Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
How do you decide you've saved enough?
Old 05-12-2007, 08:08 PM   #1
Confused about dryer sheets
 
Join Date: Apr 2007
Posts: 5
How do you decide you've saved enough?

Hello everyone. I've been lurking for some time now, and have been considering my financial situation a lot lately. Since very few of my friends will talk about saving (you know, big house, 35k for a car, best clothes, vacations twice a year), I thought I would ask the opinions of complete strangers on an internet message board.

A little backgroud: I'm 32, single, and have around $475,000 in cash, MF, and stocks. Growing at 8% , that would be worth $4.1M at age 60 if I stopped saving now. I'm saving around 30% of my gross income each year and have a mortgage, but that is my only debt.

That being said, I also feel like I've been missing out a little on life up to this point, since I have been a saver. Should I ease up a little on the saving and start enjoying life a little? Not completely eliminating saving, but cut back to 15% gross income, and maybe go on a vacation or buy a new (to me) car. How do you make that decision?
__________________

__________________
spitting_llama is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: How do you decide you've saved enough?
Old 05-12-2007, 08:40 PM   #2
Thinks s/he gets paid by the post
 
Join Date: May 2006
Location: Largo
Posts: 1,945
Re: How do you decide you've saved enough?

Depends on what age at which you want to retire and at what spending level.
__________________

__________________
Buckeye is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-12-2007, 08:47 PM   #3
Recycles dryer sheets
 
Join Date: Dec 2006
Posts: 162
Re: How do you decide you've saved enough?

I think you have already answered the question in that if you feel the need to ask it, you probably feel a lacking. Enjoy yourself! You are already at a half million at a young age. As you said, you can still save, even half as much, so the portfolio will continue to increase.

It also is not an irreversible decision. Spend some more this year, and see how you feel. If you feel more complete, continue to do so each year. If you regret the spending at the end of the year, you can always throttle back some.

The only reason I would not do the above, would be if you wanted to ER as early as possible. You do not mention that as a concern, so it probably is not. We all need to balance enjoying today with saving for tomorrow.

Believe me, this advice is coming from a fellow avid saver, so I do not give it lightly. Unfortunately for me, almost no amount is enough, but I think we still do enough fun things to not feel deprived.
__________________
firewhen is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-12-2007, 08:48 PM   #4
Full time employment: Posting here.
Patrick's Avatar
 
Join Date: Mar 2005
Location: Northern, Florida
Posts: 925
Re: How do you decide you've saved enough?

Plan for tomorrow but live for today. Time for a vacation.

"Sha-la La-la-la-la Live for today..." the Grass Roots
__________________
Retired in 2006 at age 49.

"Who among us is smart enough to learn from the mistakes of others?" - Voltaire
Patrick is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 01:15 AM   #5
Recycles dryer sheets
 
Join Date: Feb 2005
Posts: 260
Re: How do you decide you've saved enough?

You definitely need to retain more to use for yourself now. If you feel like you're doing without - at this point, there is no sense in that.

I think it's worth it to be frugal so that you can start to enjoy life later. You've really done that already. I'm thinking that at a SWR of 4%, at 4.1 million you will be living off of far more than you do now - I say enjoy it. Life is too short to have the means and deny yourself just to do it.

And that's coming from one of the most frugal people ever-
__________________
virginia is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 01:23 AM   #6
Dryer sheet wannabe
 
Join Date: Apr 2007
Posts: 15
Re: How do you decide you've saved enough?

28 years is a long time to wait for retirement when you already have half a million. How about semi-retirement within the next 10 years? Enough time to build a million dollar portoflio to yield around $30,000 worth of dividends. That should cover your essential expenses, and income from semi-retirement is just play money.
__________________
www.FinancialJungle.com
Financial Jungle Guy is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 04:30 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Location: Los Angeles area
Posts: 1,432
Re: How do you decide you've saved enough?

I made my decisions based on wanting to be able to be FI as
quickly as possible, because early on in my career a number of
my coworkers were laid off (aerospace programming) and had
serious trouble getting new jobs. I did not want to be in that
position myself. This did not mean denying myself the things I
wanted, but I decided to make the things I wanted inexpensive.

