Thru Hike When I Retire

[Coffee]

Huh? You’re already retired, so that $15,000 pension isn't growing is it? Aren't you tapping into it already? What is the thinking that this could be equal to $500,000?
Or, are you saying that your pension is paying you $15,000 / year?
If that's the case, that's better than 500,000 in the bank . That would be a 3% return on 500,000 which so far is better than bank cds. Rates are slowly rising, tho...Keep checking back every few months...

Six month treasury bills already pay nearly 2%, are totally liquid, and exempt from state income tax. Big banks fleece customers, don't be taken in by their CD scams.

Retirement portfolios should not be invested entirely in cash. I keep several years of projected spending needs in treasuries but invest the rest in securities. This is my area of expertise but most people can do almost as well just buying index funds.

[blw2]

I find this discussion interesting...on a couple levels.

one - the target dates or ages. I'm curious where the numbers come from. In days past when companies actually gave pensions....well I suppose some public sector jobs still do (police, fire, military)....then it makes sense in a way......you have an eligible date.
Otherwise it seems to me the other two categories are a) the frugal free-spirit that isn't so caught up in such things, or b) the planner/saver busy stocking money away into a 401k or some such thing.... So for these, picking that date seems harder in a way. What criteria do you use? (in case you can't guess, I'm in the 'b' category. I work now primarily for insurance, with young kids at home.... and secondarily to help save for weddings and college. Honestly I find the online calculators a bit puzzling too.... I mean how do I know, how much money I'm going to need 15 years from now??? I remember back in the early part of this century talking with my wife loosely planning retire by 50. Well, more kids, a recession, and life got in the way of that.... I find myself now longing to 'semi-retire', but how do you ever know if it's enough in that 401k? Retiring and living frugally at home vs retiring to travel and enjoy, is the variable that puts a big question mark on it....well that along with health insurance.

two - the other interesting thing is the level of support one gets from home.....along with the priorities that I put on myself. I'm firmly in the camp where my personal feeling is that I have responsibility at home and would just feel guilty leaving the family for a long period of time. At the same time I'm also getting lately that my wife wouldn't bee too keen on supporting that either. I wanted to do just a week section this summer, have been talking about it for over a year.....but she wants to do something together... I do too, but can't do both. SO I was going to try for something this spring, and that fell through because of my responsibilities as a dad. It's a circle.

[Coffee]

There is a lot written on retirement blogs and websites about "the number" needed to retire with conventional wisdom centering on the "4% rule", which means that you can take 4% of your initial savings out in year one and then increase each annual withdrawal with inflation and have a very good chance of having the funds last a "typical" retirement of a few decades. I personally find this rule too aggressive, especially for early retirees and especially in a world of very low interest rates following a nearly uninterrupted nine year bull market in stocks. 2.5 or 3% seems more prudent to me. But the problem is that this works out to some big numbers. If you want to take $50,000 out annually, using a 3% rule implies needing $1.7 million saved. A 2.5% rule implies having $2 million saved. Heck, even using the 4% rule I don't like implies needing $1.25 million. Most people won't come close to those numbers. That's where the backpacking (or generally frugal) lifestyle helps. It can be funded on a whole lot less than $50,000 per year.

[rocketsocks]

I see a whole lotta people headed for tent city before it’s over, but just because you live in a tent city, dosent mean it has to be IN a city...expand your horizons if your not gonna save and live a conservative life.

[T.S.Kobzol]

Yeah. The online retirement calculators are good as a starting point when you're trying to figure things out on your own but to try to have a social conversation at a forum and be sent to an online retirement calculator does not do much (not trying to be critical of the person who suggested it) ... to me it is more interesting to see how much users think they could get by with and enjoy their life - the amounts will vary from state to state due to various costs of living and ideas of what to do.

