When do you stop worrying about saving?

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wantrepreneur
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When do you stop worrying about saving?

Post by wantrepreneur »

I will never stop saving but wondering if people have found a point past which they have tried to save as much as they can without constantly questioning what they were saving was enough.

The reason I am asking is, I feel I won't know when that point arrives for me if such a stage exists in life. My wife and I are 32 and 33 with net worth of $1.7M. No debt, no mortgage either but may decide to take up a mortgage of $450K at some point. Net worth is well diversified as I got introduced to Bogleheads two years ago and followed advice. We make $250K a year combined in salary and there will be additional income of $350K a year for the next 3 years through my stock options - based on current price so could be $0 or a lot more than $400k/year, and therefore not a dime from that included in our current net worth.

With that context, if we maintain the current lifestyle and live life peacefully, current savings and future earnings invested well will cover our retirement years just fine. However, we both still feel this anxiety to save more and more. Fine with saving more, not fine with anxiety. Does it go away? Recommendations? Anxiety is justified? Thank you all!
livesoft
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Re: When do you stop worrying about saving?

Post by livesoft »

When your portfolio gains at least 3 times your gross wage income in a year, that's when you stop worrying about saving. You continue to save, but you do stop worrying.
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wantrepreneur
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Re: When do you stop worrying about saving?

Post by wantrepreneur »

livesoft wrote:When your portfolio gains at least 3 times your gross wage income in a year, that's when you stop worrying about saving. You continue to save, but you do stop worrying.
Just to make sure I understand you correctly - I make 100K a year but my investments return $300K a year - that's when I stop worrying. If that's the case, I am a long way away from that :D
awval999
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Re: When do you stop worrying about saving?

Post by awval999 »

The answer to this is more spiritual or what not---- perhaps not so appropriate for this forum but i'll give it a go.

When do you stop worrying about saving?

When you realize that you cannot control the future, and no matter how hard you try, or how much you save, you are here by the grace of God and you accept whatever this life gives you.
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Re: When do you stop worrying about saving?

Post by Toons »

Probably more self imposed anxiety than worry.
You probably have more saved than 99% of people in this country,but if it was done gradually,after a while it just becomes numbers,and enough is not enough..You have to learn to let go,,,and spend some.Remember money is good for 2 things goods and services.Then again enough of it can allow you to be the master of YOUR time. :happy
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Re: When do you stop worrying about saving?

Post by livesoft »

wantrepreneur wrote:Just to make sure I understand you correctly ....
You understand correctly. So you need to keep worrying until either your portfolio gains more in a year or your annual income drops a lot.
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Re: When do you stop worrying about saving?

Post by Toons »

wantrepreneur wrote:
livesoft wrote:When your portfolio gains at least 3 times your gross wage income in a year, that's when you stop worrying about saving. You continue to save, but you do stop worrying.
Just to make sure I understand you correctly - I make 100K a year but my investments return $300K a year - that's when I stop worrying. If that's the case, I am a long way away from that :D
Thats right if you make 25k a year and your portfolio earns 75k,,,quit worrying ,take a cruise. :sharebeer
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
nordlead
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Re: When do you stop worrying about saving?

Post by nordlead »

Awval's answer is pretty close to mine. I know I need to save for retirement, but it doesn't give me anxiety and my portfolio is only 100k.

Outside of that answer, I'm going to say you can stop worrying now. If for some reason you were forced to stop working you have enough to live a better lifestyle than I do and I live pretty well in my opinion. Sure, it would be a step down from what you are probably accustomed to, but you don't have to worry about food or shelter. If I lost my job I'd be wondering where the next meal is coming from in a year or so.
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Re: When do you stop worrying about saving?

Post by RadAudit »

Years ago, when dinosaurs roamed the earth, I developed a spreadsheet that projected how much I'd need to have accumulated each year until retirement in order to have the money I needed to retire. Numerous assumptions about portfolio rates of returns, etc. went in to those projections as well as a projected savings rate.

Then I kept track of my progress to my goal. If the progress to the goal got way out of line, I could have made adjustments. It didn't.

