What's your number? Why?

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gofigure
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Re: What's your number? Why?

Post by gofigure » Thu Mar 07, 2013 4:19 pm

My number is 62

If we were planning an early retirement the "number" you're asking about might be more significant.
But life as it is now isn't bad ..in fact it's pretty good..so there's no strong incentive for upsetting things as they are.
So the number you're asking about is what we'll have when we retire at age 62. According to the projections it'll be enough. :moneybag

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HomerJ
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Re: What's your number? Why?

Post by HomerJ » Thu Mar 07, 2013 4:30 pm

My number is based on what I predict my annual expenses will be in retirement x25, and then throw in a buffer...

With the house paid off, my expenses are about $5500 a month... x12 = $66,000 a year... Throw in a buffer, and let's say $80,000, so $2 million is mynumber... But I'm not sure what health care will cost.... but I'm also not including Social Security, so call those two a wash.

As I get closer and closer to retirement, I'll continue to refine my number.

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Abe
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Re: What's your number? Why?

Post by Abe » Thu Mar 07, 2013 4:31 pm

I have never discussed my personal business with anyone, but since I'm posting anonymously, why not. My networth is around 6 million. I don't feel like I have enough and don't think I ever will. I don't think I ever earned more than $50,000. per year and even then, it was just for a short period of time. My investment income exceeded my earned income a long time ago. I'm sure my living expenses are well under $40.000. per year although I don't keep up with it. I don't really know how I got to where I am except to say that I have always worked hard, saved and invested. If I had to come up with a number, I would say I would like to have 10 million. I can't really say why. I guess it's just a psychological thing.
Slow and steady wins the race.

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desertbandit442
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Re: What's your number? Why?

Post by desertbandit442 » Thu Mar 07, 2013 4:39 pm

ObliviousInvestor wrote:
KyleAAA wrote:I haven't determined my number yet, so I'd like to ask a related question. Is it worth it for investors in the 25-35 age range to go through the exercise or trying to come up with a number given the huge uncertainties involved? My current strategy is just to save as much as I can. A general secondary goal is to have $5 million in 2010 dollars at the point of retirement but I'm not going to base whether or not I retire on that because I don't really need anywhere close to that much to live comfortably.
I don't think it's crazy to calculate a goal number. For example, using the method I outlined above, as long as you re-run the numbers periodically, changes in spending are accounted for, changes in Social Security outlook are accounted for, and changes in real interest rates and life expectancies are accounted for.

But, to then try and calculate a "how much do I need to save per year" figure (which is what really matters in terms of action-steps you can take right now) requires an estimate of the dollar-weighted returns you'll earn between now and retirement. That's where things get really messy.
+1 for a goal. I sat down one weekend in 1983 and figured I would need to save/invest a minimum of $215,000 (in 1983 dollars) in addition to my planned retirement pension to live comfortably without SS. That 1983 figure adjusted for historical CPI (from 1983-2013) requires right at $500,000 today. I am retired with my pension and an investment above my 1983 goal, adjusted for inflation, and live comfortably on a little over $50,000 a year without touching the investment principal or SS. It may just be luck, but I attribute it to living within my means and having a planned goal that was adjusted, mainly for inflation, over time.

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Re: What's your number? Why?

Post by bigred77 » Thu Mar 07, 2013 4:58 pm

$10,000,000 or 60 yrs old

My goal number is 10 Mil for some of the same reasons already mentioned (Its a nice round number, its an extra digit than most peoples number and I'm narcissitic, I'm only 28 and my number needs to be huge in future dollars, its crazy to clalculate a realistic retirement number 30 years away but I'm a ironclad believer in ambitious goals) or 60 yrs old. When (If) i hit 60 and I'm not yet retired I plan to hang em up and make do with whatever I got.

My plan to get there: I already save 40k per year for retirement and I hope to increase that number by at least 1% each and every year I work. I'll save more if I have a windfall (basically if any of my stock options suddenly become significant, there will be no inheritance). I will stay the course with my boglehead porfolio moving from 80/20 now 60/40 by age 60. I will take whatever return the market gives me (I plan for 6%-10%) over the long term. I will stay out of all debt besides convential fixed rate mortgages (only 1 at a time).

After that all I have to focus on is praying for good health and trying to stay employed.

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Re: What's your number? Why?

Post by reggiesimpson » Thu Mar 07, 2013 5:31 pm

Hmmmm? So many folks talking about their "number" today on the Forum. What happened? The Dow hit a high or something?

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Abe
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Re: What's your number? Why?

Post by Abe » Thu Mar 07, 2013 5:38 pm

reggiesimpson wrote:Hmmmm? So many folks talking about their "number" today on the Forum. What happened? The Dow hit a high or something?
I don't care what the Dow does.
Slow and steady wins the race.

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Re: What's your number? Why?

