
Ask HN: How much money would you need to feel comfortable never working again? - whitepoplar
What&#x27;s your <i>number</i>, beyond which you can do anything you want without worrying about money or working for someone else? Does this change for you when you factor in having a family?
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sloaken
There are many variables in this calculation. All of which are based upon your
assumptions.

Questions:

1) Do you want to leave money behind, or exit as close to zero as possible. If
you are aiming for zero, then the amount is significantly less. But has the
risk of being off by a few years.

2) How much do you need each year?

3) What do you think inflation will do? Most calculations assume inflation is
a fixed amount. Everyone knows it is wrong but you have to use something.

4) How much will your investments pull in each year? Like #2 you have to
choose a number. The higher you choose the more likely you are going for a
risky investment and will lose everything.

5) Do you expect to need long term care or some other retirement home
facilities? My dad is looking at this, and the retirement home is like 50%
more than his normal living expenses. Assisted living is like triple his
normal living expenses. But a lot depends upon size of the retirement home.

6) What is your tax rate? Those investments will be taxed, as will, most
likely, up to half of your Social Security. Your country might be different.

Simple method: answer 2 / (answer 4 – answer 3)

example: assume 75000 a year (before taxes), investments 7%, inflation 3%

75,000 / (0.07 – 0.03) = 75,000 / 0.04 = 1,875,000

This will leave 1,875,000 for your children.

Oh you expect to draw Social Security and a pension?

How much? Assume 2K a month SS, and 500 a month on your pension. That’s 2500 *
12 = 30000

Then it is now:

(75,000 – 30,000) / (0.07 – 0.03) = 40,000 / 0.04 = 1,000,000

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gallerdude
Well, right now I’m in college, so I don’t have a great estimate of my yearly
spending. But according to the 4% rule, you need a million dollars for every
$40,000 you want per year.

I don’t think I’m super materialistic, the only possessions I really find
“enjoyable” are probably my tech - best smartphone, tablet, etc. And
fortunately these are orders of magnitude cheaper than being a car-guy. The
only big expense I imagine from being an adult would be travel, I really like
diving into totally different world views.

So my tentative number is about $1.5 million, maybe even $2 million, for
somewhere between $60K-$80K. This is obviously crazy a lot of money. But if
you compare it to how much some businesses sell for, it seems achievable.

~~~
hluska
Just so you know, if you can invest about $1,100 a month for 35 years and get
a 4% return after tax, you'll have a million dollars. And the more you invest
when you're young, the better that math gets...

Seriously bud, at your age, $1.5 - $2m is attainable even if you have a job!!

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pascalxus
It depends on what age. If I was 35, I'd say around 6M. If I was 65, I'd be
comfortable with about 3M.

If I left CA, these numbers would change quite drastically to 2 M at 35 and 1
M at 65.

these numbers would be total net worth. with a family of about 3.

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warrenm
Here's how I answered this on Quora 2 years ago:

>In short, you want ~25x your annual expenses to be able to retire (not annual
income - annual expenses). This allows you to draw ~4% every year and more-or-
less never run out of funds (presuming a conservative, stable investment.

________________

[https://www.quora.com/How-much-money-do-you-think-you-
need-t...](https://www.quora.com/How-much-money-do-you-think-you-need-to-
retire-and-why/answer/Warren-Myers-2)

~~~
cimmanom
Isn't that advice based on retiring at 55-65, with the expectation of 20-25
years of life ahead of you - such that even with zero growth you could expect
never to burn down your retirement fund entirely?

If you expect to live longer than that, 4% seems aggressive - it's far more
than you'll make annually in interest in low-risk investments, and arguably
more than you can expect from the stock market in recent conditions,
especially after accounting for inflation.

~~~
laurentl
From what I understand of the parent post, the goal is to draw 4% a year in
interests and never touch the principal. Agree that 4% is a bit aggressive
(depends if you’re talking real or nominal, i.e. do you allow for inflation as
well) but :

* your investment horizon is > 10 years, so you can afford riskier investments

* at that level of money, you’re eligible for private banking / personal wealth management and thus to better deals and performance than you would make on your own (I’m thinking Berkshire Hathaway for instance)

* presumably you don’t keep the principal intact until you die (except if you want to pass it on to your kids) so really all you have to do is earn enough interest to last ~ 50/60 years. That means doubling your original investment in 50 years, so less than 2% interest. Seems reasonable even using “safe” investments (and with a 50 year horizon, pretty much any investment is safe).

I’m curious what average yearly returns wealth managers can sustain, and if
it’s significantly better than 3-4%

