At What Age or Point in your Career did your investments start outweighing your regular paychecks?

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bigtex
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At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by bigtex » Mon Jul 01, 2019 3:18 pm

I know this question is sort of vague but at what point did the earnings from your investments significantly outweigh any regular income you receive from your 9-5 job? I am still youngish at 29 but with 100k in investments, it already feels more significant than my 60k a year in salary income. Or another way to put it, at what point did the normal working income not seem more important than the earnings / potential earnings that your investments were providing.

livesoft
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by livesoft » Mon Jul 01, 2019 3:20 pm

In my early 40's. But I had a goal in my early 20's to replace my income by age 40 from investments. I missed my goal by a few years.
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by snackdog » Mon Jul 01, 2019 3:21 pm

For most people this occurs near the end of their career. Keep in mind swings in portfolio value can be both positive and negative and while it may seem exciting to an annual increase on par with salary, the spectre of a negative swing 2-3x your income is what keeps some people working.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by abner kravitz » Mon Jul 01, 2019 3:28 pm

Not really until retirement.

sc9182
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by sc9182 » Mon Jul 01, 2019 3:34 pm

Though it may be hard to put an age/career-level to this due to: income, expenses, savings rate and investment return/sequence of returns., allow me to repeat my recent posting here:

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 account balance means - your account generating about $1000/month growth (or could support about $1000/month equivalent pension)
B) at about $500k account 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 say $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 account level your can almost smell the roses - you finally are able to see path/light towards the magic $1 million - your own $1 Million can be reached with your own hard work and disciplined savings+ investing !
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 (employer match included) - 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 401k 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 plan retirement 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 age.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by TravelforFun » Mon Jul 01, 2019 3:51 pm

For a guy who keeps a record of everything, this question is very easy for me to answer. My investment gain exceeded my family income for the first time when I was 54 and has continued to outweigh our regular paychecks since except for a few periods when the stock market retreated drastically.

I reached my salary peak at 57.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by fourwheelcycle » Mon Jul 01, 2019 3:58 pm

Since most people do not realize year to year gains in the value of their investments, and since that value can go up and down with the market, I think the most realistic way to ask this question is "when did your annual 1099-DIV income, plus the (unreported) interest and dividend income on your retirement savings, exceed your annual salary income". For me, now in my 70s, the answer is never.

I suppose you could ask the question as "when did the average year to year increase in the value of your investments, minus any increase attributable to your annual savings, exceed your annual salary income". If you ask it that way, and if you reinvest 100% of your 1099-DIV income (net of taxes), the answer for me would be sometime around age 60, which is also the year I retired.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Sandtrap » Mon Jul 01, 2019 4:27 pm

After my 20's, I never had a 9-5 job.
When you start your own company, say goodbye to regular hours, vacations, days off, time off, sick leave, automatic paychecks, . . . . . :shock:
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by smitcat » Mon Jul 01, 2019 4:34 pm

bigtex wrote:
Mon Jul 01, 2019 3:18 pm
I know this question is sort of vague but at what point did the earnings from your investments significantly outweigh any regular income you receive from your 9-5 job? I am still youngish at 29 but with 100k in investments, it already feels more significant than my 60k a year in salary income. Or another way to put it, at what point did the normal working income not seem more important than the earnings / potential earnings that your investments were providing.
The largest significant change that was in excess of our earned income came in 2008-2009 when the markets were going down - it was a very sobering experience.
For those that were not in the market yet due to age - it is a good reminder.

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Sandtrap
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Sandtrap » Mon Jul 01, 2019 4:40 pm

livesoft wrote:
Mon Jul 01, 2019 3:20 pm
In my early 40's. But I had a goal in my early 20's to replace my income by age 40 from investments. I missed my goal by a few years.
That is admirable, and difficult to do even today.
j :happy
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Trader Joe
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Trader Joe » Mon Jul 01, 2019 4:42 pm

bigtex wrote:
Mon Jul 01, 2019 3:18 pm
I know this question is sort of vague but at what point did the earnings from your investments significantly outweigh any regular income you receive from your 9-5 job? I am still youngish at 29 but with 100k in investments, it already feels more significant than my 60k a year in salary income. Or another way to put it, at what point did the normal working income not seem more important than the earnings / potential earnings that your investments were providing.
This is a great question. My annual investment returns exceeded my very significant annual work related compensation by around the age of 42. Since then the delta has only increased. The mental freedom of knowing this fact is extraordinary. Best of luck.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by livesoft » Mon Jul 01, 2019 4:46 pm

