Poll

How much money (USD) in your portfolio would you need to retire?

< $200,000
1 (1%)
$200K-400K
10 (9.5%)
400K-800K
36 (34.3%)
800K-1.5MM
40 (38.1%)
> $1,500,000
18 (17.1%)

Total Members Voted: 96

Voting closed: April 20, 2012, 09:04:53 AM

Author Topic: What is Your Number? How much would you "retire" on?  (Read 29289 times)

mb196

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What is Your Number? How much would you "retire" on?
« on: February 16, 2012, 11:10:09 AM »
Years ago I read a book by Lee Eisenberg in which he discussed the concept of having a "number".  An amount of money sufficient that would allow you to retire, or NOT having to work for money.  The book is excellent and I urge you to check it from your local library since it is not ONLY about that number but about the things one does after work is no longer a requirement.
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The book also talked about how private many people are with their "number" and how they are more likely to talk about something much more private than their number.   If the question I pose offends you, feel free to give your opinion anyway, without disclosing your superprivate "number".
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I bring it up in this great forum because back in the early 2000s (10 years ago) my number was around 1MM dollars.  This took in consideration the assumption that my mortgage would be paid off and the prevalent interest rates of yesteryear.  Now with all the changes in interests and the economy, that number has been revised.
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I'd like to hear a general idea as to what people's numbers are.  If you can name the state where you live, that would help.  My 1MM is for downstate New York.
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Pancho

Ramses

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Re: What is Your Number? How much would you "retire" on?
« Reply #1 on: February 16, 2012, 11:15:12 AM »
$340,000 usd

California

AJ

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Re: What is Your Number? How much would you "retire" on?
« Reply #2 on: February 16, 2012, 12:19:28 PM »
Right now, we're looking at $500-600k, including the value of a paid-for home.

MEJG

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Re: What is Your Number? How much would you "retire" on?
« Reply #3 on: February 16, 2012, 01:06:24 PM »
When my investments net me ~ $50,000 a year. Possibly when my investments net $25,000 a year and I can work part time happily and still call it ER.

Fred Tracy

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Re: What is Your Number? How much would you "retire" on?
« Reply #4 on: February 16, 2012, 02:08:42 PM »
200k, Oklahoma, after buying land/building small house.

JohnGalt

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Re: What is Your Number? How much would you "retire" on?
« Reply #5 on: February 16, 2012, 02:21:08 PM »
200K in retirement accounts to let grow until traditional retirement years.
200K in non-retirement assets to invest in starting an enjoyable business that I can work at part time - only working for others as needed to cover living expenses until I can live off the business revenue.

richinlondon

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Re: What is Your Number? How much would you "retire" on?
« Reply #6 on: February 16, 2012, 02:46:01 PM »
Thought I'd add a non-US perspective to the mix:

I would be really happy to have a replacement income that covered all my expenses and provided me with inflation-adjusted 2000 / month ($3100 USD / month) surplus to continue investing or for spending on myself / travelling etc.

My mortgage, utility bills and council tax (property tax) is entirely paid for by my lodgers at the house that I recently purchased, and apart these expenses, I budget 600 / month ($950 USD / month) for all my other living expenses (food, travel, insurance, clothes, mobile phone, entertainment, etc). Longer term I'd like to not have lodgers, but the extra income means that I technically get half a house  to myself plus all bills paid for free, so losing complete privacy is a small price to pay for what I gain!

So, in brief, $4000 a month net, at todays rates would give me total confidence to stop working. Am currently on track to achieve this in at most 9 years if I continue to invest in property and maintain my high savings rate (presently around 70% of after tax income). Hopefully I can do it in 7! (I'm 30 now)

I do live in an expensive city mind you (London, England) so this may seem excessive to people who live in cheaper parts of the world??

Rich

arebelspy

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Re: What is Your Number? How much would you "retire" on?
« Reply #7 on: February 16, 2012, 04:59:04 PM »
I like this question, so I added a poll.  Hope you don't mind!

I had trouble picking the poll responses, as it'd vary quite a bit between what the average person thinks, what an ERE member thinks, etc.

I think most here would be towards the low end (and the few comments so far indicate that as well), so I tried to skew it low, but I may not have done enough.  It's a tough balance, because I think most people nowdays would say > 2 Mil, but that is even above my top level on the poll.  I donno, we'll see.

Oh, and I worded the question as such: "How much money (USD) in your portfolio would you need to retire?"

By that ("portfolio") I intend to mean all investments (including rental property, precious metals, stocks, bonds, whatever) but not your other assets such as car, house (even if paid off), etc.

Feel free to add a comment to clarify your vote.
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poko

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Re: What is Your Number? How much would you "retire" on?
« Reply #8 on: February 16, 2012, 06:18:50 PM »
Ha, interestingly enough, this was a topic that came up on Ask Metafilter today: http://ask.metafilter.com/208348/Strategy-for-retiring-young

Since I've been hanging out on these forums lately, I thought everyone would be gung-ho for that dude retiring right now. NOPE.


I don't have an exact number yet. That's something I really need to sit down and calculate for myself.

Guitarist

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Re: What is Your Number? How much would you "retire" on?
« Reply #9 on: February 16, 2012, 07:30:37 PM »
Ha, interestingly enough, this was a topic that came up on Ask Metafilter today: http://ask.metafilter.com/208348/Strategy-for-retiring-young

Since I've been hanging out on these forums lately, I thought everyone would be gung-ho for that dude retiring right now. NOPE.


