Was there a $$$ number after which things got easier?

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countofmc
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Was there a $$$ number after which things got easier?

Post by countofmc » Sun May 14, 2017 1:31 pm

Totally subjective, but that's what I'm looking for, opinions from our BH community.

Just something I"ve been personally wrestling with, wondering if it ever does get easier and the compounding really starts taking over?

So for our BH members, was there a number you hit after which it really felt like amassing more and more $ was getting easier and compounding was really noticeable? What was that number?

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climber2020
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Re: Was there a $$$ number after which things got easier?

Post by climber2020 » Sun May 14, 2017 1:35 pm

For me, it was 500k. That amount was when I really noticed that daily swings in the market sometimes exceeded my regular bi-monthly contribution amounts.

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bottlecap
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Re: Was there a $$$ number after which things got easier?

Post by bottlecap » Sun May 14, 2017 1:52 pm

It never gets easier. It just is. I suggest worry about other things.

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EnjoyIt
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Re: Was there a $$$ number after which things got easier?

Post by EnjoyIt » Sun May 14, 2017 1:59 pm

The number where you have enough to fund basic necessities for the rest of your life really puts perspective from that point on. Knowing every additional dollar saved/earned can be used for experiences, luxuries or assistance in daily life really makes things easier. It also gives you the ability to quit a job you hate or not take on extra responsibility if you don't want to. At that point you have FU money.

Nova1967
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Re: Was there a $$$ number after which things got easier?

Post by Nova1967 » Sun May 14, 2017 2:12 pm

I believe it gets easier when you pay off your mortgage
I can't give a certain dollar amount since most of my assets are set aside in retirement accounts

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Phineas J. Whoopee
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Re: Was there a $$$ number after which things got easier?

Post by Phineas J. Whoopee » Sun May 14, 2017 2:22 pm

It got easier for me when, after years of effort, my net worth moved north of $0.00. I remember the paycheck well. A little positive felt better than very much negative. To put things in perspective, when I finished school I owed, on an inflation-adjusted basis, a little over $50,000 in 2017 dollars. It was an investment in myself on margin, but an uncomfortable one. Fortunately it panned out.

And yes, I did track net worth then as now, and yes, I did subtract liabilities from assets to arrive at it.

PJW

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whaleknives
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Re: Was there a $$$ number after which things got easier?

Post by whaleknives » Sun May 14, 2017 2:23 pm

I don't remember when it happened, but I did notice it.

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unclescrooge
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Re: Was there a $$$ number after which things got easier?

Post by unclescrooge » Sun May 14, 2017 2:29 pm

It happened when I turned 38.

By that time, neither fear of job loss nor market downturns caused any worry.

Rebecca_S
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Re: Was there a $$$ number after which things got easier?

Post by Rebecca_S » Sun May 14, 2017 2:30 pm

For me, emotionally it got a lot easier once we paid off the mortgage. Even in a HCOL area, I can live on very little if necessary IF I have a secure place to live.

After that, it seems to get a bit easier every year. I can breathe easier, there is more money to save even though we let ourselves splurge a little. Emotionally, I feel more balanced and am more willing to spend money on the things that make me happy since I know that we have a secure savings that covers the bare necessities.

arsenalfan
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Re: Was there a $$$ number after which things got easier?

Post by arsenalfan » Sun May 14, 2017 2:41 pm

We are a 2-income household. For us, the mental peace came at the point that one person can go unemployed without lifestyle impact. Or BOTH can cut back on hours substantially without lifestyle impact.

This is totally dependent on your budget (not surprising many here are saying a milestone is when housing is paid off - I suspect many also breathe easier when last kid is thru college, etc).

We've been at this point for 2 years. It has allowed us to take a LOT of vacation off from work, not think twice about eating out, etc etc. We're still pretty frugal folk though.

sc9182
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Re: Was there a $$$ number after which things got easier?

