1 Million dollar, that is way too much!

[lordmetroid]

I am living on $14k per year and according to me spreadsheets, I will need about $180k in investements to live on interest alone if I live a life of bare existence. However, I set my goal for $350k as that would allow me to accumulate savings and to travel.

$350k is way below the figures of $1M or $2M dollars I see people throw around. I can't even imagine how one could save so much money and what one would need so much money for.

[PathtoFIRE]

I'm not to first to point it out, but on the hierarchy of personal finance websites, your spending level is more akin to earlyretirementextreme.com whereas MMM tends to attract people with spending levels of 25-50k. But these are just general numbers, and I would say a very wide range of people and lifestyles can be found here.

About your numbers, remember that your investments need to provide 2 major things: 1) annual income to cover your expenses, and 2) additional growth to keep up with inflation. Therefore, using the basic 4% rule, someone with an annual spend of $14k will need roughly $350k in investments, so I would be cautious about FIRE with any number less than this unless you have a very specific plan or have a large degree of confidence in your ability to weather storms and exercise great flexibility, either by living on much less when needed or by picking up income here and there when needed.

[MetalCap]

PTF has it right.

Inflation is a key to account for.  Also Make sure you are accounting for increases after you FIRE (healthcare, family changes, etc)  It can be very hard to maintain that level without some flexibility as time goes on.  Doesn't mean its not doable but its something to consider.

[CommonCents]

COL and number of family members plays a large part in determining the amount people can live on.  Cities such as NY, SF, Boston, DC, etc all are more expensive to live in than say, the Midwest or south.  A family of 5 requires more resources than an individual does, even accounting for economies of scale.

If you want travel or buffer (for say, health care costs), your 14k budget is pretty bare bones.   As PathtoFIRE notes, according to the 4% rule, your target does currently allow it.  14k on 180k is almost 8%.  It sounds like you want roughly double that amount in retirement, which means on the 4% rule you actually need closer to 700k.

Some people want a large buffer so they never need to go back to work, factoring in bad markets and unexpected life issues such as health care, or using a 3% or even 2% withdrawal rate.  Also - it's not too hard to figure out how people would spend $40k or ever $80k - just look around you at the rest of society!

[Spork]

First off: there's no one right way to do things.  Your ERE methods might just work out fine for you, so I don't want to tell you you're wrong here.

But I will say one more thing the higher stash also gives you is flexibility.   If you retire with just enough to cover $14k/year expenses, you're pretty locked into that.  If you retire with enough to cover $50k/year expenses and your retirement environment changes* -- you have some flexibility to downsize to $40k or $30k a year and just roll with the changes.


*changes like: unexpected illness, political climate change that increases costs somewhere or some other unexpected large expense.

[CopperTex]

After projecting 10k+ for this years medical expenses following my husbands cancer treatments, I can definitely tell you I am not planning on retiring without a very big cushion for "shit hits the fan" scenarios.

[mak1277]

Some of us have no desire to live on $14k per year, either.

[Financial.Velociraptor]

I am living on $14k per year and according to me spreadsheets, I will need about $180k in investements to live on interest alone if I live a life of bare existence. However, I set my goal for $350k as that would allow me to accumulate savings and to travel.

$350k is way below the figures of $1M or $2M dollars I see people throw around. I can't even imagine how one could save so much money and what one would need so much money for.

I spend quite a bit more than that in FIRE and pulled the plug with less than 500k.  Plus 100k of what I did have was in 401(k) and unavailable for decades.  Agree that you can do it on a lot less than the people who do finance for a living will tell you.  Also agree that you need to very seriously consider and plan for inflation.  At 7% inflation a year (it was higher in the US in the 70s), your 14k per year will turn into 28k per year in a decade.  Can you survive without going back to work?

[AlwaysBeenASaver]

I can't even imagine how one could save so much money and what one would need so much money for.

Save so much: it's most likely a matter of scale - if you feel you can save $350K, then imaging someone earning 3x as much as you could save $1M.
Need so much: higher cost of living area - look up rents and house prices in Silicon Valley or San Francisco, for example. $14K per year won't even cover housing alone. Also, it's a very personal decision what type of  lifestyle one wants after FIRE. Your $14K lifestyle may be perfectly suited for you, but someone else may want to spend more on travel, hobbies, whatever.

[Exflyboy]

Just to add to the chorus.

As a couple is a relatively high tax state (Oregon) we spent $28k last year which was comfortable (house paid off)

When my Wife quits we'll have to fund our own HC, which we budget at +$5k.

Add to that we'll have a lot more time to do stuff.. travel etc.. could easily be another $5k.. possibly $10k

So in effect out costs will rise somewhere close to 43%.. or about $40k... Which low and behold requires $1M at an SWR of 4%.

