The Number

[Canadian Girl]

Read an article about the the book titled "The Number" by Lee Eisenberg.  It appears that if you want to be comfortable 'but not rich', you'll need a minimum of $1 to $2 million.  $2 to $5 million will put you at a higher comfort level.  $5 to $10 mill categorizes you as rich, while $10 milliion+ puts you as ultra rich.

I think the majority of people on this forum wouldn't make it on Lee's radar as comfortable.....so are we in trouble?  Are we just fooling ourselves and in denial that 'things will truly work out'? 

Lee Eisenberg's book is causing angst!

 

[CybrMike]

Can u go into more detail in what he means by 'comfortable' vs. 'higher comfort level'?

 

[frayne]

Are you talking canadian dollars ?

 

[azanon]

I think the majority of people on this forum wouldn't make it on Lee's radar as comfortable.....so are we in trouble?

I see you have one post but you spoke as if you've been following the boards.  Assuming that's the case, do you not remember the net worth polls that were conducted a while back?   Seems like i remember the average person was reporting over a million in net worth, and several were reporting being multi-millionaires.

 

[REWahoo]

This book has been discussed at length here:

http://early-retirement.org/forums/index.php?topic=5422.0
http://early-retirement.org/forums/index.php?topic=5454.0

 

[justin]

I plan on having "1-2 million" when I ER. I think that would make me comfortably rich.

 

[Canadian Girl]

Can u go into more detail in what he means by 'comfortable' vs. 'higher comfort level'?

the article says "Comfortable" are people who scale back when they retire, dine and travel modestly, yet still have a nice life.

"Comfortable Plus" in the $2 to $5 million range are those with upgraded amenities, membership in a mid-priced club, maybe they get to keep their small second home.

"Kind of Rich" or $7 to $10 million are people who like to put on the Ritz, stay at the Four Seasons, shuttle between a couple of expensive hopes.

"Rich" or $10 million + are those who can afford to spend weeks abroad, belong to a gated golf community, charter jets.

ALSO....I am not a spammer. Just finally wanted to post something. I don't get to read alot of the posts, just started here and there. Only thing that I have found however is there are alot of people here who have slightly negative attitudes. Is there anything wrong with being financial well off as in the categories above AND down to earth too? Don't have to stereotype the well off.

Just some thoughts.....

 

[Canadian Girl]

I see you have one post but you spoke as if you've been following the boards.  Assuming that's the case, do you not remember the net worth polls that were conducted a while back?   Seems like i remember the average person was reporting over a million in net worth, and several were reporting being multi-millionaires.

How do you search or find the Net Worth Polls as per above as I have not come across this. Sorry for the question, bu I am pretty new at this.

 

[Sam]

Read an article about the the book titled "The Number" by Lee Eisenberg.  It appears that if you want to be comfortable 'but not rich', you'll need a minimum of $1 to $2 million.  $2 to $5 million will put you at a higher comfort level.  $5 to $10 mill categorizes you as rich, while $10 milliion+ puts you as ultra rich.

I think the majority of people on this forum wouldn't make it on Lee's radar as comfortable.....so are we in trouble?  Are we just fooling ourselves and in denial that 'things will truly work out'? 

Lee Eisenberg's book is causing angst!

The advantage of being older is the ability to decide for oneself what is proper.  If I think 500K is comfortable for me, then it is.  I don't need Lee to tell me that.  Conversely, if I think 4 million is not enough, then so be it.

I haven't read Eisenberg's book, but I know for sure his arbitrary definitions does not apply to me.

Sam

 

[veritasophia]

How do you search or find the Net Worth Polls as per above as I have not come across this. Sorry for the question, bu I am pretty new at this.

Here are a couple of links:
2006 ER Forum Current Net Worth Survey
Part 2: Watcha worth?
For future reference, simply go to the search function at the top of the page and type in whatever it is you are searching for. In this case: "net worth"

The advantage of being older is the ability to decide for oneself what is proper. If I think 500K is comfortable for me, then it is. I don't need Lee to tell me that. Conversely, if I think 4 million is not enough, then so be it.

I haven't read Eisenberg's book, but I know for sure his arbitrary definitions does not apply to me.

That's exactly what I was thinking. If your desire is to ER, you'd better know what your expenses (everything: COL, taxes, health care, travel...) will be in retirement. Once you know that, how much you need in investments is simply expenses*25, with maybe a little padding for "comfort".

 

[retire@40]

Read an article about the the book titled "The Number" by Lee Eisenberg.  It appears that if you want to be comfortable 'but not rich', you'll need a minimum of $1 to $2 million.  $2 to $5 million will put you at a higher comfort level.  $5 to $10 mill categorizes you as rich, while $10 milliion+ puts you as ultra rich.

I think the majority of people on this forum wouldn't make it on Lee's radar as comfortable.....so are we in trouble?  Are we just fooling ourselves and in denial that 'things will truly work out'? 

Lee Eisenberg's book is causing angst!

Those figures look about right to me.  $1-$2mil would give you $40K to $80K of income.  That average would work for me and I expect to live comfortably in retirement, but not extravacantly.  Good food, health care provisions, a car, some travel, and other basic living provisions are all I am looking for.  I'm guessing $50K to $60K in today's dollars should do it.

From what others have posted in this forum, I may be in the middle of the pack with my numbers, so I don't think anyone is in "trouble" here and "angst" might be too strong of a word for someone who has done proper ER planning.

