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How much is enough? (financial independence)


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I think it's been discussed before on this forum, but perhaps not for a while. Curious as to other thoughts on how much one needs to be financially independent. This will vary tremendously by location, children's educational obligations (or lack thereof), etc. But that's kind of the point and the perspective that I think would be interesting to hear. This is inspired by @Gregmal's ($1mm + side hustle discussion), which i think is too low. 

 

to the extent people come out much lower/higher, curious as to why.

 

this may be too personal for some, but contribute whatever you are comfortable saying. 

 

I tend to think in ranges, ranges that will vary based upon choices (such as where one lives)

 

House:                   $500K-$1.5mm (sunbelt good school district 3BR to high cost of living upgraded 4BR (but not NYC/SF)

 

Childcare/Education:    $100K-$1.0mm+ (low end, public school, pay for 4 years public university, high end, DC private school 10 years pre-college = $400K/kid + $250K college + potential grad school), childcare will be paid while working but is $3K-$5K/month, so is a big money pit.

 

Healthcare/LTC                 $500K-$1mm+ , all 3 of my grandparents that lived to old age  eventually moved into an old folks home that was about $300K to enter and $2-$3K/month ongoing, this was basically a form of long term care insurance, they entered as independent living and then got "upgraded" to progressively higher levels of care as they all succumbed to alzeimers/dementia or debilitating physical illness (but their payment stayed the same because of the entrance fee). the las survivor is 95 and has severe alzheimer's and requires $60K/year of additional care on top of this but that's more elective/because he (thankfully) can. 

 

Everyday life/legacy       $1mm-$3mm ($40K-$120K), $3K-$10K/month of spending money for all the other stuff of life like cars/food/etc. I think 4% rule is reasonable, not super bearish or bullish. 

 

Result: $2mm-$6.5mm+, one could argue I'm double counting house/LTC/healthcare because in theory the house could be cashed out to pay for that, so $1.6mm-$5.5mm

 

This is the range of net worths where i would feel comfortable stopping working (or at least traditional working). Obviously its a wide range, but I'm still pretty young (early 30's) and think leaving options open on some of the choices that will be made at various stages in life is a good thing. there's also a dynamic where unless one is retiring pretty early, you'll be covering certain of these expenses (like childcare/education) during your working years. Right now,  my life choices are probably in the middle range of house, unknown on education and healthcare (but bought house in a good public district), and middle range on everyday life. I expect the range to narrow over time. Also a lot depends on how long/what part of her field my wife wants to work in. she's been in grad school or low pay training for the last 10 years (certain fields are crazy!)

 

i've read all the mr money mustache posts and understand how some people do significantly less, but I'm not in the $1mm is enough camp by any means. 

 

 

    

 

 

Edited by thepupil
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We'll bite ..... just as a future marker.

 

Different stages of life, different expectations, different amounts required. Granny and grandpa doesn't pay to educate your kids, have to give them vacations, or provide survivors with an inheritance. Granny and grandpa are also not going to make it much past 90, and increasing numbers intend to pull the plug early based on a quality of life decision. For most; upon entering retirement at 65, there is maybe 25 years of life left at best. If a couple owns their house mortgage free, 2M in liquid assets run down over 25 years, is 80K/yr - anything earned on the 2M is bonus.  For most couples, 80K/yr + state pensions will be more than adequate.

 

Gran/grandpa will be living in a one-floor flat, somewhere modest, not the huge 3BR+ house; as mobility issues, dementia, cleaning/maintaince will force the decision. Much of the 2M will be equity released moving from mansion to something smaller. Should the decision be to live in a multi-generational household; less capital will be required, and it will go a lot further - as modest living assistance will be taken up by the family.

 

Inter-generational wealth transfer has limits, and it doesn't take much to corrupt beneficiaries.

Today, Richard Branson became the worlds first space tourist, he is 72, and a ride costs US 250K. Have to think that a great many future riders are going to be grans/grandads choosing to burn inheritances on earth orbits, vs just having their kids piss it away. Go granny!

