What do you need to retire and what are you shooting for?
Need: tough to add a number to since I'm doing it through RE (three houses, some paid off, some almost paid off). If I didn't have the RE, I would need about 450-500K, including a paid off house with that amount.
Shooting for: 1 million. Just a few years to go. Partly for safety margin, partly because of pride, and partly because I have a few good years left in me.
$200,000 is the goal for me, though I don't think that much will be necessary.
My wife and I are building a tiny house on a tiny piece of property in Arizona. We intend to make the thing entirely solar and wind powered. I will also be going car-less (as I lived into my late 20s, and am looking forward to returning to.)
My current yearly expenses are 8300. Once I can subtract rent, electricity, gasoline, car repairs, and car insurance, that number will dramatically decrease. I will need to add in a minuscule amount of property tax, and water and trash bills, but I don't think any of that will be adding up to too much.
My number is a bit hard to think up, because there's a pension plan and government benefits to be had after age 67. So "all" I need to take care of is the roughly 30 years in between. I might "retire" once I reach 200k euros, which would probably give me 8k of income every year, to which I would likely add some income from parttime jobs/gigs etc.
I'm a lot like @DutchGirl... I will have a pension from work and a government pension and benefits, so I just have to bridge the gap to 55 until I start getting something and then 67 when I get the rest. At this point, I'm still saving and thinking like I won't get any of that and will have to cover myself.
$1.1M in invested assets is what I am projecting. For me there's substantial benefit to hitting age 55 regarding my employer's retirement benefits, so I'm waiting on that more than a savings number per se. I'm not sure what the minimum success threshold would be. I'm conservative in my financial planning, and will prbably have a higher net worth when I die than when I leave full-time employment. To me it's important to have the resources to allow for markedly higher spending 20-30+ years into retirement to compensate for my probable decline in physical robustness.
We aren't as extreme as many here. Ideally, I'd like to have our house paid off, the kids' college paid off, and 10-15 times our current salary in investments.
We're on target (barring the unplannable/unforeseen like market implosion or economic collapse) to retire in our mid-to-late 50s with no big change in lifestyle.
At this point, I'm trying to concentrate on shifting and accumulating assets to live on before age 59.5.
I can answer this in retrospect with a bunch of caveats.
I _needed_ 25x expenses in invested assets WITH the condition that CAPE was at 15(*) AND that I would likely be making some money (even a hundred bucks a month from incidental(**) income is worth 400x that amount in invested assets).
(*) I quit my physics job in end of March/2009 just at the bottom of the crash.
(**) I've noticed that this varies a lot from person to person. As I recommend, the things I do almost all tend to lead towards some cash in some form. However, most people I know don't do this---they don't take the step to monetization or extending the value they build to other people (e.g. websites, forum/group participation/network); they don't even try. This is unfortunate, because I think this is important.
If CAPE was 25 (as it is now) and I expected never to do anything productive whatsoever ever again, my "need" would have been higher... probably closer to 33x expenses. I would also consider how much of my budget was wants/needs.
In any case, what happened is that I'm now quite a bit beyond what my original number was, in particular thanks to Bernanke and Yellen. In other words, my original number now seems like just a mile marker I passed far back on the road.
Another thing that's important to consider is that not all money is created equal. For example, cash coming from a taxable account is better than cash coming from a job (the former is not taxed); which is better than cash in a retirement account (because you can't get it); which is better than tax coming from a business (because it doesn't run itself forever); etc. so just adding all the numbers together to get the THE NUMBER might be too crude.
My numbers are similar to C40's. My ultimate goal is to live off the dividends from my taxable Vanguard account, which would require 40x annual expenses saved there. I would then have my puny ROTH, and decent 401k to have as safely nets*. I'm hopefully about 18-24 months away from that so it's not too far fetched. However, my major safety net is knowing that I can pick up any minimum wage job and have it be more than enough to cover my expenses comfortably since discovering ERE.
*MMM had a good article about safety nets that resonated well with me as you can tell.
jacob wrote:As I recommend, the things I do almost all tend to lead towards some cash in some form. However, most people I know don't do this---they don't take the step to monetization or extending the value they build to other people (e.g. websites, forum/group participation/network); they don't even try. This is unfortunate, because I think this is important.
I posted it a while ago in my journal, with all the details about what is included, safety of margin etc. Currently we're looking at about 800K (that is excluding the value of our current house) for our family of 4.
But I use it as a guideline, but am also aware that things can change (fast).
@jennypenny - That adding value to other people is important and those who do so will often get paid. That most people only add value to themselves.
Examples:
1) Playing computer games.
2) Playing computer games while recording a voice-over of tips and tricks and putting it on youtube.
Most people do (1) adding value only to themselves. People who do (2) at very little extra effort add value to others as well and get paid. I'm not just talking about paid money as a single goal ... but also getting other values in return, like community, social capital, ... My point is, few people think of connecting their efforts with other people in a way that's beneficial to other people.
The exact number is a moving target. We have a spreadsheet that I update every month with all our account balances, remaining obligations, and current budget numbers. I also periodically adjust our projected returns, projected taxes, and assumptions about the types and levels of insurance we will need.
Since I started tracking that number in 2010 it has fluctuated between $500k and $650k. At present it's about $615k. Higher than many here, although we have about 10 more years of child support to pay, so that's part of the equation in our case.
We could get by on $420k today if we had to, but neither of us would like the lifestyle that would result.
jacob wrote:@jennypenny - That adding value to other people is important and those who do so will often get paid. That most people only add value to themselves.
Examples:
1) Playing computer games.
2) Playing computer games while recording a voice-over of tips and tricks and putting it on youtube.
Most people do (1) adding value only to themselves. People who do (2) at very little extra effort add value to others as well and get paid. I'm not just talking about paid money as a single goal ... but also getting other values in return, like community, social capital, ... My point is, few people think of connecting their efforts with other people in a way that's beneficial to other people.
That is interesting, I've never thought about it in that way. Did you happen to write any articles on the topic? I am curious to learn more.
My semi-ERE number is between $80k-$150k. My fully ERE number starts at $200k.
Semi-ERE is where I quit full time work and switch to half-time contract work + explore other income streams.
I could potentially live in abroad in a room share arrangement & cover visa costs with $300/mo which means $80k @ 5% SWR would be sufficient. Note, I have previous experience with room & board for $200/mo in the Philippines before. If I wanted my own place then bump that up to $500/mo or $120k @ 5% SWR. Technically there wouldn't be many withdrawals since I'd be working part-time as much as I can. The 5% number is based on that intention as well.
Fully ERE is probably $200k (i.e. $600/mo @ 4% SWR) and up. But I probably want a bigger buffer especially for family reasons.
I'm 33, was $25k in debt and not interested in employment till I came across this site. 20 months later I'm $25k up and saving at $3.7k/mo. ERE is hugely motivating to me because full-time employment is brutal no matter what - fortunately I lucked out with a very tolerable job (high praise). Having a clear exit goal of 3-5 years saved me, although I'm actually super impatient about that, hence the whole "semi-ERE" thing. Hoping to drop the job by next winter and switch to remote contract work, but we'll see how things go!
After nearly 10 years of data; I "need" 125-175k, depending on returns. More would be "safer" and more "comfortable" but I know people who have died chasing that rabbit hole... As I've been doing for several years.
I'm starting to think ERE followed by seasonal, or minimal PT employment is the optimal path.
