What does "enough" mean to you?

[captain picard]

Greetings,

I'm 37 years old, married, no children (but we will likely have one child within a year or two). I have real estate investments that produce approximately $85,000 of taxable income per year after business deductions. I live in the Great Lakes region, so aside from high taxes it's a low cost of living relative to most metropolitan areas. Intellectually I know that I could survive for the rest of my life on this amount of cash flow. I find myself pursuing the purchase of more and more rental property with the sole intent of increasing my eventual "retirement income." I live a lot like a retired person right now, but I'm always thinking that more is better and thus continue to buy.

For those who have already retired, what was your "enough" number? How did you settle on that, and how did you reign in the inevitable temptation to increase your passive income--even if you didn't really need it to live comfortably? I don't care about fancy cars or other status symbols, but I do have an unnatural obsession with passive income (e.g. the more the better).

What is "enough" for you? Any advice on how to slow down?

 

[fvfire]

Not yet retired. At one point it was was $1M, now I have $2M and think $3M is the answer. Not sure if it’s just inflation or hedonic adaptation.

 

[Jerry1]

Do you enjoy what you do? At 37, if you like doing the real estate gig and you're driven to purchase more, there's no need to worry about what is enough. Go get more.

For me, enough came when I didn't feel like working any longer. I looked at what I had and asked if it was enough. It was not enough to keep living like I did when I was bringing in the cash, but the changes I have to make far outweigh the cost of continued work.

Right now, you don't have enough. Get a couple to several million in the bank and make sure that child/children have enough for college and then you can start thinking about what is enough. BTW, it's a very personal thing.

 

[Bruceski44]

If we had more, we could do more for the church and the homeless and veterans and our family. So I endeavor to get more and do more.

 

[Luck_Club]

For me, enough came when the income gains just didn't seem worth it. In other words, spending 10-14 hours over 2 days to paint a house, isn't worth the stress of squeezing it into my day or giving up my cocktail hour, so I gladly pay $300-$400 to somebody else.

Same with my business. If I can't smell real big $$ potential, or I smell micromanagement, no interest.

Starting around mid forties, I found myself having to go way out on the risk premium to increase my income. When I first bought some property my incremental income increases were really good about 15%+ boost. Eventually the number began to like they would be less than 5%, and required more cash, so I got less interested. I'm still in the market, but only if I can see a home run. Marginal deals are done.

 

[Major Tom]

It definitely sounds to me that you're nowhere near ready to hang it all up. You say that intellectually, you know you could live for the rest of your life on what you have, but it's obvious that you enjoy the process of accumulating more passive income. For the time being, I'd say keep doing what you're doing. There may be a point in the future where the satisfaction of what you're doing for a living lessens, and the prospect of actually retiring starts to look pretty good.

You say that you have an unnatural obsession with increasing your passive income. If you ever genuinely feel that it is really becoming a problem and getting in the way of you enjoying your life, that might be a good time to take a look at that. I'm curious as to why you said that. Do you really feel that it's a problem, or perhaps you were just being self-effacing?

 

[Onward]

I never had a number. I saved and invested until the w*rking world had me ready to blow my brains out. Then I left.

When anything is better than another day on the j*b, it's easy to fit your lifestyle to your financial means.

It's a matter of survival.

 

[Scrapr]

Your "enough" number will change the minute after your child arrives. You will look at that $85k and think how will our little one survive without the fancy stroller/outfit/shoes/play dates/private school/etc.

Kids have a way of expanding their needs to your income

Keep going. a 300 unit apartment building will be almost enough

 

[pb4uski]

I never really had a number... but there became a point in time where I knew that by all reasonable measures that we had "enough" to continue to live our lifestyle for as long as we lived. At that point, further work was just enriching Uncle Sam and our kids and i decided that I had better things to do.

 

[RobbieB]

I, we've always had enough.

No budget, no tracking spending and no worries.

 

[travelover]

Dunno. I have more than enough to live on but I don't know how much it will cost me to die with dignity since I'm self funding my long term care. I'm hoping that an extra million will do it for both me and DW.

 

[Scuba]

Do you enjoy what you do? At 37, if you like doing the real estate gig and you're driven to purchase more, there's no need to worry about what is enough. Go get more.

For me, enough came when I didn't feel like working any longer. I looked at what I had and asked if it was enough. It was not enough to keep living like I did when I was bringing in the cash, but the changes I have to make far outweigh the cost of continued work.

Right now, you don't have enough. Get a couple to several million in the bank and make sure that child/children have enough for college and then you can start thinking about what is enough. BTW, it's a very personal thing.

Great advice. It is very personal and changes over time. For me, “enough” was when we became financially able to fund our lifestyle plus a substantial contingency for unknown costs.

 

[Lawrence of Suburbia]

When the moment arrives later this year, 'Enough' is: having dependable income (S.S., a small SPIA annuity, perhaps) which covers my basic costs (Medicare add-on coverage, condo dues, property taxes, insurance, power bill, etc.) so I'm never homeless. After that, a sustainable percentage of my portfolio (3%-ish?) taken out to pay for groceries, gas, car repairs, guitar strings, coffee, records, and general walking-around money.

I don't quite have 'enough' (you'd laugh if I told you how little), so, I'll be obliged to keep doing something to earn some cash early on ($3-400/month, say). I view this as a positive! Keeping engaged at the sharp end of life. I'm a pretty decent guitar player, so ...

