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> [she] retired at 49 with $1.3 million in savings. That doesn't not seem like nearly enough. How does she afford health insurance? I would be terrified that

> [she] retired at 49 with $1.3 million in savings. That doesn't not seem like nearly enough. How does she afford health insurance? I would be terrified that after a prolonged downturn you'd be left with nothing. And Social Security in the US pays less the less you work.

wskinner 2y ago
"Enough" is a function of how much you have and how much you need. 25x annual spend is a common heuristic for the required net worth before you can safely retire. And the older you are, the less margin of safety you need. 4% of $1.3 million is $52k, which is enough to live quite comfortably in many places.
- al_borland 2y ago
  A bad year or two in the market early in retirement can really change that calculation if they aren’t accounting for sequence-of-returns risk.
  - wskinner 2y ago
    The 4% rule of thumb is intended to include sequence-of-returns risk. See e.g. https://firecalc.com/ https://firecalc.com/, a tool commonly used to aid these decisions.
foogazi 2y ago
> I would be terrified that after a prolonged downturn you'd be left with nothing. In the long run we are all dead > And Social Security in the US pays less the less you work. Aren't there diminishing returns with Social Security ? so at some cutoff you are NOT getting more regardless of how much more you work
- r0ckarong 2y ago
  > In the long run we are all dead Arguably, being left alive with nothing is worse than dead.
- saxonww 2y ago
  There is a maximum. It's also the case that your social security income is capped, too. I think that a person earning a million dollars a year for 35 years doesn't look any different to social security than someone earning 200k a year for 35 years, because both are well over the income cap. I haven't read any of the FIRE stuff, but I wonder if it ignores social security. I'd argue that you can't say you're Financially Independent if your early retirement planning is dependent on social security; it's your money (...right), but there are rules around it, and those rules change.
- rufus_foreman 2y ago
  >> Aren't there diminishing returns with Social Security ? so at some cutoff you are NOT getting more regardless of how much more you work Yes, Social Security is highly progressive. As I understand it, it takes your average monthly income over your 35 highest paying years, indexed for inflation, and pays you (2024 numbers) 90% of your monthly income up to $1,174, 32% of your monthly income from $1,175 to $7,078, and 15% of your monthly income above $7,078. There's also a cap on the Social Security tax and so a cap on the monthly income that is considered. People refer to those as "bend points" in Social Security benefits, and there is a greatly reduced incentive to continue contributing to Social Security after reaching the second bend point. Someone who is 49 today likely started working as a teenager and would have close to 35 years of income credits (and so only a few "zero" years in the calculations). If they spent much time in a high paying job they would be close to or past the second bend point. See https://www.fool.com/retirement/social-security/bend-points/ https://www.fool.com/retirement/social-security/bend-points/, although it has 2023 numbers for the bend points. Also, sounds like the person in question was married for over 10 years, so there could be spousal benefits depending on the situation.
citizen_friend 2y ago
The emotions are no different at age 60 with 5 million.
- esafak 2y ago
  I don't believe you. Are you expecting to live to 100?
  - citizen_friend 2y ago
    Go read any forum about retirement and see all the uncertainty and worry.
- toast0 2y ago
  If you've got $5 million at 60, you've probably qualified for medicare and a significant social security payment. With $5 million, it shouldn't be hard to cover your medical expenses for 5 years, and in 2-10 years you'll get regular payments from Social Security. I'm sure there's some people who would struggle with $5M at 60, but they'd need to have some pretty specific circumstances. It should be clearly enough for most. IMHO, $5M is likely enough for most at any age, but maybe not in an area with high housing costs.
  - citizen_friend 2y ago
    The math isn’t the problems. It’s the feat and uncertainty.
    - toast0 2y ago
      When the math is clear, there's no uncertainty and fear. I have more than enough, and I don't worry about running out. If I had $5M at 60, I would feel the same way. It's clearly more than enough. If I then went on to have $1M at 70, I would worry. The earlier case of $1.3M at 49 seems reasonable to worry about. If $5M at 60 isn't enough, there's probably no reasonable number that is enough, and there's no sense worrying about it, because there's no action to be taken. If you haven't figured out how to not worry about things you can't take action about, maybe you've misspent your 60 years. But, there's not much action to take about that either.
toast0 2y ago
If you've got $1.3 M in savings, chances are you can keep your healthcare MAGI above the Medicaid income threshold and below the threshold for a large ACA subsidy. If your savings is invested, you can make choices that lead to more or less realized income, depending on where you are. At least in early retirement, I'd expect some return of investment rather than all realized capital gains and dividends. Also, depending on where you live, that might be ok for an unsubsidized exchange plan too, if you're just worried about affording health insurance. Actually use it to the out of pocket max most years, and you'd be cutting it close, especially if you have substantial living expenses, suffer an expensive injury or illness that's not covered, or need to get help with daily activities. OTOH, planning to use your assets to get into a situation where medicaid will cover you when your assets run out is a realistic plan, even if it's not a great outcome. I've got some numbers in an older comment[1]: > In my county, if I were 64 years old, assigned male at birth, I'm looking at about $17,000/year for a Blue Cross Bronze plan (less costly options available), with $9,200 out of pocket max. I'm using 64 years old rather than 49, to give an idea of the increased cost as the retiree ages, and assuming things kind of stay even with inflation (because I have to make some assumptions to budget, not because they're good assumptions!) $17k/year on $1.3m is 1.3% of portfolio, so maybe a third of a safe withdrawal rate (depending on yet more assumptions) significant, but manageable. If you end up paying the full out of pocket max every year, that's more like 2% of the portfolio, and is like half of your safe withdrawal rate. I wouldn't want to retire with half of my budget spoken for, but depends on the situation. Of course, personally, I retired at the end of 2019, and then got roped into working part time again at the end of 2022. If my financials were on the wrong track, it seems like I'd have lots of options; there's also plenty of retail work available in my community. [1] https://news.ycombinator.com/item?id=39759499 https://news.ycombinator.com/item?id=39759499
- archagon 2y ago
  If you don’t have major health problems requiring specific doctors, and depending on your place of residence, Medicaid could be a good option too. I had very positive experiences with Medi-Cal in Santa Clara County around 7 years ago: my HMO referred me to every specialist I requested, and the cost to me was always $0.

