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Old 07-18-2014, 10:46 AM   #21
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I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.
For us, a good portion of our net worth is "tied up" in tax deferred investments vehicles---in our case mostly 401K's, so our access is somewhat limited until we hit 59. I know we could access money earlier via 72t distributions, but, I have never really looked into that as an option. We also live in a rather high cost of living area (especially with regard to real estate and property taxes)---if you saw our home, I don't think you would call it a shack, but I doubt you would call it much more than modest either. Unless we moved some place less expensive (and we could but we have personal reasons for staying), housing will continue to consume a pretty decent chunk of change.
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Old 07-18-2014, 10:50 AM   #22
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I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

A 50yo male with 2 million could buy an immediate annuity and get $108,720 a year until they die. Who needs 108k/year for a retirement?
Perhaps this is true. But few people with the sense to become 2x millionaires would plunk it down on an annuity.

Anyway, opinions would vary about the suitability of $ 108,000 gross income. It would be a step up for me, but a step down for many others.

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Old 07-18-2014, 10:53 AM   #23
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I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.
Well, I used to think that if I had $1M, plus a fully-paid off house, I'd be set for life. But I made that estimate back around 1999 or so. Thanks to inflation, that $1M would have to be more like $1.4M today.

So while I'm closing in on $1M, inflation has taken its toll a bit. Plus, I don't have a paid off house...I owe about $156K. I'm also only 44, so if I retired now, there's a good chance I could live another 50 years, even more. So, that's why I'm starting to think $2M might be a better goal.

Now, if I was older, closer to getting SS, and not having as many remaining years to fund, I might be more comfortable with $1M.
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Old 07-18-2014, 11:10 AM   #24
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No, not $5M here, but significantly more than $1M. And the two homes account for only around 20% of total net worth. They are still a drain for operating costs and maintenance. Living in an RV would be a lot cheaper, and more "mobile and hostile" like Unclemick has always said, leaving more money for the joy of counting it.



Oh, and I loved my work too, building some hardware and writing firmware, and doing analysis of electromechanical systems. Would still be working if I did not have problem with the megacorp environment that I worked in.
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Old 07-18-2014, 11:17 AM   #25
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My investable assets came close to $1M earlier in the month. I think i hit something like $985-990K around July 3. But the recent market blips have taken a bit of that away. But to look at me, you wouldn't notice it either. I live in a 98 year old house that needs a ton of work. The landscaping is nothing fancy. The dusty '79 Chrysler and rusting '85 Chevy truck in the driveway don't exactly ooze class. I cut my own hair, and don't always do the best job. And today I'm wearing jeans that were a Christmas gift, 8-year old cowboy boots, and a hand-me-down short-sleeve button up shirt. I either bring my own lunch to work, or go home, as it's only 2.5 miles.

So yeah, I don't exactly look or act the part...
Actually you do look the part......of the Millionaire Next Door.

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Old 07-18-2014, 11:18 AM   #26
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If you had inflation adjusted pension of more then 50k at 55 or more then 40k at 40 you would also be millionaire.

So retired O4/O5 at age 44 with pension backed up by Federal Government is in a way millionaire even if he/she has empty bank account.
Very true.
And yet many politicians view these folks as "hard working ave Americans" while blasting the industrious small business owner with no govt' or corp pension (or benefits) and a similar REAL net worth as "greedy rich".
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Old 07-18-2014, 11:19 AM   #27
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A 50yo male with 2 million could buy an immediate annuity and get $108,720 a year until they die. Who needs 108k/year for a retirement?
Depends where you live and how you live. Seems like most folks on this board LBYM but I know that there are may people who do not. One argument my wife has used in the "why I cannot retire yet" discussion is that she might want to up our standard of living. That is actually unlikely because it is not who we are but for people who always buy a new car ever couple of years, new electronics going out for fancy meals and have extravagant vacations dialing it back is much much harder.

