What do you consider life changing money
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rwellner98
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rw2
The vast, vast majority of it is acceptably safe. You know the old "if it bleeds it leads" theory of journalism? Now multiply that by the international border and all the US sees of mexico is the violence that's been twice filtered.
There is corruption in the government unlike that in the US. That's a fact. And it makes doing business harder. But for retirees, there are dozens of easy places to consider (cancun, playa del carmen, puerto escondido, ajijic, huatulco). All have large english speaking populations and turn-key housing options. We picked Huatulco for our investment property because it's easy to get to, but is still quite affordable.
If you're willing to learn some spanish, there are hundreds of options.
If you're willing to become fluent, then only like 20% of the country consists of areas with economic or criminal problems worth avoiding to avoid any hassles.
If you prefer big cities, then the rules are the same as any big city anywhere in the world. There are spectacular neighborhoods in Monterrey, CDMX and Guadalajara, and there are neighborhoods you'll want to avoid.
In terms of a modest amount going a long way. Cement, steel, electronics, cars and many other things are global markets and have global prices. You'll pay the same for many things in Mexico as the rest of the world, including the US. But labor is less expensive, so we can afford to have 2.5 FTEs between the two places we live that take care of everything (cooking, cleaning, pool, cars, guests, repairs, gardens, etc, etc) and we can just enjoy life. And in San Miguel de Allende (where we have lived for about 12 years) things are getting a bit more pricey (though still less than the US) and we rent a 2000/sq foot three bedroom with a studio apartment for the maid for $1300/usd per month that's in a quiet neighborhood with a nice courtyard garden and walking distance to 100-150 restaurants and a brilliant culture.
No place is perfect, but I'm sold enough on Mexico that I'm a permanent resident on the path to citizenship. So that tells you where my head is at.
DaleB
Final Approach
As I flirt with the idea of retiring a couple years early - or not - I've actually given this very question quite a bit of thought. How much money, windfall-style, would it take to have enough impact that it would make a real difference for us? It's not a simple answer. My gut and my spreadsheet tells me that I could walk away from working tomorrow. We'd be fine to maintain more or less our current lifestyle for many years. Of course there's always the uncertainly; some major thing could drain every penny and leave us living on nothing but Social Security during our increasingly miserable twilight years, but there's nothing to be done about it now. Or a really bad run of economic conditions could dramatically impact our plans with no hope of full recovery.
So I'm looking at more nuanced changes. For example, we like to travel. I figured a travel budget into our retirement projections, but sure, it would be nice to (for example) fly business class rather than premium economy. Or stay at a really nice hotel instead of a decent one. I've allowed for the cost of owning and maintaining vehicles, but there are cars - and then there are cars, you know? And I'd like to ramp up our donations to various causes. A lot. And our grandkids' education, and so on.
So, "life changing" meaning "I can remove all doubt and retire now"? That's one number, and it's fairly modest, at least in my opinion. "I can retire with a lot more comfort and enjoyment"? That's another number, and it's not outlandish. "I can retire and fully realize all of our dreams"? That's a third number, and excluding a lottery win or some magical stock option payoff it's more of a dream than a plan. But even then - the lottery win could be seven figures and not 9 or 10.
So I'm looking at more nuanced changes. For example, we like to travel. I figured a travel budget into our retirement projections, but sure, it would be nice to (for example) fly business class rather than premium economy. Or stay at a really nice hotel instead of a decent one. I've allowed for the cost of owning and maintaining vehicles, but there are cars - and then there are cars, you know? And I'd like to ramp up our donations to various causes. A lot. And our grandkids' education, and so on.
So, "life changing" meaning "I can remove all doubt and retire now"? That's one number, and it's fairly modest, at least in my opinion. "I can retire with a lot more comfort and enjoyment"? That's another number, and it's not outlandish. "I can retire and fully realize all of our dreams"? That's a third number, and excluding a lottery win or some magical stock option payoff it's more of a dream than a plan. But even then - the lottery win could be seven figures and not 9 or 10.
Or retire 10 years early...
