What is your "I Quit!" Number?

[stomachmonkey]

I stopped into a friends office one day.

His receptionist was not at her desk but I heard him in his office on the phone so took a seat to let him finish.

Business had been off and he was on the phone with the manger of one of his ventures, “Steve, Steve, we need to start making some money, I’m
Going ****ing broke here, it costs me $176,000 a month to live”

I thought, “damn, I can easily stretch that to a year”

This was in the early 90’s and the guy was worth just south of $500 million.

It was then that I decided to not over complicate my life and focus on what was important which was not a 100 ft sailboat with a full time crew and $10,000 Persian rugs on it. Yes I once got yelled at by him for not taking off my shoes when getting on the boat.

If I could give my kids a nice home, an education, and not be a burden to them in my twilight years I’d have done ok and that was good for me.

I’m 55 and will likely retire this year.

I don’t intend to quit working though, I’ll probably get a gig at Home Depot selling people faucets just to keep busy and not putter around the house driving my wife nuts.

[JavaBrewer]

I want to leave something, well everything, to my kids. So that means I am going to work till I die. We lived well young ,spent when we should have saved, but have great memories. Been there and participated in my parents losing control of their situation. Will not do that if I have any say. Some sort of exit plan will be put in place before the state lecherous folks get involved.

[drcoastline]

Originally Posted by VincentVega

Well done. I imagine sailing down the bay on a call working a lot!

Spot on. In fact if I did hit the big one I would probably work more as it would give me the capitol I do not have access to now to grow my business the way I would like.

[KFC911]

Numbers? We don't need no stinkin' numbers....I quit!

Now I gotta find a job after reading some more

[ckelly78z]

Our 10 acre farm with a 2000 SF house, a 1800 sf barn, and a 6200 sf barn in NW Ohio is only $2400 a year for taxes....I couldn't imagine the same farm in a HCOL area.

[greglepore]

Yeah, its all been said above-4 factors-lifestyle, debt, taxes, health insurance.

I drive nice cars, from the 90's. Don't really feel the need to travel . Low taxes (4k/yr). Have the good fortune of getting Medicare early (long story, but required a period of disability-not recommending this ). Had no debt until very recently, now have a small mtg that's around $500/mth.

So 50k/yr does it for me. Change any one of those variables though, and things escalate rapidly.

[wdfifteen]

Originally Posted by JavaBrewer

I want to leave something, well everything, to my kids. So that means I am going to work till I die.

I have the opposite philosophy. I would like to leave something to my kids too, but I'm not going to work until I die to do it. I supported my parents for the last 10 years of their lives. Whatever Medicare and Social Security didn't pay for, I paid. It didn't hurt me. In fact I'm glad I was able to help them, it was more valuable to me than an inheritance.
So, maybe think about giving your kids that gift.

[Seahawk]

Originally Posted by wdfifteen

Totally off topic and I haven't even read the rest of your post, but this came up in one of your posts in the past and I didn't say anything. Now I want to.
Why does the US military pass on someone who is smart, motivated, patriotic, and capable except for a small physical issue? I think, from what you have said, your son would be an outstanding Army officer. But the Army passed on him. In the 21st Century military it seems like such a waste.

There is extreme competition for ROTC slots...what you find is that there is a world full of Jack's that want to serve. The services by and large get to pick and choose from among some really phenomenal young men and women.

He was contacted by one of his instructors from VMI about getting a reserve commission as a JAG in the Army...he is not interested.

His world and I am delighted to be in it.

[KFC911]

Another thread caused me to google someone in my distant past. He made (and spent) 100M before declaring bankruptcy a few years ago...because he didn't "save any" .... wtf ?

Michael Jackson could not "retire"....

Anyone can "outspend" their income....ea$y pea$y....

It's all about choices....lifelong choices and what matters to YOU....

Then you figure out how to get there

[Iciclehead]

Originally Posted by Seahawk

I had one of the great conversations I have ever had with my son over the holidays...completely ad hoc and honest.

He lost his left eye between his junior and senior year in college at VMI. He was ROTC and would have commissioned on graduation as an Army Officer had he not lost his eye.

He will finish law school this May and has a job at a firm in Norfolk, Va...the papers have been signed, he is good to go. So we talked about that.

"Nobody knows more about changes of plans than I do..." and he went on to expound his thoughts and feelings. I said very little.

Quite impressive for a young man. He learned the basics of personal finance and has adopted the rules into his life. He has a financial plan, rare these days. Start early and the OPs question gets easier to answer.

Me? I have zero debt. The farm, cars, equipment are all paid for. I have few vices that cost money, plan on staying married and love the ones I am with.

