Comments on: How Much is Enough Money? http://www.investwithpassion.com/how-much-is-enough-money/ Online Learning Community Thu, 29 Jul 2010 13:49:31 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Todd Tresidder http://www.investwithpassion.com/how-much-is-enough-money/comment-page-1/#comment-639 Todd Tresidder Sat, 30 May 2009 06:00:14 +0000 http://www.investwithpassion.com/?p=857#comment-639 Crystal - As a fun side not I was quoted in the Keller "Millionaire Real Estate Investor" book you referred to - see pgs. 124, 145, 146, 237, and 259. One quote I often tell my clients which isn't in the book but relates to your post is "If you want to know how long it will take a person to achieve any goal just look at how much of their time and resources (money) they dedicate to achieving it." Your dedication of resources is a measure of your commitment which in turn determines your success. With regard to your subject line "How Much Is Enough To Retire" I would like to add that online retirement calculators can be very misleading. While the subject is too complex for a comment but is explained fully in <a href="http://financialmentor.com/educational-products/ebooks/how-much-is-enough-to-retire" rel="nofollow">Do I Have Enough Money To Retire</a>, the simple explanation that anyone can do and gets you in the ballpark is to use the "Rule of 25". Multiply your first year expected spending by 25 which roughly allows you to spend 4% from savings each year. The reason this simple formula works is nearly all retirement calculators, from sophisticated Monte Carlo to simple formulas, derive roughly the same conclusion - you can spend between 3-5% of savings in retirement. Of course, the amount of savings and spending must be adjusted for inflation since it will be in the future and the purchasing power of your money will decrease. Anyway, that is a rough and dirty approximation to address the question within the confines of a comment. Hope it helps. Crystal – As a fun side not I was quoted in the Keller “Millionaire Real Estate Investor” book you referred to – see pgs. 124, 145, 146, 237, and 259. One quote I often tell my clients which isn’t in the book but relates to your post is “If you want to know how long it will take a person to achieve any goal just look at how much of their time and resources (money) they dedicate to achieving it.” Your dedication of resources is a measure of your commitment which in turn determines your success.

With regard to your subject line “How Much Is Enough To Retire” I would like to add that online retirement calculators can be very misleading. While the subject is too complex for a comment but is explained fully in Do I Have Enough Money To Retire, the simple explanation that anyone can do and gets you in the ballpark is to use the “Rule of 25″. Multiply your first year expected spending by 25 which roughly allows you to spend 4% from savings each year.

The reason this simple formula works is nearly all retirement calculators, from sophisticated Monte Carlo to simple formulas, derive roughly the same conclusion – you can spend between 3-5% of savings in retirement. Of course, the amount of savings and spending must be adjusted for inflation since it will be in the future and the purchasing power of your money will decrease.

Anyway, that is a rough and dirty approximation to address the question within the confines of a comment. Hope it helps.

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