Is 3 million dollars too much to shoot for?

Is $3 million Too Much to Shoot for?Last week, I wrote about the downside of living a frugal lifestyle – you’re out of step with American consumers and that’s not good if you want to be an entrepreneur. One reader brought up a very interesting point about living frugally. Here is Josh’s comment.

“There isn’t anything wrong with being frugal as long as you’re not continually denying something you desire just to save a buck. However, I have to ask all the frugal people out there, what’s the point of amassing such a large sum at middle to old age then? It’s hard to change one’s spending mindset, so unless you want to leave a huge sum to someone or just have an inexplicable need for a sense of financial security, what’s the point? Saving lots of money for old age while leading mostly a frugal life during young and middle age doesn’t make much sense to me. What would you do with several million dollars after 60 or 70? Go on a spending spree then? After mid to late 30s, time is way more precious than accumulating more money.”


Well… I am continually denying my desire. We try to live a frugal lifestyle, but it doesn’t mean I’m immune to desire. I want all kind of stuff. I can let my imagination run wild too.

  • I want new shoes
  • A big house
  • A luxury convertible
  • Musical instruments
  • Photography equipments
  • A new laptop
  • New carpet, electrical system, kitchen, and deck for our rental duplex.
  • An RTW trip
  • Etc….

I’m sure if you give me $100,000 and tell me I have to spend it in a week, it’d be gone in 3 days (a la Brewster’s Millions for the young’uns.) Everyone has to balance desire with financial responsibility. The things above are great, but they are not necessary. I’m pretty happy with our lifestyle and these things aren’t going to make me much happier in the long run.

Modest living paid off

As I mentioned in the previous frugal article, we lived frugally because the habit is ingrained. We didn’t have much money when we were growing up so now we put financial security ahead of consumerism.

Living frugally worked out very well for us because it enabled me to quit my engineering career. Currently, we spend about $50,000 per year. That’s probably at the high end of the frugal lifestyle actually. My old job paid relative well and we could have spent $120,000 per year and still have enough left to save and invest. We could afford all those things I listed above. However, if we lived that lifestyle, I wouldn’t have been able to retire early without a drastic cost of living reduction. I’d still be working in a cubicle instead of enjoying the blogger lifestyle. So living modestly paid off for us. Everyone has to find their own path though life.

What’s the point of amassing such large sum?

This one is a bit more difficult to answer. Actually, I don’t have a solid target. It would be nice to accumulate about 3 million dollars by the time we’re 60. That would make us feel wealthy and financially secure. We spend about $50,000 annually and that level of net worth should be able to support our lifestyle indefinitely. Is that too much to shoot for? Let’s go though some reasons why our goal is so high.

Inflation – Inflation is one big reason. The 3 million dollars goal will need to be inflation adjusted to about 5 million in 2035. Gas will probably cost $20 per gallon by then. If you’re not earning inflation adjusted income, it will be difficult to maintain the same standard of living. I think we will need a good size nest egg so we can reinvest a portion to offset the inflation.

Expense will go up – Recent retirees usually spend more money than when they are working. Our goal is to fully retire by 55 and we’ll travel the world for a few years. That will probably increase our yearly expenses for a while.

Healthcare – The cost of healthcare will also increase as we age. This is a tough one because everyone’s health is different. It’s good to have some money in case you need it, though.

Lengthy retirement – I don’t want to run out of money when I’m old. People live much longer these days and retirement could last 30+ years. It’s best to be financially prepared for that length of time. Life wouldn’t be much fun if you’re penniless at 75.

Financial security – Yes, we want that sense of financial security. Both of us lived through financial insecurity before and it was not fun. Life is much more stressful when you don’t have enough money to pay the bills.

Anyway, I don’t feel like we are sacrificing a lot to live a modest lifestyle. We’re pretty happy with our level of spending and we continue to save and invest for retirement. Hopefully, we’ll reach that 3 million dollars goal at some point, but we’ll be fine if we don’t get there.

Can frugal readers answer Josh’s question? Why are you trying to amass X million dollars if you’re living frugally?

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

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82 thoughts on “Is 3 million dollars too much to shoot for?”

  1. I think it really depends on how early you start and your target date. If you’re starting out at 20 it’s very easily achievable with basic compounding. After 40 you may have to have a great paying job or get creative with side hustles or starting a business to bring in more income. I think currently a $3 million nest egg is comfortable if only living off interest, but not necessarily excessive. You could definitely have peace of mind, but not be living in luxury.

