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Futureretiree
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Post by Futureretiree »

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Salathor
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Location: California, USA

Re: What’s the magic number needed?

Post by Salathor »

It's impossible to say without knowing how much you currently spend. If you don't know how much you spend now, you probably can't set a number on this because you are likely experiencing uncontrolled spending--just spending what you've got.

Theoretically, statistics show that 25x your annual expenses would likely be a sufficient amount to get you from 60 to death. But what are those expenses? If you are currently making 120k and spending, say, 100k of it, you'll need ~2.5m in today's dollars.

*All numbers are of course rough estimates.*

EDIT: Of course, hang around here and read jacob's blog and really put it into practice and you could reduce that amount by a lot more than 50%.

Futureretiree
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Re: What’s the magic number needed?

Post by Futureretiree »

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SavingWithBabies
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Re: What’s the magic number needed?

Post by SavingWithBabies »

I guess my main question is why 60? If you're 35, that gives you 25 years to accumulate and work. But do you and/or your partner want to work for 25 years? Because it is two of you, it gets a little tricky if you've combined finances. For some couples with separate finances, apparently one will retire while the other continues to work (as presumably the retired one has reached their 25x expenses or whatever they have deemed sufficient to be "retired"). But for other couples, it's kind of a both or none. I'm in the later group. So the tricky part with the later group is you need to get on the same page in terms of what you want to achieve. For example, you could likely work another 8-13 years and accumulate enough money to be able to retire earlier however it would require changes in your spending which really means changes in how you live. Do you want that? Do both you and your partner want that?

Another aspect of the whole thing is what does retired mean to you? Do you want to stop working completely? Or are you looking for more of a safety net while you pursue other interests that might result in earning money but that isn't necessarily the primary focus.

Getting back to the question though, you can plug in some numbers at firecalc.com and come up with a rough understanding of what you need to do to get where you want to be. Note that you do need to switch to the other tabs on firecalc.com and add how many more years you'll work and how much savings you'll put in per year. Plus you should go figure out roughly how much social security income both of you will have coming in and plug those numbers in too (some plug in a lower fraction of the estimate like say 2/3 to factor in some chance the amounts will be lowered).

At a certain point, you realize a few things (at least I did):

- it really is all about how much you spend
- if you can increase your income and save more, great (but spending is more important)
- your goal and/or what retired means to you might be very different from what it means to others so you need to think carefully about what you want (and with a partner, figure out what they want)
- reading the ERE book together or separately and discussing it is one way to get started

As you're curious about others numbers, I'm currently targetting $1.2M and fairly close however my original goal was $1.6M and I'm probably going to go back to that. I also want to have a paid off house (I'm in a relatively LCOL area although the housing is still in a bubble like everywhere else). But that is for my whole family (myself, partner, three kids). And I think what I really want is the safety net but I will likely continue to bring in more earnings in the future it will just be more on my terms.

chenda
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Re: What’s the magic number needed?

Post by chenda »

The question you are asking is extremely broad and could be answered in a dozen different ways. I would suggest you read some of the journals on this forum or MMM's blog posts on the subject to give you an intro into the issues to consider. This will get you started:

https://www.mrmoneymustache.com/2012/01 ... etirement/

Futureretiree
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Re: What’s the magic number needed?

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Futureretiree
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Re: What’s the magic number needed?

Post by Futureretiree »

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Andy Dufresne
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Re: What’s the magic number needed?

Post by Andy Dufresne »

Too many variables, including significant unknown unknowns - e.g. traumatic injury/death, child with special needs. Best thing is to minimize expenses, maximize income while maintain mental & physical health and of course invest automatically both via Roth/401K/HSA and reg acct. Just buy S&P/QQQ every month and forget about it - in 25 years you'll be fine.

The Old Man
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Re: What’s the magic number needed?

Post by The Old Man »

As a rough approximation take your annual expenses and multiply by 25. That number would be how much you would need to live on for 30 years based on the 4% rule.

75K/year x 25 = 1.875 Million

This is a very rough approximation, but still useful as a planning exercise. For a more in-depth analysis you would have to break out the spreadsheets.

Hristo Botev
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Re: What’s the magic number needed?

Post by Hristo Botev »

This is probably more of a philosophical question (see the subtitle of the ERE book), in addition to of course being VERY personal not only to your own particular circumstances, but what those circumstances will be 5, 10, 20, 50 years from now.

That said, as others have suggested, start with the ERE book, the ERE Wiki, click around on the earlyretirementextreme.com site, various journals on this forum, MMM's handful of "magic number" calculator blog posts, and maybe a handful of the thousands of other "FIRE" blogs out there (here's a good one that tells you her number: https://thepowerofthrift.com/my-retirem ... in-charts/).

Here's the ERE Wiki "answer" to your question: https://wiki.earlyretirementextreme.com ... _retire%3F

FWIW, I probably no longer have a "number," because for me the closer I got to that "number" (which changed several times) the more I found I was making drastic changes in my life that made the idea of a magic number meaningless.

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Ego
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Re: What’s the magic number needed?

Post by Ego »

One of the things that makes this forum a little different...

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Scott 2
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Re: What’s the magic number needed?

Post by Scott 2 »

I think 2 million (in today's dollars) at age 60, excluding social security, would have you more than covered.

There are many doing it on much less. This problem is worth considering deeply, well before age 60.

If you can get through the ERN case studies, you'll be able to do your own planning:

https://earlyretirementnow.com/category/case-studies/

Outsourcing to a financial planner will cost you 0.6% - 1% of assets each year. It is one of the highest return skills you can learn.

WFJ
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Re: What’s the magic number needed?

Post by WFJ »

The 90% confidence interval for a two party retirement 25 years in the future to last for 50 years is ($0 to $10,000,000) in today's dollars. $0 if AOC and similar run the US, we have cradle to grave care and you live long enough for the system to function. $10,000,00 if you live long enough for AOC and similar plans to fail and be forced to find another country who has recently learned the hard lessons of Socialism-lite (no such thing). $0 is assumed to be a lower bound, but may be beneficial to take on endless student/mortgage/other loans as tax credits/handouts seem to be linked to bad financial choices and something like $-250,000 may be an optimal long term savings goal and included in this estimate.

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unemployable
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Re: What’s the magic number needed?

Post by unemployable »

The establishment Left doesn't even tolerate Bernie Sanders, much less AOC. Her place is to keep the Right pissed off and the neon-hair types along for the ride as useful idiots.

2Birds1Stone
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Re: What’s the magic number needed?

Post by 2Birds1Stone »

I can't fathom being 35 and planning to work until 60. We're targeting a budget of $30k/yr with a portfolio under $1M. If you sort the Money section of the forums by views/posts you can find this topic beat to death in several existing threads.

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