What do you consider 'enough'?

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intangiblemoney
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What do you consider 'enough'?

Post by intangiblemoney » Tue Oct 16, 2018 6:32 pm

Does anyone out there in their working years have a way of figuring out what is 'enough' in terms of income to support their current lifestyle and to also save for the future?

I know it's different for everyone but I'd be curious to hear your thoughts on if and how you calculate how much is 'enough' money for you.
Intangible assets > tangible assets

sailaway
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Re: What do you consider 'enough'?

Post by sailaway » Tue Oct 16, 2018 6:51 pm

Enough is determined by your own lifestyle and long term goals.

One way to find your minimum is to slash spending and see if you adjust within a preset time period.

TravelforFun
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Re: What do you consider 'enough'?

Post by TravelforFun » Tue Oct 16, 2018 7:30 pm

Enough income: income that is high enough to support your lifestyle, save at least 15% for retirment, save sufficiently for your kids' education, and retire your debts agressively.

Enough asset: Asset that is equal to 33 times your gross annual expenses.

TravelforFun

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HomerJ
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Re: What do you consider 'enough'?

Post by HomerJ » Tue Oct 16, 2018 7:38 pm

Edit: misread the question.

"Enough" is personal.

I would suggest being careful not increase lifestyle creep too much. When you get a raise, save 50% of it, and spend the other 50%.

If you get a $5,000 raise, increase your spending $200 a month (Hey that's a lot of fun money), and increase your savings $200 a month.

After you've done this for many years, you'll be saving a good amount, but still slowly increasing your lifestyle.

You have to decide when you have enough. You can revisit this question over and over, but stick with the conservative side until you feel like you're really doing well.

Don't upgrade your lifestyle as soon as you think you can afford it... Pick and choose what's important.
Last edited by HomerJ on Tue Oct 16, 2018 7:46 pm, edited 1 time in total.
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dziuniek
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Re: What do you consider 'enough'?

Post by dziuniek » Tue Oct 16, 2018 7:39 pm

Not close enough yet, maybe some day.

- save 15% for retirement (more if early, hoping to get to 20% soon)
- save for kids college (saving some, but not nearly enough... but if I can cashflow daycare... I can cashflow college)
- paying all the bills and having some left over for hobbies, vacations, etc.

Tdubs
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Re: What do you consider 'enough'?

Post by Tdubs » Tue Oct 16, 2018 7:49 pm

Gittes: How much are you worth?
Cross: I've no idea. How much do you want?
Gittes: I just want to know what you're worth. Over ten million?
Cross: Oh my, yes!
Gittes: Why are you doing it? How much better can you eat? What can you buy that you can't already afford?
Cross: The future, Mr. Gittes - the future!

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Toons
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Re: What do you consider 'enough'?

Post by Toons » Tue Oct 16, 2018 7:50 pm

When we are able to do what satisfies our needs in the way of spending money,
And Compounding continues to grow the Net Worth.
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: What do you consider 'enough'?

Post by sailaway » Tue Oct 16, 2018 8:00 pm

HomerJ wrote:
Tue Oct 16, 2018 7:38 pm
Edit: misread the question.

"Enough" is personal.

I would suggest being careful not increase lifestyle creep too much. When you get a raise, save 50% of it, and spend the other 50%.

If you get a $5,000 raise, increase your spending $200 a month (Hey that's a lot of fun money), and increase your savings $200 a month.

After you've done this for many years, you'll be saving a good amount, but still slowly increasing your lifestyle.

You have to decide when you have enough. You can revisit this question over and over, but stick with the conservative side until you feel like you're really doing well.

Don't upgrade your lifestyle as soon as you think you can afford it... Pick and choose what's important.
I had written a bit about the difference between COL raises and merit raises/promotions, but perhaps if you are saving 50/50 your lifestyle would be maintained across both?

Does someone have data on the usual split? I went from academia to self employment, while my hsuband's advance is considered outstanding at his company, so my perspective is skewed.

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whodidntante
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Re: What do you consider 'enough'?

Post by whodidntante » Tue Oct 16, 2018 8:07 pm

If I can spend a million dollars a day for five days, and still have enough to live in a low cost country until I expire. Not that that's the plan.

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Re: What do you consider 'enough'?

Post by montanagirl » Tue Oct 16, 2018 8:11 pm

About 10 years out from retirement I began increasing 401k withholding, to where my pay was close to my predicted social security. I kept checking and adjusting, delayed filing, so that my SS is close to my old take home pay and my rmd was close to my money from side hustles. Plus with some Roth money left over for emergencies. :beer

It worked out pretty well, but I wasn't living high on the hog by any means. Seemed like a reasonable result after my chaotic working life.

Anyway that's how I figured out how much was enough.

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Re: What do you consider 'enough'?

Post by noco-hawkeye » Tue Oct 16, 2018 8:12 pm

Enough is usually something like 1M more than I have right now, or maybe 50-100% more than I have.... something along those lines.

What is enough to me today is not the same thing that I would have said when I was 10-15 years younger. As time moves along and your situation changes, this target continues to move.

I know thats kind of philosophical, but I think it's true the more I experience life.

Having said all that - If I had 5M, I'm sure that would be enough. :D

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Re: What do you consider 'enough'?

Post by Teague » Tue Oct 16, 2018 8:16 pm

Be careful about how much you get used to having, "lifestyle creep" as noted by a poster above. If you get used to having a lot of expensive things, you will need to save a lot of money. If you can be satisfied with fewer simpler things you will require much less.

Some people do not consider billions of dollars, with a mega-yacht, helicopter, and private jet to be enough. They will never have enough.

Some are content with a thatched roof over their head, a mat to sleep on, and simple food and clothing. They have enough.
Semper Augustus

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Taylor Larimore
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Jack Bogle on "Enough"

Post by Taylor Larimore » Tue Oct 16, 2018 8:27 pm

Bogleheads:

Jack Bogle write a wonderful book titled, Enough. These are excerpts:
"At a party give by a billionaire, Kurt Vonnegut informs his pal, Josepth Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, 'Yes, but I have something he will never have...enough."

"Not knowing what enough is, subverts our professional values. It makes salespersons of those who should be fiduciaries of the investments entrusted to them."