Now, everyone likes to be positive, but what happens if one of us gets cancer?.. Well friends of mine have just gone through that (sadly the guy has decided to stop chemo and is living the time he has the best way he can).. Total cost last year was $15k.

So if you do get hit with a big medical bill you want to be able to hand over the cash and worry about survival and not if your going to bankrupt yourself or your family.

The other though is that if you get a stash worth $350k, it will grow itself at a fairly healthy clip from that point.. In other words at 8% growth you would be over $1M in 14 years.. assuming you don't contribute another dime to your savings.. Will be significantly shorter if you keep stuffing the stash during that time.

[Eric]

A lot of the $1MM numbers you see are probably for 2 people.

[lordmetroid]

I will never need to worry about medical costs, I love in Sweden.

[TheAnonOne]

I will never need to worry about medical costs, I love in Sweden.

Offset by other costs regardless. There is never a free lunch.

[enigmaT120]

Offset by other costs regardless. There is never a free lunch.

It's a cheaper lunch.

[skunkfunk]

I'd say you have less than a 50% chance of not having to go back to work with that plan. You're looking for almost 8% returns after inflation and in sequence such that you don't draw down too far.

I project $25k for my family per year post-retirement spending, $36K if we really cut loose, which actually isn't that far off from your $14k if you're single.

[arebelspy]

I will never need to worry about medical costs, I love in Sweden.

Not everyone lives in Sweden.  Do you see how they might come up with higher numbers than you given different starting assumptions?

I also second the "go check out the ERE" forums.  You're more than welcome here, but I think you'll find a lot more kindred spirits over there.  :)

[zinethstache]

Back to the unplanned medical costs. Cancer seems to be the biggie everyone reports. But get this. My 10k medical costs out of pocket last year came from 2 back surgeries (massive rupture while "sitting" down in a chair...oopsie) and then out of the blue in between my surgeries, DH goes for a physical and asks about his wheezing, 2 lung biopsies later he is cleared as healthy, but lungs are pretty important and he was not given options of not pursuing the answer to the wheezing - his second biopsy was overnight at the hospital. So after years of little medical care he and I had 4 surgeries in one year, very scary! (DH had never had ANYTHING medically done up to this point and we are in our 40s) I have a very good medical plan through my work. Had I been FIREd, I am sure we would have paid quite a bit more.

I just want to point out that it is not just the big C that can rack up medical bills.

We both need crowns... guess who delayed them... WE DID, could not afford them last year, we are hoping to sneak them in this year. Coverage is only 50%, I need 2 he needs 1.

[Gockie]

To the OP,
To answer the question how to save a million dollars, I bought properties (Sydney Australia). Start with saving up a deposit for one, let the home value grow, buy another when the value has gone up (pull out equity to fund the deposit on another) then rinse and repeat.

I was lucky, I had a unit (We had only just moved out of it October 2008), moved into a new PPoR home then I was made redundant less than 1 month later. I could see the reports at work, in October 2008 all the sales were going backwards thanks to the GFC.

I got paid a redundancy payout after working for the company for 6 years. The redundancy pay was equal to 7-8 months of salary when I include leave entitlements. I wisely used that as a deposit for my second investment property. (I could've blown the lot by going travelling and/or had vision correction surgery, bought a new car).... anyway, I landed a new job basically immediately (I basically had a choice of two job opportunities, one via a recruitment agency and another through an ex colleague) and this was during the GFC so I was very lucky :).

A colleague also was laid off at the same time but he took about 6 months to find a job, I know another guy who was unemployed for about 8 months and finally could only get a job paying a lot less and another guy who ended up not finding work and ended up moving interstate with this family. Another guy struggled for months to get work more recently... I guess I had skills that were still sort after and I have to say, I had enough experience but I was not old... to be honest, age discrimination is real.

I took a shortish (domestic) holiday, started the new job...

Been working ever since, left the company I soon joined in 2009 after 4 years there, did a couple of short term contracts, bought another investment property (yes, we experienced another boom).
In the meantime during those 4 years I had also sold the original IP, bought another but that new one I completely renovated (converted from 1 bedroom to 2 with a bit of planning). That conversion of that property was worth 70k in value immediately.

Anyway, my very latest IP I rent out on Airbnb and the rental returns are very strong. Its more work than a typical rental but it's worth it.

Anyway, taking into account the equity I have in Super (retirement fund), my home and my 3 IPs i'm worth over $1mill. :)
Yes, anything can happen, the values of the homes could go down but they all have strong rental returns and my PPoR has plenty of land, and plenty of spare bedrooms, it could be used for extra income generation if I wanted to, or we could knock it down and build a duplex or more.

So that's my story.... I plan to retire in 5 years but I really like my job so in 5 years possibly I could work 2 days a week. I'd also be looking to expand the property portfolio but I may buy interstate or elsewhere as I will hit land tax issues in my home state (NSW). Plus property prices here in Sydney are now so high... houses anywhere within 20km of the city centre are worth $1mill. Now is not really the time to buy in Sydney...