 

SD

 

 

Edited by SharperDingaan
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Yea it obviously depends and perhaps my $1m was misleading as it was meant to indicate that hitting those financial thresholds by those ages is where you wanna be. By 30 years old $100k free and clear, $500k by 40, $1m by 50. The underpinning of my numbers was, 1) one takes out a 30 year mortgage on their primary residence by 30 years old(something not enough folks do), and 2) you can generate at minimum 8% returns(something that isnt that hard if you invest full time, IMO). So if you need a number, it depends upon the age you want to retire and what you actually consider "retirement"....basically, when you'll need to draw on the investment funds. But by 60, lets say you've done the 8% your $1M will be a small bit less than $2.2M, plus your home, whatever its value, is basically owned free and clear and fully available to tap into. IMO one can isolate these figures and side pocket them from daily expenses during the ages of 30-60 because they arent wild or unattainable. 

 

So essentially, you can have those things separate and nurture them, and separately make shit work with your cars/kids/education/vacations separately. Although I would definitely make the argument that if you have a side gig, lets say $2k a month, and your home is free and clear, $1M works for retirement. No living expense, $2k month spending money. $1m to invest/grow and occasionally draw from. Hard to see how $1m liquid and a shadow asset(home) isnt enough unless you're living like a savage. 

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Posted (edited)
1 hour ago, Gamecock-YT said:

your low ends could be a lot cheaper. 

housing: of course, though sunbelt RE is on fire! this amount is going up at a good rate regardless of whether one wants a $250K apartment or $400K or $500K house. 

 

education: if paying for 2 kids undergrad, less than $100K isn't happening (i get $130K for cheapest in state public, ~$50K of tuition and ~$80K of rent/food/etc)...cue the boomer "i paid for my college working in the bookstore" remarks.

 

healthcare: Fidelity estimate average couple spends about $300K on healthcare in retirement, which is lower than the $500K i put, but I'd want a lot of cushion here for reasons stated. being very old is very expensive in my experience. I don't think I'm wildly off and here, but am eager to hear others perspective. I just don't understand what people who have like $100K saved (or $1mm but w/o a large  'healthcare allocation') for retirement plan to do regarding healthcare. 

https://money.usnews.com/money/retirement/aging/articles/preparing-for-medical-expenses-in-retirement

 

everyday: too big a topic to discuss efficiently, people make lots of different choices. 

Edited by thepupil
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4 hours ago, SharperDingaan said:

We'll bite ..... just as a future marker.

...

SD

 

 

 

Who is "We"?  Are there multiple people that post using your account or is SharperDingaan always the same person?

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20 minutes ago, gfp said:

 

Who is "We"?  Are there multiple people that post using your account or is SharperDingaan always the same person?

We're private money, It's always the same person posting, and the 'we' is the extended family.

I'm the one responsible for its investment and the financial training of nephews, etc. Hence the marker reference.

 

SD    

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1 hour ago, Gregmal said:

Yea it obviously depends and perhaps my $1m was misleading as it was meant to indicate that hitting those financial thresholds by those ages is where you wanna be. By 30 years old $100k free and clear, $500k by 40, $1m by 50. The underpinning of my numbers was, 1) one takes out a 30 year mortgage on their primary residence by 30 years old(something not enough folks do), and 2) you can generate at minimum 8% returns(something that isnt that hard if you invest full time, IMO). So if you need a number, it depends upon the age you want to retire and what you actually consider "retirement"....basically, when you'll need to draw on the investment funds. But by 60, lets say you've done the 8% your $1M will be a small bit less than $2.2M, plus your home, whatever its value, is basically owned free and clear and fully available to tap into. IMO one can isolate these figures and side pocket them from daily expenses during the ages of 30-60 because they arent wild or unattainable. 

 

So essentially, you can have those things separate and nurture them, and separately make shit work with your cars/kids/education/vacations separately. Although I would definitely make the argument that if you have a side gig, lets say $2k a month, and your home is free and clear, $1M works for retirement. No living expense, $2k month spending money. $1m to invest/grow and occasionally draw from. Hard to see how $1m liquid and a shadow asset(home) isnt enough unless you're living like a savage. 

 

I definitely misinterpreted your original point, this makes more sense now. 