 

[youbet]

I think the majority of people on this forum wouldn't make it on Lee's radar as comfortable.....so are we in trouble?  Are we just fooling ourselves and in denial that 'things will truly work out'? 

Well I don't know about that Canadian Girl.  $1 mil X 4% = $40K.  From what I've been reading here, there aren't very many posting that don't have or aren't planning to have $40K income in retirement.  I sure am.

What makes you feel that the majority of people on this forum aren't planning on having $40K income in retirement?

 

[astromeria]

There's $40k and there's $40k (or even $400k). Some of us have pensions or other deferred compensation in addition to The Number--and some don't, some have subsidized health insurance and some don't, some have dependent children (or parents) or other special expenses, some have a mortgage. Some live in a pricy house and could trade down in future, others already traded down (or never traded up ;-). Some do a little work for pay on the side. Basically, one size doesn't fit all.

 

[Austin_Explorer]

Basically, one size doesn't fit all.

I think I could fit very well into $1 billion and suspect that everyone on this board could be likewise. Anyone care to put me to the test?

 

[Martha]

I don't get to read alot of the posts, just started here and there. Only thing that I have found however is there are alot of people here who have slightly negative attitudes. Is there anything wrong with being financial well off as in the categories above AND down to earth too? Don't have to stereotype the well off.

Just some thoughts.....

I am curious. Negative attitudes about what? I am not sure where you are coming from here.

 

[unclemick]

Martha

In my lucky 13th year of ER - I have an extreme negative attitude toward W**K!

IN THEORY - after Katrina some W*** would have recouped the losses and brought my portfolio back to snuff.

IN PRACTICE - SCREW W**K!!!!!!!!

Can't even bring myself to say the word.

heh heh heh

 

[azanon]

Being rich is about 15% monetary and 85% state of mind.   Even when i was a "poor" college student with a work study, i felt rich.   I just focused on all of my potential and the opportunities before me.   I dont remember ever feeling poor, so IMHO, i dont believe i ever was poor. 

 

[Dog]

I read the article and the book. It was an entertaining read. I believe the point the book was trying to make is to get folks to think about what "their number is" and to plan accordingly. It was clear from many of his interviews that many people aren't thinking about it and they are uncomfortable even discussing it. I enjoyed the book and it didn't cause me any angst...just reinforced the need for clear thinking and good planning.

 

[justin]

Being rich is about 15% monetary and 85% state of mind. Even when i was a "poor" college student with a work study, i felt rich.

That's just what poor people keep telling themselves!

 

[modlair]

Don't want to turn things into an SWR debate, but whenever 4% gets too much attention in discussion I wonder if it might not be wise to recognize that 4% means zero Social Security in your 60's.

If you believe you will get at least something from SS, that 4% number is simply "wrong" for the risks being assessed and built into it. It would certainly seem that some non-zero magnitude of SS, for non-government workers, should be the norm.

Firecalc says even modest SS magnitudes take things to 5ish%. I understand the desire to be conservative, but after you've been pessimistic about health care expenses and ignoring a ramp down in overall expenditures as you age past 70, throwing in a presumption of zero SS seems quite a bit extreme.

 

[RockMiner]

While 3.5% may be a safer 40 year SWR, a non-zero SS seems like a pretty safe bet, and so I'm thinking that 4% is reasonable even for the hyper-cautious like my self. Lately I'm giving more weight to 'live a little' in my planning, thanks to Cut-Throat. Cutting back might be easier later in life after a walker is involved.

$1-2MM seems about right for "the number" to me as well.

 

[mrbill]

...I wonder if it might not be wise to recognize that 4% means zero Social Security in your 60's.

If you believe you will get at least something from SS, that 4% number is simply "wrong" for the risks being assessed and built into it. 

I'm glad to see someone suggest that a rate greater than 4% might be feasible...it seems too often that a suggestion of anything greater than 4% is just not Politically Correct

 

[haha]

I'm glad to see someone suggest that a rate greater than 4% might be feasible...it seems too often that a suggestion of anything greater than 4% is just not Politically Correct

This is one of those things where it really won't matter what other folks think, or what is politically correct or incorrect. What will matter is how events unfold.

Ha

 

[REWahoo]

This is one of those things where it really won't matter what other folks think, or what is politically correct or incorrect. What will matter is how events unfold.

Yep. It doesn't matter if it's politically correct, just that it's financially correct.

 

[preben]

The 4% rule is based on history only as already mentioned. That said it is ALSO based on a portfolio consisting of US large caps and US bonds ONLY  , based on someone blindly pulling the same amount+inflation nomatter WHAT the market does  and based on the WORST case scenario in almost 100 years of history  .

With a well diversified portfolio that includes small/value/foreign/commodities this study concludes that a SWR of 5-6% worked historically (for the period the study covers) and that is BEFORE even considering adjusting w/r for bad years in the market where other studies have shown one can add 1-2% in SWR. (easy read; scroll to the bottom for SWR results).
http://raddr-pages.com/research/CommodityFutures.htm

Yes; the future might be very different due to current valuations, peak oil or whatever, which might bring the catious FIREe back to 4% - but that is guess work at best.

A bit tired of seeing people talking about doom and gloom and fiddling with 1-2% SWRs. Naturally fine if one can manage with a 1-2% w/r (I can if need be) but if history is anything to go by then a much higher SWR is possible from a well diversified portfolio.
Cheers!