For those under 35, what is your magic number
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Well I am 33 and my current portfolio would allow me to retire immediately if I made the commitment to live a fairly Spartan life (20K per year after paying off the mortgage). The question is would I be able to keep up such a bare bone lifestyle for perhaps the next 50 years? No extra money for trips, or eating out, or going to the movies... What's the fun in (early) retirement if you can't enjoy living it up a little? Why would I want to live like that for the next 50 years (I hope) when I could work a few more years, build a nice size portfolio, give myself some cushion in case market returns lag or inflation picks up and not have to worry about counting pennies for the rest of my life? You said that having to work a few extra years to grow your portfolio would "take a lot of stress". Yes it might cost you 5 more years of stress. For me, retiring too early with too few dollars in the bank would create a lifetime of stress, constantly wondering if my nestegg will outlive me, hoping that my expenses won't increase too much, and praying that stocks won't go through an extended bear market.
haha
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I didn't even have that. I thought I was doing great- I had $10,000 at age 30. I went to see a banker about a loan- he thought I was a real lightweight. His lack of respect for my savings kind of woke me up.
I had this low net worth in spite of making pretty good money. I just loved to spend it. Living in LA I found lots of things to do with money that I preferred to saving it!
Ha
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
OP - I don't know if you have really thought through the possible expenses of retirement. I would not dream of retiring without at least $1m in today's dollars, and we're talking in addition to a fed gov't pension, stable health care costs, paid off housing and plans of mostly gardening and raising small livestock. When you don't know your retirement horizon - how long you will live - and you don't know what health care, taxes, inflation, etc will cost, it is much better to be prudent now than eating cat food later, IMHO.
Yes, people do it now, but people now still get SS and, some, pensions.
Yes, people do it now, but people now still get SS and, some, pensions.
Jay_Gatsby
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Just to be nosy a little more, but do your numbers include a spouse's income or accumulated assets? Are you the sole breadwinner in your family (assuming you have one). If you're not married, then your assets and savings rate are quite impressive for someone who is 27 years old.
Personally, I didn't start seriously saving money until I was 30, but I've made pretty solid progress in the last 6 years. If you add my wife's assets and savings rate to my own, we could ER in the next 2-3 years (with me at 38 and her at 34).
My numbers are for our household earnings, savings, and invested assets. My wife has worked off and on for a couple of years between going to school and having kids (and taking off around 5 months each time). My $1.4 million target number is for our family of 4 (2 kids age 2 and under right now).
Jay_Gatsby
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If memory serves me, you're a lawyer, right? The difficulty you may face is sustaining your level of earnings/savings. Many lawyers go through a transition period in their early-30s (after making partner, not making partner, going in-house, going to work for the government), all of which will affect future earnings and savings. The key for you now is to save as much as possible, and let compound interest do the rest.
I finished law school but opted not to practice law. I'm practicing as an engineer now. I hope to get my professional engineer's license in the next year and I expect the salary to jump up somewhat after that. I could have a transition period where I switch from private practice to a government/agency position though (along with a drop in pay and massive increase in time off).
So Justin ...
You're 27 years old. You've invested the time (and possibly money, if you did not get a full scholarship) in law school, which means you've also invested the time (again, if not money) in undergraduate education.
Upon graduation from law school you decided not to practice law. You have 2 kids and a spouse who works on again/off again since going to school and now taking time off for raising the kids. You have a portfolio (which sounds like it excludes home equity) of $330,000+ and are saving more than $60K+ per year. You work as an engineer.
And your parents gave you a total of $8,800 dollars, plus $75 per year in gifts.
"Impressive" is one word that comes to mind.
You're 27 years old. You've invested the time (and possibly money, if you did not get a full scholarship) in law school, which means you've also invested the time (again, if not money) in undergraduate education.
Upon graduation from law school you decided not to practice law. You have 2 kids and a spouse who works on again/off again since going to school and now taking time off for raising the kids. You have a portfolio (which sounds like it excludes home equity) of $330,000+ and are saving more than $60K+ per year. You work as an engineer.
And your parents gave you a total of $8,800 dollars, plus $75 per year in gifts.
"Impressive" is one word that comes to mind.
I think everyone has their own definition of help from parents. Some people seem to ignore the fact that their parents paid for their first cars and college education/s and just focus on the monetary gifts. Well, IMO, those "other" gifts are a lot help for a young person but it is not always included in their definition.
Sure - everyone has received SOMETHING from their parents. Even those folks who were abandoned at birth received the gift of life.
Any typical kid who grew up in a non-abusive house received ~17 years of a roof over their head and food in their bellies. Usually education. Sometimes good morals. Those are all worth a good deal. The non-monetary things my parents have given me far exceed in value the monetary gifts they have given me during my adult life (after age 17).