  2. I’m contemplating retirement. I am 55 1/2 this week. I have amassed a net worth of $3million. In addition there “should” be Social Security and I have a defined benefit pension I can take now if I want. To me, amassing the $3 million required hard work and self discipline, and some delayed gratification, and some self denial. Even so, we have owned our sports cars; taken trips all over the country, Canada and Mexico, have an upper middle class home that is too large for us, and 3 beach condos that is a great investment and source of additional income. So it IS possible on a middle class income from employment to achieve this. One of our secrets has been debt elimination early. We owe no one anything, have no outstanding debt, and haven’t paid a penny in mortgage interest since 1993. I have never paid a penny in credit card interest, though I use them religiously for the freebies. To me, the best part of the wealth is not having to worry about “can I pay my bills, my mortgage, etc., or can we afford to eat out.” The security and being able to sleep at night is the MOST important part. But we are able to delineate between needs and wants; and make decisions on aquiring everything we need, and SOME OF what we want. Of course, I am better at it than my wife or daughter, and I overlook this, while trying to keep them steered in the right direction. I am currently in the throws of wanting to go ahead and retire, and of course have some reservations about will $3 million last; withstand inflation; and survive economic “events”. My retirement vision is downsizing the home to reduce maintenance required; simplify; de-clutter; and spend my days exercising and eating right, but eating well (quality); and planning or taking the next trip.
    Fingers crossed and best of luck to everyone!

  3. I totally agree on $3m as a benchmark for early retirement whether it’s 40s or 50s. If you have about half of that in some type of investment earning 7% annually, you will be able to spend about $100k/yr indefinitely.

    Great article!

  4. I was shooting for somewhere near the $3m mark but mid thirties decided $1m in capital was enough because it will end up being $3m within 20 years at 5% standard growth anyway and if I’m careful then I don’t need to “do” anything to make it happen, hard work’s done, now it just requires time. So I work part time, don’t have to take jobs I dislike and I call it ‘optional financial independence’ because I consider myself to be semi retired.

    Like they say: work smarter, not harder

    What happens if it takes longer to achieve $3m? Who cares. It may take shorter. Low debt is key. Time is the real currency here, let the others work away their lives for money but not you. Unless you really want to.. it’s your life. But whatever you do be sure it’s on your terms

    🙂 peace peeps!

  5. After living frugal for about 5 years straight out of college it’s almost hard to fathom how to spend so much money on personal interests rather than investments. It’s almost become a game to try to find deals and see if you can live below a certain threshold by being creative. Just depends on perspective I suppose.

  6. From a net worth standpoint, I am closing in on $3M pretty fast. Depending on the value of my properties, I may be there already.

    BUT, having that amount makes for a better cushion if things go bad. If you are frugal, and have just enough to make it and things go bad, you are in bad shape.

  7. I’ve come to the same conclusion that 3M is about the right amount for ME. I’ve told my girlfriend we need 5M if we’re to retire happily and without money worries. I have property which has thankfully paid off and at 40 I think I’m at around 2M 2.5M depending on how I liquidate my assets. I have a portfolio of 400k within that 2.5M and intend to see my next job out – which I hope will take me to the magic 3m. Girlfriend is a lawyer and we’re saving fast, we’re frugal and we’ve started dog boarding for an extra $500 – $1000 a month. I think we can make 5M by 45 then we’re home free…

  8. I don’t think $3 million it too big to shoot for if you continue your frugal lifestyle. But really, what is enough? What do you plan to do with the money? Are you planning to pass it on?

  9. Super excellent post. I’ll add my 2 cents. Aiming for 3 million for retirement is not out of line today. It’s great advice from my genius accountant and great advice for younger investors as well. The cost of living doubles about every 23 years now. Saving big is about securing your future. Life changes, people change. Your wants and needs will change. The future is uncertain, so save as much as you possibly can. Savings is all about security and choices. That’s equals freedom. Freedom to help your kids thru college so they aren’t strapped in debt half their lives. Freedom to give some money to your favorite causes, colleges, etc. Save big, people. We’ve already seen some pretty uncertain times.

  10. I don’t understand why you think you need $3 million to support a $50,000 annual withdrawal rate. Even if you invested it all in TIPs at a 0% real rate of return (inflation protection only) just $2.5 million would give you 50 years of guaranteed income. Even a $2 million initial investment would only mean a 2.5% withdrawal rate, which is well, well below the trinity study 4%, giving you a huge cushion.

    I retired 10 years ago at age 45, and started whittling down my bucket list. To reiterate what a few other people her have said, it was *lot* easier to do some of the physical activities on the list in my 40’s than it is now in my 50’s.

    My advice: don’t wait for the $3 million. Go small, go cheap, go now.

    • I’m pretty sure our expense will increase quite a bit once we fully retire. We’re planning to travel and that’s not cheap. We are working on our bucket list too. I’m trying to cross out a few every year, but the lengthy trips will have to wait.
      The real problem is my wife is still working and we have a small kid. Life is still incredibly busy.

  11. Learn what you like to do and what gives you passion. Over time, migrate from solely chasing the dollar to getting paid to make a difference in something that’s important to you. It shouldn’t be a race to retirement, it should be a journey to a quality life, however that’s defined for you. I know people that are a lot happier working than some who are retired.

    I’m looking forward to retiring some day. But in the meantime I am (mostly) having fun in an area of work that is interesting to me, and getting paid pretty well for my time.

    I agree with some of the comments about developing sources of passive income. The longer money comes in, the longer what you have will last.

    • I love your phrase – journey to a quality of life. That’s my goal too. Retirement isn’t really the right word for it, but there are no other word for it. Everyone has to find their own path.

