This post bears ressurection. Personally, I will have enough wealth when my wife and I can afford to have children.

I've known the answer to this for some time.

I needed 5 million in cash to live my life how I choose without working and just managing my wealth. But then I got married and had a kid - now I figure 7 million.

1 billion is a better top end number

I believe if you wait until you can "afford children", you will never quite get there because there will always be something else needed first. Having children requires a commitment to each other, as well as to the well being of the child. Priorities change once you have a family.

As far as how much is enough?
If you allow 10x your annual salary (40,000 => 400,000) you will most likely be alright. This allows you to live off the interest (@10%). Although there is inflation to add into the equation, interest income may be tax free (Roth IRA, Roth 401k, Insurance withdrawals/loans) or taxed at a lower rate since it is free of FICA/SSI-Medicaid withholdings. Ten percent is not an unreasonable return to expect from something as simple as a mutual fund. Some do much better.

Also, if you are looking at a retirement situation, you may have your home paid off, you no longer have a daily commute to work, or the need for special work attire, or lunches out every day. Overall, you will most likely have a lower cost of living at that time.

I definitely think your not wealthy unless you can live without 'working' per say. Wether through different realestate or other investments or absent t businesses I don't care how much you make if your punching a clock you can be well off but not wealthy enough. I'd rather make 150,000 and collect from investments than make 500k and be a slave to a time clock. Thats just me.

Anyone ever read Rich Dad Poor Dad? Changed my whole way of looking at things like this.

While I agree with Dru wholeheartedly, I have to disagree with the numbers.

First off, you can't live off the interest on 10%, you'll run out of money.
1. Your investments will not exceed 10% each and every year, meaning in some years you will withdrawal and eat into principal, which will reduce your income the following year, etc.
2. Monte Carlo simulation runs 10k scenarios through even an aggressive portfolio, and a 10% withdrawal rate will fail almost 100% of the time.
3. If you are living off your investments, you cannot take as much risk with them, meaning a portfolio weighted more towards bonds and secure investments that won't help your portfolio produce 10%.
3. Many studies have shown that a 4-5% withdrawal rate (you can get up to 6% with some variable annuities) shows the highest probability for success.

So here's how you determine how much you will need for retirement. Take the income that you want today (e.g. $100k). Now, what you want to do is adjust for inflation, so you multiply this amount by 1.04 (4% inflation) for every year until retirement. Example, if you have 5 years until retirement, your math would be: 100,000 x 1.04 x 1.04 x 1.04 x 1.04 x 1.04
(this is easier with a financial calculator)

Take that amount (in the example above, $121,655), and now divide it by 5%. Math: $121,655 / .05 = $2.433 Million. What this means is that I need a pool of money of $2.4 million at retirement age in order to provide me with an income of $121,655, which is $100,000 in today's dollars.

Then you can work backwards from that dollar amount to see how much you need to save each year to get there. This is traditional financial planning, and there are some reasons why I believe it doesn't work, but that's a story for another time.

Wealth is more than investments. Wealth is freedom. Freedom to do what you want, have your needs taken care of, have your family protected. Wealth is family, love, honor, integrity, and trust. You can be very, very wealthy without having any money in the bank.

Chris

Read several of his books (I have to read just about anything my clients do). There are good concepts there, but don't take his stories to heart. He's been widely criticized for having his writings/stories conflict with each other. And his new book with Trump is useless, by the way.

Any book that helps you improve your financial situation, even in minor ways, is worth reading. Just be careful! Just because it is in print (i.e. newspapers, magazines, books) doesn't mean you should take it as gold. This is coming from someone who is an aspiring writer!

Now there's a man with a plan! And how many months will it take you
to reach this goal?

Well said, Chris. I know an elderly couple who never took the time to enjoy what they built with real estate wealth (much of it). Now they're in their higher 70s, extremely "wealthy" in the traditional sense, but much of their wealth is tied up in apartment buildings and malls all over the country and they can't get to their money. I want to *enjoy* what I spent a lifetime building when I'm that age!

All that only to agree that yes, true wealth is MUCH more than investments.

shahzadmasih, please post it on the boards, lots of people can help you, but we need you to post, that way more opinions (and thus possible solutions) can be found.