Post by Gill » Thu Mar 07, 2013 5:58 pm

Abe wrote: My networth is around 6 million. I don't feel like I have enough and don't think I ever will. I don't think I ever earned more than $50,000. per year and even then, it was just for a short period of time.
How old are you? That is an impressive number on your earnings. Possibly you are well on in years and have had a long time for your savings to compound.
Bruce

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Abe
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Re: What's your number? Why?

Post by Abe » Thu Mar 07, 2013 6:01 pm

MBMiner wrote:
Abe wrote: My networth is around 6 million. I don't feel like I have enough and don't think I ever will. I don't think I ever earned more than $50,000. per year and even then, it was just for a short period of time.
How old are you? That is an impressive number on your earnings. Possibly you are well on in years and have had a long time for your savings to compound.
Bruce
I'm 69 years old.
Slow and steady wins the race.

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stemikger
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Re: What's your number? Why?

Post by stemikger » Thu Mar 07, 2013 6:05 pm

pennstater2005 wrote:
bobcat2 wrote:Rick Ferri writes.
I find that most people who have lived an modest middle-class lifestyle can live well in retirement if they accumulate $2 million in an investment portfolio (2012 dollars).
The latest numbers I looked at showed that about 3% of American households at retirement have portfolios of $2 million or more. So the working definition of "modest middle-class lifestyle" being used here is the top 3% or so of the US wealth distribution. In this case what happens to the lower 97% who have failed to reach "modest middle-class status"? :D

Median family income in the US is about $60,000 per year. How are a typical working husband and wife raising children supposed to accrue anything close to a portfolio of $2 million or more by retirement?

BobK
My wife and I make slightly over 60k per year. I don't have an exact number in mind. We save as much as possible while raising a kid with another on the way. It isn't easy but I know it will be worth it in the long run. Once the student loans are paid off look out cause I'm going to be a saving machine!
Nice!!! Listen to Dave Ramsey on this matter and make that student loan the enemy and a life stealer. When I recently paid off my mortgage I created a fake world where I was in race for my life to pay it off. It makes it much easier when you do this because at times it is very easy to get discouraged. Your student loan is a mad man that never stops chasing you and will use every method to make you give up. You on the other hand are a clever agent who knows this and never stops thinking of ways to cut him out of the picture. Good Luck Man!!! Slay that Dragon!!!
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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Rick Ferri
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Re: What's your number? Why?

Post by Rick Ferri » Thu Mar 07, 2013 6:11 pm

Here is a simple formula that I introduced in my first book, Serious Money:

1) Figure your annual spending in retirement
2) Subtract annual Social Security and other non-investment income
3) Multiply the remaining amount by 20.

That's close to your number.

Rick Ferri
The Education of an Index Investor: starts in darkness, finds enlightenment, complicates everything to find optimal, back to simplicity.

MnD
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Re: What's your number? Why?

Post by MnD » Thu Mar 07, 2013 6:22 pm

>$2M net worth, >$1.5M investment net worth
1 "years times 1%" ending salary pension
Zero debt and zero financial commitments to adult children
One house - either the present one or one purchased that does not significantly exceed the sale price of the present one.

Why? I think that this coupled eventually with two above average level Social security checks will fund a nice early (mid-50's) retirement.

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Re: What's your number? Why?

Post by LFKB » Thu Mar 07, 2013 6:44 pm

I didn't really have a number until this thread and I just decided my number is $5 million, but that certainly could change. I arrived at $5 million by $150k of annual expenses, which should be plenty. If I can continue to save at my current rate (no income appreciation) and I assume 8% growth, then I will reach that number around the time I am 37 (11 years from now).

I don't expect to achieve 8% a year though (I just picked that because it seems to be the standard number) so I expect it will take longer.

ResNullius
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Re: What's your number? Why?

Post by ResNullius » Thu Mar 07, 2013 6:45 pm

Rick Ferri wrote:Here is a simple formula that I introduced in my first book, Serious Money:

1) Figure your annual spending in retirement
2) Subtract annual Social Security and other non-investment income
3) Multiply the remaining amount by 20.

That's close to your number.

Rick Ferri
I'm curious. What asset allocation would you use to make this work for a normal lifetime.

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Re: What's your number? Why?

Post by texasdiver » Thu Mar 07, 2013 7:10 pm

Just curious if everyone is posting these numbers individually or as a couple.

My wife and I are roughly aiming for $2 million in actual retirement savings (403(b)s, Roths etc.). We don't have any particular WHY to explain that number, it's just a realistic number given our current portfolio and savings rate. The more likely scenario is that we will blow way past it as my wife is 7 years younger and pretty career-absorbed. She might well never stop working. She's on the faculty of a family medicine residency program and involved in all variety of community projects. I don't see pulling her away from it for a long time and given her personality will probably continue to dabble in her field well into her late 60s or early 70s. It's who she is. We'll have the mortgage free home, various other properties and other taxable investments and assets that I'm not considering part of the number at all.

