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- Are Millennials the New Boomers? - August 28, 2023
Hey all! It’s Friday, so you know what means: Reader Case time!
This one was an interesting one. Most of our readers are Millennials or Gen X-ers, cause they, you know, understand how this newfangled “technology” works, but every so often I’ll get a *gasp* Baby Boomer asking us to do a reader case, which just confuses the hell out of me. Say what? Aren’t you twice my age? Why would a Boomer ask a lowly Millennial for retirement advice?
Anyway, let the bloodbath–er I mean, reader case–begin.
Dear Millennial-Revolution,
I first became aware of your website via the “ChooseFI” podcast featuring Jim Collins. Then I listened to podcast #047 which featured you two and was hooked.
I’m a latecomer to FI and you guys have so much information that it makes my head spin.
Oops, my head just spun off. Let me put it back. There. Now my brain fell out onto the floor. Where is it? There it is. Nope, that’s a raisin. There it is. Nope that’s a pea. Finally found it. Chirp, chirp, chirp. Nope, that’s a bird brain (should’ve know as it is larger than I remember it being). Finally found it.
Anyway, after reading so much I feel that I need advice on which of three paths that I’ve outlined for myself, I should choose.
I’m 60 years old (1900 C.E. millennial or thereabouts) and my net worth is $347,000.
My gross income last year was $47,164 and my net was $38,085 after taxes and insurance. Out of that I put $4,950 into my pre-tax 401(k) which left me with $33,135 in take home pay.
My monthly expenses are as follows: House $666, HOA $30, Car $426, Car Insurance $100, Internet $43, Electricity $100, Water $26, Natural Gas $30, Trash $15, Food $220, Gasoline $100, Cell Phone $30, Ooma $4, Landscaper $85 and Amazon Prime $9. Which should total $2,035 per month.
Debts: Mortgage $101,297 at $666 per month, 30 years at 3.99% ending 2044 and Car $12,647 at $426 per month at 1.9% ending August 2020.
The house is worth $240,000 and the car is worth $13,000.
I have $20,000 in savings, $67,504 in my 401(k), I have $68,580 in Roth IRAs ($12,100 in VTSMX, $19,440 in HSTIX, $36,524 in HOVLX and $510 in HSCSX). And I have $37,027 in a traditional IRA invested in VBR.
I also have $1,425 in a regular stock account recently started of which I put 18% of my take home pay into every two weeks.
In January I sold my two DRIPs for $19,000 and decided to live off of that money plus my take home pay this year in order to fully fund my 401(k) this year 60% maximum at work (I’m a dealer in Las Vegas) up to $24,500. I’ve already put $6,500 into my Roth IRA this year. I then noticed that I would receive about another $2,880 in an income tax refund next year due to the 401(k) contributions plus I’ll qualify for an income tax Savers Credit next year of either $500 or $1,000. Then after reading various FI blogs I discovered that I could convert some of my traditional IRA this year into a Roth IRA. I can use the difference between my income this year and $38,700 in order to not pay any Capital Gains tax on the traditional IRA. Another win! Thank you FI community! I was skipping down the lane and whistling a happy tune.
Then, I read your blog post about murdering your mortgage in 5 years. So I did some math shit and discovered that if I paid $2010.35 for the next 60 payments then my mortgage would be paid off. However, I won’t get the large tax refund or the Savers Credit next year or the following years. C’est la vie.
But then, I listened to the Millennial-Revolution interview on the ChooseFI podcast and I thought…”I could sell everything and move to Thailand and retire now.” I had been thinking of checking out Thailand as I saw on You Tube a lot of ex-pats are living there and loving it. And FIRECracker waxing poetically about Thailand in her blog posts.
Finally, my question is, which of the three ways to go would you recommend if this scenario was yours?
Thank you very much, in advance and thank you for helping people reach FI!
Sincerely,
BoomerTryingToRetire
OK, there’s a lot of stuff to parse here. Let’s summarize it here:
| Summary | |
|---|---|
| Income (after tax) | $38,085 per year, $3,173.75 per month |
| Expenses | $24,420 per year, $2,035 per month |
| Assets | $347,000 total, $194,539 liquid |
| Debt | $101,297 mortgage |
First of all, of BoomerTryingToRetire’s $347,000 net worth, only $194,539 is in liquid assets. The rest is stuck in the house and therefore we can’t use it to retire.
Oh and about that house, you’re 60 and you still have a mortgage?!? So housing didn’t make all Boomers rich and Millennials screwed? Shocking!
While it’s a huge mystery to me why you’re not mortgage free at this age, it’s obvious something went horribly wrong, and we’re not going to dwell on it. Let’s just see how we can fix it:
Should He Pay Off The Mortgage Faster?
This was his first question. Should he try to get mortgage free in 5 years. And as much as I like the idea of getting out of debt as fast as possible, in this case it’s a moot point. He can’t do it.
According to him, he can get out of debt in 5 years by increasing his mortgage payment to $2010.35 a month. That would put his monthly expenses at $2,035 – $666 (current mortgage payment) + $2010.35 (new mortgage payment) = $3379.35. That’s $40,552.20 a year, which is more than his after-tax pay. So unfortunately, paying off his mortgage in 5 years isn’t going to happen.
