Comment by raw_anon_1111
5 days ago
It’s almost impossible for an upper middle class couple to retire in the US before their 65 unless they have some type of government provided or private company provided health insurance like teachers, police officers, military etc.
It’s about $25K a year for a decent plan which is doable. But you have to hope that Republicans - and yes this is a political issue - don’t successfully kill the ACA and make it impossible to get insurance at any cost if you have a pre-existing condition. If you are old - you will develop a pre-existing condition.
My parents are 83 and 81 and retired at 57/55. But my mom was a teacher who still gets benefits through the government and my dad gets benefits from the one factory that didn’t shut down in our hometown.
I’m 51 and even if I could retire early financially, I wouldn’t do it and stay in the US. Play the smallest fiddle for us. I “retired my wife” at 44 in 2020 8 years into our marriage when I did a slight transition to an industry where remote work with travel is the norm (cloud consulting + app dev) and we have traveled a lot including doing stints as “digital nomads”.
We are staying in one of the countries that we might retire to as a Plan B for six weeks starting next week.
Even now that we moved to state tax free Florida and my wife hasn’t had to work in six years, she keeps a current CDL because she can get a job as a school bus driver easily for the benefits and someone will pay me for independent consulting if I lose my job.
The FIRE community and my own personal situation prove you very, very wrong. It's absolutely possible for a upper middle class family to retire in their 50s, even in their 40s, if they live frugally.
"Live frugally" , "FIRE" , "work in tech"
All incompatible with 99% of the upper class, neither do they want to eat ramen to retire early.
You're also one medical disaster away from being "very very wrong"
FIRE doesn't depend on having a tech job. Its all about income to expense ratio. Planning for medical events is something that gets talked to death in these communities.
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A lot of people are often surprised at how non-frugal their lifestyles are. I'm not suggesting that people living on $50k/year aren't already frugal, but yeah, there's definitely people who take out car loans, take out mortgages for the full amount they were approved for, and all sorts of random things like buying chicken parts instead of whole chickens, buying small grocery store containers instead of bulk pricing for shelf-stable items, keeping your speed down to save gas, etc.
You really just need to build an innate understanding that the hedonic treadmill doesn't make you happier long-term and develop a resolution to get your expenses down and stay disciplined about it.
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I know several people with normie jobs (not tech related or government) and normie lifestyles that saved up enough money to never need to work again by 50 while still maintaining their lifestyle. Most still work because they have no idea what to do with their time even though they don’t need to work anymore.
You can easily derive that this is possible from the median household finance statistics published by BLS, never mind the upper class. It isn’t that hard if you care to do it.
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90%+ chance the person you are replying to has health insurance that will cover them in case of medical disaster.
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you don't need to eat ramen. there are many cost effective options out there: oatmeal, beans, rice, you could grow your own fruits and vegetables, etc.
and as for the medical disaster: heart attack and stroke are actually preventable with a plant based diet (keep your LDL under 80 and you'll vastly decrease your chance of a heart attack). i know a lot of people will hate on that, but those are the facts and any evidence based nutritionist can tell you this.
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I retired on my 40th birthday, and it is AWESOME.
The thing is... no one has anything that I want to buy. I don't mean this in an elitist way, but more of a monk way. Like, I don't understand status and keeping up with people.
This is the way.
Like good meals, but I don't really understand the allure of owning a bunch of things.
The ego, when left to it's own devices, is a hell of a drug.
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And health insurance as soon as the ACA is gutted and you have a pre existing condition? Sure I could retire to Costa Rica or Panama. One of those are a plan B and we will be in CR for six weeks and we are both learning Spanish - I am. decent at it.
I bet you also your idea of upper middle class is not statistically valid.
https://dqydj.com/household-income-percentile-calculator/
Costa Rica is on my retirement shortlist. I really like it there and have taken the family for vacation a couple times. I've driven the whole country pretty much North to South. Puerto Jimenez is one of my favorite places but it's very rural. There's some nice areas an hour or two North of San Jose as well. I've met a handful of US families that, when the pandemic hit, just sold everything they owned and moved to Costa Rica. As far as central america goes Costa Rica is a bright spot of stability and like a functioning government. I live in Dallas so pretty much have to know a little Spanish but there isn't much of a language barrier at all. You could do a lot worse than Costa Rica.
I didn't get where I am by taking random bets, but I'll say you'd lose your money here.
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Statistics! Can a person below the median income afford to retire early? The answer is a resounding no. Can a person the top 10th percentile (upper middle class) afford to retire early? Yes.
https://dqydj.com/household-income-percentile-calculator/
So the top 10% is a household income of $250K and most of those couples didn’t reach that until their 40s. They aren’t making $225K as an L5 at 25 years old like a former intern/new grad I mentored when I was at BigTech
Most software developers won’t even see above $160K inflation adjusted during their career. Most work in second tier cities in the “enterprise”z.
