Personal Finance

How much do you need to retire on?

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  • Apr 6th, 2015 7:00 pm
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Apr 11, 2008
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justaskthescientician wrote: I wouldn't want to just get by in retirement; I'd want to live well. Cruises, golfing in Florida for the winter, ultramatic beds. Sh!t like that. I'd probably want like 100k gross income in retirement.

My goal is to be essentially retired by 35, and I just turned 28. I save very aggressively and live frugally, definitely by my income level's standards. "Essentially retired" = out of the work force, running a business that doesn't require my daily input. I feel like that's something I could handle doing till I'm 55-65ish without actually feeling like I'm working.
By 35, you would have 100K passive income? What kind of principle would you need for that kind of income?
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Feb 24, 2015
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Fort Mac, AB/Lambton…
By 35, I'd hope the *business* I buy has at least that in income.

At 55-65, that's when I'd like to have a truly passive income stream, from investments.
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Archanfel wrote: By 35, you would have 100K passive income? What kind of principle would you need for that kind of income?
Yes I am very curious as well, numbers are always thrown around on RFD, with no back up
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justaskthescientician wrote: By 35, I'd hope the *business* I buy has at least that in income.

At 55-65, that's when I'd like to have a truly passive income stream, from investments.
Would you have to work significant hours at the *business*? Or would it be a capital investment?
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ksgill wrote: $400 (property tax) x 12 = $4800, $250 (Utilities) x 12 = $300 and ~1% maintenance = ~$6000/year. Total comes to $11,000 per year assuming that you do not downsize at some point. He can probably make it easily if he downsizes.

Using safe withdrawal rate of 3%, a 600k portfolio can safely generate 18k/year.
$250 x 12 = $3000
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Archanfel wrote: Would you have to work significant hours at the *business*? Or would it be a capital investment?
I'd be specifically looking for a business that did not require significant hours.

I'd be looking at buying an existing business, so, yeah, large capital investment.
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When the word "retirement" gets thrown around, most people think old folks sitting on the porch, drinking coffee and telling kids to get off the lawn. I think that's an old-fashioned way of looking at retirement.

People will get bored at doing nothing, so it's important to pick up a hobby, work part-time, or something. The better description would be "semi-retirement" with the notion that you can choose to work if you want to, and choose to not work as well. My goal to semi-retirement and financial independence is to only need to work 4-6 months of the year, and be free for the remainder of the year. Whether that's traveling, learning a different language, or read books that I find interesting. My goal is to hit $500k before 44-45, then cut back to working PT. My skill is transferable and I can always find locum work.
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ShopperfiendTO wrote: $250 x 12 = $3000
Ah, thanks for the correction. It's still under the 18k I calculated based on a 3% SWR.
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Jan 27, 2013
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guyver0 wrote: When the word "retirement" gets thrown around, most people think old folks sitting on the porch, drinking coffee and telling kids to get off the lawn. I think that's an old-fashioned way of looking at retirement.

People will get bored at doing nothing, so it's important to pick up a hobby, work part-time, or something. The better description would be "semi-retirement" with the notion that you can choose to work if you want to, and choose to not work as well. My goal to semi-retirement and financial independence is to only need to work 4-6 months of the year, and be free for the remainder of the year. Whether that's traveling, learning a different language, or read books that I find interesting. My goal is to hit $500k before 44-45, then cut back to working PT. My skill is transferable and I can always find locum work.
My idea of retirement is not having to work to pay the bills. But having enough to maintain my current standard of living. That does not preculde me from working though...I would have no issues with working, so long as the consequences of telling my boss or client to efff off are none.
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thisblowsgoatsbigtime wrote: My idea of retirement is not having to work to pay the bills. But having enough to maintain my current standard of living. That does not preculde me from working though...I would have no issues with working, so long as the consequences of telling my boss or client to efff off are none.
Yeah, that would be my definition as well. It would certainly be nice if I could work (even full time), but I don't want to be pressured into working.
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justaskthescientician wrote: I'd be specifically looking for a business that did not require significant hours.

I'd be looking at buying an existing business, so, yeah, large capital investment.
May I ask what kind of business you are thinking?
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Why do you think employers love employees with family and mortgage? Because you can bet those employees are pressured to work hard and take sh!t from bosses/customers, since they have bills to pay.

Being financial independence means you don't have to suffer through that.
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guyver0 wrote: Why do you think employers love employees with family and mortgage? Because you can bet those employees are pressured to work hard and take sh!t from bosses/customers, since they have bills to pay.

