Author Topic: How much would you need to be FI if you kept working (for fun) and only lived off of that income?  (Read 19433 times)

Ocinfo

  • Bristles
  • ***
  • Posts: 313
$800k in investments is our number (wife and I) for not needing to save money. We plan on hitting it in less than 3 years, around when I turn 35 and she is 33. At this point, I will transition into a remote work setup in a MCOL city ($800k actually makes us FI in this location), while we prepare for a couple year stint as expats (already spend 1-2+ months outside US for work and vacation).

We’ll likely keep saving money but at a reduced amount as we’re both pretty good at making money and, even part-time work in our fields would be more money than we need for the MCOL city. I’ll probably keep working part-time as a lot of my work is similar to research I’d do for fun anyhow so might as well get paid to do it. Wife can do contract work for $50 to $100 per hour, which quickly adds up.


Sent from my iPhone using Tapatalk

SpareChange

  • Bristles
  • ***
  • Posts: 447
This is what I'm planning to do. My workplace and career are very flexible on the number of shifts worked. There's an app we can use to add/trade shifts. Employer doesn't care who works as long as there's coverage, and it's not overtime. I think I'll continue FT until my net worth hits at least 300k, and then drop down to a scheduled 16hrs/wk...the minimum needed for health insurance and other bennies. I should be earning 6 wks paid time off a year by then, with 50-60 days sitting in my pto bank. I can easily live on that with room to spare without touching the stash. I can then add shifts occaissionally if/when needed for fun stuff. I'll still contribute enough to the 403b to get the match.

No particular desire (yet) to leave career or employer, so I don't perceive working another 10-15 years as a problem. Both are very stable. Don't think I'll be able to do the slow travel thing so much with aging parents.

It would take a minimum 5 more years FT to get FIREd, and I don't think that would be the optimal way to go. Tired of working FT, and I'm not getting any younger. :).

Pennycounter

  • Stubble
  • **
  • Posts: 238
We are at the point now where we could keep letting our savings compound and not save any more. we would be at our full fi number in 12 years with this approach. The issue is that our spending is so high, we would not be able to work low-wage jobs in the interim. We love in A HCOL. We would still need to earn a salary of at least $100,000, to account for our spending plus taxes on that income. At that point I may as well just keep my job at a higher salary and work 2 full fi through savings.

It's something that I look at but it doesn't really work in our situation.

Chairman

  • 5 O'Clock Shadow
  • *
  • Posts: 59
The level of optimism in this thread is amazing.

2Birds1Stone

  • Walrus Stache
  • *******
  • Posts: 5674
  • Age: 1
  • Location: Earth
  • K Thnx Bye
The level of optimism in this thread is amazing.

Realism my friend =)

retireatbirth

  • Bristles
  • ***
  • Posts: 259
I've been dwelling on this for a while. I'm mid-30s and at about $320k. I'm strongly considering semi-retiring in a few months. I would still seek a fun, highly paid job, but I think I'd be fine with the worst case of just settling for part time work. Anything is better than my current job.

retireatbirth

  • Bristles
  • ***
  • Posts: 259
The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

rubybeth

  • Handlebar Stache
  • *****
  • Posts: 1402
  • Location: Midwest
The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

A lot of people do jobs in "retirement" even without a huge amount of savings. They make ends meet with part-time jobs and social security, and live very simple lives. Having $500-$800k in savings that you don't need to touch for several years is a dream for many people. Having $1mil+ like many people plan on this site is out of reach for lower-income folks.

nereo

  • Senior Mustachian
  • ********
  • Posts: 11013
  • Location: Just south of Canada
    • Here's how you can support science today:
The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

In most developed countries its pretty hard NOT to make $30k a year if you're working at least 32 hours/week (4 days). Whether its "fun" to you depends on what the job is and what you like doing.
Long term (2+ decades) 4% is among the worst the broader US market has ever returned.  Will the next several decades be worse than the worst we've experienced? ...maybe.  Seems pretty pessimistic though...

trollwithamustache

  • Pencil Stache
  • ****
  • Posts: 688
The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

How is it optimism/unrealistic if you actually know what your spend was last year, the year before and how its tracking this year? Sure the rate of return may be off, but then I have to work this gig that I enjoy for another couple years. There are worse tortures out there.  Control the things you can control.

tj

  • Handlebar Stache
  • *****
  • Posts: 1249
  • Age: 34
  • Location: Maui
    • Arcadia Power
I've been dwelling on this for a while. I'm mid-30s and at about $320k. I'm strongly considering semi-retiring in a few months. I would still seek a fun, highly paid job, but I think I'd be fine with the worst case of just settling for part time work. Anything is better than my current job.

