How much do you need to retire?

146 Replies

I get markets, lifestyles and goals differ.. but how much passive income do you need coming in to walk away from your full time job? We all are ambitious if we’re on BP.. so what are your goals? What is the line where you say “this is enough for me?”

I now make more from my rental income that I did working and actually left the W2 job last year after matching my W2 salary. I was a teacher and my wife is a nurse. We have 2 little girls that I stay home with while also running our rental properties. My grandparents watch the girls while I am doing rehabs and such. 

With the price of child care and homes staying empty for to long it only made sense for me to start doing this full time. Best decision we have ever made. Our next goal is to bring in enough for my wife to also retire.

Derek E. What is your definition of “rental income?” Is it your cash flow per door? Or do you act as your PM for all your rentals and that is your income? Is it a combo?

Originally posted by @Dawn Curry :

Derek E. What is your definition of “rental income?” Is it your cash flow per door? Or do you act as your PM for all your rentals and that is your income? Is it a combo?

Cash flow per door. I do act as my own property manager.

I was a teacher so I didn't make a whole lot anyways to be honest. 

I also buy all of my homes with cash so they cash flow even more.

To retire at a normal retirement age you need a income of around 70% of your gross employment income.

To retire younger your passive income will need to equal your working income and you will need to continue saving for retirement.  

You would need 10X your working income invested to generate sufficient income for retirement.

"I also buy all of my homes with cash so they cash flow even more."

Buying cash flow is not the same thing as investing to generate income. To efficiently use your money to generate income for retirement you must invest it. This will actually reduce the amount of money needed to retire.  Buying retirement income is not a efficient use of money, it will effectively double the amount of cash required to retire. 

@Thomas S. 10x your working income investing — meaning in equity?

@Derek E. so you use your cash flow from other properties to buy more properties or are you using your wife’s income to save and buy more?

$4000 per month cash flow and I will leave my job. I also plan on flipping a couple houses per year at that point to continue investing.

@Derek E what was the timeline it took you to live off of rentals? I am just starting in doing buy and hold rentals. 

Originally posted by @Derek E.:

I now make more from my rental income that I did working and actually left the W2 job last year after matching my W2 salary. I was a teacher and my wife is a nurse. We have 2 little girls that I stay home with while also running our rental properties. My grandparents watch the girls while I am doing rehabs and such. 

With the price of child care and homes staying empty for to long it only made sense for me to start doing this full time. Best decision we have ever made. Our next goal is to bring in enough for my wife to also retire.

 what was the timeline it took you to live off of rentals? I am just starting in doing buy and hold rentals.

@Dawn Curry

meaning in equity?

Cash. This is not the same as dead equity. Many investors have tons of equity in real estate that generates very little true cash flow. As dead equity you would need twice as much due to the fact that the actual returns are based on prevailing mortgage interest rates. Based on todays mortgage rates you would need 20X income in dead equity. You need cash invested to generate a income equilivant to approximately 70% of your working income. It could be invested in properties generating a positive income equilivant to 70% of your income....that will suffice. However it must be positive income. It could also be generated in a income fund. Interest rates fluctuate so you save the excess in up times and apply it to the down times.  

I'm going to retire this year.   Rental income will be about 28k.  Wife gets 12 K disability.   Investment income about 4k.  So that's 44k, mostly tax free.   We have no debt beyond rental properties.   I can't wait. 

Need $10 million net worth.

Otherwise, need ~$25k/month of rental income. Long way to go.

Net worth is useless if not invested as cash to generate a income. Equity in real estate is under utilised such that it requires much more than if invested in a income fund. It will require 2X as much equity, assuming it is invested in the right properties, to generate the same income as that from a income fund with 1/2 the cash.

Originally posted by @Blake Johnson :

@Derek E what was the timeline it took you to live off of rentals? I am just starting in doing buy and hold rentals. 

 I had saved up around $75k cash before buying our first property a year ago. Since then we have just been buying properties strictly for cash flow. So less than a year after we got started.

Originally posted by @Thomas S. :

To retire at a normal retirement age you need a income of around 70% of your gross employment income.

To retire younger your passive income will need to equal your working income and you will need to continue saving for retirement.  

You would need 10X your working income invested to generate sufficient income for retirement.

"I also buy all of my homes with cash so they cash flow even more."

Buying cash flow is not the same thing as investing to generate income. To efficiently use your money to generate income for retirement you must invest it. This will actually reduce the amount of money needed to retire.  Buying retirement income is not a efficient use of money, it will effectively double the amount of cash required to retire. 

I've tried ignoring you but you just keep at it. I don't give a crap what YOU THINK about my investment style. Goodness gracious you have to be one of the most pompous and self loathing people I have come across on this website. 