Post by sc9182 » Sun May 14, 2017 2:53 pm

At each significant stage of account value (or your net-worth) - it means different things to you: "Assuming" a steady account growth rate of 5% (*lots of assumptions and guesses - along the way - note that things and perspectives change as life progresses along the way)

a) $250k balance means - your account generating about $1000/month growth (or could support about $1000/month equivalent pension)
b) at about $500k level - your account earning $25k a year. For many - this is the max typical contribution going into your 401k each year (your max contribution plus employer match of about $6k). You could cherish this moment - your account now is working almost as hard as your own net-new-monie going into account. Or you could infer as your spouse also working now and maxing out his/her 401k!)
C) about $750k level your can almost smell the roses - you finally are able to see path/light towards the magic $1 million - your own $Million can be reached with your own hard work and disciplined savings!
D) $1 million - time to cherish and celebrate this your very own great milestone! Your account is now growing $50k a year - add your additional $25k annual 401k contributions - your account now growing about $75k/year - which is much more than typical US average income. You can almost survive with this type of growth! Particularly- if you are nearing social security benefits.
E) $1.5 million- your growth approaching$100k/year (including $25k of your own contributions). 6 figure YoY savings growth- it almost feel like your spouse also working a 6-figure+ salary - and you guys are saving all of that amount! You by now paid off your mortgage or on the way towards it.
F) $2 Million - your account intrinsic growth nearing 6-figures on its own - to many this milestone could give thoughts about early or true retirement- if you are nearing social security benefits- you are good to retire at this point !!
G) $3 million - many Bogleheads appear to consider this safe number to retire - based on typical 4% consensus SWR. At this point one is truly ready to FIRE - with or without approaching social security.

Anything more - you are likely creating trust-fund kids :-) but who wouldn't like more money - if you already are or shooting to be top 1% earner.

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htdrag11
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Re: Was there a $$$ number after which things got easier?

Post by htdrag11 » Sun May 14, 2017 3:01 pm

For me, it's whatever doubling of my current budget.

For example, my current budget is $50k/annual. If taking out 3%/year of my portfolio yields $100k, then I'm home free, practically.

At this juncture, I'm doing fine with taking only 2% and had not taken out our SS money yet.

YMMV :beer

sixty40
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Re: Was there a $$$ number after which things got easier?

Post by sixty40 » Sun May 14, 2017 3:37 pm

For me it was when a decent days stock market movement was equivalent or more than what our family would spend for one month's expenses. I consider a 1-1.5% move in the market a fairly decent event. So at $1.0M, 1% movement is $10k-$15k, which is a more than we spend each month in living expenses. Also it was when one yrs market movement can pay our families yearly expenses. So at about $1M to $1.5M, it got interesting for me.

Another way I look at it was when the market movement in one day was greater then what I could contribute to 401K in 1-yr, or when a market movement in one yr was more than our yearly take salaries. When the market movement became something I could relate to in my life, it got interesting.

On another note, I could buy a fairly decent brand new car every year instead of paying for my kid's yearly college expenses.

am
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Re: Was there a $$$ number after which things got easier?

Post by am » Sun May 14, 2017 4:14 pm

Just found out today that about 0-1 mil took 6.5 yrs and 1-2 mil networth took another 3.5 yrs . This is all with constant income, savings and expenses.

We are at about 1 mil. with taxable, cash and retirement assets, paid off house, 20k/yr state pension at 62, and about 19-27 yrs away from SS (depending on when we claim). Recently have been feeling real good about the future financially. When job stress starts to overwhelm, I remind myself that no matter what, I should be comfortable for the rest of my life and it does wonders. I could live at not too much lower standard if I left medicine or went part time (although I don't intend to). This does wonders for my stress levels.

I thank bogleheads for this 100% because when I started, I went to my local bank and invested in a loaded franklin and templeton fund. Few months later discovered bogleheads and the rest is history. :D

Stormbringer
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Re: Was there a $$$ number after which things got easier?

