How much do you need to retire?
South Jersey · Member since 2016 · 78 posts · 35 votes
How much do you need to retire?
Most Popular Reply
Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
8yOriginally 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.
149 Replies
- South Jersey · Member since 2016 · 78 posts · 35 votes8y
@Account Closed how close are you?
- Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes8yThomas S. Can you just copy and paste the same thing over and over again? It would all save us a lot of time. Instead of saying the same thing different ways. Dawn Curry a lot of this depends on your age right now and far you are from retirement. I’m a younger millennial so if I want to retire at say 55 or 65, with inflation I probably need 2.5-3M in investable assets. This would be a combination of rentals, 401ks, stocks etc and maybe even a small business, if I get that far lol. As far as cash flow goes, I think 100-150k annually in cash flow would be plenty for me and my future family. I plan on hitting that goal sometime in the next ten years or so. But I’ll keep working, so that means that cash flow will just compound for the next 10-15 years. That should leave me with more money then I can spend. Plus when I fully fully retire (not just quit my day job) my house would be paid off, I’d likely have zero debt of any kind, kids grown and out of college, etc etc, so my expenses would be much less than compared to now. Hope that helps. I haven’t put a ton of thought into this, I’m just saving and investing as much as I can as I figure that’s more than 99 percent of people my age
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes8y
I would have given up long ago if it was only about earning $x per month. We have to ask ourselves why 7 times to get to the true why of why we dedicate so much to something.
Alas, we do need money to survive so I get the question. It will be different for everyone, but I'm pretty simple so net cf in the low 5 figures per month is enough. When my last loans are paid off in a few years it will increase another 50%. But... the less hungry I am for more property, the more I seem to be offered to 'take a look at this one please'. I expect to double before it's all over.
But what of the geese? No way I could get the same quantity of eggs each month without eating into the principal significantly, say, in the market. What other asset class grows while still providing income? Lets you clearly see your estimated social insecurity benefit as 'basically a unit or 2'? Going to be hard to sell my favorite geese someday.... so true 'retirement ' could be a challenge for some of us. I'm grooming my boys;)
I need 10K in monthly expenses and 12.5K in monthly investing. So once I hit 22.5K in cash flow, I'll be financially free.
I don't spend 10K monthly now, but only about 2K. However, I'm not married, don't own a house, or have kids or car payment. I expect my living expenses to increase 5 fold in the next 10 years.
- Rental Property Investor · Torrance, CA · Member since 2016 · 724 posts · 1k+ votes8yDawn Curry still a looong way to go lol. I have one property that averages $500 a month. I’ll have another by the end of this year. My property has a lot of equity so when I sell it will really speed things up. I plan to be there by my early 40’s. I’m 32 now and plan on marriage and kids soon so we’ll need to slow the work hours down when that comes.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes8y
Originally posted by @Russell Brazil:
$7 million net worth is when I call it quits.
Clear and concise, Russell. Nice!
Just curious if you will sell and buy something else at that point? Like mutual funds? Sell one or so each calendar year vs all at once to minimize the tax hit? 1031 into something else? Options I'm evaluating, too. Thanks!
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes8y
Originally posted by @Steve Vaughan:
Originally posted by @Russell Brazil:
$7 million net worth is when I call it quits.
Clear and concise, Russell. Nice!
Just curious if you will sell and buy something else at that point? Like mutual funds? Sell one or so each calendar year vs all at once to minimize the tax hit? 1031 into something else? Questions I'm evaluating, too. Thanks!
I will probably have a mix of real estate and dividend paying stocks like I do now actually, but my mix will probably move to less real estate and more stock just for simplicity sake. Id have to examine my portfolio more closely but I bet im 66% real estate and 33% stock or cash right now, Id probably flip that ratio in retirement.
District Invest Group545 Reviews Originally posted by @Aaron Hunt:
Need $10 million net worth.