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I think the main thing is to keep it simple. Americans have become, by and large lazy, dumb, and entitled. Wonder why "Russians" and "Chinese" are effortlessly pickpocketing us with all these cyber attacks? Because their 5th graders are learning STEM and our high school and college kids are learning ideology based garbage and taking out massive amounts of debt for the "privilege". Financially, Americans dont get taught the right stuff and I cant help but conclude its deliberate because theres an awful lot of jerk offs in suites whom need their wrap fees and management fees. Wanna retire without ever worrying about saving excess funds? Or managing a retirement account? Stop feeling entitled to a brand new car and iPhone every 2-3 years....Save that $7500 a year and put it in an index fund. Start at 25.....Guarantee you'll be millionaire. Want to be doubly sure? Stop fuckin renting.....

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Here are some random thoughts that popped into my head: 

1.) how well do your assets compound? This will be a mix of skill and luck. If you are better than average at compounding ‘how much is enough’ for financial independence is much less than those who have no interest/skill. And the luck part is also influenced by skill (those with skill tend to also have more luck). Amazes me that more people do not figure this one out.

- financial assets

- real estate (i am a dummy with this bucket)

2.) how much do you spend? This is underrated. To state the obvious, the less you spend once you ‘retire’ then it follows ‘how much is enough’ will be less. Opportunity cost also plays into this, especially early in life (late 20’s and 30’s). $10,000 saved/invested in late 20’s is much better than $20,000 saved in 40’s). 

3.) timing of retirement (quitting your day job)? As it relates to where you are on compounding curve of your net worth. We have all seen the graph of compound interest. It starts slow for many years (the boring stage) and then does the hockey stick at the end (the exciting stage). Ideally, you want to pull the plug on your day job after your net worth is hitting the sweet spot on the compounding chart. At that point your returns will exceed your spending in retirement so your net worth continues to compound at a decent clip even after you retire. Getting your net worth to the inflection point on the compound interest curve is life changing (not just for you but your whole family). The earlier you get started building and compounding your net worth the better.... it greatly increases the chances you will get to the hockey stick part of the compounding curve. 
- if you retire at the exact moment your net worth growth each year = retirement spending requirements you will simply move sideways from a net worth perspective. Your math formula will say you have enough to retire. Not a bad thing. But no margin of safety. And more pressure to perform in terms of return. One or two bad years and you may need to find another day job. 
——————————
- here is a real life example. Here in Canada we are encouraged to save for our kids education via an account called RESP. Returns in the account compound tax free. Canadians are allowed to contribute a certain amount per child every year and the government kicks in a little extra (20% more back when i made contributions). So when my third kid was born i opened a self directed group RESP (for all three kids) and contributed $2,000 per kid x 3 kids = $6,000. The government kicked in 20% =$1,200 so i started with $7,200. I made no other contributions. My youngest is just starting university in Sept (oldest is going into 4th year and middle kid is starting 2nd year). The RESP has grown to $137,000 (we have started drawing it down). In Canada it costs about $100,000 for a 4 year degree at university (living on campus/away from home). So over the past 16 years my initial contribution of $2,000 is going to pay for about 1/2 of each of my kids university education. Crazy. Needless to say, we are VERY happy today with how everything has worked out. Saving $ early in life ($2,000 per child), planning (opening up the RESP), effort (learning about investing and working the plan over many years), not being able to touch the funds until recently (so they kept compounding). I keep telling my family and friends (mostly the younger generation now as i have given up on the older crowd) to figure this investing thing out... it can be life changing if you are any good at it 🙂 

Edited by Viking
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3 hours ago, thepupil said:

housing: of course, though sunbelt RE is on fire! this amount is going up at a good rate regardless of whether one wants a $250K apartment or $400K or $500K house. 

 

education: if paying for 2 kids undergrad, less than $100K isn't happening (i get $130K for cheapest in state public, ~$50K of tuition and ~$80K of rent/food/etc)...cue the boomer "i paid for my college working in the bookstore" remarks.

 

healthcare: Fidelity estimate average couple spends about $300K on healthcare in retirement, which is lower than the $500K i put, but I'd want a lot of cushion here for reasons stated. being very old is very expensive in my experience. I don't think I'm wildly off and here, but am eager to hear others perspective. I just don't understand what people who have like $100K saved (or $1mm but w/o a large  'healthcare allocation') for retirement plan to do regarding healthcare. 

https://money.usnews.com/money/retirement/aging/articles/preparing-for-medical-expenses-in-retirement

 

everyday: too big a topic to discuss efficiently, people make lots of different choices. 

