When do you feel comfortable declaring you've hit your number?

[CSdot]

This morning I found a retirement plan I created in 2008 (when I was 38) after my dad died at age 64.

My goal was not to die while still working, so I picked 12/31/2024 (the end of the year I turn age 55) as my retirement goal. My plans said by 12/31/2024:

(1) I will have a certain 7-figure amount in my 401(k) and Roth accounts;

(2) the house will be 100% paid off;

(3) kids’ colleges paid or fully funded; and

(4) I will have a certain amount set aside in non-tax deferred savings (not in a retirement account).

I assumed a conservative rate of return, then calculated where each account needed to be at age 55 and again at 60 to provide a safe inflation adjusted 6-figure burn rate from age 55 - 90. This was long before I learned of firecalc or this site.

I also planned out what age my wife and I would take SS, when Medicare kicks in, and some thoughts on post retirement positions I could pick up if I got bored with retirement.

I am 51 and wife is 49, and we have already satisfied all 4 of my 12/31/2024 benchmarks, plus some. I even added a SepIRA and some rental properties. I don’t want to jinx it, but my 12/31/2029 (age 60) account numbers are within grasp (my plan assumed I would let the tax deferred account grow untouched until 60 at the earliest).

So in theory I could pull the plug now, but between the time I made my plan in 2008 and now, I have left the rat race and instead name my hours at my own small low overhead business. I actually credit this move for my ability to move my timeline forward, as I multiplied how much money I earned working on my own vs. working at a large company with its large overhead. Maybe once covid is done I will slow down and start traveling.

 

[Lewis Clark]

.... If you're approaching a failure situation then you only need $10K/year for a year or two in order to avoid it. ...

Perhaps this is true most of the time, but not all the time.

I'd recommend reviewing these blog articles at Early Retirement Now's Safe Withdrawal Rate series for a different perspective on how flexible we may need to be in the worst historical situations. Of course - and fortunately! - the worst case rarely happens.

Part 23: Flexibility and Side Hustles!
https://earlyretirementnow.com/2018...to-safe-withdrawal-rates-part-23-flexibility/

Part 24: Flexibility Myths vs. Reality
https://earlyretirementnow.com/2018...l-rates-part-24-flexibility-myths-vs-reality/

Part 25: More Flexibility Myths
https://earlyretirementnow.com/2018...hdrawal-rates-part-25-more-flexibility-myths/

 

[Gumby]

Perhaps this is true most of the time, but not all the time.

I'd recommend reviewing these blog articles at Early Retirement Now's Safe Withdrawal Rate series for a different perspective on how flexible we may need to be in the worst historical situations. Of course - and fortunately! - the worst case rarely happens.

...

I am a strong proponent of his very last point. That is, I wage retirement the same way the US military has waged war over the past century - with overwhelmingly superior firepower. There is great flexibility inherent in an inexhaustible supply of ammunition.

 

[RunningBum]

4% is a guideline, not a rule. If someone wants to march into their boss's office the day they hit 25x, good luck to them, but I sure wouldn't have felt safe doing that, and I wouldn't advise anyone else to do that.

As for getting a part-time job as a fall back, I'd much rather work OMY than go back to some lower paying less skilled job later. If it turns out it was unnecessary, then I've got Fat FIRE and that ain't so bad.

If someone is at 4% and has just lost their job, or absolutely hates it, or it is endangering their life/health, maybe starting ER and dealing with one of those fall back cases if they have to is worth the risk.

If you're going to retire at 25x annual spending, you better have a very good handle on what your annual spending will be, including irregular expenses.

 

[street]

^ it always important to turn over every stone. In many cases here the 25x expenses they haven't including SS down the road. I really believe if you have 25x there is a high percentage they will be fine.

 

[Alex The Great]

4% is a guideline, not a rule. If someone wants to march into their boss's office the day they hit 25x, good luck to them, but I sure wouldn't have felt safe doing that, and I wouldn't advise anyone else to do that.

I agree with this statement. But what would be the right number, on your opinion?
I think there is no such a magic number that would perfectly work for everybody. But I still believe somewhere between 30X and 33X will work for most people.

 

[Time2]

I think many of us like myself never feel "comfortable" with a final number. I've extended my number so many times for no real reason that I've lost track. I think for the most part it's because I've been a saver for so many years, it's hard to all of a sudden stop and spend it.