Otherwise, need ~$25k/month of rental income. Long way to go.
Similar to my goal: $10M net worth with most of it bringing in more money (i.e. investment - The equity in the home I live in is not bringing in any income so not all parts of the $10M net worth have equal value to retirement). We are currently at greater than 5 digits cash flow/month not including investment returns from appreciation of RE or stocks.
Current plan is retire summer of 2020. Maybe start with a PCT hike (~2700 miles) with my son if I can get in good enough shape and he wants me to go (he seems to be going regardless - he will be 17 years old).
- Investor · Arlington, VA · Member since 2016 · 67 posts · 65 votes8yIs anyone else planning to retire overseas to dramatically reduce expenses without sacrificing lifestyle? 2-3k/month will go very far in some places.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes8y
I find entrepreneurs do not usually retire in the typical sense people think of with a J-O-B.
I love what I do with commercial real estate so do not see retiring as an option. I am in my 40's now in age. I can see reducing down hours in my golden years for when I choose to work or not.
I already do that some now.
Some of my friends that have sold off tech companies still are out innovating and creating new businesses. People that often work for an employer are trying to escape the rat race are running away from something they do not like. Business owners typically enjoy what they do which is creating and growing a company. So in that sense entrepreneurs are not running AWAY from something but TOWARDS something. It's a different mindset and way of living with life.
Often I see the traffic on the freeways and at the park people going on the weekend trying to squeeze in every second of time before hitting the 9 to 5 again. I have been out of that so long it's hard to relate anymore. Running a business has it's own challenges that many cannot handle but can be very rewarding for those that stick it out and make their company successful.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes8y
Originally posted by @Michael N.:
Is anyone else planning to retire overseas to dramatically reduce expenses without sacrificing lifestyle?
2-3k/month will go very far in some places.We plan to have a couple houses in a couple warm resort-ish locations at least for winters.
Do you have any overseas locations in mind, Michael? I spent 18 months in the Phillippines and saw some retired Marines and Navy guys in flip flops there. My uncle (from MN) spends Jan-March in Portugal every year. Both seem economical.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes8y
Originally, I never started RE investing to retire, just to have someplace that was doing better than my other investments. Eventually it grew into something that makes as much (maybe more, after tax considerations) than my regular job. By itself, my regular job well outpaced my expenses, such that everything else was going into savings, so having the RE has just meant having another full-time handsome wage earner in the house adding to the kitty.
I'm not sure what the number is. It's easy to get wrapped up in numbers. I know that, today, if I were to retire, quit or be canned, my investment income outpaces my expenses by a decent number, so by that guideline I'm already FI (financially independent). I have the added cushion of having government healthcare (I'm a Navy vet), so I'm covered there, though my wife is not. But I like my job and what I do, so just the idea of hanging out and doing nothing isn't really that compelling. Maybe it will be in another couple of years (I'm almost 50), but beyond wanting to sit in some warm weather in the winter for a month or two, I pretty much do the things I want already.
Personally, I think if you depend on numbers to tell you what you should do with your life you're going to have a hard life. My job isn't unicorns and rainbows but it's satisfying and pays well and has a lot of flexibility (with some stress and a lot of responsibility, too). If I had a crappy job, I think I would probably spend more effort figuring out how to change that than how to get some sheer numbers on a spreadsheet to make my decisions for me.
Skyline Properties - South Jersey · Member since 2016 · 78 posts · 35 votes8y
@Joel Owens I totally agree with you! I know my term “retire” was pretty vague, but I meant like walking away from your 9-5. Being able to do what you what, when you want instead of running through the rat race! I feel like I will always be looking at bigger and better ways to invest.. because I know working a 9-5 is not something I want to do until I’m 70 lol
@JD Martin it sounds like you have a good thing going for you! Very seldomly do you hear people truly loving their job and not considering “retiring” from it. Kudos to you!
