The Intersection of FIRE and Disney

[SouthFayetteFan]

Sounds like a great party, and more importantly your daughter thought so! Nice work! I know people can spend money however they choose, but you have to wonder at those extravagant parties...Is it just another example of keeping up with the Joneses?

An excellent point. I don’t take issue with somebody who wants to spend $1,000 to celebrate their kid’s bday. However if someone is only doing it to “one-up” their friend or neighbor then I’d challenge them to evaluate their priorities

 

[pillow]

Now if we can only convince the younger generation to stop watching those wedding shows on cable............those are the biggest and most expensive parties of them all!

No kidding! Have you seen the show "Adam Ruins Everything?" He did one on the wedding industry. It was terrific and so true.

 

[Mome Rath]

Funerals are another fantastic way to spend a lot of money "keeping up with the Joneses" even after death!

 

[speedyfishy]

Did you know you can spend $15,000 to have your kids party at the Central Park zoo?

https://www.wcs.org/parties-events/birthdays/central-park-zoo

My wedding is costing about that and I’m going all out with a Disney wedding LOL

 

[alryan]

I have a question for those of you further along in your FIRE journey. So, I sometimes hear advice that you should have money, maybe a year or two of income, not invested in the stock market so that if the market is in a severe downturn you don't have to take money out. First, is this something that any of you are doing? And if you are, where does this money come from? Do you just change where your savings goes for a few years before you plan to retire? I think it sounds like a good idea, but wondering how it works in practice.

 

[LuckyMamaInDE]

Funerals are another fantastic way to spend a lot of money "keeping up with the Joneses" even after death!

Don't get me started on funerals and money and "good" funeral homes taking advantage of grieving people.

Please, everyone, discuss with your family what your wishes are and what their wishes are. My dad and I had an easier time because my mom had planned everything with us. I, otoh, found making decisions for my dad's arrangements to be difficult because his death was such a surprise. Thank goodness for my husband who had no problem asking if something was absolutely necessary and if we could make changes to what was considered usual there.

 

[speedyfishy]

My SO taught kids how to program when he was in college. He taught at Elite private schools in NYC. The kids were in elementary school and their tuition was more than our private school college education (we had scholarships but even comparing the non scholarship rate) Those kids went on crazy trips, had their parents pick them up from school with their drivers. (I know because I would occasionally wait outside the school if SO and I were meeting for dinner.) I don’t even see a way I’d be able to keep up with those people.

 

[BridgetBordeaux]

I have a question for those of you further along in your FIRE journey. So, I sometimes hear advice that you should have money, maybe a year or two of income, not invested in the stock market so that if the market is in a severe downturn you don't have to take money out. First, is this something that any of you are doing? And if you are, where does this money come from? Do you just change where your savings goes for a few years before you plan to retire? I think it sounds like a good idea, but wondering how it works in practice.

I have never heard the one or two year guideline. Usually it is a few months. I suggest shooting for a 3-6 month cushion to cover expenses, not necessarily 3-6 months of income. This is what you would do in the middle of your life.
As you get closer to retirement, you want to increase that emergency fund so that you are not forced to sell off assets during a market pullback that might occur during a multi-month recession.

 

[SouthFayetteFan]

I have never heard the one or two year guideline. Usually it is a few months. I suggest shooting for a 3-6 month cushion to cover expenses, not necessarily 3-6 months of income. This is what you would do in the middle of your life.
As you get closer to retirement, you want to increase that emergency fund so that you are not forced to sell off assets during a market pullback that might occur during a multi-month recession.

I think @alryan is talking about when you’re actually in the retirement period. (Or if not, that’s what she meant haha).

I know Root of Good blog talks about something like that. You keep 1-2 years living expenses (ie $50k-70k) typically in laddered CDs with varying maturity dates to at least keep up with inflation. Then in a market downturn you use those funds before selling at a loss and once markets recover you replenish those funds.

I’m not advocating for or against the strategy as I personally haven’t thought through all of that yet. On the surface it seems like a sound strategy though.

 

[alryan]

I think @alryan is talking about when you’re actually in the retirement period. (Or if not, that’s what she meant haha).

I know Root of Good blog talks about something like that. You keep 1-2 years living expenses (ie $50k-70k) typically in laddered CDs with varying maturity dates to at least keep up with inflation. Then in a market downturn you use those funds before selling at a loss and once markets recover you replenish those funds.

I’m not advocating for or against the strategy as I personally haven’t thought through all of that yet. On the surface it seems like a sound strategy though.

Yes, I did mean when you are actually retired, I can never phase my questions right!

 

[LuckyMamaInDE]

I think @alryan is talking about when you’re actually in the retirement period. (Or if not, that’s what she meant haha).