I don't have an exact number yet. That's something I really need to sit down and calculate for myself.

From the site

Quote
Keep in mine, if you get a 6% return on that 2.5 million, that's like $150,000k a year. That's a lot of money, depending on where you live, but it's not really enough money to live like royalty.




Mr Mark

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Re: What is Your Number? How much would you "retire" on?
« Reply #10 on: February 16, 2012, 07:59:40 PM »
When my investments net me ~ $50,000 a year. Possibly when my investments net $25,000 a year and I can work part time happily and still call it ER.

Same for me. I figure $1mln + a morgage free house in a nice place should be enough to live semi-Mustachian pretty much forever... The joy of capitalism.

Still tweaking the ideal portfolio model to get the optimum return, as past returns are misleading. But I'd probably look for a balance of:
- own own residence
- rental propertiy or 2
- Vanguard stock & bond mutuals [right now 80/20]
- Dividend stocks
- IRA/401k (only enough to collect Employer match)
- cash & near cash

Mike Key

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Re: What is Your Number? How much would you "retire" on?
« Reply #11 on: February 16, 2012, 08:18:07 PM »
I don't believe in the traditional concept of retirement. I believe it's a scam. I personally am planning for life-time lifestyle level and end of life expenses.

I kind of think retiring and goofying off while drowning worms is a waste of human potential. However, I would say, that others may consider having enough income to pursue other things akin to retirement. And with that I can agree.

Many of the most notable and successful men who created MUCH in our history worked well past what is considered "retirement" age. That's why I believe men and women too sure, should work until they are unable too.

BTW, you should really do some study into the history of retirement and how today's notion of it came to be.

In 1883, Chancellor Otto Von Bismarck of Germany had a problem. Marxists were threatening to take control of Europe. To help his countrymen resist their blandishments, Bismarck announced that he would pay a pension to any nonworking German over age 65. Bismarck was no dummy. Hardly anyone lived to be 65 at the time, given that penicillin would not be available for another half century. Bismarck not only co-opted the Marxists, but set the arbitrary world standard for the exact year at which old age begins and established the precedent that government should pay people for growing old.

There are some other accounts that point to contenders in government who where already 65 yrs old being forced into retirement by Bismarck in this move.

From that point, there where other interesting experiments in retirement and reasons for it, until the mid 30's when it became a seated concept in the United States and Europe.

Anyways, there really is a lot of reading on the subject that is quite fascinating. But it really is a concept of the last 3 centuries.

Leonardo da Vinci is a prime example of a man doing some of his greatest work at the later end of his life, and he lived to be 67. Bismarck would of forced him to retire from all that painting nonsense.

Ok end of rant. Sorry to hijack the thread.
« Last Edit: February 16, 2012, 09:10:21 PM by mikekey »

kolorado

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Re: What is Your Number? How much would you "retire" on?
« Reply #12 on: February 17, 2012, 08:07:03 AM »
I don't believe in traditional retirement either. Since I'm a homemaker, mother, hobbyist and volunteer I technically will never retire. My hubby goes to a job. He wants to retire eventually although I can't get him to nail down what it is he actually wants to do in retirement. I'm hoping he takes up some for-pay hobbies. He's turning into a decent home brewer so that's something to look into down the road. I also think he could be a personal coach and trainer for certain sports and hobbies. That's an option for a lot of retired people and there's a huge need for it. It may not be the best pay ever but a good use of your time and knowledge. Besides, you'll already have enough passive income at that point that the pay rate would not be the motivation to work anymore.
Anyway, I chose $1 million in the poll. Hubby is 38 and we're planning for him to retire at 55. We could afford sooner(even on our low single income) but he doesn't want to retire too early. His dad was 55 at retirement(and retired from working at the SSA!) so that is playing into his goal. We should have $750K or more in the 401K at disbursement age(59.5)and I am creating a fund of $250-300K to bridge the years between age 55-60. We will not have debt or a mortgage.
I don't think we'll need that much. But we feel we should prepare for astronomical health bills or lifelong support of an elderly parent or parents or even our kids. Assuming we don't have any of those special and expensive needs during our retirement and assuming SS pays out even 50% of what we're supposed to collect, we could potentially be leaving $3 million in inheritance to our kids. Of course, it could go the other way too and they'll be helping us.

catalana

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Re: What is Your Number? How much would you "retire" on?
« Reply #13 on: February 17, 2012, 09:47:32 AM »
I'm another one who looks at replacement earnings rather than a capital amount.  Once I can cover my monthly spends, then I can retire.  That's as detailed as it needs to be for now because I am still a long way off!

As it gets closer, I will need to look at using capital drawdown in conjunction with dividend and interest income, because I already have semi-decent pensions in place so have a finite timescale for the money to last.

Shandi76

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Re: What is Your Number? How much would you "retire" on?
« Reply #14 on: February 17, 2012, 11:04:31 AM »
I think replacement earnings are more important than a capital amount.

Right now I think I need a paid off house plus assets that provide about 1000pcm in income. That probably means capital assets of around 500K, though it could be as little as 250K if I manage to buy decent rental properties with a good yield, and some decent dividend paying stocks.

arebelspy

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Re: What is Your Number? How much would you "retire" on?
« Reply #15 on: February 17, 2012, 11:08:21 AM »
I'm another one who looks at replacement earnings rather than a capital amount. 