Sandtrap wrote:
Mon Jul 01, 2019 4:40 pm
livesoft wrote:
Mon Jul 01, 2019 3:20 pm
In my early 40's. But I had a goal in my early 20's to replace my income by age 40 from investments. I missed my goal by a few years.
That is admirable, and difficult to do even today.
j :happy
Or easy if you keep your salary very low. :)
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by 22twain » Mon Jul 01, 2019 5:18 pm

In my case, it was age 52, the last year of the run-up before the Great Recession.

After the recession my investments usually came out ahead, because (a) an inheritance boosted them by about 50%, and (b) I had to take a major pay cut for the last five years before I retired a couple of years ago.
My investing princiPLEs do not include absolutely preserving princiPAL.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by EnjoyIt » Mon Jul 01, 2019 5:21 pm

bigtex wrote:
Mon Jul 01, 2019 3:18 pm
I know this question is sort of vague but at what point did the earnings from your investments significantly outweigh any regular income you receive from your 9-5 job? I am still youngish at 29 but with 100k in investments, it already feels more significant than my 60k a year in salary income. Or another way to put it, at what point did the normal working income not seem more important than the earnings / potential earnings that your investments were providing.
This will never happen to me. If I ever get to the point where my investment returns are constantly more than my income, it means I have worked too long.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by TomCat96 » Mon Jul 01, 2019 5:59 pm

bigtex wrote:
Mon Jul 01, 2019 3:18 pm
I know this question is sort of vague but at what point did the earnings from your investments significantly outweigh any regular income you receive from your 9-5 job? I am still youngish at 29 but with 100k in investments, it already feels more significant than my 60k a year in salary income. Or another way to put it, at what point did the normal working income not seem more important than the earnings / potential earnings that your investments were providing.
At about age 37-38
The daily swings of my overall portfolio routinely exceed a paycheck. That could be because my salary isn't the highest.
It could also be because my portfolio is extremely aggressive by boglehead standards. The bear market/correction of december 2018 saw my portfolio dip by more than I save within a year, although not more than I earn pre-tax.

The normal working income still feels extremely important. Why?

Because none of my income comes from bonds, it doesn't feel like the gains are real. Being in the market means I could lose it all on any given day. I frequently do in fact. Up a paycheck, down a paycheck. I have decades to go. Whether I'm up or down for the day is completely immaterial to my daily existence.

For the young, I say get used to it. IMO, you don't want to be locked into thinking gains are permanent and entrenched. You'll just drive yourself nuts at the next storm. If you are young you will surely have many storms to weather.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by AerialWombat » Mon Jul 01, 2019 6:37 pm

I will never reach this point. Meaning, my annual total returns from the portfolio will literally never even come close to my current net business income.

But, I don’t need it to. I need my investments to spit out 10% of my current annual income, and I can “FIRE” myself from my company.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by teen persuasion » Mon Jul 01, 2019 6:55 pm

EnjoyIt wrote:
Mon Jul 01, 2019 5:21 pm
bigtex wrote:
Mon Jul 01, 2019 3:18 pm
I know this question is sort of vague but at what point did the earnings from your investments significantly outweigh any regular income you receive from your 9-5 job? I am still youngish at 29 but with 100k in investments, it already feels more significant than my 60k a year in salary income. Or another way to put it, at what point did the normal working income not seem more important than the earnings / potential earnings that your investments were providing.
This will never happen to me. If I ever get to the point where my investment returns are constantly more than my income, it means I have worked too long.
Agreed.

