Is anyone aiming high? $5m? $10m? more?

[Lukim]

I have read a few posts of people aiming for FI numbers around $1m (or even less).

Is anyone aiming for higher numbers?

If you have annual expenses of $150,000 and are conservative in your withdrawal rate (say 3%), that means you need invested assets (excluding home etc) of $5m. 

Is that aiming too high?

[arebelspy]

I may shoot for eight figures via a business I want to do after I FIRE, but my spending wouldn't change.

I don't see any reason why I'd need to spend $150,000 on personal expenses (though I will admit there are certain areas where it may take nearly six-figures to live there due to COL - mostly housing - I don't think I'd choose to live in any of those areas).

[griffin]

I think a lot of the MMM philosophy is the idea that you will be just as happy (or perhaps happier!) with $40k a year as you will with $150k.

[Another Reader]

No, it's not too high.  However, some well placed real estate investments should get you to that income level with a lower total investment if done right.

Arebelspy needs to let us in on his business idea....

[Lukim]

I think a lot of the MMM philosophy is the idea that you will be just as happy (or perhaps happier!) with $40k a year as you will with $150k.

I know that is the MMM philosophy (and I do not disagree with it), but just wondering if some people on this board are aiming high.

I would like to get to the point of being happy with $40k per year - but still have a lot of work to get my family's spending down to those levels.

[Lukim]

No, it's not too high.  However, some well placed real estate investments should get you to that income level with a lower total investment if done right.

Unfortunately, I am not in the US so real estate does not work well.  I have real estate investments but the income return is pretty low (net after management, maintenance etc is about 3%).  Fortunately, the value of the real estate (which I have had for 15 years) has never gone down - only up.  But I will only get that upside when I sell.

[arebelspy]

Arebelspy needs to let us in on his business idea....

You will be one of the first people I consult with.  ;)

just wondering if some people on this board are aiming high.

I would like to get to the point of being happy with $40k per year - but still have a lot of work to get my family's spending down to those levels.

Plenty here are aiming high with their net worth and income, but "aiming high" with their spending would be trying to get it as low as possible. That is, "aiming high" means "shoot for a high goal," and the goal would be to get that spending down.  ;)

Happiness comes from being content with what you have.

Or, in other words: "To be content with little is hard; to be content with much, impossible." - Marie von Ebner-Eschenbach

[Gin1984]

I am aiming for 4 million because of inflation. 

[dragoncar]

Arebelspy needs to let us in on his business idea....

You will be one of the first people I consult with.  ;)

One word: plastics

[arebelspy]

One word: plastics

I offered to let him in on the ground floor...

[gimp]

I'd like to hit a bit over $10m. At my current savings rate, and 7% growth, it'll happen... now all I have to do is stay single and childless ... and young...

[Another Reader]

If Arebelspy beats me to 8 figures, I think I might be kind of, well, annoyed.  After all, he's half my age....  ;-)

[gimp]

AR, you're 110? What was it like before electricity? :)

[Another Reader]

That would make Arebelspy 55 and a little older than most folks planning to FIRE and start a family....

[dragoncar]

If Arebelspy beats me to 8 figures, I think I might be kind of, well, annoyed.  After all, he's half my age....  ;-)

That would make Arebelspy 55 and a little older than most folks planning to FIRE and start a family....

Actually it would make AR -1998 years old.

[CommonCents]

I'm not aiming for it right now, but I'm afraid it may take upwards of $3 million before DH feels comfortable enough in our investments, passive income, and spending to retire.  (And no, we don't spend $120k now.)  He worries a lot - about inflation, long term investment growth, increased health care costs, costs of kids, etc.

[gimp]

That would make Arebelspy 55 and a little older than most folks planning to FIRE and start a family....

And here you are, 110 and using internet message boards. Weirder things have happened, eh? :)

[arebelspy]

If Arebelspy beats me to 8 figures, I think I might be kind of, well, annoyed.  After all, he's half my age....  ;-)

With that comes me being a lot more foolish and risky.  That could help or hurt me in our race to eight figures.  :P

[George_PA]

Given the power of compounding, if you had a stash of $1 million or $1.5 million or $2 million, it would not be hard to quickly snowball it into several million more in a few more years.

However, just think about this for a second.  You would have a situation where you could do FIRE with the $1.5 million with a decent life style or work probably for about 5 more years to get the stash up to your $5 or $10 mark. 

Thus, you would have to REALLY like your job to bypass the immediate FIRE for a later FIRE with a bigger stash. 

