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Old 02-01-2016, 04:11 PM   #41
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Originally Posted by rodi View Post
I presume you picked => $5M in order to illicit comments from those with larger annual budgets.
But that's not really the point. The budget should be proportional to the nest egg... So someone with $1M might have a 1/5th the budget. Or might have more - because the >$5M person might be 30yo - and need to have a smaller WR - and the person with the $1M might be 70yo, so comfortable taking 4% or higher as a WR. Or the $1M person might have a large pension to augment withdrawals.

In other words - it's an interesting question but really doesn't have enough info to garner any useful results.

I suspect that's why people started making jokes.
Excellent, thoughtful response. Good for you.
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Old 02-01-2016, 04:26 PM   #42
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Well just to play devil's advocate. Let's say youre 30 and live in social.

5m at 2% is 100k.
dude he's 30, has $5M and lives in SoCal - he/she needs more than a measly 100K a year.

According to my calculations, a straight life annuity factor at age 30 using 4% interest is about 32. So he/she should be able to draw over 150K a year for life out of that nest egg.
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Old 02-01-2016, 04:45 PM   #43
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Appreciate everyone's feedback. While some funnier than others.
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Old 02-01-2016, 05:21 PM   #44
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Well just to play devil's advocate. Let's say youre 30 and live in social.

5m at 2% is 100k.
That's 8300/mo.
Almost impossible to find a house in a non high crime area in the LA region for under a million. So that's about 4500/mo. I'm talking 2000 sqft with a 5500 sqft yard in an ok neighbourhood .

So that leaves 4k.
Take 1k for health insurance.
Take 500 for food.
500 for bills.
Maybe 500 for taxes.
And 500 for fun stuff.

That leaves about 1k/month for buffer which is pretty good but you're not renting private jets or even flying first class more than once a year .

Now take that same amount and move to south Carolina where you can buy a better house in a similar neighbourhood for 800/mo.

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Exactly. And $500 for food is nothing. $500 for fun stuff is nothing. If you've been able to amass $5M, you've had a real good run and probably spend $500 a month on vacation and travel. Go to a ball game once a month and there's another $250.

You probably have a significant other and kids as well. A 3% WR on 5 million is 150K -- and so cal taxes? Fahgetaboutit as they say in NYC.
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Old 02-01-2016, 05:50 PM   #45
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Don't you simply keep a case or two of Dom Perignon in the cellar to avoid running out and losing face when your friends drop by and you tell the cook to prepare an impromptu dinner?
I live in the Penthouse on the 16th floor and have no cellar, although I do have an underground parking space (and no car). No fun drinking champagne at home where you can not be seen by the huddled masses.
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Old 02-01-2016, 05:58 PM   #46
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No fun drinking champagne at home where you can not be seen by the huddled masses.
We prefer the 'quiet money' approach. More fun when no one sees you.

Actually had a great-uncle who wouldn't smoke cigars in public because he "didn't want anyone to think I'm rich". Of course, everyone knew he was extremely wealthy (he was fairly famous and stepping out of the Bentley was always a give-away) but that was his thing.
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Old 02-01-2016, 06:10 PM   #47
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Don't you simply keep a case or two of Dom Perignon in the cellar to avoid running out and losing face when your friends drop by and you tell the cook to prepare an impromptu dinner?
This is what I was thinking would be the way to go...
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Old 02-01-2016, 07:17 PM   #48
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People with > $5 million don't need no stinkin' budget.
it's *only* $200K on 4% rule !
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Old 02-01-2016, 07:28 PM   #49
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Inappropriate (or poorly worded) question from inexpetienced member. I would have thought ignoring it the best response? Certainly better than sarcasm.
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On this forum? LOL!
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Is that a little more sarcasm?
No, I don't think so. She was just asking a rhetorical question. People here never miss a chance to make jokes. We enjoy a lot of levity. Life is too short, and can be brutal. Why not laugh as much as you can stand?
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Old 02-01-2016, 07:40 PM   #50
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I presume you picked => $5M in order to illicit comments....
I just wanna hear some more of those illicit comments from our esteemed moderator.
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Old 02-01-2016, 07:42 PM   #51
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No, I don't think so. She was just asking a rhetorical question. People here never miss a chance to make jokes. We enjoy a lot of levity. Life is too short, and can be brutal. Why not laugh as much as you can stand?
Sure but these "jokes" were at the expense of the OP and generally derided his assumed position of wealth. Certainly agree the original question was off the mark, but I thought we were a little more open to other points of view than this. If he had mentioned a much more modest sum, I suspect our responses would have been much more civil and helpful.
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Old 02-01-2016, 07:42 PM   #52
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it's *only* $200K on 4% rule !
I think someone that amasses $5m probably has had a good paying job for some time, and probably spends more than $200k per year in their bigger earning years. It may be tough for them to live on $200k in retirement.
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Old 02-01-2016, 08:23 PM   #53
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I just wanna hear some more of those illicit comments from our esteemed moderator.
I meant elicit some illicit comments. LOL

