Number at which to stop worrying

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MrNewEngland
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Re: Number at which to stop worrying

Post by MrNewEngland » Tue Feb 13, 2018 10:37 am

mak1277 wrote:
Tue Feb 13, 2018 10:36 am
It's interesting...I "worry" about money more now than I did when I had debt, negative NW and less than $2k to my name. I wasn't even the slightest bit worried back then. Ah, youth.
This is the truth. I was just talking to a friend about this.

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Pajamas
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Re: Number at which to stop worrying

Post by Pajamas » Tue Feb 13, 2018 10:41 am

Chuck wrote:
Tue Feb 13, 2018 10:36 am
Pajamas wrote:
Mon Feb 12, 2018 6:29 pm
The very richest people on the planet are all trying to make even more money.
And thank goodness, because I have lots of really cool stuff as a result!
Image

Qmavam
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Re: Number at which to stop worrying

Post by Qmavam » Tue Feb 13, 2018 11:16 am

I suspect my worry will be, is my money growing more than I'm withdrawing.
Even though I understand the older I get the less I'll need, I still don't want my
money to run out be for I do.
The second thing I'll need to get over is, because of AA, my portfolio was only
up 7% while the S&P was up 14%, I'm going to hate that. I haven't got my AA down
to where I expect that yet, but...

All of this is high falutin when you consider that,
The Median retirement savings of families between 56 and 61 is $17,000*.
That means 1/2 of of all near retirement families have less than $17,000 of retirement funds.
If you have $500,000, $1M or $2M, you are very unusual indeed!
That's Top 20%, 88% and 94% of US families.

*https://www.cnbc.com/2017/04/07/how-muc ... y-age.html

veindoc
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Re: Number at which to stop worrying

Post by veindoc » Tue Feb 13, 2018 11:42 am

EnjoyIt wrote:
Mon Feb 12, 2018 9:10 pm
I stopped worrying about finances when we accumulated enough that if we saved $0 additional dollars compound interest alone would get us there.

That number also means that if we move into a smaller home and cut our expenses we can retire today.
We were at the same point last year. I stopped worrying. I felt confident. I even started a thread here asking permission to stop paying life insurance. We continued to maximize our tax-deferred space but slowed down on the taxable savings to about a quarter of what we had saved the year prior. I loosened up the purse strings and spent a ton of money last year - essentially all of the difference.

Funny enough, now I am worrying again. The mortgage is not paid off yet and spending a huge amount of money on travel and home improvements did not measurably increase my happiness. I also quit my stable job and am in the process of starting my own business. Not that this will break us. My husband's income is sufficient enough to support us and continue to maximize tax-deferred savings and a little bit of taxable savings.

We are still at the exact same position as last year. If we sold the home, bought a new one for cash with the equity in this one, and cut out a lot of extraneous expenses, we would be totally fine.

So I'm not sure when I will stop worrying. Maybe when the mortgage is paid off. Not sure, but this experience of spending freely last year makes me wonder what it will be like when I am fully retired and no longer saving. How will that feel?

Chuck
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Re: Number at which to stop worrying

Post by Chuck » Tue Feb 13, 2018 11:51 am

Pajamas wrote:
Tue Feb 13, 2018 10:41 am
Image
This was caused by a flood, not rich people. Funny picture, though.

Shallowpockets
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Re: Number at which to stop worrying

Post by Shallowpockets » Tue Feb 13, 2018 12:01 pm

Maybe you should look at how long to keep worrying. How many years until 65? That is your years to worry. That is finite, until you start worrying after retirement.
You have already put yourself under pressure saying $2mm is not enough. That can only increase over the years going to retirement itself. You are backing yourself into a corner.

Right now you should ease your worries by accumulating enough to feel at ease in the present life you live. Enough for your needs, for emergencies, for the college education of the kids. Get that under control. No sense in worrying about years and years ahead.

BHs make it sound easy. In a way, it is. You must put away what you can and amass those assets over time. Over years. But on the way don't woryy too much if you are already doing what you can.
Most of this will fall on deaf ears because some people are worriers, no matter what.
There are always those who can find a problem in every solution.

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bligh
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Re: Number at which to stop worrying

Post by bligh » Tue Feb 13, 2018 12:06 pm

EnjoyIt wrote:
Mon Feb 12, 2018 9:10 pm
I stopped worrying about finances when we accumulated enough that if we saved $0 additional dollars compound interest alone would get us there.

That number also means that if we move into a smaller home and cut our expenses we can retire today.
That number also means we can go part time starting today and retire very comfortably sometime in the future.
Plan is to semi-retire beginning of 2019 unless this correction turns into a recession. If that happens I'm pretty sure psychologically I will have a hard time pulling the plug.
Same here. I call this level 0.5 financial independence. ie. As long as you make enough to just pay your bills from now until the time you want to retire, you will be fine assuming a very conservative real rate of return on your investments.(Personally I use 2.5 to 3% real).. Past this point, you can change careers, work part time, and prioritize quality of life without feeling like you are making a mistake.