"I grew up with the priceless advantage of having to work for what I got."

"On February 21, 1996, I at last received my new heart.--One more reason why I am convinced that I have received more blessings than any other human being on the face of the earth."

"I've developed a profound concern that our society is moving in the wrong direction."

"We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."

"We have more than enough of the fool's gold of marketing and salesmanship and not enough of the real gold of trusteeshiip and stewardship."

"The more the financial system takes, the less the investor makes. The investor feeds at the bottom of what is today the tremendously costly food chain of investing."

"In 2007 alone, the 50 highest-paid hedge fund manager together earned $29 billion (yes, billion). If you didn't make $360 million in that single year, you didn't even crack the top 25."

"I passionately subscribe to these simple principles of balance, diversification, and focus on the long term."

"Today, if fund managers can claim to be wizards at anything, it is in extracting money from investors. In 2007, the direct costs of the mutual fund system totaled more than $100 billion year after year paid by the investors themselves."

"Over the past two centuries, our nation has moved from an agricultural economy to a manufacturing economy, to a service economy, and now to a predominantly financial economy."

"It is essential that we demand that the financial sector function far more effectively in the public interest and in the interest of investors than it does today."

"When I first came into the financial field in 1951, the annual rate of turnover of stocks was running at about 25%. Yet by last year, stock turnover had shot up to 215%."

"In the financial markets, the improbable is, in fact, highly probable."

"While there have been numerous black swans in our short-term-oriented and speculative financial markets, there have been no black swans in the long-term returns generated by U.S. stocks."

"In investing, tortoises tend to win far more often than hares over the turns of the market cycle." (Peter Bernstein, quote)

"Heck, I don't even know anyone who knows anyone who has timed the market with consistent, successful, and replicable results."

"For me, simplicity has always been the key to successful investing."

"Financial institutions have a large incentive to favor the complex and costly over the simple and cheap."

"The notional principal value of all derivatives is almost beyond imagination--some $600 trillion, nearly 10 time the $66 trillion gross domestic product of the entire world."

"Fidelity's remarkable Peter Lynch declared, 'Most investor would be better off in an index fund.' He was right!"

"Wall Street's perennial advice to its clients: 'Don't just stand there. Do something!'"

"During the 25 years ended 2005, the average equity fund reported an annual rate of return of 10%--trailing the 12.3% return of an S&P 500 Index Fund."

"I've been lucky enough to have played a key role in a number of innovations: the stock index fund, the bond index fund, the defined-maturity bond fund, the tax-managed fund, and even the first fund-of-funds."

"Nobel Laureate, economist Paul Samuelson called the first index mutual fund the equivalent of the invention of the wheel and the alphabet."

"ETFs used for investment are perfectly sound, but using them for speculation is apt to end badly for investors."

"As the Oracle of Omaha (Warren Buffett) sometimes expresses it, 'There are three i's in every cycle: first the innovator, then the imitator, and finally the idiot.'"

"My long experience warns that it's all too counterproductive for investors to jump on the bandwagon of superior past performance."

"Mark me down, too, as an index fundamentalist, a passionate believer that the simplicity of the original index fund design--highly diversified portfolio of stocks weighted by their market capitalizations--continues to represent the gold standard for investors."

"Not everything that counts can be counted, and not everything that can be counted counts."

"By worshiping at the altar of numbers and by discounting the immeasurable (trust, wisdom, character, ethical values), we have in effect created a numeric economy that can easily undermine the real one."

"That's the trouble with complex calculations: They can't be trusted to convey simple truths."

"For God's sake, let's always keep Vanguard a place where judgment has at least a fighting chance to triumph over process."

"If you do not have integrity, no one will trust you, nor should they."

"The 2003 failure of Arthur Anderson, and the earlier bankruptcy of its client Enron, was but one dramatic example of the consequences of this conflict-riddled relationship."

"Since 1950, direct ownership of U.S. stocks by individual investors has plummeted from 92% to 26%"

"In 1980 the compensation of the average chief executive officer was 42 time that of the average worker. Since then it has risen to 520 times."

"Until we pay CEOs on the basis of corporate performance rather than on the basis of corporate peers, CEO pay will, almost inevitably, continue on its upward path."

"In 1951, mutual fund assets totaled $2 billion. Today, assets total more than $12 trillion."

"The challenge to investors in picking funds has become almost equivalent to the challenge in picking individual stocks."

"The 10% annual return of the average fund over 25 years was 37% higher than the 7.3% return earned by fund shareholders (who traded)."

"A star system among mutual fund managers has evolved, with all the attendant hoopla, encouraging hyperactivity by fund investors--but most of these stars have turned out to be comets."

"In 1951, the typical mutual fund focused on the wisdom of long-term investing, holding the average stock in its portfolio for about six years. Today the holding period for a stock for actively managed equity funds is just one year."

"My dream is to design a new industry in which we give our investors a fair shake in terms of costs."

"Nearly 2,800 of the 6,126 mutual fund that existed in 2001 are already dead and gone."

"What I'm ultimately looking for is an industry that is focused on stewardship--the prudent handling of other people's money solely in the interest of our investors."

"Both leaders and managers must learn to view those who work with them--from the highest to the humblest--not just as pawns on a corporate chessboard, but as human beings with the same needs and concerns that all of us have."

"As head of Vanguard, I proposed a single overarching but simple rule: 'Do what's right. If you're not sure, ask your boss.'"

"If you want to be trusted, be trustworthy. If you demand hard work, work hard. If you want your colleagues to level with you, level with them. It's not very complicated."

"Of the Fortune 500 largest corporations in 1955, only 71 remain on the list today."

"'We did it ourselves.' Really? When I hear that, I'm bold enough to ask, 'Now just how did you arrange to be born in the United States of America?"

"Wisdom. The kind of wisdom that was rife in the age of this nation's Founding Fathers--is in short supply."

"Benjamin Franklin began each day with the (written) question: 'What Good shall I do this day?' and ended with 'What Good have I done today'".

"Success, in short, can be measured not in what we attain for ourselves, but in what we contribute to our society."

"I was born and raised to save rather than spend. I can't remember a single year during my long career in which I've spent more than I earned."

"I've been able to accumulate wealth despite giving, for about the past 20 years, one-half of my annual income to various philanthropic causes."

