The more I read and respond to readers’ questions, the more I’m realizing that all of this money stuff is pretty subjective. Especially when the questions revolve around “numbers you need” to do X, Y, or Z like during retirement.
WE’RE ALL SO DIFFERENT! And we all require different amounts depending on our own wants and desires and habits too – especially depending on the type of lifestyle we hope to have by then (will it be the same as now? BETTER? Simpler?)
Here’s a few questions (along with my answers) I pulled out from my last email convo with a reader of this site – not the same one who was freaking out about money last week :) This guy’s looking to semi-retire in 4 years once his eldest has graduated, and he’s thinking of starting a new business at that point too. You’ll see what I mean about things being very subjective, at least to me…
What is the target home pricing for someone in our income range ($62,000)?
I have no idea :( But luckily it should be an easy Google search! :) To me the “target” is always whatever I’m comfortable with and want/need, which of course will always be subjective. But that’s what I go on as I don’t really care for “averages” or what others are doing as much (though I’ll admit it’s interesting to read and blog about). To me, any house under $100k is a miracle as places around here can go for $300k-$3 Million! It’s pretty scary.
So is 8% of savings per year to live on a safe assumption?
Another one I don’t really know, though I have seen some pretty good retirement calculators out there that help with this (check out Bankrate.com). Again this is something that will vary on your personal expenses and how healthy you are/how long you think you’ll live, and what type of “retirement” living you think you’ll want to do by then.
Luckily it looks like you won’t be sitting still and that you’ll be getting into something (aka a side hustle) which will add income, but the only time you’ll REALLY know is when you’re there smack in the middle of it ;) So in the meantime you just have to guestimate and play around w/ the numbers like you’re doing. I doubt you can do much hardcore savings in just 4 years and get it where it needs to be, but combined with working longer or a new biz taking off you never really know. I’d def. run some calculators and play around more and go from there.
I have said over and over that we would need a minimum of 18 mo’s business cash reserve and 12-18 mo’s personal savings in order to do any venture, as my “security (cash flow) nerve” is very sensitive. LOL… Whats your opinion on the numbers here?
My opinion is completely the opposite actually ;) I always say I need $0 money and $0 savings in order to do a business venture – but that’s only because a) I do all business ventures online (so I need like $100 or less to get a domain name and hosting and stuff like that), and b) I do all my ventures on the side where money doesn’t matter yet.
Now if I were doing a brick and mortar place and/or quitting my job an going into business, then yeah – totally different story. And those numbers I don’t know, but if 18 and 12-18 sound security enough for your nerves, then let’s say that’s accurate :) Again it all comes down to your personality and what you’re going to be comfortable with.
I will say, however, that maybe a new industry for you to think about and learn about is the online world. I’m not sure what your current one is, but seems like you’re leaning towards a “real” business as people like to say vs an online one. And/or selling products/etc that cost money to build up an inventory and what not. You’d be amazed at how much wealth is being passed around online by people who live and breathe their biz online. It can be quite sickening (for ex. I know a handful of personal finance blogs like mine (but NOT mine, haha) that have sold in the MILLIONS. Because of biz savviness online).
So if you haven’t thought about it yet, I’d strongly consider it as a starting point. It would also make moving places in the future easier too since you can do it anywhere (though it does require a lot of sitting and behind behind a computer screen which turns some people off).
What do you see at the next election? Have you seen or heard anything that would give us, America, any pause or do you see the govt going full steam ahead etc.
I see and think/care about nothing :) Don’t mean to be flippant, but I genuinely don’t pay attention to it much ‘cuz at the end of the day I feel like it all starts with what I’M doing vs them. Whatever the future brings, whatever the changes good or bad, at the end of the day we have to adapt so I just do that first and worry about the rest when/if it happens.
I should clarify though and say I’m this way because I don’t care strongly one way or the other on hot topics to know I’m not going to make it my mission to enact any change in politics myself. Some people DO want to do that and I admire/encourage it, but I feel like a lot of people talk and bitch and moan and at the end of the day don’t do anything to change it.
So rather than think or worry, I just act now and do what’s best for my business and/or family/life and adapt when needed. And then keep a somewhat ear on general news in case something crazy’s about to happen sooner than later, if that makes sense? Hopefully that all came out right and is not offensive to you :) Just talking straight from the heart.
Advice on entrepreneurship?
Oh man, that’s a really broad question. Honestly I think the best thing you can do is figure out what you really enjoy doing/making/building (and what you’re GOOD at) and then brainstorm ways to make money from it. Then after that, TEST test test! Go out and pitch clients or sell these things and just gain as much real-life experience and knowledge as you can while it won’t make or break you.
Almost everyone I know who successfully runs a business started it on the side while working a 9-5, and then eventually made it their full-time profession once they *knew* it worked. The last thing you want to do is retire and THEN start a business from scratch and have it fail :( Better to make all the mistakes now and start learning to set yourself up for a huge win later in 4+ years when you go for it.
Anyone want to add to any of this? Am I off in saying this stuff is subjective? Do you follow/reach for certain guidelines based on what others are doing or other models out there?
Help shed some more light on this stuff for our dear reader/future retiree :)
[Photo by cfourcalvin]
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