2015 18:54
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I was thinking more of the huge bullet of students that do the jump from consulting to IB or IB to consulting. It's like jumping from the frying pan into the fire. I mean we're going into summer internships and all the kids going into IB are fatalistic about the death march they'll be undertaking this summer.
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Apr 19, 2015 08:21
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Is FI primarily an American phenomenon? It'd be interesting to contrast the experiences of devotees in the US and Europe given access to universal healthcare, extended paid maternity leave, and free or close-to-free university education in the latter.
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May 11, 2015 13:39
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That may be true for IT/engineering but finance & consulting pay close to parity in London. London is an outlier for Europe in any case. I used to think higher salary automatically meant better quality of life and say this having spent 4 years working in a 0% income tax tax haven but I wonder these days. It's an interesting thought experiment - given the option of making 200 grand in SF versus making 80 grand in Berlin... I don't think it's as clear cut a scenario as you make it out to be. Housing (rent or buy) is significantly cheaper, and it's tricky to factor in stuff like childcare, education, vacation days etc.
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May 11, 2015 14:11
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Yeah, you have to distinguish between DC and DB plans. That being said, it's difficult to argue that employees under DC plans are better off than their predecessors (or fortunate peers) with DB benefits, regardless of claims made about empowerment.
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May 11, 2015 18:48
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Yeah, you're wrong, ERISA explicitly prohibits backloading of benefit accruals.
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May 11, 2015 18:51
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You get less money from a dc plan.
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May 11, 2015 19:20
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I disagree with the statement that this generation of employees made an active decision to migrate from DB to DC. It's been pushed by the corporates. Again, the average employee is going to see less from his DC plan than he would have from a DB plan, not to mention that the pension risk has been shifted from the firm to the employee.
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May 11, 2015 22:38
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It's not difficult to set up db plans that are portable. I think people are missing the bigger picture when it comes to db versus dc which is that risk is centralized with db and decentralized to the individual with dc. It's easy to say that I'm betting on db plans, social security etc getting defunded and I'll sock away savings so I'm not reliant on them. But FI then becomes less of a movement and more a budgeting solution available to those making six figures.
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May 12, 2015 12:34
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not sure i agree. i think if you're at median household income with kids (now or in the future) in any major metropolitan city today, fi is extremely difficult to manage.
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May 12, 2015 21:50
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oh i include commuters in my comment. to be less combative, it'd be interesting hear any adherents with family and making median income chip in. shrike82 fucked around with this message at 22:19 on May 12, 2015 |
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May 12, 2015 22:16
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ChipNDip posted:Median income for a couple with kids is a lot higher than the median for the population at large. Yes I'm aware of that. It's not difficult to pull up median household income by size of household. Like I said, it'd be interesting to hear from families making about median (for their family size if you want to be exact) and their experiences with fi.
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May 13, 2015 03:53
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Cheers. Couple questions if you don't mind - when are you hoping to retire and how do you handle uncertainty with healthcare and your investment portfolio being impacted by downturns?
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May 13, 2015 07:33
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The median household income for a family of 3 in NY (and California incidentally) is about USD$69K. So you're making close to 50% more.
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May 13, 2015 13:37
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"Struggling" on 200 grand -
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May 13, 2015 14:54
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Rurutia posted:Yeah, I think people have a hard time admitting they're lower class, so they categorize the upper 60th percentile of middle class as upper class. It goes into the idea that people who often need social safety nets the most will also often vote against it. Err, 250K household income puts you in the 98th percentile.
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May 14, 2015 13:49
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I don't think anyone wants to nail down a meaningful definition of class here but rather give some perspective to posters making 6 figures coming in and saying stuff like "I can manage FI, everyone can"
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May 14, 2015 14:16
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Stuff like this?Cast_No_Shadow posted:The great thing (great may not be the best term) all the maths is percentage based so actual income is largely irrelevant to whats possible its mearly comparing how high your savings rate can comfortably be against a table for a rough year guide.
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May 14, 2015 14:26
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Yeah, I totally disagree with you about poorer people just needing to have more "conviction and creativity" to achieve FI. Living expenses don't scale linearly downwards with income (or upwards for that matter). The reason why I've been harping on this is because it stinks of "poor people can get by in life just fine - they just need to spend less money and live more frugally".
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May 14, 2015 15:43
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Let's just say I don't post seriously in D&D.
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May 14, 2015 16:08
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danielski posted:Wow, you really don't understand how fractional reserve banking works. lol look up money multiplier
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Mar 12, 2016 16:18
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tbh the "digital nomads" I've met in Thailand and Vietnam kinda grossed me out. i see the appeal and logic of living in low COL countries but they tend to go "colonial" - their behavior with locals especially local women was often pretty patronizing. and in any case, they tend to get bored after a couple years and move back home.