A fun highly paid job? What unicorn might that be?

2Birds1Stone

  • Walrus Stache
  • *******
  • Posts: 5674
  • Age: 1
  • Location: Earth
  • K Thnx Bye
The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

In most developed countries its pretty hard NOT to make $30k a year if you're working at least 32 hours/week (4 days). Whether its "fun" to you depends on what the job is and what you like doing.
Long term (2+ decades) 4% is among the worst the broader US market has ever returned.  Will the next several decades be worse than the worst we've experienced? ...maybe.  Seems pretty pessimistic though...

Eh, assuming that PT work paid $15/hr you are grossing a hair under $25k

retireatbirth

  • Bristles
  • ***
  • Posts: 259
I've been dwelling on this for a while. I'm mid-30s and at about $320k. I'm strongly considering semi-retiring in a few months. I would still seek a fun, highly paid job, but I think I'd be fine with the worst case of just settling for part time work. Anything is better than my current job.

A fun highly paid job? What unicorn might that be?

Fun as in intellectually stimulating. I'd target a data analytics job.

nereo

  • Senior Mustachian
  • ********
  • Posts: 11013
  • Location: Just south of Canada
    • Here's how you can support science today:
The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

In most developed countries its pretty hard NOT to make $30k a year if you're working at least 32 hours/week (4 days). Whether its "fun" to you depends on what the job is and what you like doing.
Long term (2+ decades) 4% is among the worst the broader US market has ever returned.  Will the next several decades be worse than the worst we've experienced? ...maybe.  Seems pretty pessimistic though...

Eh, assuming that PT work paid $15/hr you are grossing a hair under $25k

Yup.  If youre working 32hr/week you need to earn $18.75/hr to grow $30k (assuming working 50/52 weeks).  At 40 hours its $15/hr.  If you are a couple you can cut either the # of hours or the $/hr in half.

Depending on your background and skills earning $18/hr might be a dream or it might be a big pay-cut.  So whether its easy and fun depends mostly on the individual.

rockstache

  • Walrus Stache
  • *******
  • Posts: 5900
  • Age: 2015
  • Location: Northeast
This is an awesome thread. I don't know exactly what my number would be, but it sounds more and more like this could be a viable option for us, especially if my job allows me to work remotely. I don't need the health insurance, so it would really be just working for what we wanted to spend. It seems like it would be hard to transition to a mindset of not saving though.

gutts

  • 5 O'Clock Shadow
  • *
  • Posts: 34
400K + a reliable and somewhat offroad capable vehicle to travel across South and North America/sleep in it/live on the public land.

2Birds1Stone

  • Walrus Stache
  • *******
  • Posts: 5674
  • Age: 1
  • Location: Earth
  • K Thnx Bye
400K + a reliable and somewhat offroad capable vehicle to travel across South and North America/sleep in it/live on the public land.

Very close to my my own numbers/plan!

I will be closing in on that sometime late this year or early next year =)

formerlydivorcedmom

  • Pencil Stache
  • ****
  • Posts: 641
  • Location: Texas
Current plan is to look into part-time work when I've reached about 2/3 of my stash goal.  I would likely do part-time or contract work in my current occupation, just because the money is so good.  I've also thought about transitioning to teaching, which would pay all the bills but would be a full-time job.

I'm struggling with this choice.  I make terrific money now, I'm just bored.  I don't know if part-time in this occupation would be enough to get around the boredom, or if I'd just end up ticked that I have to work an increased number of years part-time.  Plus the worry about how long part-time work might be sustainable.  Yet if I change careers completely, I might end up hating it at half my current salary....

We probably have 4-5 years until we get there, so I at least have time to think about it.

kork

  • Stubble
  • **
  • Posts: 166
I think I have a good handle on this as I've been thinking about it for a while. Currently, my wife and I have about $700k in investments and $150k remaining on our mortgage.

Because of turmoil at my work, we've been looking at our numbers quite a bit.  Should we pay off the mortgage? How much is our barebones FI? Can we crush some of the groceries? Do we really need to do the hardwood floors?

And as such, it turns out to be some simple math. End result is...

We're there!!!

