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Old 03-18-2014, 08:33 PM   #21
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Certainly, a million is already worth a lot less than it was when Cole Porter wrote his song for "High Society in 1956. According to the CPI Inflation Calculator, you'd need $8.6M to have the same buying power today. In another 50 years or so, a million won't exactly be chump change, but it won't even be an amount that anyone in the developed world could consider retiring on - not even Jacob!
Then again, $1M in 1956 invested in 60/40 with a withdrawal of $40K per year every year since would have ended last year with over $32M left over.

(Per Firecalc)

Inflation works both ways.
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Old 03-18-2014, 08:34 PM   #22
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This survey is a much different (and more significant, IMO) measure of household wealth. It is % of households with > $1M in investable assests ranked by state. The LA Times piece includes home equity. California is not in the top ten.........Top states for millionaires per capita
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Old 03-18-2014, 08:44 PM   #23
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If you live in CA, particularly in the coastal cities, you live in a different world than the rest of the country. I'm sure you're aware of the bifurcation of the CA economy, where SoCal is no different than NorCal. Where I live (but not much longer), it's all the Bentleys, Hummer stretch limos, etc. "Upscale" bars and restaurants always full, huge new "upscale" living projects going up, the very latest trendy clothes that the rest of the world hasn't even caught on to yet, Paparrazzi chasing "stars" out with their kids, ad nauseum. The scene is surreal.
With apologies for the off-topic comments..........

I lived in LA for 20 years and it is indeed quite surreal. One of my co-workers had well-to-do parents who rented a beach-front home in Malibu for him while he was working as a low-level manager in a retail establishment. David Hockney was one of his neighbors. Another friend lived across the street from Tim Curry in the Hollywood Hills. I bumped into celebrities on a regular basis, both as a result of my job, and simply from just being there and keeping my eyes open. I took a 3 year hiatus from LA (in Reno) and on moving back there with my (then new) girlfriend, she had a typical "LA experience" on her first morning there. We parked the U-Haul truck in the parking lot at the Farmer's Market on 3rd and Fairfax. As we were walking into Dupar's Restaurant for breakfast, she walked slap-bang into Kiefer Sutherland, who was leaving. She literally bumped (quite hard) into him. Without batting an eyelid, she looked at him from point-blank range and said, "Oh hi Kiefer!" He looked back, a bit puzzled, said "Hi", and walked on. Then we walked into the diner, had breakfast and marveled at her "welcome to LA" moment.

I know a lot of people scoff at the place - I get a fair bit of that up here in the SF Bay Area but for me, at least, there was something about it that was magical. I didn't care that I was living in a very average apartment and riding an old motorbike (later an old Volvo, and then a bicycle), because I liked the experiences my life was made up of. I must admit I get a bit defensive when some of the people in the Bay Area visibly shudder on learning that I used to live in LA. I can appreciate why it's not for everyone, but a part of me wants to at least attempt to convey some of the magic that I felt to them.
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Old 03-18-2014, 09:59 PM   #24
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I'm always amused that these surveys seem to include retirement investments (e.g. 401k) but EXclude pension benefits. Many 'traditional' blue collar retirees have total pension benefits (inc lifelong income stream, insurances, etc.) worth >$1M, but few think of them as "rich". Even the 'immediate annuity' value of typical SS benefit gets you roughly 1/3rd the way to that $1M.
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Old 03-18-2014, 11:53 PM   #25
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That's exactly what I'm alluding to. Those of us with the goal of reaching $1m for ER in the next 10 years (even at 4% SWR) might need to recalculate. I feel with the number of people reaching the $1M+ mark will only make inflation higher. The thing to also keep in mind is that the data consists of those with "at least" $1M (without counting home values), so many of these folks could easily have $5M+.

Just when I think I have a plan to get to my ER goal it nudges itself out of my reach
I don't think that's true.

While there may be more millionaires than ever, there are way more non-millionaires and it's their spending that moves the needle as far as inflation.

In fact, meaningful inflation doesn't occur unless wages are increasing faster and with still pretty high unemployment, well we still have low inflation and interest rates.

Now people will cite how much more filling up at the gas station and certain items at the grocery store are. But food and energy are volatile so not part of some CPI calculations.