Full financial independence, of course, would be if you could just stop working for the rest of your life if you wanted to.

But each milestone on the road to full financial independence reduces worry. Each item you tick off the checklist is one less thing to worry about. Paying off the mortgage on the house. Having the kids graduate college and launch their careers. Even something like paying off all your student loans or building a 6 month emergency fund, reduces the worry.

WhiteMaxima
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Re: Number at which to stop worrying

Post by WhiteMaxima » Tue Feb 13, 2018 12:30 pm

Years to live * yearly expense

bikechuck
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Re: Number at which to stop worrying

Post by bikechuck » Tue Feb 13, 2018 12:42 pm

Lately I have been taking some comfort in Dirk Cotton's strategy of creating a floor plus upside approach to retirement. My wife and I will both have pretty good Social Security benefits and when combined with our TIAA Traditional and a similar investment we own we have a floor that will largely meet our needs. We can then be more aggressive than we otherwise would with the rest of our portfolio and use it to supplement our floor which it will do nicely with a 2% or less withdrawal. This will work even though we do not have a portfolio of the size that many Bogleheads have reported.

There are things that could go wrong with our strategy. Sadly I do not trust our politicians to fund Social Security or Medicare to the levels that would fund benefits at their current levels. If enough erosion occurs in either or both of these programs it could cause our strategy to either fail or not work as well as we would have hoped. The other threat is if either or both of us would suffer an illness or injury that would require an extended need for long term care.

I guess there is always something(s) to worry about but I also know that if you give into the worry too much it can destroy your happiness. I for one need to guard against that.

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Sandtrap
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Re: Number at which to stop worrying

Post by Sandtrap » Tue Feb 13, 2018 12:52 pm

skor99 wrote:
Mon Feb 12, 2018 5:28 pm
This is different from other threads which talk about the number for early retirement. I want to continue working for the foreseeable future, but keep thinking at what level of NW could I relax a bit and not worry too much. Family of four in a MCOL area and single earner. Kids yet to go to college. I used to think $1MM is the magic number but have learnt subsequently that is not true. Even 2 MM seems not enough now, but am conflicted about this. Any thoghts ?
There's a lot more anxiety when one has 8 million than with 1 million. The first because you have more to lose than to gain. The second, because you don't have enough.

j :D

WalterMitty
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Re: Number at which to stop worrying

Post by WalterMitty » Tue Feb 13, 2018 2:25 pm

I think my "worry index" could be best graphed using a bell curve.

Stage 1: When I was young, and made very little, and even though I had a negative networth, there wasn't much worry. I was just starting out, and there wasn't much room to go down. As they say, when you are sleeping on the floor, it's hard to fall out of bed. I also was working entry, or near entry level jobs, and had a decent degree. Given this, threat of job loss was really non-existent.

Stage 2: As I moved up the ladder at one Megacorp, and then another, and kids went from 0 to 3, and the mortgage jumped up with a move, then my worry crept up. Debt, future college costs, getting fired, all seemed to peak around this time. However, my peak wasn't too high, because while I was still in stage one, I read lots of investment books...and the best one I think was Debt Free & Prosperous Living (more of a work book). My boss at the time took the seminar, and let me read the workbook. He lived it, and I adopted it, and my small aversion to debt, grew to a full on hatred of it.

Stage 3: Debt Free. I'm late 40's, and still need to work quite a while to achieve all that I want to, however, there's not a ton of worry. Ironically, the chance of losing my job is probably at my all time high. Given the state of constant change at Megacorp, I could be here 10 years, or 10 weeks, I've seen first hand how that happens. I've been at my current run for about 17 years..but it could all end with one meeting where they say, "sorry, but we are eliminating your position". So while the chance of job loss is high (relative to other times in my life), being debt free allows me to keep worry low (not zero).

Stage 4: If I had 50x of spending, then I would have next to zero financial worry. I don't think it ever goes to zero, because I would probably worry a little about how best to pass it along to the kids...do I give them some when they turn 25, and then at 30, etc., or what?

basspond
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Re: Number at which to stop worrying

Post by basspond » Tue Feb 13, 2018 4:13 pm

(110 - your age) x yearly expenses

KlangFool
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Re: Number at which to stop worrying

Post by KlangFool » Tue Feb 13, 2018 4:18 pm

HomerJ wrote:
Tue Feb 13, 2018 2:06 am
KlangFool wrote:
Mon Feb 12, 2018 10:31 pm
Folks,

The good thing about being unemployed for 1 year or longer a few times is

A) I learned not to worry. I had to in order to survive.

B) I am prepared for whatever worst case that I can imagine. For example, I am prepared for unemployment and recession lasting 5 years at any time.

C) I have a plan for the worst case. I know my family will survive.

KlangFool
I really like this post. I was surprised you first answered 50x expenses - $4 million.
HomerJ,

The 50X number is for people that had never been unemployed for 1 year or longer.