Currently, our monthly spending is about $5k. Not very mustachian, but that's in Canada with a family of 4. $2k/month of that is mortgage and kids RESP/College savings. This could stop at any time by paying off the mortgage and reducing our monthly expenses down to $3k/month. $2k a month is for Insurance, food, gas, heat, hydro, property taxes, etc. The remaining $1k of that is extra stuff.  For example, this month it was a new iPad and tickets to two music concerts. Next month it might be activities for the kids or a little vacation. 

So currently, our expenses living exactly as we are is $5k/month or $60000k / year between us. But that's today with a mortgage and kids. It drops by a lot without those expenses.

Now, what we really need to do is assume we're shutting off the kids RESP's and the mortgage is paid off. So then we use $3k/month as a our retirement number since we're living well and happily and not feeling deprived at all.  So assuming we have $700k now and we both have decades before traditional retirement age, it goes like this.

We need $900k to generate $36k a year with a 4% SWR. Assuming a 4% return on our investments we'll get there in about 7 years. Between now and then, we need to earn $5k a month to keep paying down the mortgage and keep up with the kids RESPS. My wife's take home is currently $2500/month.  That means that I would need to cover the other $2500. Well, if we drop our income in Canada, we'll get about $1k a month tax free in Child Benefits for the next 7 years (Until oldest turns 18). So then there's just $1500/month that we need to come up with. And because I work in technology, I don't think that earning $1500/month would be terribly difficult and on my own terms working on fun projects, that satisfies the OP's question of "fun jobs."

Currently though, we're adding about $60k a year to our stache through savings.  Keeping on doing what we're doing, we'll get there even faster. But it depends on circumstances, etc.

So our plan in that in 10 years when our youngest is, theoretically, in post secondary, the mortgage is paid off, we're no longer contributing to RESPs, we'll have $900k in investments. We'll draw down $3k/month at that point and technically be fully FIRE. Between now and 10 years from now we need to earn enough to live. As shown above, we could do it pretty easily. And that's not taking into account CPP, OAS, any inheritance or things that would only increase our net worth and income.

So to the OP's question of "how much would we need to be FI if we kept working for fun?" I'm going to say $700k which is where we are right now.  VERY GOOD FEELING!





heybro

  • Stubble
  • **
  • Posts: 196
This is exactly what my plan has always been.

Once your house is paid off and you have no debt, most people take on more debt to acquire more stuff (bigger house, nicer cars, more vacations, etc.) but I would like to BUY more free time or BUY less stress or BUY more self-respect or BUY the ability to say 'No.'

Issues that always come up:
1. How do you buy health care if you were to work part-time?
2. How do you establish your 'enough' number.  Even if you figure out how much you need saved today that will grow to a reasonable number by the time you actually retire, there are so many 'what-if this happens' or 'what if that happens.'  I'd always like to believe that not all the what-ifs can happen at once so that perhaps you are as close as you can be (say 80%) and don't sweat about a (20% uncertainty).  What I mean is that you cannot plan for every catastrophe to happen so you basically become OK with a few catastrophes happening.

It just always seems that spending more money than you earn is looked at as OK.  But pulling the plug on traditional life is considered 'risky.'  I wish there was more devoted to working part time your entire life or finding living situations that allow for a non-traditional life (not having to buy massive property that you don't even care about anyway, etc.).

trollwithamustache

  • Pencil Stache
  • ****
  • Posts: 688
This is exactly what my plan has always been.

Once your house is paid off and you have no debt, most people take on more debt to acquire more stuff (bigger house, nicer cars, more vacations, etc.) but I would like to BUY more free time or BUY less stress or BUY more self-respect or BUY the ability to say 'No.'

Issues that always come up:
1. How do you buy health care if you were to work part-time?
2. How do you establish your 'enough' number.  Even if you figure out how much you need saved today that will grow to a reasonable number by the time you actually retire, there are so many 'what-if this happens' or 'what if that happens.'  I'd always like to believe that not all the what-ifs can happen at once so that perhaps you are as close as you can be (say 80%) and don't sweat about a (20% uncertainty).  What I mean is that you cannot plan for every catastrophe to happen so you basically become OK with a few catastrophes happening.

It just always seems that spending more money than you earn is looked at as OK.  But pulling the plug on traditional life is considered 'risky.'  I wish there was more devoted to working part time your entire life or finding living situations that allow for a non-traditional life (not having to buy massive property that you don't even care about anyway, etc.).

Once one can pull the rip cord, one is negotiating from a position of strength.  The Dear Lady Troll gets health insurance for her and the wee (well, not soo wee) ones even though she is part time. They really didn't want to loose her.