And, why yes. I know now - but didn't fully understand then - that the chance of those projections being close to reality was fairly low - but it did give me the chance to have a way of measuring where I was on the path to accumulating the amount of money I thought I'd need.

Beyond that - there was no real need to worry about things you couldn't control. Left time for other things.
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Re: When do you stop worrying about saving?

Post by dimdum »

Make goals and track your goals. If you are track or have reached your goals, you can stop worrying.
For example, lets say you're goal is to retire at age of 50. And then spend 100K each year after that and take SS at 65 years.

You can use http://www.firecalc.com/ or other tools to determine if you can achieve that goal or are on track of doing it.
Once you know you are on track to reach goal, you can stop worrying.
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Re: When do you stop worrying about saving?

Post by The Wizard »

wantrepreneur wrote:
livesoft wrote:When your portfolio gains at least 3 times your gross wage income in a year, that's when you stop worrying about saving. You continue to save, but you do stop worrying.
Just to make sure I understand you correctly - I make 100K a year but my investments return $300K a year - that's when I stop worrying. If that's the case, I am a long way away from that :D
This is horse business (sorry Livesoft).
Even if your investments make $500K this year, there no telling about next year.
You could easily "lose" $200K or $300K next year, without blinking, assuming a 50/50 AA.
A better metric is needed...
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Re: When do you stop worrying about saving?

Post by The Wizard »

I never "worried" about saving/investing.
When I was younger, I was content to save around 20% of gross and spend the excess on life experiences, not so much on possessions.
Another metric is tracking multiples of annual income or expenses as you get older.
Goal might be to accumulate 20 times your gross income which should easily be 30 times your annual expenses.

So the idea is to see if you're on track at age 35, 40, 45, etc...
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market timer
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Re: When do you stop worrying about saving?

Post by market timer »

When you have enough saved that you can cover your retirement expenses without saving anymore, then you don't need to worry about saving. For example, if you are 35 and plan to retire at 65 on $50K/year, then you need about $1mn (today's dollars) in 30 years. You need about $640K today to buy $1mn of today's buying power in 2043, ignoring taxes, based on 30-year TIPS yields.
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Re: When do you stop worrying about saving?

Post by Texas hold em71 »

A long time ago, I thought if I paid off my mortgage, maxed retirement, saved enough for kid's college and saved enough for our next set of cars, I would not worry. I still worry but not as much. I know now that I worry because I like to worry. A part of me believes if I worry about something it inoculates me from having THAT thing happen to me. We all know what gets you in the end are the things you don't think about. :) :shock: :D

Reading this board feeds that habit. I am saving enough but am I paying too much in taxes? Should I buy I bonds? Muni funds? Should I have equal allocation or efficient allocation? Should I keep all my funds in one institution? What if when I retire, I withdraw 4% instead of 3%? Will RMDs force me into a higher tax bracket? What if I forget about an account when I am 93? Should I buy long term care insurance? What if the internet implodes and I lose access to paperless statements? One OP was worried about moving to Texas because we might run out of water. The list goes on and on.

As several have pointed out before me, worrying is a choice you are making and you will keep making until you find something else to do with your time.
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Re: When do you stop worrying about saving?

Post by letsgobobby »

If you're a worrier, you won't ever stop. Just get used to it. I say this knowing a thing or two about worriers, and about my dad.
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Re: When do you stop worrying about saving?

Post by Fletch »

My answer is similar to a couple of others.

Don't worry about things you cannot control. Be satisfied with what you have and plan, but not obsess, for what you need (not necessairly want) in the future. Cultivate friends. Trusting in earthly things will (almost?) always ultimately let you down. Minimize focusing on yourself - God first, everyone else second, yourself third. Life is a journey, usually like a roller coaster with ups and downs. We all die; prepare for what comes after that. Everything, including faith, is a gift from God. If you can accept these things, I predict your anxiety will fade. Celebrate and give thanks for the gift of life.
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Re: When do you stop worrying about saving?