Post by Stormbringer » Sun May 14, 2017 4:34 pm

am wrote:Just found out today that about 0-1 mil took 6.5 yrs and 1-2 mil networth took another 3.5 yrs .
What sort of accounts are you accumulating that in? We are saving at a similar rate (~$200K/yr) but even with my Solo 401(k) we are limited to about $90K per year in retirement accounts, including the backdoor Roth.
"Compound interest is the most powerful force in the universe." - Albert Einstein

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ClevrChico
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Re: Was there a $$$ number after which things got easier?

Post by ClevrChico » Sun May 14, 2017 4:44 pm

For me, recovery from the global financial crisis, not really a number. Looking at net worth,

7/2009 - 7/2010 - Only increased $8k for the year!
7/2010 - 7/2011 - Increase of $70k!

It's been snowballing since 2011 with gains.

am
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Re: Was there a $$$ number after which things got easier?

Post by am » Sun May 14, 2017 4:59 pm

Stormbringer wrote:
am wrote:Just found out today that about 0-1 mil took 6.5 yrs and 1-2 mil networth took another 3.5 yrs .
What sort of accounts are you accumulating that in? We are saving at a similar rate (~$200K/yr) but even with my Solo 401(k) we are limited to about $90K per year in retirement accounts, including the backdoor Roth.
Taxable, backdoor roths, 401k, 457b, wife solo 401k, 529s, HSA, house appreciation. Biggest factor was the bull market since most of my investing spans 2007-present.

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Re: Was there a $$$ number after which things got easier?

Post by Majormajor78 » Sun May 14, 2017 5:02 pm

I started to really feel like things were moving when changes in account value started outstripping annual contributions. At that point new contributions seemed to be more geared towards re-balancing than driving the numbers upwards. Which of course they still do. Maybe in a handful of years the swings in account value will exceed our annual income. That should really make things interesting. It shouldn't, the math is of course unchanged but people will be people.
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freebeer
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Re: Was there a $$$ number after which things got easier?

Post by freebeer » Sun May 14, 2017 5:22 pm

sixty40 wrote:For me it was when a decent days stock market movement was equivalent or more than what our family would spend for one month's expenses...
+1. If we think of human capital and investment capital when a day's decent movement in the latter swamps a month's income of the former you are well on the way to your capital out-earning yourself which is where you want to be (at least close to) to be financially independent.

flyingaway
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Re: Was there a $$$ number after which things got easier?

Post by flyingaway » Sun May 14, 2017 5:28 pm

$2M made me financially independent and things got much easier.

bigred77
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Re: Was there a $$$ number after which things got easier?

Post by bigred77 » Sun May 14, 2017 5:31 pm

I look forward to 3 events:

1- Knowing even if all income ceased, I'd be able to support a family indefinitely, even if at a lower standard of living than currently. Everyone will be sheltered, educated, and fed.

2- Knowing even if all income ceased, I'd be able to support a family indefinitely at our current lifestyle. Everyone will be sheltered well, educated well, and fed well.

3- Knowing that we can support our desired lifestyle indefinitely without any additional income. That means living pretty high on the hog.


For me, getting to number 1 would mean a networth of about $1M. Number 2 means about $2.5M. Number 3 probably around $5M.

I think I can get to #1 in 4-5 more years. Hope to hit #2 maybe 10 years later. Maybe we can hit #3 in 10 years after that. At some point along the journey I may just decide I have enough and call it quits.

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Re: Was there a $$$ number after which things got easier?

Post by KlangFool » Sun May 14, 2017 5:33 pm

countofmc wrote:Totally subjective, but that's what I'm looking for, opinions from our BH community.

Just something I"ve been personally wrestling with, wondering if it ever does get easier and the compounding really starts taking over?

So for our BH members, was there a number you hit after which it really felt like amassing more and more $ was getting easier and compounding was really noticeable? What was that number?
countofmc,

In my opinion, it is not subjective.


1) It is the number that even if you save nothing, the compounding of your investment will get you through the finish line.

