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Guys... how are you affording rent right now 😭
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I don’t think this is the right approach to think about this. You’ll live in your home, so it’s not about % of NW, but more about COL including taxes and insurance and maintenance.
If your COL is 50k for food, shelter, insurance, travel, etc. and use the 4% rule, you need $2M to retire, excluding your home value. Otherwise you’d have to sell your home to live.
Also, the assets don’t have to be income producing. Rent or dividends or selling for LT cap gains are all options.
That and the fact that the more you borrow on your home, the smaller the percent of net worth is tied up in your home. When you’re in the NW building stage of life, you need to view things through that lens.
Model it out. Use excel, not the online stuff.
Mine is 20-25% if you are looking for a data point.
This was about the range I was thinking.
Glad you asked this. I hadn’t considered that and our home is about 33% of our NW… we don’t plan to sell it and downsize when we retire so it is part of the NW but won’t be an income producer.
How do you even calculate "home as a percent of net worth"? Based on outstanding mortgage? Based on market value less outstanding mortgage?
The point is that retiring early means focus on accumulating wealth early and letting it grow. With that theory, your goal should be to find something without a need to incur relocation costs by buying and selling multiple times and then keep payments low for 30 years so you can lock in low current interest rates and accumulate gains in other investments. That likely means high LTV and living in something that isn’t your dream house.
If you want to retire early, determine your own needs and bust out that handy excel file to see what gets you there. Don’t try to compare “percentage of net worth” for a financed asset to other people. Ask questions like what the percentage of my total portfolio should be in specific sectors or asset classes.