 

well guess good thing those sunbelt states have lottery scholarships to help pay for college....cue the millennial "i paid for my college thanks to people playing the lottery"

 

https://www.gafutures.org/hope-state-aid-programs/hope-zell-miller-scholarships/

 

https://www.che.sc.gov/Students,FamiliesMilitary/PayingForCollege/FinancialAssistanceAvailable/ScholarshipsGrantsforSCResidents/PalmettoFellowsScholarshipProgram.aspx

 

https://www.floridastudentfinancialaidsg.org/SAPBFMAIN/SAPBFMAIN

 

https://scholarships.adhe.edu/scholarships/detail/academic-challenge-scholarships

 

or ya know, make them pay for it themselves. 

 

 

 

 

 

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1 hour ago, Gamecock-YT said:

cue the millennial "i paid for my college thanks to people playing the lottery"

 

Touché, I forgot about those. I had one of those options (Florida native, actually had  full ride to UF/other big state schools through a specific program). I wouldn’t want to count on my kid/s being as fortunate and would want em to have choices. But yes I should have hedged the “not less than $100k or so, unless you don’t pay or they get a scholarship”

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This my Hypothetical Financially Independent Numbers but I believe it's doable. 

 

 

House:      $700K-$1.5mm ( Bay Area still 🙂 )

 

Childcare/Education:    $100K?          If I'm financially independent, I don't think I will pay childcare.  Never thought about private schools. I went to very average public schools with 0 parental involvement and I did okay. My future kids will probably go to slightly better public schools and have parental involvement, they Should be more than fine.  I'm not going to budget for college.   My "income" will extremely low. They might be able to get need-based money. Sure, CSS profile looks at retirement accounts and home but not all colleges require CCS. They can look for scholarships, go junior college then transfer, finish in 3 years, etc. or just take on debt. If I taught them to be financially competent, 50-200k of debt shouldn't be That big of an issue...

 

Healthcare/LTC:      100-500k?                With Affordable Care Act, I actually pay very little for a Bronze HSA Plan. I think it's $30 a month with dental after all the subsidies. They look at Income, not assets. 🤷‍♂️ I'm 35. This law can change so it's hard to project future expense. If I get a major health issues, I imagine I will just drop my income lower and just get on Medicaid.  In my old age, if I'm not somewhat lucid, I'll end the misery myself. (I say this now but this can change )  

 

Everyday life: $1.1M just so my lower bound is $2 Million. I think I can go much lower.

 

 

I don't have expensive taste. 

 


EDIT: I expect some Social Security when I'm of age. 

 

 

 

Edited by fareastwarriors
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Posted (edited)
7 hours ago, fareastwarriors said:

Everyday life: $1.1M just so my lower bound is $2 Million. I think I can go much lower.

 

 

I don't have expensive taste. 

 


is this from higher withdrawal rate / returning investments? Or from spending less than $3K/ month?

 

wouldn’t taxes and maintainance on a place in Bay Area alone be $1k-$2k/month?
 

A quick check on Zillow shows a $990k 1981 2/2 in San Carlos has $12k/yr of property taxes (on top of $500/m HOA lol). (I don’t know the area so this could be a special case, just the first one I picked). So if you pay cash, you still are out $1,500/month.  https://www.zillow.com/homedetails/1-Elm-St-APT-202-San-Carlos-CA-94070/15636334_zpid/

 

Edited by thepupil
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7 hours ago, fareastwarriors said:

House:      $700K-$1.5mm ( Bay Area still 🙂 )

 

Childcare/Education:    $100K?          If I'm financially independent, I don't think I will pay childcare.  Never thought about private schools. I went to very average public schools with 0 parental involvement and I did okay. My future kids will probably go to slightly better public schools and have parental involvement, they Should be more than fine.  I'm not going to budget for college.   My "income" will extremely low. They might be able to get need-based money. Sure, CSS profile looks at retirement accounts and home but not all colleges require CCS. They can look for scholarships, go junior college then transfer, finish in 3 years, etc. or just take on debt. If I taught them to be financially competent, 50-200k of debt shouldn't be That big of an issue...