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there are still tribes in the amazon that have very little money, like the hazda. they may not call it retirement but they don't need to go to the office everyday.
Serious question, what makes us so addicted and dependent to money that we can't imagine any way of life without a lot of it?
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Thanks for living frugally. Since you now have some spare money, I decided it's time for a rent increase. And a tax increase.
Without digging into this too far, I do think it’s possible but it does require starting early and sticking to the plan. I’m not one of those people, but I know people who are.
The mean household income for the 4th quintile is 115k a year. The mean of the middle quintile is 70k. There’s a theoretical 45k a year spread if you earn like the 4th quintile and spend like the 3rd (evidently possible since a lot of people live in the 3rd quintile).
Even ignoring compound interest, if you can hit that 4th quintile at 30 and you lose half the spread to taxes, by 55 you have 25 years of saving 22.5k/year for 562.5k in savings.
It’s probably not the most fun thing, but I do think it’s doable.
Here are the numbers for context:
https://dqydj.com/household-income-percentiles/
The median household income doesn’t earn the median wage every year from when they started working. That’s just a snapshot and it’s highly correlated with age. I’m 51, I damn sure couldn’t afford to max out my 401K. That means I was 25 in 1999. I definitely could afford to max out my 401K - which was then $10K a year - when I was making $35K a year.
Especially when new grads are coming out now with student loan debt.
https://mrmoneymustache.com/blog/ Read this story and more in the fire community, it's not impossible
Does that answer the question about what happens when the ACA is gutted and you can’t get insurance at any price with a pre-existing condition?
That happened to me right before the ACA went into affect. I was engaged to my now wife and we moved our marriage up early so I could get on her insurance.
https://mrmoneymustache.com/2020/11/09/direct-primary-care/
https://mrmoneymustache.com/2017/11/05/when-your-shitty-heal... Regarding ACA >My family’s monthly health insurance premium, which had already more than doubled in the last few years to $674 per month, was going up a further 44% for the coming year. For no good reason, other than perhaps the the current government’s attempts to kill off the Affordable Care Act. (By cutting various parts of the structure, the insurance market becomes less stable and predictable, and thus more expensive).
Also besides that there is also the solution of barista fire that's working part time just to get insurance. https://www.reddit.com/r/baristafire/
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Is it possible to get insurance as an expat living in a foreign country, yet spend time in the states? Would that be a good coverage for retirees that want to split time between US and other countries?
So Texas also doesn’t have income tax but my siblings house (assessed at a lower value than mine) is assessed property tax almost triple wha mine is, dwarfing my state income tax plus property tax. Not sure about Florida - YMMV.
My property taxes are $3000 a year. They were around $7K a year before we moved. We also downsized to a two bedroom condo -1200 square feet - from a 3500 square foot house in the most expensive county in GA (Forsyth) after my step son graduated in 2020 and after Covid. We sold our house for twice what we had it built for 8 years earlier and bought our condo for the same price as we paid for our house in 2016.
Florida - especially when you live in the same county as DisneyWorld - is heavily subsidized by tourism
For curiosity's sake, what exactly do you think Republicans will do to "kill the ACA"? I doubt they're going to introduce a bill that revokes the ACA in its entirety. They killed the mandate almost a decade ago and the marketplace healthcare plans have continued to limp along, depending on the state. What's next?
It’s simple. One of the original tenants of the ACA was to provide subsidies for most people earning up to what would be the upper middle class between this and the insurance mandates, it would prevent the death spiral where only the sick would sign up for it, making the cost go up until it was almost unaffordable to anyone and unprofitable for the insurance companies making them leave the exchange.
The first blow was when the Supreme Court killed the mandates. The second blow just happened when they killed the subsidies last year.
The expanded subsidies, which were a Covid-era enhancement some 10+ years after ACA was enacted.
If you could have FIRE'd before the COVID era subsidies you can do it now
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With health marketplace you can get insurance, or you can get a PPA service, or save money into a HSA, like there is multiple ways to do it.
Until the Republican Party finally succeeds at gutting the ACA or make it so bad that insurers wing cover it.
Let’s say you maxed out your HSA for 20 years and have $200K - that can be wiped out with one uncovered major medical incident the HSA max is relatively low.
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Blame that on the private insurance companies.
100%. I also blame Obama and the dem politicians who legislated this into existence. This has been a disaster.
The other way to avoid a pre-existing condition is to just avoid medical care entirely.
Ah yes, the 4chan retirement plan. Die of a preventable cause at age 42 while waiting for your captcha.
If you accept that cancer is a death sentence, it’s not absurd to “self fund” your insurance with a nest egg.
You can shop around quite a bit for non urgent care, and get good cash discount.
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