I have more than enough money to last me the rest of my life but I still end up saving money every month for no real reason other than not wanting to waste it. Which in turn is probably why I have so much saved unfortunately.

I'm at 45X and still think about a market pullback. Who wants to watch $300,000 disappear, even though it won't make any difference in what I spend. It is still a game to watch.

 

[skyking1]

Many of us have significant pensions and social security as it relates to our current costs. For me it's not so much a number anymore, more like when can I afford to take the hit of the early pension with reductions. So I'm faced with this sliding scale of 25 x something that's variable, as weighed against y minus something else. It's a bit of a pain in the ass!

 

[RunningBum]

I agree with this statement. But what would be the right number, on your opinion?
I think there is no such a magic number that would perfectly work for everybody. But I still believe somewhere between 30X and 33X will work for most people.

I don't know. I read above that supposedly social security doesn't count, but it seems to me a lot of people say "I want to spend $X, I have a pension + SS = $Y, so I need to be able to withdraw $Z, which is $X-$Y, so my withdrawal rate on $Z is WR%." I don't know why you wouldn't want to include SS and pension in your calculations, though probably a discounted rate of SS seems prudent.

Other factors are how good of a handle one has on expenses, whether there's a lot of fat in the budget one would be willing to trim, and so on. A lot also depends on one outlook. Will the US, and the world, continue to have prosperous times, or will natural or man-made events make historical look-backs meaningless? Maybe the pandemic will drag on with different strains for many years.

Someone looking to ER at 40 faces a lot more uncertainty than someone at 62.

I give it a wider range, 20x to 40x. That's kind of off the top of my head. For me, personally, I was looking for just what you said, 30-33X. I don't remember exactly what I was when I pulled the plug but I'm pretty sure it was around 30.

 

[Time2]

I don't know. I read above that supposedly social security doesn't count, but it seems to me a lot of people say "I want to spend $X, I have a pension + SS = $Y, so I need to be able to withdraw $Z, which is $X-$Y, so my withdrawal rate on $Z is WR%." I don't know why you wouldn't want to include SS and pension in your calculations, though probably a discounted rate of SS seems prudent.

Well, SS certainly changes the picture, I have 4 years to 70 yrs old before I collect, the young wife has 9 yrs. Conservatively SS will cover 50% of our spending, if it's not discounted first.


We need to start socking it to the workers to fund SS at a higher rate to cover our butts. Or not .

 

[l8_apex]

My number was $1.6M net worth: $1.3 in investments, $0.3 in my home. That was the end product of closely watching monthly expenses for 3+ years, adding in a buffer, then figuring out passive income projections to get there. (I'm not in the stock market, my money is in rental real estate and Notes Receivables).

 

[skyking1]

Oops

 

[HI Bill]

OMY, and I am serious.

+1. My number keeps going up. 5 weeks ago, I figured it was high enough and gave notice!

 

[medved]

I am risk-averse and thus not comfortable with a projected 4% withdrawal rate. So my target was to get to a place where I was very confident that I could afford everything I want using a 2% withdrawal rate. Once I got to that place, I was confident that I could retire whenever I wanted to. Then, it was just a matter of deciding when I wanted to...

 

[Koolau]

I did it all wrong!

I never had a number. I based my FI (Financial Independence) on reaching the Megacorp required number of retirement points. Reaching that gave me two things: A modest - no COLA pension AND a retiree health benefits plan (heavily supplemented).

If I knew about the 4% rule I never "internalized" it. I still recall working through a dozen calculators - most of which said "pick a % you think your stash will grow in your portfolio." I never had a clue but lots of the calculators suggested 8%.

I never had a budget.

I never calculated my spending. I just knew I was saving a BUNCH of my salary, so apparently I wasn't spending it (duh!)

I had a good chunk of savings in the port. but (looking back) 4% would have not gotten me to my salary at the time (WITH Pension, 4% would have gotten me to salary, but I didn't know what I would spend, so...)

I didn't even think about SS. At age 51, I assumed I'd never get it.

Then a miracle (as often happens): The assignment that I had been w*rking toward for 25 years materialized. I actually made it happen. I created my own position and Megacorp bought it! So why would I leave when I was finally enjoying my new found nirvana? By the time Megacorp wised up and said "why are we paying this guy to do what he actually wants to do and why isn't he as miserable as everyone else - let's give him something he hates to do." I was wise to the 4% rule, had doubled my stash, had nearly doubled my pension and believed in SS.