[Gockie]

Ps. i'll add, my home I bought in 2008 is almost paid off now (low interest rates!!) So in a matter of months the money I put towards the home mortgage will no longer be required. I'd be using the money to expand my property portfolio, obviously... yes there's shares too but I think i'll stick to what i'm comfortable with. :)
And i'll say, working for a bank is pretty great for me, being an investor. :)

[Spork]

I will never need to worry about medical costs, I love in Sweden.

Not everyone lives in Sweden.  Do you see how they might come up with higher numbers than you given different starting assumptions?

I also second the "go check out the ERE" forums.  You're more than welcome here, but I think you'll find a lot more kindred spirits over there.  :)

Actually I have probably an "above average" number of Swedish friends and have been there more than most Americans.  My experience with the ones I know probably have equal or higher numbers than Americans.  Yes, health care is different between the two.  But among the folks I know:  They got paid less and had the same or higher expenses.  I'd say this is still an anomaly even in Sweden. 

[ Granted: I still have a relatively small  data set I'm working with.  ]

[arebelspy]

I wasn't arguing that Swedes have less expenses, just that people have different expenses based on (among other things): medical issues, number of people in their family, where they live, the lifestyle they lead, etc. etc.

OP was asking why some people save 1MM, it's way too much.  Someone pointed out health care as a reason why, and he said he had it provided based on where he lived, and I pointed out that not everyone does, so that's just one reason why someone might save more.

I hold no opinions on what nationalities save or spend more, just that your 1MM being way too much may be too little for some.  It's all relative to the situation.

[phillyvalue]

The number you need obviously depends a lot on the country you are in as well as specifically where you live.

And then it obviously depends on what lifestyle you want to live. I think $1MM + paid off house is the right number for someone in an average COL area in the U.S., living a fairly "normal" lifestyle without significant sacrifices. $35-40K per year in non-housing spend gives you a good amount of flexibility to travel and provides a bit of a buffer if you encounter medical issues/etc as people have mentioned. You can obviously live on less, but that requires legitimate sacrifices to be made and probably things like travel have to become less frequent or more local. The difference in living standard between $20K/yr and $40K/yr is pretty significant versus the difference between $40K and $80K is largely a series of marginal upgrades.

[big_slacker]

I can't even imagine how one could save so much money and what one would need so much money for.

First answer: If you make more money you can save more money. Median income where I live is $88k single person, $100k for a family. $150k-$300k household income is not at all uncommon with 2 earners in professional fields of which there are a metric crap-ton of.

Second answer: High cost of living area for one. My yearly rent is over your total yearly budget (by a lot) and this place is considered a bargain.

Numbers without context... There is probably a formula or something somewhere to deal with the size of your nut vs. yearly expenses. Maybe something like 4%. :)

[retireatbirth]

The number you need obviously depends a lot on the country you are in as well as specifically where you live.

And then it obviously depends on what lifestyle you want to live. I think $1MM + paid off house is the right number for someone in an average COL area in the U.S., living a fairly "normal" lifestyle without significant sacrifices. $35-40K per year in non-housing spend gives you a good amount of flexibility to travel and provides a bit of a buffer if you encounter medical issues/etc as people have mentioned. You can obviously live on less, but that requires legitimate sacrifices to be made and probably things like travel have to become less frequent or more local. The difference in living standard between $20K/yr and $40K/yr is pretty significant versus the difference between $40K and $80K is largely a series of marginal upgrades.

Whoa! 35-40k non-housing! Sorry, but that's consumer sucka times 2 for me. I live in NYC and spend $33k per year INCLUDING housing and I don't consider it a sacrifice at all. I can't even think of any non-sucka items I would even buy with the additional 25k in non-housing spend you suggested.

[Bob W]

I'll probably never see 1 million so I'm going for 250K out of need.

So here is my very simple math

250 K at 6% = 15K + SS = 14K = 30 K and I'm good. 

My  lowest COL would be

1. Cash out equity in home and buy a home, RV or 5 acres with a moble
2. Phone, net, utilities =  $170  /2 = 85
3. Taxes/ins/home mait = $130  /2 = 65
4. Food = 90
5. car = 120 /2 = 60
6.  health = 350
7 misc = 250

Expenses = 900 month -- 11,000 annual

Churn checking accounts and credit cards for 4K annual and now I'm at 7K living expenses.   (see doctorofcredit.com and milesdividendmd.com (one is not a doctor))

So for 7 k per year I would need exactly 70K today as I figure a 10% return based on the fact that I'm 7 years away from Soc Sec and 14K income then. 