"So, in comparison to nearly all, if not all, of my peers in this business, I'm something of a financial failure."

"I do my best to avoid the temptation to peek at the value of my fund holding--a good rule for all of us."

"When John D Rockefeller was asked how much was enough, he answered:, 'just a little bit more.'"

"I hope many moons from now, I will take time to revel in the memories of all the wonderful battles I've fought during my long life."

"If you carry nothing else away from your reading of this book, remember this: The great game of life is not about money; it is about doing your best to join the battle to build anew ourselves, our communities, our nation, and our world."
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

Pinotage
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Re: What do you consider 'enough'?

Post by Pinotage » Tue Oct 16, 2018 8:35 pm

noco-hawkeye wrote:
Tue Oct 16, 2018 8:12 pm
Enough is usually something like 1M more than I have right now, or maybe 50-100% more than I have.... something along those lines.

What is enough to me today is not the same thing that I would have said when I was 10-15 years younger. As time moves along and your situation changes, this target continues to move.

I know thats kind of philosophical, but I think it's true the more I experience life.

Having said all that - If I had 5M, I'm sure that would be enough. :D
Agree that the further out from retirement you are the more philosophical (vs practical) the question is.

Now 15-20 years out from our goal retirement ages, DW and I are well on track with our savings. But we certainly do not have enough to throw in the towel today.

The only things that will bridge the gap from where we are now to "enough" are either an inordinate amount of money acquired "now", or the passage of time. As we get closer to retirement age I believe we will adjust our expectations to live within/below our means at the time, whatever they happen to be.

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Re: What do you consider 'enough'?

Post by sailaway » Tue Oct 16, 2018 8:41 pm

Pinotage wrote:
Tue Oct 16, 2018 8:35 pm
noco-hawkeye wrote:
Tue Oct 16, 2018 8:12 pm
Enough is usually something like 1M more than I have right now, or maybe 50-100% more than I have.... something along those lines.

What is enough to me today is not the same thing that I would have said when I was 10-15 years younger. As time moves along and your situation changes, this target continues to move.

I know thats kind of philosophical, but I think it's true the more I experience life.

Having said all that - If I had 5M, I'm sure that would be enough. :D
Agree that the further out from retirement you are the more philosophical (vs practical) the question is.

Now 15-20 years out from our goal retirement ages, DW and I are well on track with our savings. But we certainly do not have enough to throw in the towel today.

The only things that will bridge the gap from where we are now to "enough" are either an inordinate amount of money acquired "now", or the passage of time. As we get closer to retirement age I believe we will adjust our expectations to live within/below our means at the time, whatever they happen to be.
OP is asking about The Number, they are asking about accumulation salary.

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Re: What do you consider 'enough'?

Post by Grt2bOutdoors » Tue Oct 16, 2018 8:44 pm

1.25 * (G - t) = X * years to retirement age.
Where G = gross income expected in retirement in today's dollars
t = contribution to taxing authorities

The .25 is the "buffer", a nice to have just in case. One can dream~
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: What do you consider 'enough'?

Post by AerialWombat » Tue Oct 16, 2018 8:46 pm

As of this month, my cash and securities "enough" number is $591,250. This does not include equity in rental properties.

Derivation: My current annual lifestyle cost multiplied by the absolute minimum number of years I anticipate needing it. Also, I plan based on an expected real return of 0% per annum, but not negative. My securities AA is 30/70.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

Pinotage
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Re: What do you consider 'enough'?

Post by Pinotage » Tue Oct 16, 2018 8:58 pm

sailaway wrote: OP is asking about The Number, they are asking about accumulation salary.
True, but it is pretty tough to identify an accumulation salary without an idea of what you're accumulating towards. Ultimately the higher the accumulation target the higher the salary needed to get there.

If the plan is to work until a traditional-ish retirement age, I'd say whatever salary allows you to live debt free and save 20% towards retirement. That 20% could be 401k/403b/IRA/pension contribution. Your expenses drive the rest.

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tooluser
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Re: What do you consider 'enough'?

Post by tooluser » Tue Oct 16, 2018 8:59 pm

My rules of thumb:

While working: Divide salary as 1/3 to savings & investments, 1/3 to taxes, 1/3 to live on. More income is always better, financially speaking, so there is no overall Enough while you are working. The 1/3's are approximate. You can save more proportionally in a low tax area or when your income is lower. But if your income is lower you may also have to spend more proportionately to live on.

After retirement: Enough = final annual salary minus annual retirement plan contributions minus annual social security tax. Back this number up with a detailed projected retirement budget to be sure. To retire at your previous lifestyle, pension plus social security plus investment income (via the 4% rule or whatever method you choose) must equal Enough.

Note that retirement Enough includes savings for things like home upgrades or cars or big vacations - things you were doing while working and intend to continue doing.
The discovery of America, and that of a passage to the East Indies by the Cape of Good Hope, are the two greatest and most important events recorded in the history of mankind. -- Adam Smith, 1776

typical.investor
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Re: What do you consider 'enough'?

Post by typical.investor » Tue Oct 16, 2018 9:06 pm

intangiblemoney wrote:
Tue Oct 16, 2018 6:32 pm
Does anyone out there in their working years have a way of figuring out what is 'enough' in terms of income to support their current lifestyle and to also save for the future?

I know it's different for everyone but I'd be curious to hear your thoughts on if and how you calculate how much is 'enough' money for you.
I never think we have 'enough'.

I think about the cost of something (or doing something), the cheaper alternatives and not having it or doing it. Then I think about one day's work and income and decide if the cost is worth it to me, if a cheaper alternative would do, or if it's something we're better off without.

So I ask is the value 'enough' to justify the expenditure? I never think I have enough that I don't have to worry about it.

KlangFool
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Re: What do you consider 'enough'?

Post by KlangFool » Tue Oct 16, 2018 9:20 pm

OP,

My income is always "enough" for my lifestyle.

Save 1/3, spend 1/3, pay 1/3 in taxes.

I aim for Financial Independence (FI), not retirement. So, my enough number is 25 times my current annual expense.

KlangFool
Last edited by KlangFool on Tue Oct 16, 2018 9:29 pm, edited 1 time in total.

