Your Retirement Number

[BlueAlpha1]

Since the majority of people (70-80%) don't like their jobs, I think it's common to think of that number where you'd never have to work another day in your life. What is your net worth?

Currently as a single man with few responsibilities, mine is.....
$2 million

Yup, even at the ripe old age of 27 that's enough, so long as I don't start flying in jets and dining in 5-star boutiques. Sounds awfully low, but with a very modest return of 1% per year that's $20,000 per year in new money (the number would slightly decrease as the principal decreased.) I am the kind of man that if single, I could very easily live on $40,000 a year. That means a net loss of $20,000 per year - as such it would take me 100 years to "run out of money", a seemingly huge concern for so many elderly these days. Considering I won't live until 127, I could adjust for the net loss going up each year as the principal earns less, but I'm only likely to live another 50 years. With these numbers, I could live to be 77 and still have another half-million left. Note that at a 2% return (not difficult), I'd have no net less and would never touch the principal if I could live on $40,000 a year!!

If I were to ever get married and pop out 2 children, the number is....
$5 million

At 2% per year, that's $100,000 a year in new money. If our family of 4 required $150,000 a year to live well, that's a $50,000 net loss per year. It would take 100 years to run out of $5 million. If I lived another 50 years at this pace, I'd die at 77 and have $2.5 million to pass along to my children.

Thoughts?

P.S. I'm not saying I'd never work again if I ever hit 2 mil. I know that a man is only whole when he's working on something that fulfills him. Also not saying these numbers might not be vastly different from yours. Also know there's a million variables, things that could go wrong, that it's possible to earn more than 2%, etc. I'm simply picking my "point of no return" magic number where I could honestly stop worrying about life, going off of how I've lived my life and what it cost me since I joined the workforce 10 years ago. A better title of this thread would be your "Freedom number"

 

[Tenacity]

That's basically my goal, which is where I want to be by age 62 - 65 when I seek retirement. I know inflation will be higher and all of that nonsense, but when you look at inflation, EVERYTHING isn't increasing consistently....inflation is the average of all categories.

My goal is to have a solid $1 million in principal in a fixed income portfolio ladder earning 3% per year (which is easily doable with just Muni Bonds and Long Term CDs). That's $30,000 a year. When you add in Social Security, which based on my current statement would pay about $1,900 a month then that's another $22,800 giving me nearly $53,000 a year to play with.

I'm hoping to get to the $1 million principal sometime in my early 40's, within the next 10 years (32 now, going on 33 on August 5th). I too will not stop working once I get there, but I would love to get to that $1 million in principal range within 10 years.

I'm doing pretty good right now.....but I'm not where I would like to be in terms of that $1 million.

 

[speed dawg]

My goal is to have a solid $1 million in principal in a fixed income portfolio ladder earning 3% per year (which is easily doable with just Muni Bonds and Long Term CDs). That's $30,000 a year. When you add in Social Security, which based on my current statement would pay about $1,900 a month then that's another $22,800 giving me nearly $53,000 a year to play with.

This is an interesting way to look at it. You ever notice how all the financial calculators always tell you what they think you'll need, based on current salary? I think that's a ploy to make you invest more, so they make more. When you think about it simply, it's just like you said - get a million, and that's enough to give you a SOLID income even if invested in very conservative things.

I might not could live off of that now, because I have kids.....but $30,000 tax free when I'm 65? That's like 40K and it's not like I'm going to be out partying all the time. Any reasonable person should live very comfortably with that income plus SS.

 

[BlueAlpha1]

This is an interesting way to look at it. You ever notice how all the financial calculators always tell you what they think you'll need, based on current salary? I think that's a ploy to make you invest more, so they make more. When you think about it simply, it's just like you said - get a million, and that's enough to give you a SOLID income even if invested in very conservative things.