I think replacement earnings are more important than a capital amount.


Um, okay, but you'll (generally) need capital invested to earn those "replacement earnings."

There are other methods (niche passive income sites, for example), but mostly it would come from invested capital (whether it's invested in real estate, and you have rental income, or dividend stocks, or plain old index funds and you sell and rebalance).

So the question is: what portfolio size would you need to generate those replacement earnings?

Saying replacement earnings is more important than capital amount is ignoring or misunderstanding the fact that they're two sides of the same coin.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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mb196

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Re: What is Your Number? How much would you "retire" on?
« Reply #16 on: February 17, 2012, 01:58:28 PM »
1 - I think any realistic number that you set for yourself must first start with an idea of the monthly expenses you want to cover.  You must also have an idea how for how long you want your stash to cover you.   When I hear of people throwing in very low numbers or very hight numbers, I wonder what are they basing this numbers on.   I've tracked my expenses for the last two years.  I have approximately 40 categories of where my money goes from "barbershop" to "clothes for work" to "vacation".    When I decide NOT to work for money, I'll be able to quickly slash off the categories no longer relevant.  The transparency that this tracking gives me helps in many ways.   Having said that, and after doing the tracking for so long, I can say for sure how much I will need on a monthly basis to derive enough to cover it.  In my opinion, any number you throw around or as you prepare to plan for ERE, you MUST have a general idea of where your money goes.   One thing I kept saying in the months when I started doing it was "I can't believe I spend so much".   Most people put tracking expenses off because they think it's a cumbersome tasks but the fact is that it is very simple.  My system:  I have a small piece of paper in my wallet (2x4).  I prepared this in Microsoft Word and list all my categories.  Each time I spend something, I write it in or at the end of the day.   At the end of the month I add up all the categories and enter them into an Excel spreadsheet.   This allows me to see not only my expenses month to month, but also within each category.   Want to know how much I've spent on vacation for the year, just add up all the month with a running balance on top.  Simple.   Don't go crazy trying to create a super system, the simpler the better.   The point is to START TRACKING RIGHT NOW.   Another version of this tracking is to just have three categories:  Needs, Wants and Savings.
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2 - Mikekey, thanks for your post on the concept of retiring at 65.  I frankly don't see myself rotting at home or doing just leisure activities day after day.   The whole point of this concept is not so much "how much do you need to retire" but how much do you need to longer have to work for a living.  I guess independence, which is what ERE is about, is a better way to summarize it.  I plan to volunteer more, work in my community, spend time mentoring students and people entering the workforce so for me, these things will become "work".  But it won't be work in a typical sense since I won't be doing it for money.
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3 - Another interesting concept will be, well now that you have your 500K or your 1 million, what do you invest it in so that you are able to earn moderate income and at the same time preserve most of it.   MMM posted a great article today about Index Funds, but that is another thread altogether.   Frankly, the way the investment part should work is that you have an investing strategy as you start saving it.  In other words, if you are in your 20s, 30s or 40s, have a general idea now and allocate accodirngly.   This is extremely important as you play with tax-deferred investments, tax-free investments and taxable investments.  I read a book by Alexander Green called "The Gone Fishin' Portfolio" that explains this very well.  I also recommend this book.
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A great forum,
Pancho

arebelspy

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Re: What is Your Number? How much would you "retire" on?
« Reply #17 on: February 17, 2012, 02:11:42 PM »
1 - I think any realistic number that you set for yourself must first start with an idea of the monthly expenses you want to cover.  You must also have an idea how for how long you want your stash to cover you.   When I hear of people throwing in very low numbers or very hight numbers, I wonder what are they basing this numbers on.   I've tracked my expenses for the last two years. 


Yup.  How much you spend monthly (or annually) is the first step.  Then you need to figure out what rate of return you expect, or safe withdrawal rate, to figure out what size portfolio you need to generate that income.

Keeping in mind, of course, a few bad years at the beginning can make a big difference, and a long term average is really over the long term.

FIRECalc - http://firecalc.com - is the best tool I've found to estimate SWRs and such with a decent degree of confidence.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

AJ

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Re: What is Your Number? How much would you "retire" on?
« Reply #18 on: February 17, 2012, 02:26:05 PM »
Leonardo da Vinci is a prime example of a man doing some of his greatest work at the later end of his life, and he lived to be 67.

Yeah, but he was *painting*! Ok, maybe for him painting was a grind, but I expect that is a stretch.

I am personally all in favor of the "traditional" concept of retirement. I don't plan on spending all day fishing, but I do want to have the option. I think that level of freedom of time and thought is required to reach full intellectual and creative potential. I don't think its a waste at all. A waste is me spending 60 hours in front of a computer screen banging out code to help create a smoother process for people to buy more widgets. My real contributions to society happen in my off time, of which I plan to have more in retirement.

I truly believe that there is something fundamentally different about the thinking and creating process when there is no pressure of bosses and deadlines that allows folks to get outside the box and really solve problems. I'm not against bosses and deadlines, but they have a place and a purpose - namely, to take those great ideas that were generated in freedom and make them a reality.

A person's output != a person's value.

Dave

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Re: What is Your Number? How much would you "retire" on?
« Reply #19 on: February 17, 2012, 02:49:07 PM »
Like a few posters above, I don't really aspire to a "do nothing" classic style of retirement.