KlangFool

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djpeteski
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Re: Number at which to stop worrying

Post by djpeteski » Tue Feb 13, 2018 4:21 pm

One always needs to be a little worried. At least worried enough not to have an entourage.

MC Hammer earned 33 million in 1991 and is now broke. Among other things he had an entourage. He was not at all worried.

staythecourse
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Re: Number at which to stop worrying

Post by staythecourse » Tue Feb 13, 2018 4:28 pm

Honestly, for me what I realized is the "number at which I stop worrying" has nothing to do with my portfolio value since I am in the accumulation stage. For me not to worry ALL has to do with our monthly income to monthly liabilities. That's it. My portfolio could go to zero and it wouldn't affect me life at all. I get more anxious if I don't leave enough in the bank account to cover the mortgage or day care payment for the month as I took it all out to invest.

My wife and I are both physicians so don't really have to worry about unemployment, but must say knowing my personality and worries I think I would fall apart emotionally if I didn't have an income for the month to cover the costs MORE then whatever happens to my portfolio.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Nowizard
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Re: Number at which to stop worrying

Post by Nowizard » Tue Feb 13, 2018 4:47 pm

Would you apply the 50X annual expense only to assets in hand, or would you include income? For example, we have SS and a pension that cover close to 100% of our expenses, but only about 35X annual expenses in our portfolio. Basspond's response fits our situation well.

Tim

KlangFool
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Re: Number at which to stop worrying

Post by KlangFool » Tue Feb 13, 2018 5:41 pm

Nowizard wrote:
Tue Feb 13, 2018 4:47 pm
Would you apply the 50X annual expense only to assets in hand, or would you include income? For example, we have SS and a pension that cover close to 100% of our expenses, but only about 35X annual expenses in our portfolio. Basspond's response fits our situation well.

Tim
Nowizard,

50X applies to residue expense that was not covered by pension and/or SS. So, in your case, the number is a lot more than 35X.

KlangFool

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bobcat2
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Re: Number at which to stop worrying

Post by bobcat2 » Tue Feb 13, 2018 6:20 pm

Number at which to stop worrying

A funded ratio north of 1.05 :sharebeer

BobK
In finance risk is defined as uncertainty that is consequential (nontrivial). | The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.

randomguy
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Re: Number at which to stop worrying

Post by randomguy » Tue Feb 13, 2018 6:27 pm

DarthSage wrote:
Tue Feb 13, 2018 6:48 am
I realized some time back that I have money anxiety that won't ever go away. If I hit the Gigantic Lottery tomorrow (tricky feat, given that I don't buy tickets), I would STILL have money anxiety.

That said, part of me knows that we're just fine--2-comma club, DH has a 6-figure career that he loves (no interest in retiring early, already has a retirement side hustle worked out), we don't have expensive tastes.

I think a "number at which to stop worrying" is one of those moving goalposts. When you're broke and starting out, you think having 6 figures will make it stop. Then it's 7 figures. Then 8. We can all come up with scenarios where even a huge nest egg won't be enough--the market swan-dives as your child gets into Harvard Law and you discover that you have a rare form of cancer.
Pretty much. Now the worries about someone with 10 million (can I live the live I want) are different than those of a person with 10k (i.e. will I be able to get enough food or decent housing). But people that worry will keep on worrying.

bhsince87
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Re: Number at which to stop worrying

Post by bhsince87 » Tue Feb 13, 2018 6:37 pm

I think it's one of those "you'll know it when you see it" things. I didn't think I would ever get there, but after last weeks correction, I think I'm almost there.

Annual expenses for a good retirement will be about $60k. But we're shooting for an annual $85k spend, so we'll have plenty of buffer.

Before last week, we were at about 55X $60k. That dropped to about 52X, so in theory, we lost 3 years worth of expenses in a few weeks.

But in reality, that is crazy conservative. And so I didn't worry a bit. That's something new for me!

Now the only real remaining fear is what to do about health insurance if/when we pull the retirement rip cord....
BH87

westrichj312
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Re: Number at which to stop worrying

Post by westrichj312 » Tue Feb 13, 2018 6:39 pm

my wife and I retired in our late 40's with 2 kids in high school about 2.3 M and their college costs already payed for. At most we spend 70K per year. Are biggest problem is spending some of our money and not leaving it all to the kids. We do only what we want to do and there are only three things we enjoy and thats going to the racetrack (Arlington) three days per week, going to Vegas three times per year and laying out in the sun at various pools. Enjoy yourself because many people drop dead before they ever get a chance to enjoy any of there moola or are too sickly when they finally retire!

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tennisplyr
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Re: Number at which to stop worrying

Post by tennisplyr » Tue Feb 13, 2018 7:01 pm

KlangFool wrote:
Mon Feb 12, 2018 10:31 pm
Folks,

The good thing about being unemployed for 1 year or longer a few times is

A) I learned not to worry. I had to in order to survive.

B) I am prepared for whatever worst case that I can imagine. For example, I am prepared for unemployment and recession lasting 5 years at any time.