I find this discussion interesting...on a couple levels.

one - the target dates or ages. I'm curious where the numbers come from. In days past when companies actually gave pensions....well I suppose some public sector jobs still do (police, fire, military)....then it makes sense in a way......you have an eligible date.
Otherwise it seems to me the other two categories are a) the frugal free-spirit that isn't so caught up in such things, or b) the planner/saver busy stocking money away into a 401k or some such thing.... So for these, picking that date seems harder in a way. What criteria do you use? (in case you can't guess, I'm in the 'b' category. I work now primarily for insurance, with young kids at home.... and secondarily to help save for weddings and college. Honestly I find the online calculators a bit puzzling too.... I mean how do I know, how much money I'm going to need 15 years from now??? I remember back in the early part of this century talking with my wife loosely planning retire by 50. Well, more kids, a recession, and life got in the way of that.... I find myself now longing to 'semi-retire', but how do you ever know if it's enough in that 401k? Retiring and living frugally at home vs retiring to travel and enjoy, is the variable that puts a big question mark on it....well that along with health insurance.

two - the other interesting thing is the level of support one gets from home.....along with the priorities that I put on myself. I'm firmly in the camp where my personal feeling is that I have responsibility at home and would just feel guilty leaving the family for a long period of time. At the same time I'm also getting lately that my wife wouldn't bee too keen on supporting that either. I wanted to do just a week section this summer, have been talking about it for over a year.....but she wants to do something together... I do too, but can't do both. SO I was going to try for something this spring, and that fell through because of my responsibilities as a dad. It's a circle.

[TexasBob]

Yeah. The online retirement calculators are good as a starting point when you're trying to figure things out on your own but to try to have a social conversation at a forum and be sent to an online retirement calculator does not do much (not trying to be critical of the person who suggested it) ... to me it is more interesting to see how much users think they could get by with and enjoy their life - the amounts will vary from state to state due to various costs of living and ideas of what to do.

I was just trying to help out rickb and didn't mean to spoil the party. It is just short of a brain scramble to try to figure out how much money you need to retire and the younger you start the better off you are. To your question about the amount you need to be happy, I need way less than my wife. I almost started crying this week because my 31 year old weed eater won't start. I would fix it but I can't find all the parts I need. I ended up having to buy a new one and this one better last till I am 94. I don't mind spending money on the back packing gear but otherwise I am pretty cheap.

[map man]

It would be interesting to see how much each member thinks the could have saved to retire...I bet we would get an interesting variety of perspectives


Sent from my iPhone using Tapatalk

I don't have a pension, but do have a 403b plan (the public sector version of a 401k) and a Roth IRA. I decided my "number" is 15 times my annual salary if I want to retire by 60. My wife has also had a full time job for as long as we've been together and a 403b plan that's been accumulating for over 25 years. That makes a difference. I also live in a fairly low cost area (Iowa) with no plans to move to a high cost locale after I retire -- that too makes a difference.

I think most people are not at the extreme end of either side of this debate. We are not putting off all enjoyment until retirement, and not chucking everything and living only for right now either. We settle at where we are comfortable on the continuum between those two points.

[T.S.Kobzol]

...so obviously, if we retire at the 'retirement age' set by the government then we'll get that part of the pension. The amount you get will vary greatly if you were a waiter all your life or if you were a doctor. To retire early is to somehow utilize money saved in addition to social security without depleting it too much so that we can enjoy the extra kickback when we combine Social Security check with our personal retirement saving. I think the reason some of us here talk about retiring around 57 is that there is a legal rule to be able to withdraw out of your 401K before your retirement age without a penalty. I think the age for that is after 56 years old.

[MuddyWaters]

...so obviously, if we retire at the 'retirement age' set by the government then we'll get that part of the pension. The amount you get will vary greatly if you were a waiter all your life or if you were a doctor. To retire early is to somehow utilize money saved in addition to social security without depleting it too much so that we can enjoy the extra kickback when we combine Social Security check with our personal retirement saving. I think the reason some of us here talk about retiring around 57 is that there is a legal rule to be able to withdraw out of your 401K before your retirement age without a penalty. I think the age for that is after 56 years old.

How about they just dont wanna work no more?
Say you could retire at 55 and live on $50k/yr

Or at 65,and live on $150k/yr

Everyone got different priorities




Which would you pick?

[T.S.Kobzol]

I could live on 50k/yr quite comfortably. Actually I could do with 30k/yr although I would not reside in the USA most of the year - only for long distance trips and visits to see my kids and future grandchildren.

[jefals]

Six month treasury bills already pay nearly 2%, are totally liquid, and exempt from state income tax. Big banks fleece customers, don't be taken in by their CD scams.

Retirement portfolios should not be invested entirely in cash. I keep several years of projected spending needs in treasuries but invest the rest in securities. This is my area of expertise but most people can do almost as well just buying index funds.

