# Where in this table would you consider quitting your dayjob?



## techcrium (Mar 8, 2013)

Let's say this is a table of your age and networth.

At what age would you consider quitting your day job?

Say your day job earns $60,000 per year and will reach up to $100,000 per year.

35 $976,162.63 
36 $1,116,302.15 
37 $1,273,258.40 
38 $1,449,049.41 
39 $1,645,935.34 
40 $1,866,447.58 
41 $2,113,421.29 
42 $2,390,031.85 
43 $2,699,835.67 
44 $3,046,815.95 
45 $3,435,433.87 
46 $3,870,685.93 
47 $4,358,168.24 
48 $4,904,148.43 
49 $5,515,646.24 
50 $6,200,523.79 
51 $6,967,586.65 
52 $7,826,697.05 
53 $8,788,900.69 
54 $9,866,568.77 
55 $11,073,557.03 
56 $12,425,383.87 
57 $13,939,429.93 
58 $15,635,161.53 
59 $17,534,380.91 
60 $19,661,506.62 
61 $22,043,887.41 
62 $24,712,153.90 
63 $27,700,612.37 
64 $31,047,685.85 
65 $34,796,408.16


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## 0xCC (Jan 5, 2012)

I don't think net worth is really the right thing to be looking at. For example, it is possible to have the majority of your net worth tied up in real estate that also carries higher expenses (property taxes and maintenance) so that could really skew where in the table it could make sense to quit the day job.

For me personally there are only two things that I track with respect to how soon I can quit the day job: after-tax income from investments and how much we spend on a month to month/year to year basis.


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## andrewf (Mar 1, 2010)

Someone dreaming with excel?

I would recommend not counting chickens. A 12% compound growth rate is pretty optimistic. I see that you are also assuming $23k per year savings. That's pretty good on the income range you provided. One way to think about it is to take your income, deduct your current savings rate (so, $37,000 - $77,000/yr). If you need that income to live on in perpetuity, divide in by some reasonably conservative growth % (allowing for inflation). That is probably somehwere in the 3% range. That gives $1,233,000 - $2,566,000 in capital required to live off the returns in perpetuity. You can try different scenarios of return rates to get the number you are looking for. Of course, if 12% is realistic, you could drop that number much lower.


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## techcrium (Mar 8, 2013)

0xCC said:


> For me personally there are only two things that I track with respect to how soon I can quit the day job: after-tax income from investments and how much we spend on a month to month/year to year basis.


What if your investments don't pay dividends/income at all? Using your criterion, you would basically never retire even if you are 65 with $34 million.


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## techcrium (Mar 8, 2013)

andrewf said:


> Someone dreaming with excel?
> 
> I would recommend not counting chickens. A 12% compound growth rate is pretty optimistic. I see that you are also assuming $23k per year savings. That's pretty good on the income range you provided. One way to think about it is to take your income, deduct your current savings rate (so, $37,000 - $77,000/yr). If you need that income to live on in perpetuity, divide in by some reasonably conservative growth % (allowing for inflation). That is probably somehwere in the 3% range. That gives $1,233,000 - $2,566,000 in capital required to live off the returns in perpetuity. You can try different scenarios of return rates to get the number you are looking for. Of course, if 12% is realistic, you could drop that number much lower.



I didn't want to include growth rate and savings rate because I don't want to get into a debate of whether if its aggressive or passive, as it is not the point of the thread.

But ultimately, my question is: You have a table of networths and age. 

*At which net worth, would you decide that providing weekly status reports to your boss, waking up at 7:00 AM everyday, and having 2 hour sleepworthy meetings not worth it?*


Is it $1million 36 or $5million at 49 or somewhere outside or in between?


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## Davis (Nov 11, 2014)

It is completely meaningless without reference to the Micawber Principle: "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery." - (_David Copperfield_, Chapter 12)

Unless you you know how much money you want to have to spend every year, you can't answer the question. For the sake of argument, let's say the answer is 42 (ref: Douglas Adams). How much income will that $2.4 million produce? How does that align with your desired spending?

If you're going to be happy living a simple, frugal life - and many people are - then financial freedom can come much earlier -- easily in your 30s. If you want to live the high life, you'd better keep working into your 50s.

For spouse and me, we will finish work at 50 with something less than the 42 number, but with one DB pension supplementing us after 65, and we will have disposable income about one-third more than we spend now so we can go see the world.


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## My Own Advisor (Sep 24, 2012)

I've started to do the math. I don't really care about NW either. It's cash flow that matters. Debt-free, we need about $50,000-$60,000 per year after tax to walk-away in today's dollars. We've got some distance to go.

There is no way I would count on 12% returns going-forward. Maybe 4% real return.


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## Moneytoo (Mar 26, 2014)

techcrium said:


> But ultimately, my question is: You have a table of networths and age.
> 
> *At which net worth, would you decide that providing weekly status reports to your boss, waking up at 7:00 AM everyday, and having 2 hour sleepworthy meetings not worth it?*


I had a contract once when I had to wake up at 7am to make it to early meeting with a very nice boss taking 2 buses to get to and from office - I lasted two months and then found a normal job lol

But NW-wise looking at the numbers in your table - I think I'd quit around 40


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## indexxx (Oct 31, 2011)

techcrium said:


> I didn't want to include growth rate and savings rate because I don't want to get into a debate of whether if its aggressive or passive, as it is not the point of the thread.
> 
> But ultimately, my question is: You have a table of networths and age.
> 
> ...


I'd do it at age 40 based on your table. The reason is that this amount of principle at say a 2.5% income from a conservative vehicle will get you $46k a year- I could live very well on that if I wasn't commuting etc. I'd then have the time to pursue other things like photography which could add a bit of income on the side. Of course, I am single with no dependants (aside from two cats) so my financial needs are minimal.