  12. Why do I live frugally? Like Joe and his family, I didn’t have a lot growing up. We didn’t struggle, but we didn’t splurge either. As a young adult, when I was getting going in my career, I was able to make ends meet, making about $40k to $50k per year, and still putting away 25% of my income in my 401k and other investments. That means I was living off of 75% of my income, setting aside the other 25% for the future.

    Well, without accounting for growth (or figuring growth just keeps pace with inflation), with my 75/25 ratio, I figured for every three years I worked, that would be one that I didn’t have to. If you’re not following, that means that three years of saving 25% would mean I’d have 75% of a year’s earnings saved in three years, meaning one year’s worth of living expenses.

    As the years have gone by, I’ve tried to keep my expenses in line, but my income has increased. I now save and invest closer to 75% of my income, while living on just 25%. This now means that for every year I work, that’s three that I don’t have to. So with my simple plan, once I have enough saved to account for X year’s of my expenses, with X being 100 minus my age (I’m planning to live to be 100), I can retire.

    Of course, this plan is simple, and doesn’t account for Social Security, nor any earnings on my investments, just that my investments keep pace with inflation. In reality, my hope is that the earnings on my investments will be enough to live off of, so I’ll never have to touch principal and won’t have to worry about outliving my money.

    So the real reason for living frugally, for me, is to have a short working career and a long retirement.

    • Robert, Thank you for sharing! It’s great that you were able to keep the lid on lifestyle inflation. Saving 75% is amazing. Also, retirement doesn’t mean you have to stop working. You can do whatever you want in retirement. You can work on something you like instead of working for your employer.

  13. $3m is a lot of money. I won’t ever hit that number but I have retired early anyway and have enough to live my life on my own terms. I just don’t like getting hung-up on having a super large number. Just enough is plenty. Living frugal without feeling deprived and having that lifestyle covered is wealthy enough.

    • I agree with your philosophy. I guess $3M is just something to shoot for. Having enough is perfect for us right now, but we would like to be able to splurge on families a bit more. I would love to be able to treat the family to a Hawaii trip someday.

  14. This is Josh. Thanks for the shout out. I’m not advocating profligate spending or living beyond one’s means. I can understand frugality while someone is young in order to build a financial cushion. What I don’t understand is why someone who spends 50k/yr and don’t feel deprived at all at that level would feel as though they’ll need $3 mil to feel secure unless they never want to touch the principal. If you’ve amassed a decent amount, why not buy some of the things you mention in your post or go on that world trip now? After 40, time will fly by. Just talk with anyone 15 to 20 years your senior.

    • Life is just too busy right now to go on the RTW trip. 🙁 Mrs. RB40 is still working and the kid is a handful. We’re putting a lot of stuff off until the kid is a bit older.
      I guess it is a bit irrational. We don’t really need $3 million, but that’s our goal. It gives us something to shoot for.
      Life is flying by already. A kid seems to warp the time space continuum.

  15. We too are on a mission to retire early. My goal is to have 5 million saved in tomorrow’s dollars. We are no where near on track now but we are on our way to the first 2. As RB40 pointed out we will be facing $20 gallons of gas.
    I do have to say though that we do not live frugally at all. We are broke but that is because we don’t live frugally! I actually just wrote about the matter yesterday at
    There is a serious balancing act between saving for tomorrow and living for today. The truth is that while we are working hard to save for tomorrow we may never get there!

    • Going from broke to $5M is a tall order. You probably need to live more frugally or find a way to make a lot more income. Good luck!

  16. I think it all depends on what you want, while $3 million sure would be nice, I don’t anticipate coming close to that.

    I have a few family members and friends who are at or near retirement and it’s a little crazy when I see some of their level of extravagance – it’s little things like being able to fly wherever you want whenever you want, being able to not only go out to eat wherever you want whenever you want but being able to invite friends/family members and their friends and family members with you. Having a place to stay that you can invite friends or family members to stay with you when they visit (at least I got that one now).

    Sure I don’t need those things, but to some extent it’d be nice to have them, I think I can do that once I get my modest budget in place. Other things like having set amounts for groceries, gym membership, travel, exercise, games, etc. would be nice – I think I should be there in a few years.

    $3 million dollars breaks down to $120k/year at a 4% withdrawal, I think that should be more than enough even accounting for inflation as long as it’s well invested, but I suppose it depends on what you want. That’d be plenty to leave a hefty inheritance, travel the world, and do charity work. I personally plan on also doing charity work – but don’t think that I will do it on that scale – I’d rather contribute time and energy over money (not that I also won’t donate, but historically I never really felt like I had the extra resources to do so).

    My parents I think are planning on a similar level of retirement – it seems lavish to me, especially with a paid off house, but their property taxes are high and I think my dad always had the feeling of never having enough so that is what pushed him to work so hard to support the family. I’d imagine he’s also planning on doing charity work – giving lots of it away as well as leaving some behind. Who knows…

    • Thanks for sharing! I guess I’m not comfortable with the 4% withdrawal. I think 2-3% would be much safer. Well, we’ll see how we feel when we’re 55. By then we’ll probably be ready to splurge a bit. It depends on our kid too. If he has a good income, then we won’t have to worry about him. I want to contribute time and energy for charity too. Life is just too busy right now. I’ll try to do more when our kid is a bit older.