For me, personally, if I had the option today for an immediate FIRE I would take it because there are only so many sunny, nice days out there to enjoy, and I would getting the hell out of full time work asap.  I would not stick it out a few more years just to get a bigger stash in the $5-10 million range.  Also, once you reach around $2 million, I imagine that the law of diminishing returns would start to set in where every additional million in the stash will be less and less addition happiness to your life style.  For example, a $10 million stash person will not be twice as happy as a $5 million stash person, it would probably be closer to about 5% happier.

 

[Another Reader]

Work?  I don't think Arebelspy really intends to work, at least in the traditional sense, and I retired from the job seven years ago,  It's about building more from what you already have.  Call it a "savings" rate if you will, but it's really just using (leveraging) your asset income to acquire more asset income.  Or, if you start a business, start a high return business that requires less than 40 hours a week of your time.

Using the 4 percent SWR, $1.5M would give you $60k.  You would be hard pressed to find a rental in my high-COLA area for half that.  Houses start at $1M.  $60k won't cut it here.

[Lukim]

I have already passed the $5m mark but after looking at my wife's recent spending, I think I need to aim for the $10m mark.

[totoro]

I'm not planning on a specific dollar number in investments.  We can live on $40,000 a year.  This should be generated by rental income alone when we stop working so our other investments and the equity may just continue to grow.  Can't see us really upping the spending much unless it is to help family.

[Gray Matter]

I used to be aiming for 5+ million.  That was before finding MMM.  Now such a high number seems either ridiculously conservative or ridiculously consumptive.  I'm still aiming higher than the average MMM at something around $2 million (excluding primary residence).  That is in part because, though I have reduced spending substantially, I still like things like travel and eating out, and partially because I'm conservative and not confident about our ability to re-enter the workforce after we leave it.

[milesdividendmd]

This is an interesting question.

One factor which is not entirely intuitive is the tax efficiency of different spending levels.

Because of some quirks in our tax code it is possible to pay no taxes if you have a low level of earned income and spend less than 70 or $80,000 a year.

This means that for every dollar of spending that you wish to do above this level, you need more than a dollar of additional income.

This concept was best covered in this wonderful blog post by go Curry cracker.

http://www.gocurrycracker.com/never-pay-taxes-again/

Personally I found this argument very persuasive, and it's convinced me that $2 million is the upper bound for "my number."

Another point I would make is that there is a significant cost to working.

Even though I have a lot of money going out every month, many of these expenses will cease to exist once I hit my number.  (mortgage, disability insurance, life insurance, car expenses, professional society memberships…)

And the final point is that many assumed costs are quite fungible.

For me a big one was travel. I used to spend more than $15,000 a year on travel for my family.

By playing the miles game (travel hacking) I'm sure I spend a lot less than $1000 a year on travel now despite traveling to more places, further away.

And to end on a philosophical note, beyond the economic considerations, I've been surprised at how much happiness there is to be gained from simplification.

For me this lifestyle is like eating a single perfectly crafted piece of sushi, as opposed to multiple plates at an all-you-can-eat buffet.

[Gin1984]

This is an interesting question.

One factor which is not entirely intuitive is the tax efficiency of different spending levels.

Because of some quirks in our tax code it is possible to pay no taxes if you have a low level of earned income and spend less than 70 or $80,000 a year.

This means that for every dollar of spending that you wish to do above this level, you need more than a dollar of additional income.

This concept was best covered in this wonderful blog post by go Curry cracker.

http://www.gocurrycracker.com/never-pay-taxes-again/

Personally I found this argument very persuasive, and it's convinced me that $2 million is the upper bound for "my number."

Another point I would make is that there is a significant cost to working.

Even though I have a lot of money going out every month, many of these expenses will cease to exist once I hit my number.  (mortgage, disability insurance, life insurance, car expenses, professional society memberships…)

And the final point is that many assumed costs are quite fungible.

For me a big one was travel. I used to spend more than $15,000 a year on travel for my family.

By playing the miles game (travel hacking) I'm sure I spend a lot less than $1000 a year on travel now despite traveling to more places, further away.

And to end on a philosophical note, beyond the economic considerations, I've been surprised at how much happiness there is to be gained from simplification.

For me this lifestyle is like eating a single perfectly crafted piece of sushi, as opposed to multiple plates at an all-you-can-eat buffet.

But, if you plan to retire later, and past performance = future results, the amount one is able to pull should get progressively larger.  Even though my goal is $30-40K in today's dollars but considering that with inflation it doubles every 20 years, if I want to retire in 25 I need 2 million at least.  Also, not everyone has a large sum they are saving from so if the money into a Roth now, that money is not taxed in the end (We will be in the 10% bracket, paying no federal tax because of our daughter and our tuition and are putting away about $6000 in a Roth this year). 

