My Number Is….

While it may not be $7.5 million (!!), my number actually depends.

That may sound like a big cop out but it isn’t.


The “smartest” dumb-luck move I made was buying my house 18 years ago this summer at the very bottom of the market in the last real estate downturn. I was able to kill my mortgage in less than three years, so my rock bottom annual expenses are about $15000.

Using the 4% Rule (multiply each dollar of retirement income required by 25) I would be able to walk away from everything with a $375K nest egg.

Of course, this is just a ball park figure to use as a guideline, a talking point.

But who wants to just pay the bills?

The bare bones $375K number is my take it or leave it number. Of course I would almost have that in investible assets if I hadn’t put down payments on two investment properties….

But what about government benefits….

I choose not to include them in the equation. It’s not that I think the Government of Canada will go broke (though that depends on how long Harper holds the reins of power), I just want to consider only those things within my purview and anything extra is gravy.

Bonus fries, if you will.

I may get blasted for that but no one’s number is going to be hard and fast. There are a lot of variables you simply cannot account for 100%.

How long will you live? How will inflation (or deflation) factor in? How will the markets affect your portfolio? Is political turmoil a factor?

This may make the whole exercise seem futile but the educated guess and the plan drawn up to achieve this are very useful tools to help you attain your goals. Check out this article to give you a sense of where you are and what it may take to get the retirement you want.

You have to decide what your priorities are since few of us can have everything. I don’t need a lavish $7.5 million banked to give me what I want out of “retirement.” $7.5 million works out to 300K per year or 20x my minimum annual expenditures!!!

That kind of money would be great but at what cost? I would prefer to have the choice to cut and run as early as possible rather than slave away for an additional x number of years to hit that mark- if I even could get there without winning the lottery, that is.

Of course, how much money you need also depends on how you define retirement. I don’t think I’ll ever completely stop working. My goal is to work on my own terms. If this is also your plan, you will require a smaller nest egg since you would not be relying on it for 100% of your income.

You can also change the game if you change your circumstances.

Would you consider living at least part of the year abroad where the cost of living was lower?

If I booted out my mother and brother and downsized, I could walk away now but I wouldn’t be able to sleep at night- so that is not an option- not yet at least.

And if I am lucky enough to have kids and or partner up- game changers both.

The beauty of making a plan early is having the flexibility to adjust for the variables called life.

Call me crazy but I also find a lot of comfort in knowing I can almost walk away- it makes the stresses at work a little less stressful.


~ by angryegg on April 4, 2011.

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