  17. I don’t really view wealth accumulation as the goal of frugal living. Rather, wealth accumulation seems to be the byproduct of those lifestyle choices and I would argue that for many who read this blog, Mad Fientist, MMM, Go Curry Cracker, ERE and other early retirement genre blogs, the wealth accumulation points are going to come much faster (late 30’s to 50’s), not when you’re in your 60’s or older. Consider the following: one guy with a wife and two kids starts working at 22 and works 40 years until he’s 62. He diligently contributes $500 of his income to his 401k/month with a $100 employer match and 7% rate of return. Starting with a $5K balance, he becomes a millionaire at 56 years old, hits the $2M at 67 and $3M at 71 years old. The other guy with the same family situation starts with a $1500 contribution and a $100 match (for simplicity) and becomes a millionaire at 44 years old and hits the $2M mark at 52 years old, the $3M mark at 58 years old etc. In other words, the $1000 difference remains constant throughout the compounding/investing period. So, even as both guys are making more $$ throughout their careers, guy 2 only really feels “deprived” for the first couple years assuming he doesn’t have a bunch of lifestyle creep later on, whereas guy 1 will spend more in this late 20’s/early 30s and keep doing so indefinitely. Any increased savings will feel like deprivation Because guy 2 doesn’t have the lifestyle creep, he doesn’t feel the need to blow the $2M when he’s 52, but rather he spends some of it judiciously so can spend more free time with his family, traveling, volunteering, putting his kids through college etc. and lets the rest do what it’s supposed to do which to build more wealth.

    • Dave,
      Thanks for articulating it! You’re right. Wealth is the by product of frugal living especially if you have good income. Saving a sizable amount early on will give you a huge head start.

  18. I agree with all of your points, especially inflation! 3 Million is or isn’t a lot depending on how many years you have left to spend it (and, as you mention, your health costs), even if you’re super frugal.

    My parents scrimped and saved and are starting to loosen up right now (after initially trying to give my sister and me more money). I think they’re enjoying the fruits of their labor.

    We’ve saved up a lot and that’s allowing me to take a half-pay sabbatical someplace super expensive next year. We don’t begrudge the frugality that allows us such extravagance.

  19. I personally think $3 million is “too much” but I’m not responsible for living your life! 😉

    It really comes down to amassing enough wealth or sources of income to cover the lifestyle you want and not keep you up at night worrying about whether you have “enough”. I’d rather keep working (or in my case, go back to work) if I was constantly worried about long term financial solvency and in the short term, worrying about whether I could afford to spend $10 to have lunch with a friend or $30-40 to take Mrs. RootofGood out for dinner. What’s the point of retiring early if you’re worrying all the time, right?

    • Your part of the country is much more affordable than Portland. If we ever move, then we’ll probably reduce it by quite a bit. I don’t worry all the time, but I definitely hesitate to eat out. I guess I should learn to be more comfortable with spending money at some point. 🙂

  20. I think I will actually spend LESS once I retire early because I expect to be able to do more around the house with regards to maintenance and repairs.

    In response to Josh’s question, I am on the fringe of the frugal finance savers out there. I expect to have higher expenses each year than many bloggers that I see posting. My goal is to be able to travel, leave something to the kids, and have financial security well into my 80’s (my wife included as she will probably be the one to live that long).

    • Having financial security for your wife is a huge point. I thought about that, but didn’t write it down. Mrs. RB40 will most likely outlive me and I want her to be financially secure.

  21. Keep in mind that the “number” one needs will vary depending on where you live and what your used to. My wife and I have always saved very hard and now at 49 we have close to $5.8M of invested assets and no debt and a paid off home. I’ve always thought that $6M was my # and part of that is because I support my dad, live in NYC region and don’t like to live very frugally. Many of my friends think $10M is the more like it.

    • Congratulation! It must be nice to be so close to your goal.
      Wow, $10M. You must run with well to do crowd. I think $3M is already unreachable to a huge percentage of the population.
      NYC is really expensive, though. That’s why I like Portland. The quality of life is high, but it’s not overly expensive like NYC or SF.

  22. People like Josh seem to live in a different world from me. The primary reasons to be frugal are:

    1) The world does not owe me a safety net, so I should be prepared for the inevitable bumps in the road (layoffs, health issues) by having my own financial resources. I know most of the people in the western world now feel that the government owes them a standard of living, so why be frugal?

    2) Buying stuff doesn’t make me happy. Call me crazy. My idea of happiness is more time and freedom to spend with my family and friends.

    3) Less anxiety. Because I have built up a reasonable financial cushion and I am no longer consumed with the desire to consume (see 1 and 2 above), I worry a lot less about money, losing my job, etc. If Josh likes spinning the hamster wheel as fast as he can to shovel money out the window on fancy toys, more power to him.

