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Old 03-15-2011, 10:22 AM   #61
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But the same 4% converts $7.5 million into $300k annually. That's in the top 2% of all taxpayers.
I certainly wouldn't complain about that .

For comparison, in San Jose / San Francisco anywhere from 11-15% of households are over $200k annually. This was the most comparable figure I could find.
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Old 03-15-2011, 10:35 AM   #62
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I remember the show, and I sometimes do the same math that you do. In those days (I was pretty young) I figured that $1 million generated $25-30k in interest from a bank account, and that was a "very high" income.
Back in the sixties the mantra for big earners was "make your age." Thus a 40 year old making $40K was a stellar success. What is the equivalent for a 40 YO today, $200K?
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Old 03-15-2011, 02:04 PM   #63
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You need to define "rich" before you debate a number.
Top 10%, or top 5% ought to do it. Being better off than every tenth person, or every 20th person should qualify you as "rich" in any sensible conversation. Even at top 1%, you're still very far short of having $7MM in the bank.

It's insane how blown out of proportion the idea of "rich" has become. It's likely due to the vast income inequality that even those in the top 1%, or one-half of 1%, don't feel rich because they see people with still far larger incomes and wealth.
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Old 03-15-2011, 05:04 PM   #64
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I like G4G's definition. Top 5% definately qualifies as wealthy in my book, especially in a phenominally wealthy country like the US.
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Old 03-15-2011, 05:32 PM   #65
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Who knows what "rich" means. Obviously a personal thing. Why does it matter? As long as you have enough for your lifestyle? Seems to me that the term "rich" has taken on a negative connotation anyway. I much prefer the terms well off, comfortable, set, or even better just plain "lucky".
I agree.

Along these lines, many of us become creatures of habit as we grow older. Where a 40-year-old used to a middle class lifestyle might dream of throwing around money right and left spending twice as much or more, that isn't always the case for those of us in our 60's.

If someone spends $30K/year and has absolutely everything he/she desires, does it matter whether or not he/she has $2M or $7M tucked away? Either way, he/she is rich, IMO. To me, being "rich" has more to do with desires than with the size of one's nestegg.
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Old 03-15-2011, 05:40 PM   #66
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I agree.

Along these lines, many of us become creatures of habit as we grow older. Where a 40-year-old used to a middle class lifestyle might dream of throwing around money right and left spending twice as much or more, that isn't always the case for those of us in our 60's.

If someone spends $30K/year and has absolutely everything he/she desires, does it matter whether or not he/she has $2M or $7M tucked away? Either way, he/she is rich, IMO. To me, being "rich" has more to do with desires than with the size of one's nestegg.
I saw a poll once done across all income classes. They asked "How much more would be the minimum needed to live The Good Life".

The answer, surprisingly enough, was that each person believed that they needed about 40% more minimum to live well. And that was for pretty much all of the groups regardless of income.

Hedonic treadmill defined.
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Old 03-15-2011, 05:46 PM   #67
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Perhaps that is an invalid concept. Most people on this forum report entering a state of unending bliss within a short time after retiring, and maintaining or increasing this happiness over time.

Of course, they could be lying.

Ha
Not me! I still have that silly grin on my face.

I have only been retired 16 months, so truthfully I probably have much to learn from more experienced retirees like you, but so far I have had only one bad day. It was still better than any day at w*rk.
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Old 03-15-2011, 05:55 PM   #68
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Would anyone here be able to spend $200-300k a year without just going on major shopping sprees? Having that much disappear yearly from taxes or club dues or mortgages or insurance or whatever isn't a new Ferrari every year is so far out of anything that I can imagine, it seems alien.
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Old 03-15-2011, 05:56 PM   #69
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I saw a poll once done across all income classes. They asked "How much more would be the minimum needed to live The Good Life".

The answer, surprisingly enough, was that each person believed that they needed about 40% more minimum to live well. And that was for pretty much all of the groups regardless of income.

