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Old 10-22-2014, 07:33 PM   #121
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Yes, when you feel that your time is running out, that "safe number" no longer has to include budget for a new car every 3 years, nor a European annual vacation. Of course, some people make plan for a long life, and are willing to work longer to accommodate all their needs. There's no universal solution. YMMV.
I agree. If I did not have my "safe" number at 55 I would adjust and FIRE anyways.

Having said that I am meticulous planner and I had my minimum safe number computed 15 years ago. It is unchanged today and remains at exactly same value of 3 million in invest-able assets.

I think many people who FIRE are big planners and know exactly where they go. It is one of the traits of FIRE types IMO.
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Old 10-22-2014, 09:04 PM   #122
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This topic has been top of mind for me lately. I have been focused on financial independence every since I can remember, I'm 38. I actually work in the financial services industry as it is my passion. I talk with people all day about their finances. I've never talked about my personal financial situation with anyone other than my spouse so this post is somewhat therapeutic.

Logically, I feel like I have hit my safe number, but my assets are in liquid and non liquid assets. The total is about $5-6M, $2M of which is in marketable securities. I own a paid off commercial property yielding about $60k per year on a NNN lease (tenant pays all expenses other than major repairs.). Tenant is my business so the rent is probably above market. I would have to sell all or part of a business stake worth $1.5-$2M after-tax. I owe a little less than $400k on my house which I would love to payoff, but at 3.25% I struggle to do it. I don't consider the equity in my house an asset, gotta live somewhere.

I could easily replicate comfortable living expenses from my investments. I consider myself frugal, but CREEP is alive and real so I am probably not as frugal as I once was. The main issue is the opportunity cost of early retirement, giving up healthy income potential for no more earned income. I can save a lot of money each year. I think they may call this greed.

I have two kids with one on the way. Two colleges are paid up, but I would still need to fund the 3rd.

Logically knowing you hit your "safe" number and pulling the trigger are two very different things.
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Old 10-22-2014, 09:24 PM   #123
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As I mentioned, as people get older and accumulate more and advance their lifestyle, they are accustomed to more luxuries that are now taken for granted. Yes, the hedonic threadmill is real. And people often forget what the basic necessities are. It is a lot less than what they are consuming now.

I have often half-jokingly talked about living in an RV, boondocking in the state of New Mexico and living like many RV bloggers I have read. It does sound like fun living, and healthy too, no matter what one's net worth is. Surely, you can do that with $500K, and that's a lot more than what some of these people have. I have yet to try that for a few months, to really experience it (sans DW as she would not join me ). And the comfort is way better than what a tent provides.

I think the stash for basic survival probably goes down to near zero for countries with a more generous welfare policy. They probably cringe at the thought of saving up $500K just for basic survival.

Sure, it's roomier than my motorhome, but where's the running water? Where's the toilet?
This is very similar to the cruising community. Many couples (even families) living on sailboats long-term with way less than 500k in investments.
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Old 10-22-2014, 09:27 PM   #124
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I believe my safe number is $900,000. A 3% withdraw rate will pay my basic living expenses (food, housing, electricity, insurance and property taxes). However, I would not feel comfortable leaving my job permanently without other sources of income. I would feel comfortable enough to leave temporarily or maybe quit my career and move to something less stressful with less pay.
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Old 10-22-2014, 10:14 PM   #125
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Originally Posted by CentralTexas View Post
This topic has been top of mind for me lately. I have been focused on financial independence every since I can remember, I'm 38. I actually work in the financial services industry as it is my passion. I talk with people all day about their finances. I've never talked about my personal financial situation with anyone other than my spouse so this post is somewhat therapeutic.

Logically, I feel like I have hit my safe number, but my assets are in liquid and non liquid assets. The total is about $5-6M, $2M of which is in marketable securities. I own a paid off commercial property yielding about $60k per year on a NNN lease (tenant pays all expenses other than major repairs.). Tenant is my business so the rent is probably above market. I would have to sell all or part of a business stake worth $1.5-$2M after-tax. I owe a little less than $400k on my house which I would love to payoff, but at 3.25% I struggle to do it. I don't consider the equity in my house an asset, gotta live somewhere.

I could easily replicate comfortable living expenses from my investments. I consider myself frugal, but CREEP is alive and real so I am probably not as frugal as I once was. The main issue is the opportunity cost of early retirement, giving up healthy income potential for no more earned income. I can save a lot of money each year. I think they may call this greed.

I have two kids with one on the way. Two colleges are paid up, but I would still need to fund the 3rd.

Logically knowing you hit your "safe" number and pulling the trigger are two very different things.
Welcome to the forum! At 38, even if you are FI, no need to pull the plug on your career if you love what you are doing. But if there is a second career or other serious activity you dream of doing, now would be a great time, esp. at your NW level.