The idea is, to maintain a bohemian style of life in a sort of modest, genteel poverty. To be an eccentric old man (why change now?)

 

[Danmar]

This is a good question with the answer very personal. Many factors will come into play such as do you enjoy your job, does working another year add a lot or only a little to your investment portfolio, can you “productively” spend more or is your current spending budget your “limit”, do you have a legacy objective?

In the end, these are questions that are more likely answerable when you get a little older. If I were you I’d just keep going, add to your stash, and see how things go. At you age, I hadnt even thought of these issues.

 

[Golden sunsets]

I think enough in your case should include additional passive income generated from a different source than real estate so that you are diversified.


Sent from my iPad using Early Retirement Forum

 

[pjigar]

It is very personal. Remember that starting a family will change a lot of dynamics (and numbers) going forward. Also don't look at the rental cash flow to feel financially secure. Look at really passive inflation-adjusted returns as in S&P 500 dividend which has been steady 2% for like forever. If you can live off 2% of the invested capital then you and your heirs will be able to live off of that nest egg forever. I strive to get to this point and then I can truly feel FI. Like I said, it is very personal. So for now, enjoy the journey and do what you love.

 

[MrLoco]

I think you have done a fantastic job at age 37. You are your own boss and have built and continue to build your real estate empire. That's the good news.

On the other side you are 37 years old. As I have posted before.....healthcare costs....are the elephant in the room. I know.....you are healthy,,,,now....but as we age...stuff happens. Do you have an ACA plan now? If your premiums/deductibles are manageable now.....think what they will be 20 years from now when you are in your late 50's?

Also you can live on $85,000/ year now, but inflation will quickly erode that number. MAke sure your rental increases keep pace with inflation. I know. Obvious.

Another X factor is your child. Between raising the little one and future college costs (if you plan to help out) you are probably looking at a number around $500,000 until he/she is out on their own. And what if you have more little ones?

Curious , as a real estate investor, do you currently pay into SS and /or MEdicare? Do you already have the required 40 qtrs. to qualify for future MEdicare/SS benefits? If not how will you mange this? Not sure since rental income is not considered earned income? If not then healthcare costs will be a factor beyond age 65.

I think you should keep expanding your real estate holdings cuz the eventual number you might need could be bigger than you think. Good luck.

 

[Midpack]

When we reached double the academic SWR without SS, I retired. But I was 57 yo, there is no way I’d have quit accumulating at 37 even if we’d had enough, I would have worked until at least 55. We would have lived below our means, but we would have spent more in the decades leading into retirement. And if I had still been enjoying my career at 57, I would have happily kept working. “Enough” was not solely a number to me.

 

[cyber888]

If you ditch the kid, $85000 could be enough. With a kids or kids, it probably wont be enough sooner than you expected

 

[iloveyoga]

We were busy working, saving, and raising a family and did not really think about it, until one of us decides they really don't like their job. This happened for us in our 50's. And then you take a look and say we have enough to sustain a modest lifestyle. I agree it is very personal.

 

[scrabbler1]

I was seeking a certain value of the quickly growing company stock I held. That amount, when cashed out, would be invested into a specific bond fund and buy enough shares to generate a desired monthly dividend income to pay my expenses with a decent cushion left over.


This target kinda sneaked up on me through 2007 and into 2008, as the markets began falling in 2008. The falling markets actually helped me reach my target sooner because the targeted bond fund's NAV dropped while the company stock price didn't.


Of course, being childfree (and single) helped make my plan very much doable, too.

 

[Ronstar]

At one time I had a “number” of 4m. (Never got there). Number wasn’t based on anything concrete - just a WAG number. As I got older, a “number” wasn’t important to me anymore. LBYM replaced the number. The number we finally settled on was DW’s age in which she maximized retiree benefits.

OP - you’re only 37 - and doing well in real estate. The tone of your post doesn’t show that you are ready for retirement. You’ll know when you’re ready when you don’t have the fire to accomplish any new financial goals. Keep up your real estate investments, and gradually diversify out of real estate as your desire for more $ wanes.

 

[gerntz]

Not needing to worry about the stock market crashing. I'd prefer not, but NBD.

 

[bradaz2488]

The definition of "enough" will vary greatly depending on your retirement age, expenses, AA risk tolerance, pension/SS and when you plan to die. I'm sure you will see a wide range of answers to this question since each person situation is different. For me it was 36X expenses w/ a AA of 60/40. I was 49 when I ER'ed and I assumed no SS and my plan has me living until 95. Now (5 years later) we are at 47X expenses thanks to Mr Market. Will not increase "plan" spending until age 60 when I "hope" to have a better understanding what to expect from SS.

 

[Helen]

OP, does your $85k involve effort, like being a landlord, or is it strictly passive? Do you have another job on top of this?

Our stopping point was a target age, we reached FI before we qualified for healthcare and pensions. We saved a lot while working, plus the small pensions, my retiree healthcare covered both of us and we each received a sizable inheritance.

For me, enough came when the income gains just didn't seem worth it. In other words, spending 10-14 hours over 2 days to paint a house, isn't worth the stress of squeezing it into my day or giving up my cocktail hour, so I gladly pay $300-$400 to somebody else.

I asked my spouse last night how much it would cost to hire someone to clean our house since we both hate to do it. She said she saw ads for $20 and $30 an hour and my response was, well why aren't we doing it! We are only drawing 1% per year from our portfolio (tho the market is really high right now) and that is without Social Security.