Actually I estimate retirement expensive for us to be between 100-120K/yr. Tax, HC will be about 40% of that in my estimates...probably too much but I'd rather have too much than not enough
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Old 07-18-2014, 11:25 AM   #28
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I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.
$2m goes a lot father in some areas than others and some people with that kind of NW may be used to living on much more than $108K.
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Old 07-18-2014, 11:31 AM   #29
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I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.
Here in Bay Area, CA, 2M asset isn't saying much. Median house price can be over $1M in most places. Sure, people can retire and make a decent living but it may not be enough if you have high mortgage, kids in college, etc.. (I have no such excuses other than just adding more to my RE travel budget.)
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Old 07-18-2014, 11:37 AM   #30
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Here in Bay Area, CA, 2M asset isn't saying much. Median house price can be over $1M in most places...
True. Hence my brother left a prominent tech company, then refused a generous offer to come back when he considered what a home of 3,500 sq.ft. as he has now would cost. They could not pay him enough.
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Is Everyone a Multi-Millionaire?
Old 07-18-2014, 11:39 AM   #31
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Is Everyone a Multi-Millionaire?

Once you have reached escape velocity, as described in this thread, your nestegg keeps growing while you are off living your life.

So, for those in that situation, it is just a matter of time and of how long they have been retired.
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Old 07-18-2014, 11:50 AM   #32
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My observation is that to hit $1 million you really have to do something extraordinary. For most people that would be making a high wage ($100k or more). For others, like myself, it could be extreme live below your means. My highest income so far is $65k year, but I live on roughly $24k. So I am sure I will hit $1 million eventually.

If you are just an average Joe/Jane you simply can't get from here to there. Most people make wages similar to mine and can only save 10% or so a year. So its just not going to happen for them.

The way things are setup it is almost impossible to get out of the rat race until you are 65+.

You will notice a lot of DINKs here where each one is making $100k+ and saving aggressively. That's not typical compared to average Jane/John. This message board is made up of atypical people.

However there is hope. The birthrate has tanked all over the planet and that is good. Large populations make people worthless and keep us stuck in a feudal hierarchy. As an example, I am convinced that the Renaissance never would have happened without the plague.

I'm doing my part to help. I have no children and will not reproduce. Thankfully other people all over the globe are doing likewise, although perhaps not consciously. If global population got down to a low enough number then everyone could enjoy the fruits of scientific progress and increased productivity. As it is right now only a tiny fraction of homo sapiens get the benefits.

If people want a bright future for everyone then they should stick to one child or less. Whoever made the one child policy in China was very wise.
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Old 07-18-2014, 12:04 PM   #33
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$2 million in DC with a family won't cut it for pre-50 early retirement. At least given the things we'd like to do. Not counting on SS and no pension.
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Old 07-18-2014, 12:10 PM   #34
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I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

A 50yo male with 2 million could buy an immediate annuity and get $108,720 a year until they die. Who needs 108k/year for a retirement?
Some of us are very risk-averse! I finally retired at age 61 with over $2 million (had planned to work to 65 but it wasn't fun anymore) and still worry. I just did a cash flow projection today and using a 2% withdrawal rate, 6% investment return, 4% inflation, and starting SS at age 67, I'm gonna be a very rich old lady. That tells me I could splurge wildly and maybe withdraw 3%.

Still, medical care is a biq question mark. DH and I are paying about $7K/year in premiums (he's Medicare-eligible, I'm not) for our various coverages and I have a $6K annual deductible. I've also been though some awful market downturns. You want some cushion so you can withdraw as little as possible and let the rest recover.

And, while $108,000 looks good now (DH And I certainly don't spend that much and we live well), in 30 years at 4% inflation, that would buy what $33K buys now.
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Old 07-18-2014, 12:10 PM   #35
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I'm doing my part to help. I have no children and will not reproduce. Thankfully other people all over the globe are doing likewise, although perhaps not consciously. If global population got down to a low enough number then everyone could enjoy the fruits of scientific progress and increased productivity. As it is right now only a tiny fraction of homo sapiens get the benefits.

If people want a bright future for everyone then they should stick to one child or less. Whoever made the one child policy in China was very wise.
Unfortunately, the ones best prepared financially and emotionally to reproduce are the people that have reduced their number of children or decided not to have any as you have.

If you like the effects of 1 child, go check out China. They are in the process of having a reverse population bomb.
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Old 07-18-2014, 12:11 PM   #36
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The average tech worker in the Bay Area now makes over $100K so it may not be typical for the country as a whole but it is actually not atypical here at all.

