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What's your FI/RE Target?

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  • At half a million of savings per year, I hope you don't need to work till 67! Or you're planning a REALLY nice party during your golden years! Can we all come!?

    But for a newbie starting out and working for 30 years, saving around $75K/yr assuming a market return of 7%, will get you $7M. When you inflation adjust this you get the purchasing power of $120K/yr in TODAY's dollar. This is assuming that you could live off $120K TODAY even if you were 30 years older right now.

    This is just to give people a baseline to work from. Of course this goes up and down depending on how much you really need to live on vs how much you saving plus your particular timeline.

    I do somewhat agree, that you want to earn as much as you can now but up to a point and depending on your tax situation. For dual income both salaried which puts you up at the top of tax cake, an extra night shift can get you $1K a pop. But after taxes, you're looking at nearly half net so at some point you just rather get some damn SLEEP. So as with everything it's all about moderation.

    And of course you see this everyday, doesn't matter how much money you have if you don't have the health.

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    • Click to expand…


      So lets say you reach your 30 year, 7 mill goal. Assuming 4% withdrawl rate and 4% real growth of that month, your portfolio is pretty much a static portfolio then? growth balances out with withdrawl. What am I missing?
      Click to expand…


      Exactly. Not missing anything on that.  Once hitting the retirement, the principle is static and assumption of living solely on the interest 4% at a very conservative rate that has no draw on the basis.  = $3M inheritance to your kids with that no draw.

      We live in SoCal with one of the highest property tax and income taxes outside SanFran and NY.   Our yearly nondiscretionary (tax, insurance, utilities) is south of $25,000.  Take that out of 120-25 = 95 and then 25% marginal tax  leaves 71.5k for complete discretionary spending without impacting the principle.

      That’s  $195 a day spend and still quite a lot of discretionary spending for two every single day of the year.  With that budget, we can LIVE on a cruise ship.
      Click to expand…


      Does that $25k include health insurance and copays? Home and car maintenance? Kids calling with this emergency or that? Dental work as you get older? Eating healthy foods? Etc. My back of the envelope calculation of the basic costs of living in retirement (in a MCOL Midwestern city) is quite a bit north of $25k.
      Click to expand...


      Property taxes and all insurances (full insurance too, not medicare supplement either) along with routine maintenance.  $195 would be the incidentals -- food, entertainment, travel and deadbeat children too.

      What kind of Midwest property and cars do you have for that?  Or really bad teeth.

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      • As of now, I don’t plan on retiring early. So to hit my FI number, my spouse and I would just need to max out my tax advantaged accounts every year from now until the time we are 67 (2 401Ks + 2 Backdoor Roths = 47000). That number is low because of a combo of a low FI number, heavily frontloaded savings, anticipation of a 30+ year working career, and (while I don’t factor it into our calculations) an anticipated substantial inheritance from my spouse’s side (only child). That being said, earning potential and job satisfaction can change quickly in medicine so we continue to be aggressive with loading our taxable account / real estate portfolio in the event things change. Aiming for 300000 – 500000 / year. I am happy to report we beat that goal last year (great year financially for us)
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        I am surprised that you only save $47K out of an income of $500K. That is less than 10 %. If I were earning that much I would haave saved at least $100-150K per year since the future earning are uncertain in medical landscape.

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        • As of now, I don’t plan on retiring early. So to hit my FI number, my spouse and I would just need to max out my tax advantaged accounts every year from now until the time we are 67 (2 401Ks + 2 Backdoor Roths = 47000). That number is low because of a combo of a low FI number, heavily frontloaded savings, anticipation of a 30+ year working career, and (while I don’t factor it into our calculations) an anticipated substantial inheritance from my spouse’s side (only child). That being said, earning potential and job satisfaction can change quickly in medicine so we continue to be aggressive with loading our taxable account / real estate portfolio in the event things change. Aiming for 300000 – 500000 / year. I am happy to report we beat that goal last year (great year financially for us) 
          Click to expand…


          I am surprised that you only save $47K out of an income of $500K. That is less than 10 %. If I were earning that much I would haave saved at least $100-150K per year since the future earning are uncertain in medical landscape.
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          Oh no, I try and save $300k - $500k a year.

          I merely need $47k/year if I were to work until 67.

          I like my job and make a lot. I'm still frontloading my savings in the event those factors change.

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          • Click to expand…


            So lets say you reach your 30 year, 7 mill goal. Assuming 4% withdrawl rate and 4% real growth of that month, your portfolio is pretty much a static portfolio then? growth balances out with withdrawl. What am I missing?
            Click to expand…


            Exactly. Not missing anything on that.  Once hitting the retirement, the principle is static and assumption of living solely on the interest 4% at a very conservative rate that has no draw on the basis.  = $3M inheritance to your kids with that no draw.

            We live in SoCal with one of the highest property tax and income taxes outside SanFran and NY.   Our yearly nondiscretionary (tax, insurance, utilities) is south of $25,000.  Take that out of 120-25 = 95 and then 25% marginal tax  leaves 71.5k for complete discretionary spending without impacting the principle.

            That’s  $195 a day spend and still quite a lot of discretionary spending for two every single day of the year.  With that budget, we can LIVE on a cruise ship.
            Click to expand…


            Does that $25k include health insurance and copays? Home and car maintenance? Kids calling with this emergency or that? Dental work as you get older? Eating healthy foods? Etc. My back of the envelope calculation of the basic costs of living in retirement (in a MCOL Midwestern city) is quite a bit north of $25k.
            Click to expand…


            Property taxes and all insurances (full insurance too, not medicare supplement either) along with routine maintenance.  $195 would be the incidentals — food, entertainment, travel and deadbeat children too.

