What's your FI/RE Target?

[PenguinMD]

Curious what is everyone's FI/RE (Financial Independence / Retire Early) number?

 

As high-income earners wondering if the bar is higher due to maintaining a certain living standard. Growing up always thought $1M would be fine, but now that I crossed that and still don't feel "secure" seems I need a higher number (now thinking $3M is needed since at 4% SWR that gives $120K a year) especially if you factor any potential health issues as you get older.

 

Wondering what people's target is: $1m, $3m, $6m, $20m? And the thinking behind that number (besides just 25x of annual spending).

 

Thanks!

 

 

[Hatton]

5 Mill was always my number. Financial assets not counting house.  I quit ob when I hit it.  From every angle that I looked at it this seems to be enough.

[PhysicianOnFIRE]

My stated goal has been 50x annual expenses with an additional 5x in the donor advised fund.  That would be between $3 million and $4 million dollars.  I set that goal last year after I became debt free and the nest egg hit 25x expenses.

The bar may be raised again if I'm not ready to end my career prematurely when I hit the current target.  Or perhaps expenses will grow.  Time will tell.

[dragonfruit]

A great thing about setting a target FI/RE date is that it doesn't have to be set in stone. It constantly adjusts. God forbid you mess up a little and have to spend less in retirement! This is why I love going over the financial plan every year because each year the target FI/RE becomes more accurate.

[Zaphod]

Since Im just starting and lots will change in the next couple years I really am unsure. 3 million in invested assets seems like it should be enough to retire. Once all debts are gone, and depending on spending levels I have a feeling Id be comfortable with even less, even though I wouldnt necessarily want to wing it at that level. We're all pretty conservative this way and will likely way overdo it if financial calculators are to be trusted.

My real number Im shooting for, though unrelated to FI/RE, just a goal really, is 10m.

[nyu04]

hatton1 wrote:

5 Mill was always my number. Financial assets not counting house.  I quit ob when I hit it.  From every angle that I looked at it this seems to be enough.

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Tentatively, this is exactly my number as well.  With the house paid off by then, we will have about a million in home equity.  This would allow us to relocate almost anywhere and purchase a nice / borderline fancy place (maybe not Hawaii though) to retire.  With housing taken care of, the 5 mil should give us enough of a safety margin in almost any market condition.

Having said this, life is funny and who knows what will happen.

 

[TheGipper]

As someone who has never really looked into FI calculations, when you guys throw a number like $5mil of invested assets out there.  Do you mean tax adjusted values? (i.e multiply IRA/401k x 0.7 or whatever effective tax multiplier you anticipate).

[PhysicianOnFIRE]

TheGipper wrote:

As someone who has never really looked into FI calculations, when you guys throw a number like $5mil of invested assets out there.  Do you mean tax adjusted values? (i.e multiply IRA/401k x 0.7 or whatever effective tax multiplier you anticipate).

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I just add up the numbers.  I know that my Roth money is more valuable than the traditional 401(k) money, but it's tough to predict future taxation.

Eventually, at least some of the 401(k) money will be converted to Roth IRA.  Retiring with tax credits (a.k.a. children) at home or in college will open up some space to do so tax free.

[nyu04]

PhysicianOnFIRE wrote:

TheGipper wrote:

As someone who has never really looked into FI calculations, when you guys throw a number like $5mil of invested assets out there.  Do you mean tax adjusted values? (i.e multiply IRA/401k x 0.7 or whatever effective tax multiplier you anticipate).

Click to expand…

I just add up the numbers.  I know that my Roth money is more valuable than the traditional 401(k) money, but it’s tough to predict future taxation.

Eventually, at least some of the 401(k) money will be converted to Roth IRA.  Retiring with tax credits (a.k.a. children) at home or in college will open up some space to do so tax free.

Click to expand...

Me too.  I just look at how the numbers in all accounts add up.  5mil is most likely overkill for our spending habits but for now, it's a tentative goal.

[TheGipper]

But certainly someone who has 90+% of their retirement assets in 401k/tIRA vs Roth/Taxable should take this into account.  Most people in this conversation should probably be planning to convert as much 401k/tIRA into Roth as possible in the low income years between retirement and age 70/SS/forced RMDs.  This requires some planning and building up of one's taxable account.

Luck and health willing, I hope to have 10+ "zero income" years from retirement to age 70 to convert the bulk my IRA to Roth, while living off my taxable account and tax free proceeds from primary home downgrade.  I hope to get as much converted below an effective tax rate of 20% as possible.  But even if I'm forced to convert several hundred thousand/yr up to an effective tax of 25%+, still much better than converting at a marginal rate near 50% while working or waiting till very high late forced RMDs.

[PenguinMD]

So seems people are coalescing around $5M. So at 4% SWR that's $200k per year.

Let's say you get preferable tax treatment so your actual take-home is 80% (say they are qualified dividend or you're pulling principal out of Roth at that point for low tax and no early penalty).

At 80%, you'll have $160k in your pocket per year. Seems pretty comfortable. Especially, if mortage/housing is taken cared of and kids are all independent.

Curious what people are envisioning how they spend that money in your "golden years", that's a lot of green time and shopping .

[Zaphod]

You have taxes when you work, and you'll have them no matter what during retirement. It doesnt make a lot of sense to ruminate on it as besides position your accounts the best way possible, you cant do anything about it but have less money. Dont think it adds anything to the exercise and is way too unpredictable to be anything other than making you feel like you planned for something when you really didnt. You should just strive for comfortably more than you think, then loosen it up a bit. We could probably live pretty happily on very little if need be (debt free of course), but nothing wrong with some wiggle room.

I also plan on using POF tactics and try to roll everything over at a lower income level before rmds, etc...Always another way.

[uptoolate]

Mine was 5M similar to others above.  Once I hit it, it didn't take long for the buckets to fill up and for me to call it a day.  Also similar to above, I didn't make a big distinction between taxable, tax deferred and corporate money.

[VagabondMD]

Put me in the $5M club. A lot has to do with the timing, however, as reaching the goal before you have launched the kids from the nest means that you have not really reached the goal.  :?

In the mean time, my wife and I continue to toil...  :x

[asmallchild]

Same as everyone else.

Aiming for $10M but I suspect the current climate in healthcare won't allow for that to be a realistic goal.

Would be obviously ecstatic just to hit $5M and would return to academics or go part time once that number is reached

(Also, I'm young. I suspect as I grow older and wiser/bitterer, that number will continue to shrink and I'll just make do with more frugality)