Assuming your targeted number is 25 times your annual expense. That number is around 20 times your annual expense. Aka, around 20% below your targeted number.

2) Or, when the annual growth of your asset exceeds your annual savings by at least 2 times.

KlangFool

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Watty
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Re: Was there a $$$ number after which things got easier?

Post by Watty » Sun May 14, 2017 5:52 pm

I'm pretty middle class compared to a lot of the posters here but my first big milestones where I noticed things getting easier were when.

1) I saved up enough for a 10% down payment and was able to buy my first house.

2) I got to the to the point where, other than a mortgage, I had no debt including paying cash for cars. (I never had much debt other than car loans)

3) Through inflation my fixed mortgage payment, and related home costs, became less than renting an apartment.

bluebolt
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Re: Was there a $$$ number after which things got easier?

Post by bluebolt » Sun May 14, 2017 6:10 pm

Majormajor78 wrote:I started to really feel like things were moving when changes in account value started outstripping annual contributions. At that point new contributions seemed to be more geared towards re-balancing than driving the numbers upwards. Which of course they still do. Maybe in a handful of years the swings in account value will exceed our annual income. That should really make things interesting. It shouldn't, the math is of course unchanged but people will be people.
This is when it hit home for me also. I then ran the numbers assuming no further annual contributions and it only moved the FI date out by 2 years. That also felt pretty good.

Steven in NC
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Re: Was there a $$$ number after which things got easier?

Post by Steven in NC » Sun May 14, 2017 6:11 pm

For me it got easier when I had enough in taxable to pay off the mortgage if I lost my job. This allowed us to go one income and home school the kids. Funny thing though is if I don't remind myself that I have at least "made it" to level 1 of what I consider security I tend to live in a state of high anxiety.

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Hawaiishrimp
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Re: Was there a $$$ number after which things got easier?

Post by Hawaiishrimp » Sun May 14, 2017 6:37 pm

sc9182 wrote:At each significant stage of account value (or your net-worth) - it means different things to you: "Assuming" a steady account growth rate of 5% (*lots of assumptions and guesses - along the way - note that things and perspectives change as life progresses along the way)

a) $250k balance means - your account generating about $1000/month growth (or could support about $1000/month equivalent pension)
b) at about $500k level - your account earning $25k a year. For many - this is the max typical contribution going into your 401k each year (your max contribution plus employer match of about $6k). You could cherish this moment - your account now is working almost as hard as your own net-new-monie going into account. Or you could infer as your spouse also working now and maxing out his/her 401k!)
C) about $750k level your can almost smell the roses - you finally are able to see path/light towards the magic $1 million - your own $Million can be reached with your own hard work and disciplined savings!
D) $1 million - time to cherish and celebrate this your very own great milestone! Your account is now growing $50k a year - add your additional $25k annual 401k contributions - your account now growing about $75k/year - which is much more than typical US average income. You can almost survive with this type of growth! Particularly- if you are nearing social security benefits.
E) $1.5 million- your growth approaching$100k/year (including $25k of your own contributions). 6 figure YoY savings growth- it almost feel like your spouse also working a 6-figure+ salary - and you guys are saving all of that amount! You by now paid off your mortgage or on the way towards it.
F) $2 Million - your account intrinsic growth nearing 6-figures on its own - to many this milestone could give thoughts about early or true retirement- if you are nearing social security benefits- you are good to retire at this point !!
G) $3 million - many Bogleheads appear to consider this safe number to retire - based on typical 4% consensus SWR. At this point one is truly ready to FIRE - with or without approaching social security.

Anything more - you are likely creating trust-fund kids :-) but who wouldn't like more money - if you already are or shooting to be top 1% earner.
We have a winner.
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Hawaiishrimp
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Re: Was there a $$$ number after which things got easier?

Post by Hawaiishrimp » Sun May 14, 2017 6:40 pm

In a good day, when the market moves $10k+, that's when I'm like "WoW".

