Comments on: What is your number? http://earlyretirementextreme.com/what-is-your-number.html Becoming debt-free is the first step to building a better world. Financial independence is the second. Doing what YOU want is the third. Thu, 09 Feb 2012 00:07:08 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Wie hoch sind Ihre Ausgaben? | Genug haben. http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-22197 Wie hoch sind Ihre Ausgaben? | Genug haben. Sun, 15 May 2011 13:45:18 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-22197 [...] Dieser Post ist stark an diesen von Jacob Fisker Lund angelehnt. Dieser Eintrag wurde veröffentlicht unter Philosophie. Permalink in die Lesezeichen [...] [...] Dieser Post ist stark an diesen von Jacob Fisker Lund angelehnt. Dieser Eintrag wurde veröffentlicht unter Philosophie. Permalink in die Lesezeichen [...]

]]> By: bigato http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-21144 bigato Mon, 21 Feb 2011 01:22:56 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-21144 If the present situation keeps unchanged I would reach retirement at 44 (i'm 30), having about 490k in brazilian currency. I would be withdrawing 3% yearly. I'm planning to reduce expenses (stop paying rent and others adjustments) and learn about investing so I can count on having 4% over inflation. Will also very probably get 400 more each month. All that would allow retire at 35 with about 215k. Thinking about my expenses after retirement, when I will have more time to grow some vegetables, will cook using a wood stove i will build myself, will make my own soap from wood ashes, have some chicken, build a solar water heating system, then I will need only 110k, withdrawing 4% yearly. If I could reduce expenses to that level today, I would need only 1.72 year to pile up that amount, retiring at 32. So the focus is really on cutting expenses. If the present situation keeps unchanged I would reach retirement at 44 (i’m 30), having about 490k in brazilian currency. I would be withdrawing 3% yearly. I’m planning to reduce expenses (stop paying rent and others adjustments) and learn about investing so I can count on having 4% over inflation. Will also very probably get 400 more each month. All that would allow retire at 35 with about 215k.

Thinking about my expenses after retirement, when I will have more time to grow some vegetables, will cook using a wood stove i will build myself, will make my own soap from wood ashes, have some chicken, build a solar water heating system, then I will need only 110k, withdrawing 4% yearly. If I could reduce expenses to that level today, I would need only 1.72 year to pile up that amount, retiring at 32. So the focus is really on cutting expenses.

]]> By: George the original one http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16662 George the original one Mon, 27 Sep 2010 16:15:28 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16662 I'd argue that the math really is that simple. It's a person's comfort with the math that is complicated. I’d argue that the math really is that simple. It’s a person’s comfort with the math that is complicated.

]]> By: tmgbooks http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16657 tmgbooks Mon, 27 Sep 2010 14:46:24 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16657 The math, in real life, is not that simple. There are at least two factors will complicate the issue: Actual returns and inflation. If your investments don't keep up with inflation, your real income will fall. And, if there is an extended bull market in any investment class on which you are counting to provide you income, you could be in trouble. On top of that, there is the reality of health care in the US and the fact that even if you have health insurance, most of our policies have a cap of one sort or another or there are gaps in our policy. Hit one of those gaps and it could become necessary to choose between your money or your life. The thing is, most people pursuing "early retirement" are actually not pursuing any such thing. Retirement is when you are voluntarily out of the labor pool and do not engage in any endeavor for which you seek recompense, such as self-employment. Me, Jacob, and most of those seeking "early retirement" are actually looking to escape the rat race of the five-day workweek and plan to finance that escape with a mix of passive income and self-employment. That is not the definition of "retired," however. But you do need the goal of a "number" as that allows you to plan. And, if you continue to generate earned income (as opposed to passive income) after leaving your position as an employee, that income can serve to buffer the effects of both actual returns and inflation. Which is why it is prudent to include some aspect of earned income when planning for semi-FI. The math, in real life, is not that simple. There are at least two factors will complicate the issue: Actual returns and inflation.

