Do You Have a Number?

This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.

How much more money would you need to make to change your life significantly?  As I have mentioned in the past, I enjoy gambling on sports.  When you sign up with one online sportsbook, you seem to get a lot of sports-betting related spam.  Most of these messages promise untold fortunes provided you sign up for fairly steep fee with minimal guarantees if success – which is very similar to the stock-picking e-mails I get from time to time.

When I was thinking about this the other day, I was trying to figure out how much extra money I would have to make to actually increase my quality of life.  When you look at my household income, I’m already earning in the top 10% or so.  I wouldn’t turn down more income, but I’m not really sure what I’d spend it on – I already have enough toys (although the iPad mini coming out next month is tempting), I’m not really a car guy, and I have no interest in buying a larger house, which would just increase the amount of stuff I would have to look after.

Alternatively, how much less money could our household make and still remain at the same level of enjoyment?  This question is somewhat pertinent right now, as my wife is trying to decide if she wants to change jobs.  We’re positive that we could take a significant reduction in our income and still not have much of a change in our lifestyle.  What would change would be our plans for Early Retirement.  If we made below a certain threshold, we would obviously have to extend our working years by a bit

When I really got to thinking about this issue I came up with ‘time’ being something that we were trying to get.  I think that time is what really makes early retirement attractive to my wife and I.  This past weekend, we spent doing exactly what we wanted – I puttered around the house doing various projects, my wife did her thing and we got to relax for a couple of days.  The kind of activities that we did on our weekend is what we would like to do all of the time, but really can’t.

I guess what the question of an increase (or decrease) in income comes down to is the long-view.  Although increased income wouldn’t increase my day-to-day enjoyment now, down the road we would reap the benefits of the added time.  It’s these kind of long-term goals (over a decade away) that is sometimes less exciting than a new 60″ television or some expensive gadget, which always seems like so much fun at the time.  Alternatively, I could work part-time now on a subsistence wage, but have to continue doing this for another 40 years or so to get the time that I want.

How much would your income have to increase or decrease to change your current level of enjoyment?  Would you just spend more now, or would you save the money for retirement?

4 thoughts on “Do You Have a Number?”

  1. One secondary reason I switched from working full-time to part-time at my former company was to be able to simply stay employed and remain in my company’s ESOP (Employee Stock Ownership Program). As my ER plan began to take shape in 2007-2008, I did have a value in place for my ESOP holdings. When the ESOP hit that amount, I left the company and took the money.

    I just could not stand working full-time with its awful and sickening commute, but I needed to find a way to keep working there and hang in there for a few more years as the ESOP grew. Had I kept working full-time, I would have gotten burnt out years before I left and taken a smaller ESOP, missing out on several years of huge growth (2003-2006).

    In those part-time years, my expenses were very low so it was not a problem covering them with my reduced income. I wasn’t saving as much but by then my investment income was growing quickly.

    The plan worked out just fine! 🙂

  2. I could retire today at 40… but I am going to work a few more years to pad the “number” a bit more. I don’t want to be forced to go back to work in the future. If I return to work at some point, it will be MY choice.

    That is what early retirement boils down to for me… everyday that I wake up post-ER is wide open to all possibilities – right now I am pretty much a slave to my job, largely defined by it. I look forward to the day that it ends.

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