If your HHI is $450k, what is your retirement number

[Anonymous]

Anonymous wrote:

Anonymous wrote:Help me understand how there’s many folks here are in their 40s and have > $5MM in retirement accounts. I am 44 (DW is 46, SAHM), making ~700K/year (only the last few years, prior to that was ~350k), and have a net worth of $3.1MM. Granted I only started putting money in 401k/brokerage starting 10 years ago (have now 700k in retirement/brokerage accounts).

How did everyone accelerate to >$5MM at this same age range?

You spend way too much damn money. We are 42 and I have been a SAHM for 16 years, since we were 26. DH started out making $165k (first year Big Law) but a few years later left that and has never made over $450k, and even that only recently. We have a NW over $4M not counting 529s that are fully funded and not counting the equity in our home (roughly $800k.)

You are living too fancy a life to accumulate wealth at the rate that we are. Its simply arithmetic.

+1

Families who plan for a SAHP typically are financially savy and save well. You likely saved before being a SAHP, bought a home you can afford with only 1 income (even when you had 2), etc. We did that and banked the remainer for 5 years (had kids a bit later than you). When you save most of an 80K+ salary for 4-5 years and buy a house based on one income you will do well

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Financial advisors say $4.3M for us to retire extremely safely around 47-49 years old, live on $160K ish (in today's dollars) and be very good until 95, with a substantial amount left.

My math says more like $3.5M since we don't have any college to fund, don't want to leave much behind, and don't have any family member that lived past 85. They agreed that is probably fine, but they are cautious.

We've always spent a lot less than we earn so $160K to live on, adjust up over time for inflation, would be plenty. Their calculation also doesn't include any SS. I'm 40, so I think not including anything at all is overly cautious (but better than being reckless).

160K per year before tax is likely to be about 10K/month net. IMO it's pretty tight in a high COL area even if your housing is paid off because you also will incur high health insurance expenses before you reach 65. Our modest home has constant tax hikes due to prices rising, we are paying 2x of what we paid when we bought. Any dwelling would be about 2-3K overhead costs (RE tax, insurance, utilities, repairs/maintenance, outsourcing of things you cannot do yourself), this goes for condos/TH too which have fees. Add health insurance and you are likely already spending 5K just to live without even eating or buying any necessities, which will be another 2K if you are thrifty. If you want to buy any big ticket items, like upgrade your furniture, car, remodel you need to dig into your savings. If you want to travel and do some dining/entertainment that's easily 2-3K a month for nothing extravagant at all. There goes your 10K. Not a terrible retirement, obviously, but it's not really free of financial strain in case of big ticket spend. It's a life where you will have to decide between taking that vacation or fixing your house, or buying a new car because yours broke down and foregoing all travel that year including seeing family airplane trip away.

Agree. Amazing how many people here think they’re going to be happy having to dramatically change their lifestyle in retirement.

+1

We want to maintain the same lifestyle or better. We are downsizing a bit but have two homes (condo and smaller house), so it's actually a higher cost. Don't want to stress over bigger ticket items in retirement, so we planned and saved for a nice retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm 51 and husband is 56. We make about $300k down from about $325K. Husband was laid off recently and found another job which didn't pay as well.

Our net worth is ~$5.4M investments/cash, $1M home, $600K college savings.

While I think we could retire now if we had to as 4% of 5.4M is $216K, 80% of this after taxes is $173K assuming health insurance of $30K that leaves about $12K per month in spending. So I think we are at FIRE now- but we won't exercise it yet.

$7M is really our magic number, which we may be able to achieve in the next 4 years depending on how the stock market does, but we might reconsider if we have another job loss which is not unlikely.

At $7M, we can withdraw the same $216K but that's only 3% so we have a better buffer in the stock market goes down. We should theoretically be adding each year to our net worth if we withdraw 3% (after taxes). If we decide to withdraw 4% some years for kids weddings, helping with a DPs etc, house upgrades, new or used car we will still feel good- that would give us an additional $50K per year for those years. I personally think with $7M, we won't struggle.

A decade ago, our number was $5m (outside of home equity), but we ended up with $7m+ before we retired, and I’m glad. We could be comfortable on $5m, but have been free to travel, make some generous charitable donations, buy nice new cars, set up 529s for the grandkids, etc. and still have slightly more than we started with. It’s nice to not have to worry when the market takes a dip.

I am too burnt out to bother appreciating ability to support my grandkids (that's sort of my kid's job?) and donating to charity.