I know Root of Good blog talks about something like that. You keep 1-2 years living expenses (ie $50k-70k) typically in laddered CDs with varying maturity dates to at least keep up with inflation. Then in a market downturn you use those funds before selling at a loss and once markets recover you replenish those funds.

I’m not advocating for or against the strategy as I personally haven’t thought through all of that yet. On the surface it seems like a sound strategy though.

A portion of our retirement money is in a CD ladder. Dh likes diversity

(early 50s, FI not RE)

 

[runwad]

Yes, I did mean when you are actually retired, I can never phase my questions right!

I've been investing my emergency fund in a Roth Ira, that is in a bank savings account. No worry of losing it and I'm not being taxed on the gains.

I hate the whole concept of being taxed on the interest, so this is my work around. All other invested money is in 401ks, Roth 401k and Deferred comp accounts.

Another plus, it is shielded when its time for kids to apply for financial aid at college time.

 

[QueenIsabella]

Funerals are another fantastic way to spend a lot of money "keeping up with the Joneses" even after death!

I used to joke with my MIL, that when she died, I was going to wrap her in two black plastic garbage bags and leave her on the curb! She was very frugal, she thought it was hysterical. She raised her sons not to be frivolous. What we actually did when she died was have her cremated (she wanted to donate her body, but changed states and we didn't have the paperwork in place). We had a small, pleasant memorial service for her. No mahogany coffin, no blanket of roses draping the coffin, no professional choir singing from the balcony. You can find a balance between less expensive and tasteful.

I have a question for those of you further along in your FIRE journey. So, I sometimes hear advice that you should have money, maybe a year or two of income, not invested in the stock market so that if the market is in a severe downturn you don't have to take money out. First, is this something that any of you are doing? And if you are, where does this money come from? Do you just change where your savings goes for a few years before you plan to retire? I think it sounds like a good idea, but wondering how it works in practice.

We actually have a lot in "cash", by which I mean, in a Vanguard money market account. Normally, I would want less in such an account--right now, it's at close to 2 years salary. DH is not retired (he's 56--we're talking about it). But, here's our circumstance--we have large expenses on the horizon. We're looking to remodel our kitchen. We have college for DD15 on the horizon. While we have other money earmarked for her college, our financial planner recommended that we pay the bill from the MMA, then "reimburse ourselves" from the less liquid investments. A lot of this money is from an inheritance from MIL, and she was an active investor until the day she died. A lot of what DH inherited is in actual stocks (versus mutual funds). By doing it this way, we can decide which stocks we should sell, at that time.

As to where we got our money--clearly, we inherited a nice amount. But, we were worth 7 figures before MIL died. Also, quite a bit of our money is in 401ks. In addition, because we are frugal people who inherited from frugal people, we are very mindful about the legacy--both financial and educational--that we leave to our children.

I think most normal people could easily get by with 6 months in emergency, cash-like savings. If you know you have an upcoming expense (new furnace, another car, etc.), I would maybe put a little more in.

 

[alryan]

I used to joke with my MIL, that when she died, I was going to wrap her in two black plastic garbage bags and leave her on the curb! She was very frugal, she thought it was hysterical. She raised her sons not to be frivolous. What we actually did when she died was have her cremated (she wanted to donate her body, but changed states and we didn't have the paperwork in place). We had a small, pleasant memorial service for her. No mahogany coffin, no blanket of roses draping the coffin, no professional choir singing from the balcony. You can find a balance between less expensive and tasteful.



We actually have a lot in "cash", by which I mean, in a Vanguard money market account. Normally, I would want less in such an account--right now, it's at close to 2 years salary. DH is not retired (he's 56--we're talking about it). But, here's our circumstance--we have large expenses on the horizon. We're looking to remodel our kitchen. We have college for DD15 on the horizon. While we have other money earmarked for her college, our financial planner recommended that we pay the bill from the MMA, then "reimburse ourselves" from the less liquid investments. A lot of this money is from an inheritance from MIL, and she was an active investor until the day she died. A lot of what DH inherited is in actual stocks (versus mutual funds). By doing it this way, we can decide which stocks we should sell, at that time.

As to where we got our money--clearly, we inherited a nice amount. But, we were worth 7 figures before MIL died. Also, quite a bit of our money is in 401ks. In addition, because we are frugal people who inherited from frugal people, we are very mindful about the legacy--both financial and educational--that we leave to our children.

I think most normal people could easily get by with 6 months in emergency, cash-like savings. If you know you have an upcoming expense (new furnace, another car, etc.), I would maybe put a little more in.