My aim is to reach financial independence, by which I mean having enough money to cover essential expenses (food, power, etc) - I've chosen this because truly essential expenses are low, so the capital needed feels a bit more achievable.

I wouldn't want to have to live with only enough to cover the essentials though - and I'd also want to stay intellectually engaged, but being financially independent would allow me to search out the most interesting work, and by doing only work I'm interested in, I expect to be much better at it than the 9-5 grind, too... (I'm a software engineer).

For the sake of argument though, I reckon essential expenses are around 500pcm, or 6000pa. Assuming investments which do no worse than 3% above inflation, I'd need 33*6 = 198k.

Gutless Bastard

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Re: What is Your Number? How much would you "retire" on?
« Reply #20 on: February 17, 2012, 03:30:55 PM »
I've had the number 600k floating around in my melon for a bit.  I figure 300kish in rental properties and roughly the same amount in something like dividend stocks.  I reckon that should easily cover all of our normal living expenses plus a little more just in case.

catalana

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Re: What is Your Number? How much would you "retire" on?
« Reply #21 on: February 18, 2012, 03:04:47 AM »
Um, okay, but you'll (generally) need capital invested to earn those "replacement earnings."

There are other methods (niche passive income sites, for example), but mostly it would come from invested capital (whether it's invested in real estate, and you have rental income, or dividend stocks, or plain old index funds and you sell and rebalance).

So the question is: what portfolio size would you need to generate those replacement earnings?

Saying replacement earnings is more important than capital amount is ignoring or misunderstanding the fact that they're two sides of the same coin.
I understand that they're two sides of the same coin, I just know that trying to put an accurate value on the capital is extremely difficult, so I focus on how much the stash is paying me for the time being.  I will make more accurate calculations as I get closer.

I already have some pensions in place which start paying small amounts at age 60, 65 and 68, and am adding to another which I can choose when to take - current legislation is earliest age 55 although I think that will change by the time I get to that age.  I am excluding the stash value of my existing pensions from my total stash as they are defined benefit.  Due to those pensions the capital amount would be much higher if I stopped working at 45 versus 50, because I would not just be relying on investment returns as I would draw down the capital to form part of my income too.  This reduces the amount required, but means that the date at which I start living off the stash is very important.  For example if I stopped working at 45 (versus 50) it would have to support me for 5 more years until the pensions kicked in - and I would have 5 years fewer contributions to those very same pensions.  However there would be 5 years more growth (hopefully!) in the pension value.  That is one element of the calculations needed.

Then there is the combination of investments and their differing yields to consider.  At present most of my investments are in stocks, simply because my timescale is long, and bonds are in a shocking position right now.  However I do have an inflation linked bond with 4 years to run so not a clue what that is going to throw out just yet.  If I got into residential property in the future, then I would expect a much higher yield than from a solid blue chip.  At the moment I've not yet decided whether I am willing to play landlady again  ;-)

Soooooooooo ...... no, I don't know what "the number" is just yet.

I do however know what my monthly spends are and that I need my stash to give me 20k per annum between now and retirement.  I am only at about 3.5k at present so it is a while before I need to do those detailed calculations.
« Last Edit: February 18, 2012, 04:00:44 AM by catalana »

MacGyverIt

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Re: What is Your Number? How much would you "retire" on?
« Reply #22 on: February 20, 2012, 08:05:01 PM »
I like this question, so I added a poll.  Hope you don't mind!

I'm glad you did! It's interesting/assuring to see so many selected less than 1M.

I've run spreadsheets provided by MMM, members of Jacob's ERE site and gone through some websites for calculations and I'm still not settled on a number. Perhaps I'll feel more assured once I'm totally (including mortgage) debt free? I will be assured when I see the passive income rolling in to exceed spending needs. :-)

One consideration looming in the back of my brain is will I have enough to help care for my parents when they can no longer care for themselves. All though they were always uber-miserly (like water-down the shampoo and ketchup miserly!) I'm not entirely convinced they'll have enough 'stache at the end.

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Re: What is Your Number? How much would you "retire" on?
« Reply #23 on: February 21, 2012, 02:04:50 AM »
I love this question!  I guess unlike many people, I am not super-private about it at all!

I need $319000 before I could retire, which is 200000.  Assuming a return of 3%, this would give me a monthly income of 500.  I know everyone says to calculate with your return higher than 3%, but I'm only 24 and I've never seen the super-high return rates of yore!  I need to do my calculations on numbers I'm familiar with (assuming of course our Government don't completely destroy the banking sector and tax us into the ground).

Unlike the Brit who commented earlier, I don't live in London (your numbers did seem high to me, but London is bloomin' expensive!).  I live in the Midlands and it's fairly reasonable to live around here if you avoid the commuter villages.

My calculations assume that I own a mortgage-free house (I currently rent).  I guess it kind of goes without saying that it also assumes I continue to live as I currently do.  Obviously, if I decide to pursue a hobby of off-road driving in a 4x4, I may have to rethink my plan!

richinlondon

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Re: What is Your Number? How much would you "retire" on?
« Reply #24 on: March 08, 2012, 04:26:31 PM »
I need $319000 before I could retire, which is 200000.  Assuming a return of 3%, this would give me a monthly income of 500.  I know everyone says to calculate with your return higher than 3%, but I'm only 24 and I've never seen the super-high return rates of yore!  I need to do my calculations on numbers I'm familiar with (assuming of course our Government don't completely destroy the banking sector and tax us into the ground).

