Posts Tagged 4% solution

Photo by a.drian

In my son’s English class in 8th grade, he was asked to write a letter to himself 4 years into the future, the year he would graduate high school.  His 8th grade teacher mailed the letters to all of the students soon after graduation.  We got a kick reading about the assumptions that he had made 4 years ago about what his life would be like, such as what car he was driving, what college he was going to attend, did we ever catch Osama bin Laden, did A-Rod ever come through in the postseason, etc.  Inspired by my son, I decided to go a little further into the future, and write a letter to myself to be opened at the time of my retirement.  So, cue the swirly effects as I take you many years into the future…

Dear Old Fart,

If you’re reading this, then I can assume that I made the right decisions many years ago, because you’re able to retire.  You’re welcome.  I’m glad you’re able to enjoy the fruits of my sacrifices, and my investment savvy.  OK, I’m probably making you sick with my arrogance, but you’re probably sitting pretty in a financial sense.

In order for you to reach this stage, you had to stick to the plan that I laid out for you.  You continued to excel work, work to full retirement age, and to religiously invest in your 401(k).  You stuck to index funds, as the expense ratios wouldn’t eat up any gains that you made.  You lived within your means, because the only person you had to impress was yourself.  And you must still be married to that gorgeous woman, who’s the true brains of the marriage.  ;-)  I’m glad you didn’t screw things up, or you’d be a greeter at Wal-Mart, wrangling shopping carts and subsisting on dog food.

I hope that the kids are settled into their chosen fields.  I can only hope that they’re not still living under your roof, or all of those lessons on self-sufficiency and responsibility would have been for nothing.  If they are still living at home, it’s time for you to help them get their shit together.  They have to grow up sometime.  Make them read Your Money or Your Life again, and send them out into the Real World.  It’s time.

I hope you’ve taken care of yourself physically as well as fiscally.  You better not be one of those old, slovenly, beer-bellied guys that wear black socks with shorts.  I worked too hard on my appearance to have you turn into a buffoon.  Take some of that nest egg and invest in some new threads and a gym membership.  But don’t tap the savings too hard; you should be able to siphon off 4% of the total and still live a life well beyond subsistence.

Are you still living in the original house?  Sure, it wasn’t huge, but it was one that we could afford, and somehow we found enough space for all of us to live comfortably.  The key was not accumulating “things”, but experiences.  If you are moving to warmer climes, I hope they have the Yankees on cable or satellite.  Did A-Rod ever come through in the postseason?

Lastly, I want to wish you a happy retirement, old-timer.  I’m sure you gave it your all every day at the office, so you should have nothing to be ashamed about.  Your reputation should be intact.  I hope that you’ve inspired some others along the way.  My advice would be to never stop learning.  Did you ever learn to play the guitar?  Now’s a good time to add it to your “bucket list”.  New challenges keep your mind young. Anyway, have fun spending my money.  It should last you a long time.

Sincerely,

Your Younger Self

OK, it’s a little too arrogant, but it serves a purpose.  Would you rather read this letter at retirement, or one that starts with:

Dear Old Fart,

I hope you like working, because years ago, when I should have been investing my hard-earned money, I blew it on gadgets and expensive vacations, so you’re shit-out-of-luck when it comes to retirement.  Enjoy the dog food!

Make your plans now, and stick to them, so that you’ll have a happy letter to open in your golden years, and not one filled with a bunch of excuses.

What letter would you write to your future self?  What would you tell them?  What questions would you like to ask?

Follow me on Twitter: CorpBarbarian

• Barbaric Book Review: The Wealthy Barber The Wealthy Barber by David Chilton was first published in 1991.  It's a basic financial guide, told in a narrative style, about three young people who seek financial advice from the town barber.  Yes, you read that correctly, a barber. The story follows a young teacher as he learns, along......
• Getting Rich in America Book Review and Summary, Part 3 This is Part 3 of my review and chapter summary of Getting Rich in America: 8 Simple Rules for Building a Fortune and a Satisfying Life by Dwight R. Lee and Richard B. McKenzie. You can read the first two parts of this review by clicking the following links: Getting......
• Goal Status: January in Review Spurred on by a fortune cookie, I wrote about my modest goals for the year in this post: My Goals for 2010 So, now that we're a month into the new year, I'll give you my status.  Here goes: 1. Drop 50 pounds I lost 14 pounds in January, primarily......

• Retirement: 10 years left, 0 savings - Money Magazine Um, how scary is this? Walter Updegrave from Money Magazine is trying to help these people who have 10 years left until retirement...and no nest egg. First piece of advice? Start saving...like crazy. "If you save $500 a month for the next 10 years and earn an 8 percent annual......
• Creating a Budget 2 Now that you know where your money is coming from and where it is going, the next step in this budget creation process is going to be for you to break all of your expenses up into two different categories, separating your fixed expenses from your variable expenses. Fixed Expenses......
• Planning For Retirement Late in Life Not all of us have had the luxury of spending the last 20 years to secure our financial future. Most of the time, through no fault of our own, putting aside money for retirement takes a back seat to handling emergencies or schooling for our kids, or simply the daily......