We don't frankly need that much and are both happy living a pretty frugal life style. Travel is really our only vice. Even if we only got half way to our number I wouldn't be particularly concerned We would be fine and happy.

I get the sense that a lot of people here are just biding their time in less than satisfying professions until they finally hit their number and can push the eject button. For us we both enjoy our careers and aren't in any particular hurry to hit early retirement. Would hardly know what to do with it. Barring some sort of catastrophe, we're likely to blow well past our number just because neither of us (especially my wife) are looking to retire early to escape an unsatisfying profession.

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Re: What's your number? Why?

Post by Default User BR » Thu Mar 07, 2013 7:20 pm

reggiesimpson wrote:Hmmmm? So many folks talking about their "number" today on the Forum. What happened? The Dow hit a high or something?
There was another thread by someone who hit his number.


Brian

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Re: What's your number? Why?

Post by Johm221122 » Thu Mar 07, 2013 7:31 pm

Meg77 wrote:I think it's impossible and ridiculous to try to come up with any meaningful "number" even if you are close to retirement age but especially if you are under age 50. Any such calculation includes too many assumptions and too many volatile variables to be useful. I'm 28 and have no way to project future interest rates, inflation, average stock market returns, the timing of market crashes, health problems, layoffs, disabilities, wars, natural disasters, tax rates, expensive family situations, social security payouts or any number of other factors that may impact me between now and retirement. My plan is to save as much as I can, work as long as I can, and find a way to live off whatever I have when I can't work anymore.
I'm sorry, I can't agree with save as much as you can and then work as long as you can.You can estimate future needs with calculators to give you a basic idea.You are right life happens but I can still dream that one day I will have enough to be free of the 9 to 5 life (for me 11 to 7 ) and to accomplish this I save 25% of gross
John

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Re: What's your number? Why?

Post by YoungBoglehead » Thu Mar 07, 2013 7:48 pm

For retirement I have no clue. I'm 24.

I do know that I'd like to have 1 million within 10 years. With the income path I'm on it's entirely possible. I saved 30 grand in 2010 around age 21 and I've improved since. No help from parents, in fact, I help them financially. Once I hit my goal, I've always had an idea I'd start some charity and give most of it away, in order to motivate people who grew up like I did. I'd also like to buy a nice car (or two or three)

will it work? who knows. I'm on the right path though.
Started investing around 21, joined Bogleheads at 23.

bornloser
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Re: What's your number? Why?

Post by bornloser » Thu Mar 07, 2013 8:09 pm

Good topic. Number for me and wife is 4.2 m investable assets. I'll be there in 4 years, age 53. And that's my tentative retirement date. SWR around 3%, monitoring closely since it's potentially a significant time interval. Firecalc junkie, I confess. Couple of thoughts on some of the posts. I would never plan on "always" wanting to work or "always" loving your job or field. Things change. I enjoy my field but enjoyment has moderately declined and outside interest beckon. I have saved my entire adult life to be able to retire early if desired, so I think this a very nice option to have. I would like to simplify my life, spend more time with family and begin conversions to Roth. I would also say that planning is everything and I'm a big fan of a written plan (investor policy statement, etc). Sure, plans will be modified over time, but very few without a plan will reach their financial goal. I am also very opposed to continuing to pay the maximum into social security with the better than average likelihood of means testing for the tail of the baby boom like me and spouse.

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Re: What's your number? Why?

Post by peppers » Thu Mar 07, 2013 8:21 pm

umfundi wrote:
steve roy wrote:I have no set number.

I was going to retire the end of this year, with pension and social security and a good-size stash of cash, but the economy (and a child who is lolly gagging through college) changed my plans.

Now the strategy is to work an extra three years, then inform the kid the joyride is over, and (finally) to hook up and bail out. I'm shooting for $1.7 million in the "no more wage-slavery" accounts, which will involve the sale of principle residence and downsizing.

Here's hoping.
Steve,

Good luck with that! You make a plan, and then life intervenes.

I am also struggling with my 21-year old. When does the Bank of Dad expire? When do you say, "The UTMA (or 529) is yours, it's up to you to now to make the choices?"

Keith
Speaking as a father and grandfather: You gentlemen do realize that the Bank of Dad is open 24/7/365
:wink:

The last child got her graduate degree in 2009. However, I can see the grandchildren's education looming on the horizon. :|

Regarding the number, it will be when my wife and I say we have had enough and do not wish to work anymore. 8-)
"..the cavalry ain't comin' kid, you're on your own..."

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Marmot
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Re: What's your number? Why?

Post by Marmot » Thu Mar 07, 2013 8:23 pm

2.5 million , we achieved that number. Rick Ferri's recommendation is similar to our take on things. I am 55, may pull the trigger this year. Spouse still wants to work...ok with me:)

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Re: What's your number? Why?

