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What's your FI/RE Target?

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  • #16
    Yes, the number can shrink as time goes by.  One of the few docs at my place who had the same desire to FIRE (or maybe the one who actually seemed to have a plan as everyone seemed to have a desire) and I used to get together over lunch or dinner now and then and joke about how the number seemed to be coming down to meet us.  It was all a question of time v money.

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    • #17
      wow.  I mean I can see setting the bar at 5M for comfort or just to hit a "goal" like Zaphod suggested...but that's a ************************ lot of money.  As stated, that's $200k per year spending.  Right now in the peak of our spending with kids and car payments and a mortgage and loads of insurance and college funds, our annual spending is 120-130k/year.  I cant imagine having expenses that high without any of the costs mentioned above.  Seems like 3M is plenty for me.

       

      One thing not mentioned here is the inflation issue.  Given that, my goal is retire with net worth of 4M, which will be roughly equivalent to 3M in todays dollars 20 years from now

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      • #18




        wow.  I mean I can see setting the bar at 5M for comfort or just to hit a “goal” like Zaphod suggested…but that’s a ************************ lot of money.  As stated, that’s $200k per year spending.  Right now in the peak of our spending with kids and car payments and a mortgage and loads of insurance and college funds, our annual spending is 120-130k/year.  I cant imagine having expenses that high without any of the costs mentioned above.  Seems like 3M is plenty for me.

         

        One thing not mentioned here is the inflation issue.  Given that, my goal is retire with net worth of 4M, which will be roughly equivalent to 3M in todays dollars 20 years from now
        Click to expand...


        You make an excellent point about inflation.  If inflation inches along like it has the last few years, your estimation of needing $4 million in 20 years to match $3 million in buying power today may be true.  However, at a fairly modest 2% inflation rate, you'll need $4.5 million and at a 3% rate you would need $5.4 million in 20 years.

        I agree that $5 million is more than enough.  I'd probably be alright with $2 million, but I think I'll be willing to work an extra 5 or 6 years to have twice as much.  If it would take an extra 10 or 15 years, I might think differently.

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        • #19
          A goal is just a goal. No way related to not having to work anymore. At some point when you start to accumulate more I worry about the risk/reward from practicing. Agree if you can hit numbers that will make you basically FI and then continue to work and let it compound even for a few years...thats golden.

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          • #20
            Very long story made too short:  The FI target or "my number" changes over time - usually upward as we make more money and get more comfortable spending.  Mine is no exception.  My thinking at this point is 10k/Mo to spend spun off from $4M.  The math on that is 120k/year x 33.  It also works out to about 3% annual withdraw.  The rate is controversial and can be debated but if one retires before age 55 and takes repeated withdrawals for four decades the balance can go to zero if unlucky.  It depends more on your sequence of returns, reverse dollar cost average, and luck even more than asset allocation.

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            • #21
              just understand what the marginal utility of wealth means as you near retirement

               

              do your homework when converting to a roth-its not always favorable

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              • #22
                I guess I don't think of it in terms of a numerical goal. My estimation is that every so often I will pass some obvious financial milestones, and when I do I plan to stop and survey my situation and see how adequately I've been saving and see what my income needs are.  Some example milestones would be: paying off all student loans, paying off my house, $2M in retirement assets, $3M total net worth, and so on.  I hope that one day I'll look at my situation and realize I don't need to work any longer, or maybe I could cut back a lot. For the time being though I'm nowhere near any of these milestones, so its full-time work and business as usual, and I just stick to my retirement savings goals and don't think about it otherwise.

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                • #23




                  I guess I don’t think of it in terms of a numerical goal. My estimation is that every so often I will pass some obvious financial milestones, and when I do I plan to stop and survey my situation and see how adequately I’ve been saving and see what my income needs are.  Some example milestones would be: paying off all student loans, paying off my house, $2M in retirement assets, $3M total net worth, and so on.  I hope that one day I’ll look at my situation and realize I don’t need to work any longer, or maybe I could cut back a lot. For the time being though I’m nowhere near any of these milestones, so its full-time work and business as usual, and I just stick to my retirement savings goals and don’t think about it otherwise.
                  Click to expand...


                  I think thats probably the hardest part about all of this. Many of us feel like we didnt know anything about finance and dug a little hole to start life, than you slowly educate yourself (with the help of sites like this), and put a grand master plan in place and....boom! not much for a while, we have to sit and wait it out. Cant do much about that but let it come to you I guess.

                  One thing thats nice to see change is my debts worksheet, I update it every year and its sadly enjoyable to see whats been paid off, principals reduced and the quickly contracting average interest rate we pay. It will be even better when I dont have one.

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                  • #24

                    PhysicianOnFIRE wrote:I agree that $5 million is more than enough.  I’d probably be alright with $2 million, but I think I’ll be willing to work an extra 5 or 6 years to have twice as much.  If it would take an extra 10 or 15 years, I might think differently.
                    Click to expand...


                    Work an extra 5-6 years to have another 2 m?  You, sir - are my hero!!!

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                    • #25




                      PhysicianOnFIRE wrote:I agree that $5 million is more than enough.  I’d probably be alright with $2 million, but I think I’ll be willing to work an extra 5 or 6 years to have twice as much.  If it would take an extra 10 or 15 years, I might think differently. 
                      Click to expand…


                      Work an extra 5-6 years to have another 2 m?  You, sir – are my hero!!! <img src=" />
                      Click to expand...


                      I'll be expecting the 1st $2 million to do some of the work for me.  At 7% growth, $2 million becomes $3 million in 6 years.

                      Being debt-free and living a relatively frugal life (by doctor's standards anyway) allows us to live off of about 25% of take home pay.  The rest is invested.

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                      • #26
                        PhysicianOnFire - even with growth of current assets, I am impressed by your discipline.

                         

                        We are actually very close to each other in terms of living costs vs take home pay.  I hope to have your discipline to carry on for another 7-10 years then we should be good to go.

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                        • #27
                          My number is 3.5 million and hope to be able to get there at age 50. I think I will be able to make it happen and then probably will transition to part time work, instead of full retirement.
                          I'm trying to enjoy life as much as I can now....having had a "heart problem" in my 30's that required an intervention (which thankfully cured the condition) and seen many young people die or diagnosed with cancer, my thinking of early retirement has been stronger than ever.
                          Eat well, exercise and spent time with friends and family.
                          And of course retire early. We only live once

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                          • #28
                            Just remember one thing. My net worth (unadjusted for taxes) was just shy of $5M when I was 50. Then the financial bust came and it was $2.5M two years later. Back to where I was now, but that was a) close to a decade of essentially zero progress, and b) a wakeup call about the wisdom of leaving the workforce too early. Looking at what's happening in China and the fact that half the world is a negative interest rates, the landscape looks dangerous; I hope I won't have to take another round trip like the last one!

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                            • #29
                              Yeah Don I hear you on 2008 and 2000. I am still in the workforce because I recognize that it could happen again. I am way ahead net worth wise from 2008 and have derisked my portfolio I hope but some fear remains. I only work part-time now but I am not drawing down the nest-egg.

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                              • #30




                                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.
                                Click to expand...


                                same goal, $3M, but for us it will only be 25x spending (well, goal spending, 35x current spending).  We're not nearly as frugal as you!

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