Must be. My DH paid his own way through college and my parents struggled to help, but I ended up with loans, and not having to watch our kids struggle to send their kids to college is a source of happiness for us. If we don’t do this, we’d be leaving them money when they’re older and don’t need it as much, so why wouldn’t make their lives easier now? As for charity, we do enjoy giving to organizations that can better people’s lives, including scholarships for students at the colleges that sent us on the road to wealth. If that doesn’t make you happy, I have good news — none of this is mandatory in the United States of America.

Agree with the "gifting now while it matters". Getting a good inheritance when you are 55-60+ (if your parents live a long life) doesn't change much for most. But having college paid for, and if you can afford it, a starter car and help with down payment, that goes so much farther towards their lifelong trajectory than them getting $1M at age 60.
When we chose to have kids, we planned to saved for their college ,as we were both lower income and had over 80$ in loans combined (35+ years ago, so a lot). We lived like poor grad students and paid them off in 2.5 years, then saved $40K fora house downpayment in the next 1-2 years.
Our kids dont' have to do that. College is paid for and so is the first car. They can save for retirement from the start and save for their own home because they don't have $1-2K/month into student loans and a car payment.
I get not everyone can help pay for college, but if you are making $250-300K, you could choose to plan and at least pay for most of in-state (kid can earn $10K to help with rest yearly). For us we cannot imagine not planning to do that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Help me understand how there’s many folks here are in their 40s and have > $5MM in retirement accounts. I am 44 (DW is 46, SAHM), making ~700K/year (only the last few years, prior to that was ~350k), and have a net worth of $3.1MM. Granted I only started putting money in 401k/brokerage starting 10 years ago (have now 700k in retirement/brokerage accounts).

How did everyone accelerate to >$5MM at this same age range?

You spend way too much damn money. We are 42 and I have been a SAHM for 16 years, since we were 26. DH started out making $165k (first year Big Law) but a few years later left that and has never made over $450k, and even that only recently. We have a NW over $4M not counting 529s that are fully funded and not counting the equity in our home (roughly $800k.)

You are living too fancy a life to accumulate wealth at the rate that we are. Its simply arithmetic.

'You never paid for childcare.. We calculated that overtime with 2 kids it cost us around 1 mil with private preschool... in after tax money. And many people don't have 1person able to make 450K, it usually takes 2 income earners for this (much more common), which sucks you dry with childcare, outsourcing for some household tasks and takeout as it's tough to cook from scratch and do all the cleaning/outdoor work when you both work FT and have kids to take care of.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Financial advisors say $4.3M for us to retire extremely safely around 47-49 years old, live on $160K ish (in today's dollars) and be very good until 95, with a substantial amount left.

My math says more like $3.5M since we don't have any college to fund, don't want to leave much behind, and don't have any family member that lived past 85. They agreed that is probably fine, but they are cautious.

We've always spent a lot less than we earn so $160K to live on, adjust up over time for inflation, would be plenty. Their calculation also doesn't include any SS. I'm 40, so I think not including anything at all is overly cautious (but better than being reckless).

160K per year before tax is likely to be about 10K/month net. IMO it's pretty tight in a high COL area even if your housing is paid off because you also will incur high health insurance expenses before you reach 65. Our modest home has constant tax hikes due to prices rising, we are paying 2x of what we paid when we bought. Any dwelling would be about 2-3K overhead costs (RE tax, insurance, utilities, repairs/maintenance, outsourcing of things you cannot do yourself), this goes for condos/TH too which have fees. Add health insurance and you are likely already spending 5K just to live without even eating or buying any necessities, which will be another 2K if you are thrifty. If you want to buy any big ticket items, like upgrade your furniture, car, remodel you need to dig into your savings. If you want to travel and do some dining/entertainment that's easily 2-3K a month for nothing extravagant at all. There goes your 10K. Not a terrible retirement, obviously, but it's not really free of financial strain in case of big ticket spend. It's a life where you will have to decide between taking that vacation or fixing your house, or buying a new car because yours broke down and foregoing all travel that year including seeing family airplane trip away.

Agree. Amazing how many people here think they’re going to be happy having to dramatically change their lifestyle in retirement.

+1

We want to maintain the same lifestyle or better. We are downsizing a bit but have two homes (condo and smaller house), so it's actually a higher cost. Don't want to stress over bigger ticket items in retirement, so we planned and saved for a nice retirement.