I might not could live off of that now, because I have kids.....but $30,000 tax free when I'm 65? That's like 40K and it's not like I'm going to be out partying all the time. Any reasonable person should live very comfortably with that income plus SS.

TL DR of my original post:

I think if a single man with some sense accrued a net worth of $1 million he could theoretically retire. $30,000 a year in new money with a 3% return (some savings accounts are pushing 2% again - the easiest investment of all). If he can live on $40,000 a year he'll lose a small amount of money, but social security will kick in long before he makes a dent in that principal. And this is assuming he does absolutely nothing else with his time.

 

[Huffman]

I'd be fine with 1M euros, but I probably wouldn't reach it before 40-50. That's way too late.

Sorry guys, but I'm not busting my a** 12 hours every day for 15 years while my life withers away before my eyes.

 

[BlueAlpha1]

I
Sorry guys, but I'm not busting my a** 12 hours every day for 15 years while my life withers away before my eyes.

Totally with you - I hate this 9-5 madness. But curious how you support yourself? Are you a business owner or just work part time and live minimally?

 

[Huffman]

No, I'm working 8 hours for a comfortable salary. It's, well tolerable, but I'm often projecting other things that I could do.
Right now all the options open to me aren't truly enjoyable - so I'm projecting if I could just bite the bullet for a couple of years and then retire. But usually the calculation ends up mid-40s, so that's too long.

I'm currently eyeing a part-time or freelance option. In the German tax system, if you earn only half, you still get to keep like 70%.

 

[Tenacity]

This is an interesting way to look at it. You ever notice how all the financial calculators always tell you what they think you'll need, based on current salary? I think that's a ploy to make you invest more, so they make more.

Yes because Wallstreet has completely taken over the Personal Finance industry with now far too many theories or promoted management techniques benefiting Wallstreet in some form or fashion.

- They tell you that the stock market is the be all END all way to build wealth, because quite frankly, you have to go through Wallstreet to get access to it.

- They tell you that you will never be able to retire unless you have X times the amount of your current salary and that the only way to do this is go heavy on stocks, which again benefits Wallstreet.

The reality is that the VAST MAJORITY of today's millionaires and billionaires did not get that way through the stock market, they got that way through either owning successful businesses or having successful high paying professions, or both.

Not saying the stock market isn't a good place to park money for 20 years, but the way they promote it you would think the stock market is making people rich. I see the stock market (S&P Index Fund which is my only preferred stock vehicle) and Fixed Income (Bonds, CDs, Annuities, P2P Loans) as just more efficient ways to park your retirement and general savings to earn more than you would earn at the bank. For example, getting a balanced CAGR of 5% per year with 30% stocks/70% bonds, v.s. getting only 0.50% per year in a savings account.

IF you want to "build wealth" then you need to own a successful business, get into a successful high paying profession, or both.

When you think about it simply, it's just like you said - get a million, and that's enough to give you a SOLID income even if invested in very conservative things.

Right, usually on Investment Forums they will BLAST my plan with talks of inflation and how $1 million today will need to be $3 million tomorrow. They COULD be right, they COULD be wrong, don't know as we don't know what inflation will be.

What I DO KNOW, is that "retirement" for my Generation (Millennials) will be a luxury for only about 10% (maybe as high as 15%). The good paying jobs just aren't there, the cost of living is continuing to go up and things such as having a family are getting more and more expensive.

My $1 million plan is very conservative but again, I think it's only realistic for about 10% of my Generation. What do I mean? Well, most in my Generation will not even have the ability to begin saving/putting away for retirement until they are about 30. You usually don't get the decent paying job gigs until your late 20's, allowing you to FINALLY get on your feet, pay down debt, and begin saving for retirement by around 30.

So from age 30 - 60 (30 years), they would need to be saving at least $12,000 per year with a CAGR of 6% between stocks/bonds. That gets them the $1 million principal by age 60-ish. But how many are going to be able to put away $12,000 a year if household incomes are about $50k on average with 4 - 6 people in the house to feed? The most they would be able to put away is maybe $1,200 a year and in 30 years, that's only $107k. A nice chunk of change, but you can't retire on that.