J295
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Re: What do you consider 'enough'?

Post by J295 » Tue Oct 16, 2018 9:27 pm

Honestly never thought about it when I was working in terms of a formula. Had a well compensated vocation and I just put my head down and worked hard and saved money. Probably didn’t hurt that I wanted to retire early, and made my first equity investment in 1979 as a junior in college. My business partners, who I like and respect very much, used to poke fun at me for my frugal habits. Those habits along with a lot of good fortune allowed us the ability to retire at 53.

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Re: What do you consider 'enough'?

Post by HereToLearn » Tue Oct 16, 2018 10:30 pm

TravelforFun wrote:
Tue Oct 16, 2018 7:30 pm
Enough income: income that is high enough to support your lifestyle, save at least 15% for retirment, save sufficiently for your kids' education, and retire your debts agressively.

Enough asset: Asset that is equal to 33 times your gross annual expenses.

TravelforFun
Am not debating your 33X gross expenses figure, but wondering if that figure applies at any age or only at traditional retirement age?

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Re: What do you consider 'enough'?

Post by smectym » Tue Oct 16, 2018 11:03 pm

Perhaps posts responding to the query, “What do you consider ‘enough’?” that fail to state the number the poster would consider “enough,” should be screened out by the moderator. That would prune the dozens of posts above to what: zero?

As to Bogle’s book: the title says it all. Maybe add an exclamation point.

My number: $750,000 in savings bonds and other stuff like CD’s, plus the 2 SS income streams about to be triggered in our household. Everything else is filed under “More Than Enough.”

Smectym

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Re: What do you consider 'enough'?

Post by The Wizard » Wed Oct 17, 2018 4:25 am

Enough income in retirement seems to be in the $100k to $150k per year zone.
During working years it could be the same or more, depending on number of people and expected number of years of employment...
Attempted new signature...

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Re: What do you consider 'enough'?

Post by The Wizard » Wed Oct 17, 2018 4:28 am

smectym wrote:
Tue Oct 16, 2018 11:03 pm
Perhaps posts responding to the query, “What do you consider ‘enough’?” that fail to state the number the poster would consider “enough,” should be screened out by the moderator. That would prune the dozens of posts above to what: zero?

As to Bogle’s book: the title says it all. Maybe add an exclamation point.

My number: $750,000 in savings bonds and other stuff like CD’s, plus the 2 SS income streams about to be triggered in our household. Everything else is filed under “More Than Enough.”

Smectym
OP is asking about annual income, not accumulated assets...
Attempted new signature...

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Re: What do you consider 'enough'?

Post by Ron Scott » Wed Oct 17, 2018 6:54 am

You can never be too rich or too thin.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

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Re: Jack Bogle on "Enough"

Post by abuss368 » Wed Oct 17, 2018 7:10 am

Taylor Larimore wrote:
Tue Oct 16, 2018 8:27 pm
Bogleheads:

Jack Bogle write a wonderful book titled, Enough. These are excerpts:
"At a party give by a billionaire, Kurt Vonnegut informs his pal, Josepth Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, 'Yes, but I have something he will never have...enough."

"Not knowing what enough is, subverts our professional values. It makes salespersons of those who should be fiduciaries of the investments entrusted to them."

"I grew up with the priceless advantage of having to work for what I got."

"On February 21, 1996, I at last received my new heart.--One more reason why I am convinced that I have received more blessings than any other human being on the face of the earth."

"I've developed a profound concern that our society is moving in the wrong direction."

"We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."

"We have more than enough of the fool's gold of marketing and salesmanship and not enough of the real gold of trusteeshiip and stewardship."

"The more the financial system takes, the less the investor makes. The investor feeds at the bottom of what is today the tremendously costly food chain of investing."

"In 2007 alone, the 50 highest-paid hedge fund manager together earned $29 billion (yes, billion). If you didn't make $360 million in that single year, you didn't even crack the top 25."

"I passionately subscribe to these simple principles of balance, diversification, and focus on the long term."

"Today, if fund managers can claim to be wizards at anything, it is in extracting money from investors. In 2007, the direct costs of the mutual fund system totaled more than $100 billion year after year paid by the investors themselves."

"Over the past two centuries, our nation has moved from an agricultural economy to a manufacturing economy, to a service economy, and now to a predominantly financial economy."

"It is essential that we demand that the financial sector function far more effectively in the public interest and in the interest of investors than it does today."

"When I first came into the financial field in 1951, the annual rate of turnover of stocks was running at about 25%. Yet by last year, stock turnover had shot up to 215%."

"In the financial markets, the improbable is, in fact, highly probable."

"While there have been numerous black swans in our short-term-oriented and speculative financial markets, there have been no black swans in the long-term returns generated by U.S. stocks."

"In investing, tortoises tend to win far more often than hares over the turns of the market cycle." (Peter Bernstein, quote)

"Heck, I don't even know anyone who knows anyone who has timed the market with consistent, successful, and replicable results."

"For me, simplicity has always been the key to successful investing."

"Financial institutions have a large incentive to favor the complex and costly over the simple and cheap."

"The notional principal value of all derivatives is almost beyond imagination--some $600 trillion, nearly 10 time the $66 trillion gross domestic product of the entire world."

"Fidelity's remarkable Peter Lynch declared, 'Most investor would be better off in an index fund.' He was right!"

"Wall Street's perennial advice to its clients: 'Don't just stand there. Do something!'"

"During the 25 years ended 2005, the average equity fund reported an annual rate of return of 10%--trailing the 12.3% return of an S&P 500 Index Fund."

"I've been lucky enough to have played a key role in a number of innovations: the stock index fund, the bond index fund, the defined-maturity bond fund, the tax-managed fund, and even the first fund-of-funds."

"Nobel Laureate, economist Paul Samuelson called the first index mutual fund the equivalent of the invention of the wheel and the alphabet."

"ETFs used for investment are perfectly sound, but using them for speculation is apt to end badly for investors."

"As the Oracle of Omaha (Warren Buffett) sometimes expresses it, 'There are three i's in every cycle: first the innovator, then the imitator, and finally the idiot.'"

"My long experience warns that it's all too counterproductive for investors to jump on the bandwagon of superior past performance."