He’s going to have to retire with a mortgage. It sucks, but that’s where we are.
What Do His Retirement Numbers Look Like?
OK so given that he’s got a mortgage he’s going to have to pay in retirement, how do his numbers look as they stand now?
Well, his monthly expenses are $2,035. Per year, that’s $2,035 x 12 = $24,420. As per the 4% rule, that would require a portfolio of $24,420 x 25 = $610,500. He’s got $194,539 right now. So right off the bat I know we’re probably not gonna like this answer.
Right now, his after-tax earnings of $38,085 subtracted by his living expenses of $24,420 means he can save $13,665 a year. How does our projection look with those values?
| Year | Balance | ROI | Savings | Total |
|---|---|---|---|---|
| 1 | $194,539.00 | $11,672.34 | $13,665.00 | $219,876.34 |
| 2 | $219,876.34 | $13,192.58 | $13,665.00 | $246,733.92 |
| 3 | $246,733.92 | $14,804.04 | $13,665.00 | $275,202.96 |
| 4 | $275,202.96 | $16,512.18 | $13,665.00 | $305,380.13 |
| 5 | $305,380.13 | $18,322.81 | $13,665.00 | $337,367.94 |
| 6 | $337,367.94 | $20,242.08 | $13,665.00 | $371,275.02 |
| 7 | $371,275.02 | $22,276.50 | $13,665.00 | $407,216.52 |
| 8 | $407,216.52 | $24,432.99 | $13,665.00 | $445,314.51 |
| 9 | $445,314.51 | $26,718.87 | $13,665.00 | $485,698.38 |
| 10 | $485,698.38 | $29,141.90 | $13,665.00 | $528,505.28 |
| 11 | $528,505.28 | $31,710.32 | $13,665.00 | $573,880.60 |
| 12 | $573,880.60 | $34,432.84 | $13,665.00 | $621,978.44 |
12 years. That would mean at his current trajectory, he’d be able to retire when he’s…72.
Ick.
But wait, there’s something we can take into account that might help, which is the fact that he’s paying a car payment (!) as part of his monthly expenses. That will end in 2 years, at which point his living expenses will drop to $2,035 – $426 = $1,609. As per the 4% rule, that means we’ll need a portfolio of $482,700. And, his savings after year 2 increases to $38,085 – $1,609 x 12 = $18,777. What does that do to his numbers?
| Year | Balance | ROI | Savings | Total |
|---|---|---|---|---|
| 1 | $194,539.00 | $11,672.34 | $13,665.00 | $219,876.34 |
| 2 | $219,876.34 | $13,192.58 | $13,665.00 | $246,733.92 |
| 3 | $246,733.92 | $14,804.04 | $18,777.00 | $280,314.96 |
| 4 | $280,314.96 | $16,818.90 | $18,777.00 | $315,910.85 |
| 5 | $315,910.85 | $18,954.65 | $18,777.00 | $353,642.50 |
| 6 | $353,642.50 | $21,218.55 | $18,777.00 | $393,638.05 |
| 7 | $393,638.05 | $23,618.28 | $18,777.00 | $436,033.34 |
| 8 | $436,033.34 | $26,162.00 | $18,777.00 | $480,972.34 |
8 years and a bit. That’s better, but we’re still talking about retiring at 68.
Yeesh. What the heck happened? Normally, the benefit of owning a home comes when the mortgage gets paid off and you get to live in it super-cheap. But for whatever reason, this never happened. So we’re hit here with the double whammy of the high costs of carrying a mortgage into retirement plus locking away nearly half of his net worth in an asset he can’t use to fund his expenses.
What if he retires to Thailand?
OK now here’s where things get interesting. If he sells his house and retires to a low-cost country like Thailand, the lower cost of living affects his number dramatically. According to Numbeo, the cost of living in Bangkok for a single person (and excluding rent) is about 21,300 baht, or $645 USD. Renting a single bedroom apartment in the city centre is listed as 21,600 baht, or $655 USD. So all in, we’re talking about $1299 a month, or $15,588 a year.
And this is in Bangkok. If you were to move out of the city centre, or to another city entirely, you could drop that even further. Hell, if you were to stay in Vietnam or Cambodia, that comes down even more.
If he wants to stay closer to the States for family? He can also retire to Mexico, Panama, Ecuador, and a multitude of other South American countries to reduce his costs, and as we found out this year, even Portugal!
How much do you need to support this lifestyle if you live in Thailand? As per the 4% rule, $15,588 x 25 = $389,700. His total net worth is at $347,000, so he’s almost there now. If he were to save for a year or two, then sell the house and the car and invest it, he’s done!
Read the Workshop!
However, before he pulls the trigger and buys that plane ticket to Thailand/Mexico/SouthAmerica/Portugal, BoomerWhoWantsToRetire is going to need to learn how to invest.
