Okay financial experts: "Guaranteed lifetime income"

**AndyLate** · 09-20-20, 14:09

Originally Posted by TehLlama

For my part trying to do a half-assed FIRE plan, this is basically the mindset - but my intention is to get to the 'fk you' money stage, then proceed to keep working because I enjoy what I do, but doing it from a position of knowing I can walk out the door and never be troubled to look back sounds great.

My problem is understanding where "fk you" money starts.

Andy

**GH41** · 09-20-20, 17:19

When doing the math don't forget that what you have put away now probably won't buy half as much in 20 years as it does today. Another big one is health insurance. It isn't going to get any cheaper. Then there are the taxes you will pay on any thing you take out of the 401K.

**ABNAK** · 09-20-20, 17:29

Originally Posted by GH41

When doing the math don't forget that what you have put away now probably won't buy half as much in 20 years as it does today. Another big one is health insurance. It isn't going to get any cheaper. Then there are the taxes you will pay on any thing you take out of the 401K.

Already figured those in. I deliberately overestimated tax's and health insurance by a little.

**Steve Shannon** · 09-21-20, 07:47

Originally Posted by AndyLate

My problem is understanding where "fk you" money starts.

Andy

It starts with paycheck deduction that goes some kind of savings. First take care of your future by contributing to your 401k and a Roth IRA. Just have it taken out of every paycheck. It’s great if you can put the maximum in every month. You really will not miss it.
At the very least, you are walking away from free money if you don’t put in whatever your company puts in to match your contribution.
If the interface for your 401k allows it, set it to automatically increase each year by the amount you expect your income to grow.
The Roth is an after taxes retirement account, but any gains there are not taxable. So, if you buy a stock that increases by 2000%, the money is all your.
Most 401k plans will allow you to contribute more than the pre-tax amount. That money can be withdrawn without penalty. That’s your F you money.

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**AndyLate** · 09-21-20, 08:21

Originally Posted by Steve Shannon

It starts with paycheck deduction that goes some kind of savings. First take care of your future by contributing to your 401k and a Roth IRA. Just have it taken out of every paycheck. It’s great if you can put the maximum in every month. You really will not miss it.
At the very least, you are walking away from free money if you don’t put in whatever your company puts in to match your contribution.
If the interface for your 401k allows it, set it to automatically launch increase each year by the amount you expect your income to grow.
The Roth is an after taxes retirement account, but any gains there are not taxable. So, if you buy a stock that increases by 2000%, the money is all your.
Most 401k plans will allow you to contribute more than the pre-tax amount. That money can be withdrawn without penalty. That’s your F you money.

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Solid advice and thank you. We had basically no savings when I retired from the Army at 40. I have been working for 12 years in my second career and started at 8% 401K withholding with a 1% increase each year. My company matches 4% and also contributes 4% once each year. I am still not maxed on pre-tax 401K contributions (I'm over 50) but when I am I will probably keep increasing by 1% and put the after tax into Roth.

Hoping to be a millionaire before I retire.

I wish I knew what the US financial state or retirement will look like in the 8 -13 years I have before retirement.

Andy

**Averageman** · 09-21-20, 10:07

Originally Posted by Steve Shannon

It starts with paycheck deduction that goes some kind of savings. First take care of your future by contributing to your 401k and a Roth IRA. Just have it taken out of every paycheck. It’s great if you can put the maximum in every month. You really will not miss it.
At the very least, you are walking away from free money if you don’t put in whatever your company puts in to match your contribution.
If the interface for your 401k allows it, set it to automatically launch increase each year by the amount you expect your income to grow.
The Roth is an after taxes retirement account, but any gains there are not taxable. So, if you buy a stock that increases by 2000%, the money is all your.
Most 401k plans will allow you to contribute more than the pre-tax amount. That money can be withdrawn without penalty. That’s your F you money.

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I did this and it works great.
I began with 16% going in to my 401K and I invested the entirety of my Sons Child Support in to a College fund. To cover me another way I invested a small amount in to a Roth.
I just stepped away from it except for every annual raise, I increased it by 2-3% and left it to it's own devices.
Having the freedom to retire, pay off the House and Truck in the same year and still have a bundle to play with is very liberating.

**TehLlama** · 09-21-20, 11:11

Originally Posted by AndyLate

My problem is understanding where "fk you" money starts.