If your investments don’t keep up with inflation, your real income will fall. And, if there is an extended bull market in any investment class on which you are counting to provide you income, you could be in trouble.

On top of that, there is the reality of health care in the US and the fact that even if you have health insurance, most of our policies have a cap of one sort or another or there are gaps in our policy. Hit one of those gaps and it could become necessary to choose between your money or your life.

The thing is, most people pursuing “early retirement” are actually not pursuing any such thing. Retirement is when you are voluntarily out of the labor pool and do not engage in any endeavor for which you seek recompense, such as self-employment.

Me, Jacob, and most of those seeking “early retirement” are actually looking to escape the rat race of the five-day workweek and plan to finance that escape with a mix of passive income and self-employment. That is not the definition of “retired,” however.

But you do need the goal of a “number” as that allows you to plan. And, if you continue to generate earned income (as opposed to passive income) after leaving your position as an employee, that income can serve to buffer the effects of both actual returns and inflation. Which is why it is prudent to include some aspect of earned income when planning for semi-FI.

]]> By: Jacob http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16649 Jacob Mon, 27 Sep 2010 03:38:30 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16649 @et - That's why you do the exercise at the beginning of the entry. That automatically factors in replacement costs if you do it long enough. @et – That’s why you do the exercise at the beginning of the entry. That automatically factors in replacement costs if you do it long enough.

]]> By: Laura http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16646 Laura Sun, 26 Sep 2010 18:23:14 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16646 £400k...still 9 years to go :-) £400k…still 9 years to go :-)

]]> By: Daniele http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16645 Daniele Sun, 26 Sep 2010 17:56:46 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16645 330000euro... that means, still 3 years to go :D But I'm planning indeed to reduce expenses, increase income and go for better investments. Ciao D 330000euro… that means, still 3 years to go :D

But I’m planning indeed to reduce expenses, increase income and go for better investments.

Ciao
D

]]> By: Rob Bennett http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16643 Rob Bennett Sun, 26 Sep 2010 17:12:32 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16643 I used the "Multiply by 25" rule myself when putting together my Retire Early plan. I would use a "Multiply by 20" rule if I were putting it together today. I now know more about how investing works than I did then. That changes the number. Sometimes the best way to make the numbers look better is by learning more about what goes into them! Rob I used the “Multiply by 25″ rule myself when putting together my Retire Early plan. I would use a “Multiply by 20″ rule if I were putting it together today. I now know more about how investing works than I did then. That changes the number.

Sometimes the best way to make the numbers look better is by learning more about what goes into them!

Rob

]]> By: deegee http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16642 deegee Sun, 26 Sep 2010 16:31:59 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16642 When I was planning and doing my budgeting for my ER 2-4 years ago. I was more concerned with generating enough dividend income to more than cover my monthly expenses. This resulted in having a WR of about 2.5% in the early years of my ER, climbing to about 4% in 15 years. However, my main goal is to get to age 60 safely so I can tap into my IRA and to age 62/65 so I can tap into my frozen pension, Social Security, and Medicare, what I call my "reinforcements." Right now, the ratio of my investments to annual expenses is about 45:1. When I was planning and doing my budgeting for my ER 2-4 years ago. I was more concerned with generating enough dividend income to more than cover my monthly expenses. This resulted in having a WR of about 2.5% in the early years of my ER, climbing to about 4% in 15 years.

However, my main goal is to get to age 60 safely so I can tap into my IRA and to age 62/65 so I can tap into my frozen pension, Social Security, and Medicare, what I call my “reinforcements.”

Right now, the ratio of my investments to annual expenses is about 45:1.

]]> By: et http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16641 et Sun, 26 Sep 2010 16:07:16 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16641 What about home & vehicle repairs, buying a "new" vehicle, a buffer for other unexpected expenses etc? While some of us can minimize some of these, everyone can't get rid of all of them. Add replacement cost to the budget and it become more realistic. What about home & vehicle repairs, buying a “new” vehicle, a buffer for other unexpected expenses etc? While some of us can minimize some of these, everyone can’t get rid of all of them. Add replacement cost to the budget and it become more realistic.