The day (after) I got my "new" assignment, I gave my notice. All was well, but not because I did everything right. Only thing I really ever did right was to save, save, save. Everything else, I got lucky or blessed (I choose blessed but YMMV.)

 

[Markola]

Leaving one’s full time career need not be like flipping a light switch, i.e. you work like crazy until you “hit your number” and then do not work at all. We just got to a net worth range that allowed dialing back, like a dimmer switch, and then got on with our lives while making “Work” a smaller slice of the daily time pie.

 

[Alex The Great]

Leaving one’s full time career need not be like flipping a light switch, i.e. you work like crazy until you “hit your number” and then do not work at all. We just got to a net worth range that allowed dialing back, like a dimmer switch, and then got on with our lives while making “Work” a smaller slice of the daily time pie.

This is a nice strategy, but unfortunately not available to everyone. If you work as a software engineer on ridiculously bad product which involve the team across the globe, with extremely aggressive time line and everyone around mad about features delivered on time it is plainly not possible to reduce the effort or working hours. In fact, it is opposite: working more than 24 hours a day in a really desperate environment where everyone hate each other.

 

[Dtail]

This is a nice strategy, but unfortunately not available to everyone. If you work as a software engineer on ridiculously bad product which involve the team across the globe, with extremely aggressive time line and everyone around mad about features delivered on time it is plainly not possible to reduce the effort or working hours. In fact, it is opposite: working more than 24 hours a day in a really desperate environment where everyone hate each other.

Same concept here. Managed a group in multiple locations where there were strict deadlines on most deliverables. No part time managers in my world and no one would hire me as a part time or full time non manager.

 

[Markola]

This is a nice strategy, but unfortunately not available to everyone. If you work as a software engineer on ridiculously bad product which involve the team across the globe, with extremely aggressive time line and everyone around mad about features delivered on time it is plainly not possible to reduce the effort or working hours. In fact, it is opposite: working more than 24 hours a day in a really desperate environment where everyone hate each other.

My DW and I were both managers who left those six figure careers. She left her 9-5 physical office work 4 years ago, took a year off to detox, and landed an entirely different online, time and geography-flexible, 20 hour/week job that pays her about $17K/year. I think she discovered it through Indeed.com. It is nothing like the work she did before and completely fits her talent stack. She is a happy camper and her employer loves her. They want her to be a manager and she says “no way.” In fact, we’re renting down south for three months avoiding the Midwestern winter, and are very happy to do so.

I left my similar 28 year professional career in July. The calculators say that I should figure out how to earn $15K/year for 100% SWR success or do nothing for 90% success. I’m genuinely interested in some entrepreneurial activities to make the $15K dough. I have so many ideas that I need to narrow the list. None will involve bosses, reports, offices, performance reviews, commutes, bonehead C Suite decisions, or endless zoom calls.

So, we are in our mid 50s and, thanks to our portfolio, all we want to earn is between $17K to $32K/year. We could have stayed in our stressful management jobs several more years hoping to reach some 25X that (another $800,000) but we were unwilling. We could both fully retire with some modest lifestyle changes but we’re unwilling to sell our house or move from our city, even though we certainly could.

YMMV but our example is what I mean by a dimmer switch versus a light switch. I just want the OP to know that there is no need to get hung up on some big, single go/no-go number that keeps someone harnessed to a yoke they may evolve to no longer want. Resources and spending can be managed in service of living the life you want to live. Good luck.

 

[bonvoyage]

Last year, I discovered that we had saved about 50x our living expenses including a very generous padding for extras. That was enough for me and I retired. I am really enjoying retirement now.

My wife on the other hand, is still nervous about our level of savings (mind you, we are in the top 1.5% in terms of NW). Thankfully, she had no objections to me retiring but she has decided to keep working for a few more years. She is a senior exec in her company and is paid very well so I'm not complaining

 

[dheb]

I hit my number this year, in my invested assets. I've reached a number that FIRcalc says would have supported my spending until I'm 102, had I retired at any point in the past 120 years. I tried to be as cautious in my planning as I can: I omitted considerable equity in my house (I plan to sell the house, get a mortgage on a new one, and reinvest that equity), I ignored other assets, didn't assume I'll have income from another PT job, and I left any possible inheritance out of the plan. Any/all of those things would only boost my retirement funds.