"Mark me down, too, as an index fundamentalist, a passionate believer that the simplicity of the original index fund design--highly diversified portfolio of stocks weighted by their market capitalizations--continues to represent the gold standard for investors."

"Not everything that counts can be counted, and not everything that can be counted counts."

"By worshiping at the altar of numbers and by discounting the immeasurable (trust, wisdom, character, ethical values), we have in effect created a numeric economy that can easily undermine the real one."

"That's the trouble with complex calculations: They can't be trusted to convey simple truths."

"For God's sake, let's always keep Vanguard a place where judgment has at least a fighting chance to triumph over process."

"If you do not have integrity, no one will trust you, nor should they."

"The 2003 failure of Arthur Anderson, and the earlier bankruptcy of its client Enron, was but one dramatic example of the consequences of this conflict-riddled relationship."

"Since 1950, direct ownership of U.S. stocks by individual investors has plummeted from 92% to 26%"

"In 1980 the compensation of the average chief executive officer was 42 time that of the average worker. Since then it has risen to 520 times."

"Until we pay CEOs on the basis of corporate performance rather than on the basis of corporate peers, CEO pay will, almost inevitably, continue on its upward path."

"In 1951, mutual fund assets totaled $2 billion. Today, assets total more than $12 trillion."

"The challenge to investors in picking funds has become almost equivalent to the challenge in picking individual stocks."

"The 10% annual return of the average fund over 25 years was 37% higher than the 7.3% return earned by fund shareholders (who traded)."

"A star system among mutual fund managers has evolved, with all the attendant hoopla, encouraging hyperactivity by fund investors--but most of these stars have turned out to be comets."

"In 1951, the typical mutual fund focused on the wisdom of long-term investing, holding the average stock in its portfolio for about six years. Today the holding period for a stock for actively managed equity funds is just one year."

"My dream is to design a new industry in which we give our investors a fair shake in terms of costs."

"Nearly 2,800 of the 6,126 mutual fund that existed in 2001 are already dead and gone."

"What I'm ultimately looking for is an industry that is focused on stewardship--the prudent handling of other people's money solely in the interest of our investors."

"Both leaders and managers must learn to view those who work with them--from the highest to the humblest--not just as pawns on a corporate chessboard, but as human beings with the same needs and concerns that all of us have."

"As head of Vanguard, I proposed a single overarching but simple rule: 'Do what's right. If you're not sure, ask your boss.'"

"If you want to be trusted, be trustworthy. If you demand hard work, work hard. If you want your colleagues to level with you, level with them. It's not very complicated."

"Of the Fortune 500 largest corporations in 1955, only 71 remain on the list today."

"'We did it ourselves.' Really? When I hear that, I'm bold enough to ask, 'Now just how did you arrange to be born in the United States of America?"

"Wisdom. The kind of wisdom that was rife in the age of this nation's Founding Fathers--is in short supply."

"Benjamin Franklin began each day with the (written) question: 'What Good shall I do this day?' and ended with 'What Good have I done today'".

"Success, in short, can be measured not in what we attain for ourselves, but in what we contribute to our society."

"I was born and raised to save rather than spend. I can't remember a single year during my long career in which I've spent more than I earned."

"I've been able to accumulate wealth despite giving, for about the past 20 years, one-half of my annual income to various philanthropic causes."

"So, in comparison to nearly all, if not all, of my peers in this business, I'm something of a financial failure."

"I do my best to avoid the temptation to peek at the value of my fund holding--a good rule for all of us."

"When John D Rockefeller was asked how much was enough, he answered:, 'just a little bit more.'"

"I hope many moons from now, I will take time to revel in the memories of all the wonderful battles I've fought during my long life."

"If you carry nothing else away from your reading of this book, remember this: The great game of life is not about money; it is about doing your best to join the battle to build anew ourselves, our communities, our nation, and our world."
Best wishes.
Taylor
My favorite book!
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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jabberwockOG
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Re: What do you consider 'enough'?

Post by jabberwockOG » Wed Oct 17, 2018 7:17 am

The total "enough" number is highly dependent on context and the individual's COL location and spending habits. The most critical factors determining what is an adequate amount of assets/cash/investments for retirement or FI are 1) debt, 2) your specific cost of living where you live, 3) cost of healthcare and long term care 4) age

Lowering items 1,2,3 can significantly reduce the number. Increasing item 4 also tends to lower the number.

Being debt free, living in a LCOL area while living a moderate lifestyle, and having good low cost healthcare available allows folks at any given age to retire with a significantly lower asset total.

jharkin
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Re: What do you consider 'enough'?

Post by jharkin » Wed Oct 17, 2018 7:27 am

"enough" is the point where I can be putting away at least 20% for retirement, taking 1-2 modest vacations a year and not have to worry about being able to pay the bills that roll in each month.

Obviously some people want much more than this, and others less.

SQRT
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Re: What do you consider 'enough'?

Post by SQRT » Wed Oct 17, 2018 8:26 am

I reverse the question. Enough is how much I have. Never had a “number”. Got very lucky and ended up with a lot. This is enough. Set my lifestyle to the amount I ended up with. Not the other way around. Not representative, I know.

TN_Boy
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Re: What do you consider 'enough'?

Post by TN_Boy » Wed Oct 17, 2018 8:50 am

intangiblemoney wrote:
Tue Oct 16, 2018 6:32 pm
Does anyone out there in their working years have a way of figuring out what is 'enough' in terms of income to support their current lifestyle and to also save for the future?

I know it's different for everyone but I'd be curious to hear your thoughts on if and how you calculate how much is 'enough' money for you.
Yes to "Does anyone out there in their working years have a way of figuring out what is 'enough' in terms of income to support their current lifestyle."

If you are "reasonably close" to retirement. Important caveat on close to retirement. When I was 40, I didn't know how much money I needed for retirement.

What we did was (relatively) simple. We looked at our tax returns over a period of years. The AGI excludes retirement savings. From AGI we subtracted SS taxes, income taxes, etc. All the taxes that either go away or change (income taxes) in retirement. Then we subtracted taxable account savings (we put money in a brokerage account every year, as well as maxing out retirement accounts). After those subtractions from AGI, we knew what we lived on during those years. That gives us, call it PRE, pre-retirement expenses.

