How much is enough?

[Senator]

When I made the decision, I assume my expenses would be 2x what I expected, and my income would be half as much as I expected.

Once the numbers lined up, I bailed according to my plan.

 

[redduck]

How much is enough?

When a reporter asked Rockefeller “How much money is enough?” He responded, “Just a little bit more.”
Could that be the answer to your question?

 

[marko]

IMO, when the question is posed as it was: "Do I have enough?" the mere question itself sounds painfully naive.

It is not about having 'enough'...you need a clear idea of your expenses and a plan for where the income you'll need will be coming from.

"Well, I have $2M dollars! That's $100K of spending for 20 years...". Well, good luck with that! Maybe OP's DW is hesitant because her instincts are good. Dunno.

 

[ER Eddie]

As a single person living in California, I'd count on $40K per year at least to cover necessary expenses, including health care which still a big unknown (even if Trumpcare is likely to fail). But as previous posts said it all depends on your living habits and lots of other factors. According to the conservative rule of 4%, the total net worth would be $40K x 40 = $1.6M. Again, this is just a very rough estimation.

Wouldn't the 4% rule say you'd need 1 million in the bank, to get 40K/yr.?

 

[Koolau]

We are in our mid/late 40's, two teen's, with a high income and are high net worth. My wife is not convinced we can retire though. I tried to explain there could always be a catastrophe (lawsuit, financial collapse, etc...) but generally speaking we have enough to fire now. I explained the most likely worst case scenario, if we ended up in a deep recession for example, was we might have to spend less as we do spend a fair amount. I should add we will have to private pay for medical, have no pension, and currently live in California (but not one of the super expensive areas). So, without getting in to our particulars what do you consider "enough" that you would feel relatively safe retiring in your mid/late 40's?

It appears the real issue is DW's comfort level - or whatever issue is involved in DW not being convinced. If momma ain't happy, no one is happy. You may need to take DW through the basics on ER, including your specific circumstances. Naturally, YMMV.

 

[FlaGator]

For some, "enough" accordingly to a formula will never really be adequate for them to feel comfortable setting aside a regular paycheck. There are also the social comparisons that go on - friend "X" always seems to have money to spend, has a bigger house, takes nicer vacations, etc. We don't, so I don't think the time is right to ER.

Doesn't matter that friend "X" is living paycheck to paycheck, what is visible is put into the internal calculator.

Went through this with the late wife several times as we discussed exercising the options our savings and good fortune had created. Finally sunk in when her point of comparison couldn't borrow the money to finance their latest intended purchase after talking about it for weeks.

Had my wife never gotten sick, or had a treatable illness instead of terminal one, I'm sure I would still be working. Too much would never have been enough as there were (to her) so many uncertainties about future costs. Really don't believe she could have been comfortable taking the plunge until our NW was maybe 1.5-2X what it was. Even the low end of that might not have been enough.

With all that, my recommendation to the OP is to start peeling back the issues. Will likely take a lot of "why" follow up questions to get to the root of her concerns.

 

[Scuba]

As others have said, it depends on the spending you'd like to fund. Another CA poster was comfortable with $40K/yr. We live in So CA and are budgeting ~5x that level of spending. YMMV

 

[brucethebroker]

This was my objective, too, to not have to touch principal.

I retired nearly 9 years ago at 45. Part of my ER plan included splitting it into 2 parts. The first part was getting from age 45 to age ~60 intact, using only my non-retirement assets which represented about 2/3 of my portfolio. If at some point I had to dip into principal, that was okay as long as it wasn't a lot and wasn't until near the end of this 15-year period.

After I hit ~60, I would gain access to my "reinforcements." Those included (a) unfettered access to my rollover IRA, (b) my frozen company pension at age 65, and (c) Social Security as early as age 62, but something I wouldn't expect to need until age 65 or 67, the latter being FRA.

My longer-term retirement picture only gets better after age ~60 with those extra money sources. So, my main priority is getting to age ~60 intact. I'm 9 years into this 15-year timeframe and not only is everything well, but my SWR remains well below 3% (of all assets). And the principal has grown thanks to market gains since late 2008 when the market had tanked (and was a huge benefit to my ER BTW).

OP, you may want to split your ER plan into two parts if you have significant income sources becoming available in your 60s.