Post by 4th and Inches »

I wouldn't say that I worry about saving, but I am aware of it and plan accordingly. I still have a ways to go, but feel I'm moving in the right direction.
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Re: When do you stop worrying about saving?

Post by reisner »

Mister Money Moustache has a lot of good advice about how to stop worrying. He retired a few years ago in his early thirties with just 750K saved.

http://www.mrmoneymustache.com/
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Re: When do you stop worrying about saving?

Post by Rodc »

Few things.

I realized that older retired people I knew on rather different incomes were all happy enough. You adjust. You don't need a lot to be happy, though having a bit more is useful.

I realized that accumulated pensions, social security and savings would almost certainly provide a decent enough retirement income unless something rather surprising happened. Not great, but at least a modestly middle class lifestyle, even if I never saved another dime (as long as I could pay the bills for a few more years without raiding 401K).

I realized that the additional income generated by pumping up savings rate was not likely to make a material difference: new money was modest compared to likely returns on what I already have. Not trivial, but modest. So no point in increasing delayed gratification.

I became a bit more philosophical: Life is uncertain, get over it. We are adaptable people within rather large bounds.
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Re: When do you stop worrying about saving?

Post by Nestegg_User »

I would agree with the above posters... but I would say be Diligent
examine what your needs will be -- say 140K/yr burn rate -- and determine if you are on track based on 3% SWR (for now, based on the fact that you are young and could have significant years ahead )
Also remember that stock options are not actionable until they vest and are in the money...then they count
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Re: When do you stop worrying about saving?

Post by Mill »

OP, you are 32 years old with a net worth of 1.7 million, which is 7x greater than your combined wage income, and youre worried about saving money? You are obviously very successful, so think of it like this. You dont even need that 1.7 million. You have already proven you can live without it, and worst case scenerio, you can make it back again if it were all of a sudden taken away from you.
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Re: When do you stop worrying about saving?

Post by travellight »

I find this forum very reassuring. Many times when I read about an outrageous behavior or metric, I find that I meet it. I don't worry about saving any more due to analysis I gleaned from being here, but I still save rabidly and painlessly. I have set an arbitrary net worth goal and once I reach that, I will probably relax and loosen up on the savings habit. That goal will be after all mortgages/debt are paid off and kid is done with college.
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Re: When do you stop worrying about saving?

Post by Mill »

travellight wrote: I have set an arbitrary net worth goal and once I reach that, I will probably relax and loosen up on the savings habit.
Dont be so sure about that. I told myself Id loosen up the pursestrings a bit after I hit my first major milestone. If anything saving has become such a habit that its gotten much worse...or easier. :) Old habits die hard.
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Re: When do you stop worrying about saving?

Post by Dulocracy »

My wife says that I worry too much. She says I am obsessed with making sure things do not go wrong. In my defense, my planning has avoided several bad things in our lives. I worry about her (a lot). She is younger than I am, so I have to plan retirement for after I am dead. Which brings us to the point when I will stop worrying about saving.

I suppose that I will not worry about saving money when I die.

To answer your question, I can definitively say: at death.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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Re: When do you stop worrying about saving?

Post by travellight »

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by Mill » Tue Nov 26, 2013 6:35 am

travellight wrote:
I have set an arbitrary net worth goal and once I reach that, I will probably relax and loosen up on the savings habit.

Dont be so sure about that. I told myself Id loosen up the pursestrings a bit after I hit my first major milestone. If anything saving has become such a habit that its gotten much worse...or easier. Old habits die hard.
The arbitrary goal is 8 figures so I think I will need psychiatric help if I still worry after that, lol. I may not ever get there but that is the goal.

You are right though, I did hit my first major milestone and just set a new one. :)
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Re: When do you stop worrying about saving?

Post by wantrepreneur »

Thank you so much everyone for your thoughts and advice. Diversity is a key feature of these forums and very evident in this thread :)

My takeaways:

-- I am not a chronic worrier but because I knew little about how to invest until I discovered bogleheads, I worry about it.
-- I will try and not worry because we have enough saved up for our age and will continue to save due to disciplined spending habits.
-- Read Mr. Money Mustache - I would love to retire at 37 :)
-- I have never had a net worth goal, might be a good time to get one so that I have a hard stop that forces me to slow down.
-- Continue coming here for reassurance and stay the course.
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Re: When do you stop worrying about saving?

