Ahhh, the NUMBER! When I was 40 (22 years ago) I told my wife "the number" was $4M (Canadian dollars) - I felt confident I could generate a 10% return from that and we'd be fine with $400K pre-tax. A decade later, with much lower interest rates, my number changed to $6M. Every time I got a bonus or cashed in some options or units from my employer, it went direct to savings - we did not expand our lifestyle to consume what was coming in. I felt that if I could in retirement replace the salary income coming into the family coffers with investment income of a similar amount, we'd be fine. I know inflation will erode the value of that income. But my plan did not include ever touching a penny of capital. My investment style - which wasn't working THAT well - changed when I was in my 50s. No more swinging for the fences - I really focussed on good dividend-paying stocks - lots of utilities, telcos, banks/insurers, pipelines etc. It went well; over the past 5 years my total returns are noticeably above that of the Toronto stock exchange, the relevant benchmark for a Canadian. I retired at 60. I do think setting a target amount of capital needed in order to retire is very useful goal - having that as a focus makes one think harder about how one spends, and invests, pre-retirement.
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Ahhh, the NUMBER! When I was 40 (22 years ago) I told my wife "the number" was $4M (Canadian dollars) - I felt confident I could generate a 10% return from that and we'd be fine with $400K pre-tax. A decade later, with much lower interest rates, my number changed to $6M. Every time I got a bonus or cashed in some options or units from my employer, it went direct to savings - we did not expand our lifestyle to consume what was coming in. I felt that if I could in retirement replace the salary income coming into the family coffers with investment income of a similar amount, we'd be fine. I know inflation will erode the value of that income. But my plan did not include ever touching a penny of capital. My investment style - which wasn't working THAT well - changed when I was in my 50s. No more swinging for the fences - I really focussed on good dividend-paying stocks - lots of utilities, telcos, banks/insurers, pipelines etc. It went well; over the past 5 years my total returns are noticeably above that of the Toronto stock exchange, the relevant benchmark for a Canadian. I retired at 60. I do think setting a target amount of capital needed in order to retire is very useful goal - having that as a focus makes one think harder about how one spends, and invests, pre-retirement.
Post: What Number?
Link to comment from February 19, 2022