Okay, so what will change in retirement? Well, some expenses might go away -- maybe you pay the house off, or you have kids in college. We had a couple of adjustments to make. Other expenses go up -- like another $5k trip per year. And there is health care. So we adjust:

Post retirement expenses = PRE - expenses that go away + expenses that increase.

And then, compute taxes on Post retirement expenses. No more SS taxes, and income taxes (almost always) go down. This left us with a rough, but decent estimate of our post retirement expenses. We also did detailed breakdowns of expenses for a couple of years to see exactly where the money was going, but the main planning number used was the average PRE over 8 or 10 full years.

A big simplification for us was that our post-retirement and pre-retirement lifestyles are not drastically different. More of the fun stuff, less of the un-fun stuff. And even in our case, I am oversimplifying the thought process a bit. But I think a process like the above can get you in the ballpark.

But I'll stress -- at age 40 or 45, we would not have been able to make those calculations; forget computing expenses, we simply did not have a good understanding of what our lifestyle was likely to be at retirement age. Our plan at younger ages was max retirement accounts, plus some extra. You only have so much money. As you get closer to retirement age, it becomes clearer what resources you are going to have at retirement age, and you better understand expenses.

NextMil
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Re: What do you consider 'enough'?

Post by NextMil » Wed Oct 17, 2018 8:53 am

Yes - A budget. That is how you figure out if you are making enough to support your lifestyle and get ahead. If you are not running deficits with your spending and funding your retirement then you are at the point where you are making enough. If you are running deficits every month then, no you are not making enough money.

Hard to tell by your question, but are you asking because you feel you need to make more income or you need to reduce spending?

LiterallyIronic
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Re: What do you consider 'enough'?

Post by LiterallyIronic » Wed Oct 17, 2018 8:58 am

TN_Boy wrote:
Wed Oct 17, 2018 8:50 am
But I'll stress -- at age 40 or 45, we would not have been able to make those calculations; forget computing expenses, we simply did not have a good understanding of what our lifestyle was likely to be at retirement age.
I'm trying to retire at 50, so I better have a good handle on it by 40 or 45.

OP, I consider "enough", assuming you're asking about "enough to retire" to be 25 times your annual expenses AND a paid off house.

If you're asking how much is "enough" to be making annually, then, for me, that is determined by the following: What is the minimum amount I can earn while having enough for 1) saving the amount required to have 25x expenses by 50, assuming a 7% annual growth; 2) putting extra toward the mortgage so it can be paid off by 50; and 3) enough leftover to live a frugal lifestyle in the meantime.

TN_Boy
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Re: What do you consider 'enough'?

Post by TN_Boy » Wed Oct 17, 2018 9:14 am

LiterallyIronic wrote:
Wed Oct 17, 2018 8:58 am
TN_Boy wrote:
Wed Oct 17, 2018 8:50 am
But I'll stress -- at age 40 or 45, we would not have been able to make those calculations; forget computing expenses, we simply did not have a good understanding of what our lifestyle was likely to be at retirement age.
I'm trying to retire at 50, so I better have a good handle on it by 40 or 45.

OP, I consider "enough", assuming you're asking about "enough to retire" to be 25 times your annual expenses AND a paid off house.

If you're asking how much is "enough" to be making annually, then, for me, that is determined by the following: What is the minimum amount I can earn while having enough for 1) saving the amount required to have 25x expenses by 50, assuming a 7% annual growth; 2) putting extra toward the mortgage so it can be paid off by 50; and 3) enough leftover to live a frugal lifestyle in the meantime.
Fair enough, maybe I should have said "within five or so years of retirement." But say 20 years out, wow. Your interests and needs could change. And your example of 7% growth -- you might get more, you might get less. I think it's great for younger people to be doing this planning, but I believe realistically the best you can do is motivate yourself to save a lot, and realize how much money you might need in the future. 20 years from retirement, if your plan works out just the way you wanted, well, there is a bit of luck there. Change the 7% growth to 5% and your plan will have to change.

It's irrelevant whether the house is paid off (though I think a paid off house is desirable). If you haven't paid the house off, that's an expense your income has to support and your calculations have to include that. If the numbers work, the numbers work. If you get 7% from your investments (per your example) then you are better off investing more and NOT paying off the mortgage. But growth assumptions are just growth guesses, and paying off the mortgage is a guaranteed return.

LiterallyIronic
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Re: What do you consider 'enough'?

Post by LiterallyIronic » Wed Oct 17, 2018 9:37 am

TN_Boy wrote:
Wed Oct 17, 2018 9:14 am
It's irrelevant whether the house is paid off (though I think a paid off house is desirable). If you haven't paid the house off, that's an expense your income has to support and your calculations have to include that. If the numbers work, the numbers work.
Agreed that it's mathematically irrelevant whether the house is paid off or not. I could save $600,000 (25x expenses that exclude the mortgage) or I could save $600,000 + whatever is required pay the mortgage for however many years are remaining. I just prefer the former, because: 1) it's a more concrete number; and 2) it's a lower number. I can more easily set the goal and I can say that I'm closer to reaching that goal (e.g. "I'm 10% of the way to $600,000" instead of "I'm 9% of the way to $660,000). It's kind of disingenuous, though, given that separating the retirement goal and the mortgage goal is essentially just breaking a chunk off the "enough" goal and ignoring it for the sake of saying you're "closer" to one of the two, if you know what I mean.
TN_Boy wrote:
Wed Oct 17, 2018 9:14 am
If you get 7% from your investments (per your example) then you are better off investing more and NOT paying off the mortgage. But growth assumptions are just growth guesses, and paying off the mortgage is a guaranteed return.
Indeed. Mathematically it (probably) makes more sense to invest than to pay off the mortgage. But, personally, I wouldn't accept a random loan from somebody at 3.875% (my mortgage rate) in order to invest. And that's essentially what you're doing by investing instead of paying off the mortgage. But, on the other hand, that would mean that even investing one dollar instead of putting it toward the mortgage is more or less "borrowing to invest." So I split the difference and invest enough that will get me to my investment goal in time (if I get 7% growth) and put enough to the mortgage that I can pay that off in time.