Post by Rodc »

travellight wrote:
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by Mill » Tue Nov 26, 2013 6:35 am

travellight wrote:
I have set an arbitrary net worth goal and once I reach that, I will probably relax and loosen up on the savings habit.

Dont be so sure about that. I told myself Id loosen up the pursestrings a bit after I hit my first major milestone. If anything saving has become such a habit that its gotten much worse...or easier. Old habits die hard.
The arbitrary goal is 8 figures so I think I will need psychiatric help if I still worry after that, lol. I may not ever get there but that is the goal.

You are right though, I did hit my first major milestone and just set a new one. :)
You will switch from worrying about saving to worrying about preserving. But worry you will. :)
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: When do you stop worrying about saving?

Post by surfstar »

For all of those who will never stop worrying, despite having a 'comfortable' income/net worth - I propose:
some/each of you may donate some money to myself, and therefore I may stop worrying. Through crowd sourcing we may remove one worrier from bogleheads at a time.

Remember, you said you never would stop worrying, so might as well pass that on to me so that I may stop.

:sharebeer

P.S. - my birthday is Friday and would be a good time to start the donations :mrgreen:
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Re: When do you stop worrying about saving?

Post by Sheepdog »

I stopped worrying about savings when I retired. Then I exchanged that worry for new worries: earning enough on those savings and controlling spending so that those years of savings will last. Happily, I don't feel the need to worry about that any longer. :o
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Re: When do you stop worrying about saving?

Post by momar »

Just go out and spend some money. Don't think about it, just do it. Keep doing it until it becomes second nature.

Practice makes perfect.
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Re: When do you stop worrying about saving?

Post by letsgobobby »

travellight wrote:
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by Mill » Tue Nov 26, 2013 6:35 am

travellight wrote:
I have set an arbitrary net worth goal and once I reach that, I will probably relax and loosen up on the savings habit.

Dont be so sure about that. I told myself Id loosen up the pursestrings a bit after I hit my first major milestone. If anything saving has become such a habit that its gotten much worse...or easier. Old habits die hard.
The arbitrary goal is 8 figures so I think I will need psychiatric help if I still worry after that, lol. I may not ever get there but that is the goal.

You are right though, I did hit my first major milestone and just set a new one. :)
We also expected to worry less hitting various milestones. We do worry a little less, but we've only changed our habits a little. Really, you either are or aren't the type to obsess about these things. Unless you are at some extreme, just accept who you are. I'm a 50% saver. i always have been, I basically always will be. Sure, some years it's only 30% but that's because I'm married. Sorry honey. I will soon have enough to stop saving but I won't stop saving. It's just the way it is.

I now embrace my inner obsessive compulsive because there are worse ways to deal with anxiety.
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Re: When do you stop worrying about saving?

Post by HomerJ »

My wife's old high school friend died at age 52 last year.

We stopped saving so much, and spent a little last year (lakehouse and a boat).

Some of you might want to add dying at your desk to your list of worries.
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Re: When do you stop worrying about saving?

Post by MoonOrb »

Yeah, I'm going to say based on your ages, your $1.7M net worth, your annual income, and your stock options: you can officially stop worrying.

You can keep saving, but you don't need to worry about it anymore. You're killing it. It's not worth worrying about when you're so far ahead of the game.
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Re: When do you stop worrying about saving?

Post by JoMoney »

I don't really worry about it as it is, I worried a lot more when I had debts and no savings. I'll do the best I can with my savings now, and "que sera sera".
I'll start thinking the portfolio is big enough when (portfolio)/(life expectancy)=(salary).
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Re: When do you stop worrying about saving?

Post by travellight »

I actually like to think that I don't worry. One of my favorite phrases is "worry is like paying interest in advance on a loan that never comes due".

