Thursday, June 21, 2007

How Much Money Till You Have FU Money?

FU Money is basically the amount of money you need so that you wouldn't need assistance or employment from anyone, though the Urban Dictionary defines it slightly differently.

For me the number is currently $1.2 million. If someone slapped $1.2 million on my lap I would never need to work again, and could live rather well off of an inflation-adjusted 5.5% return ($66K). I might still work if there was something I wanted to do, but with $1.2 million, I chuck the alarm clock into the trash.

How much money do you guys need before you have FU Money?


Personal Finance Blogger said...

Withdrawing all of your interest does not allow you to increase distributions to keep up with inflation. You'd be better off with a 3.5% (approx) withdrawal rate that is increased yearly to match CPI-U or PPI. Then your money will last, your standard of living should remain approximately the same and you should have money left over at the end.

Also, don't forget about health-care costs. They will take a serious bite out of your distributions, especially as you get older.

Alex said...

It looks like the $2 Million + folks are carrying the day. That definitely seems logical, though I definitely could sit on my ass with $1.25 million.

If inflation kept at 3.5%, I feel like I could hit 9% returns (5.5% real) by investing in like 60% stocks, 40% bonds.