At what point did you feel comfortable?

[Scanner]

I heard an old saying by a millionaire -

"Making a million dollars isn't that hard. It's making $500,000 that's hard."

His point was, it was fairly hard to get to the 500K and after that, compounding and other factors led him to build a million dollar fortune.

At what point, do you feel there will be a "tipping point" where you see the finish line and you just coast in? 50% of your goal? Perhaps it's a non-monetary point like just paying off your house?

I think for me, as soon as my mutual funds/ETF's supercede my house worth, I don't know. . .it feels like a psychological tipping point for me. I don't like having most of my wealth trapped in my home.

[fairy74]

When we are able to put down 20% on a house in this crazy Southern California housing market (approximately $130,000 based on the average $650,000 house price)

[jIM_Ohio]

The answer depends on your age. I have a chart I use. (to track retirement progress). I'll add chart to my blog soon.

For a 5 year old the answer is $16,000
For a 14 year old the answer is $32,000
For a 23 year old the answer is $64,000
For a 32 year old the answer is $125,000
For a 41 year old the answer is $250,000
For a 50 year old the answer is $500,000

assuming a 9% rate of return before inflation.

This is on the same chart I use to track 401k amounts and retirement planning.

[Broken Arrow]

This is highly subjective, but I think the tipping point will be when I am raking in as much in investment as I am working.

[disneysteve]

Originally Posted by Scanner

His point was, it was fairly hard to get to the 500K and after that, compounding and other factors led him to build a million dollar fortune.

Yes, the joy of compounding.

If you have 10K and want 20K, your money has to double in value. That could take 7 years or more.

If you have 100K and want 110K, you only need to increase by 10%. That could happen in 1 year or less.

Either way, your savings grew by 10K. So it definitely becomes easier to get that growth the larger your portfolio becomes.

If I could leave my current savings and investments alone for the next 20 years, not add another penny to them and earn an annual return of 8%, I would have $1.7 million (this doesn't factor in taxes or any spending). Compounding is a very powerful investment tool and there is no replacement for starting early and getting the maximum number of years for that compounding to happen.

I don't think I'll ever "coast in" because as soon as you stop saving, you slow down your progress toward your goal and I'd much rather end up with too much money than not enough.

Of course, if the market cooperates and keeps generating returns like it did in 2006, I'll hit that goal a lot sooner which will be just fine with me, but realistically I know that won't happen.

[Scanner]

DisneySteve,

So it sounds like a few hundred grand calms your nerves, huh?

That's another great quote about money I like that a boxer made, I think:

"I don't love money. It just calms my nerves."

[genmed]

I'm feel pretty good about being able to cover all of our goals the way we are currently going, so I guess in a way I already feel like I can coast in, but wouldn't mind making it there earlier. I think when I get the house and student loans paid off (hoping before I am 36!) and a six month emergency fund fully funded I'll consider myself at the "finish line."

For retirement, I started over 10 years ago, and feel pretty good about where I am.

[scfr]

Honestly, I can't imagine ever just coasting. But the formula the "Millionaire Mind" guys came up with for being a PAW (Prodigious Accumulator of Wealth) sounds like a good benchmark for feeling comfortable.

[disneysteve]

Originally Posted by Scanner

His point was, it was fairly hard to get to the 500K and after that, compounding and other factors led him to build a million dollar fortune.

Just another way to look at this statement.

Your portfolio grew by 10% last year.

A: You started with $1,000, so now you've got $1,100.

B: You started with $500,000, so now you've got $550,000.

Both A and B had their money in the same investments. Both achieved the same return, but B made $49,900 more than A.

[DebbieL]

This makes total sense to me. Unfortunately, I'm still in the lower numbers, but I do hope to get there someday. That must be a great feeling.

[Broken Arrow]

This thread illustrates exactly why it's so important to save as much and as early as possible. The hardest part in investing is typically in the beginning, when you don't have much to work with and you're not as knowledgeable.

