For those that have retired with =>$5M in investable assets

[Meadbh]

Can we please quoting 1% as "typical." I would call it "ridiculous," "excessive", or even accept "all too common." But "typical" gives it the sort of inevitability and cloak of acceptability it does NOT deserve. Psychologically this is called "anchoring."

There are many different options for FA fees and the sooner we knock the legs out of the absurd notion that 1% is the reference, the better off consumers will be.

N. B. - I pay a flat fee that thanks to the size of my portfolio amounts to less than 0.07%. As my portfolio grows only I benefit by getting more money. The FA gets the same money for the same work and I pay an even lower percentage.


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Once again, we need to put this in context. The US has the lowest MERs, because of competition and economies of scale. Fees are much higher in the UK and other European countries, as they are in Canada.

Management expense ratio - finiki, the Canadian financial wiki

 

[marko]

Granted, everyone has to live on whatever they have accumulated, but it just seems more challenging to retire on $0.5m than to retire on $5.0m. It's a nice problem to have; I just can't relate...

Curious as to which end you cannot relate to. $.05M or $5M?

 

[HFWR]

Curious as to which end you cannot relate to. $.05M or $5M?

The bigger of the two... I'm in the smaller of the two group, btw.

 

[dunkelblau]

I think the idea is that trading a few OMYs vs cutting back on a 200K/yr spend would be an obvious decision to many. For those who are happy retiring at the median US household spend, a 5M nest egg has significantly overshot the mark so the "is this enough" question seems ludicrous. The implication is that anyone spending 4x the median must have a large discretionary component that can be reduced painlessly. I think most on this board would trim expenses by ~20-30% to ER at this point, but there are several who would not make this choice for various reasons.

I haven't retired yet and my net worth is usually higher at year-end, but not always-- and the reason is not high spending (drop would still occur with zero spending). FWIW I would not withdraw 200K/yr on a 5M portfolio unless I was past RMD age. The other poster who takes out 70K/yr on a 4.5M portfolio is depleting at a rate I would feel comfortable with (age 50-ish). I would include a rolling average of taxes and FA fees in the withdrawal amount.

 

[Danmar]

The implication is that anyone spending 4x the median must have a large discretionary component that can be reduced painlessly. I think most on this board would trim expenses by ~20-30% to ER at this point, but there are several who would not make this choice for various reasons.

Perhaps but not always. Really depends on how much you like or dislike your job. For some the money is just "hanging there". Why wouldn't you pick some more. Obviously within reason.

 

[2017ish]

Perhaps but not always. Really depends on how much you like or dislike your job. For some the money is just "hanging there". Why wouldn't you pick some more. Obviously within reason.

Agree with this. We like our jobs and have continued working so as to have, hopefully, large discretionary spending in retirement. We've always planned on a higher discretionary spend rate than we've had while working, so we didn't see any problem in working a bit longer for "fluff." But, there are limits--we need to be young enough to handle the adventures we desire!

 

[ERD50]

Can we please quoting 1% as "typical." I would call it "ridiculous," "excessive", or even accept "all too common." But "typical" gives it the sort of inevitability and cloak of acceptability it does NOT deserve. Psychologically this is called "anchoring." ...

I understand where you are coming from on this, but unfortunately, the "ridiculous," "excessive" do seem to be typical as well. I'm not sure that using the phrase 'typical' implies acceptability though? At least I don;t think of it that way, though maybe I'm off-base on that. But I still find it interesting that you see it that way - do others?

There are many different options for FA fees and the sooner we knock the legs out of the absurd notion that 1% is the reference, the better off consumers will be.

N. B. - I pay a flat fee that thanks to the size of my portfolio amounts to less than 0.07%. As my portfolio grows only I benefit by getting more money. The FA gets the same money for the same work and I pay an even lower percentage.

But we can't stop referencing it as such until it changes.

-ERD50

 

[meierlde]

I understand where you are coming from on this, but unfortunately, the "ridiculous," "excessive" do seem to be typical as well. I'm not sure that using the phrase 'typical' implies acceptability though? At least I don;t think of it that way, though maybe I'm off-base on that. But I still find it interesting that you see it that way - do others?




But we can't stop referencing it as such until it changes.

-ERD50

Perhaps a better term is customary just like 6% commissions on real estate sales are customary.

 

[unclemick]

The reason I started participating in "retirement forums" was to gain experience from others who weren't willing to trade any more life for more money (and the other assorted nonsense of having a j*b). But I'm in an entirely different sphere than those who are trying to maintain a $200k/yr lifestyle. Granted, everyone has to live on whatever they have accumulated, but it just seems more challenging to retire on $0.5m than to retire on $5.0m. It's a nice problem to have; I just can't relate...

And really fun. Back in the early days of this forum we had threads on much lower budgets.

I consider this thread a flip side to the 'Four Yorkshiremen'. The numbers/lifestyles have elements of truth interspersed with humor.

heh heh heh - we've come a long way baby!

