Anonymous wrote:Financial independence to me was when we had our Expenses x 30. So we went on 200,000 x 30 = 6,000,000 + house

30 chosen, for 30 years?

We approach it as a balance. Have three numbers, after home and colleges are paid.

1. barebones retirement number, $3M invested. (120k retirement income)
2. Good to go, $6M invested (240k retirement income)
3. Love to have, $10M ( 400k retirement income)

we crossed our first number (haven’t paid off mortgage or college, but have invested funds to pay mortgage anytime). We are on track to get to $6M in seven years and would likely exceed, so we have started spending more in order to enjoy life a bit more vs. Over saving for retirement. The key is that incremental spending is mostly taking more vacations and not limiting to ourselves based on airfare availability through miles plus a fancy dinner a month. Both of them super easy to cut, if we have to cut. Once the kids are on their own, and we can travel off-peak without kids, our travel costs would naturally come down.

So spend more, but only on discretionary things that are easier to cut down in case of job losses etc. not tying ourselves to a higher mortgage or $100k cars that we can’t afford to pay in cash. We also don’t want to wait till retirement to travel to our bucket list destinations

Anonymous wrote:OP here… thank you. All super helpful and that’s the biggest question, what we actually spend. Need to drill down on it. At one point we figured out our fixed monthly expenses are around $10k/mo but we likely spend more like $20k. And now we can add a private school tuition in additionally.

We have about $7m net worth including house and 529s.

And yes in theory am totally ready to retire from this job, not concerned about finding other things to occupy my time, husband less ready, which is fine with me!!

Yes, you need to figure out what that extra ~$10K/month is actually going to. That is a lot of "extra spending". Because that $7M wont' go far after you pay for college if you keep spending $240K+ yearly. You need a budget and full understanding of what you desire to fund in retirement and what you are willing to give up (if needed).

Anonymous wrote:Hilarious to only save 20% at 650K and blame the toddler

They are saving plenty. As long as that $40K for the toddler is redirected to savings/college savings once they are in K they will be fine. They save $100K+ into retirement. College savings is what they need to increase, but they have plenty of time for that

Anonymous wrote:

Anonymous wrote:We have a high HHI (~1m) and save a fair amount (~40%) but I am wondering if this is on par with what we should be saving. I know people say on here that the 10x salary saved for retirement is for middle class salaries not 1%, but what is a good measure then? When do you have financial independence?

How did we get to this point in this country??? We hear about a looming retirement crisis and yet some people are comfortably putting a way 40% WOW.

What point?

Some people are savers and live within their means, no matter what income level.
There are also people making $600K+ who don't save enough relatively speaking. Instead they choose to spend and maintain the luxury lifestyle. It's always been this way. Lived in CA during the tech boom of late 90s/early 2000s. Most people were renovating their homes, taking luxury vacations, etc because they thought their stock options would pay off soon. Many we knew in their 20s/30/40s were spending spending spending without much thought to saving---because those stock options would be coming down the pike. Well then the market crashed and many stock options became worthless or virtually worthless.
Some purchased their options then held them, that meant they owed major taxes on something that was basically worthless. I know of 3 people who did this, owing over 500K in taxes for something that quickly became worthless.
So in a time where they could have been saving a ton (great income), and just waited and paid ST Cap gains if options became worth something, they instead were in financial peril. They had spent their money before it was their money.

These were smart, highly educated people.

So I always assume that half the people living the good life are fully maxed to the hilt and are not actually saving as they should.

We save whatever the max is for us for 501k and ROTH IRAs. Now was save $4k a month post tax on top of that since we paid off our house. Our income has been just below the Roth maximums for almost twenty years. As it increases, so does the Roth max. We were able to pay off out house around two years ago and we fully paid for two children’s colleges. One went to an out of state state school and one went to a private school and had a partial scholarship that made it cost about the same as their sibling’s school.

We are about to retire, and have just more than $5m in 401k/IRAs. We inherited about $400k in total around 8 years ago. All parents are deceased and no other inheritances are expected. I have a small pension that will yield about $700 a month when I turn 65. Other than that, we have social security and the savings. We have over saved. Our current expected expenses will be around $125k post tax, including travel and healthcare.

Anonymous wrote:

Anonymous wrote:We have a high HHI (~1m) and save a fair amount (~40%) but I am wondering if this is on par with what we should be saving. I know people say on here that the 10x salary saved for retirement is for middle class salaries not 1%, but what is a good measure then? When do you have financial independence?

How did we get to this point in this country??? We hear about a looming retirement crisis and yet some people are comfortably putting a way 40% WOW.

Are you surprised that there is at least one person in America that makes 1 million dollars a year and also other persons in America that make less? Well, when John Astor made his first million in the early 1800s, it was due to trading furs, opium, and real estate.

Hilarious to only save 20% at 650K and blame the toddler

We’ve been making about $650k the past two years. Prior to that, HHI was more like $450k.

We contribute $105k each year to retirement, the majority of that to pre-tax accounts.

Retirement balances are about $2.5M in early 40s, and my spouse will get a decent sized pension.

We have about $200k in college savings for 3 kids (middle school, elementary, preschool). That is a mix of our contributions and grandparents. Funding is sporadic.

We are paying about $40k per year in childcare for the toddler, which eats up a fair amount of money that could otherwise be saved.

We have decent post-tax savings, but much of this is due to an inheritance. I always wonder how to account for this in posts like this. Two years ago we pulled $60k out for a home renovation. We will likely pull out a similar number in the next 18 months to pay cash for a new car.

That said, we probably save $40k per year into the post tax account. Thar account is pretty neutral from a cash flow perspective over a multi-year period, but is growing from interest.

All-in, let’s say $125k savings out of $650k HHI, or about 20%. Total NW is about $4M.

Interesting article. I never considered trying to save less 😭 My mother would be rolling over in her grave! I think so much of this comes from childhood and how you were taught. Parents never spent a penny except on education and mother thought she would die homeless. She had $3.5m.

Anonymous wrote:

Anonymous wrote:We have a high HHI (~1m) and save a fair amount (~40%) but I am wondering if this is on par with what we should be saving. I know people say on here that the 10x salary saved for retirement is for middle class salaries not 1%, but what is a good measure then? When do you have financial independence?

How did we get to this point in this country??? We hear about a looming retirement crisis and yet some people are comfortably putting a way 40% WOW.

There were always and there will be always a divide between “have and have nots”. There are plenty people richer than OP but much more folks who make less.

https://www.cnbc.com/amp/2024/04/05/ramit-sethi-advice-to-millennial-couple-making-850k-with-money-fears.html

between $0-500 a month

Anonymous wrote:We have a high HHI (~1m) and save a fair amount (~40%) but I am wondering if this is on par with what we should be saving. I know people say on here that the 10x salary saved for retirement is for middle class salaries not 1%, but what is a good measure then? When do you have financial independence?

How did we get to this point in this country??? We hear about a looming retirement crisis and yet some people are comfortably putting a way 40% WOW.

Aim for 30% and usually achieve 28-29%. HHI around $320k. Aiming for retirement at 60.