    • Thanks for sharing. I think once people go through some hard time, then they’ll see the value of financial security. Buying stuff is fun, but it’s only a temporary effect. The high only last a few minutes. 🙂

  23. I would say that we’ll be financially independent much sooner than when we (if ever) reach the $3m mark. What’s the rule of thumb? 25 times annual expenses? Plus there’s a bonus from any government pensions you receive.

    I also think there are some cost savings when you’re retired, so you might find you start spending even less than you do now (well after the first couple years of travelling)

    • Yes, rule of thumb is 25x annual expenses. It’s up to you though. It’s tough to be accurate if your expense will increase in retirement.

  24. Great points! Finding your retirement NUMBER is up to your comfort level and safety margin.

    Currently, my husband and I live off of 30k a year, with extra money being used for paying down school loans, car loans and mortgage debt, house renovations, and retirement. Once all the debt is paid off (5 year plan), we should be saving 60-70% of our income. My ultimate goal is to retire within 20 yrs at 45 yrs old with $4,000,000. This allows for a lovely safety margin… we plan to raise are yearly spending to $70,000-$100,000 annually (inflation adjusted). Right now, we are not living without, but we want to really be able to go over board anytime i want in retirement. Realistically, we could retire on about $2.5mil and it may just come to that if we get completely tired of the rat race…

    To make the 20 years bearable, we will take a trip to New Zealand once all debt is paid off (2nd honeymoon), and We may have to take a year long sabbatical once we hit the Millionaire mark…Reward for all our hard work.

    • Oh wow, thanks for sharing your goal. You are well on your way. You have to enjoy life too while you’re young. New Zealand is great, enjoy it! You can also travel to closer places while you’re in the accumulation phase. South America is pretty affordable, right?

    • Funny I also thought I had a lovely safety margin when my accounts crossed 4M in summer 2008. Then I learned what it felt like to drop a million in nine short months. Fortunately my job was secure and it allowed me to add some positions during those dark days. Now the shoe is on the other foot as my bloated portfolio lets me take our recent layoffs in stride.

      My spending is less than 10% of AGI but I wouldn’t consider myself to be frugal nor do I consciously save. More like I’m a slow spender because I insist on getting value for the money I spend. I have an aversion to status symbols, and that by itself means I don’t need to budget.

      How much to aim for is an interesting question. I’m still working mainly because I think it’s plausible that a major medical breakthrough within the next decade could add 10 to 20 years to our life spans. Even though I don’t buy bling, I do plan to splash out on premium healthcare when problems arise, and I expect that will become even more pricey than it seems now.

      • Yikes! I hope you’ve recovered and made a lot of gain since 2009.
        Mrs. RB40 is a slow spender too. She takes forever to find an article of clothing. That’s pretty awesome because her burn rate is really slow. 🙂

    • Credit cards don’t sounds like they fit in a frugal lifestyle, but if traveling is what you are planning for there are many cc’s out there where you can use points or miles for free travel (free sounds frugal). Just have to make sure you don’t carry a balance or it defeats the purpose. The signup bonus alone will cover a trip to anywhere in the world during off peak seasons.

      I look at these promotions much like I do a company matched portion of a 401k. You are leaving money on the table is you don’t use them.

  25. Money is security and we all have a certain number that will make us feel secure and let us sleep at night. I will never get to $1 million unless I win the lottery so my goal is a smaller number and I know that the money I will retire with means I will always be fearful of my financial security.

    Did anyone else have to use Google to find out what RTW trip was?

    • Sorry, it’s a Round the world trip. It’s one of the items on my bucket list. 🙂
      Everyone will have to find their own number. We live in an expensive part of the country so we need a bit more. If we ever move, then we’ll probably reduce the target by quite a bit.
      Thanks for sharing.

  26. Is 3 million dollars really the magic number one needs to retire?
    I don’t think living frugal means living poor. I have never believed in putting off happiness and being comfortable until your are 65 or 70. I want to live now and do!
    But living within your means doesn’t mean you need to live in a place with the thermostat set on 58 degrees and eating beanie weenies.
    Now rampant consumerism makes me sick and spending time at the mall or box stores instead of with your family on Thanksgiving is something I disagree with but that doesn’t make me a frugal tightwad. It just means I believe living a life of experiences and focus on the things that are meaningful to me.
    I think one can live frugal and well without being miserable and cheap. Hopefully there is a balance of doing what one wants to do while they are physically able to do them in their younger years and still being able to be secure enough in their golden years. Is 3 million dollars what we all should shoot for? I am curious to hear others “number” or the dollar amount they are shooting for so they can be able to retire? It always seems to be a topic of debate.
    Great post and live within your means so you can live today and beyond!

    • I don’t think we live all that frugal. $50,000/year is pretty darn comfortable. My younger brother (single) lives on $12,000 per year. He’s trying to catch up because he was in school for so long. Now that’s spartan.

      • RB40, you always make a monthly budget for your spending (which I think is fantastic). Any chances of having a guest post by your brother covering his monthly expenses? I’m interested in seeing the type of lifestyle $12000 a year affords one.