The important thing to factor in is inflation. LOL this will make me sound old now - I remember back in '96 you could get a tin of baked beans for 9p and long french baguette for 0.30p. Nowadays it's 0.40p for the beans and 1.20 for the baguette.  I suspect by 2050 a tin of beans will cost 1.00 and a baguette about 3.00! That's why I've also factored in that I want to have enough income that I could take around 1400 a month to continue to invest. This would slowly allow me to buy a few more properties, more gold or shares. Will your 500 / month allow for this?
And does this also include rent, or would you purchase a property outright? And have you decided how to invest your money?

As for the British Govt - they will continue to find new and unusual ways to tax us! Biggest things are not lock your money up into a traditional pension (unless you are a higher rate tax payer - and then use a SIPP instead) and don't invest in property worth > 2million - both are ripe for the picking.

MrSaturday

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Re: What is Your Number? How much would you "retire" on?
« Reply #25 on: March 09, 2012, 11:39:23 AM »
I don't have a number in that sense.  I don't care so much about the sustainability of my 'stache or passing it on to future generations.  So rather than looking for a safe withdrawal rate my forecasts assume my taxable assets only need to last until I'm 59.5, and I can burn through some of my retirement assets before I start picking up social security.

So for each year into the future, I calculate how much I can pull out before 59.5, 59.5 through 62/67/70, and 62/67/70 until I'm dead.  Then it's a matter of choosing a year where I feel like I'll have more than enough.  For example, I'm about 5 years from having at least $15k per year for life, or 6 years from having at least $20k per year.

I realize this is based on a couple of big assumptions, mainly 1) my investment returns keep pace with inflation, so the withdrawals I'm calculating in today's dollars maintain spending power, and 2) social security doesn't get cut back by more than 25% of the amount I'm expecting.  I try to keep my projections extremely conservative and will likely work an extra couple of years beyond what I anticipate to give myself some extra room.

Sacadoh

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Re: What is Your Number? How much would you "retire" on?
« Reply #26 on: March 13, 2012, 07:17:00 AM »
656,100 = the median full time salary in the UK in 2011 was 26,244 pa. Applying a YP of 25 (4% draw down rate) gets me to this number.

Assumes house paid & excluded from stash, one car & no school or university costs to pay - with the latter two being funded by a 100k step down in house value.

Being an old boy of 44 means I won't really be retiring early in Mr MMM's terms but in six years, when I expect to cash in my chips, I think many people in the UK will have begun to wake up - most are still sleepwaking in a dream that they will be able to retire at 60/65 - save for the lucky ones employed by the state on their gilt edged final salary schemes.

The Money Monk

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Re: What is Your Number? How much would you "retire" on?
« Reply #27 on: March 20, 2012, 08:59:09 AM »
About $350,000 for me at current spending levels. Or about $250,000 if my house is paid off.

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Re: What is Your Number? How much would you "retire" on?
« Reply #28 on: March 20, 2012, 12:03:09 PM »
With a paid off house, I figure $450k in financial assets (stocks and rental property), with an average yield of 5.5%.  That would get me to the $24k/year in income we'd need to meet my definition of financial independence.  We'd likely still work at part time/casual/business opportunities to add luxuries and safety margin to our lifestyle.

shedinator

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Re: What is Your Number? How much would you "retire" on?
« Reply #29 on: March 20, 2012, 12:15:36 PM »
I've noticed a couple posts here suggesting that the "traditional" view of retirement is somehow in contrast to any idea of end-of-life productivity. For those who think that, I'm wondering why they think so?
In my estimation, the original reason for retirement was a loss of productivity- people working in labor-intensive fields eventually lost the strength to do the work, and had to rely on savings, family, community, or government to provide for their existence from that point on. Talking with folks from the Silent, Greatest, and Interbellum generations (people born ~1900-1945), I get the impression that this was the most common perception of retirement for them growing up. Several have told me that they chose their careers precisely because they would not require retirement... incidentally, all of those individuals have since retired.
A second tradition seems to have risen among the later generations, probably fueled by the sharp uptick in both life expectancy and the number of companies that provided pensions, and that's the concept of retirement for out of desire, rather than out of necessity. My father will likely retire while he is still able-bodied, because his pension will provide for it, and his individual retirement accounts and social security will supplement that.
However, in both "traditional" forms of retirement, I don't see most people flipping a switch and giving up productive work altogether. I see it as a sense of freedom, or independce (go figure). Sure, my grandfather can take a random Wednesday and go fishing, or load up the car and drive 3 hours to meet an old friend for lunch, but he can also invest 2 weeks into building a stone wall in his back yard by hand to keep the deer out. And when his knees finally give out and he can't handle the stairs anymore, he doesn't have to worry about how he's going to provide for himself and my grandmother any more. I expect the same will be true of my dad- most days, he'll probably be in his workshop, or the barn, or somewhere else on my parents' 26 acres, fixing things and improving the property. But he's got 4 grandchildren in 3 states, and a whole host of other things he would like to do if he weren't putting in 40 pre-scheduled hours at his day job (where he fixes things and improves properties that are not his).
I expect that if/when I reach FI, whether that's at 40 as I hope, or further down the road, it won't slow my productivity any more than it has my immediate ancestors, but it will certainly open doors and change the format of my productivity. I'm a researcher and a writer first, and a teacher second. But as most people who feel that way can attest, the majority of places that employ people like me expect us to be teachers first, and do our writing on our own time, or wait until we're elligible for sabbatical. While I am sure I will love the classroom, the possibility that I could go into writing full time when I'm in my forties is very exciting. So yes, I have a number in mind, which will allow me to reach Financial Independence, and make it so that I don't have to work, or do anything productive, in order to support myself and my family. But I fully expect to go on being productive because it's what I will want to do. It's a very happy both-and situation, rather than a nerve-wracking either/or.

