How much money do you want to retire?

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dknightd
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Re: How much money do you want to retire?

Post by dknightd » Thu Feb 13, 2020 10:00 am

Want and need and two different things. When I had enough to cover needs, I started thinking about how much I want to keep working. Hopefully I pulled the plug somewhere between need and want.

TheNightsToCome
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Re: A poll: How much money do you want to retire?

Post by TheNightsToCome » Sat Feb 15, 2020 8:12 am

lazydavid wrote:
Thu Feb 13, 2020 7:32 am
TheNightsToCome wrote:
Wed Feb 12, 2020 8:31 pm
lazydavid wrote:
Fri Aug 04, 2017 11:46 am
I'm 39, wife is 41.

Our current target is $2.5M in today's dollars and a paid-off house. That should allow us to maintain our current lifestyle without SS.

If over the next two years, we can increase our portfolio by the average (absolute dollars, not %) of what we have the past two from combined contributions and gains, we should be at the point that the investment portion of the goal is met. That assumes no further contributions from then forward, and a 3.5% average real return (close enough to the worst average real return for any 25-year period thus far) until we're 65. Of course we WILL continue to contribute, and that plus hopefully better than 3.5% average gains will start bringing down our retirement age.

House will be paid off in 14 years, which is about the time I'd expect our (currently 10yo) son to be moving out, and we'd likely downsize.
In 6 years, we will have both reached the 2nd bend point for SS, and would expect our combined PIA to be in the neighborhood of $54k/yr with no further earnings, or $38k if benefits are paid out at 70%. This should provide a nice additional buffer.

I think we're in pretty good shape overall.
"a 3.5% average real return (close enough to the worst average real return for any 25-year period thus far)"

I realize this is a very old post, but: The worst 20-year total real return was -0.219% and the worst 30-year return was 1.894%. Interestingly, the worst 25-yr return was a little better at 2.074%. https://dqydj.com/sp-500-historical-return-calculator/

Given current stock and bond market valuations I'm worried that we're going to endure something similar. My base-case estimate for stock returns is about 1.83% (i.e., recent dividend yield) plus about 1.55% (historical real earnings growth rate), minus some haircut for valuation decline. That is, 3.5% from stocks strikes me as a good outcome rather than a conservative projection. The return from bonds will be much lower (unless you buy zero-coupons and we have prolonged deflation).
Being 2.5 years ago, I can't recall exactly where I got my numbers. But I suspect it's the worst average real return for a 70/30 portfolio like I have, rebalanced periodically. I don't now, nor do I ever intend to be, invested 100% in the S&P 500, so its history of returns in a vacuum are not terribly useful for my planning.
"I don't now, nor do I ever intend to be, invested 100% in the S&P 500, so its history of returns in a vacuum are not terribly useful for my planning."

The bond component of our portfolios is very unlikely to help with long-term returns. 20-yr TIPS pay 0.13% real, and 30-yr TIPS pay 0.3% real. https://www.treasury.gov/resource-cente ... =realyield.

So, if I was making base-case return projections for a 70:30 portfolio with a 25-yr horizon, I'd multiply (roughly) 3% by 0.7 and add 0.2%-0.3% times 0.3.

For conservative projections I'd substitute stock market returns of (roughly) -0.2% to 2%, rather than 3%.

I'll be very happy if you're correct that 25-yr returns to a 70:30 portfolio will be greater than or equal to 3.5%.

blinx77
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Re: How much money do you want to retire?

Post by blinx77 » Sat Feb 15, 2020 10:39 am

$2.5 million before I would consider starting a business or changing careers to something where there would be a substantial risk of not matching my current salary ($185k-$190k depending on bonus, but also some decent benefits). This would give me a $100k spending in a pinch. $4 million before I would be comfortable just not having an income.