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jsstevens
Your father in law suggested I switch to cocaine because it's cheaper. Just sayin'I didn't know I had to be wealthy when I started, and now I'm hopelessly addicted and can't stop?
And here's the proof:
hindsight2020
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hindsight2020
Geoarbitrage isn't victimless.
/hottake
/hottake
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My father was a Plastic Surgeon - he owned a Duke, but never had time to fly that pig. My parents encouraged me to be a College Professor - Business, I make good money but not Plastic Surgeon money. I own a Warrior and I was able to fly it over 100 hours this summer. My parents said you should do this - it's a good life, you'll have time to enjoy the things you like to do.
At the time I thought it was blue sky up the rear - but it's proven to be very good advice.
My father's gone and my mother has very late stage Parkinson's disease, I sure wish they could have had the time to enjoy things their advice blessed me with.
cowtowner
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Cowtowner
When I was poor, I couldn't afford milk for my two kids. When I was middle class, I had select baseball and university tuition
If you have to pick and choose, you can't afford to fly
A buddy of mine is getting his PPL at 56, just retired as a cop. He wants to buy a plane so bad he can taste it
I keep sending copies of my A&P bills to him. Told him, unless he plans to get another job, stick to renting.
If you have to pick and choose, you can't afford to fly
A buddy of mine is getting his PPL at 56, just retired as a cop. He wants to buy a plane so bad he can taste it
I keep sending copies of my A&P bills to him. Told him, unless he plans to get another job, stick to renting.
Crashnburn
Pattern Altitude
It’s got to be around 25X annual salary so you can pull 4% most likely indefinitely, assuming you’re invested so you have an annual return of at least 4% plus inflation.
As for me, I figure $300K would be enough to uncomplicate my life.
Half Fast
Touchdown! Greaser!
Enough to buy a Marchetti SF-260 (net, after taxes, etc.) . . .somewhere around $350K. My retirement is taken care of, but the SF-260 would take too big a bite out of it. It is the "best" airplane I've ever flown - dream handling, effortless control, not at all squirrelly, but goes just where you want it to with barely a thought. I've got some time (very little!) in a Stearman, a L-39, a sailplane, and all the usual spam cans. . .the SF-260 was my all-time favorite. . .
OneCharlieTango
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OneCharlieTango
Living in Indiana, surrounded by family, it would take a lot to affect substantial change. No matter what, my star rises and falls with the United States’ star. Real life-changing money would be enough to make me non-correlating with the United States. That means multiple homes and investments in places like Mexico, Kuala Lumpur, Dubai, Ireland, or Georgia, along with staff to manage them. That’s probably eight figures.
That would be a difference of type. Any less is just a difference of degree.
That would be a difference of type. Any less is just a difference of degree.
I’ve always had a soft spot for that airframe. It would be in my stable as a daily driver.
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jsstevens
Nope. Sage advice though it may be. I'm sticking with airplanes until the money runs out.
Half Fast
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Yeah, as I thought about this thread I began to wonder, “Just what would I do if I suddenly acquired a billion dollars?” and then I realized I would probably just keep flying until the money ran out.
Half Fast
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I hate this argument. The person who wins feels pretty good about the two bucks they laid out. If you can’t afford a losing lottery ticket, bro no bad at math isn’t your issue.
Let'sgoflying!
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Life Changing Money?
That's my money.
Coz if you take my money, I might change your life!
That's my money.
Coz if you take my money, I might change your life!
judypilot
Cleared for Takeoff
Exactly. My husband laughs at me for getting irked over a couple dollars' difference in price of one thing while I easily pay 100s for something else. I keep telling him, the reason I can do the latter is that I've done the former all my life (BTW, we haven't been married very long because we were both widowed, so these are habits I established on my own, not with him).
A few weeks ago, SWMBO and I were at dinner with another couple. Like us, they're comfortably retired. Not rolling in wealth, but comfortable. But we started talking about how we still had the same habits as when we were younger and forced to be frugal. Like dinner that evening - we had clipped BOGO coupons out of the local shopper to buy our dinners. We still shop sales, use grocery coupons, don't buy expensive clothing, etc. The habits that put some money in the bank through the years are now permanent.