Post by pennstater2005 » Thu Mar 07, 2013 8:38 pm

stemikger wrote:
pennstater2005 wrote:
bobcat2 wrote:Rick Ferri writes.
I find that most people who have lived an modest middle-class lifestyle can live well in retirement if they accumulate $2 million in an investment portfolio (2012 dollars).
The latest numbers I looked at showed that about 3% of American households at retirement have portfolios of $2 million or more. So the working definition of "modest middle-class lifestyle" being used here is the top 3% or so of the US wealth distribution. In this case what happens to the lower 97% who have failed to reach "modest middle-class status"? :D

Median family income in the US is about $60,000 per year. How are a typical working husband and wife raising children supposed to accrue anything close to a portfolio of $2 million or more by retirement?

BobK
My wife and I make slightly over 60k per year. I don't have an exact number in mind. We save as much as possible while raising a kid with another on the way. It isn't easy but I know it will be worth it in the long run. Once the student loans are paid off look out cause I'm going to be a saving machine!
Nice!!! Listen to Dave Ramsey on this matter and make that student loan the enemy and a life stealer. When I recently paid off my mortgage I created a fake world where I was in race for my life to pay it off. It makes it much easier when you do this because at times it is very easy to get discouraged. Your student loan is a mad man that never stops chasing you and will use every method to make you give up. You on the other hand are a clever agent who knows this and never stops thinking of ways to cut him out of the picture. Good Luck Man!!! Slay that Dragon!!!
Thanks stemikger! Were on our way.
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Rick Ferri
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Re: What's your number? Why?

Post by Rick Ferri » Thu Mar 07, 2013 9:50 pm

ResNullius wrote:
Rick Ferri wrote:Here is a simple formula that I introduced in my first book, Serious Money:

1) Figure your annual spending in retirement
2) Subtract annual Social Security and other non-investment income
3) Multiply the remaining amount by 20.

That's close to your number.

Rick Ferri
I'm curious. What asset allocation would you use to make this work for a normal lifetime.
Someplace between 20 percent in equity and 80 percent depending on each person's situation.

Best ballpark I can give you.
The Education of an Index Investor: starts in darkness, finds enlightenment, complicates everything to find optimal, back to simplicity.

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market timer
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Re: What's your number? Why?

Post by market timer » Thu Mar 07, 2013 9:55 pm

$500K

This would allow me to live a comfortable life on $15-20K/year. I expect to continue working in some capacity into old age, but having $500K in the bank means I can be very picky about what jobs I take. I'd feel much more comfortable with $500K and a part-time consulting type of job that brings in $50K/year than $3mn and no connection to the labor force. My goal was to have this amount saved before having children, and that seems very likely now. Obviously, this number would be higher if my wife didn't have a career of her own, and was relying on my income to support us all.

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Re: What's your number? Why?

Post by Paul78 » Thu Mar 07, 2013 10:18 pm

my number is pretty simple. I make enough to easily max 401k/ira but not enough to make significant contributions to retirement beyond that.

max out tsp every year
max out ira every year

buy a 500k house (very modest house in my area) in 5-7 years (100k down payment + 20 year mortgage)


Just to make it easy say there is no inflation and ira/401k limits do not go up.

Have about 850k in tsp/ira principle
about 150k in employer matching principle

1mil in principle +40k a year when I retire (pension). Pretty sure (hopeful) that will safely meet my needs in retirement.

also trade the 500k house for a bigger and better house (similar price) in a much cheaper (cost of living and tax wise) state

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stemikger
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Re: What's your number? Why?

Post by stemikger » Fri Mar 08, 2013 1:02 am

Rick Ferri wrote:Here is a simple formula that I introduced in my first book, Serious Money:

1) Figure your annual spending in retirement
2) Subtract annual Social Security and other non-investment income
3) Multiply the remaining amount by 20.

That's close to your number.

Rick Ferri
Thanks Rick, this was helpful.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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Re: What's your number? Why?

Post by twist101 » Fri Mar 08, 2013 7:13 am

Rick Ferri wrote:Here is a simple formula that I introduced in my first book, Serious Money:

1) Figure your annual spending in retirement
2) Subtract annual Social Security and other non-investment income
3) Multiply the remaining amount by 20.

That's close to your number.

Rick Ferri
Is this assuming retirement at age 65?

If you were to retire early at say age 55, would the multiplier number be higher?

STC
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Re: What's your number? Why?

Post by STC » Fri Mar 08, 2013 7:38 am

Im 33. Planning two retirement timelines:

Retire 53 w/ $4m in todays dollars
Retire 58 w/ $6m in todays dollars

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Re: What's your number? Why?

Post by ThatGuy » Fri Mar 08, 2013 8:44 am

I have two numbers built into my spreadsheet. The first one is for knowing I can retire at full retirement age. For this number I add up all of my guaranteed income streams, such as social security based on full amount if I didn't work another day, as well as dividends only from all investment accounts. When this number meets or exceeds my current take home pay minus savings and mortgage, then I'll know that I can retire at full retirement age without any problems.

I'm within spitting distance of this number despite being relatively young.