I can’t see his entire portfolio from this email, but of the funds he did mention, they’re all stock ETFs. And rather than a broad-based index, HSTIX is a large-cap fund, HOVLX is a value stock fund, VBR is a small-cap value fund. He’s all over the place, and most importantly, he appears to be 100% equity. That’s nuts. I’m not even 100% equity, and I’m 35. At 60, he shouldn’t be anywhere near that high. 60% or even 50% equity is more appropriate.
Social Security
And finally, we’re going to mention something I almost never include in a reader case: Social Security. I have absolutely no idea how much in social security taxes he’s paid over the years, but if he’s eligible it could be a game changer.
The average social security payout is around $1,000 a month. If you retire at 62, that becomes around $700 a month.
If BoomerTryingToRetire is eligible for anything around that amount, he would then only retire $179,700 to retire. Theoretically, he’d able to retire now, then in 2 years when he turns 62 apply for his Social Security. Then not only would he be retired, he’d be comfortably retired.
So get thee to the Social Security office and see how much you’d be eligible for post-haste!
Medical Insurance & Visas
One note that if you do decide to retire abroad, note that generally Medicaid does NOT cover you outside the country. You will need some private health insurance, but as we’ve written about before medical insurance is ridiculously cheap outside the US. A 1-year expat insurance policy from IMGlobal for a 62-year old in Thailand cost about $1500 USD for a year.
Also, if you’re serious about retiring abroad, I’d suggest going to a few countries as a tourist for a few months to see if you even like it. Moving to a different country is a big deal, so you want to make sure it’s the right decision for you before you do something drastic like sell your house. Also note that if you intend to stay in a country long-term, you’ll need to look into getting a retirement visa, which many countries offer allowing retirees like yourself to move there for up to a year at a time. Here’s a guide to the one offered by Thailand.
So there you have it. Staying where he is, he’s still 8 years away from retirement. But by retiring to a low-cost location like SE Asia, he could do it in just 2 years. And if he has Social Security, he’d be able to retire there now.
What do you guys think? Let’s here it in the comments below!
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It takes a lot of guts to rethink everything at 60 years of age. Better late than never — kudos to this guy!
A tip on Social Security: they’re incredibly short-staffed. I’ve heard horror stories of multi-hour waits even with an appointment. Probably best get to https://www.ssa.gov/site/signin/en/ instead; our Boomer friend seems plenty savvy enough to create a login and make that work, and the online interface can provide everything necessary to figure out where he stands.
Yes, thank you for that. As someone in their 30’s, I don’t think I’ve ever even logged into my Canadian-equivalent CPP site.
Thanks Adam, I appreciate the comment. I do have an account with SSA and my benefit at age 62 is $1,385 per month and at full retirement it would be $1,932 per month.
I do believe that I will wait at least until age 65 to retire because of the expense of health insurance. The cost is daunting and I think it is more prudent for myself to wait until I qualify for Medicare. At least I’m still healthy at this point in my life.
That’s a great analysis, and Adam is right about the Social Security site. People like to knock the government but the Social Security people have it together when it comes to the website. It has your earning history, and what you can expect at different retirement ages and even dumps to spreadsheet form if you want. The striking thing is that this guy is above the median net worth for his age but is still not in what I’d consider a super great position to retire. You’ve shown he can do it with enough life hacking but it is by a fairly thin margin. And he is better off than most, I’m concerned about my fellow boomers because most of them are not as well prepared as he is and few are taking the pro-active stance he is. He is going to be fine, but many are not. And I’m used to my millennial kids looking at me like I’m an idiot so yeah, we are used to having you smart kids splain stuff to us.
Really? He’s above median net worth for his age? Where are you getting that?
I looked up a 2016 study, https://dqydj.com/net-worth-by-age-calculator-united-states/ and it showed net worth counting residence median for 55-59 to be $168,044.19 and for 60-64 to be $224,775.17 so I figure he is in between those two groups. But he has over $300k so he’s ahead of the game, admittedly most people are in trouble though. If you don’t count home equity the median for his age is only about $50,000. I don’t know if their data is good but it is pretty scary. The average net worths are quite a bit higher because of Warren Buffet and the other 1%’rs so median is probably the most representative number.
Way too optimistic an analysis I feel.
You assume 6% ROI in the calculations. So you want him to be 100% in equity? Not so wise, no?
Wouldn’t a portfolio of 50% bonds/50% equity be more reasonable? In that case, the ROI would be lower.
Go back & read the post again. Firecracker is specifically telling BTTR *not* to be in 100% stock allocation. One can debate whether or not 6% ROI is reasonable in a 60/40 portfolio… personally I’d re-run the math with 5% ROI assumption. But I can get a little pessimistic and cautious. I’m still trying to climb the “Wall of Fear” myself, FIREcracker!
Who knows, 6% might be reasonable. Depends on your outlook. Vanguard’s historical data shows that between 1926-2017, a 60/40 portfolio averaged 8.8% and 50/50 averaged 8.4%.
https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations?lang=en
I use 6% for a 60/40. A 100 equity portfolio has a median of something like 11% or something, but again, totally not recommending that for someone in their 60’s about to start withdrawing.
Vanguard (and Bogle himself) also mentioned recently that Stock Market returns over the next decade may be around 4% only (stock market returns of 4% = a 100% allocation in equities).