I've got three kids in very HCOL area and $2 million in investable assets and slightly more than $100k in annual expenses (plus tack on like $20k for the employer portion of our healthcare). I would need $4 million now because I still need to cover college, mortgage and healthcare for everyone. Oddly enough, my cash needs will probably decline in about 20 years when the mortgage is done and kids are out of school and I will overshoot, but the reality is I'm not hanging things up unless all bases are covered and as long as I am working full time I am going to make sure to save, so it is what it is. But with $2.5 million as long as I could hustle up like $50-60k I could cover healthcare and college savings and still see increases in net worth (albeit small) so the risk of the business venture (which would initially be fee-for-service based on things I already do, with other more speculative ventures growing over time) would be low.

The potential business is in the crosshairs, but I am first looking to see if there are other higher paid employment opportunities first (no shame in juicing my salary for a few more years first for the right opportunity) and then if things don't seem to be falling in place will start planning for the business for mid-2022.
Last edited by blinx77 on Sat Feb 15, 2020 10:49 am, edited 1 time in total.

schachtw
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Re: How much money do you want to retire?

Post by schachtw » Sat Feb 15, 2020 10:43 am

I’ve won the game.

69 retired, 6MM

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fishandgolf
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Re: How much money do you want to retire?

Post by fishandgolf » Sat Feb 15, 2020 10:37 pm

….hummmm…..

Money does not buy happiness......but it does buy a more enjoyable form of misery...…… :|

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willthrill81
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Re: How much money do you want to retire?

Post by willthrill81 » Sat Feb 15, 2020 11:33 pm

fishandgolf wrote:
Sat Feb 15, 2020 10:37 pm
….hummmm…..

Money does not buy happiness......but it does buy a more enjoyable form of misery...…… :|
I think that a certain amount of money is, for most people, a necessary but insufficient condition for happiness. It's difficult for most people to be happy when their roof is leaking, their clothes are falling apart, and their hungry. But if you have $3 million, research suggests that there would not be a long-term improvement to your happiness if you had $10 million instead.

A friend of mine and I were recently discussing how the really meaningful differences are between those with $1 million annual incomes or more (call them the 'wealthy' strictly for the sake of this comparison) and someone making around $100k in a MCOL ('comfortable' but obviously still very wealthy by global standards especially) are today. Wealthy folks can take first class flights instead of coach, but unless you're traveling a lot, a higher level of comfort for a matter of a fraction of a day isn't very meaningful. The differences in comfort between a $200k vehicle and a $30k vehicle are actually quite small (e.g. both probably have comfortable adjustable seats, air conditioning, good sound system, and very reliably get you where need to go). More expensive houses are mostly that way because they are just bigger. The comfortable folks can go to virtually any destination in the world and stay there in comfort, just not 5-star hotels for a month at a time. And despite being foodies ourselves, we've learned that you can get some fantastic food without spending a lot for it. Some would say that you cannot compare a $20 bottle of wine with one that's $2k, but thankfully our tastebuds are not that refined with wine at least.
“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

Pierre Delecto
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Re: How much money do you want to retire?

Post by Pierre Delecto » Sat Feb 15, 2020 11:36 pm

SQRT wrote:
Thu Feb 13, 2020 9:55 am
Wannaretireearly wrote:
Thu Feb 13, 2020 12:37 am
Whatever I have at age 50. By that time we'll have universal healthcare, joining the rest of developed civilization. 🤑
How old are you? I’m beginning to doubt the US will have this in my lifetime. I’m 69.
Hope they aren’t somehow able to outlaw private. I’m saving up for private.

Luckywon
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Re: How much money do you want to retire?

Post by Luckywon » Sun Feb 16, 2020 1:39 am

willthrill81 wrote:
Sat Feb 15, 2020 11:33 pm
fishandgolf wrote:
Sat Feb 15, 2020 10:37 pm
….hummmm…..

Money does not buy happiness......but it does buy a more enjoyable form of misery...…… :|
I think that a certain amount of money is, for most people, a necessary but insufficient condition for happiness. It's difficult for most people to be happy when their roof is leaking, their clothes are falling apart, and their hungry. But if you have $3 million, research suggests that there would not be a long-term improvement to your happiness if you had $10 million instead.

