What ratio of networth to income should one consider quitting?

[techcrium]

For general circumstances?

#1 Allow me to explain: Imagine a young guy stumbled on $850,000 in inheritance and he, at the time, is making minimum wage of $10 per hour.
At this point, he should really evaluate his current job position in life relative to his nw. His $850,000 will provide $25,500 each year in dividends and he will basically roll over in his bed everyday.
Yes, he can toil everyday to rack up perhaps another $25,000 in his minimum wage job...but is that really worth it?


#2 Another older gentleman has $1,850,000 in assets and is almost set for retirement. His boss calls him in and offers him VP of sales with compensation of $2.5million annually (stock bonus).
At this point, he should also evaluate his job position in life relative to his nw. If he "suffers" for an additional year, he will more than double his NW


So in my thread. Both people hate their jobs but #1 should really consider retiring/quitting/finding more meaningful job and #2 should really tough it out for 1-2 more years.

NW : Income ratio....what NW to Income ratio should 1 consider quitting?

Every man has their price.

[Retire-Canada]

Anytime you really hate your job you should consider quitting. That said you can find a new job while you stick it out an extra few months at the shitty job. If you truly can't find a better option you'll be glad you didn't just quit the first job and you may well reconsider how much you hate it.

[techcrium]

Anytime you really hate your job you should consider quitting. That said you can find a new job while you stick it out an extra few months at the shitty job. If you truly can't find a better option you'll be glad you didn't just quit the first job and you may well reconsider how much you hate it.

So $2.5million wouldn't do it for you...how about $5million per year?

If not, then $10million? $100million?

There is a price for everyone.

[nereo]

What you are describing is the price for One More Year (OMY).

Once you are solidly FI only greed & fear can keep you working a job you hate.
It's that in-between state (where you'll probably be ok but adding to your stache will increase your portfolio's survival) where it gets tricky.

If I were in that 'in-between' stage I'd probably stick it out for OMY if doing so would increase my nw by >20%. As my WR drops lower and lower I'd need more and more $ to stay another year.  I'm not sure any amount of money could cause my to stay in a job I hate if my WR was below 3%; my only motivation at that point would be increasing my donations to charity and the 'good' i could do.
YMMV

[Laura33]

It's not the ratio of net worth to income -- it's the ratio of net worth to spending.  The 4% rule says when your net worth is 25x your spending, you are good to go and (likely) will never need to work again.

But it also depends on your specific circumstances.  If you are spending $20K/yr because you are on minimum wage and want to inflate your lifestyle significantly, you shouldn't quit on $850K; if you are more than happy living on $50K/yr and have $1.8M invested, you can pass up the $2.5M because you don't need it.  If you hate your job, you should look to improve that period, and can quit without having another job lined up as soon as you have FU money.  If you are 30 you might want a larger safety net than if you are 70.  If you have significant health problems you might be more inclined to say screw it sooner even if you're not at 25x.  Etc. etc. etc.

Tl;dr:  There are no absolutes.  Money is a tool to get you what you want out of life.  Once you have enough for what you need, no need to put up with even one more day of intolerable bullshit. 

[Retire-Canada]

So $2.5million wouldn't do it for you...how about $5million per year?

If not, then $10million? $100million?

There is a price for everyone.

I would stop working any job once my actual cost of living x 25 was in my investment account. I don't need more money after I hit that target so I wouldn't stay on for more money in any realistic sense.

If you paid me $6M/yr I would work 2 extra months past reaching 25x living expenses that would put me at over $2M invested and my free time would become far more valuable than working more. Since this is a totally batshit crazy unlikely scenario it's not something I spend time pondering.

[MrMoogle]

So you also need to include your expenses in this equation.  Say today I hit 25x my expenses, after 15 years of working, and I'm offered a job at 25x/year.  One year of this would cut my drawdown from 4% to 2%, from 80% success to basically 100% success (using historical data).  I'd probably work a year of that to mitigate the possibility of needing to go back to work later.  It also depends how much I like the job.  I'm fairly satisfied with my current job, so another year of it wouldn't be bad.  It also depends if you have plans to have a side hustle after you RE.  I don't plan on having one, so I'm more likely to work a little extra now.

Lots of variables.

[dividendman]

I have that dilemma right now.

I earn ~400k. My NW is ~950k. Of that 400k I could save probably 250k after taxes and other spending. I can easily live on the 4% rule with my 950k nw....

I've decided to just quit because the time (1 year) is more valuable than another 250k on my nw. I actually did one less year than my original plan because I'm sick of working!

[NESailor]

So $2.5million wouldn't do it for you...how about $5million per year?

If not, then $10million? $100million?

There is a price for everyone.

I would stop working any job once my actual cost of living x 25 was in my investment account. I don't need more money after I hit that target so I wouldn't stay on for more money in any realistic sense.

If you paid me $6M/yr I would work 2 extra months past reaching 25x living expenses that would put me at over $2M invested and my free time would become far more valuable than working more. Since this is a totally batshit crazy unlikely scenario it's not something I spend time pondering.

A friend made around 7M after all was said and done last year.  Looking at her facebook feed and just knowing her family (I know her dad a lot better than her) - she probably spends under 150K/year.  She keeps working.  I think she likes the challenge and $ is a way to keep score.  Even by most ultraconservative Bogleheads metrics she has been FI for years...  I.E.:  NW:Income means nothing to her.

[Retire-Canada]

A friend made around 7M after all was said and done last year.  Looking at her facebook feed and just knowing her family (I know her dad a lot better than her) - she probably spends under 150K/year.  She keeps working.  I think she likes the challenge and $ is a way to keep score.  Even by most ultraconservative Bogleheads metrics she has been FI for years...  I.E.:  NW:Income means nothing to her.

Not everybody wants to retire. Personally I can't wait, but I don't expect everyone to feel that way.