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What was your "safe" number?
Old 10-20-2014, 09:44 AM   #1
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What was your "safe" number?

I am fast approaching 1/2 million in savings. I feel like 500 is my "safe" number, that once I achieve it, I'm basically always going to have "enough" money to live on without drawing principal. It's also real easy to think about the rule of 72 and hitting 1 million in 10 years. (I'm 37)

My real hope is my savings/future anxiety starts becoming rational once I hit the 500 milestone.

Did others have a "safe" number, that once they go there, you just knew you were going to be ok no matter what?
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Old 10-20-2014, 09:48 AM   #2
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I used 1 million as my benchmark.


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Old 10-20-2014, 09:50 AM   #3
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My logical brain says that when I can live off a 2% withdrawal, I've definitely hit my safe number with room to spare. My emotional side sees us spending thousands of dollars and still gets worried. But I've only been fired for 1/2 year so maybe my emotional concerns will subside with time.
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Old 10-20-2014, 09:50 AM   #4
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500K is a safe number if one can live on 4% X 500K =20K/yr.

Sadly, most of us forgot how to live like college students. But I guess if we have to, we can relearn it.
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Old 10-20-2014, 10:01 AM   #5
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I'm thinking 750k€ in today's money, plus paid of home. As a bare-bones minimum. I'd probably still continue working for a few years, albeit maybe part-time, unless I'd really hate my job by then.
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Old 10-20-2014, 10:02 AM   #6
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Originally Posted by NW-Bound View Post
500K is a safe number if one can live on 4% X 500K =20K/yr.

Sadly, most of us forgot how to live like college students. But I guess if we have to, we can relearn it.
That's very different from how I think about it. I have (presumably) time to let it grow. I can have a mid life crisis, lose/quit my job, just do enough to make ends meet and that egg will likely grow, and when I need it will be enough to get by. My safe number isn't my "retire now" number, it's my "I can lose most of my earning power, and still be ok long term". Or another way I look at it is, I can reinvent myself by switching careers just because I feel like it and make almost nothing, and still be ok.
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Old 10-20-2014, 10:04 AM   #7
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500K is a safe number if one can live on 4% X 500K =20K/yr.
Only if you're comfortable with a 4% WR, which I would not be unless some other income stream was in the not so far away distance. Like, a pension, or SS. This is especially true with a budget that would not allow for much non-discretionary spending to be trimmed down if needed.
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Old 10-20-2014, 10:07 AM   #8
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That's very different from how I think about it. I have (presumably) time to let it grow. I can have a mid life crisis, lose/quit my job, just do enough to make ends meet and that egg will likely grow, and when I need it will be enough to get by. My safe number isn't my "retire now" number, it's my "I can lose most of my earning power, and still be ok long term".
I would guess that for most people, 'safe' means 'safe now', not 'safe if there's enough time for future market returns'. It sure does for me. What if you reach your safe number, then are RIF'd into a severe recession?
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Old 10-20-2014, 10:07 AM   #9
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You are doing well for your age. My feeling of safety came more from being debt and mortgage free. Very empowering to not be owing to any creditors.
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Old 10-20-2014, 10:11 AM   #10
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My safe number isn't my "retire now" number, it's my "I can lose most of my earning power, and still be ok long term". Or another way I look at it is, I can reinvent myself by switching careers just because I feel like it and make almost nothing, and still be ok.
That's what I call my "coasting" number. I didn't explicitly quantify this, but I remember when our portfolio was around 1M and thinking that we could just take part time / lower paid work and still be ok.
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Old 10-20-2014, 10:11 AM   #11
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My safe number was $1.5M in investable assets, plus another 100K annually in rental income. I have recently paid off a mortgage that gives me another ~$1,150 in cash flow, so I lowered my ‘safe’ number by the mortgage amount, so $1.3M. It really depends on how strong you want your bunker to be.

Keep in mind, I also have SS coming, and a small pension ($1,100 mo.) at 65, I am almost 55 now. I have a small VA disability amount, which also gives me free health care. My home is paid off, so I only need a small housing allowance. And I only have to plan on 35 years or so.

I want to be able to live off either my rental income, or my investment income, or my pension and SS. If one fails, the other two will be at least twice what I need.