[milesdividendmd]

This is an interesting question.

One factor which is not entirely intuitive is the tax efficiency of different spending levels.

Because of some quirks in our tax code it is possible to pay no taxes if you have a low level of earned income and spend less than 70 or $80,000 a year.

This means that for every dollar of spending that you wish to do above this level, you need more than a dollar of additional income.

This concept was best covered in this wonderful blog post by go Curry cracker.

http://www.gocurrycracker.com/never-pay-taxes-again/

Personally I found this argument very persuasive, and it's convinced me that $2 million is the upper bound for "my number."

Another point I would make is that there is a significant cost to working.

Even though I have a lot of money going out every month, many of these expenses will cease to exist once I hit my number.  (mortgage, disability insurance, life insurance, car expenses, professional society memberships…)

And the final point is that many assumed costs are quite fungible.

For me a big one was travel. I used to spend more than $15,000 a year on travel for my family.

By playing the miles game (travel hacking) I'm sure I spend a lot less than $1000 a year on travel now despite traveling to more places, further away.

And to end on a philosophical note, beyond the economic considerations, I've been surprised at how much happiness there is to be gained from simplification.

For me this lifestyle is like eating a single perfectly crafted piece of sushi, as opposed to multiple plates at an all-you-can-eat buffet.

But, if you plan to retire later, and past performance = future results, the amount one is able to pull should get progressively larger.  Even though my goal is $30-40K in today's dollars but considering that with inflation it doubles every 20 years, if I want to retire in 25 I need 2 million at least.  Also, not everyone has a large sum they are saving from so if the money into a Roth now, that money is not taxed in the end (We will be in the 10% bracket, paying no federal tax because of our daughter and our tuition and are putting away about $6000 in a Roth this year).

I think the convention is to discuss such goals in real (inflation adjusted) dollars.

Presumably the level of the 15% tax bracket will continue to rise with inflation, as will the level at which those in the 15% bracket (and below) will be able to take investment income tax free.

So, for the purposes of this argument, I would say that on the day you retire The most tax efficient upper limit of your number would be 25 times The level at which you can take capital gains tax free in the 15% tax bracket or below.

One area that I would push back on is your decision to put your retirement savings in a Roth IRA. In most instances you would be better off putting it into a traditional IRA and converting it to a Roth after your retirement.

If you pursue this method you will not pay taxes now, and you will not pay them upon withdrawal.

[arebelspy]

But, if you plan to retire later, and past performance = future results, the amount one is able to pull should get progressively larger.  Even though my goal is $30-40K in today's dollars but considering that with inflation it doubles every 20 years, if I want to retire in 25 I need 2 million at least.  Also, not everyone has a large sum they are saving from so if the money into a Roth now, that money is not taxed in the end (We will be in the 10% bracket, paying no federal tax because of our daughter and our tuition and are putting away about $6000 in a Roth this year).

Yes, this is how inflation works.  :)

If you need 30-40k in today's dollars, you need 1MM stache in today's dollars.

In the future that may be 60-80k nominal spending and 2MM nominal stache, but it'll be the same in real dollars, and as long as wages keep up (which they should - even those lamenting the flat wages since the 70s just mean they haven't grow in real terms, but they have grown in nominal terms) then you'll be saving at the same rate, and it'll be just as easy of a goal to hit 2MM nominal with your inflated salary as it is to hit 1MM real (today) with your current salary.

So don't sweat it, it's all pretty much a zero sum game.  :)

[Gin1984]

This is an interesting question.

One factor which is not entirely intuitive is the tax efficiency of different spending levels.

Because of some quirks in our tax code it is possible to pay no taxes if you have a low level of earned income and spend less than 70 or $80,000 a year.

This means that for every dollar of spending that you wish to do above this level, you need more than a dollar of additional income.

This concept was best covered in this wonderful blog post by go Curry cracker.

http://www.gocurrycracker.com/never-pay-taxes-again/

Personally I found this argument very persuasive, and it's convinced me that $2 million is the upper bound for "my number."

Another point I would make is that there is a significant cost to working.

Even though I have a lot of money going out every month, many of these expenses will cease to exist once I hit my number.  (mortgage, disability insurance, life insurance, car expenses, professional society memberships…)

And the final point is that many assumed costs are quite fungible.

For me a big one was travel. I used to spend more than $15,000 a year on travel for my family.

By playing the miles game (travel hacking) I'm sure I spend a lot less than $1000 a year on travel now despite traveling to more places, further away.