If you value this over having time off when your body is younger and you can enjoy more and you don't hate your jobs or they aren't draining you of being able to enjoy your life then I get it. Also I am going to ignore "we" if it comes from a SAHP, sorry you have no idea what it's like to work for decades in a 2 income household not making crazy money while raising kids and still doing all the things you do without working for someone else.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Help me understand how there’s many folks here are in their 40s and have > $5MM in retirement accounts. I am 44 (DW is 46, SAHM), making ~700K/year (only the last few years, prior to that was ~350k), and have a net worth of $3.1MM. Granted I only started putting money in 401k/brokerage starting 10 years ago (have now 700k in retirement/brokerage accounts).

How did everyone accelerate to >$5MM at this same age range?

You spend way too much damn money. We are 42 and I have been a SAHM for 16 years, since we were 26. DH started out making $165k (first year Big Law) but a few years later left that and has never made over $450k, and even that only recently. We have a NW over $4M not counting 529s that are fully funded and not counting the equity in our home (roughly $800k.)

You are living too fancy a life to accumulate wealth at the rate that we are. Its simply arithmetic.

+1

Families who plan for a SAHP typically are financially savy and save well. You likely saved before being a SAHP, bought a home you can afford with only 1 income (even when you had 2), etc. We did that and banked the remainer for 5 years (had kids a bit later than you). When you save most of an 80K+ salary for 4-5 years and buy a house based on one income you will do well

She became a SAHM at 26, unless she was in IB or some other high flying profession that pays $$$ after college, or she had an inheritance she likely contributed nothing initially. She married a lawyer and it's how she was able to SAH while growing their NW by saving on childcare, eating/ordering out and other services 2 income households tend to spend more on. Obviously well earning one-income households with a frugal and responsible SAHP do very well and have a huge leg up compared to 2 lower income households. Water is wet.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm 51 and husband is 56. We make about $300k down from about $325K. Husband was laid off recently and found another job which didn't pay as well.

Our net worth is ~$5.4M investments/cash, $1M home, $600K college savings.

While I think we could retire now if we had to as 4% of 5.4M is $216K, 80% of this after taxes is $173K assuming health insurance of $30K that leaves about $12K per month in spending. So I think we are at FIRE now- but we won't exercise it yet.

$7M is really our magic number, which we may be able to achieve in the next 4 years depending on how the stock market does, but we might reconsider if we have another job loss which is not unlikely.

At $7M, we can withdraw the same $216K but that's only 3% so we have a better buffer in the stock market goes down. We should theoretically be adding each year to our net worth if we withdraw 3% (after taxes). If we decide to withdraw 4% some years for kids weddings, helping with a DPs etc, house upgrades, new or used car we will still feel good- that would give us an additional $50K per year for those years. I personally think with $7M, we won't struggle.

A decade ago, our number was $5m (outside of home equity), but we ended up with $7m+ before we retired, and I’m glad. We could be comfortable on $5m, but have been free to travel, make some generous charitable donations, buy nice new cars, set up 529s for the grandkids, etc. and still have slightly more than we started with. It’s nice to not have to worry when the market takes a dip.

I am too burnt out to bother appreciating ability to support my grandkids (that's sort of my kid's job?) and donating to charity.

Must be. My DH paid his own way through college and my parents struggled to help, but I ended up with loans, and not having to watch our kids struggle to send their kids to college is a source of happiness for us. If we don’t do this, we’d be leaving them money when they’re older and don’t need it as much, so why wouldn’t make their lives easier now? As for charity, we do enjoy giving to organizations that can better people’s lives, including scholarships for students at the colleges that sent us on the road to wealth. If that doesn’t make you happy, I have good news — none of this is mandatory in the United States of America.

It's them struggling at a younger age (better health, more energy) or you struggling in your 50s-60s with your health issues, older age fatigue/brain fog, having to keep up with younger workers, getting laid off or stuffed with more responsibilities, etc. Plus I am not averse to the idea of them living with us for free until they get on their feet. You can help in other ways other than sponsoring expensive party life at a $$$$ private school with all expenses paid, summers in Europe and then them earning 50K a year while relying on parents to pay for a nice urban rental, vacations and uber eats and happy hours.

Charity can f-off, let billionaires and those with tons of disposable income pay. We grew up poor in squalid small apartments, and our parents are dirt poor in old age, plus dead beat siblings. Charity starts at home for us.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Help me understand how there’s many folks here are in their 40s and have > $5MM in retirement accounts. I am 44 (DW is 46, SAHM), making ~700K/year (only the last few years, prior to that was ~350k), and have a net worth of $3.1MM. Granted I only started putting money in 401k/brokerage starting 10 years ago (have now 700k in retirement/brokerage accounts).

