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Old 04-23-2015, 07:46 PM   #21
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Old 04-23-2015, 07:47 PM   #22
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Is 1 inflation adjusted? 'cause I'd be pretty skint in 40 years if it's flat. What is it, around $14,000pa in todays dollars?


In my wildest dreams I couldn't spend a mil' in a year; I must get some better dreams ... mescaline?


I guess I'll go with 3.
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Old 04-23-2015, 09:24 PM   #23
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I like #4 I could give a big chunk to the church each year and still live like a king.
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Old 04-23-2015, 10:24 PM   #24
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I like #4 I could give a big chunk to the church each year and still live like a king.
Why would that be better than giving a smaller amount of a smaller income and still living like a king? Just curious.
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Old 04-23-2015, 10:33 PM   #25
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I would do a downsized #2.

I wouldn't set aside 1/4 of the 4M... but I'd carve out a chunk to cover expensive bucket list items... maybe 3-400k. I think 3.6M is more than enough to live comfortably going forward. Especially since I'm not in the 4M demographic now... so this would be a big expansion of my budget. LOL.
About this.
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Old 04-23-2015, 11:24 PM   #26
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Thanks for all the great responses! I thought everyone would go for 5.
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Old 04-24-2015, 01:13 AM   #27
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I'm going with #3 as I'm living this situation right now. I just removed 1.5 SWR from my portfolio and purchased a motorhome.


So, now I have a smaller portfolio and a smaller SWR. I expect to have 10 years of expenses just above the new SWR and then have appropriate spending for the following 25-35 years.


This is not really a financial plan... more of a financial concept!
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Old 04-24-2015, 05:57 AM   #28
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If the 40 years would be guaranteed then I would approach very differently from "there is a chance we will need it to last for 40 years". That darn time variable is impossible to predict.

So... Back to reality. I guess I seek a withdrawal rate that maximizes fun and minimized stress of running out of money. Whether that's a cool million to blow in the early years or a safe withdrawal rate will probably change day to day based on many factors - health. Economy. People around me. My age. And my post FIRE confidence. Etc etc.

I think generally someone who reached 4M net worth had sacrificed to get there and probably will do themselves a disservice by NOT splurging a bit on a few "nice things" in life be it toys/travel/giving or what ever makes you super happy inside.

Personally I am having problems letting go of my cheap and miserly habits - Worse now post fire. Debated whether to get extra stuff on my burger last night. Driving a 21 year old Subaru with dents all over and such as my daily driver to keep the miles off the newer car. Maybe it's because I am in early days of FIRE still and filled with anxiety over whether or not we have enough.

So for now I would land in the very safe withdrawal camp ... And trying to get the Withdrawal rate down further... I would not blow a million. Maybe 50-100 grand to fix up the house get a newer vehicle or do some travel. Keep balance is key..

But it would suck if I dropped dead today not having ever owned a new vehicle, for example, or visited a few places that are on d bucket list.

I keep reminding myself of that.
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Old 04-24-2015, 07:50 AM   #29
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Probably a combination of #2 and #3. If $4M fell into my lap, I'd go ahead and buy my dream house. That would be my big splurge, although it would be less than $1M. And afterwards, I'd spend whatever I felt like from year to year, rather than a consistent amount, although I'd keep an eye on the total amount, to make sure I didn't blow through it like your stereotypical lottery winner.
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Old 04-24-2015, 07:56 AM   #30
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Why would that be better than giving a smaller amount of a smaller income and still living like a king? Just curious.
Well it would be the same but I don't have 4 million. So the church's share would be much bigger. With 4 million I am sure I could double my tithe with no problem.
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Old 04-24-2015, 08:05 AM   #31
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#3.

First year would be bigger (I've already planned in my head the cruise I'll take the entire extended family on when I win the lottery....), so shades of #2, but after that it would totally be whim-based, within limits.
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Old 04-24-2015, 08:42 AM   #32
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I'd go with #3, which I would consider to be about the same as #4.

I think spending 4-5% of $4M or whatever is left each year is very sustainable. Even if I spend it down or the portfolio drops to $2M, I could probably make do on 4% of $2M ($80k/yr).

At 5% of $200k, I honestly don't know what I would do with all that money since we live on $32k/yr or so right now. I guess I could stop looking at price tags? I'm pretty sure we could travel around the world for a year very very comfortably on $200k assuming we stayed in one place for a while (which would be a requirement anyway given my distaste for spending multiple hours inside an arid metal tube with 17" of personal space).

But would we even want to trot the whole globe for a year? We could marginally afford to do so now (with more budget travel options) but choose not to (as FIREd says about his plans to buy the $1M CA house).
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Old 04-24-2015, 08:43 AM   #33
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My plan:

Starting with (1) for at least first year of retirement. We have 4-5 yrs of good data on what I THINK we will spend in retirement but want to confirm those values using actual retirement data. Just retired so this will be our first year of real data.

Assuming that our expenses are what I think they will be, we have enough saved to splurge on things. So for year 2 of retirement, I plan to set aside a chunk of funds to splurge on things when we want. We aren't huge spenders so probably won't be a whole lot of stuff at once. More likely things like: get a new car when we really want rather than me working like a dog to keep things running, spend more on trips we go on, give yearly gift to kids to help encourage them to save, invest and get FI eventually (thanks Dad for doing this with me!).
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Old 04-24-2015, 08:55 AM   #34
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Spend 200k in the wildest dream category. Set aside 2M to live off.

The rest is money to invest in strange ventures or fund other people's financial independence.
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Old 04-24-2015, 11:48 AM   #35
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#3, but I am tempted to do #2. I want to flop down $1M for one hand of blackjack at Las Vegas. Win or lose, I stick to #3 afterward.
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Old 04-24-2015, 12:26 PM   #36
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#3, but I am tempted to do #2. I want to flop down $1M for one hand of blackjack at Las Vegas. Win or lose, I stick to #3 afterward.
Blackjack is the wrong game for one hand...some of the player edge comes from the various moves over many hands. The best bet would be the "don't come" box. That would also give you someone to hate or love, depending on who was throwing.

I'm going with 2. I'd say the answer depends on your current assets and what you are living on now. The duration of 40 years is nice to have nailed down. If you started with assets that supported $25k/yr spending vs assets that supported $100k/yr the answer would be different.

One thing I wouldn't do is get into the "lottery winner track" of buying stuff that costs a lot to keep, and is hard to get out of, like a mansion on the coast. But I picked 2 to buy awesome experiences, but with the idea of not having my day to day life change too much. I certainly would plan to spend more now, in my fifties, than later. So maybe theres another numbered answer that fits for me.
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Old 04-24-2015, 01:11 PM   #37
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It's fun to play hypotheticals.


I'd choose option 2. But as several others have said I'd blow it with much less than 25% of my overall stash. Still, 5% of $4 million could deliver a pretty memorable time. And I'd blow it on experiences. Not stuff.


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Old 04-24-2015, 01:35 PM   #38
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I'm planning on 40 more years to live, but I don't have $4 million. If I did I would consider buying a nicer, larger residence than the one I have now for $500k to $750k and live of the rest.

I guess that's 2 to start with, followed by 4.


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Old 04-24-2015, 02:00 PM   #39
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I would most likely buy a vacation home, either in a warm location for winter getaways or in Europe for a base of operations for our vacations there. Perhaps I'd have enough to buy both. That puts me closest to your option 2, but I don't really think it fits very well. Your description of makes it sound as if I would be blowing $1 million on frivilous spending, but vacation homes should retain their value and even have potential to appreciate.
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Old 04-24-2015, 04:01 PM   #40
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