That is what I chose to do at 43.
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Old 10-23-2014, 02:05 AM   #126
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My safe number was 250K when I was younger. I could have stayed in my little house and not gone anywhere but I was not thinking right. I wasn't thinking much of inflation and interest rates were really high so living on interest would have been easy. As I aged and got a bigger house I was thinking 400K, I could draw out 4% and collect SS so be fine. Then when I got 400K we had a recession and I lost 170K so i was thinking 800K so I could lose half and be ok. But when I got close my mom died and left me 170 and my investments made 150K in a year so I jumped to a million almost before I knew it. Now down to 960K and it feels like enough, retired and spending like a normal person. If I get down to 500K I might worry but really want to stay over 800K.
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Old 10-23-2014, 06:15 AM   #127
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Not much like WR - but EXACTLY like WR.

?x annual spending is the inverse of WR - they are directly correlated.

4% WR = 25 x spending.
3.5% WR = 28 x spending
3% WR = 33 1/3 x spending.
2.9% WR = 35 x spending
Generally agree with you, Rodi. Difference to me is that is the safe number to trigger FIRE for me. Yes it translates to 2.99% WR. However, I look at WR at a work in progress. Some years will go up during retirement and others down depending on market conditions. But, yes, it is more or less the same.
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Old 10-23-2014, 10:37 AM   #128
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My idea of being as rich as I could possibly want is to have enough $$$ that I could fly first-class anywhere without giving a damn about the cost. Maybe 8M - 10M. I'm 58.
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Old 10-23-2014, 12:36 PM   #129
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I'm currently sitting between $2-3 million which I feel as safe, though I remember that around $400k to $500k I started feeling like odds were getting low I'd never run into a situation where I couldn't afford a basic roof over my head or food in my belly, regardless of whether or not I had a job.

Mike
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Old 10-23-2014, 01:04 PM   #130
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"Safe", has a lot of meanings

Too bad there is no tidy measure of earnings potential between age 37 and whenever you want to walk away from paid employment. But I think I see what you mean about "safe". It's your "I'm still going to work, but if I keep my lifestyle the same, by the time I retire, I'll not need to worry" number.

Life tends to throw you curve balls, though. You "aquire" dependents. Your tastes change. I'd say if you keep those changes out of your life, then your 1/2 mil is perfectly fine (matches your definition of 'safe'). And, as others have said, congratulations! I wish I had that much when I was 37!
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Old 10-23-2014, 01:39 PM   #131
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though I remember that around $400k to $500k I started feeling like odds were getting low I'd never run into a situation where I couldn't afford a basic roof over my head or food in my belly, regardless of whether or not I had a job.

Mike
I think Mike articulated well the idea/feeling/Psychology I had intended with the title of the thread. Thank you mike. Wish I could have done the same up front.
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Old 10-23-2014, 02:32 PM   #132
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My safe number was $2MM in investable assets. I've heard it defined as the number where one could tell people (the boss) to "scr*w you" if one wanted and not worry about how it might affect one's security.

I figured at that number, even with a long retirement, I could live in reasonable comfort. It was a number that was important to me in my career--a real motivator.
Ditto.
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Old 10-24-2014, 11:03 AM   #133
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Small correction to OP, i'm 36 not 37. I always round up for retirement planning, and apparently cant remember my real age anymore.


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Old 10-27-2014, 10:11 PM   #134
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Out of curiosity, I went back 10 years to my mid-40s and the smallness of the amount shocked me. Congrats to the poster.
10 years later the amount is up almost exactly 5x, which demonstrates the power of luck, compounding, and considerable saving, particularly the last 5-6 years since our youngest was halfway through college and we felt that back monkey was about to be gone.
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Old 10-27-2014, 10:24 PM   #135
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Our pension is such that after 30 years, your take home pension pay is equivalent to working take home pay so the safe number can be zero and many people I have known has done that or even have negative net worth and are fine. Of course nothing is 100% fail safe as you are dependent on variables outside of your control with a pension and SS is not backstop either.


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Old 10-28-2014, 08:51 AM   #136
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Is the pension COLA'ed?
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Old 10-28-2014, 09:10 AM   #137
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Is the pension COLA'ed?

It is 2% per year unless inflation is over 5%, then it's 5%. They add up though. My take home pay is $400 a month higher than when I retired 4 years ago, and my monthly costs have not increased anywhere near that.


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Old 10-28-2014, 10:00 AM   #138
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When I moved to America, back in '79, I knew that if I saved up just £100K, I could move back to England and live off the interest; such were my spending habits. When I achieved that number, my spending habits had changed, inflation had occurred, and I'd learned to accept my role in the land of cubicles. It was only last year that I realized that with a $2M net and readily available health care, that it was time to take a new plunge at the beginning of this year! So I vote for $2M!
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Old 10-28-2014, 10:01 AM   #139
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Mine is getting lower all the time, as the BS bucket becomes more full. It turns out they are nearly in-sync with each other

But I felt like I was over the hump when I realized the value of my retirement accounts at my target date in 2018, along with my FERS pension, would allow about $7K per month gross income. That would allow me to delay SS at 70, and DW would have a decent SS income if I pass first.
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