Guitarist

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Re: What is Your Number? How much would you "retire" on?
« Reply #30 on: March 20, 2012, 12:27:24 PM »
I've created a spreadsheet to calculate my number based on Jacob's calculations on ERE.
I've only put in expenses starting in January so I'm at least waiting a year before I feel comfortable with the number. I know once my number barely moves from month to month, I've got a pretty good idea.
At this point, I am looking at about $550,000... and this is with me not doing anything too crazy with savings yet (at least according to my thoughts on the matter). Apparently I had a 50% savings rate when I actually started tracking my income/expenses already (including retirement savings)!

travelbug

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Re: What is Your Number? How much would you "retire" on?
« Reply #31 on: March 25, 2012, 09:05:32 PM »
this is very interesting and I am especially curious at the estimates that are very low.
we are deciding how much we can glean from our assets at the moment as we are going to be doing that soon and have been crunching numbers ALOT.
We are going to be selling our residence, but will need enough $ to be able to buy back a similar one if we choose to wherever we want.
We will be living off interest from our capital investments and do not want to touch the capital, in fact we want to add to it if possible.
We need 1m+, we are in our 30s with two small children and will be travelling in many countries so will stay in cheaper countries for afew months and that will give us more to spend in more expensive countries.

atelierk

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Re: What is Your Number? How much would you "retire" on?
« Reply #32 on: March 26, 2012, 07:04:08 AM »
The important thing to factor in is inflation. LOL this will make me sound old now - I remember back in '96 you could get a tin of baked beans for 9p and long french baguette for 0.30p. Nowadays it's 0.40p for the beans and 1.20 for the baguette.  I suspect by 2050 a tin of beans will cost 1.00 and a baguette about 3.00!

My retirement philosophy is one of making my home a center of production - for myself - rather than consumption. So I'd make my own beans (and probably grow them as well) and my own French baguette for pennies, rather than buy them. That way I'll need a whole lot less to retire on since I won't need to buy nearly as much.

Consumers will need a much bigger number than producers. In my case, I'm figuring around $525,000 - in upstate NY - will be plenty.

arebelspy

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Re: What is Your Number? How much would you "retire" on?
« Reply #33 on: March 26, 2012, 07:54:27 AM »
The important thing to factor in is inflation. LOL this will make me sound old now - I remember back in '96 you could get a tin of baked beans for 9p and long french baguette for 0.30p. Nowadays it's 0.40p for the beans and 1.20 for the baguette.  I suspect by 2050 a tin of beans will cost 1.00 and a baguette about 3.00!

My retirement philosophy is one of making my home a center of production - for myself - rather than consumption. So I'd make my own beans (and probably grow them as well) and my own French baguette for pennies, rather than buy them. That way I'll need a whole lot less to retire on since I won't need to buy nearly as much.

Consumers will need a much bigger number than producers. In my case, I'm figuring around $525,000 - in upstate NY - will be plenty.

Inflation will still be a major factor.  Unless you're planning on milling your own flour from grain you grow yourself.  Inflation will hit everything, meaning that sure, you won't be buying the expensive bread, but the cost of the stuff you do use will double, just like the rest.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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atelierk

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Re: What is Your Number? How much would you "retire" on?
« Reply #34 on: March 26, 2012, 09:05:37 AM »
The important thing to factor in is inflation. LOL this will make me sound old now - I remember back in '96 you could get a tin of baked beans for 9p and long french baguette for 0.30p. Nowadays it's 0.40p for the beans and 1.20 for the baguette.  I suspect by 2050 a tin of beans will cost 1.00 and a baguette about 3.00!

My retirement philosophy is one of making my home a center of production - for myself - rather than consumption. So I'd make my own beans (and probably grow them as well) and my own French baguette for pennies, rather than buy them. That way I'll need a whole lot less to retire on since I won't need to buy nearly as much.

Consumers will need a much bigger number than producers. In my case, I'm figuring around $525,000 - in upstate NY - will be plenty.

Inflation will still be a major factor.  Unless you're planning on milling your own flour from grain you grow yourself.  Inflation will hit everything, meaning that sure, you won't be buying the expensive bread, but the cost of the stuff you do use will double, just like the rest.

Right. But if the cost of the stuff I do use is already less, then a 3 or 4% jump is also less in actual $$ meaning I still don't need as big a 'stache to begin with. That's my point. Not that inflation won't happen, but because I substitute time and skill for much of the money that a consumer has to spend (because they must pay for everything), my expenses will be lower all along, even with inflation. So I can safely start with less.

If a month's worth of bought vegetables (say, $100 worth to make the math easy) jumps 3%, then I would find myself spending $36 more per year. But if I grow my own, and I normally spend $100 on seeds every spring and seeds also jump 3%, I'm spending $3.00 more per year to eat the same veggies. It would be even less than that, however, since most seeds aren't used up in one year - if stored properly, they'll stay viable for 3 - 5 years.