Not sure how Boomer (or anyone else) could then get a 6% return on a 60/40 allocation (it just not gonna happen unfortunately).
Again, the 4% return from the stock market is not what I say, it is what Vanguard and Bogle say (and I would say they are more competent than myself eh ..).
Also, with regards to the 4% rule, I use it as rule of thumb BUT when it comes to properly do the math, I prefer to multiply by 30, and not 25 (to be on the safe side..).
Many articles on the subject show that the 4% rule might be way too optimistic.
Finally, if Boomer is to travel and stay a few months in a few countries to check them out before potentially moving there, then he will need extra money for this.
So yeah I like your reader cases, but you tend to be way too optimistic with regards to the 4% rule and Stock Market returns 😉
Seems like a case where Mr. Boomer failed to save very much in his younger years. This is unfortunate, but also not unusual — Many Boomers grew-up in the age of pensions and didn’t realize they needed to save so much.
Ce la vie! I do think the best option for Mr. Boomer is retiring overseas based on what he’s saved. His money will go a lot further and his medical expenses should be a lot lower.
If he doesn’t mind living overseas, this should make for a great quality of life after retirement.
Researching this article brought up a lot of pictures of Thailand and now I want to go back too. Aah Thailand. I miss your beaches and pad thai…
And speaking of Thailand, have you followed the cave rescue in Chiang Rai? 8 have been rescued, 4 to go. Amazing story, pray the get out safely.
Long time reader and boomer here. I hope it works out well for my fellow geezer (and I’m glad to know there is more than one boomer following this awesome blog).
We’re retired, but I read this blog and others. The day you stop believing in learning from anyone is the day you start dying. And, a sage person (not sayin’ I’m one) can also learn from other people even if not in lockstep agreement. I personally don’t care to chase dividends for a couple or reasons. But I still respect why FIRECracker and Wanderer see dividends as part of their retirement strategy. Another part of their message is to know what you’re invested in and why. So they may like cherry kool-aid, but I only like three green stuff? Doesn’t matter. What matters is just drink the FIRE kool-aid. 🙂
Their message about LBYM, saving, and investing, while planning for an early retirement is just as sound now as it was a hundred years ago…. I should know as I was there. Hah! Just kidding.
Also, be ready for setbacks. I got seriously downsized at mid-career and had to start over (new degree, etc). Through a lot of hard works, some decent breaks, a little luck, we were able to pull the rip cord at 60. Not very early, but better than later.
Congrats on the ripcord pulling! How are you liking retirement?
Every day in retirement is the Best Day Ever!!! Just finished Year One on 6-30-2018. Lots of regional travel and some across the water trips forthcoming (3 weeks in Europe).
Thanks for what you and Wanderer do. I think of you two as financial first responders; willing to go in and save whoever you can. As an army veteran, I was kinda like a first responder. We just had bigger, badder equipment. Ya know, first responders with nukes. 🙂
I am in the same boat, 57 with a mortgage, and not much better shape. But even at 60, there are definite advantages. In Canada, we can take our Canada Pension early, but reduced of course, and side hustles are easy to come by.
Home Depot, Canadian Tire, Butchard Gardens, (guess where I live?) all are glad to hire the part time boomer, and right now are advertising positions available.
A House can produce revenue without selling, rent a room, build a suite, or rent the entire thing. My bung could produce $2500 a month in rental, thats enough to pay the mortgage, taxes, and some to spare.
A home equity loan, rolled into an investment is also another way to reap equity from the dump, but with a lot of risk. One reader suggested a 6% ROI is optimistic? I agree, I think it will be tough to do with the current economic climate, will see. Also at 60 you need to be building a Yield Sheild, which protects the nest egg, and generates cash.
some things to think about…
cheers
If you’re going to go into the real estate renting game, you’d better be comfortable with risk. The “correct” thing to do from a real estate perspective would be to rent out your bung, HELOC as much of your equity out as possible, and invest that in a portfolio. That’s the “correct” thing to do, but personally I’m just not comfortable taking on that much leverage.
I guess that’s why I never got into the real estate game.
Hey Spaceman… Did you attend the spring MMMeetup in our home town? I missed it. I hear 5 or 6 were there.
Nooooooooo, I missed it…. waiting for a Chatagua to come here….
I think the one thing not calculated that should have been was retiring in the U.S. while including Social Security. Retiring at 62 or 65 in the U.S. seems realistic if Social Security is included.
Yeah you’re right, but I have no idea what his SS numbers are, so I can’t analyze a blank page.
FC, thank you for taking the time to analyze my situation, it is certainly appreciated. My SS numbers are $1,385 per month at age 62 (which is now one year away) and $1,932 per month at my full retirement age of 66 1/2.
First..who was the boomer that hurt you guys? Come Here for a hug..don’t move away, I will not hurt you.
As a reader of multiple FI blogs, I appreciate the time and free advice you guys give. As a retired boomer at 54, your concepts and math help reinforce my plan. No matter if a boomer, millennial,gen X or etc your help in driving the point of FI and controlling your financial freedom is very much appreciated.