Why do I assume 7%? Because that's the lowest number that will allow me to get to my investment goal in time. If I only get 6% (or lower), then I don't have enough money to invest enough to retire at 50. And that would bum me out. I'd rather just keep investing 25% of gross and tell myself that doing so will allow me to retire at 50 (and if it doesn't, I can cross that bridge when I get there), instead of investing 25% of gross and being like, "Well, it's still not going to be enough, so what's the point of it". It's just a psychological thing that makes me feel better about the present and the future.

Random Poster
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Re: What do you consider 'enough'?

Post by Random Poster » Wed Oct 17, 2018 9:37 am

How about:

Take what you spend annually now, and multiply that number by 1.33.

Then multiply that resulting number by 40 (if you think that you can accept some risk of having to cut back expenses in the future) or 50 (if you'd rather have likely more secure, no-need-to-cut-back-later, retirement).

For every two years that you are older than 40 years of age but less than 60, you could probably reduce the 40 or 50 multiplier by one. So if you are 50, the multiplier becomes 35 or 45.

For every year that you are older than 60, you could probably reduce the (now) 30 or 40 multiplier by one.

Note that my math assumes a 50/50 portfolio and that you cease paid work at 40, but not before.

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Re: What do you consider 'enough'?

Post by 22twain » Wed Oct 17, 2018 9:51 am

The Wizard wrote:
Wed Oct 17, 2018 4:28 am
OP is asking about annual income, not accumulated assets...
Looks like this needs to be repeated.
My investing princiPLEs do not include absolutely preserving princiPAL.

remomnyc
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Re: What do you consider 'enough'?

Post by remomnyc » Wed Oct 17, 2018 9:59 am

When I first planned for my retirement at 65, the goal was 25x expected expenses. When the Great Recession happened, I started turbo charging my savings (out of fear of a layoff) at the same time the market started taking off. As a result, I reached 25x expenses a lot sooner than expected, but at a younger age than planned. Then, I recalibrated enough to 30x expenses in my 50s and called it a day. I have more than enough to cover my needs and enough to cover all my wants.

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Re: What do you consider 'enough'?

Post by EzM » Wed Oct 17, 2018 10:00 am

I'll need 25x expenses to begin thinking about early or semi-retirement phase.

The goal would be saving whatever can reasonably get me to that point in 10-15 years, either with high likelihood of success or using minimal return figures (3-4% instead of 6%+). You can simply use a typical financial calculator (time value of money) to get an idea, calculating for the annual PMT required.

That would at least spit out a savings goal of something like $25-40k/year. The next question is what income level and current spending level would allow me to save that much.

Then I'd adjust later on based on my current assets and goals.

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Re: What do you consider 'enough'?

Post by TN_Boy » Wed Oct 17, 2018 10:05 am

LiterallyIronic wrote:
Wed Oct 17, 2018 9:37 am
TN_Boy wrote:
Wed Oct 17, 2018 9:14 am
It's irrelevant whether the house is paid off (though I think a paid off house is desirable). If you haven't paid the house off, that's an expense your income has to support and your calculations have to include that. If the numbers work, the numbers work.
Agreed that it's mathematically irrelevant whether the house is paid off or not. I could save $600,000 (25x expenses that exclude the mortgage) or I could save $600,000 + whatever is required pay the mortgage for however many years are remaining. I just prefer the former, because: 1) it's a more concrete number; and 2) it's a lower number. I can more easily set the goal and I can say that I'm closer to reaching that goal (e.g. "I'm 10% of the way to $600,000" instead of "I'm 9% of the way to $660,000). It's kind of disingenuous, though, given that separating the retirement goal and the mortgage goal is essentially just breaking a chunk off the "enough" goal and ignoring it for the sake of saying you're "closer" to one of the two, if you know what I mean.
TN_Boy wrote:
Wed Oct 17, 2018 9:14 am
If you get 7% from your investments (per your example) then you are better off investing more and NOT paying off the mortgage. But growth assumptions are just growth guesses, and paying off the mortgage is a guaranteed return.
Indeed. Mathematically it (probably) makes more sense to invest than to pay off the mortgage. But, personally, I wouldn't accept a random loan from somebody at 3.875% (my mortgage rate) in order to invest. And that's essentially what you're doing by investing instead of paying off the mortgage. But, on the other hand, that would mean that even investing one dollar instead of putting it toward the mortgage is more or less "borrowing to invest." So I split the difference and invest enough that will get me to my investment goal in time (if I get 7% growth) and put enough to the mortgage that I can pay that off in time.

Why do I assume 7%? Because that's the lowest number that will allow me to get to my investment goal in time. If I only get 6% (or lower), then I don't have enough money to invest enough to retire at 50. And that would bum me out. I'd rather just keep investing 25% of gross and tell myself that doing so will allow me to retire at 50 (and if it doesn't, I can cross that bridge when I get there), instead of investing 25% of gross and being like, "Well, it's still not going to be enough, so what's the point of it". It's just a psychological thing that makes me feel better about the present and the future.
I don't really disagree with any of your assumptions/plans. I, perhaps pessimistically, feel that a lot of these "am I on track to retire many years from now" posts are wanting a precision that is unachievable.

I am older than you, and while I haven't actually polled them :-) I look at my friends in their 50s and 60s and think "how good would their predictions at 40 have been about their financial status, interests, etc?" And I strongly suspect a lot of their predictions would have been dead wrong, were they brave enough to make them! And it can work both ways. Unexpected layoffs or divorce; unexpected windfalls from picking the "right" company with a stock option plan .... family members needing help (driving a location change). New hobbies (want to live near the beach because surfing is now the center of their life ....) I could go on. Things change a lot between 40 and 60. And the "how do I pay for health care" problem, which has always been a problem for early retirees, and continues to change in various ways.

But having aggressive savings goals, and a plan based on those goals is surely a great idea, and better than what I did. I just ... wouldn't want to take such plans too literally. I do make an exception for some of the hyper-savers/minimal lifestyle folks --- it's not my way, but I can see those people having more likelihood of a long term plan working, because they are willing to live a very basic lifestyle.

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Re: What do you consider 'enough'?

Post by DanMahowny » Wed Oct 17, 2018 10:10 am

I've always had "enough". Even when I was broke.