It's that moment when I realize things gonna get easier. :sharebeer
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

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Re: Was there a $$$ number after which things got easier?

Post by Dandy » Sun May 14, 2017 6:48 pm

When your appreciation exceeds your contributions you start to really feel that you money is working for you just as hard as you are working to save.

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Re: Was there a $$$ number after which things got easier?

Post by Pajamas » Sun May 14, 2017 9:08 pm

Yes, but the number varies depending on the individual and their situation and outlook.

For me it was the point at which I would find myself in a job I didn't want any longer and would ask "Should I quit or not?" instead of "Should I try to find another job or stay in this one?"

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Re: Was there a $$$ number after which things got easier?

Post by tibbitts » Sun May 14, 2017 9:24 pm

countofmc wrote:Totally subjective, but that's what I'm looking for, opinions from our BH community.

Just something I"ve been personally wrestling with, wondering if it ever does get easier and the compounding really starts taking over?

So for our BH members, was there a number you hit after which it really felt like amassing more and more $ was getting easier and compounding was really noticeable? What was that number?
Compounding is really a term that should only be used with interest-bearing investments, although I understand using it loosely in other contexts. Given the interest rates you've been seeing for the last decade or so, compounding simply doesn't "take over." Ever. It was a completely different feeling when we had money markets and CDs paying 6-8% vs. 3% inflation.

So to answer your question, no, there is no number today where compounding will matter. What will matter is if you simply have "enough" at 0% real, but you won't be getting any help from compounding in getting there.

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Re: Was there a $$$ number after which things got easier?

Post by investingdad » Sun May 14, 2017 9:54 pm

For me, it was when our portfolio was appreciating more in a year than I was / am earning by going to work.

Granted, said portfolio could lose money and hopefully I won't when I go to work during the year.

It's nice to have a third member at work for us, it doesn't ask for anything and near as I can tell, it has an easy commute.

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Re: Was there a $$$ number after which things got easier?

Post by DTSC » Sun May 14, 2017 9:56 pm

It got a lot easier after my mortgage = $0

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Re: Was there a $$$ number after which things got easier?

Post by poker27 » Sun May 14, 2017 9:57 pm

I recall doing the 'what if' math nearly daily during the last crisis. I was early in my career, and didn't have much stashed away. Getting to 6 months, a year, and other marks in reserves were all important points for me.

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Re: Was there a $$$ number after which things got easier?

Post by cantos » Sun May 14, 2017 10:04 pm

sc9182 wrote: a) $250k balance means - your account generating about $1000/month growth (or could support about $1000/month equivalent pension)
b) at about $500k level - your account earning $25k a year. For many - this is the max typical contribution going into your 401k each year (your max contribution plus employer match of about $6k). You could cherish this moment - your account now is working almost as hard as your own net-new-monie going into account. Or you could infer as your spouse also working now and maxing out his/her 401k!)
C) about $750k level your can almost smell the roses - you finally are able to see path/light towards the magic $1 million - your own $Million can be reached with your own hard work and disciplined savings!
D) $1 million - time to cherish and celebrate this your very own great milestone! Your account is now growing $50k a year - add your additional $25k annual 401k contributions - your account now growing about $75k/year - which is much more than typical US average income. You can almost survive with this type of growth! Particularly- if you are nearing social security benefits.
E) $1.5 million- your growth approaching$100k/year (including $25k of your own contributions). 6 figure YoY savings growth- it almost feel like your spouse also working a 6-figure+ salary - and you guys are saving all of that amount! You by now paid off your mortgage or on the way towards it.
F) $2 Million - your account intrinsic growth nearing 6-figures on its own - to many this milestone could give thoughts about early or true retirement- if you are nearing social security benefits- you are good to retire at this point !!
G) $3 million - many Bogleheads appear to consider this safe number to retire - based on typical 4% consensus SWR. At this point one is truly ready to FIRE - with or without approaching social security.
.
Thank you for this. Putting aside the typical analysis of expenses vs how much you need to meet those expenses, this is pretty much the Truth, certainly for me, and I would wager, for most.