In my part of the country you can buy a nice house for 75K in a nice 120K population college town.   So with your 250K remaining you could have a MMM certified SWR of 4% or 10K. Then add 4k for churning = 14K  Since you are young you could forego the car and health (ACA would pretty much cover you with zero income)  Your total annual nut would then be 7K   You would have 7K left over for discretionary spending.

You are not extreme. Many here  are wanting to mimic a mythical middle class lifestyle as seen in the movies.  You're probably smarter than that.   Side gigs abound and my guess living on 7K per year you would never even need or want to touch your principle. 

Do some travel hacking through the cc rewards program and you could literally travel the world on 15K per year.   You could even do 5 months in beautiful, friendly and awesome Thailand and pick up 7K working 15 hours a week teaching English while enjoying their lush climate at the beach sipping bloody marys with visiting tourists. 

You're o.k. my friend!    Live thinking outside of the box and live a long, prosperous and awesome life. 

And don't forget to figure Soc Sec into your equation.   It may be a long way off but you really don't "need" to make your 350K last for life if you have a government annuity waiting for you at age 62 that covers your expenses.    My guess would be that you will pick up plenty of extra cash along the line, never touch your principle and that you will be at 1 million is less that 10 years.     At that point you can honestly evaluate if it is too much. 

[skunkfunk]

Bob, can you count on card churning and travel hacking forever? I haven't messed with that stuff much, but I imagine there's a chance it'll go away someday.

[phillyvalue]

The number you need obviously depends a lot on the country you are in as well as specifically where you live.

And then it obviously depends on what lifestyle you want to live. I think $1MM + paid off house is the right number for someone in an average COL area in the U.S., living a fairly "normal" lifestyle without significant sacrifices. $35-40K per year in non-housing spend gives you a good amount of flexibility to travel and provides a bit of a buffer if you encounter medical issues/etc as people have mentioned. You can obviously live on less, but that requires legitimate sacrifices to be made and probably things like travel have to become less frequent or more local. The difference in living standard between $20K/yr and $40K/yr is pretty significant versus the difference between $40K and $80K is largely a series of marginal upgrades.

Whoa! 35-40k non-housing! Sorry, but that's consumer sucka times 2 for me. I live in NYC and spend $33k per year INCLUDING housing and I don't consider it a sacrifice at all. I can't even think of any non-sucka items I would even buy with the additional 25k in non-housing spend you suggested.

For a family that wants to live a normal life and travel often, $3000/mo in non-housing spend is hardly anything extravagant. Maybe if you are referring to an individual or in a very low COL area I can see your point. As a single person living in NYC now I am spending an annualized ~30K including housing but that is buying one room in a cheap apartment, zero travel (no time with work), and most of my food and transportation is being paid by the firm. Appropriate for a 23 year old saving a ton of money but for a family in the same area and including travel, expenses would at least double.

[retireatbirth]

The number you need obviously depends a lot on the country you are in as well as specifically where you live.

And then it obviously depends on what lifestyle you want to live. I think $1MM + paid off house is the right number for someone in an average COL area in the U.S., living a fairly "normal" lifestyle without significant sacrifices. $35-40K per year in non-housing spend gives you a good amount of flexibility to travel and provides a bit of a buffer if you encounter medical issues/etc as people have mentioned. You can obviously live on less, but that requires legitimate sacrifices to be made and probably things like travel have to become less frequent or more local. The difference in living standard between $20K/yr and $40K/yr is pretty significant versus the difference between $40K and $80K is largely a series of marginal upgrades.

Whoa! 35-40k non-housing! Sorry, but that's consumer sucka times 2 for me. I live in NYC and spend $33k per year INCLUDING housing and I don't consider it a sacrifice at all. I can't even think of any non-sucka items I would even buy with the additional 25k in non-housing spend you suggested.

For a family that wants to live a normal life and travel often, $3000/mo in non-housing spend is hardly anything extravagant. Maybe if you are referring to an individual or in a very low COL area I can see your point. As a single person living in NYC now I am spending an annualized ~30K including housing but that is buying one room in a cheap apartment, zero travel (no time with work), and most of my food and transportation is being paid by the firm. Appropriate for a 23 year old saving a ton of money but for a family in the same area and including travel, expenses would at least double.

I'm still not seeing it. Your non-housing expenses seem very high. I travel, too, but I use credit card rewards and pay next to nothing out of pocket. I guess if you want to travel all the time you might not have enough points, but seems like that individual could find a less expensive hobby if that were the case.

What are you spending 30k on if your essentials are cheap and/or covered?

[atrex]

Longtime lurker, first time poster.

This is disappointing.  I'd say the #1 meta-rule of MMM is to be non-dogmatic.  Here comes a poster who questions the defacto dogma of the forum, and he gets 20 posts disagreeing with him, outlining the burgeoning dogma of the MMM crowd: thou shalt retire on $600K to $2MM, anything more is spendypants, anything less is ERE (which is treated as crazy).  Boo!  Y'all are taking a financial philosophy based on thinking outside of convention, and codifying it into a nice boring financial straightjacket.