]]> By: CJ http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16637 CJ Sun, 26 Sep 2010 09:33:48 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16637 About £250,000, which at the moment will take me about 25 years to reach. I plan to decrease expenses and increase my income however, so in reality I hope to have this in under 10 years. About £250,000, which at the moment will take me about 25 years to reach. I plan to decrease expenses and increase my income however, so in reality I hope to have this in under 10 years.

]]> By: Alex http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16635 Alex Sun, 26 Sep 2010 05:08:13 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16635 At the end of the day, it all boils down to the basics, and how well you manage the basics. It was 200k for me, but that money grew rather well and since then I have a very nice net worth that will keep giving to my Princess, who shall inherit half of everything. At the end of the day, it all boils down to the basics, and how well you manage the basics. It was 200k for me, but that money grew rather well and since then I have a very nice net worth that will keep giving to my Princess, who shall inherit half of everything.

]]> By: Britz http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16632 Britz Sun, 26 Sep 2010 03:49:37 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16632 Nice, simple, and clear blog entry! I'm half-guessing that those $5.50 on a movie ticket now (three years on) seem like an outrageous luxury ;) Nice, simple, and clear blog entry!
I’m half-guessing that those $5.50 on a movie ticket now (three years on) seem like an outrageous luxury ;)

]]> By: Anon http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-16630 Anon Sun, 26 Sep 2010 01:04:51 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-16630 My number is $400k, which I hope to hit within 3 years. After I hit this I will quit my job and "retire," but I will likely take up offers to make small amounts of money, especially depending on the health insurance situation in the US at that point. And because there are things that pay money that I actually like doing :-) My number is $400k, which I hope to hit within 3 years. After I hit this I will quit my job and “retire,” but I will likely take up offers to make small amounts of money, especially depending on the health insurance situation in the US at that point. And because there are things that pay money that I actually like doing :-)

]]> By: Steve http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-10660 Steve Sun, 18 Apr 2010 02:43:30 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-10660 Since there is not really time to "wait around" and see how much your daily expenditures are before you figure out your number, one has to come up with quick ways to find annual expenditures. You can use your tax returns or W2s to see your net income for the year [adjusted for savings, investments, debt,... for example, if you have savings, you can deduct this from your net income to find your expenses for that year. If you have no savings, but have gone into debt instead, you would add the debt to your net income, etc.] This would give you a quick number as to your expenses. Of course, there are still other things you have to adjust for, if undeclared, help from family, etc. Another way, that is not too great, is to look at the debits on your bank statement(s), assuming that they are all expense-related. [This is assuming you have no credit card, or if you have one, you pay it off; if you don't pay it off, you would adjust for whatever debt is left over from that period...] Of course, tracking your expenses is good for you, so this is just a quick suggestion for those who want a quick figure to get their number, without waiting too long to find out their number. Since there is not really time to “wait around” and see how much your daily expenditures are before you figure out your number, one has to come up with quick ways to find annual expenditures. You can use your tax returns or W2s to see your net income for the year [adjusted for savings, investments, debt,... for example, if you have savings, you can deduct this from your net income to find your expenses for that year. If you have no savings, but have gone into debt instead, you would add the debt to your net income, etc.] This would give you a quick number as to your expenses. Of course, there are still other things you have to adjust for, if undeclared, help from family, etc.
Another way, that is not too great, is to look at the debits on your bank statement(s), assuming that they are all expense-related. [This is assuming you have no credit card, or if you have one, you pay it off; if you don't pay it off, you would adjust for whatever debt is left over from that period...]
Of course, tracking your expenses is good for you, so this is just a quick suggestion for those who want a quick figure to get their number, without waiting too long to find out their number.