Our investment returns only need to replace our expenses, not our entire earned income, especially since we save over half of our earned income.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by nguy44 » Mon Jul 01, 2019 7:15 pm

bigtex wrote:
Mon Jul 01, 2019 3:18 pm
I know this question is sort of vague but at what point did the earnings from your investments significantly outweigh any regular income you receive from your 9-5 job? I am still youngish at 29 but with 100k in investments, it already feels more significant than my 60k a year in salary income. Or another way to put it, at what point did the normal working income not seem more important than the earnings / potential earnings that your investments were providing.
As was mentioned above, earnings from investments fluctuate, there will be years of losses. At 29 you perhaps have only been investing for 7-8 years, which have been very good. Wait until you see what can happen over the course of 30-40 years.

My normal working income was always important when I was working, because the savings from that is what drove our investments. We were far better savers than investors when I was working. Being good savers can help in those years when your investments are down.

Through that normal working income, I was fortunate enough to be able to retire and no longer require normal working income. So maybe this is the point where normal working is not important, since I no longer require it to live comfortably. :happy

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by willthrill81 » Mon Jul 01, 2019 7:19 pm

abner kravitz wrote:
Mon Jul 01, 2019 3:28 pm
Not really until retirement.
This is logical. Many, perhaps most, people would choose to retire when their investments grew to the point that they could live off of them (i.e. 'start outweighing your regular paycheck'). And for most people, this is around 'typical' retirement age (i.e. mid-60s).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by lobon » Thu Jul 04, 2019 5:27 am

Never intentionally because I live off much less than I make- I'll consider retiring when my annual gains exceed my annual EXPENSES.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by SQRT » Thu Jul 04, 2019 6:21 am

Probably in my early ‘50’s but I was ploughing everything back into the portfolio so didn’t notice or realize it. Retired at 56.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by dcabler » Thu Jul 04, 2019 6:27 am

First time it happened, I was in my mid 40's. I remember sort of thinking it was a major milestone. But then again, I had no real idea what I was doing back then and those were the days of some pretty hefty annual stock returns...

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by MathIsMyWayr » Thu Jul 04, 2019 7:02 am

When your investment is 5x regular income. A market fluctuation of +/- 5% of your investment is quite "normal." The pivoting point is achieved when your saving rate matches the market fluctuations. If you save 25% of your income, 25%/5%=5x.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Admiral » Thu Jul 04, 2019 7:27 am

lobon wrote:
Thu Jul 04, 2019 5:27 am
Never intentionally because I live off much less than I make- I'll consider retiring when my annual gains exceed my annual EXPENSES.
It's logical to look at expenses, not income, as you note. But just because one year (like this year) has huge percentage gains that may exceed one's expenses doesn't mean it's safe to retire. That's where the SWR comes in. There will be down years where expenses greatly exceed market gains (or, natch, losses).

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Bacchus01 » Thu Jul 04, 2019 7:38 am

Hard to tell because I don’t differentiate between returns and contributions, but the total net worth gain in a given year relative to salary level has been higher on several occasions in my early 40s, but not consistently so. Last year was basically a no growth year. This year is already up more than I expect to make in salary the whole year.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Rus In Urbe » Thu Jul 04, 2019 7:42 am

I calculate our progress in a slightly different way, keeping a spreadsheet with Net Worth (NW).

I calculate our NW quarterly. Then, in order to smooth out the market "upsies & downsies," I add together the quarters in the current year to get a running average of gains (and in 2008, briefly, potential loss). This average gives me a big picture that helps me track our progress, and the results have further inspired me to STC and LBYM.

So, I can answer the OP's posed question a slightly different way: the yearly increase of our NW has varied with the market, and was also affected by a small inheritance, our spending, and a real estate sale.

For instance, potential NW gains were 3x salary in 2009 and in 2014----yay! But in 2016, NW potential gain was a lousy 1/3 salary. In 2008, the potential LOSS approached 3X salary (STC!). But overall, the potential NW gains have been about two times salary for the past fifteen years. Note that I include the word potential because gains and losses are not real until you sell and settle---until then, your investment numbers and your property values float up and down; only your cash is an actual number; this is well worth remembering when markets roil.

The OP's question sort of implies that the value of your Investments just goes steadily upward, and once the investments are larger than your paychecks, you're good to retire. Hm, I wish it were that neat.