    • Shane,
      Being Frugal? I don’t know exactly what it means. My husband and I do save in certain things… such as having a stupid phone everyone complaints about because we r not able to get pics, internet, etc. Still, our bill is low. We don’t have cable either, we did not want our kids to watch certain channels so we just never had cable and never had the urge to have it. Is that frugal? Hmmm…We went to Machu Pichu last summer and to Brazil for the World Cup Soccer! We visited ALL amenities there and even had a tour in the amazon! So Shane, do have fun now!!! I don’t know how old you are now…but my husband and I have been having this fun since we got married 29 years ago. In addition we go to out to eat and the movies every single Friday! While raising the children we had to go to the Drive Ins to save money…we used to pack the car with their cousins and food! Now the kids are 27 and 29 and is just my husband and I at the movies…I still enjoy to snuggle and hold hands while watching a movie…SO DO HAVE FUN NOW BECAUSE YOU MIGHT NOT BE ABLE TO CLIMB MACHU PICHU WHEN YOU TURN 60!

  27. The issue is not the money. Money by itself is not worth much but you can buy assets which will give off revenue for generations (good blog post title there). Giving the gift of financial independce to your kids and the kids of your kids.

    You cannot guarantee when another RB40 will show up in the family tree…

  28. I’ll agree with the couple of others who said that the reason for being frugal now is so that I don’t _have_ to wait until 65 or 70 to retire.

    Once you put yourself on frugal autopilot, it’s totally painless.

    $3 million would be a ton of money for us, and way more than we need for early retirement.

    Which is all easy to say. I see a ton of folks in this space succomb to “one more year” syndrome to increase their buffer and reduce anxiety. I’d like to believe that I can dispassionately assess the numbers when my time comes… but we’ll see! 😉

    • The one more year syndrome seems to be more ingrained as you get older. 🙂 You’re right, when you’re on frugal autopilot, you don’t even notice it. I don’t feel deprived at all. Well, I guess we should fix the HVAC at some point….

    • The one more year syndrome hit me when I looked at the next decade of expenses and the cost escalation of those expenses compared to the inflation index that everyone quotes. Both College tuition and medical / health care expenses are accelerating way WAY faster than core CPI or PPI that is oft quoted by the world of financial planners and such.

      For us, the big expenditures now that house is paid off is for

      1. College education for 2 kids. This includes undergrad at a 4 year school….
      2. cost of health insurance which is escalating very rapidly, especially for those who may not qualify for employer sponsored health care (when ya quit) or an ACA subsidy (when ya earn too much).

      In our case, we considered retiring overseas at least part time. However, health insurance is getting in the way of that and we’re investigating options. We have to be insured with a policy that covers both in the USA and during extended travel abroad – most policies dont – certainly the ones available through the state and federal “portals” dont do it. So we tried to go with dual policies – basically paying for health insurance “twice” to get USA coverage and Non-USA coverage. Spendy…very spendy. What’s worse, if we decided to permanently domicile outside of the USA, we would ditch the US healthcare policy but as a US citizen would still need to PAY A PENALTY for not being part of ACA even though we are insurred by a local carrier in (pick your country) that we would be living. So….my conclusion is …. God damn you, ACA…… Really a messed up law that needs fixing.

      • Those are my concerns too. We have 1 kid so that’s not as difficult. Health insurance will be pretty tough, thought. Hopefully, things will be better when we both fully retire. I thought if you don’t live in the US, you don’t need to pay the penalty. I need to do a bit more research.

  29. I think it is about the right amount (although many would see it being very high) for the reasons stated above, especially the fact that the average life expectancy for an adult once they actually reach retirement is way into their 80s in the western world.

    Also, I think it should be attainable as long as you save hard, invest wisely and do so over a substantial number of years.

    • We live in a pretty expensive part of the country so that’s why it’s a bit high. If we relocate, then I’ll probably reduce it quite a bit.

  30. There is an assumption that time is more important when you are young, so old people don’t need as much. I would look carefully at that assumption. Time is important at every stage of life.
    I’ve reached a point that spending to get deeper piles of stuff isn’t worth the time and effort to get the stuff, much less the time and effort to maintain, clean and then store the stuff. That is the lesson of frugality. Less can be more. Or in one word, simplicity.
    Because it really is simple. What’s most valuable to me are time with family and friends, and the memories that come from that.
    So when is that point of enough reached? What that number works out to be will be different for each of us, but that point is far more easily obtainable when we choose to live a simpler life. We pare our excess, to make more room for the abundance of what is important. The price tag for my idea of a rich life, is cheap, but value is priceless.

    • Simplicity is definitely easier. Life is less complicated when you live a bit more simply.
      Living frugally really give you more time to spend with family. You won’t be distracted by the endless entertainment options around you.
      Thanks for sharing your idea.

  31. I don’t think 3 millions dollars would be too much for us to shoot for but it may be different for you or someone else. We all have our own numbers that make us feel a bit more comfortable for when the time comes to say good-bye to our 9-5 (or in my case much longer) careers. I mentioned your post to my wife this morning and asked her if we should be doing more with our budget in terms of enjoying the money we earn and we agreed we should. Now that our mortgage is paid and we have no debt + a newborn and more than 25 years left to retire (if we retire at 65) that we should be enjoying ourselves a bit more. We hope to plan more trips in the coming years but are also balancing this enjoyment with our future living so investing more into retirement savings. Great post and lots to think about. Have a great weekend.

