The biggest question for many of us who live in expensive real estate markets is how much would be tied up in your home value. Someone with a nice home in Silicon Valley and a weekend getaway place in the mountains could easily have $5M+ tied up in real estate.
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Staying healthy was the goal that I set a decade or so ago. Weight-wise, so far so good but my bad cholesterol level (LDL) has been persistently higher than optimal.
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Yes, I do think the Dream Dollar Amount answer depends a lot on local cost of living, home prices etc.
For retirement planning, the saving goal also needs a taxation factor consideration. For example, $100K in a traditional 401k is āworthā about $70k. $100k in the bank is full value.
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Threshold for F U $$ will be different for someone making $50k/year than it will be for someone making $500k/year. Would be more meaningful to me to think of it in terms of income generation capacity being some multiple of current annual income. And for the vast majority of people in the US (very different than the vast majority of people on this site) you reach F U $$ long, long before $5 million.
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Agree with getting/staying healthy. I consider it an investment in myself and a way to, maybe, avoid some medical costs down the road.
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I donāt know when you plan to retire, but you can save $7 million in the next 10, 15, 20 years?? Wow.
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Just canāt say what the number is, until the rate of inflation slows way down. Itās used to be 5 million and no real worries. You can live off interest very well. But with runaway inflation this past year, the number could be something entirely different.
I hate the idea of having huge taxes in retirement due to increasing govāt issues and also having property values that are rising rapidly with dwindling income. Might take 20 years to be an issue. But who wants to plan well for retirement then get hammered by inflation. This hasnāt been an issue since the 1970ās/early 80ās.
At this point, I wish we had more in real estate investments. Rentals will likely keep up with inflation.
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I never count the value of a home in the, āhow much is enough,ā/Dream Dollar Amount type questions.
But as @Colorado_mom points out, taxation is an issue as well, and itās not just 401k amounts either. Capital gains taxes as well. I would think most people donāt have their assets in just cash that isnāt earning anything at all, though. Idle cash is definitely not the way to hedge against inflation.
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Iād never count the home in the retirement at all either. But recently have been working closely with my Dad whoās getting close to 90. And his property taxes have risen sharply in the last few years. That coupled with some unexpectedly high increases in oil ( a large oil heated house), food and need for a new car has put a dent in his well defined budget. This is the first time in almost 30 years of his retirement that inflation and taxes have become an issue. And it looks like the skies the limit.
We own an expensive home with moderate taxes ( for the area). I can see that in 30-40 years if the value our home keeps rising quickly; It would take a real bite out of retirement. Donāt want/plan to ever move so thinking more about taxes, and inflation then ever before.
Inflation is just one more data point to add to the formula.
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As a rough cut I guess about 20x of my current pre-tax salary. I figure Iād draw it down by about 4% annually, or what amounts to about 80% of my current income.
e.g. if I make 100k, then my number is 2M. That yields 80k in annual retirement income to live on.
Personally weāve hit that number in terms of net worth (i.e. including our primary residence) but I like my job and the 20x figure is really more of a minimum so Iām still working. I might reasonably hit 30x or more by the time I decide to call it quits, which allows for more vagaries in the stock market, inflation, etc. DW quit a couple years ago.
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Wouldnāt it be that the threshold will be different for someone spending $50k/year versus spending $500k/year?
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Avoiding probate means (to me) titling everything so that very little, perhaps nothing is in the name of the deceased (before death). And anything in the name of deceased also in name of another. So joint bank accounts, joint properties. I have a will but very little is in name individually, so ānothingā much that is held up by probate.
Taxes still apply.
For my father, his only sizeable asset was his home. He is now living in assisted living off the proceeds of the sale of his home. So, I think you need to keep the value of your home in the picture.
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@youdon_tsay - your plan to talk to a lawyer sounds like a good one. Iād never rely on my own research to figure out something as important as estate planning. 
Just throwing out there that you may want to check w/a few estate lawyers - not all would charge $5k upfront. I have friends in the field and have dealt with one myself - often itās hourly.
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This is what we are doing with everything we can do it with. And our kids are beneficiaries for some other things. When both of us parents are gone, we are pretty sure nothing will be left for probate. Our estate lawyer helped with this set up.
As incomes rise, the tendency is spending rises as well. So to a certain extent, making/spending are the same. Some people who make more (even of they do not spend it) will be more likely to plan to spend more in retirement. Though for many people I agree its spending more than making that is relevant. But looking at either making or spending is more meaningful than looking at an absolute $$ amount in terms of determining F U $$.
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Taxes can take a big bite. Joint titling of property avoids probate but it also avoids the step up in basis benefit which could translate to a large capital gains tax when the property is sold.
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So donāt you lose the step up in basis when/if someone wants to sell the home? I thought that keeping it in the original name gave one some advantage as the date of death was the value. And if the home was sold later, the date of death was used?
Might be wrong here. But in our family, three homes (grandparents and parents) are extremely valuable v. purchase prices paid (10k, 15, and 11K in the 1960ās). Iād hate to lose that and have to sell a home when someone dies due to losing step up in basis. The taxes on a single home would be hundreds of thousands.
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Agree. I based my number on my spending. $200k per year (4% withdrawal) with no debt where I live is still way more than I spend now even including my mortgage, and I live very comfortably. Sure I could work until 60, 62, 65 and amass a small fortune but to me, time and good health to enjoy it are for more valuable. So 50 it is.
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Some peopleās spending rises very slowly compared to their income, or stops rising after a certain point. However, if these people reach high enough income for that to happen, they are likely to reach retirement levels of wealth relatively early (catchy acronym FIRE, or the older āmillionaire next doorā).
Some other peopleās spending will always rise to consume and outpace any amount of income or wealth, so that they are likely to have a personal balance sheet around zero or negative (more debt than assets). For such people, retirement levels of wealth are an illusion, since they can and will spend it to nothing quickly, even if they come across a huge windfall of money.
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