 

[taiyuu_otoko]

That's basically my goal, which is where I want to be by age 62 - 65 when I seek retirement. I know inflation will be higher and all of that nonsense, but when you look at inflation, EVERYTHING isn't increasing consistently....inflation is the average of all categories.

My goal is to have a solid $1 million in principal in a fixed income portfolio ladder earning 3% per year (which is easily doable with just Muni Bonds and Long Term CDs). That's $30,000 a year. When you add in Social Security, which based on my current statement would pay about $1,900 a month then that's another $22,800 giving me nearly $53,000 a year to play with.

Not to rain on anybody's parade, but this is pretty close to impossible. Nothing to do with any individuals skill sets, but let's just take a look at Tenacity's plan, which on the surface, appears to be rather conservative. Let's look at the time period of NOW (2016 when Tenacity is 32) to THEN (2046 when Tenacity will be 62).

Just consider these questions:

In THIRTY YEARS, will the dollar still be the reserve currency?

In THIRTY YEARS, will social security still even exist?

In THIRTY YEARS, will the United States economic system still exist?

In THIRTY YEARS, will the U.S. military still reign supreme?

In my opinion, assuming everything will be more or less the same as it is now, in thirty years, is a pretty risky assumption.

You might consider having a much more broader goal of having 1 mil, IN TODAY'S PURCHASING power using any means possible. But given how BROKE the U.S. pension system is, it might not even be possible for U.S. citizens to amass ANY wealth beyond what the government deems legal.

I strongly suggest that ANY forward thinking individual at least spend some reading alternative news financial blogs to prepare for inevitable changes in our economic system,whether they come or not.

Planning on muni bonds and social security is not the best long term business strategy, IMO.

 

[Tenacity]

Not to rain on anybody's parade, but this is pretty close to impossible. Nothing to do with any individuals skill sets, but let's just take a look at Tenacity's plan, which on the surface, appears to be rather conservative. Let's look at the time period of NOW (2016 when Tenacity is 32) to THEN (2046 when Tenacity will be 62).

Just consider these questions:

In THIRTY YEARS, will the dollar still be the reserve currency?

In THIRTY YEARS, will social security still even exist?

In THIRTY YEARS, will the United States economic system still exist?

In THIRTY YEARS, will the U.S. military still reign supreme?

In my opinion, assuming everything will be more or less the same as it is now, in thirty years, is a pretty risky assumption.

Okay T.O., but if all these things happen like you state, including the US dollar crashing, Social Security is no longer in existence, the UNITED STATES ECONOMIC SYSTEM no longer exists, and if the US Military is weak to where we are being bombed monthly and no longer the land of the "free".........then ANY retirement plan is null and void at that point because the country is no longer stable.

You might consider having a much more broader goal of having 1 mil, IN TODAY'S PURCHASING power using any means possible.

Okay man, but you just said what if the US economic system (which I assume you mean capitalism) no longer exists (or is changed to Bernie Sanders like socialism), you also said what if the dollar crashes and the US Military is weak. Dude, how in the hell does someone even amass $1 MILLION nevertheless $2 million, $3 million, etc. in that type of environment?

But given how BROKE the U.S. pension system is, it might not even be possible for U.S. citizens to amass ANY wealth beyond what the government deems legal.

So then perhaps my $1 million goal is TOO OPTIMISTIC, instead of being very conservative?

I strongly suggest that ANY forward thinking individual at least spend some reading alternative news financial blogs to prepare for inevitable changes in our economic system,whether they come or not.

Planning on muni bonds and social security is not the best long term business strategy, IMO.

Well, keeping the conversation at passive investments (not active), what are some other passive investment ideas that are out there with efficient stability, returns, along with a historical reference? All I know of are:

- Stocks
- Fixed Income
- Real Estate
- Commodities
- Cash

What else is out there with efficient stability, returns, along with a historical reference?