+1 to this, and the "enough is when passive income..." reply and Socca's comment about working PT in the family business. Boy, if a do it yourself book had to be written, these three comments would cover many of the bases. The 25X, 35X, 40X annual income are quick rules of thumb, but expected annual income and expenses are still the main drivers. 3-4% does not work for someone afraid of the stock market (DW??) and looking to CD's. But it is too low for someone top heavy with investment property, making 7-10%.

I also like the "what's the worst case senario" when convincing DW. Big house could be sold. Relocation from CA if necessary. Sell some toys. Take a PT, flex schedule, no pressure job (or BOTH of you could....). Cut back on "extras" until an economic downturn goes away (ave. duration of recession is less than 2 years as I recall). Lots of good advice so far guys.....

 

[traineeinvestor]

Enough is when passive income exceeds active spending without touching the principal.

+1 unless you are planning on a very long retirement period, in which case you need to factor in the effect of inflation

When I FIRE'd at 47 I arbitrarily assumed our expenses would increase by 20% and that, over a 50+ year retirement period, our passive income would have to increase enough to compensate for inflation. No pension, SS etc available to us.

I probably spent as much time on planning non-financial aspects as the monetary stuff - making sure I would have enough to do and that DW was on board with my plans and comfortable with them.

 

[photoguy]

Enough is when passive income exceeds active spending without touching the principal.

Seems like a reasonable guideline but in practice this is not really that concrete for a 40 year old.

The issue is that many retirement expenses are backloaded into old age. Especially medical and long term care. At 40, you might spend nothing more than premiums.

 

[bclover]

It appears the real issue is DW's comfort level - or whatever issue is involved in DW not being convinced. If momma ain't happy, no one is happy. You may need to take DW through the basics on ER, including your specific circumstances. Naturally, YMMV.

Ding, ding, ding. we have a winner. You can fling out all the studies, numbers, firecalc calculations you want. bottom line is the wife is not comfortable where you are currently at.

so you don't have enough.

 

[CaliKid]

I appreciate all the great replies... even the few slightly snarky ones. Thanks all.

Yes, the problem is my wife doesn't know what enough is since she isn't involved in our finances though I have tried. I have a good handle on expenses and know exactly what income our assets produce so I know it's enough. Having said that it is hard to walk away from a good income at work so I am trying to work less for now. Again, thanks for all the great feedback.

 

[Sojourner]

We are in our mid/late 40's, two teen's, with a high income and are high net worth. ... So, without getting in to our particulars what do you consider "enough" that you would feel relatively safe retiring in your mid/late 40's?

In your situation, with three people depending on you financially, I'd be shooting for having at least 33x annual expenses as my "enough" number. The more people depending on me, the more conservative I'd want to be with my FIRE planning. Being the cautious type, I might even want to be closer to 40x before feeling like it was really, truly "enough". I believe FIRECalc would show that a 2.5% WR has never failed historically under any scenario.

 

[cathy63]

I appreciate all the great replies... even the few slightly snarky ones. Thanks all.

Yes, the problem is my wife doesn't know what enough is since she isn't involved in our finances though I have tried. I have a good handle on expenses and know exactly what income our assets produce so I know it's enough. Having said that it is hard to walk away from a good income at work so I am trying to work less for now. Again, thanks for all the great feedback.

Have you considered going with your wife to a CFP for an outsider's opinion on how much you could spend given your current nest egg? Sometimes hearing from an "expert" can provide another layer of reassurance.

Also, how much confidence does she have in your expense plan? Would she be willing to work up a budget on her own? There are lots of spreadsheet templates online that have categories of expenses to consider.

 

[bloom2708]

Spend time here and Bogleheads.org. If you want feedback on the numbers, present your financial information in the "Asking Portfolio Questions" format.

https://www.bogleheads.org/forum/viewtopic.php?t=6212

It all depends on your spending, healthcare and lumpy purchases each year. Going from spending $200k on whatever you want to $75k might feel like a drastic shift.

I personally can do it. My wife and daughters would find it a shock to the "we buy whatever we want" system.

 

[daylatedollarshort]

We decided to semi-ER when we found the Consumer Expenditure Survey and realized we would have more than most retirees already, but less than we had been spending per year. We realized our expenses could be much lower because we had a house in a high cost of living area and we were prepared to downsize or live in a lower cost of living area if we needed to. Plus with working less our taxes would be lower, our kids would finish college and either move out or pay rent before too long, with lower expenses we were FI and being FI we could eliminate disability insurance and life insurance, with more free time we could price shop more and outsource less, etc. In hindsight if we had been on top of our expenses more we could have retired ten years sooner or at least just switched to part-time work much earlier than we did.