Hedonic treadmill defined.
I am most definitely living The Good Life, and not spending the entire amount dictated by my SWR despite feeling quite free to spend it. I have everything I want (well, except for that rice cooker that is on order, and that Amazon says will arrive tomorrow! ).

Several others on the forum have also mentioned not really needing or wanting to spend all that their SWR would allow them to spend. Perhaps we are the exceptions. We are a pretty nifty bunch, really.
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Old 03-15-2011, 06:01 PM   #70
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Would anyone here be able to spend $200-300k a year without just going on major shopping sprees? Having that much disappear yearly from taxes or club dues or mortgages or insurance or whatever isn't a new Ferrari every year is so far out of anything that I can imagine, it seems alien.
It would be interesting to see the results of a poll on that. Even better, a poll of those in accumulation phase who are LBYM'ing their hearts out, asking what they would buy if they could afford it. I suspect that most of those desired goodies are not that appealing once one has enough money to afford buying them.
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Old 03-15-2011, 06:14 PM   #71
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Not me! I still have that silly grin on my face.

I have only been retired 16 months, so truthfully I probably have much to learn from more experienced retirees like you, but so far I have had only one bad day. It was still better than any day at w*rk.
On the contrary, I would say that I should learn something from you- the secret of continual day to day bliss. Anyway, I was not talking about any individuals, just the oddity of retirement being a more powerful factor in happiness than (as reported in studies) presence or absence of serious but chronic diseases, presence or absence of spouses or SOs, more or less money, more or less sex, kids successful or troubled... -on and on. We all have seen these studies. Than can be summarized that happiness cannot be permanently racheted upward. Of course these studies might be wrong, poorly designed, or dishonest. We cannot really know. We all also read about retirees who are miserable, go back to work, get kicked out by their wives, etc-we just are not going to read about any of that here.

It sure is mystifying to me, though I also like being retired. Admittedly I am likely a bit less gung-ho than you are?

Ha
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Old 03-15-2011, 06:17 PM   #72
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Would anyone here be able to spend $200-300k a year without just going on major shopping sprees? Having that much disappear yearly from taxes or club dues or mortgages or insurance or whatever isn't a new Ferrari every year is so far out of anything that I can imagine, it seems alien.
We spend much more than that per year. No sprees. No Ferraris. You'd be surprised how it adds up. Alimony, travel, several homes. No debts.
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Old 03-15-2011, 06:37 PM   #73
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I am most definitely living The Good Life, and not spending the entire amount dictated by my SWR despite feeling quite free to spend it. I have everything I want (well, except for that rice cooker that is on order, and that Amazon says will arrive tomorrow! ).

Several others on the forum have also mentioned not really needing or wanting to spend all that their SWR would allow them to spend. Perhaps we are the exceptions. We are a pretty nifty bunch, really.
I suspect that it is kind of mentally hard to go from a LBYM mindset to a spend lots and lots mindset.
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Old 03-15-2011, 08:01 PM   #74
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Would anyone here be able to spend $200-300k a year without just going on major shopping sprees? Having that much disappear yearly from taxes or club dues or mortgages or insurance or whatever isn't a new Ferrari every year is so far out of anything that I can imagine, it seems alien.
Daycare, mortgage, and taxes in a high cost of living area will easily eat into 200K and leave people with an average lifestyle.
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Old 03-15-2011, 08:10 PM   #75
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My version of this poll is that I only play the CA lottery if the pot is over $10MM. Otherwise it isn't worth my dollar to take an astronomical risk.
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Old 03-15-2011, 08:29 PM   #76
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Well the quoted $7.5M portfolio would (using our standard 4% SWR) give an income of ~$300k/year.

That is certainly a very very nice income but perhaps not "rich".

I can see the logic of those quoted.
Hmmm, $300K/yr plus $7.5 mil to spend, so that's another $300k/yr or so for a 60yr/old planning on living to 85. I understand that does not quite work, but you know what I mean. Its hard to blow $500k a year and not have something to show for it. For example you buy a $1mil vacation home...you still have the $1mil, just now in real estate. So that's more than enough for anyone to do 'what they want'.

