Investing General Discussion

Gravel said:

Man, this year has been nuts. We're up almost 6 full years of expenses.

Which is wild, because the first year we were down about 4 and a half years of expenses. In fact, we basically started 2024 at exactly the same net worth as we retired with at the end of 2021.

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I know this year is an outlier but my motivation to work is severely flagging seeing the numbers. I may officially drop to part time in 2025. Congrats on retirement, can't wait to join you. Looking at 2026 to retire officially right now, might move it up if no major crashes happen.

Rangoth said:

For those about to retire(grats, also jealous), what would be the withdrawal/financial plan? I've always wondered that and it's typically not a topic people feel comfortable discussing in person.

• Take out "regular" amounts, similar to a paycheck? Only take money out when needed allowing it to grow in the retirement account?
• Are you over whatever age(62? 65?) to avoid penalties, or do you simply not care?
• Would you continue to actively trade or literally retire and shift to hobbies or whatever?
• When you do the math to say "Im ready to retire!" what type of formula do you typically use?
  • For me it's something along the lines of "if i took my current annual salary would it last me 20 years". There is a lot more to it, but that's my general sort of rule of thumb. But it depends on my age(retiring at 45-50 I'd want 30ish years). I also want enough for "ohh shit" moments beyond that amount, ideally enough to leave some for family, etc. Do I need that much if I no longer have a mortgage, etc, etc....

The only thing I know for absolute certain is that I would prefer to retire earlier rather than later even if that means less money, but still enough to do most things. I don't think I am gonna live forever as men in my family don't, so if I can get the mortgage paid off I would be looking to retire asap after that.

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I'll go through your questions one by one with the conventional wisdom and my thoughts, Blazin and others may have additional things to contribute, I don't pretend to be an expert on this. The part I am good at is making money in the first place which makes a lot of the other things academic.

• Take out "regular" amounts, similar to a paycheck? Only take money out when needed allowing it to grow in the retirement account?

I'd try to take out lumps when needed at local market highs, and avoid doing so at local market lows. There's no way to really know when these are, but if there was a sudden big drop you don't want to be stuck pulling out $20k every 1st of the month or something. You should have a good idea of your yearly expenses or needs so you know about how much you need to be pulling out. There's also some good conventional wisdom about keeping a years' worth of expenses in a bond ETF or similar that won't have the same returns as an equities ETF or straight equities, but it also doesn't go down so you can pull from that during a downtown so you don't have to sell equities at a low.

• Are you over whatever age(62? 65?) to avoid penalties, or do you simply not care?

I'm not old enough to pull from 401(k) or IRA's, but I have a lot in taxable accounts too. Prior to 59.5 I'll pull from the taxable accounts and afterwards I'll mix in withdrawals from both to minimize taxes.

• Would you continue to actively trade or literally retire and shift to hobbies or whatever?

I don't actively trade now, I buy about 85% VTI and 15% VGT and just let it sit. Literally haven't sold any in 8-9 years.

• When you do the math to say "Im ready to retire!" what type of formula do you typically use?

There are a lot of FIRE calculators, but the bottom line is it depends on how much you spend. If you can live off $50k/yr, you only need about $1.2M to never work again. Also depends on how much you can flex your expenses for downturns. If you would like to have $200k/yr in retirement but you could do $100k if needed, you can retire with WAY less and flex down during downturns. There's also the 4% rule which is more of a benchmark, you can withdraw about 4% of your portfolio per year for 30 years and reasonably expect it to last. The other problem is a lot of high earners never think they have enough, so you end up with people with 8 figure net worths wondering if they can quit... of course they can, but what if! There's always a scenario where you need more money. At some point you say enough and stop.

• The only thing I know for absolute certain is that I would prefer to retire earlier rather than later even if that means less money, but still enough to do most things. I don't think I am gonna live forever as men in my family don't, so if I can get the mortgage paid off I would be looking to retire asap after that.

Mortgages are some of the cheapest debt you can own... if your mortgage rate is sub-5%, keep that shit, do not pay it off, and keep that money in the market. When the rates come back down I actually want to refinance into an interest-only loan and keep my equity only at around 20% because I'm just throwing away money sitting in my house that could be earning in the market.

I should probably retire earlier but I'm trying to hit a benchmark birthday and retire just before that, I don't know why, just seems like a psychological victory to retire then.

Gravel said:

No, I retired at 37. I'm 40 now.

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What kind of NW did you retire with at 37? With you saying "we" I'm assuming you're married, do you have kids?

I'm about 10 years older than you and still skittish about retiring. Mad respect pulling the trigger.

Gravel said:

No kids, just wife and I. We retired with about $1.1m and we spend around $50k a year.

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Nice. Thats definitely leanfire territory, but you're living the dream especially with these last couple years (2022 did suck).

Khane said:

I've thought about this a lot in recent years and have a similar "dilemma" you spoke of Cad where its within reach which is making me less and less ambitious to the point of just wanting to coast or even just semi retire.

My personal number for comfortable retirement is 6.5M or thereabouts. This is so I don't have to worry about budgeting or bad market runs at all and wouldn't have to make any sacrifices to my current living standard.

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6.5M would give you a very comfortable professional working salary for life without having to ever work if you can just live off the gains and not dip into the principal ever.

How far away are you from it?