When 4% of my investment $$ was equal to my annual spending,
I considered myself FI, but I did not retire because my job was
going along very smoothly.

Two years later in 2006, the dividends (2.5%) on my investment $$
were more than enough to live on when my working conditions went
from excellent to crappy. That is when I decided I had enough,
and retired. Being able to do so at 48 when i needed to made the
earlier sacrafices worthwhile.
__________________
learn, work, save, invest, fire
CyclingInvestor is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 05:20 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Re: How do you decide you've saved enough?

Using 4% SWR of the portfolio as a general guideline against expected general expenses. But also considering other factors and income streams like health care expenses, age, time to SS, Medicare, etc...
__________________
chinaco is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 08:27 AM   #9
Thinks s/he gets paid by the post
Helen's Avatar
 
Join Date: Oct 2004
Location: Portland
Posts: 1,354
Re: How do you decide you've saved enough?

spitting_llama,

You could certainly cut back on the savings for a while and catch up on your personal needs.

I've had to do that this year to put some money into my house. Had I not done this it would have cost me a lot more money in the long run.

At your age, there are probably a lot of things that could improve the quality of your life. For me, as I age, there is less and less I want in the form of materialism.

You are way ahead of the game, good going on saving so much at such an early age !
__________________
Helen is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 08:39 AM   #10
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Re: How do you decide you've saved enough?

It's too complicated a question for any stranger to answer for you, since we don't know your lifestyle expectations, financial obligations and a hundred other factors. But you still need some kind of ballpark rules of thumb to get you on track.

The one I always found most useful is to estimate what annual expenses (today's dollars) you think you will need in retirement, including health insurance, after taxes. Multiply that by 25 and you have a conservative starting point.

Sit down with FIRECALC and run as many credible scenarios as you can think of. You'll find that a consistent range of current savings seems to emerge.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 10:51 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,199
Re: How do you decide you've saved enough?

Another variable is how much you like or dislike your job.

Another possible useful piece of advice: Look at expenditures on a case-by-case basis. Would I rather buy this car, or retire 8 months earlier? Is it worth it to go to the movie theater for $15 versus get a DVD from the library for free and make popcorn at home.

IOW, it doesn't have to be an all-or-none decision on spending.
__________________
Al
TromboneAl is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 11:51 AM   #12
Full time employment: Posting here.
 
Join Date: Jun 2006
Posts: 718
Re: How do you decide you've saved enough?

"How do you decide you've saved enough?"


When my nest egg will generate enough to meet my yearly expenses. Along with X amount of cushion I feel comfortable with. We plan on the more conservative side of things.

I guess it comes down too how long do you want to take for FIRE.
__________________
Mwsinron is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 11:59 AM   #13
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Re: How do you decide you've saved enough?

Quote:
Originally Posted by spitting_llama
Should I ease up a little on the saving and start enjoying life a little? Not completely eliminating saving, but cut back to 15% gross income, and maybe go on a vacation or buy a new (to me) car. How do you make that decision?
It sounds like you already know you've slipped over the frugal line into deprivation!

T-Al's nailed it. Ask yourself if the object or experience you're spending the money on is worth your hourly rate.

Once you have your LBYM skills you can loosen the reins once in a while and live it up a little. You can always clamp back down if it's necessary but you'll probably find it's "easier" (more satisfying) to LBYM than it is to throw money around.

Spouse had an interesting observation the other day: "It's going to take as much time & effort to get rid of this ER portfolio as it took us to put it together!"
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 12:04 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Re: How do you decide you've saved enough?

you've been given some good answers - one word

Balance
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 03:37 PM   #15
Confused about dryer sheets
 
Join Date: Apr 2007
Posts: 5
Re: How do you decide you've saved enough?

Thanks for the replies everyone. I have no idea what FIRECalc is, but it sounds like a lot of you rely on it quite a bit. Maybe I'll go check it out.

I think another factor is the fact that I'm an actuary. I'm sure you all know how tight actuaries can be, so that is part of the reason I'm "money-wise". I really enjoy the people I work with, but am so-so on the actual job. While it can be challenging at times, which I need, a lot of the time it is very repetitive.