C) I have a plan for the worst case. I know my family will survive.

KlangFool
+1 Through similar experiences, though I'm far from rich, I've developed the mindset that no matter what life gives me, I can handle it......a pretty nice feeling.
Those who move forward with a happy spirit will find that things always work out.

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StevieG72
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Re: Number at which to stop worrying

Post by StevieG72 » Tue Feb 13, 2018 7:05 pm

cfs wrote:
Mon Feb 12, 2018 6:19 pm
SQRT wrote:
Mon Feb 12, 2018 5:40 pm
Worriers never stop worrying.
Ding, ding, ding, we have a winner !!!

Wishing all the worriers a good evening.

Gracias por leer ~cfs~
Thanks, and a good evening to you as well!
Fools think their own way is right, but the wise listen to others.

randomguy
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Re: Number at which to stop worrying

Post by randomguy » Tue Feb 13, 2018 7:07 pm

basspond wrote:
Tue Feb 13, 2018 4:13 pm
(110 - your age) x yearly expenses
Anyone who needs that much money to feel safe will never feel safe enough to stop worrying. When you are talking about 90x (20 year old ) or even 45x (i.e the 65 year old) you are past reasonable fears and that person will find something else to worry about. Maybe your expenses rising or someone stealing your money. You should accept you will always have money worries and get on living:)

metalworking
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Re: Number at which to stop worrying

Post by metalworking » Tue Feb 13, 2018 7:42 pm

KlangFool wrote:
Mon Feb 12, 2018 10:31 pm
Folks,

The good thing about being unemployed for 1 year or longer a few times is

A) I learned not to worry. I had to in order to survive.

B) I am prepared for whatever worst case that I can imagine. For example, I am prepared for unemployment and recession lasting 5 years at any time.

C) I have a plan for the worst case. I know my family will survive.

KlangFool
Now i know why people are not worriers. If the worst scenario I could imagine was unemployment and a recession lasting five years I would be less of a worrier also. Even though i am miserable at work I continue on because I don't know the future of healthcare cost. So say the costs continue to soar and myself or my family gets a severe long term and expensive medical condition. Then lets say I get lucky enough that i can even afford the ridiculous premiums but then the insurers are allowed to go back to the days with lifetime limits on coverage.
Then I lose my families coverage and cant get them the quality of care (or any care) they need. That is my worst scenario and I don't know if my family or I will survive. This is my worse case scenario.

chicagoan23
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Re: Number at which to stop worrying

Post by chicagoan23 » Tue Feb 13, 2018 8:01 pm

skor99 wrote:
Mon Feb 12, 2018 5:28 pm
This is different from other threads which talk about the number for early retirement. I want to continue working for the foreseeable future, but keep thinking at what level of NW could I relax a bit and not worry too much. Family of four in a MCOL area and single earner. Kids yet to go to college. I used to think $1MM is the magic number but have learnt subsequently that is not true. Even 2 MM seems not enough now, but am conflicted about this. Any thoghts ?
OP, first you should stop reading this thread.....the responses definitely make anyone want to start worrying.

My "stop worrying" number is much different from my "financial independence" number. That number will be different for everyone. For me, I feel very financially secure today with a net worth just under $1.75 million and annual expenses excluding income taxes of about $90k. I'm not at all worried about my finances right now even though I still need to work at least another 10 years with major savings and no market crashes before I feel as though I am truly financially independent.

I never worried about money when I was younger and I just socked away savings. After having four kids and with a stay-at-home spouse, I began to worry more. At one point when there were a lot of layoffs at my workplace and the economy was struggling, I was experiencing true financial anxiety. That started to change once I had enough to pay off the house in full, plus another $500k or so. At that number I'm confident that even if I lost my job as the markets tanked, I could pay off the mortgage and my wife and I could sell our labor for some type of compensation and get by. Not live the lifestyle we want or have become accustomed too, but definitely get by. And even then, I still wouldn't be relying on government assistance or family/community assistance yet, which would also be available in the case of true desperation.

If I were you I'd try not to worry. Easier said than done, but worrying can lead to bad choices. People who worried about having enough are going to sell at the bottom and people who worry about missing out are going to wait to buy until we are at the top. If you have banked enough to pay off your house and also have a decent nest egg, you'll be fine. At that point you're already better than most the population. Don't let financial worries weigh you down.

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sergeant
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Re: Number at which to stop worrying

Post by sergeant » Tue Feb 13, 2018 8:04 pm

bhsince87 wrote:
Tue Feb 13, 2018 6:37 pm
I think it's one of those "you'll know it when you see it" things. I didn't think I would ever get there, but after last weeks correction, I think I'm almost there.

Annual expenses for a good retirement will be about $60k. But we're shooting for an annual $85k spend, so we'll have plenty of buffer.

Before last week, we were at about 55X $60k. That dropped to about 52X, so in theory, we lost 3 years worth of expenses in a few weeks.

But in reality, that is crazy conservative. And so I didn't worry a bit. That's something new for me!