The yields on the treasuries and the cds are pretty close. You can get higher yields on both if you go longer term. Coffee's right, the income on the treasuries aren't taxed at the state level. They ARE, on your federal return. (Some states it's a wash, since none of your income is taxed anyway).
I agree with Coffee about not having all your retirement in cash, however I know a lot of folks are not comfortable with the markets and consider it gambling. I would suggest that if you WERE comfortable with stocks , you'd know how to do a lot better than 2 or 3% and safely.
Of course, this isn't the only way to generate income in retirement. Some people invest in real estate. Some folks are making 100k/year, selling stuff on ebay.
Pros and cons to all these. It's all personal, and whatever you do, you need to be able to sleep well. Worrying about your money can ruin your health, so be sure you educate yourself about your choices so you are comfortable with them.

[colorado_rob]

There is a lot written on retirement blogs and websites about "the number" needed to retire with conventional wisdom centering on the "4% rule", which means that you can take 4% of your initial savings out in year one and then increase each annual withdrawal with inflation and have a very good chance of having the funds last a "typical" retirement of a few decades. I personally find this rule too aggressive, especially for early retirees and especially in a world of very low interest rates following a nearly uninterrupted nine year bull market in stocks. 2.5 or 3% seems more prudent to me.

Agree on the 4% rule being a bit aggressive these days, I'm trying to use 3%, so far, so good.....

By the way, CD's are coming up a bit finally (but of course, that's a harbinger to inflation as well....). Just yesterday I bought some 2.875 3-year FDIC insured CD's, here are the paticulars, including the CUSIP:

WELLS FARGO BANK NA (SD)
3 YEAR, Non Callable
CUSIP: 949763PW0
100.000 2.785 2.785 24,665/1 Buy Primary
04/10/2018

And 5-year CD's are over 3% now (3.022 at Goldman Sachs), though I'm not interested in those longer term CD's in this rising rate environment, I have CD ladders of 3-month to 3-year maturities. CD ladders are cool for conservative investors, like myself. Well, finally cool, not so cool a year ago when rates were pathetic.

And think about learning about corporate bonds... not bond funds where the manager gets about 1/4-1/3rd of your gain, but just direct bond buying. Get thoroughly educated though, there are pitfalls.

I'm talking here about the conservative portion of a total portfolio, the balance of the higher return stock/equity side, what ever percentage in each one is comfy with these days.

[Dogwood]

Welcome to the Suze Orman show.

[MuddyWaters]

If you dont have retirement money in investments, inflation eats it up.

The government hides real inflation rate.

No risk free return keeps up with real inflation in last decade since 2007.

Its a racket. Its a fake market.
Its goverment rigged now
And you have to participate to keep up

All you have to know, is dont sell at the bottom...
Have enough to wait it out
5 yrs, 10 yrs , etc
Theres always an exit point thats good
Dont worry about it

[colorado_rob]

Conspiracy theories and watching too much bad TV are two of many reasons people flounder financially.

[Another Kevin]

I hope never to be able to thru-hike. Because if I become able, that means some sort of disaster has struck.

I have responsibilities in my family, in my church, in my community, in a broader world. Some of the wider-ranging ones are hard to fulfil while I'm still working for The Man. I do what I can, and always see more that needs doing. There are many causes that today I can support only with my treasure, while they call out for my time and talents as well.

I love hiking, as a way to recharge the spirit, and I love coming back to the world with renewed purpose.

Walking away from my life for half a year? The only way that's going to happen is if the ties that I have with people who depend on me are broken. God forbid! No, even after I'm done with drawing a paycheck, I'll still be trying to do good work, and sometimes breaking away to play. I'll be blessed if that can keep up until the time comes to walk that lonesome valley home.

Definitely, HYOH. There are a lot among you who feel less bound to the world than I am. You may well be more enlightened than I am as. Surely, some of the great sages have said that life is all about letting go of your attachments. It's just not how I roll. Jesus told Martha not to envy Mary for having chosen the better portion. Significantly, though, he didn't tell Martha not to go on about making sure that He and His disciples had a meal on the table and a place to sleep. Both were needed - the mystic listening to the Word and the labourer carrying out the good work.