(Or... I mistyped. )
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Old 02-01-2016, 08:24 PM   #54
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It may be tough for them to live on $200k in retirement.
As is often pointed out on this forum, depending on geography, it can be tough to live on $200K when working.
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Old 02-01-2016, 09:19 PM   #55
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Yes, I've noticed that trend growing the past few years.

Many people seem to be taking the outlook that the goal is to have as much or more, in real dollars, at the end as in the beginning whether you're talking a single year or the balance of your life. Whereas in earlier years on the Forum most seemed to be looking at simply not running out of money while trading it for the retirement lifestyle they enjoyed the most.

I think the proportion of folks who get more satisfaction out of not spending than spending is growing. For example, there seem to be more folks who would gain more satisfaction from staying home and not spending $10k on travel than actually doing the travel. They'd really enjoy the travel. But they'd enjoy opening the spreadsheet and seeing the unspent money there even more.

After a lifetime of intense planning and saving, seeing your portfolio grow in real terms post retirement is more satisfying than spending some money to have more experiences.

Not my view but I can understand how it can be for many.

I can totally agree, seeing numbers move up is pretty exciting. Being able to send grandkids to college is high on my list hopefully in 10 years.


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Old 02-01-2016, 09:41 PM   #56
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As is often pointed out on this forum, depending on geography, it can be tough to live on $200K when working.
In CA, that's $50K in fed and state income tax for MFJ with standard deduction. It's $15K tax for $100K. Add another 7.45% for FICA.

For single, $25K fed and state income tax for $100K and $65K tax for $200K. Then additional 7.45% FICA for $100K, slightly less for $200K ($117K income cap for SS).
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Old 02-01-2016, 09:42 PM   #57
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Certainly better than sarcasm.
What's wrong with sarcasm?
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Old 02-01-2016, 10:06 PM   #58
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In CA, that's $50K in fed and state income tax for MFJ with standard deduction. It's $15K tax for $100K. Add another 7.45% for FICA.

For single, $25K fed and state income tax for $100K and $65K tax for $200K. Then additional 7.45% FICA for $100K, slightly less for $200K ($117K income cap for SS).
Us retirees don't pay no FiCA; we collect through SS a small portion of that which has been deposited in our accounts; never to come out even or ahead of what we have put in.
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Old 02-01-2016, 10:12 PM   #59
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Us retirees don't pay no FiCA; we collect through SS a small portion of that which has been deposited in our accounts; never to come out even or ahead of what we have put in.
This is the comment I was replying to.
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As is often pointed out on this forum, depending on geography, it can be tough to live on $200K when working.
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Old 02-02-2016, 05:57 AM   #60
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I can totally agree, seeing numbers move up is pretty exciting. Being able to send grandkids to college is high on my list hopefully in 10 years.


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It might be a few factors. One is the very erratic nature of the market in the past few years; you want to build up some ice under your feet for when the next meltdown arrives.

The other may be that the profile of those on this forum has changed.

Just an impression, but it seems that when I first started lurking here 10 years ago the typical RE person was late 40's and early 50's. About 3 years ago we've seem to be seeing people in their 20's and 30's; obviously the money has to last a lot longer.

There also seems to be a lot of folk who left work involuntarily; maybe a little less prepared financially so the need for continued growth vs spend down is there.

Just my guess.
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