A portion of our retirement money is in a CD ladder. Dh likes diversity

(early 50s, FI not RE)

I've been investing my emergency fund in a Roth Ira, that is in a bank savings account. No worry of losing it and I'm not being taxed on the gains.

I hate the whole concept of being taxed on the interest, so this is my work around. All other invested money is in 401ks, Roth 401k and Deferred comp accounts.

Another plus, it is shielded when its time for kids to apply for financial aid at college time.

Thank you for the responses! Very helpful. I have a while until I have to worry about it, but was curious.

 

[Carol unsworth]

I have a question for those of you further along in your FIRE journey. So, I sometimes hear advice that you should have money, maybe a year or two of income, not invested in the stock market so that if the market is in a severe downturn you don't have to take money out. First, is this something that any of you are doing? And if you are, where does this money come from? Do you just change where your savings goes for a few years before you plan to retire? I think it sounds like a good idea, but wondering how it works in practice.

This is something I wonder about too. We live in the U.K., I’m 57 my husband is 60 and we are both retired.
I have a traditional pension which is enough to cover essential monthly expenses ( food, Telephone, transport, insurances, utilities etc) .Though we could live on this life would be pretty miserable!
My husband has his pension invested in the stock market, and we have enough to last 30 years, but we will both receive social security ( him in 6 years me in ten) and once we are in receipt of that we will not need to use any of my husbands money at all .
We plan to go go go for at least five years, a couple of good holidays a year, we love USA and Canada, so we will be using hubbies money for that and a bit of spending money each month.

Health care is free to us in the UK( lucky I know)
So my question is also what to keep in a cash emergency fund ?
We are completely debt and mortgage free, could probably replace any appliances if needed out of the monthly budget, so just have no idea at all what to keep

Thanks in anticipation

 

[Mome Rath]

So my question is also what to keep in a cash emergency fund ?

Everyone is so different, but I would say at least 3 months living expenses... or whatever amount you two feel secure in after discussing it. It's to provide a safety net in reality, but also an emotional safety net. You always want enough to provide a nice space of breathing room in case the unforeseen happens.

 

[QueenIsabella]

This is something I wonder about too. We live in the U.K., I’m 57 my husband is 60 and we are both retired.
I have a traditional pension which is enough to cover essential monthly expenses ( food, Telephone, transport, insurances, utilities etc) .Though we could live on this life would be pretty miserable!
My husband has his pension invested in the stock market, and we have enough to last 30 years, but we will both receive social security ( him in 6 years me in ten) and once we are in receipt of that we will not need to use any of my husbands money at all .
We plan to go go go for at least five years, a couple of good holidays a year, we love USA and Canada, so we will be using hubbies money for that and a bit of spending money each month.

Health care is free to us in the UK( lucky I know)
So my question is also what to keep in a cash emergency fund ?
We are completely debt and mortgage free, could probably replace any appliances if needed out of the monthly budget, so just have no idea at all what to keep

Thanks in anticipation

In your case, I would think 3 months worth of living expenses would be plenty. The goal is to have enough that if you did have a major expense, you wouldn't be forced to sell stocks at the wrong time. It sounds like you have the bases covered, which is great. I'm thinking more of the unanticipated expenses--you need a new roof, down payment on a new(er) car, that sort of thing. Even if you own your house outright, there can be ongoing repairs and expenses. Our city was hit by a hurricane last year--although we were relatively unscathed (just a few tree limbs down), there was massive wind and water damage. It was completely random, who got slammed and who got off easy.

 

[SouthFayetteFan]

I appreciate all the comments on “emergency funds” but does everybody understand that the actual original question was referring to the cash balance you sit on when you are retired - presumably early given the purpose of this thread (ie 45 years old with no regular income and possibly kids still living in your house)...

Here’s an excerpt from Root of Good on what they did there: (Justin and his wife retired in their 30s with somewhere under $2MM in assets).

During 2017 we moved to a slightly more conservative asset allocation that now includes about $125,000 of bonds and $50,000 of money market and CDs. The remaining 90% of our assets are fully invested in the stock market which means we do really well when when the market goes up but we suffer quite a beating when the market drops.​

So 10% of their total assets at the time were bonds/money market/CDs and the $50,000 in actual cash represented almost 2 years (24 months) living expenses or “emergency fund”.

Here’s a non FIRE article by Kiplinger advocating for regular retirees to maintain 3 years in cash to “ride out a bear market”:

https://www.kiplinger.com/article/retirement/T047-C032-S014-how-much-cash-should-retirees-hold.html​

3 years may be extreme but the concept holds value in theory. The worst thing you can do while in the midst of a significant market downturn as an early retiree is liquidate a portion of your portfolio - it can really mess with your SWR for years to follow. I think to answer the actual question, for the early retiree I’d say a minimum of 12 months in cash and preferably 18-24 months. Most early retirees achieve that through lower than average expenses so that number may only be $25k or $50k.