That's just one simplified example, but if you add in reducing, reusing, recycling, repurposing and generally figuring out needs from wants - then starting with less than the proverbial million bucks becomes quite feasible.

arebelspy

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Re: What is Your Number? How much would you "retire" on?
« Reply #35 on: March 26, 2012, 09:29:24 AM »
That's wrong, because presumably and hopefully your portfolio will have real growth (i.e. above inflation rates).  If you have less in dollars invested, it'll grow less, meaning it'll be able to pay for your cheaper items.

Let me put it another way that might make more sense.  I'll just make up some numbers to illustrate my point.

Let's say you buy all your groceries, and thus need $1,000,000 to kick off enough returns to pay for that, and fight inflation.
Your groceries now cost more, but your portfolio grew more to cover that.

Let's say now that you make your own, so you need less real dollars to retire on (say half as much, 500,000).  That kicks off what you need to cover your cheaper items.  The cheaper items then have inflation, costing you more.  Hopefully your portoflio covers that.

Either way, doing things cheaper does mean you need less to retire on.  It does not, however, help you fight inflation in the future, unless you're completely independent (such as milling your own flour from grain you grow).

Make sure you don't underestimate inflation, even if you are more independent, because inflation will hit the flour you're buying, along with any other goods your purchasing.  Doing things cheaper will let you retire on less, but won't stop inflation from eventually ravaging your portfolio if you don't take steps to guard against it.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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shedinator

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Re: What is Your Number? How much would you "retire" on?
« Reply #36 on: March 26, 2012, 09:59:05 AM »
The important thing to factor in is inflation. LOL this will make me sound old now - I remember back in '96 you could get a tin of baked beans for 9p and long french baguette for 0.30p. Nowadays it's 0.40p for the beans and 1.20 for the baguette.  I suspect by 2050 a tin of beans will cost 1.00 and a baguette about 3.00!

My retirement philosophy is one of making my home a center of production - for myself - rather than consumption. So I'd make my own beans (and probably grow them as well) and my own French baguette for pennies, rather than buy them. That way I'll need a whole lot less to retire on since I won't need to buy nearly as much.

Consumers will need a much bigger number than producers. In my case, I'm figuring around $525,000 - in upstate NY - will be plenty.

Whereabouts in Upstate? I grew up in Parishville.


Inflation will still be a major factor.  Unless you're planning on milling your own flour from grain you grow yourself.  Inflation will hit everything, meaning that sure, you won't be buying the expensive bread, but the cost of the stuff you do use will double, just like the rest.

True, but at $525k, you're looking at a $15k+ SWR at 3%, which should be low enough to allow your 'Stache to keep pace with inflation. If you own your own home, and do a lot of homesteading-type stuff, $15k goes a long way. Even further in a lot of places in UPNY. A lot of my childhood friends are raising families on not much more than that, and I'm guessing atelierk will not being paying rent after retirement.

arebelspy

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Re: What is Your Number? How much would you "retire" on?
« Reply #37 on: March 26, 2012, 11:05:43 AM »
If you own your own home, and do a lot of homesteading-type stuff, $15k goes a long way.

But with inflation, it won't go as far.

We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

shedinator

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Re: What is Your Number? How much would you "retire" on?
« Reply #38 on: March 26, 2012, 08:42:11 PM »
If you own your own home, and do a lot of homesteading-type stuff, $15k goes a long way.

But with inflation, it won't go as far.

Sure, which is why I picked a number that would allow the total to keep pace with inflation. Hence my first sentence
"at $525k, you're looking at a $15k+ SWR at 3%, which should be low enough to allow your 'Stache to keep pace with inflation."
Most experts recommend a withdrawal rate of 3%. If you withdraw 5%, you're basically only taking 75% of your "income," and reinvesting the other 25%. That should allow your overall 'Stache to grow at a rate that outpaces inflation. So the first year you'd be taking out 15,750 . The next year, if it's an average year, your money grows by about 6% (assuming you have some bonds mixed in, since you're already retired). That's 509250*1.06=539,805. 3% of that is $16,194.15, which is a 2.8% increase over the previous year.
So $525k should be enough money to sustain annual expenses of $15,000, even adjusting for inflation, almost indefinitely.

Guitarist

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Re: What is Your Number? How much would you "retire" on?
« Reply #39 on: March 26, 2012, 08:57:35 PM »
I've created a spreadsheet to calculate my number based on Jacob's calculations on ERE.
I've only put in expenses starting in January so I'm at least waiting a year before I feel comfortable with the number. I know once my number barely moves from month to month, I've got a pretty good idea.
At this point, I am looking at about $550,000... and this is with me not doing anything too crazy with savings yet (at least according to my thoughts on the matter). Apparently I had a 50% savings rate when I actually started tracking my income/expenses already (including retirement savings)!

That number also includes rent... so it should be lower then that when I own a home outright.

arebelspy

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Re: What is Your Number? How much would you "retire" on?
« Reply #40 on: March 26, 2012, 09:36:16 PM »
If you own your own home, and do a lot of homesteading-type stuff, $15k goes a long way.

But with inflation, it won't go as far.

Sure, which is why I picked a number that would allow the total to keep pace with inflation. Hence my first sentence
"at $525k, you're looking at a $15k+ SWR at 3%, which should be low enough to allow your 'Stache to keep pace with inflation."


I think you're missing my point.  This side conversation started because he said that some of the stuff he was doing to lower expenses would help him against inflation.  No, it won't.  It means he'll need less of a nest egg to retire on, but that portfolio will still need to keep up with inflation.