A friend of mine and I were recently discussing how the really meaningful differences are between those with $1 million annual incomes or more (call them the 'wealthy' strictly for the sake of this comparison) and someone making around $100k in a MCOL ('comfortable' but obviously still very wealthy by global standards especially) are today. Wealthy folks can take first class flights instead of coach, but unless you're traveling a lot, a higher level of comfort for a matter of a fraction of a day isn't very meaningful. The differences in comfort between a $200k vehicle and a $30k vehicle are actually quite small (e.g. both probably have comfortable adjustable seats, air conditioning, good sound system, and very reliably get you where need to go). More expensive houses are mostly that way because they are just bigger. The comfortable folks can go to virtually any destination in the world and stay there in comfort, just not 5-star hotels for a month at a time. And despite being foodies ourselves, we've learned that you can get some fantastic food without spending a lot for it. Some would say that you cannot compare a $20 bottle of wine with one that's $2k, but thankfully our tastebuds are not that refined with wine at least.
A few things I'd add to the list of meaningful differences:
-regular household help
-home in a safer neighborhood
-access to better schools
-ability to assist parents financially, treat other family members in various ways
-freedom from having to worry about relatively small amounts of money, as in "I'm just going to hire a good plumber and get this fixed, and not worry about the cost". "I'm not going to argue with this company because I don't want to get agitated over it."

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willthrill81
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Re: How much money do you want to retire?

Post by willthrill81 » Sun Feb 16, 2020 11:02 am

Luckywon wrote:
Sun Feb 16, 2020 1:39 am
willthrill81 wrote:
Sat Feb 15, 2020 11:33 pm
fishandgolf wrote:
Sat Feb 15, 2020 10:37 pm
….hummmm…..

Money does not buy happiness......but it does buy a more enjoyable form of misery...…… :|
I think that a certain amount of money is, for most people, a necessary but insufficient condition for happiness. It's difficult for most people to be happy when their roof is leaking, their clothes are falling apart, and their hungry. But if you have $3 million, research suggests that there would not be a long-term improvement to your happiness if you had $10 million instead.

A friend of mine and I were recently discussing how the really meaningful differences are between those with $1 million annual incomes or more (call them the 'wealthy' strictly for the sake of this comparison) and someone making around $100k in a MCOL ('comfortable' but obviously still very wealthy by global standards especially) are today. Wealthy folks can take first class flights instead of coach, but unless you're traveling a lot, a higher level of comfort for a matter of a fraction of a day isn't very meaningful. The differences in comfort between a $200k vehicle and a $30k vehicle are actually quite small (e.g. both probably have comfortable adjustable seats, air conditioning, good sound system, and very reliably get you where need to go). More expensive houses are mostly that way because they are just bigger. The comfortable folks can go to virtually any destination in the world and stay there in comfort, just not 5-star hotels for a month at a time. And despite being foodies ourselves, we've learned that you can get some fantastic food without spending a lot for it. Some would say that you cannot compare a $20 bottle of wine with one that's $2k, but thankfully our tastebuds are not that refined with wine at least.
A few things I'd add to the list of meaningful differences:
-regular household help
-home in a safer neighborhood
-access to better schools
-ability to assist parents financially, treat other family members in various ways
-freedom from having to worry about relatively small amounts of money, as in "I'm just going to hire a good plumber and get this fixed, and not worry about the cost". "I'm not going to argue with this company because I don't want to get agitated over it."
I would argue that a household earning $100k in a MCOL area can get/do any of those things to a significant degree if those are priorities.
“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

Luckywon
Posts: 678
Joined: Tue Mar 28, 2017 10:33 am

Re: How much money do you want to retire?

Post by Luckywon » Sun Feb 16, 2020 11:21 am

willthrill81 wrote:
Sun Feb 16, 2020 11:02 am
Luckywon wrote:
Sun Feb 16, 2020 1:39 am
willthrill81 wrote:
Sat Feb 15, 2020 11:33 pm
fishandgolf wrote:
Sat Feb 15, 2020 10:37 pm
….hummmm…..