    • Congratulation on paying off your debt! A new baby is great too. 🙂
      It sounds like you’re in a great financial position so you should enjoy yourself more. Traveling is a lot of fun and will create lasting memories. You have to enjoy life now too. You can still live frugally and just splurge for the things you really want once in a while. Enjoy!

      • I signed up for your site, I only get emails when you post something new. But I never get feedback when someone else posts something…what should I do? No, I don’t have a smart phone with internet, I have a stupid phone no data plan. I do ck my email daily…

      • I agree. We’ve become a bit more relaxed when it comes to spending money but not to the point where we are blowing it all. We will always use a budget and to be honest we are young so money will always come in handy. I believe creating that balance is what keeps our relationship alive in terms of money and love. Now that our son is here we will travel to the UK, Spain, Thailand, Italy, Paris… all the places my wife wants to go.. oh and Disney! I’ve travelled so much around the world before I got married but my wife deserves to do the same as do I. I’m happy that we stuck with the budget and frugal ways to get where we are today. I’ll be featuring this post in my Saturday Weekend Review today. It’s certainly an important question Josh raises. Mr.CBB

  32. For me the amount (e.g. 3$m) is completely irrelevant and not something I focus on at all. I’m much more concerned about the annual income I can generate form my investments.

    • Under The Money Tree,
      Where do you invest? I am so lost in that department…most of the time I worry that I am ignorant in that department. You never think about the amount , that is probably because you already have enough in your nest for your future. I only have enough to solve any money problem “right now”. Fortunately, I have never faced money problems in my entire life. Managing the money and expenses is my forte, MY PROBLEM IS INVESTING. I have always worked, had fun traveling, raised my two sons and always had money left to save. This article made me worry that I might not have enough for the future when I retire. My husband and I we are both 51, have been happily married for 29 years. What can we do now if we don’t have a million nest? Is there still time for us? We do have a big savings (not a million), retirement fund (just mine), social security (husband).

      • Mayan Queen,

        Sounds like you need some very specific investment advice. Here you go:

        1. Open an account with Vanguard.
        2. Since you are 51, I’m going to assume you still have at least 10 years before you and your husband retire.
        Below is a simple and cheap asset allocation that I think will fit you.
        40% on Vanguard Total Stock Market ETF (VTI)
        15% on Vanguard Small-Cap ETF (VB)
        20% Vanguard Total International Stock ETF (VXUS)
        20% Vanguard Total Bond Market ETF (BND)
        5% Vanguard Total International Bond ETF (BNDX)

        Re-balance every quarter.

        Disclaimer: I do not work for Vanguard and have absolutely no gain from you buying any of the above. I’m not a financial advice either. Just someone who is very interested in saving.

        I wish someone had given me this kind of advice awhile ago. I would have been retired by now. With that said, I’m not complaining. My wife and I have 1.2M saved up right now (not including our house which is worth about 850k with still 500k owing). My goal is 4M before we retire at age 60 (15 years from now).


        • Hello RB40, I love this comment. You give very clear advice to someone who does not know a lot about investing. I am in the same boat. This year I consolidated several 401k’s into my Merrill Lynch IRA account as I am close to leaving work (at 51) although the money is sitting in a cash account right now there, not invested until I can figure out how to invest it. My income will come from my real estate I have accumulated (Vacation Rentals & year round rentals) the last few years with very minimal debt. So I will not need any money from it, until I am legally allowed to withdraw. Anyway, I have always been better at making money than at investing money. Can I use this same advice to invest with in my Merrill lynch IRA or does it really need to be a Vanguard account (if so, I guess I can roll my ML IRA to a Vanguard IRA?)

          • That’s actually GS’ advice. I think it’s pretty good. I have some of the same funds and similar allocation. I’m pretty sure you can invest in Vanguard funds at Merrill Lynch. Give them a call.

  33. I agree with Josh’s comment, but for me the goal isn’t to have all that money for when you’re old – it’s trying to amass it much quicker so you can be financially independent much earlier. It is tricky to find that amount where you’ll want to ‘stop’ and enjoy yourself instead of continuously saving and saving as much as you can all the way to your deathbed, although living frugally doesn’t have to mean depriving yourself. You’re always trading off one thing for another – goods or services vs freedom and greater passive income later – so you’ve just got to figure out your own values and goals and do your best to live a good life!

    • That’s what I think too. We amass the money quicker so we can have a choice to do what we want earlier. The bur rate will also be lower so the sum will last longer. It all adds up to having more time for yourself rather than working.

