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moana posted:How exactly did you decide on a target number, No Wave, if you don't mind me asking? I have heard that the rule of thumb is to take the income you want to have annually, multiply that by 25, and that's how much you will need to retire and live on indefinitely. So if I want to retire with an annual income of around $60,000, I would need to have $1,500,000 in investments. Has anyone else heard that? Or any other rule/number?
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Jul 19, 2013 19:53
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moana posted:So once I own my house outright and need $40k for expenses, I would need to save... I think that number came from the idea that your investments will generate 4% interest, which seems pretty sustainable (at least until the next 2008 happens, I suppose). Then again, with inflation, the reasonable annual income of today might not be enough in 20+ years.
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Jul 19, 2013 20:07
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Cicero posted:I think most people going for FI plan to own their homes outright? Like, it you have a lot of money saved up, that's one major expense you can knock out. Sure, you'll still have to cover property taxes and maintenance/repairs, but that is obviously still going to be far less than mortgage or rent, especially if you pick up some handiness to work on your home yourself instead of hiring people. I can only speak for myself (obviously), but my husband and I are throwing almost all of our extra money at paying off the house, and putting a little here & there into investments. The plan is to pay the house off by 1/1/2016, then hammer at the investments.
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Jul 23, 2013 18:48
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