I think I should release the hug…feeling a little awkward :0)
Awww thanks. It’s always fun when a boomer is a fan of this site (despite the fact that there’s a video on the front page yelling at you).
This boomer is a fan too. My wife and I are 69, retired, and living on our Social Security. We manage to save 29% of that income on an annual basis. Our home is paid off and we have zero debt. Aside from some health issues you might expect at our age, life is good.
With your excellent advice (add me to those who wish I’d learned these lessons decades ago) I believe I can make our lives even better. Thank you for helping to make the world a better place for so many.
I mostly write thrillers and apocalyptic fiction novels but have put out a couple of non-fiction how to’s as well. I love having time to write and want to say that I also a fan of your writing style. That delightful, informal, conversational tone made Quit Like a Millionaire a joy to read.
social security for the win! it was just this past year i realized we were kinda old and not too far from that gravy train (well it’s our money). it really changes the calculations and withdrawal rates. i still haven’t completely run the numbers as we’re 5 years apart in age but i now anticipate a higher available spend rate if i quit today.
Being old does have its advantages. Not many, but SS is one of them.
Velcro GO-GO boots are the in thing i hear…
Great article. At his age, if he does try Thailand, I suggest he NOT burn his bridges as a dealer in Vegas. Living abroad as a digital nomad really works for some–but often it doesn’t–especially the older one gets. I’ve written about this here (https://mightyinvestor.com/nomad-life/). The best move is to explore living abroad for a year without destroying your career in the process. Boomer-Dude, good luck!!! I think it is great you are thinking outside the box! I hope Mil-Rev provides a “two years later” update on this one…. 😉
Hey, I’m happy to run an update if I can.
On the plus side, being from Las Vegas he’s probably used to the heat, so Thailand might be a good fit for him!
Have you been to Vegas? Super different climate than Thailand! But I know you are just joshing around…..;)
Mighty Investor, thank you for the nice comments. I went and read your article and you make a compelling case. Perhaps I’m not to old for one last adventure! Anyways, thank you for a thought provoking article.
Boomer Who Wants To Retire,
We’re never too old for adventures. Just be smart about it and don’t burn any bridges. You’ll be glad you kept your options open!
JL Collins: Your gateway to geezers. 🙂
For a guy like Mr. Boomer, SS will likely make a big difference and he should follow your advice to find out what his benefit will look like ASAP.
In our travels, I have met many Boomers living the expat life on little more than SS.
I’ve visited John and Mary three times in San Clemente, Ecuador and they have just such a life. It takes some effort and flexibility and a willingness to embrace your new community, but for those who do it is rich in ways beyond money:
https://johnandmarylivingitupinecuador.wordpress.com/2018/07/03/temporary-shade-lost-pruning-day-in-the-garden/
BTW, they rent.
Thank you, Mr. Collins, I will check out John and Mary. Ecuador is not someplace that I’ve considered but I’m open-minded and I do like the fact that Ecuador uses American currency.
Oh Jim, you’ll always be our favourite boomer 🙂
And having done a Chautauqua in Ecuador I can second what a beautiful country that is to retire to.
Just, you know, minimize time spent on the Galapagos ferries. Yeesh.
Boomer…
Of the South/Central American counties I’ve visited, Ecuador would definitely get the nod were I to move that direction. In addition to using the dollar (and there is talk of that changing) it is a short flight back to the US and I speak a bit of Spanish and would like to pick up more.
But, I have never been to Thailand and from what I hear it is awesome.
Firecracker,
“Ferries?” What ferries?
Or do you mean those miserable little half open wooden boats with the big ass engines that bang thru the ocean chop for four hours filled with vomiting tourists? 😉
Another Boomer here! Love the advice of Thailand for retirement but maybe I am slightly bias as I am in Chiang Mai right now. Heading out to Doi Suthep in a few hours and then to Cheevit Cheeva for a snowflake! (You know you want to be here.) Thanks to your “Let’s Go Exploring series!” Love the blog! Thanks for all of the great posts!
Oh God, I love Chiang Mai. Can’t wait to go back one day and get one of those snowflake things again. Drool.
Another bonus that may make his FI number a bit lower is that when his mortgage is eventually paid off that will reduce his annual expenses by almost $8,000.
Another Boomer here and a big fan of Milenial Revolution! Mr BoomerTryingtoRetire, please check out Mr Free at 33’s blog. He (Jason Fieber) retired in Thailand with a similar net worth to you and IS THRIVING in Thailand! His last post of his Fire Fund July 5th was $358,789.17 and look at that picture of him by the pool! Dude’s ripped and working out, has a girlfriend and pays for her meals too on his stash. He may make some cash from his blog, but what’s to stop Mr BoomerTryingtoRetire from starting a blog in Thailand discussing his life and adventures and making a little blogging income on the side? We need more boomer bloggers and I would love reading about a boomer’s adventures retiring in Thailand. MrFreeat33 is a retirement coach so he can maybe give you some advice. All the best!
Thank you, RocDoc, I will check out the blog of Mr. Free at 33. It sounds very interesting.