Now the only real remaining fear is what to do about health insurance if/when we pull the retirement rip cord....
You don't figure health insurance into your annual expenses? Seems silly not to assume you have to pay for it.
Lincoln 3 EOW!

bhsince87
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Re: Number at which to stop worrying

Post by bhsince87 » Tue Feb 13, 2018 9:26 pm

sergeant wrote:
Tue Feb 13, 2018 8:04 pm
bhsince87 wrote:
Tue Feb 13, 2018 6:37 pm
I think it's one of those "you'll know it when you see it" things. I didn't think I would ever get there, but after last weeks correction, I think I'm almost there.

Annual expenses for a good retirement will be about $60k. But we're shooting for an annual $85k spend, so we'll have plenty of buffer.

Before last week, we were at about 55X $60k. That dropped to about 52X, so in theory, we lost 3 years worth of expenses in a few weeks.

But in reality, that is crazy conservative. And so I didn't worry a bit. That's something new for me!

Now the only real remaining fear is what to do about health insurance if/when we pull the retirement rip cord....
You don't figure health insurance into your annual expenses? Seems silly not to assume you have to pay for it.

I'm sorry, I wasn't clear about that. At $60k income with current laws, we would get an ACA subsidy and be fine. We would spend about $8k max on healthcare, $52 for everything else.

At $85k we would not get an ACA subsidy, but if the exchanges still exist, we would still have coverage. We would spend about $30k max on healthcare. So have about $55k to spend on other stuff.

My worry is if the ACA mandated coverage or pre-existing issues goes away. Then we could be in deep do-do.
BH87

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weltschmerz
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Re: Number at which to stop worrying

Post by weltschmerz » Tue Feb 13, 2018 9:50 pm

Sadly, I agree with the responses that say $10M or 100x yearly expenses. That's feels about right. In my case, I'm burning through about 70k per year, and I could live for another 50 years (best-case). Add in another $1M for long-term care or medical expenses, and I need about $4.5M. Man, I ain't even close to not worrying about money.

Stormbringer
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Re: Number at which to stop worrying

Post by Stormbringer » Tue Feb 13, 2018 10:31 pm

KlangFool wrote:
Mon Feb 12, 2018 5:53 pm
OP,

50 times your current annual expense.

At 72K per year, it is 3.6 million.

KlangFool
A 65 year-old couple can get an inflation-adjusted annuity that kicks off $72K per year for $2M. At that point all the gyrations of the market are someone else's problem to worry about.
"Compound interest is the most powerful force in the universe." - Albert Einstein

KlangFool
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Re: Number at which to stop worrying

Post by KlangFool » Tue Feb 13, 2018 10:48 pm

Stormbringer wrote:
Tue Feb 13, 2018 10:31 pm
KlangFool wrote:
Mon Feb 12, 2018 5:53 pm
OP,

50 times your current annual expense.

At 72K per year, it is 3.6 million.

KlangFool
A 65 year-old couple can get an inflation-adjusted annuity that kicks off $72K per year for $2M. At that point all the gyrations of the market are someone else's problem to worry about.
OP is at the late 40s.

KlangFool

jminv
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Re: Number at which to stop worrying

Post by jminv » Tue Feb 13, 2018 10:50 pm

I will be more content when I reach $10M. Of course, I'll still want more. That's just the nature of most people and certainly on this forum: there's never enough. I will say I was happy when I reached 60x annual expenses (and since I'm on bogleheads you can guess I'm pretty cheap to begin with!).

smectym
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Re: Number at which to stop worrying

Post by smectym » Tue Feb 13, 2018 11:22 pm

What is “worrying.” I check the balances daily (against much well-meant advice) and follow market gyrations intently. Yet we’re pretty well set (mid-60’s couple, one kid in grad school) and I know that. If achieving the worry-free state means deliberately forgetting about the details of ones financial situation because of a general sense that “we have so much money it doesn’t matter,” I’ll never get there. I know a lot of people say “I don’t want to always have to worry about money.” But a bit of obsessive “worrying about money” is salutary at every income and accumulation level.

visualguy
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Re: Number at which to stop worrying

Post by visualguy » Wed Feb 14, 2018 12:12 am

weltschmerz wrote:
Tue Feb 13, 2018 9:50 pm
Sadly, I agree with the responses that say $10M or 100x yearly expenses. That's feels about right. In my case, I'm burning through about 70k per year, and I could live for another 50 years (best-case). Add in another $1M for long-term care or medical expenses, and I need about $4.5M. Man, I ain't even close to not worrying about money.
That reminds me of a conversation with a colleague. I asked him if it's worth going through the stress of doing another startup. He said that these days you need 8 figures to retire early, and live well without worrying much about money. 7 figures doesn't cut it anymore. I dismissed it at the time, but then after thinking about it, he wasn't really all that much off-the-mark.

Afty
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Re: Number at which to stop worrying

Post by Afty » Wed Feb 14, 2018 12:47 am

I don’t understand all the 50x expenses answers. All the data show that 33x expenses allows for perpetual withdrawals. What are you all so worried about?