 

[BlueAlpha1]

I know it's not much, but SOME savings accounts are offering a better return than we've seen since 2008.

I had five figures parked in Everbank, which was offering 1.62% for six months. I also bank at a local credit union in Florida which pays 2% up to $15,000 (one I even saw paying 3% on that exact rate but only for residents of that state). Another pays 5% up to the first $5,000.

I am also seeing a lot more savings account bonuses than I've ever seen. I just reopened a Chase account and got a $400 bonus within 10 business days with direct deposit (no minimum). Only requirement is to have the account 6 months and meet the minimum balance to avoid the fees cutting into the bonus, but if you pressure them you can get waivers on that over the phone.

I've managed to pull off what amounts to 3.5-4% averages on standard savings accounts by capitalizing on bonuses and getting out quickly. It's not the optimal way to earn interest, but with CD's and bonds being at an embarrassing low, you might as well have easy access to your money if you're opting for safer, more conservative investments.

I have accumulated about $2,000 in gains since January 2015 on savings interest and bonuses.

Check out www.hustlermoneyblog.com or www.nerdwallet.com to explore these promos.

 

[taiyuu_otoko]

Dude, how in the hell does someone even amass $1 MILLION nevertheless $2 million, $3 million, etc. in that type of environment?

Precisely why I posed the question. Because rest assured, some people WILL figure out a way, and some people WON'T.

What else is out there with efficient stability, returns, along with a historical reference?

You might consider stable returns to be no longer a plausible way to gain wealth. As systems transition, there are TONS of ways to profit, but very few of these allow for "passive" growth. Most require EXTREME flexibility.

I'm just suggesting that the next 10-20 years are going to be VERY chaotic economically, you might need to stay on your toes, and learn not only to LOOK FOR but willing to TAKE opportunities as they come up. (Along with the requisite exit strategy).

There is no "system" that will work based on "historical" results because we are entering a period (massive fiat debt bubbles) which has never really happened before.

I'm just saying that if you think you can "stick" your money somewhere and forget about it, you may be disappointed.

Why I suggested reading those economic blogs for economic advice (instead of pick up forums). Pick and choose a few who you resonate with, and go from there.

If you want a good starting point, head over to zerohedge.com and look on the left. There's decent list of sites and blogs to get better insight and how to grow wealth during fvcked up economic times.

 

[Tenacity]

I'm just suggesting that the next 10-20 years are going to be VERY chaotic economically, you might need to stay on your toes, and learn not only to LOOK FOR but willing to TAKE opportunities as they come up. (Along with the requisite exit strategy).

There is no "system" that will work based on "historical" results because we are entering a period (massive fiat debt bubbles) which has never really happened before.

I'm just saying that if you think you can "stick" your money somewhere and forget about it, you may be disappointed.

I actually agree with this and I've been preaching this over to my "buddies" at the City Data Economics Forum. Maybe you should join in over there because it's only a very select FEW of us that can see that the upcoming 20 - 30 years will NOT be like the previous, but the vast majority over there just call us negative, doomsday promoters and chicken littles.

 

[taiyuu_otoko]

Maybe you should join in over there because it's only a very select FEW of us that can see that the upcoming 20 - 30 years will NOT be like the previous, but the vast majority over there just call us negative, doomsday promoters and chicken littles.

Those would be "blue pill," economically speaking. Ignore them. Focus on your own fortunes.

 

[speed dawg]

If you want a good starting point, head over to zerohedge.com and look on the left. There's decent list of sites and blogs to get better insight and how to grow wealth during fvcked up economic times.

Suggestions for someone who really doesn't want to read all that?

Just about all my savings are in the 401K. I mean I have a little cash but not enough to do anything except cover emergencies. I really don't know any other tax-free options. I'd love to start a business but to-date I have not come up with that magical idea.

