My Personal Finance Journey

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Is $1M Still Enough?

Contributed by mm | April 4, 2007 9:42 PM PST

Back to 2003 when I started this blog, I wrote a post "Is $1,000,000 enough?" Then, I crafted a statistical model to argue that if I spend thrift and invest wise, one million dollars can be a good goal to support a happy retirement at 40. At that time, I just purchased our first house and started the American Dream of getting rich while our net worth was at $120,000 and went up $3,000 a month.

It has been three and half years since that post, and many things have changed, mostly for the good. For one, with over $670,000 reported in our balance sheet, the million-dollar goal seems to be within reach in the next two years. Also, our sideline business has been minting money since 2005, which should provide a good cushion if I ever leave my full-time day job.

On the flip side, many assumptions in my original analysis are no longer true. We apparently couldn't live thrift enough for an inflation-adjusted $45,000 a year as demanded in my original model -- our annual spending budget for 2007 is just shy of $90,000. With an early retirement, I am also on the hook to pay for the family's own medical insurance out of my own pockets.

Back in July 2005, I silently changed my definition of $1M from an "early retirement" goal to a "financial independence" goal. The problem I'm facing now is: should I still consider $1M as the golden number that can free me from mundane pursuits, or it is just a nice round number?

The parameters are pretty clear:

1) We probably need $110k (adjusted annually for inflation) to maintain the household if I bid farewell to the corporate life.
2) The earning power of our household business is becoming more reliable (and strong) now. To be very conservative, we can probably count on at least $50k after tax per year from these entities for the long run -- that's only half of our revenue run rate right now.
3) I might be looking for some part-time consulting or training jobs in the future, and these jobs should be able to net a quick $15k after tax per year.
4) From my million-dollar portfolio, an ultra-conservative allocation should return 5-6% a year, so it is another $55k.

So without any sophisticated math, it appears that a million dollars is all I need for my financial independence. In fact, since I'm so conservative in counting my income streams and really liberal on the expense side, I will most likely be able to pay all my bills and contribute more savings to our retirement fund to defeat the inflation. So once again, $1,000,000 is enough.

This does not necessarily mean I'm counting my days at my current job, though. Finance professionals usually see the world as a combination of risks, so another couple of years on my high paying job after I pass the million-dollar milestone will certainly create a larger safety net. Furthermore, I'm still getting enough challenges and fulfillments from my current corporate job, and to be able to retire, I need to prepare myself psychologically. After all, I cannot count beans all days if I suddenly have eight more hours a day on my own.

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This Post Has Received 39 Comments. Share Your Opinions Too.

Jeremy Noring Commented on April 6, 2007

First time I've read your blog, and it's really great. Congrats on the excellent financial planning and hard work!

Re: retirement

For me, retirement really sounds dull. Like, terribly dull. It's not that I want to overwork myself, but I think it'd get pretty bored at home, trying to find something to do with myself for vast expanses of time. I actually imagine myself always having a job of some sort (even if it's part time, and even if it's trivial and/or inconsequential) to provide myself with social interaction and the reward of getting work done.

I've read a few articles about this (there was a good one in the Economist a year back), and it's becoming increasingly common for people to work in their retirement years. And often not because they need the money, but because it gives them a sense of self-worth and much needed social interaction. Which is, in my opinion, something that might be hard to put a price on.

joewatch Commented on April 6, 2007

Have you taken account homeownership in your calculation? Don't forget you will need to apply a significant amount of your liquid assets as a down payment and also have enough income to cover mortgage, taxes, and maintenance.

b2a Commented on April 6, 2007

MM - Forgive me if this has been answered or if you are trying to keep it private, but what is the household business you run?

Also, I am just begining my career so retirement is really not in sight for me...but 1 Million dollars just seems like an underachieving and easily attainable goal with even a mediocre salary if the person takes advantage of compound interest.

1 Million dollars seems insignificant once home ownership (in Seattle or Shanghai) is taken into consideration and the comfortable life style professionals enjoy. Currect me if I'm wrong, but wouldn't a $5 million dollar, or even $10 million dollar goal be more of a real goal for you? Tuition/housing/living expense for your kid will already cost nearly 200k in 15 years...

dong Commented on April 7, 2007

1 Million is nice round number, and people often pick it as goal when they're young, but in the end it's never about a number - it's about getting what you want, and not just getting what you think you should want.

SS Commented on April 10, 2007

Financial goal perspectives change dramatically with age. I can recall thinking as long as I make $80K per year I'll be able to provide for all aspects of my financial planning. Now 10 years later making more than double that my "comfort" threshold has increased dramatically. Personal psychology has major impact on this.

Can you provide more insight into your side business and income that in reference to your blog and income is from advertising?

Stephen Snyder Commented on April 10, 2007

"One Million Dollars" and being a "millionaire" are somewhat outdated. Yes, you can easily live on a million for the rest of your life if you want, but it you'll have to always watch your spending.

Q Commented on April 10, 2007

$1MM is a beautiful goal - it is at least a concrete goal. You cannot set an amorphous, general goal of "I want to save enough for retirement" and continue to stay excited about the pursuit day after day, year after year. That's where the $1MM comes in. You have to stay motivated, and proud of yourself. It is my goal, and I work towards it every day.

I am about to pass $200,000. That's ten times more than the $20,000 I had just a few years back. But I still have to quintuple my money in order to hit $1MM. It kinda screws with you a little.... so anything one can do to keep themselves engaged - saving and investing - is a positive thing.