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HomerJ
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Re: Number at which to stop worrying

Post by HomerJ » Wed Feb 14, 2018 12:57 am

chicagoan23 wrote:
Tue Feb 13, 2018 8:01 pm
That started to change once I had enough to pay off the house in full, plus another $500k or so. At that number I'm confident that even if I lost my job as the markets tanked, I could pay off the mortgage and my wife and I could sell our labor for some type of compensation and get by. Not live the lifestyle we want or have become accustomed too, but definitely get by. And even then, I still wouldn't be relying on government assistance or family/community assistance yet, which would also be available in the case of true desperation.
This... That's about the point I stopped worrying too...

It's not true financial independence like many people are referencing with the "50x expenses" comments.

But you know your family is going to be fed and warm.

Watch Cinderella Man, a true story boxing movie, set during the Great Depression.

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Re: Number at which to stop worrying

Post by Olemiss540 » Wed Feb 14, 2018 7:11 am

djpeteski wrote:
Tue Feb 13, 2018 4:21 pm
One always needs to be a little worried. At least worried enough not to have an entourage.

MC Hammer earned 33 million in 1991 and is now broke. Among other things he had an entourage. He was not at all worried.
Worried enough to not have a drug compartment built into their car. Loaiza had earned something like $40Mil playing Major League Baseball. So interesting where financial distress can lead people that had so much fortune in their lives.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

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Leesbro63
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Re: Number at which to stop worrying

Post by Leesbro63 » Wed Feb 14, 2018 7:24 am

Stormbringer wrote:
Tue Feb 13, 2018 10:31 pm
KlangFool wrote:
Mon Feb 12, 2018 5:53 pm
OP,

50 times your current annual expense.

At 72K per year, it is 3.6 million.

KlangFool
A 65 year-old couple can get an inflation-adjusted annuity that kicks off $72K per year for $2M. At that point all the gyrations of the market are someone else's problem to worry about.
Then you have to worry about the insurer’s solvency and what taxes will do in a big inflation situation.

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Re: Number at which to stop worrying

Post by Nowizard » Wed Feb 14, 2018 9:18 am

Klangfool: Based on your response, wouldn't our portfolio requirement be a lot less rather than a lot more than 35X expenses if SS and pension income cover almost all of our annual expenses? Our residual expenses are essentially zero unless we make an unusual purchase.

Tim

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Abe
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Re: Number at which to stop worrying

Post by Abe » Wed Feb 14, 2018 11:02 am

KlangFool wrote:
Mon Feb 12, 2018 10:31 pm
Folks,

The good thing about being unemployed for 1 year or longer a few times is

A) I learned not to worry. I had to in order to survive.

B) I am prepared for whatever worst case that I can imagine. For example, I am prepared for unemployment and recession lasting 5 years at any time.

C) I have a plan for the worst case. I know my family will survive.

KlangFool
From Dale Carnegie's book, "How to Stop Worrying and Start Living".

There's a simple three-step technique that can help when you're besieged by personal or professional worries.

First, ask yourself what's the worst that could possibly happen. Second, prepare to accept the worst. Finally, figure out how to improve upon the worst, should it come to pass.

Edited to add: I think the problem with this thread is that there is no magic number in which we can stop worrying. Worrying is just part of living. Most people worry about things occasionally. This is normal. The thing is to try to control it so that you're not losing sleep at night. Don't let it become excessive or obsessive. As another poster said, "it can consume you". I personally have experienced waking up in the middle of the night and starting to worry about something negative going on in my life, and I just keep rehashing the same thoughts over and over again. It is very hard to break this cycle. Sometimes I will get up and do something different for a while, drink a glass of milk, read a book or get on the Boglehead site on my computer. After a while, I go back to bed and I usually can go back to sleep. My point is we have to find ways to deal with worry and anxiety or it will consume us.
Slow and steady wins the race.

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Leesbro63
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Re: Number at which to stop worrying

Post by Leesbro63 » Wed Feb 14, 2018 12:07 pm

Abe wrote:
Wed Feb 14, 2018 11:02 am

From Dale Carnegie's book, "How to Stop Worrying and Start Living".

There's a simple three-step technique that can help when you're besieged by personal or professional worries.

First, ask yourself what's the worst that could possibly happen. Second, prepare to accept the worst. Finally, figure out how to improve upon the worst, should it come to pass.
I don't think that applies here. Because running out of money at retirement age or older is usually a permanent problem. So the worry is justified. It's very hard to accept that worst case. The consequences are huge. Worry is actually part of the planning activity that helps prevent the problem.

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Abe
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Re: Number at which to stop worrying

Post by Abe » Wed Feb 14, 2018 12:21 pm

Leesbro63 wrote:
Wed Feb 14, 2018 12:07 pm
Abe wrote:
Wed Feb 14, 2018 11:02 am

From Dale Carnegie's book, "How to Stop Worrying and Start Living".

There's a simple three-step technique that can help when you're besieged by personal or professional worries.