- Investor · Arlington, VA · Member since 2016 · 67 posts · 65 votes8y
Originally posted by @Steve Vaughan:
Originally posted by @Michael N.:
Is anyone else planning to retire overseas to dramatically reduce expenses without sacrificing lifestyle?
2-3k/month will go very far in some places.We plan to have a couple houses in a couple warm resort-ish locations at least for winters.
Do you have any overseas locations in mind, Michael? I spent 18 months in the Phillippines and saw some retired Marines and Navy guys in flip flops there. My uncle (from MN) spends Jan-March in Portugal every year. Both seem economical.
Both of those places are on my list. I’ve been looking more at South America (Ecuador, Colombia).
My original goal was 3k/month, but now I think 5/6k. Live off 2/3k in one of the countries mentioned above, save 3/4K a month, and come back every 1-2 years to buy another property.
- Moorpark, CA · Member since 2016 · 22 posts · 14 votes8y
My wife and I sat down and planned out our ideal life. We have families spread across a couple of continents so time with each, two vacations/year, some time dining out, etc. She plans on a remote job and I plan on consulting/photography/environmental work in different countries on short contracts. We figured a base of 85K/year, a better base of 120k/year and a truly safe passive base of 150k/year. We figured 10 years of working and saving 75-85% of our income and invest in Index funds and REI. Target is $1.5 million in Index funds and 30 doors. Lots of reading on Money Moustache, on here at BP and some podcasts from Choose FI allowed us to come up with this number.
Originally posted by @Dawn Curry:
@Dan H. How long have you been investing? ... basically, how long has it taken you to get to this point where you have an opportunity to retire in 2020?
There is not a straight forward answer to this because I have been investing almost my entire working life (started with 401K), so I have been investing ~28 years. However, during the Great Recession my net worth was maybe 1/12th of what it is today (I already owned a rental and the home I was living in and my equity in both went from a significant amount to hardly any equity but I suspect neither property was upside down but close and of course stocks were way down (everything was way down)). Prior to the Great Recession my net worth probably was close to 1/5th of what it is today.
So while I have investing for many years (~28 years) most of my net worth has been accumulated in the last 7 years. RE has done well. Stocks have done well. Basically in the last ~10 years it would have been difficult to have invested in something with poor returns (a poor investment is one that did not produce above 15% ROI). Hopefully people realize this has not always been the case.
The greatest value of that early investing/saving is that it provided me the means to jump in somewhat aggressive during the recovery from the great recession. If I had not done the early investing/saving I would not have been in as good a position to benefit from the recovery. So while my net worth in 2010 was not much compared to my net worth today, it had a critical role in creating the current net worth. From 2012 through 2017 we acquired at least one small San Diego multiplex per year (San Diego RE is not cheap) excluding 2016 (we made offers in 2016 but did not close on any). Lending criteria was strict in the Great Recession. It helped to have assets/net worth and a great credit score. If I had started from $0 in 2012 it would have been difficult to achieve the same net worth.
As indicated the answer is not as simple as I started with $0 dollars in 2010 and expect to retire without concern for money in 2020.
Good luck
- Contractor · Loganville, WI · Member since 2015 · 65 posts · 44 votes8y
The wife and I just talked about this last night. We need to collect 1.5 million in rent over the next 30 years after expenses. Then we would need to sell the the units for 300k at today's market value. We would need to buy 3 more units in the next 5 years to pull off our timeline.
That would give us enough to live to 90 years old in luxury.