 

[travelover]

.............. Having said that it is hard to walk away from a good income at work so I am trying to work less for now. .............

Another way to look at it is that you have enough money to do anything you want with your (remaining) time. Given all the choices, is working your present job what you want to do?

 

[foxfirev5]

When you pull the trigger that's enough . Hopefully you've done your homework. There are way too many variables to ask a simple question and expect validation.

 

[Car-Guy]

To me, a person has "enough" wealth to retire when they don't have to "depend" on investments in the equity market to fund and maintain their intended retirement lifestyle for their anticipate life expectancy. Personally I would (and did) pad those numbers a bit too.

Example,
My base retirement funds (bucket #1) are invested in a bunch of FDIC insured accounts across multiple banks. (Yes I understand the effects that inflation will have on that money) but it's better than burying it in a 55 gallon drum out in the fields somewhere. While I do have a little in gold and silver but I'm not a "prepper" so if the US dollar goes bust I'm screwed.

However, I do invest (bucket #2) in the equities market but not with money that I depend on to support my retirement. I'll probably never spend that money unless I decide to get really crazy with my hobbies.

In my case, I would not have felt comfortable retiring in my mid to late 40's, with my wealth at that time following such a philosophy, but I was very comfortable by my late 50's. Of course YMMV.

I realize that this is not an opinion shared by many on this board but that was my investment/retirement philosophy before I retired and still is today.

 

[pb4uski]

Enough is when passive income exceeds active spending without touching the principal.

Way too conservative IMO... plus, what is "passive income"... just interest and dividends or interest, dividends and capital gains?

If just the former and dividend yields are 2% and bond interest is 3% then that would be 40x... many of us have successfully retired with a lot less.

 

[FREE866]

Whenever i read these threads I'm like "oh man maybe I made a mistake" ...seems like people are extra conservative on this board. I "retired" 6 months ago with ~25x yearly expenses..maybe I'm too aggressive, but it's worth the risk....Not working is an indescribable feeling of freedom.....

 

[Blue Collar Guy]

Whenever i read these threads I'm like "oh man maybe I made a mistake" ...seems like people are extra conservative on this board. I "retired" 6 months ago with ~25x yearly expenses..maybe I'm too aggressive, but it's worth the risk....Not working is an indescribable feeling of freedom.....

Good for you, Enjoy your freedom, you earned it. Tomorrow is promised to no one. I worked 5 extra years being too conservative, lost time I can never make up.

 

[Scuba]

Whenever i read these threads I'm like "oh man maybe I made a mistake" ...seems like people are extra conservative on this board. I "retired" 6 months ago with ~25x yearly expenses..maybe I'm too aggressive, but it's worth the risk....Not working is an indescribable feeling of freedom.....

+1
We have no kids and lots of flexibility with our expenses. About 45% of our budgeted spending is for travel, dining out, concerts and theatre, wine and gifts. Therefore I am very comfortable that 25x expenses will more than cover us throughout retirement, and we probably could have retired much earlier.

 

[Sunset]

I appreciate all the great replies... even the few slightly snarky ones. Thanks all.

Yes, the problem is my wife doesn't know what enough is since she isn't involved in our finances though I have tried. I have a good handle on expenses and know exactly what income our assets produce so I know it's enough. Having said that it is hard to walk away from a good income at work so I am trying to work less for now. Again, thanks for all the great feedback.

Walking away from a high paying job and leaving $$$ on the table is another issue many struggle with.

Perhaps a partial solution while you continue to work is to ensure you take really great vacations even to the point of including a week or two of unpaid time off work (if allowed).

So many people work and don't even take their 2 week vacations, it's no wonder they get burnt out.

 

[CaliKid]

Walking away from a high paying job and leaving $$$ on the table is another issue many struggle with.

Perhaps a partial solution while you continue to work is to ensure you take really great vacations even to the point of including a week or two of unpaid time off work (if allowed).

So many people work and don't even take their 2 week vacations, it's no wonder they get burnt out.

For sure. I live for vacations. Like the old Loverboy song Working for the Weekend... I work for my vacations! I am an owner at work so can choose my schedule. I just make a little less money when I am gone. Plus, I think it paints a bad picture for employees if I am gone too much or too extravagantly. Having said that, I just did over a month in Europe with the family... and already working on plans for next year's big trip. It does make work more bearable but it's hard to get away from the workplace stress as it's always there for me.