Even if 3 months was the right answer - for a frugal early retiree (assuming $36k annual expenses), would anybody say that $9k is a large enough emergency fund? This person’s sole source of income is potentially dividends from and sale of stocks...Just food for thought for my FIRE chasing friends here

 

[QueenIsabella]

I appreciate all the comments on “emergency funds” but does everybody understand that the actual original question was referring to the cash balance you sit on when you are retired - presumably early given the purpose of this thread (ie 45 years old with no regular income and possibly kids still living in your house)...

Here’s an excerpt from Root of Good on what they did there: (Justin and his wife retired in their 30s with somewhere under $2MM in assets).

During 2017 we moved to a slightly more conservative asset allocation that now includes about $125,000 of bonds and $50,000 of money market and CDs. The remaining 90% of our assets are fully invested in the stock market which means we do really well when when the market goes up but we suffer quite a beating when the market drops.​

So 10% of their total assets at the time were bonds/money market/CDs and the $50,000 in actual cash represented almost 2 years (24 months) living expenses or “emergency fund”.

Here’s a non FIRE article by Kiplinger advocating for regular retirees to maintain 3 years in cash to “ride out a bear market”:

https://www.kiplinger.com/article/retirement/T047-C032-S014-how-much-cash-should-retirees-hold.html​

3 years may be extreme but the concept holds value in theory. The worst thing you can do while in the midst of a significant market downturn as an early retiree is liquidate a portion of your portfolio. I think to answer the actual question, for the early retiree I’d say a minimum of 12 months in cash and preferably 18-24 months. Most early retirees achieve that through lower than average expenses so that number may only be $25k or $50k.

Even if 3 months was the right answer - for a frugal early retiree (assuming $36k annual expenses), would anybody say that $9k is a large enough emergency fund? This person’s sole source of income is potentially dividends from and sale of stocks...Just food for thought for my FIRE chasing friends here

I think one of the big considerations for the PP who asked about this is, she's in the UK. That means she's not going to get slammed with a huge, unexpected medical expense. I suspect that unexpected medical expenses are high on the list of financial emergencies.

I completely agree that the idea is to ride out a bear market, and people should think carefully about their individual circumstances--if you drive a 20yo beater car, you need to have $$ available for a newer one. You know that, eventually, you'll need it. Ditto for home repairs. I know if I didn't have to worry about college, health care, cars, and major home repairs, I would look at my investments differently. Even with home repairs, we're talking about the unexpected (furnace goes, tree limbs go through the roof) versus remodeling that could be put off for a year or three if necessary (which you could plan for).

 

[pillow]

I appreciate all the comments on “emergency funds” but does everybody understand that the actual original question was referring to the cash balance you sit on when you are retired - presumably early given the purpose of this thread (ie 45 years old with no regular income and possibly kids still living in your house)...

Here’s an excerpt from Root of Good on what they did there: (Justin and his wife retired in their 30s with somewhere under $2MM in assets).

During 2017 we moved to a slightly more conservative asset allocation that now includes about $125,000 of bonds and $50,000 of money market and CDs. The remaining 90% of our assets are fully invested in the stock market which means we do really well when when the market goes up but we suffer quite a beating when the market drops.​

So 10% of their total assets at the time were bonds/money market/CDs and the $50,000 in actual cash represented almost 2 years (24 months) living expenses or “emergency fund”.

Here’s a non FIRE article by Kiplinger advocating for regular retirees to maintain 3 years in cash to “ride out a bear market”:

https://www.kiplinger.com/article/retirement/T047-C032-S014-how-much-cash-should-retirees-hold.html​

3 years may be extreme but the concept holds value in theory. The worst thing you can do while in the midst of a significant market downturn as an early retiree is liquidate a portion of your portfolio - it can really mess with your SWR for years to follow. I think to answer the actual question, for the early retiree I’d say a minimum of 12 months in cash and preferably 18-24 months. Most early retirees achieve that through lower than average expenses so that number may only be $25k or $50k.

Even if 3 months was the right answer - for a frugal early retiree (assuming $36k annual expenses), would anybody say that $9k is a large enough emergency fund? This person’s sole source of income is potentially dividends from and sale of stocks...Just food for thought for my FIRE chasing friends here

That seems like a pretty aggressive allocation for retirement for Justin and his wife. Maybe for folks in their 30's it works cause theoretically they could go back to work if necessary. I'm not sure I'd be comfortable with 90% stocks at retirement given that we're in our 50's and less marketable.