What’s your money number?
March 14, 2016
Do you have a number?
The number that means you’re safe? You can relax, you can enjoy life and kick up your heels a bit? Maybe buy the good cheese, or wine, or really splash out and get both?
This is an emotion question, not a logic one. What number would you need to hit to feel like life is alright?
In 2008, my number wasn’t about net worth; I wasn’t that advanced in my Personal Finance Nin-jit-su. It was salary. It was “do you know how much I could save if I made a $100,000 salary?”
8 years later I still can’t answer that question so now I’ve got two more years to figure it out because arbitrary and deadlines are what I’m all about.
But what’s that number?
Would I feel safe if I had $1M in the bank?
No, that wouldn’t buy a house with four walls and a roof here.
Would I feel safe if we had $2M in the bank?
See above.
Would I feel safe if we had $3M in assets and carried a spare $100 bill in all our wallets?
That’s just asking to be mugged.
Would I feel safe if we had $5M in assets?
If we had $5M, say $1.2 of that was spent on a house, bought outright. We’d need to need 0.8M for renovations since of course nothing for that much is going to be updated and we’ll find something that needs fixing. Tuck away another $1M for maintenance and taxes for at least the next decade.
No, better make it $10M. I think – I’m only speculating here, that I’d feel comfortable to relax, without having changed our basic lifestyle, other than quitting my job and managing money full time, buying a house (and don’t look! I’m just gonna slide this under the wire, adding two more dogs to the pack), if we had at least $10M in assets.
Back up – what was that?
Quitting my job is a change in lifestyle? Not exactly. It’s just redirecting my energy and time to focus on the thing I’m pretty good at. And it’s realistic. I do alright for now, with PiC’s love and support, but nothing is forever.
Specifically, my health could nosedive and force me out of the rat race at any point. The horror show that is trying to get approved for disability can’t possibly get easier as we age, that’s simply not what governments do. It took Mom six years to be approved. She would have been dead on the street in the time it took the state of California to help out with a few hundred a month, long after she’d lost much cognitive function, and the ability to feel reasonably human, if I hadn’t already been working my butt off to keep the lights on, gas in the car, and food on the table.
You’d better believe I took a dang hint from that. I’ve been planning for and saving against forced retirement, reasons of cripplement, since 21. Shoot, I’ve been planning in case of my early demise since I was 22 because when you find yourself in college supporting dependents that you didn’t birth, not even once, life gets serious in a hurry.
$10M is my Happy Place. (I think.)
What’s your Happy Place number? Also, Happy Pi Day!
*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and DIY Jahn*
I think our number would be a little lower than that, because we own a house and are in a less expensive area. But we also still owe on the house, and the taxes will persist (as will the maintenance). We need to replenish savings in the wake of day care, and expenses for Baguette will also persist, at a higher dollar figure than property taxes. And then of course there’s all of the regular staying alive that we hope to do.
Sigh.
How is quitting your job NOT a lifestyle change, though?
Tragic Sandwich recently posted…Doing What Works, Because It Works
I look at quitting my job as “not a change” from this POV: I work all day, every day, both for money and for family. If I quit, I’d do different work, all day, most days. Possibly for money, possibly not. It depends on my health. So it’s not necessarily quitting jobs entirely, I’m leaving that open.
Living where we usually live, we’ve already hit that number. It is lovely.
Of course, it is also too boring where we live to enjoy life without careers and employment, so it isn’t really “enough” to do whatever we want. Just “enough” if we were more type B personalities, and enough that we don’t need to stress out for money reasons. about long stretches of unemployment
If, however, we moved out to Paradise, I think we’d need more like 3 million *and* one of us would need to be gainfully employed. I think we could handle 5 million with no expectations of employment.
nicoleandmaggie recently posted…Money philosophy post: Invest in things that will pay off
So awesome. Paradise for $5M SOUNDS like a deal. If I don’t think too hard about the process of making the $5M.
Good points. I would only do well not working this job if I were working on something else that was meaningful and important to me. And generating income.
With the house paid off, the car paid off, and Social Security of about $1200 a month: $1 million in savings.
And no, I don’t have that. Not going to have it. I would’ve hit that goal by now had I not been laid off at 62, an age at which you have almost no chance of getting hired…especially not in a recession.
But…once your roof and your car are paid for and Medicare is covering most of your health care, your expenses are surprisingly low. What I have is keeping me comfortable, at least for the time being.
Funny about Money recently posted…Check Up on Your Financial Adviser
I know your pain. Mom and Dad had the same problem, only ten years younger IIRC, and that was one direct cause of our crappy situation.
Comfortable for now is good.
I’m thinking my number would be pretty close to FaM’s number. Maybe I’m being naive, but I think if I was living in a paid off house with a paid off car, I wouldn’t need a huge amount of money to live comfortably when I’m retirement age.
Eh, maybe I should up that to $1.5 million, just in case my currently crappy health becomes a regular thing (I’m holding out hope that this has just been a bad year) and assuming there are no advances in the health insurance area by the time I retire.