As a side note, my parents did let me use the family station wagon until I was 17, at which point I turned in my license due to insurance being too expensive. I didn't drive for the first two years of college and depended on bumming rides, the city bus and the college's bus system, and getting rides from my parents.
My first car (and only car so far) I bought on my own during college. I was lucky to find very good employment teaching and researching as an undergrad that typical undergraduates were not able to come by. I also applied for (and obtained) competitive research grants and approximately 11 different scholarships which helped a lot. However, most of that scholarship money went towards my tuition at the school of investing (I bought a bunch of dot.com stocks back then ON MARGIN and lost essentially all of my hard-earned scholarship money that way).
I don't think I will ever pull the plug completely - I'm way too enterprising. But, I will pull the plug from the corporate world and focus on things which I purely love, and if it requires 'work' then so be it. Of course, I'm only 25 so my thinking may change drastically in 5, 10, 20 years.
3 million is my goal; 5 million would be ideal.
Justin - I was originally set to go to law school after college, but clerked at a firm the summer beforehand and once I went to orientation I pulled out. I was not 100% about it - getting the JD would have been cool, but I knew I didn't want to practice and could not justify following through with it. Curious why you decided not to practice, and if you knew about this during 1L, 2L, etc.?
3 million is my goal; 5 million would be ideal.
Justin - I was originally set to go to law school after college, but clerked at a firm the summer beforehand and once I went to orientation I pulled out. I was not 100% about it - getting the JD would have been cool, but I knew I didn't want to practice and could not justify following through with it. Curious why you decided not to practice, and if you knew about this during 1L, 2L, etc.?
Who are you to judge what number works for me or others? Talk about ridiculous.
Some people may WANT to live "extravagant lifestyles" in retirement.... in fact for me that is the whole point. I want to retire and live the life I dream of - the last thing I want to "look at" when I retire is "where cuts can be made."
The main reason I am aiming to FIRE at 48 (18 years) is to be young enough to do and enjoy all the things I love - travel, golf (as in everyday), going to the lake (boat), etc. I would never even consider retirement if it meant just getting by, I'm going to have fun!
Some of us plan on living for more than a handful of years into the future, and are aware of what inflation does to our money.
My number, which I admittedly pulled out of thin air, is $4 million. That's a figure where I would be comfortable knocking off for good today, be able to maintain a comfortable lifestyle (including health insurance premiums and the like, as I'd have no more employer to pay those for me!), and be able to continue to add value to my protfolio to withstand the ravages of inflation.
I think it's silly to figure that you want to live a lifestyle of $XX,XXX per year in today's dollars, reach a number that will provide that, and then call yourself done. Stuff happens. You could be in a terrible car accident, or suffer some degenerative disease, or get sued. I couldn't be really comfortable without a cshion over and above my basic needs. And I also don't plan on dying at any particular age, reaching that age, running out of money, and still being strong and healthy. You can't take it with you, but I'd much rather die with a bunch of money in the bank (without having lived cheaply!) than to run out. I may not have any heirs, but I could sure leave that money to an organization I support. I wouldn't mind people going into a Humane Society decades from now and wondering who the hell was jnojr and boy he must have loved animals to have left $1,000,000 to care for them!
My number, which I admittedly pulled out of thin air, is $4 million. That's a figure where I would be comfortable knocking off for good today, be able to maintain a comfortable lifestyle (including health insurance premiums and the like, as I'd have no more employer to pay those for me!), and be able to continue to add value to my protfolio to withstand the ravages of inflation.
I think it's silly to figure that you want to live a lifestyle of $XX,XXX per year in today's dollars, reach a number that will provide that, and then call yourself done. Stuff happens. You could be in a terrible car accident, or suffer some degenerative disease, or get sued. I couldn't be really comfortable without a cshion over and above my basic needs. And I also don't plan on dying at any particular age, reaching that age, running out of money, and still being strong and healthy. You can't take it with you, but I'd much rather die with a bunch of money in the bank (without having lived cheaply!) than to run out. I may not have any heirs, but I could sure leave that money to an organization I support. I wouldn't mind people going into a Humane Society decades from now and wondering who the hell was jnojr and boy he must have loved animals to have left $1,000,000 to care for them!
I started having doubts about whether I would practice law during my 2L year. My clerkship at a firm during the summer before 3L year solidified my doubts. I went ahead and finished school. Having a JD opens doors and leads to responsibilities that I otherwise would not have access to at this point in my career. Being out of the workforce and paying for school for 3 extra years definitely set me back significantly in the FIRE department. But I learned a lot and made good money during summers and from a consulting business I started on the side.
I've met many people who got JDs and then never practiced law.