 

Healthcare/LTC:      100-500k?                With Affordable Care Act, I actually pay very little for a Silver Plan. I think it's $30 a month with dental after all the subsidies. They look at Income, not assets. 🤷‍♂️ I'm 35. This law can change so it's hard to project future expense. If I get a major health issues, I imagine I will just drop my income lower and just get on Medicaid.  In my old age, if I'm not somewhat lucid, I'll end the misery myself. (I say this now but this can change )  

 

Everyday life: $1.1M just so my lower bound is $2 Million. I think I can go much lower.

 

 

I don't have expensive taste. 

 

 

 

 

 

Yikes!  I get the whole John Malone school of building wealth without showing much in income but you can only keep your income that low for so long.  How are you even qualifying for conforming mortgages on all that bay area rental property with income so low that ACA premiums are subsidized down to $30/month?

 

Kids are more expensive that you are budgeting for.  Is there a mother for these hypothetical kids or is the mother still hypothetical as well?  If there is a mother, she might earn some income and spoil your plans.  She might also both earn income and spend, which double spoils those plans.

 

I wouldn't plan on building wealth while exploiting government subsidies intended for the working poor as your long-term plan - especially if you are planning to raise a family.

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Yea IDK, but the future with education in 15-20 year IMO will look very different. But otherwise, my take on that as someone with 3 kids is as follows:

 

1) you dont NEED to go to college, but it certainly helps. 

2) As Viking did, you can start saving decades in advance. For instance, one condo I own I put down ~$40k half a decade ago and earmarked that investment to fund most of my kids education. At the time my first son was just born so at minimum I had 18 years to grow it. Today, mark to market minus mortgage I have about $160k equity. You can also use the income from the property to fund some of the education cost. You can cash out refi. Lots of options.

3) Your kids can gets loans that you help them with, or pay yourself...my wife's father did this as they weren't super wealthy people...worked out just fine.

4) You can always go to the community school for 2 years and then transfer to big name school...this is the most efficient IMO. First two years of college everybody I know, myself included at least, spent partying and socializing anyway. 

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4 hours ago, thepupil said:


is this from higher withdrawal rate / returning investments? Or from spending less than $3K/ month?

 

wouldn’t taxes and maintainance on a place in Bay Area alone be $1k-$2k/month?
 

A quick check on Zillow shows a $990k 1981 2/2 in San Carlos has $12k/yr of property taxes (on top of $500/m HOA lol). (I don’t know the area so this could be a special case, just the first one I picked). So if you pay cash, you still are out $1,500/month.  https://www.zillow.com/homedetails/1-Elm-St-APT-202-San-Carlos-CA-94070/15636334_zpid/

 

 

The key question is when did you buy? Buying today or during COVID times, the property taxes are gonna be high since purchase price is high. Prop 13 favors those to who bought and stayed... San Carlos is a great place for professionals to raise a family but too expensive for me.  I wouldn't live in Marin, SF, San Mateo, and Santa Clara counties. Too expensive. 

 

I'm thinking more Castro Valley for decent school district and Pre-Covid, Pleasant Hill, or certain parts of Martinez in Contra Costa County. But honestly, I'm okay with San Leandro, San Lorenzo, and even Hayward in Alameda County.


Buying Today is a lot harder to make the numbers work in the Bay...

Edited by fareastwarriors
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4 hours ago, gfp said:

 

Yikes!  I get the whole John Malone school of building wealth without showing much in income but you can only keep your income that low for so long.  How are you even qualifying for conforming mortgages on all that bay area rental property with income so low that ACA premiums are subsidized down to $30/month?

 

Kids are more expensive that you are budgeting for.  Is there a mother for these hypothetical kids or is the mother still hypothetical as well?  If there is a mother, she might earn some income and spoil your plans.  She might also both earn income and spend, which double spoils those plans.

 

I wouldn't plan on building wealth while exploiting government subsidies intended for the working poor as your long-term plan - especially if you are planning to raise a family.

 

I'm not using conforming mortgages anymore. No income loans are back (!) but need lower LTV and higher rates...

