How Much is Enough

My goal was to maintain a lifestyle similar to what I had while working. I worked out the before and after numbers on a worksheet and was comfortable with what I saw. I cut back on a few things and starting paying attention to a budget but I am entirely happy with the result.
 
How much is enough?

Like many (I suspect), I stayed in the j#b a year or two longer than necessary from a financial perspective. The reason for sticking around had nothing to do with increased consumption in retirement but everything to do with peace of mind - I wanted enough fat so I don't have to worry about having to choose between unacceptable (to me) lifestyle sacrifices or going back to work for financial reasons later in life.

With 40+ years of retirement ahead of me, this required me to over-engineer our finances. I arbitrarily added 20% to our cost of living, assumed that DW would quit her part time j#b at the end of 2014 (even though she wants to carry on), ignored the fact that at some point DD1 and DD2 will be off the payroll and ignored a few small assets. If I had been more aggressive, I could have retired a couple of years earlier but I would have worried a lot more - for me the trade off was worth it.

The mental deal I have made with myself is that if after two years of early retirement our finances remain sufficiently ahead of where they need to be for our lifestyle, I will take the family to NY and London (which is very expensive from out here in HK) and give a bit more to some charities I support.

I FIRED two days ago at age 47. :D
 
Congratulations, trainee. You figured out how to take that big step! So you're staying to live in Hong Kong in retirement?
 
traineeinvestor said:
How much is enough?

Like many (I suspect), I stayed in the j#b a year or two longer than necessary from a financial perspective. The reason for sticking around had nothing to do with increased consumption in retirement but everything to do with peace of mind - I wanted enough fat so I don't have to worry about having to choose between unacceptable (to me) lifestyle sacrifices or going back to work for financial reasons later in life.

I FIRED two days ago at age 47. :D
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Yes, we have more fat than we need too. But I figure that we can roll over money and keep investing; will hopefully keep us well ahead of inflation and market worries.

Congratulations! It must feel amazing to have that wind in your hair!!!!
 
We reached our net worth goal this summer and officially entered "one more year" mode, we've agreed to work until at least next summer but I predict we'll push thru until end of 2014.

It is so hard because right now we are in peak earnings years (45 & 42) and really socking away a lot of money. It just seems foolish to walk away from that, when every additional year can permanently add that much more to the monthly budget. Things would be a lot easier if one of us would get fired or something. :)
 
tiuxiu said:
It is so hard because right now we are in peak earnings years (45 & 42) and really socking away a lot of money. It just seems foolish to walk away from that, when every additional year can permanently add that much more to the monthly budget. Things would be a lot easier if one of us would get fired or something. :)
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This scenario conjures up this image for me:
3774283713_f477b81203.jpg


;) :D
 
Agree with reaching the peak earning years (currently age 43). Leaving a job that is increasing your net worth by 2% a month average is hard to do. Just did the calculation for Sept and our net worth increased 6.48%! It will be very hard to give up this income in 2 years.
 
We made a bucket list of things we like to do.
We made sure that expensive houses and cars are not part of it.
We made sure that we are not going to keep up with others.

It comes to $50,000 / year from investments and pensions plus SS,
approx, 85-90K total.

I think we can live with that.
 
We had a very clear understanding of how much we spent, in after tax dollars. This was at the macro level, not the micro level. We did not have it down to how much we spend on, say, dining out or movies. I think understanding your current expenses, your projected expenses (adjusted for inflation), adding in dollars for non recurring items and increased items like dental are a key ingredient in determining how much is enough.

So we had the number. We added to that an estimated after tax number that we projected to spend on frequent travel. Added another factor to be conservative and called it a day.

After almost 3 years we are on the number...not by the month, or, year but over the three year period. What we really did not and could not estimate was our housing since we sold our house, travelled, and are not renting for a little while until we decide what we want.

We also found that we have more income than we anticipated and that the 'number' that we used for retirement savings was overstated. The other issue is lifestyle for us. We have been careful spenders all of our lives. Although we are travelling extensively we still cannot shake some of our frugal habits. That was a bit of a surprise.
 
1) Nobody has an answer to "How much is enough ?". Mo matter what they say, they just don't have an answer. Mostly... more is better So the question then becomes that oft-said tradeoff..."What do I have to give up now to have more later ?" and/or "Is what I have now enough for me given that I no longer want to work ?"

2) Personally, I told myself that I would retire when I had an X-Sized nestegg, but then I got it and my X-goal just got ever bigger. Lee Eisenberg writes very eloquently about this phenomenon in his book "The Number" about how laughable his initial nestegg goal was. That book, by the way is a great read if you are interested.

3) The level lifetime spending plans are probably best but may be hard to acheive in practical terms. The ESP-Planner (aka Larry Kotlikoff) approach uses the lifetime level spending approach to retirement and lifetime planning and forecasting. Were I smart enough to take the ESP-Planner advice I would now considerably up my spending and live "The Good Life" right now. I do live the good life right now, I just am not spending all I could.....yet.
 
The lifetime spending models often assume that spending more money now will make you happier. After a certain point of having your needs met, most research shows that spending more money doesn't buy more happiness.
 
Gumby said:
My goal is to have the same lifestyle pre- and post-retirement, both of them pretty darned good.
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Same here.
I live well on X dollars a year. When dividend income from our portfolio reaches X dollars after taxes I am ready to FIRE. BTW I am all my life 100% in stocks :)
and it looks like we will work few years past the FI date.
 