If you want to leverage all your properties then go right ahead. Stop trying to tell me how wrong you think I am for buying properties with cash. 

I buy cheap homes and cash flow extremely well. I don't care what you think about how I invest. Every situation is different. Most people can see/understand that. You live in some fantasy world where everyone else is wrong unless they are doing things the way Thomas does them. 

Originally posted by @Dawn Curry :

@Derek E. so you use your cash flow from other properties to buy more properties or are you using your wife’s income to save and buy more?

We live off of the wifes salary and use all rental income to put towards more rental properties and continue to grow.

When I hit $10,000 a month I’ll think about it. But, honestly I wouldn’t be surprised if I ride it out for 30 years. Perhaps when my business is to the point where I’m buying a house every couple months I’ll quit. At that point I’m losing money by keeping the job because my time would be more lucrative hunting deals. My Fiancé loves her job I know she’s in it for the long haul. I guess my passion for Real Estate has never had anything to do with escaping the “Rat Race.” It’s all about growing as big as possible before I pass the torch to the next generation. I don’t feel stuck. I’m grateful for that.

Originally posted by @Jonathan Hulen :

When I hit $10,000 a month I’ll think about it. But, honestly I wouldn’t be surprised if I ride it out for 30 years. Perhaps when my business is to the point where I’m buying a house every couple months I’ll quit. At that point I’m losing money by keeping the job because my time would be more lucrative hunting deals. My Fiancé loves her job I know she’s in it for the long haul. I guess my passion for Real Estate has never had anything to do with escaping the “Rat Race.” It’s all about growing as big as possible before I pass the torch to the next generation. I don’t feel stuck. I’m grateful for that.

 Maybe I am an outlier in this forum, but I am not "passionate about real estate" as I just see it as a means to an end.  I am passionate about living life, and if real estate can help give me the freedom to do that....Great.  So many on here talk about "retiring" but really they are just trading a W2 for a different job of sorts in real estate.  Having gone through several mini-retirements of 6-24 months in duration off of passive income, to me, retirement is about doing whatever you want when you want.

based on the trinity study you would need at least 25-50 times your yearly expenses in investments. that way you can withdraw 4-2% of your investments without touching the equity. I think aiming for this is a good milestone if you plan to fully retire. Also keep in mind that if you plan to keep doing real estate just bring in enough to match your monthly expenses and then some. that's like 4k monthly for most people, however keep in mind that if you reduce your expenses, get creative, and house hack a bit you can get your expenses down to 1-2k monthly.

$7 million net worth is when I call it quits.

@Eric C. I get where you’re coming from. I used to have the same viewpoint. Life is to short to work all the time and we should enjoy it. The thing is when I had that mindset I wasn’t happy. I came to realize that self indulgence was never going to give me a sense of fulfillment. For me it’s all about having a mission to focus on. I love the grind. I love testing myself to see how much I can take. For me Real Estate isn’t a means to an end, because there is no end. I have no end goal. I just want to keep moving forward until I drop. I know most people aren’t wired like me and I’m not saying my way is the right way. We’re all different.

Originally posted by @Dawn Curry :
I get markets, lifestyles and goals differ.. but how much passive income do you need coming in to walk away from your full time job?

We all are ambitious if we’re on BP.. so what are your goals? What is the line where you say “this is enough for me?”

 I need a lot. In fact it can't even by quantified by a number due to inflation or any number of issues that could arise in my life or my family's lives.

For that reason I will never limit myself to a specific number.

To the person who think's $44K a year is enough to retire. What happens if you have a major medical issue? What happens if your parents need long term care? $44K isn't going to get you through to the other side.

I have had some major things happen to me in the last year, and if it wasn't for the fact that I have substantial savings and a decent income I would have been buried. Life happens and you have to be in a position to handle these challenges. I can't help my family or friends in their time of need if I am barely skating by.

@Jonathan Hulen is that $10,000 just in cash flow? If that’s the case.. I’m assuming, just like @Derek E., that these numbers are based solely on cash flow, in which you aren’t taking away from your maintenance, repairs, Cap ex, vacancy, etc.... correct?

I love the grind as well! I love seeing how much I can get into, how much I can make.. but I keep reminding myself that I’m doing this for a purpose.. to become financial free where I can spend more time with my family. I know that I will always “tinker” because that’s just how I am. 

@anthony gayden... I totally get where you’re coming from! Im very conservative when it comes to numbers for me but every market is different and expenses vary drastically depending on the location - to each his own! :)

you don't need 70% if your gross income to retire.   You need to cover your expenses.  My gross income of is much larger than my expenses,  due to my savings rate, so it is also much larger than what I need to retire. 

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