My penultimate number is based on 6% of my taxable investments plus guaranteed streams that are already in place. When my ultimate number is reached, I will reduce tax advantaged savings and ramp up taxable savings in order to fund an early retirement. As such, it includes the mortgage payment :). The idea is to bridge the taxable money into the tax advantaged money, which is why the high draw down percentage. This secondary number is subject to change as I get closer to hitting it, as well as the tax advantaged taxable split should there be significant tax consequences.
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Re: What's your number? Why?

Post by Rick Ferri » Fri Mar 08, 2013 9:01 am

twist101 wrote:
Rick Ferri wrote:Here is a simple formula that I introduced in my first book, Serious Money:

1) Figure your annual spending in retirement
2) Subtract annual Social Security and other non-investment income
3) Multiply the remaining amount by 20.

That's close to your number.

Rick Ferri
Is this assuming retirement at age 65?

If you were to retire early at say age 55, would the multiplier number be higher?
That would make sense. Perhaps 30x uncovered annual expenses. That's 10x more for the extra 10 years. I see a formula developing here.

Rick
The Education of an Index Investor: starts in darkness, finds enlightenment, complicates everything to find optimal, back to simplicity.

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Re: What's your number? Why?

Post by floydtime » Fri Mar 08, 2013 9:30 am

Rick Ferri wrote:Here is a simple formula that I introduced in my first book, Serious Money:

1) Figure your annual spending in retirement
2) Subtract annual Social Security and other non-investment income
3) Multiply the remaining amount by 20.

That's close to your number.

Rick Ferri
By this calculation, our number is zero (or slightly negative). However, I'm adding buffer money to cover us until we start getting SS.

EDIT - Oops, the previous post addresses exactly my situation...
Rick Ferri wrote:That would make sense. Perhaps 30x uncovered annual expenses. That's 10x more for the extra 10 years. I see a formula developing here.
But, no matter what the multiplier, we'd still be at zero unless the pre-SS number was separated out like this...

Number = ((Ann_Spending-Ann_SS) * 20) + (Ann_Spending * Years_until_SS)
"Do not value money for any more nor any less than its worth; it is a good servant but a bad master" - Alexandre Dumas

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Re: What's your number? Why?

Post by InvestorNewb » Fri Mar 08, 2013 9:46 am

Abe wrote:I have never discussed my personal business with anyone, but since I'm posting anonymously, why not. My networth is around 6 million. I don't feel like I have enough and don't think I ever will. I don't think I ever earned more than $50,000. per year and even then, it was just for a short period of time. My investment income exceeded my earned income a long time ago. I'm sure my living expenses are well under $40.000. per year although I don't keep up with it. I don't really know how I got to where I am except to say that I have always worked hard, saved and invested. If I had to come up with a number, I would say I would like to have 10 million. I can't really say why. I guess it's just a psychological thing.
Congrats on reaching this amount!

Can you share more about the steps you took to get there? i.e. what % of your salary did you save? are you a lifelong index investor? how old are you? Thx.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

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Re: What's your number? Why?

Post by Johm221122 » Fri Mar 08, 2013 9:58 am

InvestorNewb wrote:
Abe wrote:I have never discussed my personal business with anyone, but since I'm posting anonymously, why not. My networth is around 6 million. I don't feel like I have enough and don't think I ever will. I don't think I ever earned more than $50,000. per year and even then, it was just for a short period of time. My investment income exceeded my earned income a long time ago. I'm sure my living expenses are well under $40.000. per year although I don't keep up with it. I don't really know how I got to where I am except to say that I have always worked hard, saved and invested. If I had to come up with a number, I would say I would like to have 10 million. I can't really say why. I guess it's just a psychological thing.
Congrats on reaching this amount!

Can you share more about the steps you took to get there? i.e. what % of your salary did you save? are you a lifelong index investor? how old are you? Thx.
I'm very interested also. Give us the details, this is a great accomplishment
John

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Re: What's your number? Why?

Post by Garco » Fri Mar 08, 2013 10:25 am

Rick Ferri wrote:Having worked with thousands of people to help find their "number" for an investment portfolio, I can make a few observations:

Your "number" in saving depends on:

1) the percentage of retirement spending for basic needs, which cannot be reduced, and discretionary which can be reduced and is reduced with age.
2) other sources of income (pensions, rental income, inheritance, annuities, Social Security, etc)
3) whether other assets can or will be sold over time (land, second home, airplane, collectibles)
4) how much a person want's to leave behind for heirs or charity to inherit.

In very general terms, I find that most people who have lived an modest middle-class lifestyle can live well in retirement if they accumulate $2 million in an investment portfolio (2012 dollars). This is enough to supplement income from Social Security and perhaps other income sources, and assumes no burning desire to leave heirs with anything except what's left.