Some incredibly well-to-do people I've met combined a law degree with something else... MD, engineering, etc. Your JD was absolutely not a waste, unless you so thoroughly hate law that you'll never have anything to do with it. For any business on Earth there's going to be a way to make out like a bandit by combining your JD with degrees and experience in other fields.
Justin & jnojr -
I completely agree; a JD is not a waste at all. The skill set that you learn, and the degree that one ultimately holds is extremely valuable beyond the traditional facets of legal practice.
For myself, I could not justify it before starting law school. I didn't want to incur the massive debt (parents paid for college but couldn't afford to pay for law school) and the opportunity cost of forgoing 3 years of work, so I went into finance right out of college. I was young(er) and thought I would be confined to the practice of law, plus my school was in a major city and 'ranked' a 2nd/3rd tier school so practical reasons held me back as well. That being said, I will go back to school for a professional degree in the near future, and still consider getting the JD (other option is a MBA).
From my experience working in finance, I have found it interesting how many clients come from non-traditional backgrounds (non CFA/CPA/MBA) - there are former neuroscientists, quite a few MDs, and JDs as well. Many guys I've met in hedge funds come from engineering and science backgrounds. It's refreshing to see those individuals break the boundaries of traditional roles of what they should do with their degree. At the same time, I know quite a few people (many friends) who pursued a JD or another degree and feel locked in and miserable - they won't take the risks and apply their knowledge and skill set in other lines of work. It reinforces my thoughts that education and degrees are simply tools - what you do with it rests on the individual.
I completely agree; a JD is not a waste at all. The skill set that you learn, and the degree that one ultimately holds is extremely valuable beyond the traditional facets of legal practice.
For myself, I could not justify it before starting law school. I didn't want to incur the massive debt (parents paid for college but couldn't afford to pay for law school) and the opportunity cost of forgoing 3 years of work, so I went into finance right out of college. I was young(er) and thought I would be confined to the practice of law, plus my school was in a major city and 'ranked' a 2nd/3rd tier school so practical reasons held me back as well. That being said, I will go back to school for a professional degree in the near future, and still consider getting the JD (other option is a MBA).
From my experience working in finance, I have found it interesting how many clients come from non-traditional backgrounds (non CFA/CPA/MBA) - there are former neuroscientists, quite a few MDs, and JDs as well. Many guys I've met in hedge funds come from engineering and science backgrounds. It's refreshing to see those individuals break the boundaries of traditional roles of what they should do with their degree. At the same time, I know quite a few people (many friends) who pursued a JD or another degree and feel locked in and miserable - they won't take the risks and apply their knowledge and skill set in other lines of work. It reinforces my thoughts that education and degrees are simply tools - what you do with it rests on the individual.
jIMOh
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I take home close to 48k per year. Most of this pays the mortgage and the IRA's. There is some which pays bills (utilities, but 1.7k of my checks go to mortgage and IRA... another $200 goes to utilities).
So it's not a number, it's a matter of the IRA's having enough to cover spending needed when the house is paid off.
If the IRA's/401k's have $2 M by age 60, no brainer, retire.
Based on comments on this site, I think I can retire on much less than that, though.
Wife also works and makes good $$. She has little ambition to retire.
So it's not a number, it's a matter of the IRA's having enough to cover spending needed when the house is paid off.
If the IRA's/401k's have $2 M by age 60, no brainer, retire.
Based on comments on this site, I think I can retire on much less than that, though.
Wife also works and makes good $$. She has little ambition to retire.
Good gravy. My food bill alone is almost $10K a year. I don't live large at all (and am quite slender), but apparently I don't live that lean either...
Bravo on keeping costs so low. I think I pay premium buying so much pre-packaged stuff, due to lack of time...maintenance I suppose on working too much. Oh, crap, and it's mostly organic...I'm screwed on food costs...
Maybe I can get the DW to go for a chicken coop and a garden
-Mach
Rustic23
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Jimoh, out of curiosity how many years till you turn 60?
DblDoc
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Maybe I can get the DW to go for a chicken coop and a garden
-Mach
Do it! You'd be amazed at how much you can save on groceries even after factoring in chicken feed and straw. And it is all organic - assuming you avoid pesticides etc.
And then there is the exercise you get and the just plain fun/satisfaction of growing your own food.DD
Mach - actually, raising some of our own food is part of our retirement plan. we're planting fruit trees on our property now (and some hardwoods we can harvest in 20 years for extra income) and plan to raise chickens and goats, as well as maintain a garden.The lake across the street has good fishing too. Especially if you're trying to eat organic/local/sustainable, food costs tend to take up a large chunk of the budget ... and as DD says, doing the work means you don't have to pay gym membership
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