Also, to those are thinking about retiring early, just do it. In this group, I think anyone who is thinking about that can probably do it. I retired at 60 and only later realized I probably could have retired at 55 and still been comfortable. That leap is a big one, but I guess it's pretty common for people to think they can't retire yet when they can.
Someone raised the issue that the question was how much money would be life-changing, not what we'd do with it. I don't think any amount of money would actually be life-changing for me. In fact, I'd probably end up giving most of it away and not spend all that much on myself. I might spend more on my husband, who has had a much harder life financially than I have. A few years ago I bought him a Corvette for Christmas/birthday (in his case, they're only a couple of weeks apart). Seeing the joy he gets from that car has been well worth the expense.
Half Fast
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Y'know, if you enjoy making others happy with extravagent gifts, I really like the mid-engine 'vettes. Especially in black.
But a Ducati Panigale V4 would be almost as nice...
Ed Haywood
En-Route
Money can buy time. Once you have enough to live off your investments, you do not have to work. That's 40-48 hours a week of time gained. That's my goal for the next two years.
Ed Haywood
En-Route
In my experience, the goal line keeps shifting with age.
In 20's, it was enough to buy a decent used car and pay off wife's student loans. Let's call that $25K.
In 30's, it was enough for a down payment on a house. Let's call that $100K.
In 40's, it was enough to pay for kid's college. Let's call that $250K.
In 50's, it was enough to pay off house, have sufficient nest egg in 401K, and have enough for toys like boats, planes, and nice cars. Let's call that $1M.
In 60's, it will (for me) be enough to stop working and live off investment income without drawing down principal. Let's call that $5M.
In 20's, it was enough to buy a decent used car and pay off wife's student loans. Let's call that $25K.
In 30's, it was enough for a down payment on a house. Let's call that $100K.
In 40's, it was enough to pay for kid's college. Let's call that $250K.
In 50's, it was enough to pay off house, have sufficient nest egg in 401K, and have enough for toys like boats, planes, and nice cars. Let's call that $1M.
In 60's, it will (for me) be enough to stop working and live off investment income without drawing down principal. Let's call that $5M.
EdFred
Taxi to Parking
I'm 49. $1 mil would add enough to current retirement so I could start sleeping in tomorrow and never touch principle for the rest of my life and make zero cutbacks on my life.
That's life changing, and that's all I really want at this point.
That's life changing, and that's all I really want at this point.
Terry M - 3CK (Chicago)
Line Up and Wait
@Ed Haywood unless you own a business to sell for a multiple of earnings, how do you get there?
At, say, 5% return, it takes a meaningful chunk to replace my income (without touching principal). How do I get the time back? (Seriously seeking wiser input). I feel like I only work. No time for me.
At, say, 5% return, it takes a meaningful chunk to replace my income (without touching principal). How do I get the time back? (Seriously seeking wiser input). I feel like I only work. No time for me.
Brad W
Pattern Altitude
boy...that's something that has been nagging at me for a few years now....figuring out when the pile of money is big enough to retire....
I'll be 57 in a couple weeks, but have been hankering to retire or semi retire for a few years now...I still have kids at home though, and insurance is through my work. We're all healthy enough but we do have some health expense.... still I recon we'd probably be ok with a catastrophic type health plan, or maybe one of the medishare type programs.... but I'm not sure and the wife is less sure.....
Then there' the size of the pile of money to live off of.... that one is hard to figure. I feel like we'd be ok to live frugally if we both quit today, but maybe or maybe not to do a lot of travel and such...especially since she still enjoys her job and isn't itching to get out like I am, so we wouldn't totally be draining the pile of money as we ease into a more flexible time schedule. My current daydream is to retire now (really I wanted to 5 years ago) and start on a homebuilt...an RV-14 or RV-15 maybe as a retirement project while she's continuing to enjoy her work. Then we could use the RV to do a bit of travelling
hindsight2020
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hindsight2020
I hear ya. Heard that in life one too many times, know way too many people in that situation, which is the reason I stayed to an active duty retirement in the military, at a great FAE-delta from say airline pilot (as an income hypothetica) in the same amount of longevity/time period. De facto Medicare at 46-49 (depending on what year beyond 20 active I decide to pull the trigger) is transformative for me. I rejected early on (as in my 20s) the premise of having to keep toiling just for health coverage. And it certainly became a done deal once I gained dependents on life-sustaining medication; this isn't an academic hypothetical for me.