[arebelspy]

Longtime lurker, first time poster.

This is a disappointing.  I'd say the #1 meta-rule of MMM is to be non-dogmatic.  Here comes a poster who questions the defacto dogma of the forum, and he gets a 20 posts disagreeing with him, outlining the burgeoning dogma of the MMM crowd: thou shalt retire on $600K to $2MM, anything more is spendypants, anything less is ERE (which is treated as crazy).  Boo!  Y'all are taking a financial philosophy based on thinking outside of convention, and codifying it into a nice boring financial straightjacket.

Sorry you're so disappointed.

The main thing here is to challenge thinking.

The OP was pretty certain in their beliefs:

1 Million dollar, that is way too much!

I can't even imagine how one could save so much money and what one would need so much money for.

And we challenged that, to open his/her mind a little to see why someone might save that much.

If someone had come in with the opposite post, with a title of "1 Million dollar, that is way too little!" and ended the post with "I can't even imagine how one could save so little money and how one would live with so little money." you can bet we'd have provided counterfactuals of people living with less, how one could get by with half that, etc.

The point wasn't to shoot down the poster, or be negative, or provide "dogma" as you claim.  It was to open his/her mind to other people's lives, hopefully help them gain a little empathy, and see an alternative point of view.

Similarly my point in making this post isn't to shoot you down, but open your mind to another way of thinking.  :)

Whenever someone posts in absolutes, they're likely to be challenged, whether they're posting that 1MM is too much, or too little, the point isn't a dollar figure, but opening your mind to other possibilities and situations besides your own, and thinking for yourself, beyond some absolute you're locked into at the moment.

Welcome to the forums atrex!  :)

[Eric]

Longtime lurker, first time poster.

This is a disappointing.  I'd say the #1 meta-rule of MMM is to be non-dogmatic.  Here comes a poster who questions the defacto dogma of the forum, and he gets a 20 posts disagreeing with him, outlining the burgeoning dogma of the MMM crowd: thou shalt retire on $600K to $2MM, anything more is spendypants, anything less is ERE (which is treated as crazy).  Boo!  Y'all are taking a financial philosophy based on thinking outside of convention, and codifying it into a nice boring financial straightjacket.

Welcome!  I'm not sure where you got your numbers, but you should look around a little more.  Many people plan less than $600k.  Me for instance, as I think $500k will be plenty.  However, I may often write $1MM, as I'm married so it's a shared goal.  So is that too much or too little?  That's pretty much the reason for contention.  You can't just call out a number without considering at least basic factors like number of people or COL.

If you're planning on less, tell us how.  I doubt you'll find a lot of resistance if you have a plan.

[atrex]

It came across to me as one sided and more of beat down than challenging.  When posters make repetitively make similar or the same points, that, to me, points to dogma defense, not an effective challenge of beliefs.

[phillyvalue]

The number you need obviously depends a lot on the country you are in as well as specifically where you live.

And then it obviously depends on what lifestyle you want to live. I think $1MM + paid off house is the right number for someone in an average COL area in the U.S., living a fairly "normal" lifestyle without significant sacrifices. $35-40K per year in non-housing spend gives you a good amount of flexibility to travel and provides a bit of a buffer if you encounter medical issues/etc as people have mentioned. You can obviously live on less, but that requires legitimate sacrifices to be made and probably things like travel have to become less frequent or more local. The difference in living standard between $20K/yr and $40K/yr is pretty significant versus the difference between $40K and $80K is largely a series of marginal upgrades.

Whoa! 35-40k non-housing! Sorry, but that's consumer sucka times 2 for me. I live in NYC and spend $33k per year INCLUDING housing and I don't consider it a sacrifice at all. I can't even think of any non-sucka items I would even buy with the additional 25k in non-housing spend you suggested.

For a family that wants to live a normal life and travel often, $3000/mo in non-housing spend is hardly anything extravagant. Maybe if you are referring to an individual or in a very low COL area I can see your point. As a single person living in NYC now I am spending an annualized ~30K including housing but that is buying one room in a cheap apartment, zero travel (no time with work), and most of my food and transportation is being paid by the firm. Appropriate for a 23 year old saving a ton of money but for a family in the same area and including travel, expenses would at least double.

I'm still not seeing it. Your non-housing expenses seem very high. I travel, too, but I use credit card rewards and pay next to nothing out of pocket. I guess if you want to travel all the time you might not have enough points, but seems like that individual could find a less expensive hobby if that were the case.

What are you spending 30k on if your essentials are cheap and/or covered?