Money does not buy happiness......but it does buy a more enjoyable form of misery...…… :|
I think that a certain amount of money is, for most people, a necessary but insufficient condition for happiness. It's difficult for most people to be happy when their roof is leaking, their clothes are falling apart, and their hungry. But if you have $3 million, research suggests that there would not be a long-term improvement to your happiness if you had $10 million instead.

A friend of mine and I were recently discussing how the really meaningful differences are between those with $1 million annual incomes or more (call them the 'wealthy' strictly for the sake of this comparison) and someone making around $100k in a MCOL ('comfortable' but obviously still very wealthy by global standards especially) are today. Wealthy folks can take first class flights instead of coach, but unless you're traveling a lot, a higher level of comfort for a matter of a fraction of a day isn't very meaningful. The differences in comfort between a $200k vehicle and a $30k vehicle are actually quite small (e.g. both probably have comfortable adjustable seats, air conditioning, good sound system, and very reliably get you where need to go). More expensive houses are mostly that way because they are just bigger. The comfortable folks can go to virtually any destination in the world and stay there in comfort, just not 5-star hotels for a month at a time. And despite being foodies ourselves, we've learned that you can get some fantastic food without spending a lot for it. Some would say that you cannot compare a $20 bottle of wine with one that's $2k, but thankfully our tastebuds are not that refined with wine at least.
A few things I'd add to the list of meaningful differences:
-regular household help
-home in a safer neighborhood
-access to better schools
-ability to assist parents financially, treat other family members in various ways
-freedom from having to worry about relatively small amounts of money, as in "I'm just going to hire a good plumber and get this fixed, and not worry about the cost". "I'm not going to argue with this company because I don't want to get agitated over it."
I would argue that a household earning $100k in a MCOL area can get/do any of those things to a significant degree if those are priorities.
Agree. I'm thinking of my own situation. I live in southern California.

hicabob
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Re: How much money do you want to retire?

Post by hicabob » Sun Feb 16, 2020 11:53 am

Pierre Delecto wrote:
Sat Feb 15, 2020 11:36 pm
SQRT wrote:
Thu Feb 13, 2020 9:55 am
Wannaretireearly wrote:
Thu Feb 13, 2020 12:37 am
Whatever I have at age 50. By that time we'll have universal healthcare, joining the rest of developed civilization. 🤑
How old are you? I’m beginning to doubt the US will have this in my lifetime. I’m 69.
Hope they aren’t somehow able to outlaw private. I’m saving up for private.
Countries that have universal healthcare also have private docs for those that want and can afford them. Canada, Australia, UK, Germany, Mexico etc.

Wannaretireearly
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Re: How much money do you want to retire?

Post by Wannaretireearly » Sun Feb 16, 2020 1:15 pm

hicabob wrote:
Sun Feb 16, 2020 11:53 am
Pierre Delecto wrote:
Sat Feb 15, 2020 11:36 pm
SQRT wrote:
Thu Feb 13, 2020 9:55 am
Wannaretireearly wrote:
Thu Feb 13, 2020 12:37 am
Whatever I have at age 50. By that time we'll have universal healthcare, joining the rest of developed civilization. 🤑
How old are you? I’m beginning to doubt the US will have this in my lifetime. I’m 69.
Hope they aren’t somehow able to outlaw private. I’m saving up for private.
Countries that have universal healthcare also have private docs for those that want and can afford them. Canada, Australia, UK, Germany, Mexico etc.
This. I'm 41. I dont hold out a lot of hope we'll get this done in my lifetime...
Buy Low, Sell High

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LadyGeek
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Re: How much money do you want to retire?

Post by LadyGeek » Sun Feb 16, 2020 1:40 pm

As a reminder, conjecture on future changes in US law (changes in healthcare) is off-topic. See: Politics and Religion (proposed legislation)
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yangtui
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Re: How much money do you want to retire?

Post by yangtui » Sun Feb 16, 2020 1:52 pm

Based on family history I need to plan to be alive for another 55 to 65 years. I would probably need between 5 million to 7 million USD to feel comfortable completely withdrawing from the working world. In reality I would probably move to Asia and work as a college/university professor and/or get involved in the F&B industry.

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