Speaking of flexible schedules, I struggled with this once the weef rejoined the workforce, given she's 8 years younger than me. The thought never crossed my mind as we were busy just surviving the toddler years, but here we are. There's been a lot of changes associated with her return to work, which has affected many things to include the future status of my aircraft ownership, but I will say I've pretty much settled into the fact we're on different life timelines and if we intend on staying together as a couple, schedule expectations in retirement are going to have to adjust for me.
To wit, unless and until she changes her mind again (no guarantees in this life, marriage included), I'll have to endure metro-proximity to healthcare facilities for her career, past the time I desire to stop working (mid-late 50s). That means I'm probably tied into more congested living than I would have wanted to. No reason paying off no home, we are still nomads well into my 50s.
The upside is that, we can afford to slide into retirement in different time scales, which means a ladder-step early income exit for me is even more affordable than if we were both co-age and stopped working at the same time. And I do hold out hope as she grows older too, she'll want to slow down from the bedside, which is already wrecking her as a mid 30s RN. That presents a lot more flexibility for us location-wise. Point being, many ways of skinning the thing, but silver linings abound imo.
Good luck to all.
Ed Haywood
En-Route
Time value of money. Start young as a serious investor. If you start contributing your IRA or 401k by your early 30's, by the time you hit your 60's you will have 30 years in the market. Average annual growth rate of the S&P 500 index over last 30 years has been 10.7%. $10K invested in 1992 is worth $170K now. That's what I did, and I have well over $1M in my 401K in my late 50's. With max contributions and market growth, balance should double before I start drawing on it. Add military retirement, social security, and paid off house, and I have no concerns. No secret magic here, just discipline and patience.
If you didn't start young, I can't help you other than to say better late than never. Do the next generation a favor and slap them on the head when they say "life is short, buy toys now". For most of us, life is long. Put compound interest to work for you.
Getting to $5-10M is a different story, and usually requires some level of business success, stock options, executive compensation, etc.
Terry M - 3CK (Chicago)
Line Up and Wait
Curious @hindsight2020 and others . . . What is your next career? What are folks retiring to?
Terry M - 3CK (Chicago)
Line Up and Wait
@Ed Haywood started at 16 with $50/month in a mutual fund. 401k from 25 forward hitting the IRS maximum since 30.
My math says I need $7mm to maintain this income but I'm not assuming 10.7%.
I agree with everything you typed. I am just not confident I can walk away.
My math says I need $7mm to maintain this income but I'm not assuming 10.7%.
I agree with everything you typed. I am just not confident I can walk away.
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Ed Haywood
En-Route
Sounds like you are on a great path.
The math is pretty straight forward. Rule of thumb says drawing down 4% a year will last you 30 years, so figure $40K annual income for every $1M in retirement saving. I'm planning on drawing 2% because I want to leave the principal to my kids. So just depends on what you think you need to live happily in retirement.
^^^^This. The vast majority of the retired people I spoke with before retiring early said the same. Had I believed them at the time I would have retired 2 years earlier myself. As to how much money you need is very specific to the person. While general recommendations get you in the ballpark, they are far from gospel. For example, the amount "recommended" for me by the "experts" was about $2 million. I retired with less than $1M and a mortgage.
