Wall Streeters call it their “walk-away” money.
Well, they actually call it something you can’t print in a newspaper, but it means the same: How much money would it take for you to leave the rat race?
Not that you would necessarily quit. But imagine hitting the magic number that makes you bolder and more at peace–maybe even better–at your job.
For Robert Safro, cha-ching equals $2 million in addition to his retirement accounts.
“That’s the figure that I want in liquid assets that would allow me to turn over some clients and reduce my workload,” said the 48-year-old Bethesda, Md., entrepreneur.
Having a target number is even more common in the financial markets, veteran traders say. Those who have reached their number and not quit are more likely to trade with more confidence and take better risks, they say.
“It’s [the number you hit] where what the outside world thinks doesn’t matter anymore,” said Jon Najarian, chief market strategist for PTI Securities in Chicago. “I know a lot of guys who thought they’d hit their number a few years ago, and then the market turned on them.”
Of course, what keeps many of the rest of us working is the euphoric rush of buying groceries and paying tuition. But there are parameters that can give you a sense of how much you’d need to walk away from it all.
The Web sites of several investment firms–such as www.troweprice.com–offer free calculators that let you manipulate your retirement date to see what an early exit would cost.
Or try this calculator.
Answering these three questions won’t map out a financial strategy, but it will help you discern the how-much question:
1. Are you really reaching for your father’s retirement? Unrealistic expectations will set you up for failure. 2. Are you looking to spend away your fears? There’s an illusion that money means control. 3. Are you flexible enough?
“The whole notion of a personal independence number can be an entertaining and motivating mental game,” said Tom Morris, author of “True Success: A New Philosophy of Excellence.” Taken too literally, he says, it gets ridiculous.
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Your Money
Find other personal finance stories from the Tribune’s Your Money team in the Business section Sunday in the
Edited by Lara Weber (lweber@tribune.com) and Chris Courtney(cdcourtney@tribune.com)