Another boomer here. I’ve just begun semi-retirement (half time)at age 63. And still have about a year to go on my mortgage. I love reading fire blogs and also want to thank you both for your contributions.
I had always assumed that, even though i’ve been saving for retirement for over 30 years, my income at retirement would be pretty limited, I would likely need to sell my house and downsize and otherwise live very frugally. But the reality now seems to be that I can keep the house if I want, that multiple small incomes (my social security, my wife’s social security, a small pension from a former job, 4% or so withdrawal from retirement savings, and some small rents) will add up to a pretty significant income at age 66, and that bridging the next couple of years until social security should not be that difficult (other than the mental stress of switching from saving to withdrawing.
In the case study, i’m A bit skeptical about the living expenses listed. I don’t disbelieve the stated expenses, but I note an absence of a number of irregular expenses that could add significantly to the annual total – such as home maintenance, travel and entertainment, gifts and charity, etc. I doubt there is really $1,000 per month available to save and invest, though to have saved $190,000 over the past 30 years suggests a history of saving $500 or so a month.
I agree that social security should be a significant part of his retirement income and would encourage him to wait until 66 in order to receive full social security benefit, to build additional savings, and to get the car paid off. And just continue regular payment on the mortgage unless he decides to sell the house in order to rent, downsize, or move abroad. Retirement income of $2,500-3,000 per month might be achieved from a combination of $1,200-1,500 social security (he definitely should check his SS statement), $1,000 retirement savings withdrawal (4% on $300,000 or 5% on $240,000) and perhaps some part time work.
You’re right about the unexpected expenses, but hey if he sells his home and moves to Thailand, that goes away, right?
True enough. Putting myself in his shoes, I can’tsee Myself moving to Thailand – but maybe Mexico. I do think he has more options if he saves for another few years and gets the car debt paid. But if he thinks now is the time to pull the trigger, then by all means sell the house, pare down, and find a cheap foreign destination.
Hi,
I am 40 this year. I am considered as Generation X or maybe Y depending on the classification. I feel that it is better for one to focus on the current situation rather than dwelling on the past in which one cannot control any more.
Thailand is indeed one of the retirement abode destination. I am of view that it may be worthwhile trying to live for a few months to see whether one is indeed liking the place.
I am currently exploring my options whilst living my life to the fullest. I still have a full time job and can pull my trigger at any point of time once I find my preferred options.
Ben
Now you really got me scared. My financials are even worse, though I am ‘only’ 51. I have worked and lived in Portugal and wouldn’t mind going to retire there at the age of 55. But never thought Portugal being very cheap to live. I am Dutch and sure living expenses overhere are way much higher but tax regime since the financial crisis was brutal to locals.
Is there a link to how to retire in Portugal? Also, I read most of your articles and Collins book, but don’t seem to understand how getting 8% yearly returns is still feasible in current market.
Portugal was a surprisingly affordable place to live. We loved it there, and our living expenses rivalled that of Malaysia.
https://www.millennial-revolution.com/freedom/travel-series/the-magic-of-porto/
And yes the news looks uncertain right now, but throughout the entire recent bull market, the news has also looked uncertain. Last year I was convinced Trump would spin us into a recession yet my portfolio advanced 10%. *shrug* Don’t time the market.
Another boomer here. 60 at the end of this year, retired at 54.5. Early by boomer standards. While I do have the benefit of one of those DB pensions described above, I was thrilled to find MMM et al., in December of 2015 and start living the way I’ve always wished to live. Honestly, I feel like I’m in my 20s again. Ditched my ClownJeep (2.5 yrs. ago), moved to Biketoria on Canada’s west coast, brew my coffee at home, live in a small inexpensive space near the ocean. Travel to warm places all winter. Doesn’t get much better. Not surprised how many of us boomers read FI blogs and try to keep up. I think it’s how a lot of us really wish to live! Thanks for another interesting reader case.
Biketoria? Is that an actual city name?
Nickname for the capital of B.C.
You need to see it to believe it, should be called Biketoria, (its Victoria) We have dual bike lanes with special traffic lights controlling the bicycle traffic, its very confusing.
The old rail line right of way, connect the city with outlying areas, and are all paved bike routes. Almost all major routes, have specific bike lanes.
He’ll have to figure out social security. It doesn’t look good if you don’t count social security benefits. I also don’t know about moving to Thailand or other cheaper locations. That’s easier when you’re young. I think it’s much more difficult to adjust when you’re 60. Anyway, good luck to the boomer. I’m sure he’ll figures it out.
Oh there will be challenges in moving, but his other option is working until 72 so, you know, give it a shot at least.
Surprising that no one brought up his ridiculous car-related expenses. He’s burning more than $600 per month to support a car. That’s crazy. It’s Vegas. It’s flat. He could ride a bike. Yes it is hot, but I would that the casinos have showers for their employees. Oh, and there’s always the bus. He could be saving a ton more by addressing that one area.
Ha, right. Last time we were in Vegas the sidewalks were the cleanest part of the entire city since nobody walks anywhere outside the Strip. We saw a homeless guy hail a cab down to go somewhere.
A quick note about Thailand.