  34. Hi Joe, I love your website because it is more “human” than most other financial sites. Thank you for sharing how you deal with your day to day personal life ! I retired at 58 years old. While I don’t have 3 million in savings, I am one of the lucky few folks who have a pension that is indexed to inflation, and in a few years have access to social security that will also be indexed. Having this guaranteed income, along with my own savings and frugal lifestyle before retirement, has allowed my wife and me to travel to Europe, and do many other things we always wanted to do. But the key for us was knowing that our pension pays our everyday expenses while our savings pays for “fun” stuff. So my question to you is, instead of trying to accumulate a huge some of money, why not accumulate enough so that you could purchase something like an annuity (5-year renewable fixed, for example) to pay monthly expenses (with less stress and less care with what happens to the stock market) along with side funds for all other expenses? It seems to me that the total amount that you would have to save would be considerably less. Best wishes to you and your family.

    • Thank you for the compliment! A pension is great!
      I like the idea of annuity paying for the fixed expenses. I was planning to it off until we’re older, but maybe we should look for a good product now. The interest rate is not good, though.

  35. As usual, Joe, a thought provoking and intelligent post !

    Two points worthy of comment. First, i am doubtful that you will feel any more secure with $3M in assets than with, say $1M or $1.5M. The marginal security you may feel along the way could be outweighed by the stress and risk that you need to take in order to achieve that asset base if retired. As the song says… Dont Worry, Be Happy.

    The rationale to amass $xM is to ensure the amount of assets that will allow one to live freely in a life style that one is accustomed to without being tied to a job. Now, the real question is what life style you wish to live in. Some people, as they age, do indeed splurge on a few “wants”. Some do not…but the extra cash gives them a secure feeling if the unimagined happens — house fire, serious illness, need to help family, additional education for kids, etc. Having a war chest / nest egg that is substantial enough to handle some of those unknowns is the motivator. And if none of the inevitable happen, then I suppose one can hold a big party at the old folks home every friday night…or leave a bunch of dough to their kids/heirs/etc.

    It’s all about choices…. and about managing risk…. and ones comfort levels.

    I think $3M is the right amount for a retiree at 40 to be able to retire. Knock approx $50K-$70K off of that amount for each year you are over 40. SO for a 50 year old… need $2.3M…. for a 60 year old $1.6M…. for a 70 year old…. $900K…. etc. Just a simple rule of thumb based on “average household income of the USA”…

    • Thanks for the encouragement! We are slowly accumulating this amount. We’re not stressing out about it or anything.
      Nice back of the envelope calculation. We’ll see how it goes and evaluate it again when we’re 55.

      • retirebyforty,
        I am scared now, I am 51 and I am not gonna have that million when I retire, I have STRS for teachers which is not even gonna be close to that. I have been contributing to STRS for 21 years. I also worked previously and contributed to social security. Will I still be able to “get something” from social security? I don’t have any other investments, how much should I be investing and where? Any advices will be tremendously appreciated! One good thing is that our town home is paid off! I made that my number 1 priority. I am still married and my husband does not have any retirement nest besides social security. We have been able to save $200,000.00…and is just sitting in the bank. How should I invest that little cushion wisely and safely????

        • Do you get the social security statement? It sounds like you should be getting something from social security. It’s great that your town home is paid off.
          I would find a good financial adviser to help you with investing. You can also try calling Vanguard directly. They are pretty helpful. If it was me, I would invest 50/50 in stock and bond index fund. However, I’m not a financial adviser so you should talk to a professional. 51 is still young.

        • MQ, you are a millionaire. You just don’t hold the principal. Think how much money you would need to have in the bank in order to generate your pension? 2, maybe 3 million at current rates of 1 – 2 %. Also, you will get some of your social security, not all. This is because of the government windfall provision. They will reduce your social security by a certain percentage. It depends on how much pension you get. As for the cash, try a closed end tax free bond fund like VGM. It pays 7.2% tax free. Principal will fluctuate, but if you reinvest your dividends and keep building, at some point you take the dividends as a check each month. You’d currently be getting about $14,000 per year tax free.

    • I think your estimates are too high…well I guess it depends on your income sources. You will probably get “some” Social Security also. For instance, I am retiring at 51 with about $1mil in net worth, mostly in real estate which provides a good amount of income. I will be able to survive now as I live in a paid for house that I bought in foreclosure. My income from Real Estate is inflation adjusted and at 62 I will start collecting Social Security to supplement my income. Real estate is not easy, but provides excellent return on investment (if you buy low, fix up yourself & rent high.). A lot of people tell me they do not have the handyman skills- I didn’t either, I learned them. If I can, you can (probably better). Although you do have to have the personality to deal with tenants…if you hate conflict, it is not a good idea for you. But for income taxes, some of my properties show as a net loss due to depreciation of the building, reducing my over all tax expense for the year.

  36. Well, we save about 50% of our income, but I don’t really feel like I am denying myself anything. I eat out whenever I want, travel quite a bit, and feel comfortable and content.

    Sure, I could use a new bike, but the one I have now works just fine.

    For me, $1m would mean not having to work any more (I like my job, so there is no urgency here, but I like the idea of being work-optional). $2m would mean we could do more traveling and charity work.

    $3m wouldn’t really change much.

    Once you stop wanting things, I don’t really see much upside to going back 😉

    • Great job Dan. I don’t feel deprived either. We’d like to travel more, but it’s more of a time constraint thing right now. We’ll travel a bit more soon.


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