~~~
warrenm
If you check the Quora link I shared ([https://www.quora.com/How-much-money-
do-you-think-you-need-t...](https://www.quora.com/How-much-money-do-you-think-
you-need-to-retire-and-why/answer/Warren-Myers-2)), I further link to a Google
sheet
([https://docs.google.com/spreadsheets/d/1-JRc0MUy5S8jE49XGCjR...](https://docs.google.com/spreadsheets/d/1-JRc0MUy5S8jE49XGCjRf95Isj-
frM7kbTLikqD0Wz8/edit?usp=sharing)) where you can play with the numbers
yourself :)

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muzani
It's an oddly phrased question.

From a religious perspective, I think our purpose should be contributing
something to the world as long as we live. Work is one of the best forms of
contribution, which is why people pay for it. If I'm just sitting there living
off a hoard, I might as well be dead. I would not be happy to not work.

I would be happy to work "half time" though, about 20 hours/week. I'm aiming
for $25k this year or next to achieve that.

But if I didn't want to work at all, it would be at least $2M. It would make
me very anxious though, with inflation and all.

~~~
somethingsimple
> From a religious perspective, I think our purpose should be contributing
> something to the world as long as we live.

I agree in principle, but what motivates me to be financially independent is
not having to deal with all the bullshit that comes along with work. Office
politics, drama, having your priorities set by someone else, etc. I also find
having to care about promotions and such extremely stressful.

During periods of high stress, I find myself dreaming of FI just to stay home
reading books and going to the gym. But more realistically, I’d likely
continue to work my current job, with some changes.

If I were to become financially independent overnight, I’d schedule a 1:1 with
my manager and explain that either I’m now working 100% on my terms, or I
quit. That would allow me to just contribute to the product we’re developing,
without having to deal with the bullshit. I’d then be perfectly fine staying
at my current position for the rest of my career (i.e. no promos).

~~~
muzani
That is what I do now though, with about $25k in the bank. I suppose too many
bosses assume that I'm not willing to quit, if there's too much bullshit. But
in this industry, we usually have a lot of other options.

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krageon
I think I calculated it to be 4.4 million, but that is assuming I do not move
to a cheaper part of the world. I could probably get by with 2/3 or even half
that if I had lower costs of living. I never factored that (or made a list of
places to live in such a case) because calculating a projected amount of
medical costs quickly becomes very complicated in that scenario. I prefer
living in a part of the world that has a mostly fixed lifelong medical cost
(even if it is on average a little higher for my projected total costs), just
for the security this will afford me.

I'd have to invest this 4.4 million at about 4% interest (this is as you can
see very conservative and in general seems to be regarded as a very safe
interest level) to stay at that level of wealth more or less for the rest of
my life. I could then pass it on to my children, which was one of my
requirements. If you do not have that, the number can probably be a lot lower.
It's possible that investing part of it into a house (with stuff like solar
panels and a heat exchanger) might make for a better return month to month
(with lower risk, very important). I've not yet made serious calculations to
that effect, but the napkin math suggests to me that this is the case.
Obviously this would not be enough to cover everything, but it might make the
final number lower also. This is complicated further by potential maintenance
costs that you need to factor in.

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fractalwrench
Around £500k to live a frugal existence, and £2m to live it large, assuming
the majority of the money was invested in the stock market. It probably
wouldn't be very fun never working again though, as you'd miss out on social
interactions with colleagues and the rush of trying to achieve some goal.

I'm pretty much starting out in my career though, so the true number may end
up being much higher, and my enthusiasm may wane after doing this for a
decade.