Over decades of watching our bottom line, this has not been my experience. It has increased very nicely overall---but not steadily!
I'd like to live as a poor man with lots of money. ~Pablo Picasso

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Retired2013 » Thu Jul 04, 2019 8:03 am

sc9182 wrote:
Mon Jul 01, 2019 3:34 pm
Though it may be hard to put an age/career-level to this due to: income, expenses, savings rate and investment return/sequence of returns., allow me to repeat my recent posting here:

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 account balance means - your account generating about $1000/month growth (or could support about $1000/month equivalent pension)
B) at about $500k account 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 say $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 account level your can almost smell the roses - you finally are able to see path/light towards the magic $1 million - your own $1 Million can be reached with your own hard work and disciplined savings+ investing !
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 (employer match included) - 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 401k 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 plan retirement 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 age.
+++++1
When I was 20, I set a goal of being a millionaire some day. I remember those mile stones above. However, $1M when I was 20 is equivalent to $4.2M today so my portfolio is still growing even though DW and I are retired.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by remomnyc » Thu Jul 04, 2019 8:13 am

Two years before I retired, my dividends equalled my expenses.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Kenkat » Thu Jul 04, 2019 8:23 am

Annual investment income will fluctuate greatly year to year based on market conditions, so this is a bit of a moving target. That said, in 2017, my investment portfolio increased by an amount that was more than my income for the year for the first time. I was 53.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by CyclingDuo » Thu Jul 04, 2019 8:55 am

bigtex wrote:
Mon Jul 01, 2019 3:18 pm
I know this question is sort of vague but at what point did the earnings from your investments significantly outweigh any regular income you receive from your 9-5 job? I am still youngish at 29 but with 100k in investments, it already feels more significant than my 60k a year in salary income. Or another way to put it, at what point did the normal working income not seem more important than the earnings / potential earnings that your investments were providing.
We focus more on our human capital from the 9-5 in our final working years and accumulation. For every $10K we bring home via our human capital, it is the equivalent of having $250K in a portfolio that could survive a 4% SWR if we were retired at this point and having to withdraw our annual salary from our portfolio as replacement income. We wouldn't overlook the significance of your $60K annual salary in that regard when compared to your current investments. You would have to have a portfolio of $1.5M to throw off $60K per year under the 4% SWR. And of course, by the time you reach a portfolio value of $1.5M, chances are your household salary income will have grown higher than $60K.

There are times during bull markets where your portfolio gains will surpass your human capital income. You are not old enough to have been invested during the 1990's, but that was one wild ride in the latter half of that decade in terms of portfolio gains. Of course, the flip side is how much it all went down during the bear markets of 2000-2002 and 2007-09. In other words, as significant as your gains on $100K in investments may feel during this bull, you have yet to experience the flip side of what it feels like. :mrgreen:

Keep on, keeping on with the annual salary and contributing to your investments/savings through thick and thin. :beer
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by stoptothink » Thu Jul 04, 2019 9:31 am

I suspect it never will. At 38(me) and 33, we're at about $700k in investments accounts (<90% of which came from the last 7yrs) and our total investment returns at this point are less than 1/2 of 1yr of (modest, for this board) HHI. But, like many others here, we save over 50% of gross, and could easily live of <1/4 of gross income soon (home, wife's tuition, and daycare all done in <3yrs) so this isn't really something we're concerned about. It was cool seeing just my Roth IRA grow more this week than my gross income the last two weeks, but it will go down (and back up); so, it's better that I just stop looking.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by LiterallyIronic » Thu Jul 04, 2019 10:05 am

By my calculations, it will never happen. Even when my account balances reach the amount that I want to retire ($600,000), that will generate a monthly growth of $2000 ($600,000 x 0.04 / 12 = $2,000). I add more than that in my own contributions plus employer match. So my retirement account will never generate more than I add, until I stop adding.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by MotoTrojan » Thu Jul 04, 2019 10:31 am

$100K in investments feels like it outweighs a $60K salary? Interested to see what you think during a bear.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by FrugalInvestor » Thu Jul 04, 2019 10:38 am