]]> By: John Ingle http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-8257 John Ingle Thu, 17 Dec 2009 21:26:39 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-8257 So this was the first post of your blog eh? I like it. I always find it difficult to get my writing started, but once that first part is done its far easier to continue. Anyway, back on topic (I know this response is way later than the last), at 4% withdrawal rate my number is $450,000. However, I try to be conservative about things so I'm aiming for 3% withdrawal rate. That brings my number up quit a bit to $600,000. I hope to reach it in 13 years or less. So this was the first post of your blog eh? I like it. I always find it difficult to get my writing started, but once that first part is done its far easier to continue.

Anyway, back on topic (I know this response is way later than the last), at 4% withdrawal rate my number is $450,000. However, I try to be conservative about things so I’m aiming for 3% withdrawal rate. That brings my number up quit a bit to $600,000.

I hope to reach it in 13 years or less.

]]> By: tom http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-1567 tom Mon, 14 Jul 2008 03:09:39 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-1567 Forgot to add, I am currently at 20K euro (after deducting the 5K in side business 'equity'), so I currently have about 1 euro per day in dividend income. This makes me richer than probably a billion of humans on this earth!! It also covers about 100% of what I spend if except for suits, going out and splurges. My efforts are focused around keeping said 3 cost items as low as possible while keeping it tolerable from a social point of view. Forgot to add, I am currently at 20K euro (after deducting the 5K in side business ‘equity’), so I currently have about 1 euro per day in dividend income. This makes me richer than probably a billion of humans on this earth!! It also covers about 100% of what I spend if except for suits, going out and splurges. My efforts are focused around keeping said 3 cost items as low as possible while keeping it tolerable from a social point of view.

]]> By: tom http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-1566 tom Mon, 14 Jul 2008 03:04:46 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-1566 My number is around 200,000 euro. At the 2% dividends from global market cap indexing this yields 10 euro per day, more than enough since I will be living with my parents for the time being (just graduated). I also have a company car. By living of 2% only, income stream will increase every year and I will gradually move out, and buy a car (if I quit). I will be at 200K within 50 months if all goes as planned. If I 'retire', I will become an entrepreneur. hat's my real dream, but I want to play it safe first and I have a great job actually. I am also launching a (fully outsourced) side business, and I truly believe I have a fair shot at doing a tremendous amount of good for this world (can't comment any further currently) WHILE earning $500K for myself, if all goes to business plan. I risk about 5500 euro in startup cost for this project. My number is around 200,000 euro. At the 2% dividends from global market cap indexing this yields 10 euro per day, more than enough since I will be living with my parents for the time being (just graduated). I also have a company car.

By living of 2% only, income stream will increase every year and I will gradually move out, and buy a car (if I quit). I will be at 200K within 50 months if all goes as planned.

If I ‘retire’, I will become an entrepreneur. hat’s my real dream, but I want to play it safe first and I have a great job actually. I am also launching a (fully outsourced) side business, and I truly believe I have a fair shot at doing a tremendous amount of good for this world (can’t comment any further currently) WHILE earning $500K for myself, if all goes to business plan. I risk about 5500 euro in startup cost for this project.

]]> By: rob http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-1211 rob Fri, 23 May 2008 23:43:21 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-1211 If you think I can predict my daily expenditures, you've obviousy never met my wife! :) If you think I can predict my daily expenditures, you’ve obviousy never met my wife! :)

]]> By: Steve Austin http://earlyretirementextreme.com/what-is-your-number.html/comment-page-1#comment-737 Steve Austin Wed, 12 Mar 2008 19:04:54 +0000 http://earlyretirementextreme.com/2007/12/what-is-your-number.html#comment-737 Target is 30x annual expenditures. In a pinch (expenses go up faster than planned or assets drop further than padded), 25x. Target is 30x annual expenditures. In a pinch (expenses go up faster than planned or assets drop further than padded), 25x.

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