How did everyone accelerate to >$5MM at this same age range?

Start investing the max you can in IRAs and 401k from age 20/22. My 25 has over $150K already in retirement.

Your kid started working at 20? At what pay? Most graduate at 22 and then make peanuts unless they are in a small handful of high paying professions that only require bachelors degree. Then there are expenses. kids who live with their parents for free always get a leg up on being able to max savings.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm 51 and husband is 56. We make about $300k down from about $325K. Husband was laid off recently and found another job which didn't pay as well.

Our net worth is ~$5.4M investments/cash, $1M home, $600K college savings.

While I think we could retire now if we had to as 4% of 5.4M is $216K, 80% of this after taxes is $173K assuming health insurance of $30K that leaves about $12K per month in spending. So I think we are at FIRE now- but we won't exercise it yet.

$7M is really our magic number, which we may be able to achieve in the next 4 years depending on how the stock market does, but we might reconsider if we have another job loss which is not unlikely.

At $7M, we can withdraw the same $216K but that's only 3% so we have a better buffer in the stock market goes down. We should theoretically be adding each year to our net worth if we withdraw 3% (after taxes). If we decide to withdraw 4% some years for kids weddings, helping with a DPs etc, house upgrades, new or used car we will still feel good- that would give us an additional $50K per year for those years. I personally think with $7M, we won't struggle.

A decade ago, our number was $5m (outside of home equity), but we ended up with $7m+ before we retired, and I’m glad. We could be comfortable on $5m, but have been free to travel, make some generous charitable donations, buy nice new cars, set up 529s for the grandkids, etc. and still have slightly more than we started with. It’s nice to not have to worry when the market takes a dip.

I am too burnt out to bother appreciating ability to support my grandkids (that's sort of my kid's job?) and donating to charity.

Must be. My DH paid his own way through college and my parents struggled to help, but I ended up with loans, and not having to watch our kids struggle to send their kids to college is a source of happiness for us. If we don’t do this, we’d be leaving them money when they’re older and don’t need it as much, so why wouldn’t make their lives easier now? As for charity, we do enjoy giving to organizations that can better people’s lives, including scholarships for students at the colleges that sent us on the road to wealth. If that doesn’t make you happy, I have good news — none of this is mandatory in the United States of America.

It's them struggling at a younger age (better health, more energy) or you struggling in your 50s-60s with your health issues, older age fatigue/brain fog, having to keep up with younger workers, getting laid off or stuffed with more responsibilities, etc. Plus I am not averse to the idea of them living with us for free until they get on their feet. You can help in other ways other than sponsoring expensive party life at a $$$$ private school with all expenses paid, summers in Europe and then them earning 50K a year while relying on parents to pay for a nice urban rental, vacations and uber eats and happy hours.

Charity can f-off, let billionaires and those with tons of disposable income pay. We grew up poor in squalid small apartments, and our parents are dirt poor in old age, plus dead beat siblings. Charity starts at home for us.

Nice straw man you built there.

Love how everyone above 50 is "struggling" with "brain fog" and you somehow translated "putting money into a 529 for the grandchildren" into parents completely subsidizing their kids' party lifestyle. It's nice if you're helping your parents. My parents died young, so I don't have that responsibility. It's fine to admit that you have higher priorities than helping your children/grandchildren. You don't have to try to cast those that do in a negative light.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Help me understand how there’s many folks here are in their 40s and have > $5MM in retirement accounts. I am 44 (DW is 46, SAHM), making ~700K/year (only the last few years, prior to that was ~350k), and have a net worth of $3.1MM. Granted I only started putting money in 401k/brokerage starting 10 years ago (have now 700k in retirement/brokerage accounts).

How did everyone accelerate to >$5MM at this same age range?

You spend way too much damn money. We are 42 and I have been a SAHM for 16 years, since we were 26. DH started out making $165k (first year Big Law) but a few years later left that and has never made over $450k, and even that only recently. We have a NW over $4M not counting 529s that are fully funded and not counting the equity in our home (roughly $800k.)

You are living too fancy a life to accumulate wealth at the rate that we are. Its simply arithmetic.

'You never paid for childcare.. We calculated that overtime with 2 kids it cost us around 1 mil with private preschool... in after tax money. And many people don't have 1person able to make 450K, it usually takes 2 income earners for this (much more common), which sucks you dry with childcare, outsourcing for some household tasks and takeout as it's tough to cook from scratch and do all the cleaning/outdoor work when you both work FT and have kids to take care of.

Neither did the poster I was replying to. His wife SAH too.