I spend maybe on average 1000-1100/mo besides rent. There are things I could theoretically cut down on, but there are also things missing that will be added in the future. Healthcare is a big example, I pay 0 for insurance until I am 26 and am not budgeting any out of pocket costs for now. Even with employer coverage lowering the cost this will cost me a few hundred per month in a few years. I do throw student loan payment in monthly expenses, I am paying the minimum possible given how low the rates are. Overall I am saving 70% of after-tax income while still taking advantage of at least some of what nyc has to offer, so Im pretty happy with things for now.

Basic rounded budget:
100 utilities
300 non-comped food and dining out
50 cell
100 capitalized cost for clothes
75 subway/non comped transport
150 student loan payment
200 entertainment/going out
50 household consumables

[arebelspy]

It came across to me as one sided and more of beat down than challenging.  When posters make repetitively make similar or the same points, that, to me, points to dogma defense, not an effective challenge of beliefs.

Trust me, no one thinks the OP is too extreme.  They spend 14k for themselves?  The wife and I spend 18-20k combined.  We're all generally in that 20-40 range here, some of us on the lower end, some of us higher.  Plenty down in the 15k range too.  Herb.Derp. has the "spend less than 10k" challenge, and handily meets it annually.

Still, I stand by my original post in the thread:

I will never need to worry about medical costs, I love in Sweden.

Not everyone lives in Sweden.  Do you see how they might come up with higher numbers than you given different starting assumptions?

I also second the "go check out the ERE" forums.  You're more than welcome here, but I think you'll find a lot more kindred spirits over there.  :)

Which was (in the first 2 sentences) trying to open his mind, as I mentioned, and (in the second part) pointing him where he might for more commonalities (not that he's not welcome here).

We don't paint the ERE people as "crazy," like you claim.  Just more extreme. They're close enough to us on the Wheaton Eco Scale  that we understand it, for the most part.  ;)

A lot of times posters read the OP and then want to throw in their two cents, and it looks like piling on.  If OP actually stayed and engaged, it turns into a conversation, but when they throw up a comment and run, threads with lots of responses tend to look like that.

[jcoz]

In the United States there is a huge variance in what an individual would need to have a comfortable lifestyle.  Housing and food have huge regional variances.  If you are not tied to an area there are savings to be had by simply moving.  As the OP eludes to, healthcare is not a concern for him but would be for anyone in the U.S.  ObamaCare or its legislative improvement may continue to exist but until there is some stability in the marketplace healthcare will continue to be the greatest unknown expense for early retirees. 

The greatest benefits any extreme early retiree has are time and well honed frugal muscles.  If things go awry they have the ability to restart a career with the added benefit of not needing a huge income to sustain themselves and add savings.  If they chose to expand their families, I would expect they would choose like minded partners and raise frugal children. 

[lordmetroid]

It came across to me as one sided and more of beat down than challenging.  When posters make repetitively make similar or the same points, that, to me, points to dogma defense, not an effective challenge of beliefs.

Trust me, no one thinks the OP is too extreme.  They spend 14k for themselves?  The wife and I spend 18-20k combined.  We're all generally in that 20-40 range here, some of us on the lower end, some of us higher.  Plenty down in the 15k range too.  Herb.Derp. has the "spend less than 10k" challenge, and handily meets it annually.

Still, I stand by my original post in the thread:

I will never need to worry about medical costs, I love in Sweden.

Not everyone lives in Sweden.  Do you see how they might come up with higher numbers than you given different starting assumptions?

I also second the "go check out the ERE" forums.  You're more than welcome here, but I think you'll find a lot more kindred spirits over there.  :)

Which was (in the first 2 sentences) trying to open his mind, as I mentioned, and (in the second part) pointing him where he might for more commonalities (not that he's not welcome here).

We don't paint the ERE people as "crazy," like you claim.  Just more extreme. They're close enough to us on the Wheaton Eco Scale  that we understand it, for the most part.  ;)

A lot of times posters read the OP and then want to throw in their two cents, and it looks like piling on.  If OP actually stayed and engaged, it turns into a conversation, but when they throw up a comment and run, threads with lots of responses tend to look like that.

I am still here reading your answers but besides findning out that low costs is not considered a part of Mustachianism but rather Early Retirement Extreme there hasn't been much things explaining why one need so much money.

[pom]

Hi,

Let me explain why I personally need more than 1 million.

1. We are a couple with a young child. We would like to have a second child and maybe even a third. That alone means that we need at least twice what a single person needs. Expenses are approximately 15k€ per year for food, clothes, diapers ... so that is a need for 400k€ just there.

2. We live in a high COL and we like it here. Rent+utilities for our 65 sqm apartment here is around 1900€ a month, depending on how the family evolves, it might be too small an apartment. Admittedly we could go back to a 50 sqm apartment (approx 1500€ a month) once all kids are gone so this is a temporary situation. My point is that just to cover rent we would need 500k€ in savings.