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JoMoney
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Re: Was there a $$$ number after which things got easier?

Post by JoMoney » Sun May 14, 2017 10:22 pm

Everything above 0 is great. Somehow, being -$5,000 in debt can feel like you're sinking with an anchor pulling you down where you never get a breath of air.
It feels much easier when you're +$5,000 you don't owe anybody, there's a little bit of a cushion between your next paycheck and the street, and you can see how much extra out of each paycheck you can save above and beyond your expenses... That's when it's easy. When your own contributions are making your savings grow huge amounts every week it really feels like you're making progress.

When you really start amassing more, concerns start growing about how best to invest and at the same time protect what you've managed to save.
When your net worth starts fluctuating +/- $5,000 just from daily market swings things change. When you receive a big bonus at work, put it all in the market, and the next day your balance is lower than it was before you made the investment you start questioning how 'easy' it is.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Was there a $$$ number after which things got easier?

Post by 123 » Mon May 15, 2017 12:34 am

When daily market fluctuations in our portfolio sometimes exceed our annual contributions it seems like maybe we don't need to be concerned about continuing work/contributions. On really good/bad days market fluctuations in our portfolios have exceeded our annual earnings, these kind of things make efforts to continue working feel a little futile.

We just stay the course.
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Re: Was there a $$$ number after which things got easier?

Post by goingup » Mon May 15, 2017 9:29 am

OP-
I know what you're getting at. There was a point reached which felt like critical mass--a point where the portfolio steams under its own power and total return outstrips contributions. We were into the commas before I felt this happen. The long bull market has made this possible. A high savings rate and dividend reinvestment for many years has worked well to this point. Our challenge now is to be good stewards.

SimonJester
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Re: Was there a $$$ number after which things got easier?

Post by SimonJester » Mon May 15, 2017 9:43 am

+1 for it got easier after paying off the mortgage.

Knowing no matter what I had a roof over my head I was no longer stressed out at work. We could then divert a LOT of cash towards retirement and watch it pile up....
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EnjoyIt
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Re: Was there a $$$ number after which things got easier?

Post by EnjoyIt » Mon May 15, 2017 10:08 am

For all you people that said "growth in the accounts exceeded wages from work"
Why are you still working?

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Re: Was there a $$$ number after which things got easier?

Post by The Wizard » Mon May 15, 2017 10:11 am

No, there was never really a dollar amount where things became "easier".
I became borderline FI at a certain point when my projected retirement income approximately equalled my net employment income. So a couple years after that I was comfortable retiring.
Things got easier after that. :)
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Re: Was there a $$$ number after which things got easier?

Post by 2Birds1Stone » Mon May 15, 2017 10:30 am

I crossed an interesting threshold with today's paycheck.

Net Worth crossed 12X annual expenses.

YoY portfolio growth cracked +$100k over the past 12 months.

I guess this can be helpful if the market continues to go up, or psychologically crushing if the market enters bear territory and my contributions over the coming years are offset by market losses.

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Re: Was there a $$$ number after which things got easier?

Post by KlangFool » Mon May 15, 2017 10:39 am

EnjoyIt wrote:For all you people that said "growth in the accounts exceeded wages from work"
Why are you still working?
EnjoyIt,

SWR = 4% for retirement age. SWR = 3.33% or lower for early retirement. So, if the account growth exceeded 4%/3.33% or like 10% now, the investment is still not big enough for retirement.

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JDCarpenter
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Re: Was there a $$$ number after which things got easier?

Post by JDCarpenter » Mon May 15, 2017 10:48 am

For us, it wasn't really a dollar amount.

Rather, it was when the last kid graduated college (we chose to pay for undergrad and the kids went to schools of their choice). Going from 3 enrolled to 0 enrolled in 4 years reduced expenses to the point that things got very easy. Three years later, we are both retiring ....
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itstoomuch
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Re: Was there a $$$ number after which things got easier?

