How much is enough??

[ess105]

Originally Posted by GordMay

The median net worth for those earning $500,000/year is slightly over $800,000.

That's a staggering statistic if you ask me. While it's good for the economy to spend most of what you earn, it doesn't do much for positioning you to retire on the income you grow used to.

[GordMay]

The income median will contain a mix of age groups, including some “youngsters” who haven’t had much time to accumulate significant wealth.
I’d hazard a guess that a median family’s lifetime earnings (wages) might approximate a million dollars (more or less).
I know mine (42 years to date ) would be less than $2M. Thanks to Maggie, I have a pot to piss in, and not much more.

[knottybuoyz]

Originally Posted by GordMay

I have a pot to piss in

You better not let CRA (Reveneurs) find out!

[Captain Mark]

It would be interesting to see if the poll results, or more specifically the voting by members had anything to do with boat size/type?

Here's a proposed typical breakdown of where the cruising kitty goes, and is a good reference for what is descretionary and more importantly what isn't. I got these from Beth Leonard's Voyager Handbook and have seen very similar breakdowns in Cruising World Magazine.

Food: 33%
Communication: 20%
Maintenance: 16%
Insurance: 16%
Diesel: 4%
Dockage: 5%
Entertainment: 10%
Other: 8%

I suppose the "Other" 8% could be lower if you had hydroponics on board Just kidding.

Do others think this is a fairly realistic breakdown?

Mark

[44'cruisingcat]

[quote=GordMay]According to “CNNMoney”, the Median net worth for 60 year olds, is slightly over $200,000, and slightly over $100,000 for 45 or 50 year olds. The median net worth for those earning $500,000/year is slightly over $800,000.

The median is an absolutely useless statistic. It's 1/2 way between the highest sample and the lowest. So if you had 99 people with $1.6m and one gambling addict with just a buck to his name you end up with a median of $800k, even though the AVERAGE is much higher. I have absolutely no idea why various organisations quote median figures, unless their intent is to mislead.

[ess105]

That is not an accurate description of median. In your example, the median would be $1.6m. The median is determined by lining the sample set up in ascending order and picking the middle value. If the sample size is even, you average the two middle values. The idea of median is to give a representive of the typical value. For example, average income numbers are highly distorted by the super-wealthy. Median numbers tend to eliminate the effect of extremely large minority values.

Wikipedia has other explanations: Median - Wikipedia, the free encyclopedia

[GordMay]

Central Tendency
The term central tendency refers to the "middle" value or perhaps a typical value of the data, and is measured using the mean, median, or mode. Each of these measures is calculated differently, and the one that is best to use depends upon the situation. For salary statistics, the mode and median are most often used.
In a set of numbers
Mean is the average
Median is the number or numbers in the middle of the set
Mode is the most frequently appearing number.

Tell a man there are 300 billion stars in the universe, and he'll believe you. Tell him a bench has wet paint on it, and he'll have to touch to be sure.

[rebel heart]

I did a lot of math on this one over the last few weeks, and it's some of the very early blogs over on my site: Rebel Heart - The boat and her crew - The Saga of the Rebel Heart

Basically I'm in my late 20's, and am giving myself six years, which gives me:
- Six years of putting money into my 401k (which I can then roll over to my IRA when I leave).
- Six years of saving $1000 a month, which *not* calculating in interest (and the money I've already saved), gives me a nearly five year cruising budget.
- Six years to pay off the boat mortgage with $300 overpayments.

In fact it's the boat mortgage that's really making it so we have to stay around for so long, since with the mortgage comes insurance, and just re-occuring debt in general, which we have more than enough of right now.

My name isn't on the loan right now, which is good, because when we get back I can use the IRA for a home downpayment (first time buyer), or leave it all in for my retirement, or a little of both.

At a very strategic level, I want to make sure that I have a bunch of money sitting in a long term investment account when I leave, the boat payed off, and a bunch of money sitting in a short term mutual fund.

Also, the closer you get to leaving for your cruising date the more you should really ensure that the money for your trip is sitting in bonds. I can deal with market fluctuations for 30 years (my retirement), but if the market where to nose dive 50% (black Monday style), I *need* that short term money.

[rebel heart]

And to directly answer the question, I'm going with $60K in contributions for a 5 year trip.

Calculating in a 7% interest compounded anually, at the end of six years that's around $102K in actual money, minus a few thousand in fees, minus a 30% capital gains tax on the $40K, and the actual cash in hand if I can follow a 7% index for a while is about $80K.

Man I hate the IRS.

[Gallivanters]

but my boat was paid for and I had a job waiting for me in Saipan.

Since then I've dropped my anchor in Australia, Thailand, Egypt, the Caribbean and Everywhere in Between... and I still have those thousand bucks.

Kirk

[seafox]

do you live on air?

[ess105]

Originally Posted by rebel heart

Also, the closer you get to leaving for your cruising date the more you should really ensure that the money for your trip is sitting in bonds. I can deal with market fluctuations for 30 years (my retirement), but if the market where to nose dive 50% (black Monday style), I *need* that short term money.

For a five year trip that is certainly true although even there I would suggest a mix of maturities so you can ride out bond price fluctuations.

If you've saved and are planning on going out for longer then you can opt for more of a split. If you think of your money sitting in various buckets depending on when you need it, you can invest those different buckets differently. Your 0-5 year bucket would be your low risk items, bonds, CDs, deposits, your 5-10 year bucket could be a bunch of medium risk equity products : indicies, growth funds and your 10 year up stuff can take on a bit more risk beyond those. From time to time, when you feel the market is right, you allow some to trickle down so you never run out of short term funds.

[Sailormann]

According to “CNNMoney”, the Median net worth for 60 year olds, is slightly over $200,000, and slightly over $100,000 for 45 or 50 year olds. The median net worth for those earning $500,000/year is slightly over $800,000.

Life in debt will do that - pay cash or do without...you end up waiting a little longer but you end up with a fair bit more.

[ess105]

That is true for consumer goods but not necessarily true for income generating and/or appreciating assets.

Borrowing at 5% to earn 12% is a path to developing worth.
Borring at 20% to have a bigger television in not.

[cruiseallure]

We made the decision, marked the date, started doing the safety work and will be ready, big bucks or not. We will not retire, but will liquidate, and go til we can't or don't want to anymore. To live simply and to simply live is how we're doing it

sailallure