So yeah, is our number perfect? no. are there cost risks going forward, yes. Does it take some negotiating/haggeling/ time when you walked away to make it all happen, yes it does. But if you are currently spending less than 70% of you combined income, its pretty easy to downshift and still cover all of your lifestyle costs... and have no current withdrawal rate.

kork

  • Stubble
  • **
  • Posts: 166
2. How do you establish your 'enough' number.  Even if you figure out how much you need saved today that will grow to a reasonable number by the time you actually retire, there are so many 'what-if this happens' or 'what if that happens.'  I'd always like to believe that not all the what-ifs can happen at once so that perhaps you are as close as you can be (say 80%) and don't sweat about a (20% uncertainty).  What I mean is that you cannot plan for every catastrophe to happen so you basically become OK with a few catastrophes happening.

I actually have a philosophy on this. Bear with me.

The first book I ever read was The Wealthy Barber.  I was about 22 years old and had 40+ years to retire.  I figured, based on his 12% gains that I'd have $10+ million dollars at 65 when I "retired."

I used to imaging all the things I'd do when I turned 65.  All those things I "thought" I would want. A big boat, a big house, a big this, that and the other thing. And on top of it, I was still early in my career and a keener.

Fast forward 15 years. Those things don't appeal to me any longer in the same way. Now I'm much more interested in the enlightenment of the Fulfillment Curve.

And here's what I've come up with to validate when is enough, enough.

I had a great upbringing.  It wasn't without drama, but I always knew I was protected.  I was secure. Always had shelter, always had food. But I needed to "save up" for things I wanted.  New video games, bicycle, toys, remote controlled cars... And through the actions of saving and sacrifice, my fulfillment was higher on those items that I actually had to work for.

So I figure, if I have enough money to satisfy the necessities of life and feel secure while still having the ability to work or sacrifice or save to obtain those extras, then that increases the fulfillment. Appreciation of the things we own isn't acquired with money... Appreciation can't be bought.

So the $1k/month we have that we spend on extra stuff right now, we'd need to save a couple months to refinish the floors or to buy a new macbook.  Do we need either of those, nope... But we appreciate them more when we don't have an endless faucet of money overflowing into our coffers.

So enough is enough to keep us safe and the larger the nest egg becomes, the safer it becomes during market downturns....   But I'm not sure we're interested in significantly more money flowing in.  It affects fulfillment in a negative way.

 
« Last Edit: March 29, 2018, 11:53:10 AM by kork »

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6493
  • Location: BC
I think I have a good handle on this as I've been thinking about it for a while. Currently, my wife and I have about $700k in investments and $150k remaining on our mortgage.

Because of turmoil at my work, we've been looking at our numbers quite a bit.  Should we pay off the mortgage? How much is our barebones FI? Can we crush some of the groceries? Do we really need to do the hardwood floors?

And as such, it turns out to be some simple math. End result is...

We're there!!!

Currently, our monthly spending is about $5k. Not very mustachian, but that's in Canada with a family of 4. $2k/month of that is mortgage and kids RESP/College savings. This could stop at any time by paying off the mortgage and reducing our monthly expenses down to $3k/month. $2k a month is for Insurance, food, gas, heat, hydro, property taxes, etc. The remaining $1k of that is extra stuff.  For example, this month it was a new iPad and tickets to two music concerts. Next month it might be activities for the kids or a little vacation. 

So currently, our expenses living exactly as we are is $5k/month or $60000k / year between us. But that's today with a mortgage and kids. It drops by a lot without those expenses.

Now, what we really need to do is assume we're shutting off the kids RESP's and the mortgage is paid off. So then we use $3k/month as a our retirement number since we're living well and happily and not feeling deprived at all.  So assuming we have $700k now and we both have decades before traditional retirement age, it goes like this.

We need $900k to generate $36k a year with a 4% SWR. Assuming a 4% return on our investments we'll get there in about 7 years. Between now and then, we need to earn $5k a month to keep paying down the mortgage and keep up with the kids RESPS. My wife's take home is currently $2500/month.  That means that I would need to cover the other $2500. Well, if we drop our income in Canada, we'll get about $1k a month tax free in Child Benefits for the next 7 years (Until oldest turns 18). So then there's just $1500/month that we need to come up with. And because I work in technology, I don't think that earning $1500/month would be terribly difficult and on my own terms working on fun projects, that satisfies the OP's question of "fun jobs."

Currently though, we're adding about $60k a year to our stache through savings.  Keeping on doing what we're doing, we'll get there even faster. But it depends on circumstances, etc.