First, ask yourself what's the worst that could possibly happen. Second, prepare to accept the worst. Finally, figure out how to improve upon the worst, should it come to pass.
I don't think that applies here. Because running out of money at retirement age or older is usually a permanent problem. So the worry is justified. It's very hard to accept that worst case. The consequences are huge. Worry is actually part of the planning activity that helps prevent the problem.
Yes, I agree with you that it is very hard to accept running out of money in retirement, but I think if I run out of money during retirement, I will have to find a way to deal with it. So if that happens, I will have to accept it as hard as that is to do, and then try to find a way to improve the situation. Maybe that's going back to work. Maybe that's taking out a home equity loan or reverse mortgage or maybe getting some type of government assistance. I think that's better than sitting around and worrying about it.
Slow and steady wins the race.

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Leesbro63
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Re: Number at which to stop worrying

Post by Leesbro63 » Wed Feb 14, 2018 12:53 pm

I guess there are acceptable and non-acceptable degrees of worry. Obsessing crosses the line.

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Re: Number at which to stop worrying

Post by gowri » Wed Feb 14, 2018 1:31 pm

Me and my husband are early and mid thirties. Trying for first (and probably only) baby. I was a worrier by nature and my husband is/was my complete opposite. At some point, I had just stopped worrying and I didn't even know it. I had the confidence in myself that I will handle whatever life throws at me. Then I thought about it and kind of understood why I had changed.

We are Indians and our plan is to go back to India in a few years as our entire family is in India. We don't want to stay away from aging parents and our siblings and their families. We have enough to own a fully paid off home in a city with lot of job opportunities. We plan to take up traditional jobs there. Husband is buying a vacation rental and expect about $4000 per year (which is a lot of money in India). We have around 5 acre farm land (planning to buy another 10 this year). Farming is my husband's passion and we come from traditionally farming families. So even if we both become unemployed, I am confident that we will live well. We plan to leave whatever accumulated in 401Ks, taxable accounts (which is currently around 150K) for the expected child's higher education if he/she wants to come to this country for education. So, our food, clothing and shelter is almost taken care of and I am done with worrying. I consider everything else (like travel) a luxury. I will travel if I can, I don't feel sad if I cannot. So, unless something really really bad happens, we are set. If I become very sick at old age, completely dependent on others, costing a hell lot of money, I would rather just die.

Also, I also don't think of retirement in traditional sense. I want to be financially independent. However, I cannot imagine not working till I am physically incapable of working. If I retire from traditional job, I know I will spend more time working the fields or tending to animals, or I will take up some productive hobby to help people around me.

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Re: Number at which to stop worrying

Post by jharkin » Wed Feb 14, 2018 3:01 pm

Looking at the numbers I find I am in a very similar boat to Klangfool. $1.5MM would do it, as I could payoff the house and have enough left to cover a (scaled back but not destitute) living.

My target for retirement is $2.5MM but that would allow a very comfortable retirement allowing for travel etc. So that's leaves a range.

I see so many throwing out huge multiples assuming the need to continue current very high consumption levels indefinitely and insure against every possibility. Lets remember that we can always do what *normal* non BH folks do:

* reduce consumption, live off SS
* downsize, sell the house, or reverse mortgage
* Kids want to go to college and you cant cashflow it? - FAFSA, student loans, apply for every scholarship you can, part time job (that's how I went through school)
* long term care? Burn off assets til you qualify for medicaid (that's what my grandparents did and they lived comfortable into their 90s)

I'm not saying that any of those should be a first, or even second or third choice. Probably they are a last choice but remember they are out there. Unless this nation completely collapses there are social safety nets in place to ensure that no matter how bad things get, very few of us will actaully end up living on the street.

So I set my number to plan for average cases. If we try to ensure against a black swan I think all we are doing is setting ourselves up to die alone at our desk in a corporate office.

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Re: Number at which to stop worrying

Post by EnjoyIt » Wed Feb 14, 2018 4:19 pm

veindoc wrote:
Tue Feb 13, 2018 11:42 am
EnjoyIt wrote:
Mon Feb 12, 2018 9:10 pm
I stopped worrying about finances when we accumulated enough that if we saved $0 additional dollars compound interest alone would get us there.

That number also means that if we move into a smaller home and cut our expenses we can retire today.
We were at the same point last year. I stopped worrying. I felt confident. I even started a thread here asking permission to stop paying life insurance. We continued to maximize our tax-deferred space but slowed down on the taxable savings to about a quarter of what we had saved the year prior. I loosened up the purse strings and spent a ton of money last year - essentially all of the difference.

Funny enough, now I am worrying again. The mortgage is not paid off yet and spending a huge amount of money on travel and home improvements did not measurably increase my happiness. I also quit my stable job and am in the process of starting my own business. Not that this will break us. My husband's income is sufficient enough to support us and continue to maximize tax-deferred savings and a little bit of taxable savings.

