How Much Is "Enough"?

5 Replies

So life has been good since the mortgage crisis doldrums.  Projecting growth over the coming years it is clear that we'll do well if things go as expected.  At the ripe old age of 36 I am beginning to think about "retirement" and what I would like for an average day to look like going forward.  I have probably worked 80+ hour weeks for the last 3-4 years and the benefit of all of this hard work is starting to pay off.  It seems silly to keep working this hard going forward given that we probably have "enough" now to start living the life of our choosing without all of the drama and hassle.  

Given that real estate investing can be very lucrative it will be hard to stop investing.  I am thinking of dialing things back some or diversifying where my investments are parked.  Doing something new and exciting may be worth investigating too.   

At what point do you feel like you have enough FU money to dial things back and stop working so hard?  25X annual expenses seems like a common litmus test, but for real estate investors it may need to be lower given that the investments are quasi active.  

Any thoughts?  

I enjoy what I do so I will probably always have a deal or something small going.

I'd like to push to 100 units but when I hit 50 I'm going to evaluate. I might just decide I'm done with this RE thing at that point and just manage what I have, and go work on boats instead, IDK.

I do know I don't want to be like a couple of guys I know whose goal it is to die at their desk, they just love a deal. I know one guy in his 70's who is still at it, at that point its just for the rush. He has so many millions one or two more isn't going to do much for him. What another RR? Another trip? How much money can you spend.

I think when you hit the enough level you kind of realize it one day and your just done.

@Bryan Hancock

I like the 25x annual expenses litmus test. I think it's a pretty good benchmark if you are going for a standard cost of living and aiming for wealth preservation and reasonable value in your investments.

Some people take that opportunity to go more passive. Get managers working for you, or even get into private lending. Travel the world, maybe write a novel.

For me, the lack of intense activity would not be my cup of tea. I want to use that opportunity to pursue bigger problems, whether they be in urban revitalization, tech, or international development.

For me, financial freedom is a chance to be free from the rate race, but not a chance to be free from investment. Ideally, I want to move into impact investing. Because this is wrought with peril (I know, I have seen many of these not work out), I am aiming for higher than 25x annual expenses. That way, I am not 'impacting the world' with my family's financial future. Instead, I want to use the icing on the cake.

I think that drawing a line in the sand is a big part of living intentionally. There are some great thoughts from Aaron Walker in this podcast from Radical Personal Finance. Check it out, makes a great case for living intentionally once you have mastered the business.

Thanks for the interesting post. Just worked out my number. I'm not at 25X just yet in investments/savings. but it was encouraging to see that I was further along than I thought. 

In theory, I'm thinking about scaling back/retiring in my 40s. I like my job but I don't love it. For now, I'm working on my list of things I'll do when I do quit my job.

I agree with setting a goal.  One one hand, it gives me something to strive towards.  But also on the other hand, the chase of money can be addicting, and the same goal serves as a stopping point.  This is not to say that I will stop investing when I hit my goal, but rather it is the point that I say to myself, "it is enough".  That is my financial freedom point and anything I do after that is because I enjoy it.  

Remember, no one on their death bed says they wished they made more money in their lifetime.  

A multiple of expenses only make sense if you are happy at your expense level, and to encompass potential increase in future expenses.  Let's say you are spending only $50K/yr for a family of 4.  It may not be that way for life.  If in the future, you need to support your aging parents, $50k/yr for a family of 6 is likely not enough.  Hence you need a large buffer. I think 25x is the bare minimum.

As for myself, I arbitrarily set $5MM in net assets and $200K/yr in passive income as the goal.

It is interesting to me that the goal setting and discussion of what is enough doesn't really come up on the forums much.   This is especially interesting on this forum because financial independence is often the stated goal of many that post regularly.  

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