So our plan in that in 10 years when our youngest is, theoretically, in post secondary, the mortgage is paid off, we're no longer contributing to RESPs, we'll have $900k in investments. We'll draw down $3k/month at that point and technically be fully FIRE. Between now and 10 years from now we need to earn enough to live. As shown above, we could do it pretty easily. And that's not taking into account CPP, OAS, any inheritance or things that would only increase our net worth and income.

So to the OP's question of "how much would we need to be FI if we kept working for fun?" I'm going to say $700k which is where we are right now.  VERY GOOD FEELING!

That is a great desciption.  Pretty much where I am at, except I quit my job, down to part time $1500/mo and DH is working for $4k/mo. Since FIRE, a few items come up -- vacations, home maintenance, and a plan to replace the car.

The car is a big one for us.   it is 12 years old now and will eventually need replacement.  One way to cut some of our costs to give more wiggle room has been cutting insurance , I am dropping one car (going to ebike), and have dropped most of the life insurance, too.   Savings keep coming after FIRE.  (oh, and the kids are starting jobs this year and costing less and less)   

snapperdude

  • Stubble
  • **
  • Posts: 107

The first book I ever read was The Wealthy Barber.  I was about 22 years old ...


What kind of shitty ass schools did you go to?

2Birds1Stone

  • Walrus Stache
  • *******
  • Posts: 5674
  • Age: 1
  • Location: Earth
  • K Thnx Bye

Lmoot

  • Pencil Stache
  • ****
  • Posts: 786
    • Journal
Already earning much lower than it seems the average is here, has its benefits. I would feel
comfortable leaving full time work if I had as low as $250k in the bank. Id continue working my part time job (which happens to be my fun job, and has an employer funded 503b...though its not a lot). And Id use most of the $250k to purchase rental properties so I can continue to generate income, while having assets that are expected to continue growing in value. Id keep maybe $50k cash, and build on that from after-expenses rental income profits. My expenses are lean enough that the fun job would cover that and my fun money.

I have dual citizenship to a country that has free healthcare, and while I dont plan on living there, I wouldnt hesitate to pay only for the most catastrophic plan I qualify for here, and getting expensive procedures done in my birth country. That is what my siblings have done. 3 years ago my sister had a life-saving procedure done with a 4 day private room hospital stay....cost less than $1,000 (all we paid for was the supplies, a bag of blood, and the first day of the hospital stay. In the US, it would be around $50k (and that would just include 1 day in recovery).
« Last Edit: March 30, 2018, 05:53:56 AM by Lmoot »

FreshPrincess

  • 5 O'Clock Shadow
  • *
  • Posts: 73
This is kind of what my plan is.  DH would be content working his full-time job because it's easy, pays moderately well and has good benefits.  I love my job - I truly do - but I think I've always felt like I wasn't supposed to be working for a living.  In every new job I've taken something didn't feel "right".  And then I found this forum and it all kind of clicked for me; this is what I was missing.  I didn't HAVE to work if I just made better financial choices.  THIS was my future.

Long story short.  I plan to get us to 750k with a paid off mortgage by 40.  And then DH can work if he wants - his salary more than covers our bills.  And I will quit my job and let the pot grow while I do something I love.  My current obsession is dance.  No reason I can't teach a dance fitness class in my area for a few years.

kork

  • Stubble
  • **
  • Posts: 166

The first book I ever read was The Wealthy Barber.  I was about 22 years old ...


What kind of shitty ass schools did you go to?

Ha! Meant the first "Finance" book I ever read.  ;-)

Nudelkopf

  • Pencil Stache
  • ****
  • Posts: 899
  • Age: 28
  • Location: Australia
I've always had $300k in my mind as my "Baby FI". That's the number I wanted to be at by around age 30 - or the age that I'd probably start having kids. Then I can have some decent time off with the kids. And since I'm a teacher, it's really flexibile and very easy to go part-time (not to mention the 12 weeks of paid leave per year to spend with the kids!). Working 2 or 3 days per week or 5 half-days would bring in plenty of income to keep pay the expenses, plus a little bit of savings each year.

I'm on track to reach that $300k by 30, if I stay in my LCOL area. And I half-imagine that I'll have a partner to help raise the child with, which will also help.

kork

  • Stubble
  • **
  • Posts: 166
The other thing I noticed with the recent market correction is that by choosing to earn enough $ to pay the current bills is that I'm not as concerned with market fluctuations. I enjoy working, just not all the time. By having enough of a stache and working it easily allows to ride out the bumps.