This country is WAY more than just a cheap place for farangs to retire on the cheap and with cheap beers and nice beaches (and perhaps something else thats also cheap…).
I m just kinda annoyed when I see messages telling people to just retire in Thailand cos its cheap and the country is easy going.
I discovered Thailand 13 years ago when I was in my twenties and I ve been loving this country and the Thai people even since.
And what I love is the Thai people, Thai culture, Thai food, Thai temples, Thai attitude etc etc…
The fact that it is cheap is a bonus for sure, but that’s not the sole reason why I love this country.
Thailand is now full of farangs. Even in Isaan, you ll find some.
It is not an adventure anymore, sadly.
So please, if you go and retire there, respect the people and the country, and don’t take it for granted.
Thank you.
Absolutely. Love the Thai people, Thai food, Thai everything. Land of a thousand smiles indeed.
First off, I would like to thank everyone for their comments and especially to FireCracker for taking the time to review and analyze my situation, it is heartwarming to know that someone would take the time out of their day to advise a stranger.
To clarify a couple of points that I left out; my Social Security payments would be $1,385 per month starting at age 62 (July 2019) and $1,932 at full retirement age, 66 1/2 for me.
I bought my house January, 2012 for $114,230 and is now worth $259,000 according to Zillow. I was lucky in the timing of my purchase.
The mortgage isn’t yet paid off because I’ve been trying to catch up my savings and investments which is also why I’m 100% equities, very risky, I know but I felt that it was my best chance for retirement. My 401(k) is in an S&P 500 fund and is now worth $74,000 due mainly to my putting $15,000 in so far this year.
In 2001 I lost my business and I was negative net worth with $47,000 in credit card debt due to cash advances which I used to try and save my business. I paid off all of the credit cards (it was difficult but I did it). I started saving for my retirement but I started slowly and gradually built up my savings rate (thanks mainstream financial writers for your bad advice). I discovered the FI community about a year ago and it has made a world of difference in cutting my expenses and boosting my savings rate.
Last month I decided to switch from investing the full amount into my 401(k) (I’m now contributing 15% instead of 60%) and instead to put $2,000 per month towards my mortgage and pay it off in 20 months using Roth IRAs to pay the remaining amount. I can do this by using my savings as well as my making my regular payment. I now owe $98,600 on the mortgage.
Yes, I had a late start but I think that I’ve recovered nicely, considering. I just wish I knew about FI sooner. Perhaps my example will help some younger people avoid my mistakes.
Hey BWWTR… Sorry to hear about your lost business. And I agree, you’re making a recovery. Any thoughts on ditching your house and car in the future perhaps when you’re FI? By that I mean finding an inexpensive rental, riding your bike, taking transit and renting a vehicle now and then. Take care bud.
Hi Kent, thank you for the comments. I have thought about taking the bus to work and I may start doing that.
Right now I’m working on paying of the house and the car within two years by using savings, Roth IRA and selling some items. With the house and car paid off my expenses drop to around $900 a month and at that point I’m FI.
I initially started the Roth IRA with the plan of using the money to pay off the mortgage.
Again, thank you for your comments and questions.
Sounds like you have a plan. Work until 62. Collect 1385 in SS. House and car will be paid off by then. I estimate you will have over 125k in your retirement accounts. Per the 4% rule you will make at least 415 monthly. Total of 1800 income with 900 in expenses. You don’t need to retire overseas. There are some expenses that I don’t think you have accounted, like home and car maintenance, property taxes, and entertainment, but I think you are well within budget.
You are correct, Sir, I forgot to account for those things. My property taxes are currently $1,400 per year with a 3% cap per year so I should add about $125 per month starting then. Home maintenance should add another $100 per month set aside. Car maintenance shouldn’t be too bad other than oil changes and tires as my car came with a lifetime drive train warranty. Entertainment, well, I’m a pretty cheap date. Most anything more exciting than watching paint dry keeps me entertained. I also forgot Doctors, Optometrists and Dentists so perhaps $1,300 to $1400 per month is more reasonable. I think that I’ll be okay though. Thank you for your comments.
Quick question, I noticed the health care link takes you over to IMG. Are you no longer using World Nomads for your health care needs?
Clearly this man is open minded and is just looking for some advice. This article came off as very rude to me, starting with the first paragraph and that photo. If you think it’s surprising that someone at 60 has a mortgage then you are really out of touch. This is a very common situation. And suggesting that he moves to another country at his age is just ridiculous.
First of all HE suggested moving to Thailand as a solution (read the actual e-mail). And if you still have a mortgage at 60, you fucked up. Plain and simple. But of course sensitive whiners like you are going to focus on feelings rather than what I actual said which is “let’s not dwell on this and try to fix it”.
You: “I don’t like your tone but I offer no solutions.”
Me: “here’s how you math shit up”.
Seriously, no one gives a shit about your feelings. Either offer a solution or get out.
I don’t care if he suggested it or not. It’s stupid. And yes he fucked up still having a mortgage but so did the rest of his generation.
Calling ideas stupid while not offering any suggestions is the height of stupidity.
Big fan of the blog!
