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Subject Expert
Inflation last 10 years has been around 35%, so there has been come lifestyle creep or other increased spending too, so seems like that $5m might go up as well.
As for $5m being enough, that’s your decision. Anyone can live comfortably on this, but no one is forcing you to quit working!
Congratulations! If you think you might be aiming low, how much more would make you comfortable? How long do you think it’d take to hit that number?
I know lots of people here do coast FIRE or get some type of job to stay busy and get some extra income. Personally, I don’t think I’ll have any issue filling my days as long as I have enough money to live the way I want. I’m still 10+ years away from FIRE, but I’d rather work a little longer to know that when I retire I’m done working for good.
Enough will never be "enough" then. It will be a moving target.
How old are you and what is your plan for retirement (if you have one)
Subject Expert
Planning what you will do in retirement is half of the process.
The way I look at it is that I peg to an annual income number from what I was making a little before the pandemic. The economy and prices were pretty stable before things got wacky for a while, so it seems like a good base year. My wife and I were doing okay with a house payment and kid expenses. I figure with the house paid off and the kids (hopefully!) launched and handling their own expenses we'll have some buffer for fun and safety. I mark that up with the current consumer inflation numbers and use a 3% SWR to calculate my current required amount of income producing assets.
How much of the $2.7M delta was growth versus contributions?
Exact half and half.
How do you guys spend money to need so much in retirement? I have a hard time spending $3k a month now and cant imagine I'd spend more than that (excluding healthcare and adjusting for inflation). The past 12 years since college my annual expenses has never exceeded $35k a year. I have surpassed my retirement number but Im not 35 yet and dont want to retire yet. Initally, had planned for retirement at 45. May move it down to 40. I have a $300k base and bonuses has been 25% to 35% the past several years. Even with two vacations a year, never gone over $35k in annual expenses. Savings has been great.
Congratulations - Spending $35K/year is definitely an outlier. You must not have kids
Many mortgages are above $35K/year, and Medical insurance/healthcare costs for a family could exceed $35K as well
You can always bump it up a bit more to give yourself more of a cushion. I’m expecting us to overshoot our target, which I view as a minimum, not a finish line.
Yes, though my numbers are double that, and I only count investments (i.e., not counting my house). I should hit that by 50 at the latest, so another 5 years.
Wow! Thats awesome! Mind sharing how it grew so large?
Promotions/better paying job? Saving? Etc
Everything plays a role; having two incomes, earning a higher salary, investment returns, and, of course, a bit of luck.
But the single most important first step is investment discipline.
- Max out your 401(k) every year.
- Live on a budget and spend less than you earn.
- Diversify your investments and stay invested for the long term.
None of these are exciting, but consistently following them is what builds wealth over time.