Meh at hitting a million

[aaronc879]

Yes Mr. Money mustache is a multimillionaire and I guess we'll never know what he really spends

Just remember that Mr. Money mustache is not real it's just a product And his followers are his customers

There's a funny video on CBS MarketWatch you can see it on YouTube of a Mr. mustache gathering in San Francisco . They interview millennial's who think that they're going to retire at age 30 it's really funny

It's possible to retire at 30. Get a software engineer job like MMM and save 70-ish% of your income for 8 years then quit. Then just live a reasonable life instead of extravagant and you're all good. You could maybe do a little freelancing every once in a while for extra money. People here do that all the time and still say they are retired. Having a spouse with another $100K/yr job makes it easy.

 

[Steelart99]

FWIW, given the cost of the lifestyle we enjoy and plan to continue, $1M is just enough (along with some small pensions and SS) to continue living 'well'. So yeah, we celebrated and I turned in my notice ... FIRE'd in early November.

 

[purplesky]

It's possible to retire at 30. Get a software engineer job like MMM and save 70-ish% of your income for 8 years then quit. Then just live a reasonable life instead of extravagant and you're all good. You could maybe do a little freelancing every once in a while for extra money. People here do that all the time and still say they are retired. Having a spouse with another $100K/yr job makes it easy.

Yes I agree it's possible

This thread seems to apply more to the millionaire next door crowd

The millionaire next door isn't going to go buy a JetSki when he gets to 1 million.
Drink a glass of wine or beer and then go back to work

 

[purplesky]

FWIW, given the cost of the lifestyle we enjoy and plan to continue, $1M is just enough (along with some small pensions and SS) to continue living 'well'. So yeah, we celebrated and I turned in my notice ... FIRE'd in early November.

Congratulations that's awesome .

 

[UnrealizedPotential]

A household at the income level of 56,500 per year is not going to come close to saving $1 million in retirement accounts During a working career

Unless They live in a van down by the river or follow Mr. mustache And drive a 10-year old. Beater and live in a tiny house for the rest of their lives . Or maybe live in someone's basement

That's a lower middle-class wage Yes the stories of the struggling middle class are true

But typically in this early retirement.org community people will start talking about how the middle-class over spends and they shouldn't buy iPhones and Starbucks And the wonderful phenomenon of shareholder value economics and globalization Low wage Math is somehow ignored

Achieving $1 million in investable assets just isn't a big deal Because that only produces a lower middle-class wage

Get to $2 million and now you're talking solid math

The idea that $1 million in investable assets only produces a lower middle class wage is not necessarily true. It would depend on how much risk one would want to take . I personally would not want to take the risk necessary to get it done. I could get way over 56k no problem. 100k, big problem.

 

[purplesky]

The idea that $1 million in investable assets only produces a lower middle class wage is not necessarily true. It would depend on how much risk one would want to take . I personally would not want to take the risk necessary to get it done. I could get way over 56k no problem. 100k, big problem.

If I had $ only 1 million to work with I would try and live off of 30 to 40,000 a year and then grow the principal

I wouldn't even attempt to get to 50,000 a year as a withdrawal rate

 

[UnrealizedPotential]

If I had $ only 1 million to work with I would try and live off of 30 to 40,000 a year and then grow the principal

I wouldn't even attempt to get to 50,000 a year as a withdrawal rate

I would not use 50k as a withdrawal rate either. I would however take the $1 million and use it to generate the 50k. It's a very simple matter for me. There would be plenty of money leftover for future growth. I am not judging you purple sky for what you wrote above. What you wrote would work fine. I would do it differently however, that's all.

 

[Major Tom]

If I had $ only 1 million to work with I would try and live off of 30 to 40,000 a year and then grow the principal

I wouldn't even attempt to get to 50,000 a year as a withdrawal rate

This is pretty much what I'm doing with my $780K portfolio, though I'm being a little more conservative. Withdrawals have been constant at $15,600 for the last 5 years, but I'm thinking of increasing them a little to ~18K (a WR of 2.3%) which should still be sustainable, and hopefully allow for modest growth over the long term.

 

[purplesky]

I would not use 50k as a withdrawal rate either. I would however take the $1 million and use it to generate the 50k. It's a very simple matter for me. There would be plenty of money leftover for future growth. I am not judging you purple sky for what you wrote above. What you wrote would work fine. I would do it differently however, that's all.

Yeah that's kind of what I meant Use the 1 million to produce income

You can definitely Live well-off 50,000 a year

But the jump to 100,000 a year definitely helps big time so that's why I mentioned the $2 million target

 

[purplesky]

This is pretty much what I'm doing with my $780K portfolio, though I'm being a little more conservative. Withdrawals have been constant at $15,600 for the last 5 years, but I'm thinking of increasing them a little to ~18K (a WR of 2.3%) which should still be sustainable, and hopefully allow for modest growth over the long term.

That sounds very doable

If the stock market cooperates you should be able to grow that $780,000 for sure

 

[scrabbler1]

I'm sure that's true in general but there seems to be quite a few people around here who get more in government assistance because of their kids than what they spend on their kids. Kids don't have to be THAT expensive especially if you aren't paying commercial daycare costs. Education is nearly free, healthcare is cheap unless they have a rare chronic condition, clothes can be second hand, food is minimal if you are just making slightly larger helpings of what you would eat anyway. No kid needs 90% of the toys that they have.