Being financial independence means you don't have to suffer through that.
For sure. In the really old days, before the financial system was more sophisticated, especially for more contract type workers, employers would often lend employees money to buy a house when it wasn't out of whack like today. They knew that that worker would be enslaved by them due to the servitude of mortgage debt.

Recently, a friend of mine bought a house. His boss jokes "guess you're here for life".
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at1212b wrote: For sure. In the really old days, before the financial system was more sophisticated, especially for more contract type workers, employers would often lend employees money to buy a house when it wasn't out of whack like today. They knew that that worker would be enslaved by them due to the servitude of mortgage debt.

Recently, a friend of mine bought a house. His boss jokes "guess you're here for life".
I have worked for people who say that a lot about certain staff members. I find it both revealing and inappropriate. If it were me they were talking about it, I wouldn't like it but why shouldn't bosses create a work environment that people enjoy instead of one that they can't leave due to financial shackles.
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Everyone's number will be different depending on what budget entails. I for one don't really need too much. Yeah, I buy too many computer gadgets and games. Occasional trip to Vegas, love to do the outdoorsy things (camp/cottage) and explore. Don't care much for international travel. Don't care for expensive cars, clothes, house, etc.

Our number is about $1.2-1.4mil (not counting home)... we'll get there early 40s or so. Then either we'll ask for 20hr/weeks or quit... our call. Kids are only young once and we have 2 of them and would like to spend a good deal of time with them. We won't be making ZERO income once we hang it up... my hobbies generate money and she'll be a seasonal consultant to stay sharp and employable if need be.
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Archanfel wrote: May I ask what kind of business you are thinking?
Nothing in particular. Though it would have to be something that I understood or could easily understand. Something that I have at least a bit of exposure to or could get exposure to. And it would very likely be a business that was well-established, with an experienced manager, and one in which the current owner was willing to stay on board with for at least a few months after selling. These aren't really tall orders.

I was thinking franchise restaurant. Maybe auto repair/tire sales. Maybe a pharmacy. I haven't given it too much thought because I don't plan on even looking at businesses for sale for at least another five years. Currently my focus is on getting the funding for said business. That's the tall order. $400k or so seems about right.
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choclover wrote: I have worked for people who say that a lot about certain staff members. I find it both revealing and inappropriate. If it were me they were talking about it, I wouldn't like it but why shouldn't bosses create a work environment that people enjoy instead of one that they can't leave due to financial shackles.
It's entirely dependent on the industry and time. I grew up in Hamilton, and half my family worked in the steel mills when such existed, and the tacit agreement wasn't that you were indebted and thus had to stay, but that the money was so good that you stayed. The carrot rather then the stick, in other words. I agree the stick is worse. ;)
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Likely he's saving a large chunk of his current income, and he's therefore actually not spending a whole lot anyway. So if you live 40 years not really spending too much because you're saving a large chunk of your income, why would you suddenly need to spend more after retirement? You wouldn't. Which means that you don't need to retire with as much as you'd think.

I don't think his number is that far off as long as you spend smart and plan smart.

Depending on how my income evolves, I could see myself aiming to do something similar.
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A $600k portfolio invested 100% in dividend paying equities could pay you 4% per year, and that $24k would grow every year with dividend increases, almost certainly by more than the inflation rate. You never touch the capital. A couple who enjoys free or low cost hobbies could live on $24k if their home is paid off, and cheap to run. I know the blogger Mr Money Moustache lives on around this amount, and lives very well. See his blog for details, it might blow your mind if you think you need millions to retire.

I've also seen others who have pensions or CPP with a good number of years of max contributions, who can estimate their pension incomes at 60/65 as being enough to live, who then retire and burn through RRSP's until that point. For example, if you were 50 and needed $25k plus 2% inflation per year, $500k in savings (plus 2% interest from savings account) would last you 20 years. So if your pension kicks in at 60, you could retire at 40 with only $500k in savings.

You could also retire very early and NOT live in a traditional house. Maybe sell your $500k plus paid off house, and become a full time RV'er or sail boater. Maybe keep your house but convert your detached double garage into a nice studio apartment for you to live in, and rent out the main house for your retirement income.

So many options if you open your eyes to them. All depends on how badly you want to stop working. My wife and I both have rewarding well paying work, but both of us would still rather be masters of our own time left on this earth. No risk of being bored in retirement for us, way too many interests and hobbies.
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Mar 19, 2015
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Spidey wrote: But many on RFD are in their 20's and have their entire career planned out, even know when they will retire. Must be magic to know what the next 40-45 years holds for them.
There's plans and then there's dreams.
One can normally always tell the difference by what's spewed out.
Don't believe everything you read on internet forums.

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