 

[urn2bfree]

I understand where you are coming from on this, but unfortunately, the "ridiculous," "excessive" do seem to be typical as well. I'm not sure that using the phrase 'typical' implies acceptability though? At least I don;t think of it that way, though maybe I'm off-base on that. But I still find it interesting that you see it that way - do others?




But we can't stop referencing it as such until it changes.

-ERD50

But that is the point...it has changed. And I think we can reference it in a better way. As was pointed out by someone else, much has changed in investing with technology that makes it much easier to do it yourself. It also has made it easier for the financial advisors, which is why many can now charge less than what used to be "typical" or "customary." Just as technology has made computers and TV's cheaper, it has made financial planning and portfolio management cheaper. There is a concerted effort by some to maintain this notion that 1% is typical, customary or even "appropriate." It's understandable, but it is plainly and simply an attempt to anchor the price. We consumers don't have to repeat it. Language matters. (See Frank Luntz's career) The power to change starts with us. Every time 1% is mentioned, I think the many lower priced options should be mentioned.



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[Neill]

How much will taxes on portfolio income eat into that 220K?

When you aren't working, you have a lot more time available to spend money!

Portfolio generated $130k in the taxable portion last two years. That's gets taxed at 0%. I can convert a chunk of IRA to Roth before any taxes have to be paid. Then the marginal rates are high for both capital gains and income.
I don't plan to generate much if any capital gains that are taxable. I gift some appreciated stock to my minor kids and use the money to fund them. Have to keep gains in the $2k region to avoid kiddie tax but the marginal rate there will be lower than mine because of phase outs.
I can do some tax loss harvesting to get some more money out I guess if I need to.

 

[ERD50]

...There is a concerted effort by some to maintain this notion that 1% is typical, customary or even "appropriate." It's understandable, but it is plainly and simply an attempt to anchor the price. ... Language matters.
...

I guess we will have to agree to disagree (at least I will!). I understand what you are trying to say, I just don't agree that using the word "typical" as a descriptor is any way condoning, accepting it, inferring it is appropriate, anchoring it, or anything like that. It is merely describing it. Language does matter - look up "typical" in your Funk & Wagnall's - I don't see anything of the sort.

The power to change starts with us. Every time 1% is mentioned, I think the many lower priced options should be mentioned.

I think the alternatives normally are mentioned. And I agree that they should be, but it may get omitted from time to time, as being 'common knowledge' here. In fact it is usually in the context of DIY and low cost index funds. And I typically (!) see it mentioned that there are a few places that charge the lower fees (Rick Ferri?), or recc to hire a one-time (or occasional) review, rather than pay each and every year.

-ERD50

 

[marko]

Are we really debating the difference between the words 'typical' and 'customary'?

Or am I misunderstanding? (I do that a lot)

 

[rodi]

Are we really debating the difference between the words 'typical' and 'customary'?

Or am I misunderstanding? (I do that a lot)

Not all of us arguing it - just some folks.

 

[ERD50]

Are we really debating the difference between the words 'typical' and 'customary'?

Or am I misunderstanding? (I do that a lot)

I don't know, I was just trying to address the other poster's comments. I don't think there is any debate, unless one wants to have that debate with the dictionary?

-ERD50

 

[dtbach]

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.

Yeah, that was the view by my parents for years. But now that they are in their mid-90's, my dad tells me everyday that they should have spent more on travel and entertainment. They can't do anything now, but hey they are millionaires. You can bet when I get the inheritance, it will be spent fairly lavishly. You CAN"T TAKE IT WITH YOU!!

 

[dixonge]

To all of us who questioned the motivation behind this original question, and the $5M target -- well, to be fair, serie1926 is consistent...

http://www.early-retirement.org/forums/f26/howdy-32254.html#post596114

 

[serie1926]

To all of us who questioned the motivation behind this original question, and the $5M target -- well, to be fair, serie1926 is consistent...

http://www.early-retirement.org/forums/f26/howdy-32254.html#post596114

WOW! Thanks for posting that old post!!!

Amazing how the years have flown by and the blessing of hopefully being FIRE'd shortly.

 

[ERD50]

To all of us who questioned the motivation behind this original question, and the $5M target -- well, to be fair, serie1926 is consistent...

http://www.early-retirement.org/forums/f26/howdy-32254.html#post596114

Off topic from that, but your current sig, reminded me of this song by Steve Goodman (the sentiment has been expressed different ways over the years, I'm sure):

To me, life is like a book. We all have the same first and last chapters. Filling the pages in between determines the value of our existence...

Carine McCandless

Steve Goodman - Between the Lines Lyrics

The day you're born they sign a piece of paper
To certify the date of your birth
And the day you die they sign another
Just to prove you've gone back to the earth

And between those two pieces of paper
There's the truth that is so hard to find
And the story of your life is written ' , but
You must read in between the lines ...

... more at link

-ERD50