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## Charlie (May 20, 2011)

techcrium said:


> *At which net worth, would you decide that providing weekly status reports to your boss, waking up at 7:00 AM everyday, and having 2 hour sleepworthy meetings not worth it?*


If I felt that bitter about my job, I'd be looking for another. But assuming this is the only option, given your table I'd be gone between 40-45. Probably $2m investable or so based your estimate for spending.


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## Ag Driver (Dec 13, 2012)

Deleted


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## tygrus (Mar 13, 2012)

This is really a depends on question.

Some people could take a million bucks and create another cashflow business out of it probably making close to what they were salaried. Others couldnt and would need to invest it for some returns and others would just horde it.

If you are talking about investing it, then I think you need about 2M if you are debt free. That should spin close to $100k a year off in income. If you are conservative and just plan on spending the principle, then you need probably closer to 3-4M.

Remember though, lifespans are increasing and if you think you might kick at 80 and happen to live to 100 that could be trouble it you are just burning through the cash.


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## 0xCC (Jan 5, 2012)

techcrium said:


> What if your investments don't pay dividends/income at all? Using your criterion, you would basically never retire even if you are 65 with $34 million.


I probably should have said "after-tax returns" instead of "after-tax income". As others have noted the issue is cash flow, not net worth. Unless you are equating investment portfolio size with net worth in your table I'm not sure that the absolute number in the table has that much meaning. Whether cash flows come from capital gains, interest, RRSP/TFSA withdrawals or dividend income really only makes a difference in how much tax you have to pay on it.

People seem to be looking at the 40-45 age range in your table starting at a net worth of $1.86M. What if the person lives in Vancouver or Toronto and $0.8M-$1.0M of that is the primary residence? What if they also own a vacation property that takes up another $200k-$300k of that $1.86M net worth? Of course, if your table is actually investable assets and not net worth then that is a different story.


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## techcrium (Mar 8, 2013)

0xCC said:


> I probably should have said "after-tax returns" instead of "after-tax income". As others have noted the issue is cash flow, not net worth. Unless you are equating investment portfolio size with net worth in your table I'm not sure that the absolute number in the table has that much meaning. Whether cash flows come from capital gains, interest, RRSP/TFSA withdrawals or dividend income really only makes a difference in how much tax you have to pay on it.
> 
> People seem to be looking at the 40-45 age range in your table starting at a net worth of $1.86M. What if the person lives in Vancouver or Toronto and $0.8M-$1.0M of that is the primary residence? What if they also own a vacation property that takes up another $200k-$300k of that $1.86M net worth? Of course, if your table is actually investable assets and not net worth then that is a different story.



ok...so 1.8 million is not enough to quit your day-job for you.

So let's move a few more years then...how about mid 40s with $3million?

Is that enough or still not enough?


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## 0xCC (Jan 5, 2012)

When I was in my late 20's-early 30's I came up with a "FU" number that I thought would fairly easily cover a comfortable lifestyle for the rest of my life. I was thinking of it from the perspective of if the money just fell into my lap (i.e. winning the lottery) vs. actually building an investment portfolio. That number was $10M.

Since then (I'm in my early 40's now) I have actually built up an investment portfolio that is almost generating as much annual income as my first full-time job and I have realized though that process that I don't need nearly that much. My net worth is not as high as the $1.8M in your table at 40 and I think I will probably be in a position to have the option of comfortably walking away from my day job by the time I am 45. I don't expect that my net worth will be as high at $1.8M at that time but I don't live in Vancouver or Toronto, my primary residence is less than 25% of my net worth and my annual spending is right around (or maybe 105-15% higher than) the salary at my first full-time job.

So for me personally, assuming that any non-investment real estate was less than 25% of my net worth and assuming that I could get the same yield I am getting on my current investment portfolio I would say that $1.8M would probably be enough for me. If non-investment real estate was 50% or more of my net worth then the $1.8M would not be enough (also assuming that annual real estate costs increase linearly with value).


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## Nerd Investor (Nov 3, 2015)

Also depends how much of that net worth is in RRSPs vs Non-reg. 
I too generally think in terms of cashflow, but I've figured to be comfortable taking the early retirement leap I would need to be debt free, with about $2.5M in liquid assets.


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## Moneytoo (Mar 26, 2014)

CoitusMaximus said:


> some of these suggestions are laughable. quitting with 1.8 million in mid to late 30's? Maybe if you are single and move to a tropical country with very low cost of living but in canada if you have a family and quit based on your 1.8 million net worth would put a big question mark on your long term future.


Riiiigghhht... and what if you're married and your spouse is making more than enough to cover the living expenses and some luxuries, so you can leave 1.8 million to compound untouched until you actually need the income?


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## jetsfan (Mar 20, 2015)

..


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## Moneytoo (Mar 26, 2014)

jetsfan said:


> I absolutely would not want to live with the daily resentment of her going to work, and me staying home enjoying retired live. I'd rather be in the office


I think my husband is more ready than me for an early retirement - at the very least he could've bought a boat and spent the summer sailing with his buddies (giving me a right to ***** about it sometimes :biggrin


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## Eclectic12 (Oct 20, 2010)

Nerd Investor said:


> Also depends how much of that net worth is in RRSPs vs Non-reg.


What one wants for a lifestyle is going to matter .... but what one has in a TFSA I expect would shift the situation as well.

Say this $1.8M person is one of those who took advantage of the 2009 TFSA rules so that $1M is in the TFSA. Unless one is in a high cost area and/or has a lavish lifestyle ... I'd expect a tax free income of $50K would cover a lot of people's needs. That's before considering whatever the remaining $800K is generating across an RRSP and taxable account.

Cheers


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