Of course, later on, your financial decision will play an ever-increasingly important role in your portfolio growth, but overall, not taking advantage of time by not saving hard and fast is a guaranteed way to lose out.

I don't think I'll ever coast either, because what I am really after is a balanced, simple, meaningful (and, OK, Martha Stewardish ) lifestyle of living below my means.

[LivingAlmostLarge]

Not until I know my retirement is secure.

[Scanner]

I guess I didn't mean to suggest one should coast but rather where I guess it feels to be a downhill battle vs. an uphill.

The feeling I get, with DisneySteve, he's headed downhill (still pedaling but headed there).

I still feel like it's uphsill for me.

[disneysteve]

Originally Posted by Scanner

I guess I didn't mean to suggest one should coast but rather where I guess it feels to be a downhill battle vs. an uphill.

The feeling I get, with DisneySteve, he's headed downhill (still pedaling but headed there).

I still feel like it's uphill for me.

I don't know that I feel like I'm going downhill (physically maybe ). We're not anywhere even close to our retirement goals financially. I do think we are on track as far as my projections are concerned but only if we keep going at the rate we're going and don't encounter any major setbacks along the way. Since I'm basing my projections on retiring 20 years from now, who knows what could happen between now and then. And now that my wife isn't working again, we have to readjust to planning on my income alone. So maybe the hill I'm on isn't as steep as it once was, but I don't think I've crested the peak quite yet.

[jIM_Ohio]

It's difficult to know at an early age "exactly" how much I'll need. Even knowing "aproximately" how much I'll need is difficult to "guess". I am 34 yo and have about 20-40 years prior to retirement.

I'd like to retire in 20 years, but I only could do that IF

"current income/.03"=value of my retirement accounts. If I make the same then as I do now, then this comes out to 2 million plus. This assumes 3% withdraw rate, which suggest money could last forever.

retiring in 40 years would be "current income/.04"=value of accounts. This assumes a more traditional 4% withdraw rate.

But the "current income" variable is based on what I make now. If my salary goes up, I'll need more saved. This compounds the problem because I need to save now for an income I think I'll have later. Assumptions based on assumptions have a wild way of not holding water...

[Scanner]

JIm,

I think a lot depends on the type of work one does too and expectations of retirement. We are Generation X; I'm 38. We tended to seek out careers that were not just "paycheck producers" but provided a measure of personal satisfaction.

Our parents really didn't do that - they sought jobs that paid well and provided security.

For the most part, I feel I'm true to my generation - on a scale of 1 to 10 with my job(s), I would rate them at a 8.

I have plans to teach into my 60's on a part-time basis, either on a post-grad level or even if it is a piddly adjunct community college job for 10 hours/week.

However, let's say you are a general laborer or something and just start to hate it, well, you are going to want to fully retire by a certain age. I think you are really gong to feel the pressure to squirrel it away.

I'd imagine it would be uphill all the way.

[jIM_Ohio]

If a person retires to "nothing" at age 55, they are probably doing it more for health reasons than other considerations.

I agree part time work "during" retirement sounds appealing. provided I can do the part time work and still travel, ski and coach soccer... which are the passions I plan to follow.

[bjl584]

Two Things:

1) When my personal savings and investments are worth more than my home.

2) When my investments are earning more annually than my salary at work.

[jIM_Ohio]

Originally Posted by bjl584

Two Things:

1) When my personal savings and investments are worth more than my home.

2) When my investments are earning more annually than my salary at work.

Why is the value of your home important to when you retire?

[bjl584]

No other reason than I recently read that for the majority of Americans the single greatest asset that they have is their home. I figure that if I can stay away from the norm and the majority, then I will be more likely to succeed at financial independence. I guess that I just feel that if I do what everyone else does, then there's a better chance that I will end up like everyone else. It's the people on the fringes that march to the beat of a different drum that are the most likely to succeed. (To a point of course and kept in context.) I just don't want my house to become my greatest asset in retirement. I would feel a lot more successful having my personal investment accounts being my greatest asset. Just my way of looking at things I guess.