In all likelihood never but it wasn't a question I asked. For me and I think for most here the critical question was "when will the income from my investments plus my other planned sources of income support the lifestyle I desire in retirement with reasonable certainty?" When the answer was "now" I worked a while longer for good measure and then retired.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Surdelsur » Thu Jul 04, 2019 10:43 am

sc9182 wrote:
Mon Jul 01, 2019 3:34 pm
Though it may be hard to put an age/career-level to this due to: income, expenses, savings rate and investment return/sequence of returns., allow me to repeat my recent posting here:

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 account balance means - your account generating about $1000/month growth (or could support about $1000/month equivalent pension)
B) at about $500k account 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 say $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 account level your can almost smell the roses - you finally are able to see path/light towards the magic $1 million - your own $1 Million can be reached with your own hard work and disciplined savings+ investing !
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 (employer match included) - 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 401k 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 plan retirement 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 age.
OMG this is my plan almost to a T

Traveler
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Traveler » Thu Jul 04, 2019 11:08 am

Surdelsur wrote:
Thu Jul 04, 2019 10:43 am
sc9182 wrote:
Mon Jul 01, 2019 3:34 pm
Though it may be hard to put an age/career-level to this due to: income, expenses, savings rate and investment return/sequence of returns., allow me to repeat my recent posting here:

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 account balance means - your account generating about $1000/month growth (or could support about $1000/month equivalent pension)
B) at about $500k account 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 say $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 account level your can almost smell the roses - you finally are able to see path/light towards the magic $1 million - your own $1 Million can be reached with your own hard work and disciplined savings+ investing !
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 (employer match included) - 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 401k 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 plan retirement 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 age.
OMG this is my plan almost to a T
Based on this, my portfolio would have to be ~$4.6M. It will never happen. Seems the question would be positively answerable for either highly financially successful people (high income, high savings) or lower income people where the threshold isn't too high. Even when I retire, unless I never spend down principal and live within the income generated from investments, it will never happen.

That said, from a practical point, what one spends is much more important. Precisely why, when I read a retirement article or see a calculator that uses pre-retirement income instead of anticipated expenses, I disregard it.

am
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by am » Thu Jul 04, 2019 11:54 am

sc9182 wrote:
Mon Jul 01, 2019 3:34 pm
Though it may be hard to put an age/career-level to this due to: income, expenses, savings rate and investment return/sequence of returns., allow me to repeat my recent posting here:

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 account balance means - your account generating about $1000/month growth (or could support about $1000/month equivalent pension)
B) at about $500k account 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 say $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 account level your can almost smell the roses - you finally are able to see path/light towards the magic $1 million - your own $1 Million can be reached with your own hard work and disciplined savings+ investing !
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 (employer match included) - 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 401k 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 plan retirement 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 age.
Spot on!

Thesaints
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Thesaints » Thu Jul 04, 2019 1:13 pm

bigtex wrote:
Mon Jul 01, 2019 3:18 pm
I know this question is sort of vague but at what point did the earnings from your investments significantly outweigh any regular income you receive from your 9-5 job? I am still youngish at 29 but with 100k in investments, it already feels more significant than my 60k a year in salary income. Or another way to put it, at what point did the normal working income not seem more important than the earnings / potential earnings that your investments were providing.
Are you getting >50% return from your investment ??

Anyway, that depends on your investment volatility. It is not rare for stocks to have performance bursts and with sufficient capital even relatively high compensations may appear not all that relevant. Yet, one has to recognize that stock returns come and go, while salary is paid every month.

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TomatoTomahto
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by TomatoTomahto » Thu Jul 04, 2019 1:25 pm

livesoft wrote:
Mon Jul 01, 2019 4:46 pm
Sandtrap wrote:
Mon Jul 01, 2019 4:40 pm
livesoft wrote:
Mon Jul 01, 2019 3:20 pm
In my early 40's. But I had a goal in my early 20's to replace my income by age 40 from investments. I missed my goal by a few years.
That is admirable, and difficult to do even today.
j :happy
Or easy if you keep your salary very low. :)
To be clear, by “regular paychecks” I’m reading total annual compensation.