Hazzard Commented on April 10, 2007

I know exactly how you feel. We are 35 with a net worth of $435K. I have often thought that the magic number is $1M, but have thought about health care, unexpected expenses etc. I've decided that I want to try to get to as large a number as possible by 45 and then make some decisions.

While I don't have a measurable income from side projects, I'm hoping that some real estate will help us move along. My goal has been to increase our net worth more than we make in regular income each year. If we can continue that, we'll be able to enjoy our family time together 24X7 at 45.

stocktrader Commented on April 10, 2007

1MM cash is not chump change and is a substantial amount. Many networth millionaires cant claim to have one million liquid assets.

24x7 family, watching movies all waking hours etc become intolerable within days. One needs to have a hobby to engage oneself.

stocktrader Commented on April 10, 2007

1MM cash is not chump change and is a substantial amount. Many networth millionaires cant claim to have one million liquid assets.

24x7 family, watching movies all waking hours etc become intolerable within days. One needs to have a hobby to engage oneself.

william nixt Commented on April 10, 2007

The 1,000,000.00 net worth will not make it. Family needs, childrens college, grandchildren, parents, financial setbacks, illness etc. 3 or 4 million is a more reasonable goal for early retirement (semi). You need to be more in tune to what quality of life you and your family deserves between 45 an 80 years old. Investments are genneraly the majority of your income after 70.

Nobody Commented on April 12, 2007

When I hit a million I will continue to work, but I'm going to save less and vacation more.

Michael Halls-Moore Commented on April 12, 2007

I think it's great you're trying to shoot for the $1million goal, but why not concentrate on trying to build up some assets that will generate an income for you without needing to do any work?

For instance, your family business. Why not systemise it and then hire somebody to take care of the work while you cream off a profit?

Can it be franchised?

I would prefer a post-tax income figure guaranteed annually that is not inclusive of having to work.

We can all dream eh? ;-)

Great post though!

ken Commented on April 16, 2007

Basically agree with Blasak - understand the comforts are nice but for to have practical financial independence you do need to control your expenses.

Think back to the BMW purchase - how much are you willing to work to drive old bmw's instead of newish corollas???

joewatch Commented on April 16, 2007

Well, if mm wants to live on $110k a year, that's his right. As long as he's not living above his means, I don't see why he shouldn't. Accusing him of being spoiled is ridiculous. If you told Donald Trump he was spoiled, he'd laugh in your face. In any case, I expect mm to reach $3M by the time he's 40 at the rate he's going at.

David Commented on April 17, 2007

I love the blog that you have. I was wondering if you would link my blog to yours and in return I would do the same for your blog. If you want to, my site name is American Legends and the URL is:

If you want to do this just go to my blog and in one of the comments just write your blog name and the URL and I will add it to my site.


Sidney Commented on April 23, 2007

$1,000,000 sounds great but the value will diminish over time once you retire. If you constantly take out all the interest how much will that $1m buy you say 10 or 20 years down the road? You need to have something generating an income as well to keep topping it up.

Lionsault Finance Commented on April 28, 2007

$1 million may not be a big sum of money in America since the standards of living is high. But it is definitely a sum that allows us to retire comfortably in Singapore since our inflation rate is low and kept in check stringently by our government. Anyway, good financial planning. I also like your thrifty habits. In line with my philosophy also. :)

I-key Benney, On Is $1,000,000 enough Commented on May 1, 2007


Your blog is over flowing with very important and interesting financial and business information.

You must be a very busy man to create and maintain such a large blog.

About your question "Is $1,000,000 enough", it depends on the individual, the lifestyle and the country.

So there are a couple of factors which are crucial to answer that question.

Ikey Benney

pesli Commented on May 3, 2007

Great retirement plan, it might just work out as you have predicted. Anyway I came across this software which has a financial planning program. It calculates how much you would have to save to meet the amount you would like to have when you retire. Here is the site for those who are interested in it

RobertR Commented on May 7, 2007

In one of your introductory posts you mention that you wanted $1MM to retire comfortably in China, but now it sounds like you are planning to stay in and retire in America, is that correct? I could see retiring on US $1MM in China, I travel there frequently and the cost of living is quite low but I can't imagine retiring off of that in the States, assuming you stay in or near a metro area and don't move to a cheap state like Kansas. Good savings rate though, just be sure to enjoy your money as well and not focus on being so frugal all the time. I'm in my 40s right now and have been frugal like you which has allowed me to save a nest egg of low seven figures but I sometimes look back and regret not enjoying more if it when I was younger.

Homer Commented on May 8, 2007

Are you guys planning to have any kids? If so you better factor in a lot of money for them, especially education expenses. Retiring on just $1MM at a young age is risky in my opinion.

ProspectZone Mortgage Commented on May 10, 2007

$1M is a pretty number, especially since we all like the word "millionaire" - but inflation has ruined that American dream. The pretty number won't provide for a comfortable middle class living in most areas of the United States.

Jennifer Gordon Commented on October 11, 2007

Thank you for getting out there are doing something and then sharing. A lot of people "think" investing to death, criticize what others do, and end up with nothing. It is a great idea to have some freedoms so you work purely for pleasure. That also makes you a better employee.

Kalomyal Commented on May 5, 2008

Of course, but what do you think about that?,

Forexman Commented on June 5, 2008

Hi. This is really interesting post. Thank You! I have just subscribed to Your rss!

Best regards

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Qtbywwtg Commented on June 25, 2008

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DashWeicLecigeGar Commented on September 2, 2008

wow :)
its very interesting point of view.
Nice post.
realy good post

thx :-)

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