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gpresot
Estimate your annual income for the rest of your career (with realistic
assumptions on promotions, raises to compensate inflation and a bit more,
change of jobs...). Add the pension contribution of your employer (if any);
discount back with appropriate nominal investment rate (if you included
inflation raises in the first place, otherwise you need to net that). This is
the value of your career. Now the difficult part: how much annual income are
you willing to sacrifice to get free time and being able to do all the things
you want to do? You can do it on an annual basis or % basis of the total. You
should also project forward your estimated expenses, to double check that you
don't value your free time so much that you would not have enough money to pay
the rent: if you end up in this situation, move to a cheaper country and redo
the calcs. And maybe add a safety factor, for some peace of mind: as somebody
else posted, shares or bonds may not do well every year.

EDIT: this approach assumes you maintain your current (and foreseeable)
quality of life in terms of disposable income.

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cimmanom
$3M to never work again. $6M to never work again AND never worry about money.

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mud_dauber
I use a well-regarding money mgmt firm.

We run my "number" through a bunch of simulations. It includes two pensions,
social security and tax-deferred savings. The total number today, if you
runrate the pension & SS assumptions, is $3.5M and gives me a 95% chance of
success going forward.

The only reason I haven't already quit is the chance of pocketing another
chunk of change from my current startup. Then I'm gone.

~~~
whitepoplar
I'm curious, what value do you think a money mgmt firm offers over low-cost
brokerages/fund providers like Vanguard?

~~~
mud_dauber
The answer is... it depends.

Initially they helped us gather the info from >30 years of various accounts,
then forcing us to make some assumptions - retirement dates, estimated
budgets, and so on. It sounds rudimentary but was still very useful.

Longer term: prompt reinvestment of cash; advice on medical insurance planning
(we were transitioning from Cobra coverage), whether to pay off selected debts
early, and so on.

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1ba9115454
$1 million invested in property giving a rental income of around $4000 pcm.

Alternatively, a boostrapped SaaS with $4000 MRR (Monthly recurring revenue.)

The latter is easier to achieve.

~~~
jklein11
I would argue that the latter is far more difficult to achieve. The trickiest
part about the former is coming up with the $1 million to invest.

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87
To genuinely never-ever do any kind of work I'd want at least $20M. As a
European I'd be pretty worried about seizure, future taxation and the likes.

If we're talking not working for others, I guess that's more of a mindset
thing. I never have and would rather not. Have enough to last ~10 years and
wife is okay supporting me so I'm not particularly worried.

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codegeek
My number is 10,000 USD per month AFTER taxes. Don't ask me but this is what I
need to run a family of 4 and just have a little bit extra.

So with absolutely safe investment of a 1% checking account, I would say 12
Million USD in Cash ? I know that there is inflation factor but in 2018, thats
the number.

~~~
sloaken
Depending on your assests I would consider a short term bond (like 3 to 6
month). At least you should do better than your checking account. Long term
bonds runs too many risks IMHO.

~~~
whitepoplar
6-month T-bills are currently yielding 2.18%. They're pretty much the most
secure investment you can possibly make. Vanguard, Schwab, and Fidelity all
charge no commissions on treasuries, whether traded on the secondary market or
new issues. Fidelity has the added bonus of having an "auto-roll" feature
which will automatically invest maturing bonds into new ones of the same type,
making for a completely hands-off investment.

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billconan
I guess 10 million

~~~
dmlittle
If you invest it all and withdraw about 4% per year (as warrenm mentioned)
this would give you an income of $400,000 per year.

~~~
AnimalMuppet
That was my number, too. The thing is, at that number I don't have to worry
about the year the market returns -10%. I don't have to worry about the year
that inflation is running higher than the interest rate on T Bills. I don't
have to worry about that sudden medical expense. I don't have to worry about
money at all, short of the total collapse of the US economy. (And with that
much money, I can even buy some gold bars in Australia for insurance...)

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jagipson
4 million dollars (USD). Then I would invest all of it in municipal bonds, and
live a modest life from the interest.

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estilos
Somewhere between €600000 and €1000000, with the higher number being if I
wanted to have children. But my personal expenses are pretty low.

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nunez
I'm shooting for $5M by 45, which should allow for $200k/year spend less
taxes. I'll probably still work, though.

Reach goal is $20M.

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a_bored_husky
Honestly, about 60K to keep working for 3 years and then never again (for
money, anyway).

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jryan49
1M dollars in tax advantaged income fund

3M in 401ks

Have wife, we both work.

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fturco
Probably around 100,000 €.

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segmondy
$300 million USD

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vinchuco
Housing+utilities+food