Andy

My thoughts are broadly similar to this - the 25x income, in practical terms means that post-CPI inflation adjusted, assuming that tax situations don't shift drastically without accompanying inflationary growth in market value. Again, this is where holdings time-indexed to what I'll actually buy are the difference.

https://20somethingfinance.com/finan...ce-definition/

I think the most subtle definition changes are 'fk you, I can flip burgers part time', 'fk you, I can exist on the beach/in a tiny house/buy a low maintenance retirement place with no further income', and then finally 'fk you, I walk out the door and nothing has to change'.
Depending on which is your preference, what time horizons that entails (e.g. retiring by 40 you have to hedge with a ~3-4% annual burn rate, if you're targeting an age that starts with a 6 and can reasonable expect SSI of any form, 4-5% is realistic and safe. The biggest part always comes down to lifestyle inflation, what additional costs may emerge going forward (HSA's are another solid vehicle, long term care insurance is also solid).
Transportation and entertainment costs come down, paying off mortgages at various points work out to great practical breakpoints, but time-value of money burned prematurely is what makes or breaks early retirement setups... but also why my plan 100% revolves around trying to achieve FU money, but continuing to work because I actually enjoy doing that, can deliberately blow half of it on toys and the rest on college money for kiddos after expenses, and each billing cycle not spent burning nest egg works out to about 3x billing cycles before every monte carlo simulation puts me at destitute (which is actually just no dedicated retirement savings income, like a scary percentage of financially illiterate americans).

**TehLlama** · 09-21-20, 11:12

Originally Posted by TehLlama

My thoughts are broadly similar to this - the 25x income, in practical terms means that post-CPI inflation adjusted, assuming that tax situations don't shift drastically without accompanying inflationary growth in market value. Again, this is where holdings time-indexed to what I'll actually buy are the difference.

https://20somethingfinance.com/finan...ce-definition/

Practically, maximizing every contribution with 'Roth' in the name is the fast track, having to move the rest to taxable accounts and leveraging tax-benefitted options like muni bonds are the rest of the strategy - investing early, and in growth matters.

Retirement savings ahead of college savings, as crazy as it sounds, is correct. Love my kids, but the only reason I'm contributing to stuff now is that Coverdell ESA's have annual limits, and they're low enough I don't notice or care much. In every other regard, 'borrow for school' works better than 'borrow for retirement', so that gets the prioritization, besides we're about to see a seismic shift in how education is paid for now that big schools have had to tacitly accept that teaching can be done 100% online, and very little of that experience is inherently unique to the institution... and definitely does not require forking over tens of thousands of dollars for the privilege of having to deal with institutional accommodations/food/et cetera that bring you close enough to deal with the existential horror of 9am M/W/F classes. That will be a thing of the past, and the price will have to reflect it.

**Averageman** · 09-21-20, 12:07

Originally Posted by TehLlama

Practically, maximizing every contribution with 'Roth' in the name is the fast track, having to move the rest to taxable accounts and leveraging tax-benefitted options like muni bonds are the rest of the strategy - investing early, and in growth matters.

Retirement savings ahead of college savings, as crazy as it sounds, is correct. Love my kids, but the only reason I'm contributing to stuff now is that Coverdell ESA's have annual limits, and they're low enough I don't notice or care much. In every other regard, 'borrow for school' works better than 'borrow for retirement', so that gets the prioritization, besides we're about to see a seismic shift in how education is paid for now that big schools have had to tacitly accept that teaching can be done 100% online, and very little of that experience is inherently unique to the institution... and definitely does not require forking over tens of thousands of dollars for the privilege of having to deal with institutional accommodations/food/et cetera that bring you close enough to deal with the existential horror of 9am M/W/F classes. That will be a thing of the past, and the price will have to reflect it.

Yeah, the retirement came before the College money, but for several reasons.
If I'm not financially squared away, I can't help myself, let alone my Son.
If I ended up in Court via a custody battle, I look like Ward F'ing Cleaver when I drop that on them.
As the savings accumulated it became a ongoing lesson for my Son. You have to teach your kids finance because most likely, no one else will. Once they learn it and see it grow, you'll have a Junior Scrooge McDuck living with you.
I never missed the money coming out of my check, likely as not, you wont either, just live within your means.

**TehLlama** · 09-22-20, 23:12

Originally Posted by Averageman

You have to teach your kids finance because most likely, no one else will. Once they learn it and see it grow, you'll have a Junior Scrooge McDuck living with you.
I never missed the money coming out of my check, likely as not, you wont either, just live within your means.

This is probably the most underrated reason why wealth and poverty remain generational. Whatever other reasons people try to attribute, this is it, and cycle-breakers in positive directions are still uncommon.

Live beneath means, because rainy days are inevitable. I typically have to force myself not to take this mindset to an extreme, and at least spend some money enjoying things I can physically only do at my age... but there's room in the budget.