The key is that my wife's health insurance tracks to both of us...should that change, the only variable for us is working the next insurance. Change is real.

Not surprised that you are in a balanced situation, well thought out....that is totally my impression of who you are.

I am not quite there as my divorce made a hole in the finances, but we are quite close to debt free plus enough assets to comfortably support cost of life.

Most folks don't realize that there are 3 different life profiles in retirement:

First, the multi-year vacation that we all dream of as retirement where we travel endlessly, play golf endlessly, get in shape etc etc. Reality is that this lasts at most a few years for almost everyone. After you have exhausted the vacation/golf/fitness goals you then are in the next phase where you:

Second - still have your health, good energy and have satiated your lifelong desires and now find yourself with time on your hands. What are you going to do with your time? Sit on your porch and heckle the kids who walk by? Volunteer somewhere? Start working at a "fun" job? This is the phase most people fail at and I can speak from experience having "retired" three times already. When your hobbies become your job, they fairly rapidly become less of the forbidden fruit they are during our working years and more of a routine, remarkably similar to our money earning years.

Lastly - our last stage of life. Energy, health begins to fail, perish the thought we become immobile and cannot do anything and we need to be cared for.

Anyway, every person is different, the three stages are variable and overlap but the point is that each one has a different financial profile. Stage 1 is expensive as you are *doing* things and likely spending money, but if you are working off of a fixed asset base you are balancing near term draws against long term needs (particularly Stage 3).

Stage 2 can be quite cheap as you may be even making a few bucks working at Home Depot or something, but your spending profile is lower.

Stage 3 can be long and expensive, particularly in the USA which has lower social support and greater personal exposure to health care costs, but at this point, you probably sell your house, move into a seniors house or similar and have some recovered assets becoming spendable....plus you don't care except of course for spousal or familial needs or desires for leaving an inheritance or care of spouse.

So, again, this is a simplistic model....but based on many conversations with retirees and some seminars I have attended it is broadly true.

Guts of it though the poll is too simplistic....there is not one annual number that will worth throughout your twilight years but as with any plan, it is not the prediction of the future you are trying to make, but rather the present impact of future scenario's and changes to situation that you want to understand.

Spending more in Stage 1 and really enjoying yourself risks the need for positive income in stage 2 or exhausting your financial resources in Stage 3 before you kick off.

Spending less in Stage 1 means you may miss enjoying the fruits of your labours at the time where health/energy is available and end up with a big bank balance in Stage 3 and have no option to make use of it...not bad, but personally less fulfilling.

I have the advantage of a wife being much younger than I (13 years) who is also a trained therapist and caregiver, so my Stage 3 is probably a little different than the norm.
We have landed on a pattern similar to the esteemed Mr. Seahawk, have a zero debt status, cash to support spending, keeping spending modest and under control with the option to liquidate real assets for Stage 3.

Dennis

[Adrian Thompson]

I don't think talking about a specific $ amount makes any sense. By the time people are heading into retirement most people have an established lifestyle they would like to maintain. I've always worked on the assumption that you need at least 20 times your final income. That will allow you maintain your existing lifestyle, pay yourself a cost of living increase and not run out of money.

I've never understood the 75% of your final figure number either. Yes, you should time your mortgage to be paid off by the time you retire, but if your mortgage was 25% of your income at retirement you are doing something very very wrong.

Finally for us, our travel will go up massively, another cost increase. The standard 4-5 weeks a year just isn't enough time for us to travel. We'll be gone a whole lot more than that either in an RV or an SUV with a trailer, either way that's tens of thousands of miles a year at 10mpg. Gas ain't getting cheaper, and while hybrid, electric, plug in is getting more common, electric SUV"s that can pull a 4-6K lb trailer up to 600 miles a day probably isn't going to be available in my lifetime.

Note to OP, how about a new poll that lists multiples of your final (annual) paycheck as a target. Put me down for 20 times

[Iciclehead]

Originally Posted by Adrian Thompson

I don't think talking about a specific $ amount makes any sense. By the time people are heading into retirement most people have an established lifestyle they would like to maintain. I've always worked on the assumption that you need at least 20 times your final income. That will allow you maintain your existing lifestyle, pay yourself a cost of living increase and not run out of money.

I've never understood the 75% of your final figure number either. Yes, you should time your mortgage to be paid off by the time you retire, but if your mortgage was 25% of your income at retirement you are doing something very very wrong.

Finally for us, our travel will go up massively, another cost increase. The standard 4-5 weeks a year just isn't enough time for us to travel. We'll be gone a whole lot more than that either in an RV or an SUV with a trailer, either way that's tens of thousands of miles a year at 10mpg. Gas ain't getting cheaper, and while hybrid, electric, plug in is getting more common, electric SUV"s that can pull a 4-6K lb trailer up to 600 miles a day probably isn't going to be available in my lifetime.