May I (a millennial) ask for some advise too 🙂
I am single and in late twenties in Canada. I seem to be stuck in analysis paralysis & am wondering how I best allocate the $96k (and growing monthly) I have sitting in my chequing account. Would you happen to have any additional suggestions.
Based on what I have had read the stock market seems highly valuated (higher average PE ratio, with lower future projected returns). Hence I am a bit sceptical of going all in into my td e-series mutual funds by increasing it’s monthly allocation and maybe waiting for a more favourable PE valuation
But have read that market timing should be avoided.
At some point I did like to get financially independent (have passive income cover my expenses), maybe an annual income of $40k or so but am flexible.
Currently not interested in buying a house/car and am renting with roommate and taking the transit.
Below is my current financial snapshot:
GROSS/NET ANNUAL INCOME
Annual salary: $54400 (+ covered with good health benefits)
Annual performance bonus: $2000
Dividends (from 2 Canadian stocks): $1200
Totals: 57600
MONTHLY EXPENSES:
Rent ($450)+Food ($200-300, cook home) +Transportation ($100, bus pass) +Cell Phone ($17) = $867 (max 900)
No Debts/Fixed Assets
INVESTMENTS:
Stock 1: $2,665 (previous employer)
Stock 2: $26,500 (current employer, employee share purchase plan – I contribute 10% of my paycheque and company matches %25 of my contribution)
Total:$29165
TD E-series mutual funds:$6750 (target allocation of 25% each across Canadian Index Fund, US Index Fund, International Index Fund & Canadian Bond Index Fund)
Adds $100/month across the 4 index funds ($25 each, started initially just to get used to investing)
Chequing account: $96000
Registered Pension Plan (RPP): $22000
(I contribute 6% of my paycheque and company contributes 5.7%
Target allocation of 25% each across Canadian Index Fund, US Index Fund, International Index Fund & Canadian Bond Index Fund)
Thank you
“But have read that market timing should be avoided.”
There ya go, you answered your own question!v 🙂
If you’d like us to analyze your situation, please follow the guidelines here for reader cases: https://www.millennial-revolution.com/can-analyze-personal-situation/
Thanks FIRECracker 🙂
That would be great. I sent it in on June 3, will re-send it 🙂
Just re-sent it with updated financials.
> Oh and about that house, you’re 60 and you still have a mortgage?!?
Yes sadly it is not always roses. Not sure about this guy, but I’ll throw out one possibility DIVORCE. For me it was financial armageddon. I went from net worth of about £200K to 0K, thereby wiping out 20 years of graft. From there I rapidly went to MINUS 150K in pretty short order. I then reversed this back to PLUS 200K and no mortgage in 6 years, but only because I discovered YMOYL. Shit happens. You will overcome.
> Should I retire to Thailand?
Hell yeah! As someone who lived in Thailand back in 2003/2004 I can’t rate the place highly enough. I was back there again in 2016 and it still ROCKS! It’s more expensive now, but if you know your way around you can live in a really nice area like Sathorn (in BKK) for less than $1000 a month – it depends on how hedonistic a lifestyle you want to live, for me, not so much. If you want cheaper still, consider Philippines. Drop by the “living in the Philippines” forum, we are a friendly bunch.
We’ve heard great things about the Philippines too! Nicest people ever 🙂
Thailand ?
Sounds like he will barely have enough to cover living expenses.
He might consider Rosarito, Mexico. It’s 30 minutes from San Diego, easy to drive back and get Medicare coverage when he needs it. But very cheap, nice weather, huge expat community. Heck the father of a British princess will be his neighbor.
The best retirement advice by far is start a work from home side hustle. Purchase a domain nane, reserve dedicated web hosting, install WordPress on your hosting and domain name, pick a topic, and start blogging your way to “side hustle millionaire” status. That’s best retirement advice right there! 🙂
Hey we didn’t have internet in our 20’s, 30’s and 40’s!! We would have been alot smarter if we had!! So happy that at this satge of the game, we have an FI community to help us figure it out. We won’t get as far as the younger generation but we may have a little freedom due to their great insight and ability to leverage social media! Many Thanks!
Congrats for retiring super early. Looks like though, you 2 still have to hustle with side gigs. It helps you are child-free. (My partner via his ex, has 2 adult. He said when they started to calculate how much it costs to have a child.. it just got number crazy that they had to abandon the exercise. Too scary at the time.)
I do come from a background of extreme frugality and poverty in Canada while growing up. My parents with their then 5 children, were in a 1 bedroom apartment 100 km. outside of Toronto in 1960’s. Yes, you heard me. You can imagine the stress of my parents…I am certain given your family/friends’ backgrounds, you already know similar stories (of immigrant parents).
So parents bought their lst house (and child 6 was born) and paid off under 10 yrs…a miracle since father was a restaurant cook and mom, full-time housewife.
Home ownership works better if the owners will pay off mortgage early and when there are several children with growing needs.
It probably explains why all 6 of us, each own a home.. Some of us have paid off mortgage several years ago. Sure all of us have scrimped carefully… without much world travel. But that’s ok..
The shadow of historic personal poverty is very difficult to shake. And memory of enormous financial sacrifices by parents. Give to your parents.