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Jan 16, 2017 00:28
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thai food isn't just pad thai and thailand has pretty good Japanese food given the Japanese expat population + seafood industry
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Jan 17, 2017 01:13
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No offence that's a bizarre way of thinking. FI should involve you being where you want to be doing what you want to do. It's one thing to suggest moving to a low COL area within the States, it's another to push moving to a place like Thailand to minimize some actuarial risk of ruin. And I suspect it's the idle dream of a single guy rather than someone with a partner and/or kids because stuff like education and safety are definitely factors.
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Jan 17, 2017 23:41
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Eyes Only posted:simulation stuff Couple things - 1) if you want to use the gordon model for forecasting equity expected returns, most academics/practitioners are forecasting significantly lower returns - on the order of 3-4% compared to your 6.5%. GDP growth has actually been a ceiling, not the floor for dividend growth with the latter tending to capture half of GDP growth. It's not surprising when you consider public equities not capturing entrepreneurial growth very well. 2) on MVO, even wealthfront kinda shrugs and falls back on black-litterman to back out expected returns. stuff like this makes me skeptical about roboadvisors and their value add, any random dude can run an MVO with a bunch of numbers and construct an 'optimized' portfolio. garbage in, garbage out.
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Feb 14, 2017 11:32
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OctaviusBeaver posted:We're approaching year 10 of a bull market so I think it's premature to complain about a broken engine. Even if it is broken I think it's hard to blame education funding since more people have college degrees than ever. And the US has seen strong economic growth compared to many countries that subsidize education more than we do, France for example. I think it's safe to say that equity returns are pretty decoupled from the average American's financial situation. Your parents' DB plans + home equity are likely worth more than a millennial maxing out his 401K. With mass automation looming, something has got to give with wealth distribution in the US.
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Mar 16, 2017 08:32
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Outside of the 1%ers, income is probably pretty highly correlated with wealth.
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Mar 21, 2017 16:44
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Sorry, I just found the two scenarios you set up kinda funny - 250K household or a millionaire making 30K. Maybe the latter's more common than I think but it comes off as implausible.
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Mar 21, 2017 17:08
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If you want to get into the weeds, you need to take into account cost of living adjustments and family net wealth. A guy with a million in Ohio is probably going to much much better off than a guy with 10 in SF these days. A millennial or gen-Xer with boomer parents paying for their living costs is likelier happier. I'm scratching my head at how controversial the Kahneman study is here since the counterargument someone posted up thread acknowledges Kahneman's paper as being problematic for its argument. There's a body of behavioural economics research showing people think in relative terms rather than absolute in many facets of life. What's the counterargument anyway? That people with high incomes consuming more address less happy than their peers that save more? That seems like a broader judgement about consumption. My views on money and happiness have changed over the past 5 years. My partner and I make just above 300K in our mid thirties with a peer group working in finance/tech in NY making the same. I used to buy into libertarianism ie low taxes and personal responsibility where you deserve your wealth. This is rampant in those two industries and honestly the FI movement. But after spending a stint in London and Berlin, I think US society is fundamentally hosed when it comes to wealth and views around it. We've actually been thinking of moving to Berlin because of that.
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Mar 22, 2017 01:40
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Has anyone told you about the group of tech billionaires that have been pouring money into R&D whether we live in a simulation and if so, how to escape it? Or that Peter Thiel wants to inject himself with young people's blood?
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Mar 22, 2017 02:50
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Crazy Mike posted:As a poor middle class guy I would like to know more about your insights into the difference in wealth attitudes between the US, London, and Berlin. In what ways are London and Berlin better or worse? I've heard there is a lot of real estate and too many immigrants problems in London and that Berlin favors renters more than owners significantly. Couple things - 1) I don't think I've become more 'altruistic'. I'm just sick of the FYGM libertarian bro-ism rampant in finance/tech, partially due to my loss of faith in the belief that sweat and intelligence = success. Uber is an extreme example of it but the amount of poo poo I've seen rich white kids talk about minorities (PoC or women) behind closed doors tells me it's a broader issue especially in tech. 2) London being troubled by immigrant problem is fake news straight out of Fox. The issue it's facing is that it's becoming more like the US if anything with a political party destroying the welfare state and its universal healthcare setup. 3) I like Germany because I believe it's fundamentally a more egalitarian society especially with worker-corporate relations, income distribution, and state intervention into welfare. The union setup there is pretty interesting if you want to google it. And Berlin from a personal career standpoint has a good tech scene and good housing price-to-income ratio not to mention that renting is good as a long-term solution. The dream retirement location would be Scandinavia but the job situation there is so-so honestly. The sad thing is that US-strain neoliberalism is infecting the West so all this might evaporate over the next 30-40 years.
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Mar 22, 2017 03:19
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Not sure Hillary is a great example considering her long-term ties to finance. Anyway D&D is a better forum if you're still bitter about the elections.
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Mar 22, 2017 03:50
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