wskinner 2y ago

"Enough" is a function of how much you have and how much you need. 25x annual spend is a common heuristic for the required net worth before you can safely retire. And the older you are, the less margin of safety you need. 4% of $1.3 million is $52k, which is enough to live quite comfortably in many places.

al_borland 2y ago
A bad year or two in the market early in retirement can really change that calculation if they aren’t accounting for sequence-of-returns risk.
- wskinner 2y ago
  The 4% rule of thumb is intended to include sequence-of-returns risk. See e.g. https://firecalc.com/ https://firecalc.com/, a tool commonly used to aid these decisions.

foogazi 2y ago

> I would be terrified that after a prolonged downturn you'd be left with nothing. In the long run we are all dead > And Social Security in the US pays less the less you work. Aren't there diminishing returns with Social Security ? so at some cutoff you are NOT getting more regardless of how much more you work

r0ckarong 2y ago
> In the long run we are all dead Arguably, being left alive with nothing is worse than dead.
saxonww 2y ago
There is a maximum. It's also the case that your social security income is capped, too. I think that a person earning a million dollars a year for 35 years doesn't look any different to social security than someone earning 200k a year for 35 years, because both are well over the income cap. I haven't read any of the FIRE stuff, but I wonder if it ignores social security. I'd argue that you can't say you're Financially Independent if your early retirement planning is dependent on social security; it's your money (...right), but there are rules around it, and those rules change.
rufus_foreman 2y ago
>> Aren't there diminishing returns with Social Security ? so at some cutoff you are NOT getting more regardless of how much more you work Yes, Social Security is highly progressive. As I understand it, it takes your average monthly income over your 35 highest paying years, indexed for inflation, and pays you (2024 numbers) 90% of your monthly income up to $1,174, 32% of your monthly income from $1,175 to $7,078, and 15% of your monthly income above $7,078. There's also a cap on the Social Security tax and so a cap on the monthly income that is considered. People refer to those as "bend points" in Social Security benefits, and there is a greatly reduced incentive to continue contributing to Social Security after reaching the second bend point. Someone who is 49 today likely started working as a teenager and would have close to 35 years of income credits (and so only a few "zero" years in the calculations). If they spent much time in a high paying job they would be close to or past the second bend point. See https://www.fool.com/retirement/social-security/bend-points/ https://www.fool.com/retirement/social-security/bend-points/, although it has 2023 numbers for the bend points. Also, sounds like the person in question was married for over 10 years, so there could be spousal benefits depending on the situation.