And to end on a philosophical note, beyond the economic considerations, I've been surprised at how much happiness there is to be gained from simplification.

For me this lifestyle is like eating a single perfectly crafted piece of sushi, as opposed to multiple plates at an all-you-can-eat buffet.

But, if you plan to retire later, and past performance = future results, the amount one is able to pull should get progressively larger.  Even though my goal is $30-40K in today's dollars but considering that with inflation it doubles every 20 years, if I want to retire in 25 I need 2 million at least.  Also, not everyone has a large sum they are saving from so if the money into a Roth now, that money is not taxed in the end (We will be in the 10% bracket, paying no federal tax because of our daughter and our tuition and are putting away about $6000 in a Roth this year).

I think the convention is to discuss such goals in real (inflation adjusted) dollars.

Presumably the level of the 15% tax bracket will continue to rise with inflation, as will the level at which those in the 15% bracket (and below) will be able to take investment income tax free.

So, for the purposes of this argument, I would say that on the day you retire The most tax efficient upper limit of your number would be 25 times The level at which you can take capital gains tax free in the 15% tax bracket or below.

One area that I would push back on is your decision to put your retirement savings in a Roth IRA. In most instances you would be better off putting it into a traditional IRA and converting it to a Roth after your retirement.

If you pursue this method you will not pay taxes now, and you will not pay them upon withdrawal.

Perhaps I was unclear.  I cannot decrease my taxable income any more without losing non-refundable credits.  I pay NO federal taxes as of now because of those credits, therefore I am throwing as much into the Roth as I can. 

[milesdividendmd]

This is an interesting question.

One factor which is not entirely intuitive is the tax efficiency of different spending levels.

Because of some quirks in our tax code it is possible to pay no taxes if you have a low level of earned income and spend less than 70 or $80,000 a year.

This means that for every dollar of spending that you wish to do above this level, you need more than a dollar of additional income.

This concept was best covered in this wonderful blog post by go Curry cracker.

http://www.gocurrycracker.com/never-pay-taxes-again/

Personally I found this argument very persuasive, and it's convinced me that $2 million is the upper bound for "my number."

Another point I would make is that there is a significant cost to working.

Even though I have a lot of money going out every month, many of these expenses will cease to exist once I hit my number.  (mortgage, disability insurance, life insurance, car expenses, professional society memberships…)

And the final point is that many assumed costs are quite fungible.

For me a big one was travel. I used to spend more than $15,000 a year on travel for my family.

By playing the miles game (travel hacking) I'm sure I spend a lot less than $1000 a year on travel now despite traveling to more places, further away.

And to end on a philosophical note, beyond the economic considerations, I've been surprised at how much happiness there is to be gained from simplification.

For me this lifestyle is like eating a single perfectly crafted piece of sushi, as opposed to multiple plates at an all-you-can-eat buffet.

But, if you plan to retire later, and past performance = future results, the amount one is able to pull should get progressively larger.  Even though my goal is $30-40K in today's dollars but considering that with inflation it doubles every 20 years, if I want to retire in 25 I need 2 million at least.  Also, not everyone has a large sum they are saving from so if the money into a Roth now, that money is not taxed in the end (We will be in the 10% bracket, paying no federal tax because of our daughter and our tuition and are putting away about $6000 in a Roth this year).

I think the convention is to discuss such goals in real (inflation adjusted) dollars.

Presumably the level of the 15% tax bracket will continue to rise with inflation, as will the level at which those in the 15% bracket (and below) will be able to take investment income tax free.

So, for the purposes of this argument, I would say that on the day you retire The most tax efficient upper limit of your number would be 25 times The level at which you can take capital gains tax free in the 15% tax bracket or below.

One area that I would push back on is your decision to put your retirement savings in a Roth IRA. In most instances you would be better off putting it into a traditional IRA and converting it to a Roth after your retirement.

If you pursue this method you will not pay taxes now, and you will not pay them upon withdrawal.

Perhaps I was unclear.  I cannot decrease my taxable income any more without losing non-refundable credits.  I pay NO federal taxes as of now because of those credits, therefore I am throwing as much into the Roth as I can.

That makes perfect sense then.

Thanks for clarifying.

[RapmasterD]

Everything is relative. Again, the biz about what is mustachian or not. Yuck.

I applaud all the multimillion targets, as long as you're saving at least 40% of your take home and not idling your SUV at the Burger King drive through. But that's just me being judgmental. I mean...what the hell do I know about what is mustachian or not?

I shook the man's hand a few weeks ago, and he seemed fairly easy going.