3. My wife family is in Europe and mine in Canada, that adds to 5k€ a year in plane tickets to visit each family twice. We could go only once a year but family is important to us. Add 125k€ there.

4. We love to travel, lets say that in FIRE we want to do two one-month vacations, we need 10k€ more or less for that so add another 250k€.

5. Add 20% buffer due to "shit happens"

My conclusion is that we want to save a minimum of 1.5 million euros for a family of 3 (and potentially up to 5 people).

[velocistar237]

I am still here reading your answers but besides findning out that low costs is not considered a part of Mustachianism but rather Early Retirement Extreme there hasn't been much things explaining why one need so much money.

Family of 5 here. We'll have liquid assets of about $750K in 2015 dollars when we pull the plug. That includes enough to cover the remainder of our mortgage plus a bit of a spending buffer, in a high cost-of-living area, and we plan to keep earning some income after FIRE. We'll probably save a bit for college for 3 kids, too.

Splitting those costs between two adults gets about $18K/year, obviously less if you factor in kids.

In terms of need, I agree with you. Most people could lower their expenses and get by just fine with less, as is proven over on the ERE site, where even people in NYC live on less than $20K/year. MMM is aimed more at the "less ridiculous" lifestyle, and so has broader reach and a bigger audience than Jacob's "extreme" site. MMM's house is nice and big, he has two vehicles, musical instruments, etc. On this forum, many people choose to work a few more years and pad their amount to pay for optional stuff. We plan to make a few unnecessary house upgrades after FIRE, like remodeling our kitchen, and we'll probably do some travel.

Many people here want to be generous after they retire, so we have discussions of people working one more year so they can give money away.

So, "need"? No, very few people need to spend that much. You don't even need to spend $14K/year, but I'm sure the ERE folks won't tell you you're ridiculous if you go over there. Jacob spends about $7K/year.

As for the how, it's just about having a decent income and working long enough. We have some high earners on this site who could accumulate $1 million in 5 years, so it's not that surprising. Also, several people discover MMM late after they've already worked 20 years and saved that much.

I forget, did you figure out your correct withdrawal rate? With $14K/year at a 4% withdrawal rate, you'll need $350K. If you want a buffer, you'll need to increase that.

And we are talking 2015 US dollars, right?

[arebelspy]

I am still here reading your answers but besides findning out that low costs is not considered a part of Mustachianism but rather Early Retirement Extreme there hasn't been much things explaining why one need so much money.

My overall point was people have different circumstances than you.

Let's make up some numbers to illustrate.

Someone wanting 1MM at a 4% SWR spends 40k annually.

You get by on 14k.

So imagine they spent that as well, but also had a spouse (+8k).  And 2 kids(+4k +4k).  And lived in a higher COL (+5k).  And had to pay for their own health care (+5k).

Boom, there's 40k right there, 1MM needed.

And I wasn't outlandish with those numbers, but rather conservative (the second adult costing about half as much as the first due to shared resources, the 2 kids costing half each as the second adult, or 1/4 the first one, under costing the medical, a higher COL can easily cost more than 5k).

Then you add in stuff like travel and it can go higher.  Now yes, the can optimize lower, too, but 40k for a family of 4 in a high COL area isn't unreasonable, and acting like 1MM is impossible, and you can't fathom how people could spend that much means you need some more empathy or a better imagination.

[dude]

I can't even relate here.  I anticipate having the equivalent of a $2.4mil portfolio between pension + savings when I retire in 4.5 years, and that does not include the wife's savings or joint savings, or SS for either of us.  And I by no means see myself living an extravagant lifestyle -- though we do multiple budget-minded travel/trips each year.  $14K/year would seem like extreme deprivation to me. Goes to show how relative it all is (and how goddamn lucky I am).

[lordmetroid]

I earn about $27k per year after taxes, a median income for a Swede at my age of 32 and I am spendning roughly $14k per year and saving the rest. However, if I didn't have a mortgage I would be living on about $10k per year instead.

[CommonCents]

It came across to me as one sided and more of beat down than challenging.  When posters make repetitively make similar or the same points, that, to me, points to dogma defense, not an effective challenge of beliefs.

Trust me, no one thinks the OP is too extreme.  They spend 14k for themselves?  The wife and I spend 18-20k combined.  We're all generally in that 20-40 range here, some of us on the lower end, some of us higher.  Plenty down in the 15k range too.  Herb.Derp. has the "spend less than 10k" challenge, and handily meets it annually.

Still, I stand by my original post in the thread:

I will never need to worry about medical costs, I love in Sweden.

Not everyone lives in Sweden.  Do you see how they might come up with higher numbers than you given different starting assumptions?

