Right now (at 24) this looks pretty impossible, but we'll see how my salary and career goes over the next few years...

Put me in the it depends camp as well. I'm over 40, and I'm not yet where I want to be with retirement savings, but I've made good progress since I had my little panic moment in my late 30's and started shoveling as much as I could toward retirement. The number I'm aiming for is going to seem low compared to the calculators and some of the other comments: $300K. But that's based on needing $12K a year to live on, at 4% withdrawal rate. Of course I'd like to have more than that, but I could live on such an amount. Even now, while I have more expenses than I would when retired.

Jackie said:

Frugal Confessions said:

Hi Jackie!

 

$12K a year is very impressive. Would you want to do a guest post or a post on your website about how you live on $12K a year? I a fascinated!

I don't live on $12K a year now, but I could if I stopped doing a bunch of stuff. If you want a guest post on that I can send you one :)

I would love to read that guest post!  It's so counter I-need-multiple-millions mentality that runs ramped today!

I would love you to talk about it, but only if you have time and would like to. I can put you up on my Chronicle blog as well.

Let me know if I can help you out in any way:).

Hi Jackie!

 

$12K a year is very impressive. Would you want to do a guest post or a post on your website about how you live on $12K a year? I a fascinated!

I don't live on $12K a year now, but I could if I stopped doing a bunch of stuff. If you want a guest post on that I can send you one :)

$12K a year is very impressive. Would you want to do a guest post or a post on your website about how you live on $12K a year? I a fascinated!

It depends on the lifestyle you want, your health, whether you have other dependents to care for and etc. 

 Charles Schwab wrote a book I liked called Your Fifty Now What that talks about considerations just prior to and post retirement.

The simple math is a 3% or 4% withdrawal rate for all the years to come after you retire. If you were to retire at 40 and needed 50K income to live from than you at least need 1.666 M$. That would let you live for 33 years and it doesn't take into account the cost of inflation. That would bring you at 73 years old which is not old these days.

Math aside, it's based on how you set yourself up and where the income to live from comes.

I am hoping to be financially independent at the age of 45 which means I don't have debt and I can change career path or anything without being tied down. Retirement on the other end is probably closer to 55 and depending on my investment income (real estate, bonds, dividends, ...)

To answer your question now. If you assume you want to retire at 60, using the rules above, you should be above the 500K$ mark at least (not including principal residence equity). The other question relates to your saving capabilities, before 40, saving ability tend to be lower than in the 40s. Hopefully, your savings accelerate.

 

Hi,

 

Thanks for the post. I am new here in http://yakezie.com/forums/. Please help me with this.

Patricia

- Income from investments

- Income from blogging 

- Income form books

- Income from a small business

- Income from real estate

- and so on ..

The 3% rule come from what you usually need in retirement to cover your expenses and life style. It's usually call the withdrawal rate but it's just about how much you need to cover your expenses. You can adjust for inflation if you desire.

I believe it's important to see that killer number that it would add up to to make you realize it's not a free lunch and you need a solid plan to achieve it.

So here goes. Let's say you plan your finances extremely carefully, prioritizing spending, maximizing income and minimizing debt early on. It is possible to retire much earlier than you might think by creating business opportunities and passive income sources that create a "salary" much like any other job, without requiring your time and energy.

When I was reviewing my annual expenses recently, I realized that if I didn't have a job requiring transit and other job related considerations, I could very likely live comfortably on less than 30,000 a year in today's dollars, with extra left over for saving and an occasional vacation. 

So, choosing a conservative and tax smart investment method like long term treasury mutual funds which can yield a tax free 3-4% (I know, with recent developments we could debate the merits of US Treasuries... but just stick with me), it would take 1,000,000 to produce the (close to) risk free, and tax free income that I'd need. 

That's just an example. If you were still (kind of) working - writing online, selling ebooks, working part time, etc. This amount could be much lower, especially if you are without a house payment, or better yet, own any investment real estate outright that could provide additional (almost) passive income. 

Just my 2 cents.

It depends on your goal. If you're hoping to retire, then you're going to want 400x your average monthly expenditure. This gives you a 3% safe withdrawal rate which should last forever (see firecalc.com).  So if you spend $5K/month, then you need $2M.  

The 400x comes from dividing by 3%, and multiplying by 12 months.  

This is very interesting method. and I have started idealizing a post on it. Unless you want a friendly copyright on it

The 400x comes from dividing by 3%, and multiplying by 12 months.