I agree I need to find a balance, but my life up to this point has been solely trying to further my career. Exams, overtime, special projects, they're all done so I can move up the proverbial ladder. I'm now at a point where I feel like I've worked hard, but now it's time to play a little. But I also want to retire early (how early, I don't know), buy a motorhome, and follow my favorite college football team. Choices, choices.

Dex, you're right, it's all about balance. Guess I'll have to figure that out.
__________________
spitting_llama is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 05:49 PM   #16
Moderator Emeritus
Khan's Avatar
 
Join Date: Aug 2006
Location: Pine Island, Florida
Posts: 6,868
Send a message via AIM to Khan
Re: How do you decide you've saved enough?

Quote:
Thanks for the replies everyone. I have no idea what FIRECalc is, but it sounds like a lot of you rely on it quite a bit. Maybe I'll go check it out.
A calculator.

Extreme lower left corner of the page.
__________________
"Knowin' no one nowhere's gonna miss us when we're gone..."
Khan is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-13-2007, 05:50 PM   #17
Full time employment: Posting here.
citrine's Avatar
 
Join Date: Mar 2007
Posts: 944
Re: How do you decide you've saved enough?

If you feel that you are missing out....then you are being too frugal.
The best words of wisdom that I have ever received:

The joy is in the journey.

There is a set amount that I save and invest....the rest I use for things that make me feel fulfilled and happy.....and make some donations to make the world a better place.
__________________
citrine is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-14-2007, 10:30 AM   #18
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Re: How do you decide you've saved enough?

Quote:
Originally Posted by Rich_in_Tampa
The one I always found most useful is to estimate what annual expenses (today's dollars) you think you will need in retirement, including health insurance, after taxes. Multiply that by 25 and you have a conservative starting point.
That's not quite right, you need to estimate your annual expenses, including health care AND taxes then multiplty that amount by 25. The difference being that any taxes due must be paid out of the portfolio and portfolio earnings.
__________________
MasterBlaster is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-16-2007, 07:47 PM   #19
Recycles dryer sheets
Arc's Avatar
 
Join Date: Sep 2006
Posts: 370
Re: How do you decide you've saved enough?

Quote:
Originally Posted by spitting_llama
Hello everyone. I've been lurking for some time now, and have been considering my financial situation a lot lately. Since very few of my friends will talk about saving (you know, big house, 35k for a car, best clothes, vacations twice a year), I thought I would ask the opinions of complete strangers on an internet message board.

A little backgroud: I'm 32, single, and have around $475,000 in cash, MF, and stocks. Growing at 8% , that would be worth $4.1M at age 60 if I stopped saving now. I'm saving around 30% of my gross income each year and have a mortgage, but that is my only debt.

That being said, I also feel like I've been missing out a little on life up to this point, since I have been a saver. Should I ease up a little on the saving and start enjoying life a little? Not completely eliminating saving, but cut back to 15% gross income, and maybe go on a vacation or buy a new (to me) car. How do you make that decision?
Yes
__________________
Arc is offline   Reply With Quote
Re: How do you decide you've saved enough?
Old 05-16-2007, 08:41 PM   #20
Thinks s/he gets paid by the post
Fireup2020's Avatar
 
Join Date: Feb 2007
Posts: 1,186
Re: How do you decide you've saved enough?

Yes.

Welcome.

Ditto to Citrine's post. Carpe Diem - but not at your financial goals' expense!
__________________

__________________
Make no mistake, my friend, it takes more than money to make men rich. - A. P. Gouthey
Fireup2020 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Money Mag: Can this Retirement Be Saved? deserat FIRE and Money 46 05-21-2007 01:02 PM
You probably need 25 to 30 times your current salary saved to retire?????? nun FIRE and Money 28 04-19-2007 09:21 PM
FIRECalc data dumps or saved runs for referencing during posts? Nords FIRECalc support 6 01-25-2007 07:09 AM
Maximum $$$ Saved in any given year Canadian Girl FIRE and Money 21 07-31-2006 11:58 AM
Saved everything, want 2b "Writer / Composer" JohnR Young Dreamers 0 04-13-2005 09:46 PM

 

 
All times are GMT -6. The time now is 12:49 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.