Post by itstoomuch » Mon May 15, 2017 11:00 am

Yes, It got easier when you know or exceed your Liability Matching Portfolio# (aka LMP) or your Funding ratio (FR).
This will take thinking in Income rather than Investing/Savings Assets.
YMMV
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

The Wizard
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Re: Was there a $$$ number after which things got easier?

Post by The Wizard » Mon May 15, 2017 11:57 am

itstoomuch wrote:Yes, It got easier when you know or exceed your Liability Matching Portfolio# (aka LMP) or your Funding ratio (FR).
This will take thinking in Income rather than Investing/Savings Assets.
YMMV
Totally agree on the income focus, though I prefer my spreadsheet method with different income streams at different times...
Attempted new signature...

wolf359
Posts: 1246
Joined: Sun Mar 15, 2015 8:47 am

Re: Was there a $$$ number after which things got easier?

Post by wolf359 » Mon May 15, 2017 11:58 am

I don't really understand this question. When what gets easier? What do you mean by "things?" The savings process? Living life and staying motivated to keep saving? The rapid build-up of assets to cross the finish line?

For me, it was very easy to stay motivated in the beginning. If you set up a high savings rate (whatever high is for you) and automate it, saving is pretty easy. Your first deposit moves you up from zero, and your second deposit doubles your account. Even drastic market moves aren't that alarming. If your balance cuts in half, and you move from $10,000 to $5,000, but are contributing $1,000 a month, it's not too long before your balance recovers. Things are actually pretty easy as long as each month's contributions are at least 1/2% to 1 % of your total balance. Although the market can move faster than that, it doesn't do it all the time, and you can pretty much watch your balance steadily climb in a straight line up.

What makes it easy isn't the balance. It's the amount you're contributing relative to the balance. It's automating your purchases so you don't think about it. It's about increasing your contributions when you get pay raises, so you increase with inflation and as your ability to earn grows.

One of the dirty little secrets is that the compounding chart doesn't work like that smooth curve line in real life. The year to year return varies considerably. For example, over the last ten years, the total return of the S&P 500 was:

Dec. 31, 2016 11.96%
Dec. 31, 2015 1.38%
Dec. 31, 2014 13.69%
Dec. 31, 2013 32.39%
Dec. 31, 2012 16.00%
Dec. 31, 2011 2.11%
Dec. 31, 2010 15.06%
Dec. 31, 2009 26.46%
Dec. 31, 2008 -37.00%
Dec. 31, 2007 5.49%

You could have $1 million invested in 2015, and compounding would still feel painfully slow. If you had $1 million invested in 2008, it would just feel painful. Negative compounding happens, too.

2015 was a big slog for me, although I had a significant (for me) amount invested. At the beginning of 2016, the markets tanked, then came back by March. In November it really took off, and has stayed aloft since. But -- it doesn't do that every year.

What made my financial life easier was:
1) When I first had enough saved in taxable to sustain 2-3 years of unemployment.
2) When I developed a plan to allow indefinite financial independence at an acceptable standard of living. (Not at our desired lifestyle, but I no longer have to fear not being able to feed my family.)
3) When I achieve full FI at my desired lifestyle.
4) When I achieve full FI with an acceptable margin of safety.

There's a race between being able to earn and accumulating sufficient assets. If I am unable to stay employed at my current salary, momentum will take us over the finish line as long as I make enough to live on.

- Getting enough accumulated to pay off the mortgage at any time helps make things easier.
- Getting the kids through college and off on their own will make things easier.
- Actually paying off the mortgage will make things easier.

But until I actually hit full FI earlier than I need to, I'm not sure I'm going to rest easy.
For all you people that said "growth in the accounts exceeded wages from work"
Why are you still working?
I've had growth in the account exceed my wages from work. I've also lost more in the account than I make at work. I'm still working because the markets fluctuate. Even if I hit my nominal number I have to allow a margin for safety. Making my numbers at the peak of an all-time high means the market could be at the top part of its standard deviation. I'd rather not voluntarily give up my income at that point, especially if I'm retiring early.