- 8yBjorn AhlbladPro MemberInvestor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
My wife and I are retired.........................and we have a son and daughter, both in college. If it were not for REI I'd be a greeter at the local Walmart. For those of you thinking about retirement-it is easier if you have kids earlier than later. We have a decent income from REI, and a little from some index funds, which by the way, after fees are not a big deal, so I am actively on the hunt for another building. Wish I would have planned parenthood as well as I planned finances! ;<)
I walked away from my job in 2017 and am pursuing investing full time. I currently have 3 rentals that bring in $1600 a month gross. I am working on a deal to add 3 more doors that will take me to $3900 gross a month. My cash flow will be approximately $1400. Nothing close to my last job but investing has also allowed me to return to college and spend more time with my family and church while still being able to pay my bills. My goal is to take 10% of my net as a salary and return the rest to investing. 5-year salary goal $3500 a month.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes8y
@Dawn Curry I think many people grossly underestimate the amount of money they need. Lots of factors play into this:
- Younger people forget that having a family costs money.
- Health care expense can be heavy. There are high deductible plans or some go without, assuming they will always be healthy which is a mistake. Dental, vision, medication are all in this bucket too.
- People miscalculate cash flow, by not including enough CAPEX which can run up to 10% of gross rents over time. People fail to include property management, but what how enjoyable is retirement if you are dealing with tenants.
- If you plan to travel during retirement, expenses will run higher than pre-retirement.
- People forget that if you retire at 30, you may have 80 years left. Will your cash producing assets hold up over that time period? And what if you need assisted living when you get older. That can cost thousands per month today. Of course you can go to a nursing home for free if you are broke, but trust me that is a bad plan.
- What if there is a major economic event? I figure if I plan for 2-3X what I really think I will need, that gives me some buffer for something major. Diversification helps in this area too. Another fear in this area is taxes. Investors are being treated very kindly under current tax law.
- People assume, "I will just go back to work if I run out of money". This makes the major assumption that there will be jobs waiting. In a major recession, nobody is hiring. The other factor is as people age to their 50's and 60's, they become less desirable to hire. Prime W2 income years are your 30's and 40's.
- What is the point of life if you can't make a difference? Money is the best way to make a difference. Funding charities, universities, medical research, etc. It takes good amounts of cash to do this. Look at the amazing difference people like Bill Gates have made with their money. You can't get there on 70% of your W2 or $40K per year.
I may be strange for saying this, but I am planning to have passive income that is over my current W2 income (which isn't low). I don't see the point of busting my butt building a rental empire if I am just going to "get by".
- Specialist · Dallas, TX · Member since 2010 · 511 posts · 252 votes8y
Answer to this question is different for different people, and sometimes different for same person in different stage of the life. As of now... I think ideal should be...
$2 Million, that you...
- Invest in RE at 7 Cap = 140K/Year
- Invest in high dividend stock/ETF (5% Dividend) = 100K/Year
- Deposit to CD at 5% (If we get 5% CD back in future :) ) = 100K/Year
At 100K/Year you can have decent life... again for some people it can be 50K and other it can be 500K...
- Investor · Culver City, CA · Member since 2017 · 76 posts · 40 votes8y
For a long time I thought I would quit my job when I had $4 million outside the value of my home. I've begun to reassess this. $4 million isn't what it once was, so I may need more. I am pretty comfortable with leaving the US and retiring somewhere much more affordable too. So I may need less.
I imagine once I am done working for the man, I'll still work for myself in some fashion. So I don't really know about retiring. I am assuming Social Security will be bankrupt at some point between when I retire and when I die. So if I get that, I will be grateful. If not, I am prepared.
- Investor · Washington, DC · Member since 2017 · 198 posts · 323 votes8y
I want to cash flow $5000 a month (after capex, repairs, vacancies) which is double my current monthly spend of around $2500 per month. I am single and I can easily live off $60k a year and when I reach my goal (I cash flow about $3100 a month after capex and repairs taken out currently) I will split my time between the US and South America. I used to live in Buenos Aires and I could easily airbnb an apartment in the nicest part of the city and order take out food every other night, take taxis everywhere and still live for under $2000 a month. I would spend the North American summer in the US and then after spending Christmas in the US with my family I would head to South America and spend the winter (South American summer) there. It was a good life and one that I hope to return to as soon as I reach my real estate investment goals.
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