I also second the "go check out the ERE" forums.  You're more than welcome here, but I think you'll find a lot more kindred spirits over there.  :)

Which was (in the first 2 sentences) trying to open his mind, as I mentioned, and (in the second part) pointing him where he might for more commonalities (not that he's not welcome here).

We don't paint the ERE people as "crazy," like you claim.  Just more extreme. They're close enough to us on the Wheaton Eco Scale  that we understand it, for the most part.  ;)

A lot of times posters read the OP and then want to throw in their two cents, and it looks like piling on.  If OP actually stayed and engaged, it turns into a conversation, but when they throw up a comment and run, threads with lots of responses tend to look like that.

I am still here reading your answers but besides findning out that low costs is not considered a part of Mustachianism but rather Early Retirement Extreme there hasn't been much things explaining why one need so much money.

Arebelspy already said it, but I can say that I spoke as I did because the OP seemed to me to be rather rude and challenging in how the question was phrased - with set beliefs as if there was only one "right" way to do things, and it didn't seem to take in characteristics different from the OPs at all that would explain why that sum might not be too much, but rather still reasonable and fitting a mustachian perspective.  (I don't particularly appreciate hearing absolutes which suggest the only right way of doing things is that person's way and generally feel compelled to play devil's advocate...)  So I and others responded to that particular post title and post: different size families, different cost of living, health, charity, and caution for running out. 

If someone had come on posting "$500k is too way too little" instead, I'd be pointing out the opposite facts: some people have smaller families, lower cost of living, live in a country with universal health care, live off the land for groceries, etc, and I'd be linking to Herbert Derp's posts.  And if they had come on with an open mind and asked a neutral question about why people have the targets we have, we'd likely be having a great dialogue.

I also was responding to the assumptions that I thought were flawed, with a withdrawal rate that is double what I see as sustainable.  (That alone brings the OP's figures substantially closer to the $1 million sum the OP was appalled by.)

[dude]

Kinda curious as to why this thread is in the Post-FIRE forum?

[Bob W]

Bob, can you count on card churning and travel hacking forever? I haven't messed with that stuff much, but I imagine there's a chance it'll go away someday.

No you cannot.  You cannot count on 3% SWR.   You cannot count that the Fed won't tap your retirement stache.  You cannot count on much in the future.  So yeah,  I definitely wouldn't want to count on card churning, checking churning and travel hacking for more than 3-4 years.   

[CommonCents]

I earn about $27k per year after taxes, a median income for a Swede at my age of 32 and I am spendning roughly $14k per year and saving the rest. However, if I didn't have a mortgage I would be living on about $10k per year instead.

That's cool.  You can check out Herbert Derp's posts if you want to learn how to trim more: http://forum.mrmoneymustache.com/throw-down-the-gauntlet/spend-less-than-$10-000-in-2014/

He lived on $11,490 in 2013 and $5,692 in 2015.  And that includes health care that you might get for free.


[Mod Note: Fixed Link.]

[mohawkbrah]

fellow ERE'r checking in

 to each their own but i would prefer to be free of work earlier and live a simpler life than to continue the grind.

[arebelspy]

fellow ERE'r checking in

 to each their own but i would prefer to be free of work earlier and live a simpler life than to continue the grind.

The old monk anecdote.  Many of us feel the same.  :)

[ender]

OP, are you married? Do you have kids?

When I was single I had spending which was pretty close to your $14k/year. Now I am married, and expenses for two of us are higher than they were for me as a single person. When we have children, they will likely increase again.

When you encounter things which seem unreasonable/unbelievable, you can either:

• Judge them
• Learn from them

But beyond feeling my favorite emotion of all — victory — I wanted to highlight those emails as the perfect reminder that instead of instantly judging someone we disagree with, why not say, “Hmm…I wonder if there’s a reason he does that. What can I learn from him?”

It seems you have unapologetically chosen the former.

[lordmetroid]

OP, are you married? Do you have kids?

When I was single I had spending which was pretty close to your $14k/year. Now I am married, and expenses for two of us are higher than they were for me as a single person. When we have children, they will likely increase again.

When you encounter things which seem unreasonable/unbelievable, you can either:

• Judge them
• Learn from them

But beyond feeling my favorite emotion of all — victory — I wanted to highlight those emails as the perfect reminder that instead of instantly judging someone we disagree with, why not say, “Hmm…I wonder if there’s a reason he does that. What can I learn from him?”

It seems you have unapologetically chosen the former.

Yes, I am single... A little bit surprised about your increase in spendning after your married, the household common expenses can then be shared between two persons so I would have expected it to decrease significantly.

[ender]

Yes, I am single... A little bit surprised about your increase in spendning after your married, the household common expenses can then be shared between two persons so I would have expected it to decrease significantly.

I previously was splitting expenses 3 ways, having two roommates.

Now only two ways...