We are still at the exact same position as last year. If we sold the home, bought a new one for cash with the equity in this one, and cut out a lot of extraneous expenses, we would be totally fine.

So I'm not sure when I will stop worrying. Maybe when the mortgage is paid off. Not sure, but this experience of spending freely last year makes me wonder what it will be like when I am fully retired and no longer saving. How will that feel?
I too still have a mortgage and would prefer it gone, but at 2.75% and 10 more years to go, why bother? i think spending all that extra cash has taught you something. Spending more does not necessarily make you happier. Actually I find owning expensive things creates increased stress. This is especially true when those things require extra care or maintenance. For example I would rather own a decent $500 Japanese watch as opposed to a $10k watch that requires service or the gold can scratch. I would rather own a reasonable set of dishes as opposed to something fancy and expensive later to stress out over a broken glass or plate. I would rather own a reasonably comfy used car as opposed to a brand new $100k+ that I will stress out over every parking spot or scratch. Basically, I don't want my stuff owning me. On the other hand I dont mind spending a little more money to make life easier and buy us time such as yard service or a maid. When traveling I prefer to spend a little extra on accommodations in the middle of where we want to be as opposed to the outscirts forcing us to commute while on vacation.

May I ask, what did you spend all that extra money on? What did you find worth it and what was just a waste? I think your experiences can be helpful to myself and others.

Consideribg your name, I am going to venture a guess that you are a vascular surgeon who opened up a vein clinic. Am I right? How has life been now that you don't have to round in the hospital or deal with the Hospital EMR? I assume you also stopped taking call. How has that affected your life?

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Re: Number at which to stop worrying

Post by jlcnuke » Wed Feb 14, 2018 4:47 pm

skor99 wrote:
Mon Feb 12, 2018 5:28 pm
This is different from other threads which talk about the number for early retirement. I want to continue working for the foreseeable future, but keep thinking at what level of NW could I relax a bit and not worry too much. Family of four in a MCOL area and single earner. Kids yet to go to college. I used to think $1MM is the magic number but have learnt subsequently that is not true. Even 2 MM seems not enough now, but am conflicted about this. Any thoghts ?
Enough to not worry about money while working?

Assuming you practice a LBYM lifestyle, enough liquid net worth to carry you over in the event of 1-2 years without income (depending on how pessimistic you want to be) would be plenty to not worry about money imo. If you and/or your spouse can't find "some" employment within 2 years then the collapse of society is more likely to be a concern than lack of USD's in a bank account..

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Re: Number at which to stop worrying

Post by SQRT » Wed Feb 14, 2018 4:49 pm

Sandtrap wrote:
Tue Feb 13, 2018 12:52 pm
skor99 wrote:
Mon Feb 12, 2018 5:28 pm
This is different from other threads which talk about the number for early retirement. I want to continue working for the foreseeable future, but keep thinking at what level of NW could I relax a bit and not worry too much. Family of four in a MCOL area and single earner. Kids yet to go to college. I used to think $1MM is the magic number but have learnt subsequently that is not true. Even 2 MM seems not enough now, but am conflicted about this. Any thoghts ?
There's a lot more anxiety when one has 8 million than with 1 million. The first because you have more to lose than to gain. The second, because you don't have enough.

j :D
Yes and no. I have a fair bit and most people would say I needn’t worry about running out. But maybe I’m worried about not spending enough and leaving too much “on the table”? Also, one person’s “worry” is another person’s “thinking or planning”. Having a NW well into 8 figures often brings a new list of issues to consider. Should I change my AA? Should I hire a FA or family CFO? How should I structure my estate? Should I diversify into private assets. Should I set up a private foundation? I’m sure there are others.

There is a continuum of concern ranging from “I am thinking about it” to “I’m so worried I can’t sleep”. Thinking is probably a good thing while debilitating worry, probably not. Simply worrying about something usually isn’t very useful unless you act to reduce your risk and hence your worry. I would think that the very fact that you are a poster here means you think and maybe worry about financial issues. It’s natural.

And as I posted before, some people are just worriers. I’m generally not one of them.

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Re: Number at which to stop worrying

Post by skor99 » Wed Feb 14, 2018 5:39 pm

Thanks for all the responses - very interesting to see some people in the same boat as me and others completely unconcerned.
I personally do not worry about the unprobable things much, if somebody has the misfortune to get a disease or accident that proves to be very expensive, then it is bad luck.
For me, it is about being free to do what I would like to do ( which might include me continuing to work indefinitely till physically possible if I like the work ). The point is to be worry free as soon as possible that I could quit work whenever I want to and not have to work in an unpleasant situation and pick up something else that doesn’t pay as much. That’s the number I think about and not a million dollar accident or a $25K retirement cruise.

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Re: Number at which to stop worrying

Post by hoops777 » Wed Feb 14, 2018 6:15 pm

I stopped worrying when I realized that SS will cover all of our basic living expenses and we could live exactly the way we want,leave a nice inheritance to our kids,without even owning a stock,if that is our choice.
K.I.S.S........so easy to say so difficult to do.

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