Of course, when Starbucks sees increased traffic, they will increase prices (plus coffee may go up in price as developing countries have more demand for "first world" products and commodities, like cars and beef).
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Old 03-19-2014, 12:12 AM   #26
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I've heard the CA arguments before but honestly when I sit down with a clear head I don't see it as being outrageously expensive especially for retirees. For e.g. if you own your home all you would pay is the RE taxes which are far less than many other states. My RE taxes are only $4500 per year. A paid for house worth at least $500k is good to have in retirement I would imagine. HELOC on it or the option of selling and moving to a cheaper state later if needed is a great plus. Food is food, I can't imagine a BigMac costing less elsewhere than here. Sure gas is a bit more but in retirement you're probably not driving all that much. Non tangible things, the weather is a huge plus but the traffic is a huge minus at least in the big cities. So what am I missing?
+1. For those in CA who have owned their homes for awhile, Prop 13 saves us a lot of money. The state income tax is less of a factor for those of us in retirement with modest incomes. If you move outside of LA or SF, day-to-day cost of living is pretty reasonable.
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Old 03-19-2014, 08:52 AM   #27
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Read it somewhere that when "millionaire" word was first coined, it was worth $4M in today's dollar.
Nah, it would be more than that. FWIW, in 1962 when the first thing you knew old Jed's a Millionaire and the kinfolk said Jed move away from there, $1M would equate to about $7.77M in today's dollars.

For things to go up 4x would put the date around 1976-1977 (1976 yielded about a 4.13x increase and 1977 was around 3.85x)

I wonder if, even in the 1960's, by Beverly Hills standards, a millionaire was no great shakes? There was a line in the Beverly Hillbillies about the children of the mere Millionaires feeling intimidated by the children of the truly wealthy! Although, FWIW, Jed Clampett started off with $25M.
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Old 03-19-2014, 09:50 AM   #28
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Nah, it would be more than that. FWIW, in 1962 when the first thing you knew old Jed's a Millionaire and the kinfolk said Jed move away from there, $1M would equate to about $7.77M in today's dollars.

For things to go up 4x would put the date around 1976-1977 (1976 yielded about a 4.13x increase and 1977 was around 3.85x)

I wonder if, even in the 1960's, by Beverly Hills standards, a millionaire was no great shakes? There was a line in the Beverly Hillbillies about the children of the mere Millionaires feeling intimidated by the children of the truly wealthy! Although, FWIW, Jed Clampett started off with $25M.
Made my day. Any Retirement/wealth management discussion that includes Jed Clampett and his net worth is wonderful.
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Old 03-19-2014, 09:51 AM   #29
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+1. For those in CA who have owned their homes for awhile, Prop 13 saves us a lot of money. The state income tax is less of a factor for those of us in retirement with modest incomes. If you move outside of LA or SF, day-to-day cost of living is pretty reasonable.
+2 If you are willing to live outside the Bay area in Norcal, and live in a paid for house, Prop 13 is indeed a huge help. Our taxes are 2170 a year. And being in the 15% tax bracket helps as well. I looked at moving to Oregon recently, and property taxes on a similar house would double. Then there's all the rain they get. The climate and lifestyle here=hard to beat! Mango
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Old 03-19-2014, 10:13 AM   #30
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Someone must have spiked my morning coffee, I'm usually much more civil at this hour.

But is it not reasonable to see a correlation between the taxes one must pay to live in a state and the overall desirability of the state?

If there were a state in some part of the country where it was unbearably cold in the winter, and horribly hot and humid in the summer, and it had the highest taxes in the country, who would choose to live there?

We talk about how valuable our time is on this forum, and how we don't want to waste any precious time we have because life is short. Then we tell people to go move to some part of the country where they will be holed up all winter long waiting for the thaw to come, then suffer unbearable humidity all summer. But tell them how great it will be to save a few dollars in taxes.

It just seems like a real contradiction to me that I've never understood.
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Old 03-19-2014, 03:27 PM   #31
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Those of us in Minnesota get to have the terrible weather AND high taxes.

On the plus side, all of our kids are above average.

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Someone must have spiked my morning coffee, I'm usually much more civil at this hour.

But is it not reasonable to see a correlation between the taxes one must pay to live in a state and the overall desirability of the state?

If there were a state in some part of the country where it was unbearably cold in the winter, and horribly hot and humid in the summer, and it had the highest taxes in the country, who would choose to live there?

