Ask HN: How much money is enough? | Hacker News Reader

Ask HN: How much money is enough?

14 pointsanonymousexit22 comments

Facing a potential exit and not sure if I should take it.

I actually retired at age 40 with less than 700k. My wife and I own a house. We both moved back to Canada, so we don't worry about health care costs. And, we really don't spend money on much. I figured our food/living costs comes out to $1000 a month. We don't have kids or any other big expenses. We're pretty frugal too. Anyways, it all depends. Some will tell you 7 million. That's fucking absurd. If that was true, hardly ANYONE in the US would be able to retire. Others will probably tell you 5 million, which I still find absurd. Anyways, regardless of what people on here will say, you already sound like someone who is indecisive. I've noticed that people who are always searching for their answers from others will never be satisfied by them.

Thanks for answering. Out of curiosity, did the 700k include the house?

My company is quite small. It can maintain it and have a relatively stable income, but I'm not sure if I have the motivation to keep working on it due to other changes in my life.

Sorry for the late response. No, the 700k didn't. However, our house isn't worth much. We live in a rural part of Canada, and our house here was just under $70k. It's a pretty nice house too. You can even find cheaper houses, if you're willing to compromise a bit. It's not that far from Kelowna, which is a nicer area but over priced. In the States, I've lived in California (SF Bay Area) and Hawaii. Those places are WAY expensive. I would probably end up moving to a cheaper part of the country with cheaper housing. But, the health insurance thing would really worry me. Health care in the U.S. is dauntingly expensive. I know that private HMO insurance for people over 55 y.o. is over $10k a year, and that goes higher as one ages. Canada is why my wife and I are able to retire pretty young.

>Health care in the U.S. is dauntingly expensive.

It has become much better with new laws. For $200/month you can have a decent health insurance in California.

Probably 7 million after taxes. The first million will buy you a decent house. The next million will let you buy other materialistic goods and/or give away. The next 5 million can go into a very safe savings account which will net you 6 figures a year in interest.

With 7 million, you should be set for life with a decent lifestyle.

OP does not need 1 million to buy a house unless he wants to live in New York or SF. One million for material goods is plenty but it will not be enough if he wants to live a very extravagant life. Assuming 4% return on the rest, next 5 million will give you around $200k which is way above US median income.

The 100k+ yearly interest is what makes this so appealing as a minimum. By doing nothing, you earn close to the median full time software engineering income. Consider the interest a payment of 2000 hours per year to do what you want.

If you have a 7mm offer, and less than 1mm in net worth, take the deal (not, of course, before asking for more money).

I think I once decided I could live happily from £3 million.

To pay off the current house would cost me £50k, then spend half a million to buy a huge house to live in, along with all the gadgets, furniture, and solid wood you could need. After that spend 4x100k to buy four more houses.

That leaves £2 million to live off, plus the rental income of five properties, and a spare 100k to cover emergency repairs, and furnishings for the rental places.

If I won/earned/received £2 million I would probably need to keep working, unless investments did exceptionally well, but £3 would be sufficient for myself and partner.

The thing with your route is doing the rental business would be too stressful for me. For me, enough is being able to live off interest. Unless the bank goes bankrupt, I really don't have anything to worry about.

Part of the reason for choosing rental-based income is that tenants would give me "a job".

I'd go insane with nothing to do, so I'd probably find myself working for a coffee shop or similar anyway, but the idea of the renting is to make sure I had a token-job, or function. (Hell with five properties and low fees I could probably become a management company..)

What is the future potential of the business?

Do you personally have what it takes to lead it to that potential?

Are you a starter, who gets bored after the technically hard parts are solved?

Would the proceeds, if invested in a combination of bonds and dividend bearing stocks, provide an annual income that you could live on in a modest manner for the rest of your life? By this I don't mean SF, NY or London but a nice location with a more modest cost of living.

If you are getting bored and the exit would provide you a base salary for the rest of your life so that you could explore other new ventures ... I would take the exit.

In the end no one but you can really decide but these are some of the questions I would ask myself.

I don't have the potential to turn it into a tremendously lucrative company without sacrificing some of the principles that are important to me: non-recurring billing, a non-aggressive sales channel, etc.

I'm not sure if selling is in itself a violation of those principles since the buyer would likely want to be more aggressive, which is why I am not sure about the prospects of a sale. That said, I have also been in the industry for about 7 years and am frankly getting tired of it, so I'm curious how people view numbers. Based on a revenue multiplier, the sale price would be high 6-figures, low 7-figures max. So not exactly move-to-Antigua, but certainly a break from struggling to pay rent while getting the company going.

When related to happiness, some have said (annually) $75,000: http://www.forbes.com/sites/robertglatter/2012/07/27/how-muc...

Others claim $161,0000: http://www.cnbc.com/id/50027184

There was a good study about diminishing marginal utility of wealth I read a while back. I'll see if I can find and post it. Don't quote me on this, but I think $5M was a good number.

Yea, I believe the most common number was $70k/$75k per year depending on the report. After that, it's mostly diminishing returns.

Don't forget to factor your age into the equation. The more years you have left to invest and/or earn more, the less you really need. And don't forget to think about your skill with money too. The younger you are, the longer time you will have to avoid wasting away your fortune. If you are smart with money then you will need less than someone who is not.

thanks

It's always just one more dollar. I think you have to consider the opportunity costs involved with the exit versus the potential financial upside. The right number is the amount for which you are comfortable to part with your current business.

When you first started the company, was your goal to be an exit or to keep running the company? If it was an exit, and this chance will give you enough money to live on a comfortable salary for 10 years, I would take it.

When the only thing the 'company' has to offer you is:

A corner office with two windows

A private toilet/shower

A wet bar

A kitchenette

Because you already have all the money.

you should think about life extension and plan things not for the common 100 but much longer if you are thinking of not working again.

in a general sense, id like to have as much money as needed to travel every month for two weeks to some nice destination without super luxury

Are you in the business of disappearing photos by any chance?

No, nothing that lucrative I'm sure. :)

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