To me $4 mil is my rich line.
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Old 03-15-2011, 08:48 PM   #77
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Top 10%, or top 5% ought to do it. Being better off than every tenth person, or every 20th person should qualify you as "rich" in any sensible conversation. Even at top 1%, you're still very far short of having $7MM in the bank.
I like the idea of defining rich by percentiles since it's objective and quantifiable (assuming you adjust for cost of living appropriately). However, another way of thinking about what is rich is how much money do you need to have a qualitatively different lifestyle?

I know many couples who would be at the 200k mark and be in the top 5 or 10% by that measure. However, their lifestyle may not be that much different than others with lower incomes. They still worry about saving for retirement, paying college costs for their kids, losing their jobs, etc. While their lifestyle is certainly comfortable, they don't really feel rich because they still have to worry about the exact same things.
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Old 03-15-2011, 10:29 PM   #78
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I suspect that most of those desired goodies are not that appealing once one has enough money to afford buying them.
I think you may be correct. For myself, I thought "once I reach"...I will buy "x". Well..I reached it and haven't bought "x" because for some odd reason...it really is not that important to me anymore. I think LBMing helped me realize I was happier with less stuff and a simpler way of life.

I'm still in accumulation phase for the next 3 years....but this year started a practice run...of seeing if I could live and run our home life on an amount ...that allows me to continue to live as I currently am and still save...even once the mass accumulation phase is over.

This amount is currently only 21% of what I grossed last year. Doesn't include my husbands income or his numbers.

I think I might be addicted to this LBMing.
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Old 03-15-2011, 10:43 PM   #79
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I am most definitely living The Good Life, and not spending the entire amount dictated by my SWR despite feeling quite free to spend it.
Sometimes spending "more" isn't dictated by wanting a bunch of small things but rather because one component of a lifestyle is expensive. For example, we have friends building a new home in northern Wisconsin. They love to fish, boat and kayak and would have preferred to have a home on a large lake. But lake lots and taxes/maintenance on lake homes are very expensive up there and would have easily added $15k to their annual expenses. (That's a lot of rice cookers every year.) So they are building on a 3 acre wooded lot instead to stay within their SWR.

They're happy with what they're doing but I'm not sure it's The Good Life. He confided in me recently that he'd sure like to be building on the lake.......

I think that sometimes the thrill of LBYMing as an end in itself can wear thin in retirement. While DW and I are certainly frugal livers (or we wouldn't be FIRE'd), I admit that we'd rather go on a camping trip than sit at home relishing the fact that we didn't spend the money. the act of not spending just doesn't generate the thrill for us that it used to when we were accumulating in order to FIRE.

When we were accumulating, friends might invite us to join them for dinner at a restaurant we like and we'd say no thanks. We'd put the $50 we saved into the FIRE account and actually get goose bumps over our good fortune of being $50 closer to FIRE. Now if friends call and invite us to join them for dinner and we don't go because the budget is tight that month and we don't feel we should spend the $50, I'm truly disappointed. Time passes and things change....... DW has been retired 8 yrs. Almost 5 yrs for me.
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Old 03-15-2011, 10:52 PM   #80
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...I would say that I should learn ... the secret of continual day to day bliss?

Ha
Because I do not hate my work, I do not experience continual bliss from retirement either. As my part-time work has always been sporadic, there have been periods where I was completely free for a few months at a time, and I really did not feel overwhelmed with joy during those periods.

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... I suspect that most of those desired goodies are not that appealing once one has enough money to afford buying them.
I would still say having $7M is rich, as it is quite a bit more than my net worth. However, it is true that I would not (might not?) change my lifestyle much if I had that. But I would enjoy seeing that bottom line everyday with Quicken though. It would be really nice, even if I would look at it on my laptop inside a modest 8'X25' motorhome parked somewhere in the NM mountain.

As an author has nailed it, "Money is much more exciting than anything it buys" - Mignon McLaughlin
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