But a lot of the people we know with incomes like that have expenses to match and worry about money as much as those making much less, if not more, because of high expenses. A family with annual expenses of $50K can replace most of that with two CA minimum wage jobs, but unemployment benefits or two minimum wage jobs do not help much when a household has $4k a month in rent or mortgage payments alone plus two leased $80K cars in the driveway.
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Old 07-18-2014, 12:14 PM   #37
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Here in Bay Area, CA, 2M asset isn't saying much.
+1. I just feel average here.
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Old 07-18-2014, 12:29 PM   #38
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My observation is that to hit $1 million you really have to do something extraordinary. For most people that would be making a high wage ($100k or more). For others, like myself, it could be extreme live below your means. My highest income so far is $65k year, but I live on roughly $24k. So I am sure I will hit $1 million eventually.

If you are just an average Joe/Jane you simply can't get from here to there. Most people make wages similar to mine and can only save 10% or so a year. So its just not going to happen for them.

The way things are setup it is almost impossible to get out of the rat race until you are 65+.

You will notice a lot of DINKs here where each one is making $100k+ and saving aggressively. That's not typical compared to average Jane/John. This message board is made up of atypical people.

However there is hope. The birthrate has tanked all over the planet and that is good. Large populations make people worthless and keep us stuck in a feudal hierarchy. As an example, I am convinced that the Renaissance never would have happened without the plague.

I'm doing my part to help. I have no children and will not reproduce. Thankfully other people all over the globe are doing likewise, although perhaps not consciously. If global population got down to a low enough number then everyone could enjoy the fruits of scientific progress and increased productivity. As it is right now only a tiny fraction of homo sapiens get the benefits.

If people want a bright future for everyone then they should stick to one child or less. Whoever made the one child policy in China was very wise.
We think a lot alike.

I worked full-time for 16 years before working part-time for 7 more years before I ERed back in 2008 at age 45. My highest wage earnings year was my last full-time one, in 2000, when I made about $75k.

I live on about $20k a year, including income taxes. I am single and childfree, knowing at age 20 I never wanted kids but not realizing until I was about 35 that I could parlay that wonderful choice into an ER 10 years later.

I combined my single, childfree status with LBYM and an exploding company stock value to cash out about $300k worth in 2008 at low (NUA) tax rates and ER even though my taxable account had, with the company stock's proceeds, about $600k. This was when the markets were crashing in 2008, a huge benefit for me starting my ER. Yes, everything in my life seems backwards at times compared to others - when people were getting all upset and nervous about the crashing markets, I was overjoyed!

Then again, I'm an outlier in so many areas it makes perfect sense that I would see the 2008 crash as a huge break toward starting my ER.

Now that the markets have bounced back nicely, that $600K in my taxable accounts has risen to more than $800k despite pulling out about $22k every year in dividends. And the rollover IRA I began in 2008 has doubled, waiting for me to have unfettered access to it in about 8 years.

I am at about $1.3M now between the 2 accounts even though I am using only 2/3 of it to pay my bills with plenty left over. In fact, I have a surplus in my bank account sitting around waiting for me to invest it somewhere. Oh dear, what shall I do with it??
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Old 07-18-2014, 12:45 PM   #39
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Don't forget that $108K per year is not inflation adjusted! So in 20 years it will seem like considerably less. Then there is the cut for taxes - not large, since it's an annuity, but it will still cut into the spendable income.

But the biggie is that that annuity payout is not adjusting for inflation. Even after 10 years it will seem like considerably less. After 15 years since we retired, cumulative inflation has reached 40%. That would be a huge cut in standard of living.
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Old 07-18-2014, 12:45 PM   #40
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With over 36 years together I think "we" when talking net worth. We are over 2 and under 5, never had reasonable paying jobs (think I topped out at under $16,000 salary as a mushroom grower for a while, while she worked very hard and with great loyalty thinking that owners would compensate her - instead she was the one - one - among the car dealership managers who offered to and took a salary cut when the dealership was in trouble. This after working for over 10 years without a raise. Yeah - no big incomes here.)

Instead we both liked old stuff and surround ourselves with it, bought old places and put in the effort to make them decent and rentable, and lo and behold, we seem to have stacked up some ducats. Really looking forward to Medicare in a few months, which I'll pay a substantially higher amount than the norm for, but it will still be $400 hundred less than my current insurance. Almost as big a monthly income bump as when I started taking my piddly SS checks at 62.
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