What I do though is expend mental energy on things that are actionable that lead to a favorable outcome. :)
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Re: When do you stop worrying about saving?

Post by fanmail »

MoonOrb wrote:Yeah, I'm going to say based on your ages, your $1.7M net worth, your annual income, and your stock options: you can officially stop worrying.

You can keep saving, but you don't need to worry about it anymore. You're killing it. It's not worth worrying about when you're so far ahead of the game.
Agreed, unless their expenses are super high like 200k a year or something.
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Re: When do you stop worrying about saving?

Post by ofcmetz »

OP, you are playing excellent offense and defense. Great job!

I'll add that in my opinion saving is not something worth worrying about if you are doing it. If you are consistently savings 15% or more of your income and start in your 20's, then you should be fine. I'm not saying don't spend effort and energy towards the goal of saving and investing, just don't worry about it.

Now, if you are someone (not to likely on this board) that hasn't saved and is not saving more than a few % per year, then you should worry.

Financially, I think I worry most about having a decent income (usually has something to do with getting the good overtime security details) to provide well for my family. I know with a decent income, the savings will be there. I have a spreadsheet to prove this.
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Re: When do you stop worrying about saving?

Post by reisner »

Jack Bogle is happy with low eight figures. I think most of us can make do with a decimal point less than that.
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Re: When do you stop worrying about saving?

Post by IlliniDave »

wantrepreneur wrote:I will never stop saving but wondering if people have found a point past which they have tried to save as much as they can without constantly questioning what they were saving was enough.

The reason I am asking is, I feel I won't know when that point arrives for me if such a stage exists in life. My wife and I are 32 and 33 with net worth of $1.7M. No debt, no mortgage either but may decide to take up a mortgage of $450K at some point. Net worth is well diversified as I got introduced to Bogleheads two years ago and followed advice. We make $250K a year combined in salary and there will be additional income of $350K a year for the next 3 years through my stock options - based on current price so could be $0 or a lot more than $400k/year, and therefore not a dime from that included in our current net worth.

With that context, if we maintain the current lifestyle and live life peacefully, current savings and future earnings invested well will cover our retirement years just fine. However, we both still feel this anxiety to save more and more. Fine with saving more, not fine with anxiety. Does it go away? Recommendations? Anxiety is justified? Thank you all!
Well, it's better than having the opposite "problem" I guess--I know people that suffer anxiety when they don't immediately "enjoy" every nickel that passes within a hundred yards of them.

Based on your description, it doesn't sound like the "anxiety" will ever totally go away for you and your wife. So I'd say just embrace the compulsion to save and maybe then you won't have anxiety over it, it can be just a game for the two of you. I have some amount of nervousness that comes and goes since my wealth level isn't bullet proof yet. Seems to be something I can turn into positive motivational energy pretty easily, so I don't dwell on it. I don't think there's an objective level of wealth where a person can just switch it off--you'll reach some point where something in your subconscious will back off. Or not.
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Re: When do you stop worrying about saving?

Post by HomerJ »

MoonOrb wrote:Yeah, I'm going to say based on your ages, your $1.7M net worth, your annual income, and your stock options: you can officially stop worrying.

You can keep saving, but you don't need to worry about it anymore. You're killing it. It's not worth worrying about when you're so far ahead of the game.
Yeah, that's kind like having 24 hours to run a marathon starting at 6:00 am, and at 10 in the morning, you're already at mile marker 20. You can't stop, but there's nothing wrong with walking the rest of the way.
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Re: When do you stop worrying about saving?

Post by wander »

I will say 25 times your current salary.
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Re: When do you stop worrying about saving?

Post by travellight »

by wander » Tue Nov 26, 2013 4:57 pm

I will say 25 times your current salary.
Wow, that is huge. How did you come up with that?
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Re: When do you stop worrying about saving?

Post by wander »

travellight wrote:
by wander » Tue Nov 26, 2013 4:57 pm

I will say 25 times your current salary.
Wow, that is huge. How did you come up with that?