I think you and I agree on that.  I'm just pointing out that the idea of making your own bread, while it may be great to help you lower expenses, won't do anything to help you fight inflation.  I was disputing that claim.  Do you agree, or disagree with that?
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

shedinator

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Re: What is Your Number? How much would you "retire" on?
« Reply #41 on: March 26, 2012, 11:27:44 PM »
If you own your own home, and do a lot of homesteading-type stuff, $15k goes a long way.

But with inflation, it won't go as far.

Sure, which is why I picked a number that would allow the total to keep pace with inflation. Hence my first sentence
"at $525k, you're looking at a $15k+ SWR at 3%, which should be low enough to allow your 'Stache to keep pace with inflation."


I think you're missing my point.  This side conversation started because he said that some of the stuff he was doing to lower expenses would help him against inflation.  No, it won't.  It means he'll need less of a nest egg to retire on, but that portfolio will still need to keep up with inflation.

I think you and I agree on that.  I'm just pointing out that the idea of making your own bread, while it may be great to help you lower expenses, won't do anything to help you fight inflation.  I was disputing that claim.  Do you agree, or disagree with that?

Ah, I see now. Yeah, I agree with that, unless the bread is made from wheat which he grew and milled himself, using energy he produced himself, etc. Only real way to avoid inflation is to go 100% off the grid.

But what I saw from him was this:
"Right. But if the cost of the stuff I do use is already less, then a 3 or 4% jump is also less in actual $$ meaning I still don't need as big a 'stache to begin with. That's my point. Not that inflation won't happen, but because I substitute time and skill for much of the money that a consumer has to spend (because they must pay for everything), my expenses will be lower all along, even with inflation. So I can safely start with less. "

So I thought he was saying he wouldn't need as big a 'stache to begin with, and you were disagreeing. Looks like I misread the tenor of the conversation :)

Tyler

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Re: What is Your Number? How much would you "retire" on?
« Reply #42 on: March 29, 2012, 06:12:38 PM »
My definition of my "Number" is the stache required to generate enough income to pay my minimum "essential" bills and cover inflation without affecting the total principal.  I'm still reasonably young and don't see myself never working again, but this definition allows me to stop working indefinitely if I so choose.  For any spending above the minimum I can get any job I like, and a full-time job in the Matrix won't be necessary.

My wife and I are naturally semi-Mustachian (and improving even more now that we've discovered this site!) and have been tracking our expenses closely for a while now.  With a paid-off house and a commitment to Badassity, and using the retirement accounting methods outlined in 'Work Less Live More' (great book if you haven't read it) we figure we can live on around 30k a year if we need to.  That makes our number between $750k and $1mm depending on the SWR you assume (4% and 3%, respectively). 

In reality, once we reach that goal we'll both still find jobs we enjoy.  Covering $30-40k a year between two smart people seems imminently doable in a low-stress way, which will let our stache grow in the background untouched.  In that sense, our Number is just the starting point for our ever-growing safety net.  Left alone, it will eventually grow to the point that it'll take care of anything we need.
« Last Edit: March 29, 2012, 06:54:05 PM by Tyler »

pka222

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Re: What is Your Number? How much would you "retire" on?
« Reply #43 on: March 29, 2012, 06:58:46 PM »
400,000USD- no other assets. I expect it to produce 20K a year, which my family and I can live on most any place except big cities where we don't want to be anyway.  Too little?

MMMdude

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Re: What is Your Number? How much would you "retire" on?
« Reply #44 on: April 02, 2012, 11:28:56 PM »
I have a few numbers in my mind.

750K - this is bare minimum needed in my opinion.  I would pull the trigger at this level if work started becoming detrimental to my health
1.25 Million - this is my target amount.  Basically works out to 30X projected expenses in retirement.
1.75 Million - this is my NO WORRIES number.  Easily takes care of basic living expenses + having some luxuries such as a nicer vehicle, more travel, etc

SnackDog

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Re: What is Your Number? How much would you "retire" on?
« Reply #45 on: October 18, 2013, 03:26:31 AM »
During the dot-com boom they used to say the number in California was $40 million. This included about $20MM in taxes of one sort or another, $10MM for property and $10MM to live on in a lavish lifestyle.  If you had less, you probably needed to start up another company.

The most common number I hear around the workplace is $5MM.

dude

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Re: What is Your Number? How much would you "retire" on?
« Reply #46 on: November 13, 2013, 08:59:39 AM »
Late to this thread, via the more recent thread polling people's "number."  Have been obsessing over this for a while now.  Used to think my number had to be $1M+, and I'd have to work until around 62 to get there.  However, I now know I could probably do it on $500-$600K, assuming I bounce the last check.  But $800K+ gives me my best shot of being safe.  There's a decent chance I could hit that number in the next 5-7 years (age 53-55) assuming a 6% return and continued contributions (regular and catch-up) plus matching.  Or the market could tank again and that dream would evaporate.  We will see.

thelamb

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Re: What is Your Number? How much would you "retire" on?
« Reply #47 on: November 13, 2013, 09:14:14 AM »
$500K = career change or self-employment with some possible additional education
$700K + paid off house = piddle around house, painting, making music, writing books with no need to make money on said activities + volunteering, coaching and small, safe ventures like A rental property
$1.1M = above + larger business development and more regular travel

In Ohio