19 ms·

Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to ret

Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to retire to a lower-cost location.

andrewmcwatters 1y ago
Hell, roughly $600,000-800,000 is enough to lean FIRE, the last time I checked.
- usaar333 1y ago
  Sure, if you are single with no family and wiling to live outside California.
- quickthrowman 1y ago
  If I retired at 40 I don’t think I’d want to remove more than 2% a year from the principal amount, which is.. $12,000-$16,000 a year. How is that possible? Even with a fully paid off house, you still have property taxes, utilities, maintenance. Even 4% a year which is recommended for a 30 year retirement, you’re only taking out $24,000-$36,000 a year.
  - hervature 1y ago
    You are supposed to invest and keep the money working for you. Adjusted for inflation, S&P 500 returns 6.5% a year. That alone gets you above the poverty line. Recall, this is inflation adjusted so your $600,000 is growing with inflation and the poverty line income also grows over time. This does not account for any swings.
    - loeg 1y ago
      You can't actually draw down 6.5%/yr, though, because of sequence of returns risk. The number that is actually safe (historically) is something like 3.5%.
    - quickthrowman 1y ago
      Keep in mind that almost all of the FIRE advice available online has been written in a bull stock market that is almost 2 decades long (COVID drawdown is a blip on the 2008-2025 chart). Past performance is not indicative of future returns. Do you know anyone still running a risk parity 60% UPRO/40% TMF (3x long S&P 500, 3x long 20-year Treasury Bonds) portfolio? That portfolio composition had massive returns, until the Fed started hiking rates. The annual implied volatility of SPX is around 15-20%, if you want to withdraw 6.5% a year at 40 and have to restart your career at 55, be my guest. A 40% drawdown on 600k is -240k which puts you at 360k, 6.5% of which is $23,400. Starts getting pretty tight if you need to sell assets for cash which reduces your future returns.
      - deanmoriarty 1y ago
        > Keep in mind that almost all of the FIRE advice available online has been written in a secular bull market that is almost 2 decades long Most of the reasonable FIRE advice (e.g. https://earlyretirementnow.com/ https://earlyretirementnow.com/ quality) suggests a ~3-3.5% withdrawal rate, which has been measured using historical data way before the current secular market. Is your take that even such withdrawal rate wouldn't work anymore, moving forward?
  - daemonologist 1y ago
    3.5% historically holds up over longer retirements (I ran a rough model and got ~98% success for 50 years). $21k is quite lean - you'd have to pick and choose luxuries like a car, no roommates, travel, etc. - but for a single person in many parts of the country it's doable. The big gamble is that Medicaid might get cut further, which would definitely force you back to work.
    - quickthrowman 1y ago
      Yes, it’s doable if you rent a $500/month apartment/bedroom in a rural area or split a shitty $1000/month apartment in a mid tier city and don’t have a car, never travel, and don’t use medical care. My employer paid health insurance premiums are ~$15,000/yr. That sounds like my personal idea of Hell, I’d like to be able to get treatment if I got cancer instead of being given a prescription for painkillers and a look of sorrow from a doctor that can’t treat me. FWIW, I currently live in a shitty $1000/month apartment in a mid-tier city, not casting any aspersions on the living situation. But, I’ve lived in this same city without a car and it’s miserable.
  - ghaff 1y ago
    Presumably, it would be cheaper if I had a fairly modern urban condo but my exurban property is a good $15K+ per year. Heck, I just had a kitchen fire and, even with good insurance, I'll probably be $50K out of pocket when all is said and done. I could probably have done things more on the cheap but didn't really make sense.
- dmoy 1y ago
  Lean fire on $600k-$800k is taking an extreme gamble on the cost of health insurance continuing to be subsidized way beyond Medicaid levels. Which you might be fine with, but it's a pretty big risk. Unsubsidized healthcare in a lot of places in the US costs $10k-$20k per person per year. For early retirement that eats up like $400k-$500k per person.
  - dom96 1y ago
    This is why you don't retire in a country with private healthcare
    - ghaff 1y ago
      Medicare isn't that much cheaper than exchanges although the cost decreases over time as you aren't earning significantly any longer. And lots of issues associated with moving countries.
    - HNdev1995 1y ago
      My parents live in the UK which has free healthcare. The situation is dire. The waitlist for chronic pain surgeries are 3-4 years long. Lots of people, including my parents, have resorted to flying out to other cheaper countries to get treatment.
      - igor47 1y ago
        Is chronic pain an outlier here, or representative of wider trends? My uninformed prior is that surgery is not a good approach for chronic pain, and that the NHS is more likely to cover surgeries with a more clear-cut cost/benefit ratio
        ljf 1y ago
        For things like hip replacements, cancer treatment and other physical ailments the NHS is pretty awesome. Some stuff it fails at I am sure, but as you say that is in part down to the way that it prioritises care based on results.
deleted 1y ago
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mathiaspoint 1y ago
If you're willing to be fiscally conservative, go to a cheaper location, and continue working on side projects you don't need the payout at all. The question everyone seems to be asking is "is the payout worth spending the first ten years of your career in the West Coast startup scene." Ten years is quite a lot of time to spend somewhere you don't actually want to live.
- okdood64 1y ago
  The converse(?) is also true; how easy is it to leave somewhere you've made roots (family, friends, community) in for a decade or two?

Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to retire to a lower-cost location.

andrewmcwatters 1y ago

Hell, roughly $600,000-800,000 is enough to lean FIRE, the last time I checked.

usaar333 1y ago
Sure, if you are single with no family and wiling to live outside California.
quickthrowman 1y ago
If I retired at 40 I don’t think I’d want to remove more than 2% a year from the principal amount, which is.. $12,000-$16,000 a year. How is that possible? Even with a fully paid off house, you still have property taxes, utilities, maintenance. Even 4% a year which is recommended for a 30 year retirement, you’re only taking out $24,000-$36,000 a year.
- hervature 1y ago
  You are supposed to invest and keep the money working for you. Adjusted for inflation, S&P 500 returns 6.5% a year. That alone gets you above the poverty line. Recall, this is inflation adjusted so your $600,000 is growing with inflation and the poverty line income also grows over time. This does not account for any swings.
  - loeg 1y ago
    You can't actually draw down 6.5%/yr, though, because of sequence of returns risk. The number that is actually safe (historically) is something like 3.5%.
  - quickthrowman 1y ago
    Keep in mind that almost all of the FIRE advice available online has been written in a bull stock market that is almost 2 decades long (COVID drawdown is a blip on the 2008-2025 chart). Past performance is not indicative of future returns. Do you know anyone still running a risk parity 60% UPRO/40% TMF (3x long S&P 500, 3x long 20-year Treasury Bonds) portfolio? That portfolio composition had massive returns, until the Fed started hiking rates. The annual implied volatility of SPX is around 15-20%, if you want to withdraw 6.5% a year at 40 and have to restart your career at 55, be my guest. A 40% drawdown on 600k is -240k which puts you at 360k, 6.5% of which is $23,400. Starts getting pretty tight if you need to sell assets for cash which reduces your future returns.
    - deanmoriarty 1y ago
      > Keep in mind that almost all of the FIRE advice available online has been written in a secular bull market that is almost 2 decades long Most of the reasonable FIRE advice (e.g. https://earlyretirementnow.com/ https://earlyretirementnow.com/ quality) suggests a ~3-3.5% withdrawal rate, which has been measured using historical data way before the current secular market. Is your take that even such withdrawal rate wouldn't work anymore, moving forward?
- daemonologist 1y ago
  3.5% historically holds up over longer retirements (I ran a rough model and got ~98% success for 50 years). $21k is quite lean - you'd have to pick and choose luxuries like a car, no roommates, travel, etc. - but for a single person in many parts of the country it's doable. The big gamble is that Medicaid might get cut further, which would definitely force you back to work.
  - quickthrowman 1y ago
    Yes, it’s doable if you rent a $500/month apartment/bedroom in a rural area or split a shitty $1000/month apartment in a mid tier city and don’t have a car, never travel, and don’t use medical care. My employer paid health insurance premiums are ~$15,000/yr. That sounds like my personal idea of Hell, I’d like to be able to get treatment if I got cancer instead of being given a prescription for painkillers and a look of sorrow from a doctor that can’t treat me. FWIW, I currently live in a shitty $1000/month apartment in a mid-tier city, not casting any aspersions on the living situation. But, I’ve lived in this same city without a car and it’s miserable.
- ghaff 1y ago
  Presumably, it would be cheaper if I had a fairly modern urban condo but my exurban property is a good $15K+ per year. Heck, I just had a kitchen fire and, even with good insurance, I'll probably be $50K out of pocket when all is said and done. I could probably have done things more on the cheap but didn't really make sense.
dmoy 1y ago
Lean fire on $600k-$800k is taking an extreme gamble on the cost of health insurance continuing to be subsidized way beyond Medicaid levels. Which you might be fine with, but it's a pretty big risk. Unsubsidized healthcare in a lot of places in the US costs $10k-$20k per person per year. For early retirement that eats up like $400k-$500k per person.
- dom96 1y ago
  This is why you don't retire in a country with private healthcare
  - ghaff 1y ago
    Medicare isn't that much cheaper than exchanges although the cost decreases over time as you aren't earning significantly any longer. And lots of issues associated with moving countries.
  - HNdev1995 1y ago
    My parents live in the UK which has free healthcare. The situation is dire. The waitlist for chronic pain surgeries are 3-4 years long. Lots of people, including my parents, have resorted to flying out to other cheaper countries to get treatment.
    - igor47 1y ago
      Is chronic pain an outlier here, or representative of wider trends? My uninformed prior is that surgery is not a good approach for chronic pain, and that the NHS is more likely to cover surgeries with a more clear-cut cost/benefit ratio
      - ljf 1y ago
        For things like hip replacements, cancer treatment and other physical ailments the NHS is pretty awesome. Some stuff it fails at I am sure, but as you say that is in part down to the way that it prioritises care based on results.

deleted 1y ago

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mathiaspoint 1y ago

If you're willing to be fiscally conservative, go to a cheaper location, and continue working on side projects you don't need the payout at all. The question everyone seems to be asking is "is the payout worth spending the first ten years of your career in the West Coast startup scene." Ten years is quite a lot of time to spend somewhere you don't actually want to live.

okdood64 1y ago
The converse(?) is also true; how easy is it to leave somewhere you've made roots (family, friends, community) in for a decade or two?