 

My mistake here is I'm mix my current actual situation with my Hypothetical  financially independent situation. I wouldn't own any rentals in my Hypothetical scenario  since I wouldn't be able to afford it.

 

I grew up here as a poor immigrant so I'm used to not having/needing much. Even as I've gotten wealthier, I can't change. I got engaged last year ( 🙂 ) and she grew up nearly the same way. We have been together for 12 years. She knows what she's in for... You're right though she probably won't be as down for the lower end range but she Can Handle it just fine if we did though. 

 

I guess the only things we splurge on now is traveling but even then we are primarily using credit card points/miles for accommodations. For Flights, we get great deals on Scotts Cheap Flights or The Points Guy. We are like to walk around, eat, and experience the culture. it doesn't have to be super expensive. 

 

 

 


Yes, healthcare is a big issue. It's so expensive if you don't have an employer to subsidize it... However, I say if someone qualifies for government help, why shouldn't they take it? My ~$30/month is probably more extreme scenario but plenty of subsidies are available for different family sizes and income. See attached for federal and CA subsidies for healthcare. Medi-Cal is the CA version of federal Medicaid. (I strongly wish our governments crack down harder on blatant abuse/fraud of various programs more but that's a topic for another day...) 

 

 

 If you're only source of "income" is from capital gains or dividends, you can control it, more or less, and/or use some margin while rates are super low to pay for some living expenses.  

 

 

2021 FPL-chart.pdf

Edited by fareastwarriors
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I was playing around with the calculator on the CA exchange just now. Holy moly, the subsidies are insane. It must be because of all those bills that got passed: 

 

If you or the person you’re married to received unemployment insurance benefits for at least one week in 2021, and you report it on your application, your household will automatically qualify for a Silver 94 plan with lower deductibles, copays, and coinsurance — all for a monthly premium as low as $1 per person.
 
 

coveredca.png

Edited by fareastwarriors
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On 7/11/2021 at 11:54 AM, thepupil said:

I think it's been discussed before on this forum, but perhaps not for a while. Curious as to other thoughts on how much one needs to be financially independent. This will vary tremendously by location, children's educational obligations (or lack thereof), etc. But that's kind of the point and the perspective that I think would be interesting to hear. This is inspired by @Gregmal's ($1mm + side hustle discussion), which i think is too low. 

 

to the extent people come out much lower/higher, curious as to why.

 

this may be too personal for some, but contribute whatever you are comfortable saying. 

 

I tend to think in ranges, ranges that will vary based upon choices (such as where one lives)

 

House:                   $500K-$1.5mm (sunbelt good school district 3BR to high cost of living upgraded 4BR (but not NYC/SF)

 

Childcare/Education:    $100K-$1.0mm+ (low end, public school, pay for 4 years public university, high end, DC private school 10 years pre-college = $400K/kid + $250K college + potential grad school), childcare will be paid while working but is $3K-$5K/month, so is a big money pit.

 

Healthcare/LTC                 $500K-$1mm+ , all 3 of my grandparents that lived to old age  eventually moved into an old folks home that was about $300K to enter and $2-$3K/month ongoing, this was basically a form of long term care insurance, they entered as independent living and then got "upgraded" to progressively higher levels of care as they all succumbed to alzeimers/dementia or debilitating physical illness (but their payment stayed the same because of the entrance fee). the las survivor is 95 and has severe alzheimer's and requires $60K/year of additional care on top of this but that's more elective/because he (thankfully) can. 

 

Everyday life/legacy       $1mm-$3mm ($40K-$120K), $3K-$10K/month of spending money for all the other stuff of life like cars/food/etc. I think 4% rule is reasonable, not super bearish or bullish. 

 

Result: $2mm-$6.5mm+, one could argue I'm double counting house/LTC/healthcare because in theory the house could be cashed out to pay for that, so $1.6mm-$5.5mm

 

This is the range of net worths where i would feel comfortable stopping working (or at least traditional working). Obviously its a wide range, but I'm still pretty young (early 30's) and think leaving options open on some of the choices that will be made at various stages in life is a good thing. there's also a dynamic where unless one is retiring pretty early, you'll be covering certain of these expenses (like childcare/education) during your working years. Right now,  my life choices are probably in the middle range of house, unknown on education and healthcare (but bought house in a good public district), and middle range on everyday life. I expect the range to narrow over time. Also a lot depends on how long/what part of her field my wife wants to work in. she's been in grad school or low pay training for the last 10 years (certain fields are crazy!)

