Author Topic: Flipping Sam's $5mil minimum upside down  (Read 6593 times)

daposton

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Flipping Sam's $5mil minimum upside down
« on: October 18, 2018, 05:48:25 PM »
I really enjoyed the details on Sam's post today on "Why $5mil is barely enough".  I thought of another way to consider the same scenario.  Let me know if you think this makes sense.

Using the same data as the family from LA, assuming you had paid off your home, your kids were older, and the 529s were fully funded.  You could then drop about $73,200 from the yearly budget.  Multiply that by 25, then subtract from $5mil and you arrive at $3,170,000.  This is very close to my calculations on a reasonable threshold for a high/middle FIRE budget. 

In summary, no house payment, drop $1mil off the number.  Kids major costs covered, drop $900K off the number.

Stating it this way might take the sting off of the $5mil a little.

Thanks, dap

Sam

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Re: Flipping Sam's $5mil minimum upside down
« Reply #1 on: October 27, 2018, 12:16:26 AM »
Sure, that makes a lot of sense. Everybody’s stage in life and expenses are different. I just encourage more people to put out some realistic numbers and do some calculations to see what fits for them.
Regards,

Sam

Money Ronin

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Re: Flipping Sam's $5mil minimum upside down
« Reply #2 on: October 30, 2018, 06:32:45 PM »
That article really hit close to home.  While I could quibble with some expenses (e.g., go with a lower tier of health insurance if they are healthy), the couple will face even bigger expenses in just a few years.  As their daughter ages, it's common for kids to have piano lessons, swimming lessons, soccer, enrichment lessons, etc. adding a few hundred per month to the budget.  Or unexpected dental work (not covered by health insurance) can be a big hit.

Sure, if you assume no kid, their financial problems are solved.  If I didn't have kids, I'd be sipping Pina Coladas and getting Caught in the Rain (Google it).  I wouldn't need to live in my average but expensive house in a good school district.  I wouldn't have to pay double (4 vs 2 people) when I go on vacation or pay for peak pricing during summer and winter vacations.  Then there is summer camp, scouting, food, clothing, etc.

Kids are expensive and my largest category of discretionary spend.  But since most people do end up having kids, the article really put things into perspective.  We all pay (often dearly) for the choices we make.

Recovering Engineer

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Re: Flipping Sam's $5mil minimum upside down
« Reply #3 on: October 31, 2018, 07:27:08 AM »
Sure, if you assume no kid, their financial problems are solved.  If I didn't have kids, I'd be sipping Pina Coladas and getting Caught in the Rain (Google it).  I wouldn't need to live in my average but expensive house in a good school district.  I wouldn't have to pay double (4 vs 2 people) when I go on vacation or pay for peak pricing during summer and winter vacations.  Then there is summer camp, scouting, food, clothing, etc.

Kids are expensive and my largest category of discretionary spend.  But since most people do end up having kids, the article really put things into perspective.  We all pay (often dearly) for the choices we make.
This is why I like Sam's articles, they are more representative of life. Too many stories about FIRE just aren't a realistic depiction of normal life. Look at this 21 year-old blogger who travels the world, doesn't own or rent a home because he has no possessions and lives in a hotel for a week at a time! But he's "retired" at 21! Look at this 25 year-old married couple with 2 jobs and no kids retiring at 27 with $750,000 net worth!

Sure not everybody is going to have kids or even get married and they can be perfectly fulfilled living their life. But the vast majority of people will get married and have a family. Most of the scenarios presented in financial "journalism" are applicable to a normal family with kids life. You can always quibble with specific numbers in other people's budgets but at least this was an attempt to show what real life looks like for the majority of people.

Sam

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Re: Flipping Sam's $5mil minimum upside down
« Reply #4 on: October 31, 2018, 07:29:40 AM »
I wonder if people are able or unable to properly match their situation with other people's situations?

If you are retired at 35 with no kids and no spouse, why would you compare your budget to a couple with two kids who retired at 45?

It makes no sense to get outraged by other people's situations if they aren't they same as your own.
Regards,

Sam