One of the biggest misconceptions I've seen some people make is accurately determining how much they are currently living off. Most people simply add up their check stubs. However, if you count the actual expenses to the nickel, one may be surprised especially if the life you plan to retire to is not very extravagant. The acronym FIRE sums it up and is the rally call for early retirement. It stands for Financially Independant Retired Early. There are a number of online sites and forums that provide all kinds of information on the subject. Regardless, having "enough" money can't buy you one extra second of good health or existence. Just do it.
eman1200
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Bro do you even lift
my plan is to start a gofundme retirement account
DaleB
Final Approach
How true. The first time we engaged a "financial planner" (ha) they said we really needed to give them about double my total pre-tax earnings every month, then we might be able to retire by the time I was 65 or 70. They were of course high on crack. We did it as a favor to a classmate of my son, working for one of the big name firms as a summer intern. Of course their version of "retirement planning" was a big steaming pile of insurance and annuity products. The next time we talked to a planner, which was a couple years back, their news was not as dire - but still saying I'd need to work until I was 70 in order to retire comfortably. Maybe that would have been true if I'd turned everything over to them...
Yes, that. I was pretty disappointed by the well-meaning advice we'd been getting and had identified several deep flaws in their models. I built my own pretty complete spreadsheet based on what I knew to be true to figure things out. Investment performance, taxes, medical costs, our current monthly burn rate, travel plans, vehicle purchases, gifts, charitable giving, social security, all of it. I can adjust the inflation rates, retirement age, pre- and post-retirement investment performance, travel budget, and a bunch of other things and see what the long-term effect would be. Then I started running Monte Carlo simulations on the numbers I have to see whether what I built was sane or not. I'm pretty confident that I have a good post-retirement picture.
The only downside is that now it's really becoming a daily struggle to bother going to work when I know I could quit today and we'd be fine as long as we don't live past 110 or so. I'll stick with it until the end of the year just because we've hit our insurance deductibles, and the market is in such a sucky slump right now that my retirement account contributions are doing double duty. I'd really hate to start pulling money out of investments that are doing so poorly, and if I finish out the year I'll have another month or three worth of cash socked away. After the first of the year, though -- all bets are off.
So right now the threshold for "life changing" is pretty low.
Terry M - 3CK (Chicago)
Line Up and Wait
If 65 only option is Medicare with supplement. Less than 65 the better option in most states is to get a policy off the ACA Marketplace, ie, obamacare. And if you have a diverse set of assets you can even qualify for certain ACA subsidies. I use an ACA medical policy with subs as I'm still several years from Medicare eligibility.
Plano Pilot
Line Up and Wait
After seeing what BC covered for my parent's medical bills, in addition to Medicare, I think it is worth it. I was not involved in paying the bills when my dad was alive but for mom it is $366mo for Plan F. Dad died of multiple myeloma and mom has been in the hospital several times but there have been verry little out of pocket cost.
Half Fast
Touchdown! Greaser!
Well, that depends. If you have a retirement from your former employer there might be better options.
My retirement from Lockheed Martin lets me continue on my original medical plan, but paying the full premium. When I compared benefits versus cost, it was the best bang for the buck. Plus, my being on that LM plan qualifies my wife (who's on Medicare) for an excellent supplement plan for no cost, plus a small subsidy that's applied to her Medicare premium. On balance, we come out ahead this way.
Now, I will admit that Lockheed does have pretty good retirement benefits as corporations go, so not everyone will have the same options. My point is that people should explore all their options, not just leap blindly to ACA.
Half Fast
Touchdown! Greaser!
Yeah, I did pretty much the same thing. Created my own spreadsheet so I could tweak inflation rates, investment earnings, SS start dates, etc. My wife and I met with four or five financial planners, some of which got close to the same answers I did but a couple were pretty far off. The absolute worst that I talked with was Fisher Investments. Completely terrible, numbers were waaay off, erroneous assumptions that they didn't correct even after I explained the problems (like they completely ignored the effect of my pension). They simply would not listen; their folks were in sell-sell-sell mode all the time, and I found it impossible to contact any real analysts. Epic fail.
The guy we ulitmately went with, though, had modeling that closely tracked my own, came recommended by several of my LM colleagues, and offered to advise me on my 401k allocations the last couple of years of my employment before I was even his client. His advice worked well so I felt good about continuing to use him, and so far it's worked out.
True. But as you mentioned your case is more the exception than the norm. Have several friends with similar plans. Out of curiosity, at want age did you retire from Lockheed, and if you care to share what was premium you paid?