Now, if the idea was how much I’d need in the bank NOW and not for the retirement years, then that’s something I’d need to think deeply about.
Good point – for some of us there’s a huge difference between having the number now versus starting at retirement age.
My fingers are crossed this was just a bad year for you and that you’re through the worst of it!
These numbers are all huge compared to what most people manage to ever reach… I feel pretty comfortable about money now with a net worth including housing equity of just above USD 1 million (Close to AUD1.5 million). To retire, I figure we need about AUD 2.5 million in total. I project we’ll have double that by the time I retire, but you never know what will happen. The big question at the moment is whether Moominmama (used to be Snork Maiden) will go back to work. At the moment I’m not sure that’s going to happen.
Oh I know. This was all about the emotional part of the money 🙂
When does Moomimama have to make a decision about going back to work? Do you have a set leave period like Canada and the UK have for a year after which she’d have to make the decision?
This is one of those things i hate to calculate because you have to make too many assumptions. So, without calculations, I can say YES to $10M. I’d keep working, of course.
Post-tenure and assuming my husband remains enthusiastic about his job, I feel like $2-$3M would be OK. Maybe less if we don’t have kids. And if/when the mortgage is gone, even less.
SP recently posted…February Recap / March Goals
Totally calculation-free! And also probably reality free. 😉
It’s so hard to know my number, mainly due to not knowing future health needs. And also knowing that my husband has an expensive hobby that’s important to his mental equilibrium.
I think we could be safe with 5 million and a paid-off house if we could count on health staying the same and hobby spending not expanding beyond current levels.
However…one of my parents underwent a major health crisis, and we have paid caregivers and an unpaid saint of a family member providing 24/7 care. When we were first told the care needs, I did the math on having agency caregivers doing all the work, and the number was high: I think above 200,000/year. The unpaid family member is doing the bulk of the care, so the actual costs are lower, but it does lead me to believe that any “safe” maximum should be very high. Eapecially if you want to be in your own home no matter what.
Future health needs is a huge reason my emotional number is at $10M. As you clearly have experience with, a health crisis could bankrupt us easily, it nearly destroyed my finances when I was taking care of Mom and she didn’t get the best care she should have because I simply couldn’t afford it.
Your family member is an absolute saint, I hope you’re helping to look after that person a bit as well!
My happy place: mortgage paid, cars paid (already done, just would like it at retirement also), SS benefits, and $3MM in the bank. We could live a happy retirement with that.
Even if SS benefits aren’t at 100% of what they are today, that will help and we’re only counting on SS as icing on the cake anyway.
Joe recently posted…Unemployment Interview
SS benefits: same here! They don’t even enter into my calculations because who knows where it’ll be when we retire?
I would say somewhere around $1M plus my condo paid off, just for me in our current highish cost of living area. In reality, that looks like about $2.5M total for two people with the condo in today’s dollars. If we have kids some day, that’ll change. Then we would want a bigger house and it’ll increase spending, so I’d probably want another $1-2M in that case. I think we should hit the $2.5M number in our thirties.
Leigh recently posted…February 2016 update (+10.1%)
I just wanted to add that I feel pretty comfortable with money where I am now, even though I do still need to work for a while yet. I’m not worried about money and that’s quite lovely!
Leigh recently posted…February 2016 update (+10.1%)
That’s wonderful!
Interesting piece!
Right now, given that we live in such a low cost of living area, I’m happy to quit with just the rental income (Net around $900/month), Robs stipend, and a paid off house. However, I don’t have older dependents who need me… just kids, and whatever you miss with them, you miss. I feel that I have time to earn serious money later on, but I also have parents and in-laws with money (ie they can care for themselves) and siblings with jobs (kind of).
That’s definitely a very different POV than the one I’ve had, and it sounds much more attractive than my version 🙂
I do agree that I don’t want to miss anything that’s important to us with the little one, and that has shaped a lot of my approach up til now because try as I did, I couldn’t change the reality of older dependents. It’s perhaps not likely we’ll reach my magic number any time soon but it’s fun to dream.
My husband bought a $2 lottery ticket (happens once or twice a year so no frets) once and the jackpot was $10M. He said we could both retire and never work again in our lives. I told him he was crazy because half the money would go to taxes and there’s no way we could make the money last the rest of our lives out of savings accounts given the way life throws you emergencies when you least expect or want them. He was shocked.
10M after taxes is probably my happy place, too. Because I worry.
FF @ Femme Frugality recently posted…How to Be Happy
I think since I’m all on my own, but number is a lot lower -like 1.5 million. That’s what I’m aiming to save to retire anyway.
Mel @ brokeGIRLrich recently posted…Financially Savvy Saturdays #134
I think about it more in terms of a monthly income stream. At the moment, I feel safe with around $5,000 a month. My house is paid for and I rarely spend more than $2,000, so that’s plenty of savings to replace a car or change a roof. My friend’s mom just got into a $10,000 a month assisted living facility, so I expect to need at least that for the last 10 years of life. Should be ok if my current savings are invested for the next 50 years.
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