We talk about how valuable our time is on this forum, and how we don't want to waste any precious time we have because life is short. Then we tell people to go move to some part of the country where they will be holed up all winter long waiting for the thaw to come, then suffer unbearable humidity all summer. But tell them how great it will be to save a few dollars in taxes.

It just seems like a real contradiction to me that I've never understood.
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Old 03-19-2014, 05:29 PM   #32
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Plenty of millionaires here in CT. It is expensive -- both housing costs and taxes -- but it is the best place I've ever lived, and I've lived all around the country, first as a Navy brat and then during my own time in the Navy. (My second choice would be either the Seattle area or Maine).
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LA Times: Number of millionaires in US reaches a new high
Old 03-19-2014, 06:25 PM   #33
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LA Times: Number of millionaires in US reaches a new high

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+2 If you are willing to live outside the Bay area in Norcal, and live in a paid for house, Prop 13 is indeed a huge help. Our taxes are 2170 a year. And being in the 15% tax bracket helps as well. I looked at moving to Oregon recently, and property taxes on a similar house would double. Then there's all the rain they get. The climate and lifestyle here=hard to beat! Mango
+3

We also looked in Oregon and found that state taxes, utilities, and property taxes all together were going to triple or quadruple expenses for us.

Add to that travel costs for having to leave the state for some of the year in search of sunshine.

We finally decided to sink or swim with California.
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Old 03-19-2014, 07:27 PM   #34
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Plenty of millionaires here in CT. It is expensive -- both housing costs and taxes -- but it is the best place I've ever lived, and I've lived all around the country, first as a Navy brat and then during my own time in the Navy. (My second choice would be either the Seattle area or Maine).
I addressed a wedding gift to Ridgefield CT to "Richfield, CT" when I misheard the city. But then I realized Richfield probably was correct too.
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Old 03-19-2014, 11:55 PM   #35
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Nah, it would be more than that. FWIW, in 1962 when the first thing you knew old Jed's a Millionaire and the kinfolk said Jed move away from there, $1M would equate to about $7.77M in today's dollars.
I think that is correct. My memory isn't very good these days.
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Old 03-20-2014, 11:05 AM   #36
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I addressed a wedding gift to Ridgefield CT to "Richfield, CT" when I misheard the city. But then I realized Richfield probably was correct too.
Spot on.
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Old 03-20-2014, 12:08 PM   #37
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+2 If you are willing to live outside the Bay area in Norcal, and live in a paid for house, Prop 13 is indeed a huge help. Our taxes are 2170 a year. And being in the 15% tax bracket helps as well. I looked at moving to Oregon recently, and property taxes on a similar house would double. Then there's all the rain they get. The climate and lifestyle here=hard to beat! Mango
Even in the Bay area we have retired friends on Medicare, with paid for houses, and Prop 13 property taxes, and they do not spend any more to live than the low end posters in the monthly budget thread.

They also get the scenery, parks, beaches, and weather for free, do not need to spend a lot on heating or cooling, have ready access to mass transit, produce from the central valley at farmers' and ethnic markets for dirt cheap prices, and can utilize free days or free library passes at most of the museums and other tourist attractions.
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Old 03-20-2014, 12:17 PM   #38
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They also get the scenery, parks, beaches, and weather for free, produce from the central valley at farmers' and ethnic markets for dirt cheap prices, and free days or free library passes at most of the museums and other tourist attractions.
This kind of thing is to often overlooked. Any amenities you get but you do not have to maintain are worth a lot; not the least because as you age you can continue to enjoy them without the "I really ought to trim that hedge, mow that grass, shovel that snow." Also, these are fine climates- no need to spend money to escape summer or winter.
Add no need to escape bad weather to no need to go elsewhere seeking beauty or stimulation and IMO it pays to think long and hard before you leave an attractive, stimulating, temperate area even if it does perhaps cost a bit more day to day. Even the people you meet are different.- which may of course be a plus or minus for you.

Ha
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Old 03-20-2014, 01:06 PM   #39
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Taxes are low but you deal with congestion and traffic even if you don't have to commute.
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Old 03-20-2014, 01:53 PM   #40
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I spent my high school years in LA. I ain't going back there. Most folks (I've met in Bay Area - disclaimer) who escaped from LA say the same thing. They won't go back. Smog & traffic, crimes, ...

Yeah, I ran into a few celebrities in LA (Smother's brothers, Fonzi, to name a few) in 4 years I was there. So what? LA is LA. Bumping into celebrities now and then doesn't change things.
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