            What kind of Midwest property and cars do you have for that?  Or really bad teeth.
            Click to expand...


            All I know is that the current health insurance that I have for myself and my family would be $18,000 per year, the property tax and personal property tax for my home and mid-range cars (Volvo, Honda, and Prius) is $12,000 per year, and our insurance for home, cars, and umbrella is $11,000 per year. That's $41,000 per year, and I have yet to pay utilities or eat a bite of food. Or have a root canal.

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            • That sounds right to me. Property tax = $25000; Home, car and umbrella insurance = $6000; Health insurance = $23,000. I'm at $54,000 before spending a dime for living. Granted I don't live in the Midwest.

              While I'm not going to retire early, that's why I'm looking to come up with $225,000 per year in retirement.

               
              My Youtube channel: https://www.youtube.com/channel/UCFF...MwBiAAKd5N8qPg

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              • That sounds right to me. Property tax = $25000; Home, car and umbrella insurance = $6000; Health insurance = $23,000. I’m at $54,000 before spending a dime for living. Granted I don’t live in the Midwest.

                While I’m not going to retire early, that’s why I’m looking to come up with $225,000 per year in retirement.

                 
                Click to expand...


                So per calculations, todays 225K is like 550K in 30% for 3% inflation.

                At a 4% SWR, you are saying you'd need 13 million in nest egg.

                 

                Yea. Not gonna happen to me on my MD income/stock market only.

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                • meant 30 years*

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                  • That sounds right to me. Property tax = $25000; Home, car and umbrella insurance = $6000; Health insurance = $23,000. I’m at $54,000 before spending a dime for living. Granted I don’t live in the Midwest.

                    While I’m not going to retire early, that’s why I’m looking to come up with $225,000 per year in retirement.

                     
                    Click to expand...


                    My goal is $200k per annum, so it looks like we are thinking along the same lines. It would be nice to continue to eat healthy foods, have internet access, catch an occasional show or sporting event, and take a trip or three. Heaven forbid my daughter wants a wedding, my son an engagement ring or either wants to go to med school. (Actually, could handle the first two, probably not the latter without continuing to work.)

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                    • In the Midwest, high state income tax, low property taxes.

                      $3,600 property tax, $2,400 to insure home and 2 cars. With $14,000 for HDHP, we're at $20,000. We have to eat and pay for gasoline, etc..., so I consider $40,000 to be our core expenses (barebones no fun budget). We spend closer to $70,000, so I consider $30,000 to be discretionary.

                      We have financial independence, but I'd be more comfortable with what I call financial freedom, which I've defined as having enough to support your core spending + 2 x (discretionary spending). For our family of four, that’s annual spending of $40,000 + 2x($30,000) = $100,000 a year.

                      25 * $100,000 = $2.5 million. I've exceeded that in net worth, but not in retirement savings, so we don't quite have FF yet.

                      I realize the kids will get more expensive, and we plan to pay for college with 529 plans that aren't included in above calculation. The best we can do is exceed the targets a bit and be flexible with the plan.

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                      • All I know is that the current health insurance that I have for myself and my family would be $18,000 per year, the property tax and personal property tax for my home and mid-range cars (Volvo, Honda, and Prius) is $12,000 per year, and our insurance for home, cars, and umbrella is $11,000 per year. That’s $41,000 per year,
                        Click to expand...


                        I am amazed at how much the health insurance costs have skyrocketed. My group insurance is $16K per year with $2500 deductible per each person and a 20 % coinsurance after that at a max of $10K per family. So it can easily reach $30K for our 3 person family. And we have not come to dental costs, let alone property taxes and insurance on house and cars. BTW, I live in low COL area in the south.

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                        • That sounds right to me. Property tax = $25000; Home, car and umbrella insurance = $6000; Health insurance = $23,000. I’m at $54,000 before spending a dime for living. Granted I don’t live in the Midwest.

                          While I’m not going to retire early, that’s why I’m looking to come up with $225,000 per year in retirement.

                           
                          Click to expand…


                          So per calculations, todays 225K is like 550K in 30% for 3% inflation.

                          At a 4% SWR, you are saying you’d need 13 million in nest egg.

                           

                          Yea. Not gonna happen to me on my MD income/stock market only.
                          Click to expand...


                          Not as I see it. I'm not retiring early, probably around 67 in 8 or 9 years. Social security is part of the plan. If it disappears, I'll adapt. Right now, my wife and I are each in line to receive $42,000 per year at age 70. So continuing to speak in today's dollars, I need to generate $143,000 per year to reach my desired annual income. That is $3.575M at a 4% withdrawal rate. That's within striking distance.

                          As far as what that equates to 30 years from now, I will allow asset allocation and continuing exposure to the stock market to take care of that, along with flexibility and adaptability.
                          My Youtube channel: https://www.youtube.com/channel/UCFF...MwBiAAKd5N8qPg

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                          • Antares I am still blown away by $25000 for property taxes  you don't want to know what I pay

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                            • Antares I am still blown away by $25000 for property taxes  you don’t want to know what I pay
                              Click to expand...


                              Yeah, but Antares gets a lot more benefit from that huge property tax.  

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                              • We have a fantastic library. Not kidding.  :?

                                 

                                My property taxes here in the suburban New York City metro area are not exceptional, and I'm not living in a mansion. But it is a fairly upscale community. When I sell the place and downsize in a lower COL area, the taxes will feel like I'm getting an unbelievable deal!
                                My Youtube channel: https://www.youtube.com/channel/UCFF...MwBiAAKd5N8qPg

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