citizen_friend 2y ago

The emotions are no different at age 60 with 5 million.

esafak 2y ago
I don't believe you. Are you expecting to live to 100?
- citizen_friend 2y ago
  Go read any forum about retirement and see all the uncertainty and worry.
toast0 2y ago
If you've got $5 million at 60, you've probably qualified for medicare and a significant social security payment. With $5 million, it shouldn't be hard to cover your medical expenses for 5 years, and in 2-10 years you'll get regular payments from Social Security. I'm sure there's some people who would struggle with $5M at 60, but they'd need to have some pretty specific circumstances. It should be clearly enough for most. IMHO, $5M is likely enough for most at any age, but maybe not in an area with high housing costs.
- citizen_friend 2y ago
  The math isn’t the problems. It’s the feat and uncertainty.
  - toast0 2y ago
    When the math is clear, there's no uncertainty and fear. I have more than enough, and I don't worry about running out. If I had $5M at 60, I would feel the same way. It's clearly more than enough. If I then went on to have $1M at 70, I would worry. The earlier case of $1.3M at 49 seems reasonable to worry about. If $5M at 60 isn't enough, there's probably no reasonable number that is enough, and there's no sense worrying about it, because there's no action to be taken. If you haven't figured out how to not worry about things you can't take action about, maybe you've misspent your 60 years. But, there's not much action to take about that either.

toast0 2y ago

If you've got $1.3 M in savings, chances are you can keep your healthcare MAGI above the Medicaid income threshold and below the threshold for a large ACA subsidy. If your savings is invested, you can make choices that lead to more or less realized income, depending on where you are. At least in early retirement, I'd expect some return of investment rather than all realized capital gains and dividends. Also, depending on where you live, that might be ok for an unsubsidized exchange plan too, if you're just worried about affording health insurance. Actually use it to the out of pocket max most years, and you'd be cutting it close, especially if you have substantial living expenses, suffer an expensive injury or illness that's not covered, or need to get help with daily activities. OTOH, planning to use your assets to get into a situation where medicaid will cover you when your assets run out is a realistic plan, even if it's not a great outcome. I've got some numbers in an older comment[1]: > In my county, if I were 64 years old, assigned male at birth, I'm looking at about $17,000/year for a Blue Cross Bronze plan (less costly options available), with $9,200 out of pocket max. I'm using 64 years old rather than 49, to give an idea of the increased cost as the retiree ages, and assuming things kind of stay even with inflation (because I have to make some assumptions to budget, not because they're good assumptions!) $17k/year on $1.3m is 1.3% of portfolio, so maybe a third of a safe withdrawal rate (depending on yet more assumptions) significant, but manageable. If you end up paying the full out of pocket max every year, that's more like 2% of the portfolio, and is like half of your safe withdrawal rate. I wouldn't want to retire with half of my budget spoken for, but depends on the situation. Of course, personally, I retired at the end of 2019, and then got roped into working part time again at the end of 2022. If my financials were on the wrong track, it seems like I'd have lots of options; there's also plenty of retail work available in my community. [1] https://news.ycombinator.com/item?id=39759499 https://news.ycombinator.com/item?id=39759499

archagon 2y ago
If you don’t have major health problems requiring specific doctors, and depending on your place of residence, Medicaid could be a good option too. I had very positive experiences with Medi-Cal in Santa Clara County around 7 years ago: my HMO referred me to every specialist I requested, and the cost to me was always $0.