 

i've read all the mr money mustache posts and understand how some people do significantly less, but I'm not in the $1mm is enough camp by any means. 

 

 

    

 

 

 

Lot's of double counting here. House + Healthcare/LTC + Living expenses should be combined. You are not going to be vacationing, living at home, and going out to dinner while in LTC. If you plan to spend 100k a year in retirement then you have LTC taken care of. If you anticipate spending a long time in LTC, get insurance. A good LTC plan starting at 59 is $550 a month for a couple.

 

For healthcare an unsubsidized gold family plan in my state from Anthem is $600/month with a max oop of $8500- so $16k a year if you hit the MOOP. That is 400k to fund it in perpetuity using the 4% rule. Use an HDHP now when you are young and healthy and fund the LTC insurance and MOOP tax free. 

 

A good rule of thumb is just looking at income replacement. 

Take your gross pay and subtract out your savings multiply by 0.7 and divide by 0.04. (the .7 is a combination of lower tax rate (about .15 lower) and  less spending (0.15) in retirement). 

 

 

 

 

 

 

 

 

 

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I think it is very age dependent.  Even if you had $2-6M at age 30, you'd probably be better off keeping it invested for a few decades and living off of your working wages, than to retire and try to make it last the rest of your life.   At 65-70 years old retiring with $2-6M is a no brainer not only do you not have as much time left to spend it, but you also don't have as long to compound it anyway.  And you also don't have child/education expenses, you probably own your home(s) outright, and you don't have as much energy and motivation to work and further your career.   Now if you had 10 times that at 30, then you could live comfortably and keep a large amount invested as well.    So my number for when I would recommend you quit working increases exponentially as age decreases.

 

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Posted (edited)

Sorry if it wasn’t clear. I don’t mean to make this as about me as it has been. More curious to hear others numbers and rationale (like @fareastwarriors reply)
 

I recognize my numbers skew anxious coastal conventional striver.
 

Totally fair game to rip mine apart and point out I consistencies or double counting though.
 

Edited by thepupil
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I got caught up too before. I was working in nice office in downtown SF. Everyone felt poor and inadequate but once I quit and came back to my previous "working class" environment, then I realized people just make do with a shit-ton less and live their lives.


Look at the numbers we throwing are around here. Most people can't even imagine a number that big even in their retirement...  

 

Edited by fareastwarriors
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Yeah I mean could always lifestyle hack it to southeast asia/eastern europe and live well for not a lot. Healthcare in Thailand is decent and cheap. If you are an American, Vietnam offers a 1 year visa that only requires leaving the country every 90 days (currently with covid it's down to 30 days, so not sure if it will go back to 90 or not). Do an airbnb search for a place in Da Nang or Chiang Mai that you could live with...that's what $500 max? Build up a good stock of airline miles or prowl sites like secretflying to come home for holidays or when you get homesick. Get bored of Asia? Fly to Poland, Czech, Croatia, Georgia, Spain, and Greece for just a little bit of an increase in cost of living. What's all those expenses run you for a year? Hardly anything at all.

 

Want to come back to the states? Just keep your income low enough to get on the silver plan for the premiums mentioned above and rent an apartment in a LCOL state for a six months/year before you decide to do something else. 

 

Obviously this probably won't work with kids but just throwing out another option besides the endless rat race. 

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So maybe related but maybe too personal for some....but what do folks actually spend their money on? This is obviously different at various points in life. IE I won't be paying $100 for gymnastics lessons for my daughter forever. But outside of transitory shit. You're retired, whether it be at 50/60/70....what actual expenses would you have? Only ones I could think of are food(definitely) and fishing/golf....Own the boat and fishing is much cheaper, less than $10k a year for sure. And golf you can get memberships for under $10k as well. I guess travel...although I spend time where I want. Dont really have desires to do crazy traveling. Do you really need to budget for unlimited, never-ending happy hours at Margaritaville?

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