Rick Ferri
That's about how I figured it but I think the payout/decumulation strategy matters a lot for whether this number works. To provide assurance about #1 -- the basic needs -- may suggest use of an annuity with some substantial portion of the accumulation, in combination with the Social Security "annuity." I have some "found" money (inheritance) for a cushion. Rick's other formula works out to about the same figure for me.

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Rick Ferri
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Re: What's your number? Why?

Post by Rick Ferri » Fri Mar 08, 2013 10:34 am

Finding your number isn't hard once useful spending and income data is seperated from noise, and certain assumptions about leaving money behind et all are accepted.

Rick Ferri
The Education of an Index Investor: starts in darkness, finds enlightenment, complicates everything to find optimal, back to simplicity.

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HomerJ
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Re: What's your number? Why?

Post by HomerJ » Fri Mar 08, 2013 10:35 am

Grt2bOutdoors wrote:Not Rick, but if I wanted to continue living in my paid-off Northeast home if it were, in today's dollars, you are hardly well above a modest middle-class lifestyle. It's expensive to live here and that includes renting as well. Medicare doesn't pick up a lot of things, and if you have bad teeth though no fault of your own (genetic or just plain bad luck), you may find those $2K+ root canals to be a real budget buster.
There are a ton of people who live in that area who get by on much much less than you do... You are NOT middle-class.

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Re: What's your number? Why?

Post by HomerJ » Fri Mar 08, 2013 10:38 am

Rick Ferri wrote:You are correct in that this is an upper middle class number. I had written upper middle initially, then changed it because most people who are upper middle-class don't think they are. I was trying to adjust "modest" to what I believe someone who reads this board would consider modest.
Let's use the correct term on these boards please... Upper middle class is the correct description. My one beef with the Bogleheads is that many of them have no idea how well they are doing... People making $100k a year are not living a modest middle-class lifestyle... I have lived a modest middle-class lifestyle, and it was a lot lower than $100k a year.

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Re: What's your number? Why?

Post by ResNullius » Fri Mar 08, 2013 10:49 am

HomerJ wrote:
Rick Ferri wrote:You are correct in that this is an upper middle class number. I had written upper middle initially, then changed it because most people who are upper middle-class don't think they are. I was trying to adjust "modest" to what I believe someone who reads this board would consider modest.
Let's use the correct term on these boards please... Upper middle class is the correct description. My one beef with the Bogleheads is that many of them have no idea how well they are doing... People making $100k a year are not living a modest middle-class lifestyle... I have lived a modest middle-class lifestyle, and it was a lot lower than $100k a year.
Yes, I think many financial advisors think you're in the "mass affluent" group if you have investable assets of $250K to $1M. I assume they would consider these same folks to be more than just upper middle class. On the other hand, I don't think there are any really good definitions out there of what is and isn't middle class, upper or lower. I think a lot of folks with quite a bit of money don't want to be considered above upper middle class, while others who are solidly middle class want to be considered wealthy. Much is in the eye of the beholder and the mind of the speaker. By the same token, if a person is still working and earning good money, they are much better off than a retired person who has the same amount in investable assets. I think Rick has a really good point regarding the importance of getting the facts straight prior to assigning labels or giving advice.

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Re: What's your number? Why?

Post by af895 » Fri Mar 08, 2013 10:52 am

All my figures are in today's dollars.

My number is ~$400,000 to $500,000 by retirement.

It's based on an inflation indexed DB pension paying $30,000/year and a desired budget of $50,000/year (no dependents, no legacy) leaving a gap of $20,000 to fill in which I believe $400-500k would be enough to do.

I've also excluded the Canada Pension Plan and Old Age Security from my calculations to add a buffer. I have no idea if those programs will be available in future so this further stacks the deck in my favour.

I live on a lot less than that now so that provides room for travel and other hobbies.
Last edited by af895 on Tue Mar 19, 2013 7:58 am, edited 4 times in total.

irwinmfletcher
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Re: What's your number? Why?

Post by irwinmfletcher » Fri Mar 08, 2013 11:39 am

I am always surprised in these threads how many plan to have multiple millions (over $2 mil) by 40. By my math even saving $50,000 a year starting at 22 (no easy feat) and earning 7% a year won't get you there by 40 assuming you start with $0.

Perhaps we have an inordinate number of NYC investment bankers and Silicon Valley entrepreuer Bogleheads?

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Re: What's your number? Why?

Post by ResNullius » Fri Mar 08, 2013 11:53 am

irwinmfletcher wrote:I am always surprised in these threads how many plan to have multiple millions (over $2 mil) by 40. By my math even saving $50,000 a year starting at 22 (no easy feat) and earning 7% a year won't get you there by 40 assuming you start with $0.

Perhaps we have an inordinate number of NYC investment bankers and Silicon Valley entrepreuer Bogleheads?
There are a lot of doctors on this Board.

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Re: What's your number? Why?