I am not sure how $500,000 can last for a 37 year old.
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Old 10-20-2014, 10:13 AM   #12
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The closest thing I had to a "safe" number was the amount my company stock had to be worth for me to cash it out back in 2008. That number was $300k and that was the last piece of my ER puzzle which fell into place so I was able to ER nearly 6 years ago. The $300k would be added to my existing savings which included a good amount in my taxable account and what would become my rollover IRA. All 3 blobs of money have risen nicely in the last 6 years.
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Old 10-20-2014, 10:14 AM   #13
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I had anxiety about this until I pulled the plug and RE'd. Anxiety actually seemed to increase for me after reaching $1M. After RE'ing and no longer having the threat of a market correction delaying my retirement the anxiety has subsided. Now investing in simple balanced funds for a hands off approach.

I never had much paycheck to paycheck anxiety, however. We are DINKS with what turned out be stable employment and low expenses.

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Old 10-20-2014, 10:16 AM   #14
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I would guess that for most people, 'safe' means 'safe now', not 'safe if there's enough time for future market returns'. It sure does for me. What if you reach your safe number, then are RIF'd into a severe recession?
There must be a number when you get over it, further saving is about wealth, not necessities.

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You are doing well for your age. My feeling of safety came more from being debt and mortgage free. Very empowering to not be owing to any creditors.
I've never had any debt outside of a mortgage. I would love o pay off the mortgage, (171k), but mathematically I can't justify it @2.875%. When I factor in the write off, I'm at or below inflation.
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Old 10-20-2014, 10:17 AM   #15
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Originally Posted by Senator View Post
My safe number was $1.5M in investable assets, plus another 100K annually in rental income. I have recently paid off a mortgage that gives me another ~$1,150 in cash flow, so I lowered my ‘safe’ number by the mortgage amount, so $1.3M. It really depends on how strong you want your bunker to be.

Keep in mind, I also have SS coming, and a small pension ($1,100 mo.) at 65, I am almost 55 now. I have a small VA disability amount, which also gives me free health care. My home is paid off, so I only need a small housing allowance. And I only have to plan on 35 years or so.

I want to be able to live off either my rental income, or my investment income, or my pension and SS. If one fails, the other two will be at least twice what I need.
That, OTOH, sounds like a pretty extreme belt-and-suspenders approach to me. (Please don't take that personal, Senator.) You'll make your heirs very happy one day.
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Old 10-20-2014, 10:19 AM   #16
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Congratulations on nearing the half-million mark, especially at your age. It does sound like $1 million is actually your safe number but I know what you mean.

There was a discussion about critical mass here a few months ago that you might have missed: The concept of critical mass about when your portfolio starts growing more on its own than the contributions you make to it.
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Old 10-20-2014, 10:22 AM   #17
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my safe number is 2% of NW, averaging more than that in interest and dividend payments. And, some cash on the side for illness, new cars, vacations, etc. Stock dividends and SS should increase with inflation.....so I don't have to worry long term, if I live a long time. And, I want some left over......for my kids......just like my parents wanted a little left over for my sister and me.
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Old 10-20-2014, 10:23 AM   #18
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That's very different from how I think about it. I have (presumably) time to let it grow. I can have a mid life crisis, lose/quit my job, just do enough to make ends meet and that egg will likely grow, and when I need it will be enough to get by. My safe number isn't my "retire now" number, it's my "I can lose most of my earning power, and still be ok long term". Or another way I look at it is, I can reinvent myself by switching careers just because I feel like it and make almost nothing, and still be ok.
That's true. Your number is not at all shabby as you are still young.

By the way, I do not know about your circumstances, but when at your age I never did feel financially secure because I had young children to support.
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Old 10-20-2014, 10:28 AM   #19
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There must be a number when you get over it, further saving is about wealth, not necessities.
Certainly, but FOR ME, that number is a far cry from 500K. 500K will generate income around the poverty line. That's not my idea of safety.

But I'm not criticizing your thinking, mine's just different. (And my perspective is that of a family of four. Maybe, if you're a single in a low COL area with access to affordable healthcare, 17.5-20 grand before taxes is not that bad.)
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Old 10-20-2014, 10:30 AM   #20
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Felt safe enough to quit my job at 42 when NW went over 2M, 1.2M invested, no debt whatsoever, able to live on 2K monthly if needed (no kids helps) - AND a still working spouse making a six figure salary for at least another 5 - 10 years.

Seemingly "safe" scenario, but I was quite nervous about leaving my job.
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