For me, then, worrying about retirement is a lot more about supporting myself, those I have responsibility for, and my charities, than it is about maintaining, say, a traveling lifestyle. I still worry, even though I've tried to lead a life of prudence. What with one thing and another, I came late to being "settled down." I was in and out of grad school for years, and that wipes you out! Still, I've been paying maximum Social Security all my working life, have always stashed at least 10% of what I make into saving for retirement, and have worked for all these years since school at a job with a defined-benefit pension. That's the "three-legged stool," say the financial advisors. I can be content, too, with a fairly minimal lifestyle. What backpacker cannot? We all become accustomed to living for days at a time with only what we can carry.

But then I look at the business and political landscape, and I worry. I am guessing that my company may not be long for this world, and it's catastrophically underfunded its pensions. (The pension shortfalls in American business across the board are likely to wipe out the government's insurance program, too.) I don't know to what extent I can trust that the money in my 401(k) actually exists - what actually keeps the bankers from selling counterfeit stocks? There's no deposit insurance on those accounts. How do I know that I won't wake up one morning and find that some banker Madoff with them? And we've all heard the tidings of doom surrounding Social Security and Medicare.

What's most worrisome is that when I hear the politicians playing to either the disaffected workers or the angry Millennials, they reframe the issue. I hope that some of the money that I've been squirreling away all these years will still be there when I need it. To the politicians - on both sides of the aisle - that hope becomes a desire to sponge off the government. The wish to be able to take out some of what I put in becomes a wish for a handout. At the same time, I already also hear the grumbles that people like me are holding on to jobs that rightfully belong to younger folk. The attitude of those coming after me seems to be, "why don't you just die already so that we can have your job and your possessions?" Sorry, I'm not eager to go before my time!

The Preacher warns that time and chance happen to us all. Still, the Master told us to take no thought for the morrow. His grace is sufficient.

What this all adds up to: Even if I'm not contemplating a major thru-hike in retirement (well, maybe a little thru-hike, I've kind of got a bug in my ear about the NY Long Path) there's still the question of when to give up the regular job. I'm guessing that one of these days the company will decide that for me. They may very well be doing me a favour- forcing my hand to go and do the next thing.

[TexasBob]

................But the problem is that this works out to some big numbers. If you want to take $50,000 out annually, using a 3% rule implies needing $1.7 million saved. A 2.5% rule implies having $2 million saved. Heck, even using the 4% rule I don't like implies needing $1.25 million. Most people won't come close to those numbers. That's where the backpacking (or generally frugal) lifestyle helps. It can be funded on a whole lot less than $50,000 per year.

You are right and this is good advice. I think it is a shame that a lot of people don't start thinking about retirement early enough in life to give them selves a chance to save the kind of money you are talking about. When your 55 its too late to make a big a difference in how much money there will be when you retire and your lifestyle maybe significantly different in retirement than you envision it will be.

[Lyle]

I think the key, if you really want to retire early, is to lower your consumption dramatically. Just think, seriously, about how much "stuff" you have and worry about that is completely unnecessary and not really contributing, in any significant way, to your happiness or health. It's mind boggling.

Look at all the folks who have simplified their lives and are living day to day, and happier than they have ever been. Check out the van dwellers/tiny house folks for ideas on a new and simpler lifestyle.

We tend, if we really think about it, to accomplish and acquire the things we really decide to. It really does come down to making a decision, 95% of the time.

[pesphoto]

I think the key, if you really want to retire early, is to lower your consumption dramatically. Just think, seriously, about how much "stuff" you have and worry about that is completely unnecessary and not really contributing, in any significant way, to your happiness or health. It's mind boggling.

Look at all the folks who have simplified their lives and are living day to day, and happier than they have ever been. Check out the van dwellers/tiny house folks for ideas on a new and simpler lifestyle.

We tend, if we really think about it, to accomplish and acquire the things we really decide to. It really does come down to making a decision, 95% of the time.

100 % agree, I'm working on this now, got rid of all debt, and many or most possessions. Next up is to ditch the house( which I will never pay off) and figure out an alternate way to live despite what the expectations of most of the rest of society is. Not that living in an rv or tiny house doesn't come without its pitfalls and issues but it sure seems like a good way to go as I get older. Nowadays there do seem to be alternate ways to go if you look and plan enough.

[colorado_rob]

I think the key, if you really want to retire early, is to lower your consumption dramatically. Just think, seriously, about how much "stuff" you have and worry about that is completely unnecessary and not really contributing, in any significant way, to your happiness or health.

EXCEPT, of course, gear. Right? :-)