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Old 03-10-2014, 11:06 AM
nonlnear nonlnear is offline
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Default Net worth for retiring early

What are your thoughts on early retirement? (Let's say around 40.) What net worth would you have to have locked away for you to consider hanging it all up and doing your own thing? If you were to leave regular employment, what would you do with your time?

I think it's easy to get locked into one way of thinking about this question and I'd like to hear as many perspectives as possible.

My default thought has always been about ~$10M, but I'm becoming less sure about that. I think it's always been around there because I never really had an idea of how to make my time much more valuable than a couple hundred thousand dollars. I would definitely still quit a regular day job by around the $10M point, but I'm less sure I would quit trying to increase my net worth as opposed to just working on "projects" that may or may not be profitable.
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Old 03-10-2014, 11:15 AM
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I'd be good on about 1.2 million, I think. I have yet to determine what I would do with my time however, I guess that's why I work at Innitech.
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Old 03-10-2014, 11:19 AM
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I ran a calculation assuming 5% annual investment return, and a 5m starting point allowed a salary of ~300k per year for over 40 years.

10m sounds conservative to me.
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Old 03-10-2014, 11:25 AM
nonlnear nonlnear is offline
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Quote:
Originally Posted by great3981 View Post
I ran a calculation assuming 5% annual investment return, and a 5m starting point allowed a salary of ~300k per year for over 40 years.

10m sounds conservative to me.
If I were to completely quit regular gainful employment I'd like to have at least 2 households (or equivalent in terms of travel/extra rent). I could live my workaday life sans work on a lot less than $10M, but I'd want a little more than one Little Pink House before I clocked out for a significant portion of my working years. At least that's been my thinking.
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Old 03-10-2014, 11:33 AM
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Quote:
Originally Posted by nonlnear View Post
What are your thoughts on early retirement? (Let's say around 40.) What net worth would you have to have locked away for you to consider hanging it all up and doing your own thing? If you were to leave regular employment, what would you do with your time?

I think it's easy to get locked into one way of thinking about this question and I'd like to hear as many perspectives as possible.

My default thought has always been about ~$10M, but I'm becoming less sure about that. I think it's always been around there because I never really had an idea of how to make my time much more valuable than a couple hundred thousand dollars. I would definitely still quit a regular day job by around the $10M point, but I'm less sure I would quit trying to increase my net worth as opposed to just working on "projects" that may or may not be profitable.
40 sounds a bit early. I reduced my workweek by age 55 and retired at 58 but certainly didn't have anything near the $10M you are mentioning: that number should be enough at any age.

What I have found is that professionals who retire early are not just spending their time golfing and traveling. There are other part time fun opportunities, some of which are remunerative. The SOA sponsored two sessions on this subject a few years ago that you might find of interest. Links are below.

http://www.soa.org/Workarea/DownloadAsset.aspx?id=29412

http://www.soa.org/Workarea/DownloadAsset.aspx?id=29355

Alan
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Old 03-10-2014, 11:46 AM
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You need 33 X current annual expenses. Mr Money Mustache says X 25 is enough, but to me, that is too risky.

$10M is ridiculous. No wonder people get trapped into donkeydom with thoughts like that.
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Old 03-10-2014, 11:48 AM
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It doesn't look like you need any money at all. Just look on the street and you'll find plenty of people who retired early.
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Old 03-10-2014, 11:53 AM
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Originally Posted by bananadotcom View Post
You need 33 X current annual expenses. Mr Money Mustache says X 25 is enough, but to me, that is too risky.

$10M is ridiculous. No wonder people get trapped into donkeydom with thoughts like that.
Oh I'd be out of donkeydom well before $10M. $5-$10M is where I'd be switching gears to VC, or some other entirely self-employed scenario if I were to keep working full-ish time.
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Old 03-10-2014, 11:54 AM
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Quote:
Originally Posted by nonlnear View Post
If I were to completely quit regular gainful employment I'd like to have at least 2 households (or equivalent in terms of travel/extra rent). I could live my workaday life sans work on a lot less than $10M, but I'd want a little more than one Little Pink House before I clocked out for a significant portion of my working years. At least that's been my thinking.
IMHO, a lot of this is achievable on 300k annual salary.
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The wonderful thing about tiggers
Is tiggers are wonderful things!
Their tops are made out of rubber;
Their bottoms are made out of springs!
They're bouncy, trouncy, flouncy, pouncy,
Fun! Fun! Fun! Fun! Fun!
But the most wonderful thing about tiggers is
I'm the only one!

Diversions Wins!:
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Old 03-10-2014, 01:05 PM
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No kids? Kids would make a big difference in answering this question.

How about a spouse? working or not?

I can't imagine not working at all at 40. I would want to keep busy with something money making or at least potentially money making (for example, writing cool apps may not make any money, unless it does...) or full time volunteering (something more demanding and adding more value than candy striping)
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