LARS said:
You know how much you need to retire? 50% more than you have... ha ha. The real point is it can become a moving target unless you can control/understand needs vs. wants. And only you can do that for your given idea of retirement.
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Agree, it is different for all. LBYM has always been a good route, while remembering to enjoy life. Too many colleagues I have known deprived themselves to excess only to keel over a couple of years after retirement or have health issues. Like everything else, balance and common sense serve best. Travel when you can, and remember that life is too short to miss living.

I read somewhere that time shifting is a major cause of human unhappiness. "I'll be happy when..."
 
RetireAge50 said:
However, we will likely work a few more years so that we will be able to "live the good life". Basically everything we earn from now until we retire can be spent on "wants" like travel, cars, giving, rv's, etc. etc.

How did you all decide how much "good life" budget you wanted in retirement?
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We sort of did it the other way around. We weren't all that frugal before DH retired and I semi-retired. Part of that was that we had 3 kids with lots of expenses.

So, some things like that we've sort of been there, done that and don't really want or need to do it now. (I had my Corvette when I was 34 and it was great but I don't miss it now).

Anyway, we are probably different from many here in that our spending now is much less than what we earned during our working years and that is with kids in college. In a few years, it will go down again.

We are already spending much less than we spent, say, 5 to 10 years ago. But, I don't see that our lifestyle has changed in any material way.

Part of it is the usual stuff (lower taxes, don't need to save for retirement, expenses related to work) but part of was conscious decisions we made that greatly reduced ongoing expenses but didn't really change our lifestyle. For example, we moved into a smaller house with much lower maintenance costs. The house is just as nice as the one we sold. We just cut a lot of things but our lifestyle hasn't really changed mostly because the things we cut weren't the things that really mattered to us.

We did leave room for some things discretionary we want to do in retirement but when we really looked at it, most of them weren't really that expensive.
 
Malcolm2 said:
Travel when you can, and remember that life is too short to miss living.

I read somewhere that time shifting is a major cause of human unhappiness. "I'll be happy when..."
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+1 to this. I don't have to know all the answers, and in fact, believe they might be a bit illusory anyway. But I know time itself is a precious commodity and being happy is too important to wait for it.
 
MasterBlaster said:
1) 2) Personally, I told myself that I would retire when I had an X-Sized nestegg, but then I got it and my X-goal just got ever bigger. Lee Eisenberg writes very eloquently about this phenomenon in his book "The Number" about how laughable his initial nestegg goal was. That book, by the way is a great read if you are interested.
Click to expand...
+1

My first concept of retirement came soon after I started work at an ultra-mega corp. I looked at my pre-401k thrift plan and was impressed how fast it was growing. I thought that if I could ever amass $200,000 I'd be set for life. At the time I made $12K and 8% government bonds were available. Times have certainly changed.
 
daylatedollarshort said:
The lifetime spending models often assume that spending more money now will make you happier. After a certain point of having your needs met, most research shows that spending more money doesn't buy more happiness.
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I recall reading recently that the median saturation point was 75K/yr, so assuming a 3% SWR, this works out to 2.5M USD minus 33x your annual income from pensions and social security.
 
We had enough when we retired but we have even more after three years of retirement.

We got rid of a lot of 'things' and expenses in order to transition to a retired life with lots of travel. The 3600 sq foot home has been replace by a 1400 sq. foot rental condo and we love it. Two cars down to one in the next month. Traded a suburban lifestyle to one just on the edge of downtown with great access to rapid transit.

So our projected expenses would have been the same, but our desired change in lifestyle has actually reduced our expenses. At the same time, the equity from our former home is earning a higher return than we anticipated. All good for the moment.
 
brett said:
We had enough when we retired but we have even more after three years of retirement.

We got rid of a lot of 'things' and expenses in order to transition to a retired life with lots of travel. The 3600 sq foot home has been replace by a 1400 sq. foot rental condo and we love it. Two cars down to one in the next month. Traded a suburban lifestyle to one just on the edge of downtown with great access to rapid transit.

So our projected expenses would have been the same, but our desired change in lifestyle has actually reduced our expenses. At the same time, the equity from our former home is earning a higher return than we anticipated. All good for the moment.
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That is close to our plans, but you are much further along. Good job.
 
My goal is to be like brett. When you travel do you keep home base condo or just pick up and leave?
 
RetireAge50 said:
My goal is to be like brett. When you travel do you keep home base condo or just pick up and leave?
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We are doing this next year too. But we will travel and not have a home base due to not knowing where we want to live.

I have costed it all out and it would be at least 30%-50% cheaper for us to travel than live somewhere (in Australia, where we are) and live a middle class lifestyle.

We have two young children and have decided to show them the world. We have committed to coming "home" and renting somewhere close to family for 3 months each year so the children can continue relationships with them, as can we.

But I am sure we will have many visitors along the way.

We are planning to start in Asia and then Europe, Italy and France especially, and then perhaps Season in different places, for 3-6 months at a time to help immerse ourselves into a community and a language and also keep costs down.

We will also have our "house" money rolling over and not being touched as an extra investment so we can come home or settle somewhere at any time.

I agree, the minimising and downshifting is liberating to say the least!!

Is anyone else planning something similar?
 
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