So, I feel like, having reached my number (my goal might be a better term), if my investments declined tomorrow below that number while I'm still working, that's no different than if they declined right after I retire. It's a bummer, yes, but as long as future economic conditions aren't worse than any in the past 120 years, FIREcalc says that where I'm sitting right now, I would have been OK.

But I'd still feel more comfortable being above that number at the time I retire. So, yeah ... good question.

 

[urn2bfree]

Once you hit it, you're good to go. SWR takes the worst historical record into account so you shouldn't be worried about day to day fluctuations in the market.

This.

If you are truly "safe" to spend 3% for 40 years from $1,000,000($30,000) and adjust it up annually for inflation- but you do not spend it because you don't feel like it yet, that means for that "1st"year you spent 0% of your portfolio, and now you have 39 years left to spend (3% +1 year of inflation) let's say $30,660 in year 2--regardless of the fluctuation in your portfolio. Because Historically that fluctuation would have happened in Year 1 AND you would also have spent $30,000 that first year- and if history still plays out as it has- you would have been fine doing so. So surely you should not be punished for spending 0 the first year.


Technically- if you believe in the Historical Record as being predictive enough of the future to have an SWR (call it X%)- your first year SWR should be "safe" at X% of the highest value your portfolio ever reaches. before you spend it.

 

[gooddog]

I looked at your question from a different angle when we were trying to 'hit the #', mainly because we kept changing 'the #'. Finally settled on having 200k/year for the rest of our life without ever having to work. That is based on age 100. Once we hit that, it was a relief. Doing it that way has the advantage of getting to your goal quicker, as you age it takes less to hit the goal.

 

[MasterBlaster]

Regarding Thoughts on The Number

If you've never read Lee Eisenberg's (2006) book "The Number" I highly recommend it. Mr Eisnberg looks at many different aspects of thinking about your retirement nestegg. Mr Eisenberg was executive editor at Esquire magazine (among other things) so he knows how to write a relevant and entertaining dialog. Every year or three I dig it out of my stack and re-read it for the knowledge and entertainment value.

And I couldn't help notice that it's available for close to nothing (used) on Amazon (plus shipping)

https://www.amazon.com/Number-What-Need-Rest-Your/dp/0743270320

Do you know your Number? What happens if you don't make it to your Number? Do you have a plan? The Number is no ordinary finance book—it offers an intriguing and entertaining tour of weath gurus, life coaches, and financial advisers, and our hopes and fears for the future. The result is a provocative field guide to your psyche and finances and an urgently useful book for anyone over thirty.

The often-avoided, anxiety-riddled discussion about financial planning for a secure and fulfilling future has been given a new starting point in The Number by Lee Eisenberg. The buzz of professionals and financial industry insiders everywhere, the Number represents the amount of money and resources people will need to enjoy the active life they desire, especially post-career. Backed by imaginative reporting and insights, Eisenberg urges people to assume control and responsibility for their standard of living, and take greater aim on their long-term aspirations.

From Wall Street to Main Street USA, the Number means different things to different people. It is constantly fluctuating in people’s minds and bank accounts. To some, the Number symbolizes freedom, validation of career success, the ticket to luxurious indulgences and spiritual exploration; to others, it represents the bewildering and nonsensical nightmare of an impoverished existence creeping up on them in their old age, a seemingly hopeless inevitability that they would rather simply ignore than confront. People are highly private and closed-mouthed when it comes to discussing their Numbers, or lack thereof, for fear they might either reveal too much or display ineptitude.

In The Number, Eisenberg describes this secret anxiety as the “Last Taboo,” a conundrum snared in confusing financial lingo. He sorts through the fancy jargon and translates the Number into commonsense advice that resonates just as easily with the aging gods and goddesses of corporate boardrooms as it does with ordinary people who are beginning to realize that retirement is now just a couple of decades away. Believing that the Number is as much about self-worth as it is net worth, Eisenberg strives to help readers better understand and more efficiently manage all aspects of their life, money, and pursuit of happiness.

 

[Nightingale9]

How about this for a number: the greater of (1) 25 times the minimum amount you must spend each year, or (2) 17 times the amount you’d like to spend each year.