 

[BlueAlpha1]

Suggestions for someone who really doesn't want to read all that?

Just about all my savings are in the 401K. I mean I have a little cash but not enough to do anything except cover emergencies. I really don't know any other tax-free options. I'd love to start a business but to-date I have not come up with that magical idea.

Me neither

 

[BlueAlpha1]

I actually agree with this and I've been preaching this over to my "buddies" at the City Data Economics Forum. Maybe you should join in over there because it's only a very select FEW of us that can see that the upcoming 20 - 30 years will NOT be like the previous, but the vast majority over there just call us negative, doomsday promoters and chicken littles.

I'm currently preaching to my buddy too, that he sounds very silly with this talk of making it to "30 under 30", amassing a $500 million net worth and "becoming the greatest rapper of all time." IF you have a blueprint to get there that you can systematically explain to me step by step, I'm all ears. We all want to rise above this 9-5 slavery system. But I've been talking to the guy 2 years and haven't heard anything other than vague, new age generalities and an unwarranted god complex. The guy has made 0 progress since I met him just like most millennials. NO ONE wants to live a life of purpose where I get paid to do what I love more than me. I have made for a terrible employee and been through 8 jobs (fired from 2) in 11 years, but "following your dreams" doesn't amount to a 7 (or even 6) figure net worth.

Granted, I've also lost money these last 2 years. But I got over this "quit your job and become a millionaire" fad much faster. Or at least the idea it won't happen overnight.

He's a good friend, so I tolerate this sort of junk.

 

[Steady Eddie]

The way I see it the western world is living beyond the carry capacity of the planet. Our leaders have decided to impoverish us to restore some semblance of balance to the supply and demand model.
Bonds, stocks and property they say. Well lets start with the stock market. The stock market is rigged. Even before high frequency trading. Between commissions and fees you'll make next to nothing (if not loses) investing in the stock market. According to a recent report, only 1 in 8 fund managers beats the market.
Bond yields are in negative territory. So why would you put your money there?
Property is good because the value will, almost, always rise. The problem in London is they've risen beyond any normal person's ability to pay for it.
My current landlord leases properties from owners who can't find tenants to pay the extortionate rents. My landlord puts bunk beds into every available room and rents each bed out. The trouble with this is 3 or 4 properties have been closed down by the local authorities due to over crowding.
I've had to move 3 times in the last year. Always with no notice.

Why do I put up with this when I can afford better? The answer is it allows me to save money.

The business model my landlord uses is pretty solid, but his vetting of tenants is awful. Some of these tenants don't pass the glance test, but he rents to them because they have money on them. These tenants will always have an excuse as to why the can't pay the rent when it's due.
They're also more trouble than they're worth. In one of the properties that was closed, one of the tenants stabbed another tenant.

My landlord likes the word "hostel" to describe these arrangements. But it'd be wise to view that in the loosest, terms possible.

The only way I see this being profitable is if you own or part own the property you're renting.

My retirement number is £5m. For all the reasons BA detailed. Although failing that I expect to be working til my late 70's, early 80's. The British government seeks to raise the pension age to 81 or thereabouts in the year 2028. This is to save the scheme from going bust.

 

[Asmodeus]

.45
That is my retirement number.
I am not going to retire quietly. I will not be an old decrepit sick weakling facing the final years of my life sleeping in a bed for the majority of it. I will not be able to stand the sight of myself becoming so pathetic.
A single .45 placed in the brainstem... That is my retirement...

 

[BetterCallSaul]

.45
That is my retirement number.
I am not going to retire quietly. I will not be an old decrepit sick weakling facing the final years of my life sleeping in a bed for the majority of it. I will not be able to stand the sight of myself becoming so pathetic.
A single .45 placed in the brainstem... That is my retirement...

Well I understand your viewpoint, but my next career goal is becoming the local dirty old man. I will be shameless about it.