In that case, I guess we hit this point some time back, but then DW had to go an get an increase in income. Now we’re back in the muck.

This reminds me of those silly “you will need x times your annual income in retirement” articles put out by brokerages to pump up their AUM. We had been ready to retire, but wife got a big increase, and now we are unprepared. Sad. Oh so blessedly close :D
Okay, I get it; I won't be political or controversial. The Earth is flat.

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scubadiver
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by scubadiver » Thu Jul 04, 2019 3:40 pm

Early 40s, assuming we can ignore last year.

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whodidntante
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by whodidntante » Thu Jul 04, 2019 3:52 pm

I already have days where a market movement exceeds or invalidates two weeks toiling at my working stiff station in life. But it would be a poor bet for me to retire. The risk of ruin is too high.

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corn18
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by corn18 » Thu Jul 04, 2019 3:53 pm

I don't think it will ever happen. My income is 5x my expenses and my portfolio needed to retire will never generate my current income. I'm hoping it will generate my current expenses in a few years so I can retire.
Don't do something, just stand there!

rossington
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by rossington » Thu Jul 04, 2019 5:15 pm

corn18 wrote:
Thu Jul 04, 2019 3:53 pm
I don't think it will ever happen. My income is 5x my expenses and my portfolio needed to retire will never generate my current income. I'm hoping it will generate my current expenses in a few years so I can retire.
Sounds like you have a great job! Or are living well within your means (or both). Hopefully you can save/invest most of the 80% of your income above your expenses. If you can get it to cover expenses then you'll at the very least be comfortable with that. Maybe you can lower your expenses too. Hope your enjoying the 4th!! :beer
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

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6miths
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by 6miths » Thu Jul 04, 2019 5:37 pm

Never did. Probably outstripped expenses after mortgage paid off and market rebounded after 2008 downturn when I was 47.
'It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so!' Mark Twain

Thesaints
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by Thesaints » Thu Jul 04, 2019 5:42 pm

Let's say that my TNW increase over the past few years has been larger than my salary before taxes. That makes it for a darn good feeling as well.

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LilyFleur
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by LilyFleur » Fri Jul 05, 2019 2:29 am

When I was 57 and severely under-employed, my 401k increased in value (not from my contributions, but from earnings) many, many times the amount of my yearly income. When I became eligible for a pension, and my boss treated me poorly the first time after that, I resigned. It just wasn't worth the stress, the commute, and the one measly week of vacation anymore.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by basspond » Fri Jul 05, 2019 5:35 am

Early-mid forties, we are now in our mid 50s. But buyer beware. In fourth quarter of 2018 our “paper loses” out stripped our yearly income but then in 1st quarter of 2019 the gains were higher then our entire salary.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by A440 » Fri Jul 05, 2019 6:18 am

The first time my IRA return was greater than my salary was in my mid-20's. This was my first investing "Ah-ha moment". However, my salary was only $25,000 back in the early 90's. :happy
In my mid-40's my portfolio would earn more than my take home pay with an average annual return of 7%.
Now in my early 50's the market needs a return of only 5% to exceed my take home pay.
"The power of compounding is the eighth wonder of the world" -Einstein
I don't know what the future holds, but I know who holds my future.

oldmotos
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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by oldmotos » Thu Jul 11, 2019 10:41 pm

According to my NW records I was 48 when it first happened but then not again until I was 53 after which it happened almost every year. I never took that as a sign I was ready to retire as the markets can also go down. It did make the decision to retire a few months ago at age 64 easier.

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Re: At What Age or Point in your Career did your investments start outweighing your regular paychecks?

Post by sf_tech_saver » Thu Jul 11, 2019 10:56 pm

Ideally, it NEVER happens until you retire or near it.

It sounds good -- lots of investment income -- but a great career path should crush broad stock market returns. I was able to grow my W2 by 20% for roughly 20 years in a row on average.

It's exciting when income becomes a whole other job sized value on your W2 -- but your best capital should be human capital IMHO.
VTI is a modern marvel

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