Note to OP, how about a new poll that lists multiples of your final (annual) paycheck as a target. Put me down for 20 times

Generally agree.....very dependent on rates of return (given an asset based retirement funding scenario) and also whether or not you are willing to deplete the principle amounts as part of funding.

For us, we expect depletion and the 20x number goes round. Our solid fixed costs food, shelter, transportation, taxes run around $50k per year, so 20X that implies an asset base of $1M to support basic living.

If you do asset depletion though, the number gets a lot smaller....make your assumptions - ours are EOL at 87, reduced lifestyle from 75 forward, rate of return on investments of 3.5% with an inflation base of 2% applied across the board.

Also note we live in two countries with two residences, one of them will be liquidated and does not form part of the asset base as it is not spendable.

Dennis

[VincentVega]

Put me down for 20 times

I've been thinking 15, at ~10 right now.

This talk of housing costs has me rethinking the east coast thing!

[LWJ]

Gents

This conversation is exactly what I needed to see. Keep it up.

Thanks!!!

[fintstone]

I disagree with the presumption that one should always go into retirement debt free. Obviously not high interest revolving debt, but not necessarily with a house or car. I think that is only the case where one has limited income after retirement, or worse, only has social security. If one's home is financed at...say 3-4% and they are gaining over 12% on investments (plus writhing off their mortgage on taxes)...they would not necessarily be better served to pay off their mortgage. In fact, I can see some folks getting a brand new 30-year mortgage and upsizing rather than downsizing when retiring (as you will likely never have to pay it off). Your heirs will still get the equity when you pass. $200K in equity on a paid off, $200K house inherits no different than $200K equity in a $500K house that in financed. My goal is to have almost the same retirement income (or more) as when I work (minus paying into a retirement fund, social security, etc.). That should enable me to pay a mortgage as easily as now (either for a primary or secondary home).

[Crowbob]

You are almost absolutely correct, fint.

Leveraging everything takes effort and diligence and precious time. Retirement, to many, means getting out of the game comfortably i.e., debt-free ASAP.

[fintstone]

Yep. Level of comfort is an important factor.

[Seahawk]

Debt is not an issue if managed within the context of your budget, at percentages of the budget that make sense. Debt is a tool if properly used.

Farms, at least my size farm, are hard to leverage in terms of loans...we knew that going in 25 years ago so my goal was to maximize our retirement accounts (Government TSP for my wife, other IRA's, my military retirement and other investments) and get the farm debt free, keep it debt free.

The other thing is that I maintain my equipment. Everything with a motor is under cover...not cheap but here is Jack over fifteen years ago mowing with a small diesel tractor I used today.

The F150 and the rental house are gone, but the tractor remains

[fintstone]

Agreed. If your home is your only investment, one would be well advised to pay it off before retiring. I am similar to you and have multiple retirement investments and income streams. One concept that I have always considered to be sound based on the commutative property...or is it the associative property?

Whichever, what it tells me that if I have a paid off rental worth $400K and my personal house is mortgaged at $400K, it is the same as if I have paid off my mortgage. Similarly, having $400K in an investment account or equity elsewhere is essentially the same as having my primary home worth $400K paid off. I came upon this strategy because as a military member, that had to move ever 2-3 years, I assumed I would miss out on the "paid-off" house at retirement that others planned/valued...and I expected military retirement to be minimal. So, I kept my first home and rented t while I moved around the nation/world. I knew that when/if I ever wanted to return, I would have a small, paid off (or with significant equity) home.

Personally, I like rentals as if one chooses properly, they can buy one for almost nothing down, turn them over to a manager and relatively painlessly let them grow. My strategy was to buy a new (larger home) each time we had another child and rent out the old home. When each child was ready for college almost 20 years later, the homes were already paid off. (through rental income and tax write-off). Then I had the option to sell to pay for college, to keep and refinance for money for college, or continue to rent and use the mortgage-free rental income for college costs. I kept the homes as one child did not go to college and the other had scholarships that helped fund (and I paid the rest from income/other savings). Now both rentals are part of my retirement (along with other investments). It seems some of the best investments take a long time.

[wdfifteen]

Originally Posted by Crowbob

You are almost absolutely correct, fint.

Leveraging everything takes effort and diligence and precious time. Retirement, to many, means getting out of the game comfortably .

+1
Playing monopoly is not my idea of a fun retirement. If you enjoy it go for it, but I don't want to worry about payments or interest rates or the market any more.