There are many extremely wealthy people that don't have "enough", and they never will.
Funding secured

TN_Boy
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Re: What do you consider 'enough'?

Post by TN_Boy » Wed Oct 17, 2018 10:14 am

22twain wrote:
Wed Oct 17, 2018 9:51 am
The Wizard wrote:
Wed Oct 17, 2018 4:28 am
OP is asking about annual income, not accumulated assets...
Looks like this needs to be repeated.
The original question was a little vague.

I don't think the responses have been off-target. You need expense projections to know what assets you will need. The OP asked about income to support current lifestyle. Based on needed assets, you can derive a savings rate and you can make some growth estimates. And then you can decide what income supports that savings rate for you. It's possible the responses haven't tried to connect the dots enough.

I think the estimate of growth is pretty much guessing a long way from retirement, but you can try. I also think expense projections a long way from retirement are sorta guessing also.

ajjulee
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Re: What do you consider 'enough'?

Post by ajjulee » Wed Oct 17, 2018 10:38 am

Tdubs wrote:
Tue Oct 16, 2018 7:49 pm
Gittes: How much are you worth?
Cross: I've no idea. How much do you want?
Gittes: I just want to know what you're worth. Over ten million?
Cross: Oh my, yes!
Gittes: Why are you doing it? How much better can you eat? What can you buy that you can't already afford?
Cross: The future, Mr. Gittes - the future!
Great film! Great writing!
What I write on this forum is sometimes the truth, maybe the whole truth, and not always nothing but the truth, for the purposes of online anonymity.

B. Wellington
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Re: What do you consider 'enough'?

Post by B. Wellington » Wed Oct 17, 2018 11:08 am

intangiblemoney wrote:
Tue Oct 16, 2018 6:32 pm
Does anyone out there in their working years have a way of figuring out what is 'enough' in terms of income to support their current lifestyle and to also save for the future?

I know it's different for everyone but I'd be curious to hear your thoughts on if and how you calculate how much is 'enough' money for you.
The best way that I can answer this is to track your monthly (yearly) spending. Include everything including taxes etc. This gives you a "rough" estimate on your yearly (weekly/ monthly)cash flow.

What's leftover? How much are you saving in retirement accounts? Do you have room to save (or spend) more?

This gets tricky looking into the future with inflation rates and a conservative estimate on future investment returns. However, basing this on the 3%- 4% withdraw rates in retirement you are looking at a nest-egg total of 25X-33X of EXPENSES (not income.) Hope that helps.

FWIW... The "average" household income in the US is approximately $56,000 per year. That may work in the Midwest but maybe not so well in higher cost of living areas...YMMV

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HomerJ
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Re: What do you consider 'enough'?

Post by HomerJ » Wed Oct 17, 2018 4:33 pm

Tdubs wrote:
Tue Oct 16, 2018 7:49 pm
Gittes: How much are you worth?
Cross: I've no idea. How much do you want?
Gittes: I just want to know what you're worth. Over ten million?
Cross: Oh my, yes!
Gittes: Why are you doing it? How much better can you eat? What can you buy that you can't already afford?
Cross: The future, Mr. Gittes - the future!
There is something to said about making sure you have enough money to buy a holodeck... once they invent it.
The J stands for Jay

MathWizard
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Re: What do you consider 'enough'?

Post by MathWizard » Wed Oct 17, 2018 5:24 pm

When the after benefits/after tax amount from expected income stream from pensions/ SS and portfolio
is equal to my take home minus savings. This is after the kids are no longer dependent and debt is gone
which is where I am now.

beardsworth
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Re: What do you consider 'enough'?

Post by beardsworth » Wed Oct 17, 2018 5:51 pm

intangiblemoney wrote:
Tue Oct 16, 2018 6:32 pm
Does anyone out there in their working years have a way of figuring out what is 'enough' in terms of income to support their current lifestyle and to also save for the future?

I know it's different for everyone but I'd be curious to hear your thoughts on if and how you calculate how much is 'enough' money for you.
Looks like you're new to the forum in the last week-and-a-half. Welcome.

That search box at the top of each forum page can be your friend. There have been many previous discussions here on this subject. For example, the following, which you may also find helpful:

https://www.google.com/search?sitesearc ... +number%22

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VictoriaF
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Re: What do you consider 'enough'?

Post by VictoriaF » Wed Oct 17, 2018 6:07 pm

I have been keeping track of my expenses for many years. When I was preparing for retirement, I assumed my normal expenses plus a large budget for travel and increased budget for local entertainment. I also added some money for medical expenses, but that was mostly a guess.

I have been retired for four years, and I under-spend my budget:
- my travel is much less expensive than I budgeted for, because I use credit card bonuses for airfares, walking el Camino de Santiago is very inexpensive, and many of my trips are to visit family and friends
- my local entertainment expenses are slightly higher than what I have budgeted because I take expensive improv and standup classes
- my medical expenses are low because I don't have any chronic diseases.

Before I reach the age of 70, I am delaying Social Security, spending my liquid assets and paying taxes on Roth conversions. After the age of 70, my Social Security and two pensions will provide me with the "floor" of my needs. The liquid assets will be sufficient to continue my travels, taking classes, and renting in a high-cost area. The potential medical expenses are a wild card, but I am taking good care of myself and hope for continuing good health.

This is my "enough."

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: What do you consider 'enough'?

Post by sailaway » Wed Oct 17, 2018 6:13 pm

beardsworth wrote:
Wed Oct 17, 2018 5:51 pm
intangiblemoney wrote:
Tue Oct 16, 2018 6:32 pm
Does anyone out there in their working years have a way of figuring out what is 'enough' in terms of income to support their current lifestyle and to also save for the future?

I know it's different for everyone but I'd be curious to hear your thoughts on if and how you calculate how much is 'enough' money for you.
Looks like you're new to the forum in the last week-and-a-half. Welcome.

That search box at the top of each forum page can be your friend. There have been many previous discussions here on this subject. For example, the following, which you may also find helpful:

https://www.google.com/search?sitesearc ... +number%22
That is not what the OP is asking: they are asking about salary during accumulation.

OP, the 1/3 lifestyle, 1/3 taxes, 1/3 savings guideline is not one I had seen before, but it does allow you to choose a lifestyle and find the salary that works for YOU.

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