So I can be ready to retire anytime. I want to withdraw the money 4% yearly. It's nice to receive the same amount of payment so I can still have some money left over (like right now) and don't have to change my life style.
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Re: When do you stop worrying about saving?

Post by travellight »

Oh, I see... that is with not scaling back at all and basically continuing your current paid salary ad infinitum. Makes sense. Oddly, that calculation ends up the same as my goal which I thought was a little bit pie in the sky; your metric actually makes my goal seem reasonable.
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Re: When do you stop worrying about saving?

Post by Texas hold em71 »

wander wrote:
travellight wrote:
by wander » Tue Nov 26, 2013 4:57 pm

I will say 25 times your current salary.
Wow, that is huge. How did you come up with that?

So I can be ready to retire anytime. I want to withdraw the money 4% yearly. It's nice to receive the same amount of payment so I can still have some money left over (like right now) and don't have to change my life style.
I have heard of 25 times expenses but not 25 times salary. Are you on track to hit that before 70?
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Re: When do you stop worrying about saving?

Post by HomerJ »

wander wrote:I will say 25 times your current salary.
25 times expenses is what you mean. If you're spending your entire salary, you're not saving anything, and you're never going to retire.

If you are saving something, you're spending less than your salary, and therefore you need less than your salary to live "the exact same lifestyle you're living today" (A lot less, really... Not only do you not need to save in retirement, but you also stop paying payroll taxes, and hopefully your house is paid off when you retire, so there's a mortgage payment you don't need to make any more).

Salary changes a lot more than expenses.

For instance, my expenses have stayed pretty constant the last few years. But my salary is all over the place... My wife and I got substantial raises a few years back, but we just saved those. Expenses remained about the same (we did start taking an extra vacation each year). But an increased salary didn't change our retirement calculations.

My wife retired last year, but I'm still working... Our salary was cut in half (more than half)... Doesn't change my retirement calculations. Expenses have stayed about the same.
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wander
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Re: When do you stop worrying about saving?

Post by wander »

I mean my current income so I can still at the level to save for retirement as I am still far away from retirement age and the 4% will only last for 30 years.
That's when I don't need to worry anymore. For now, I am just like the OP, keep worrying about saving. :happy
paulsiu
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Re: When do you stop worrying about saving?

Post by paulsiu »

I think you are in a good spot. Most people would dream to be in your shoes. You can stop worrying about saving on the day you can stop working and live forever on your money. This mean you can live on a portfolio where you can withdraw about 3% to 4% per year + inflation. You can stop working and do whatever you want. You can continue working but only on stuff that you like, unlike most people who work on stuff they might not like because they want to get paid. If you can figure out how much you need, you can work backwards to see how close you are to your goal based on your portfolio size. You may be able to project how soon to when you are free.

This means keeping the spending down. When you get a 400k windfall, you have to resist the urge to buy a boat or blow your money that will set your goal back. If you make that much money and live a middle class lifestyle, you could be free from work sooner than most people can hope.

On the flipside, don't afraid to live in the now. Don't keep thinking, I will do x when I retire. Do it now, you could die tomorrow. Live in the now, but balance it with your goal.

Paul
littlebird
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Re: When do you stop worrying about saving?

Post by littlebird »

Hopefully long before you wind up like one of my neighbors, a self-confessed multi-millionaire who is unable to break the habits that made him one. In their seventies, long retired, he and his wife still spend their days going from grocery store to grocery store buying what's on sale there, visiting the local coupon exchange, eating out - in Wendy's - only when there's a coupon or someone gives them a gift card, buying their clothes in thrift shops and garage sales, taking gifts of used household items from neighbors who think their life style reflects their means.
basspond
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Re: When do you stop worrying about saving?

Post by basspond »

You are well on your way to a very comfortable portfolio. However, you will always have anxiety if saving is your #1 priority. I didn't find peace until I realized that all I have is a gift from God. By first investing 10% in charitable organizations and at least 15% in investments, I have little or no anxiety about saving. My anxiety will also ease when my investments reach 30 times my anticipated expenses in retirement.
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