Besides, what's wrong with working and contributing to society?

EnjoyIt
Posts: 1508
Joined: Sun Dec 29, 2013 8:06 pm

Re: Was there a $$$ number after which things got easier?

Post by EnjoyIt » Mon May 15, 2017 5:54 pm

KlangFool wrote:
EnjoyIt wrote:For all you people that said "growth in the accounts exceeded wages from work"
Why are you still working?
EnjoyIt,

SWR = 4% for retirement age. SWR = 3.33% or lower for early retirement. So, if the account growth exceeded 4%/3.33% or like 10% now, the investment is still not big enough for retirement.

KlangFool
Hold on, the people are saying that the growth exceeds their income. From that number you must deduct taxes including FICA as well as any contributions one makes to retirement accounts. That means that growth not only exceeds their income but also exceeds their expenses which must be much lower than income. If growth exceeds my income that means I have saved way way way too much money considering my taxes are 30% of my income and I spend about 25-30% of my income.
wolf359 wrote:
For all you people that said "growth in the accounts exceeded wages from work"
Why are you still working?
I've had growth in the account exceed my wages from work. I've also lost more in the account than I make at work. I'm still working because the markets fluctuate. Even if I hit my nominal number I have to allow a margin for safety. Making my numbers at the peak of an all-time high means the market could be at the top part of its standard deviation. I'd rather not voluntarily give up my income at that point, especially if I'm retiring early.

Besides, what's wrong with working and contributing to society?
Working does not mean you are contributing to society, it just means you are getting up doing someone else's bidding. Even the self employed are doing work for a payer's behalf. It also does depend what kind of work that you do. If you are a frivolous litigation lawyer are you really contributing to society? I know, a straw man response. I figure if you have enough money to stop working and really have nothing better to do then work, then by all means work. If you enjoy what you do, or get some significant satisfaction from what you do then again, work. But working just for the sake of working is a waste of your most precious resource which is time.

livesoft
Posts: 60984
Joined: Thu Mar 01, 2007 8:00 pm

Re: Was there a $$$ number after which things got easier?

Post by livesoft » Mon May 15, 2017 6:05 pm

EnjoyIt wrote:If growth exceeds my income that means I have saved way way way too much money considering my taxes are 30% of my income and I spend about 25-30% of my income.
That's not how it works because portfolio growth is not consistent year-in and year-out. Even early on before financial independence one's portfolio may increase in one year 3 or 4 times one's income. After all, a sustained withdrawal rate of 3.5% or 4% is what many people aim for, but their portfolio better have at least once or twice a return of 15% to 20%.
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EnjoyIt
Posts: 1508
Joined: Sun Dec 29, 2013 8:06 pm

Re: Was there a $$$ number after which things got easier?

Post by EnjoyIt » Mon May 15, 2017 6:09 pm

livesoft wrote:
EnjoyIt wrote:If growth exceeds my income that means I have saved way way way too much money considering my taxes are 30% of my income and I spend about 25-30% of my income.
That's not how it works because portfolio growth is not consistent year-in and year-out. Even early on before financial independence one's portfolio may increase in one year 3 or 4 times one's income. After all, a sustained withdrawal rate of 3.5% or 4% is what many people aim for, but their portfolio better have at least once or twice a return of 15% to 20%.
I think you are confusing withdrawal rates vs income which are two different values.

jeep5ter
Posts: 29
Joined: Mon Jan 07, 2013 5:50 pm

Re: Was there a $$$ number after which things got easier?

Post by jeep5ter » Mon May 15, 2017 6:11 pm

wolf359 wrote:
For all you people that said "growth in the accounts exceeded wages from work"
Why are you still working
Employer subsidized insurance

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