Post by Flashes1 » Fri Mar 08, 2013 12:40 pm

HomerJ wrote:
Rick Ferri wrote:You are correct in that this is an upper middle class number. I had written upper middle initially, then changed it because most people who are upper middle-class don't think they are. I was trying to adjust "modest" to what I believe someone who reads this board would consider modest.
Let's use the correct term on these boards please... Upper middle class is the correct description. My one beef with the Bogleheads is that many of them have no idea how well they are doing... People making $100k a year are not living a modest middle-class lifestyle... I have lived a modest middle-class lifestyle, and it was a lot lower than $100k a year.
Homer, money is all relative. Maybe $100k is a lot of money to you....but maybe it's not a lot for other people...but on the same token $500k is not a lot of money for other people, etc. I'm sure there's some people in this world who think you have a lot of money. There's always someone out there who's got more money.....the problem is humans tend to compare themselves to the company they keep. You hang out with people making big money....you're going to compare yourself with them....maybe it pays to hang with people who make less????

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Re: What's your number? Why?

Post by Bacchus01 » Fri Mar 08, 2013 12:57 pm

ResNullius wrote:
irwinmfletcher wrote:I am always surprised in these threads how many plan to have multiple millions (over $2 mil) by 40. By my math even saving $50,000 a year starting at 22 (no easy feat) and earning 7% a year won't get you there by 40 assuming you start with $0.

Perhaps we have an inordinate number of NYC investment bankers and Silicon Valley entrepreuer Bogleheads?
There are a lot of doctors on this Board.
Still tough.

Doctor income starts later and education debt often lasts 20+ years. Doctor net worth often doesnt' accelerate untl their 50's. The obvious differences being those that are highly specialized.

The real difference tends to be among dual-income and whether you have kids or not.

I make way more than the "average" Dr. and will be around $1.5M at age 40. However, I have 3 kids who I would spend every penny on and a wife who has been at home for the ast 8 years. Take those things awayand I'd be well over $3M by 40.

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Re: What's your number? Why?

Post by HomerJ » Fri Mar 08, 2013 1:08 pm

Flashes1 wrote:
HomerJ wrote:
Rick Ferri wrote:You are correct in that this is an upper middle class number. I had written upper middle initially, then changed it because most people who are upper middle-class don't think they are. I was trying to adjust "modest" to what I believe someone who reads this board would consider modest.
Let's use the correct term on these boards please... Upper middle class is the correct description. My one beef with the Bogleheads is that many of them have no idea how well they are doing... People making $100k a year are not living a modest middle-class lifestyle... I have lived a modest middle-class lifestyle, and it was a lot lower than $100k a year.
Homer, money is all relative. Maybe $100k is a lot of money to you....but maybe it's not a lot for other people...but on the same token $500k is not a lot of money for other people, etc. I'm sure there's some people in this world who think you have a lot of money. There's always someone out there who's got more money.....the problem is humans tend to compare themselves to the company they keep. You hang out with people making big money....you're going to compare yourself with them....maybe it pays to hang with people who make less????

I'm quite sure that many people living in high-cost areas like the North-east or the west coast feel that $100k/year is a not a lot of money...

But for every person making $100k in those areas, there are 20 people making $50k or less, and also living\working in that same high-cost area. If 90%-95% of the population is making less than you, it's hard to call yourself middle-class.

I didn't mean to call out Grt2bOutdoors... I know he's not living an extravagent lifestyle. But I think he's living a lot better than most of the people within a hundred miles of his home.

Edit: Here's a thought though... Maybe this explains why people feel like they are middle-class even though they make a lot of money. Maybe the Boglehead is saving, and the 20 people around them are not, and the lifestyles are actually pretty similar... So maybe Bogleheads making $75k are living a middle-class lifestyle since they are spending the same each year as $50k a year person who doesn't save anything. If you're making $100k though, unless you're saving $40k-$50k of that year, your lifestyle is better than middle-class.

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Re: What's your number? Why?

Post by ThatGuy » Fri Mar 08, 2013 1:24 pm

To follow up on Homer's point, the median household income in San Francisco was $72,947 according to the last census. Median owner-occupied houseing unit was $767,300. I think, even in an expensive city such as SF, $100,000 a year is well off. The per capita median was $46,777, by the way.

To suggest that $2 million in investable assests is middle class, is a major shifting of the line.

On a tangent, all those who suggest vehemently that one should never spend more than 2 times their annual income (3 times at an absolute maximum), should realize this is just isn't in the realm of reality in dense areas.
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Re: What's your number? Why?

Post by mptfan » Fri Mar 08, 2013 1:31 pm

Bacchus01 wrote: I make way more than the "average" Dr. and will be around $1.5M at age 40. However, I have 3 kids who I would spend every penny on and a wife who has been at home for the ast 8 years. Take those things awayand I'd be well over $3M by 40.
The biggest wealth destroyer for someone in your position is divorce.

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Re: What's your number? Why?

Post by Grt2bOutdoors » Fri Mar 08, 2013 1:41 pm

HomerJ wrote:
Flashes1 wrote:
HomerJ wrote:Let's use the correct term on these boards please... Upper middle class is the correct description. My one beef with the Bogleheads is that many of them have no idea how well they are doing... People making $100k a year are not living a modest middle-class lifestyle... I have lived a modest middle-class lifestyle, and it was a lot lower than $100k a year.
Homer, money is all relative. Maybe $100k is a lot of money to you....but maybe it's not a lot for other people...but on the same token $500k is not a lot of money for other people, etc. I'm sure there's some people in this world who think you have a lot of money. There's always someone out there who's got more money.....the problem is humans tend to compare themselves to the company they keep. You hang out with people making big money....you're going to compare yourself with them....maybe it pays to hang with people who make less????

I'm quite sure that many people living in high-cost areas like the North-east or the west coast feel that $100k/year is a not a lot of money...

But for every person making $100k in those areas, there are 20 people making $50k or less, and also living\working in that same high-cost area. If 90%-95% of the population is making less than you, it's hard to call yourself middle-class.

I didn't mean to call out Grt2bOutdoors... I know he's not living an extravagent lifestyle. But I think he's living a lot better than most of the people within a hundred miles of his home.

Edit: Here's a thought though... Maybe this explains why people feel like they are middle-class even though they make a lot of money. Maybe the Boglehead is saving, and the 20 people around them are not, and the lifestyles are actually pretty similar... So maybe Bogleheads making $75k are living a middle-class lifestyle since they are spending the same each year as $50k a year person who doesn't save anything. If you're making $100k though, unless you're saving $40k-$50k of that year, your lifestyle is better than middle-class.
Actually, I know my immediate neighbors are living better than I am and that's okay - half of them are nearly retired, won the technology and healthcare lottery available at the time (referring to ridiculous lucrative benefits you will likely not find today unless you are on the executive floor), they bought their homes in the early 90's, they own multiple homes, etc. The other neighbors all bought their homes in the 90's so they benefitted from the great real estate boom and a number of them work in the public sector so they have awesome (unattainable in private sector) benefits and will retire with pensions valued in the millions plus their taxable. In fact, one did with a pension worth 90K a year for a job that paid $100K in a low risk occupation. That's why I say I'm middle class - compared to those neighbors, I'm the poor one. It irks me when they show their ignorance - "just go out and find a job with a pension" :annoyed I didn't know that when I moved into my middle class neighborhood. :oops: I have quite a while to go work-wise, health and other things permitting so I may have time to catch up. Spending wise, I spend way less than my neighbors, I have to if I want a shot at a decent retirement. Oh, and my car is turning 17 years old this year. So, I'm making hay while the sun shines.

My number is $2.5 million - that may sound upper or rich, but as I described in my scenario above, it's costly to live in a state where my money goes to support others retirement. (this is not political, it's just the facts of my life).
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: What's your number? Why?

Post by Easy Rhino » Fri Mar 08, 2013 1:55 pm

1 million, in today-ish dollars Why? No idea. But I'm still youngish (37), (the wife will have a modest pension, maybe larger depending on how long she stays at her job) and we've got some time for our nest egg to inflate along with costs.

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Re: What's your number? Why?

Post by jwa » Fri Mar 08, 2013 2:06 pm

Rick Ferri says I need 2 million???? Good Lord, I'll never make it.

With that said, my number is $500,000 which is a little less than what I currently have and significantly less than what most here say they need. I'm getting close to pulling the plug but then only part way as I will still work part time for a few years. I live in a low cost area, my house is paid for, college bills are in the past, I happily drive old cars and otherwise live a quiet life style which I am very content with. Also. as was pointed out earlier, I don't need to save $20,000 or more for my retirement each year.

I have a small pension coming in the near future and I will hold off on SS until age 70 as will my wife. The combination of those two at age 70 will essentially cover all of our living and discretionary expenses. Of course, the canary in the cage is health care and potential long term care but that's true with everyone. With the happiness quotient currently at something like $60,000 income per year for families across all areas of the US I'll be OK by that measure. I'll be OK with Dr. Bernsteins 20 to 25 after deducting pensions, social security. I've pumped my numbers into a variety of the retirement calculators including the one I like the best, Fire Calc, and all say I am on track or well ahead of the game.

So Rick, your clients apparently need 2 million which in my world seems absurd but I realize I don't live in their world. A fourth of that number works for me.

All the best.
Last edited by jwa on Fri Mar 08, 2013 2:08 pm, edited 1 time in total.

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Re: What's your number? Why?

Post by irwinmfletcher » Fri Mar 08, 2013 2:07 pm

"I make way more than the "average" Dr. and will be around $1.5M at age 40. However, I have 3 kids who I would spend every penny on and a wife who has been at home for the ast 8 years. Take those things awayand I'd be well over $3M by 40."


Bacchus--

what is your specialty? That is still impressive at any level. We're about the same age--maybe I should I had gone to med school instead of law school!

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