What about housing costs? I live in a studio apartment, barely big enough for one person to live in, not 2 or 3 people. Bigger housing such as a 2-bedroom or 3-bedroom apartment would be costlier, whether it is rent or a bigger mortgage along with higher property taxes, more home furnishings, and utilities. Even if per-capita costs are lower than for one person, the total costs will be higher.

 

[laurence]

Yeah with three kids under 12 right now, a million falls well short for us to ER, but it's San Diego. I think 2 million will be the number that gets me really excited, as that will be when we could make it if we really had to. We'd like to be in the 3-4 range before we both quit earning completely, however. Our high income friends think that's a far too risky, poverty wage NW for their comfort. I just can't believe the numbers they are coming up with - 7,8,9,10, 20 million, even!

 

[aja8888]

I would not use 50k as a withdrawal rate either. I would however take the $1 million and use it to generate the 50k. It's a very simple matter for me. There would be plenty of money leftover for future growth. I am not judging you purple sky for what you wrote above. What you wrote would work fine. I would do it differently however, that's all.

My bold....please tell us your simple secret on making a safe $50K per year on $1MM.

I know that's a 5% return but I can't seem to find anything that pays that much except for preferred stocks and junk bonds. Also, is that simple $50K after tax money?

 

[Major Tom]

My bold....please tell us your simple secret on making a safe $50K per year on $1MM.

I know that's a 5% return but I can't seem to find anything that pays that much except for preferred stocks and junk bonds. Also, is that simple $50K after tax money?

Agreed - and in particular, $50K/yr, every single year, for a 30 or 40 year period.

 

[RetireAge50]

Agreed - and in particular, $50K/yr, every single year, for a 30 or 40 year period.

Firecalc default settings gives this a 98% chance of success. 72% if inflation adjusted.

 

[daylatedollarshort]

Firecalc default settings gives this a 98% chance of success. 72% if inflation adjusted.

Just curious - Do you discount those results any further for the potential case that future investment returns may not be as good or better than the past or do you use those results as they stand to make investment decisions?

 

[JohnnyBGoode]

Yeah with three kids under 12 right now, a million falls well short for us to ER, but it's San Diego. I think 2 million will be the number that gets me really excited, as that will be when we could make it if we really had to. We'd like to be in the 3-4 range before we both quit earning completely, however. Our high income friends think that's a far too risky, poverty wage NW for their comfort. I just can't believe the numbers they are coming up with - 7,8,9,10, 20 million, even!

I live in the Bay Area (which I imagine makes San Diego seem affordable by comparison) and there is no way that one needs $7M+ for a "comfortable" retirement, unless one equates comfortable with permanent residence on a cruise ship or something like that.

For me, I'm thinking $2.5M ($100K annually at 4% withdrawal rate) is a good target. $3M ($10K/month!) would be super groovy. But clearly above the bare minimum.

 

[RetireAge50]

Just curious - Do you discount those results any further for the potential case that future investment returns may not be as good or better than the past or do you use those results as they stand to make investment decisions?

I don't really do anything with it. Was just using it to see if it was in the ballpark to make around 50k on a million. I plan to take variable withdrawals based on how the market actually performs.

 

[UnrealizedPotential]

My bold....please tell us your simple secret on making a safe $50K per year on $1MM.

I know that's a 5% return but I can't seem to find anything that pays that much except for preferred stocks and junk bonds. Also, is that simple $50K after tax money?

First of all, no where did I mention safe. No risk , no reward. There are ETF super aggressive bond funds that I would put 250k. Next 450k in a global taxable bond fund. There you already have 50k in income. Then put the remaining 300k in a conservative stock fund for growth. Is this beyond the risk tolerance of most on the forum? Perhaps. But it is not beyond MY risk tolerance. The 50k would be before taxes. I said it would be a simple matter. It is. Safe? I never said that.

 

[UnrealizedPotential]

Agreed - and in particular, $50K/yr, every single year, for a 30 or 40 year period.

Every single year. LBYM and have money to put in at lower prices. This equals more firepower for more income because you are buying more shares.

 

[aja8888]

First of all, no where did I mention safe. No risk , no reward. There are ETF super aggressive bond funds that I would put 250k. Next 450k in a global taxable bond fund. There you already have 50k in income. Then put the remaining 300k in a conservative stock fund for growth. Is this beyond the risk tolerance of most on the forum? Perhaps. But it is not beyond MY risk tolerance. The 50k would be before taxes. I said it would be a simple matter. It is. Safe? I never said that.

If it's not safe, than it's not that simple and probably not that desirable to do. If you are going to infer that it is simple to consistently pull $50 K from a fixed sum forever (lifetime) and expect people here to believe you, then by all means, detail your assumptions rather than stating it is simple to do.

Maybe it would be easier to pull off by purchasing annuities instead of taking market risk?

And taxes would eat into the $50 K.

 

[UnrealizedPotential]

If it's not safe, than it's not that simple and probably not that desirable to do. If you are going to infer that it is simple to consistently pull $50 K from a fixed sum forever (lifetime) and expect people here to believe you, then by all means, detail your assumptions rather than stating it is simple to do.

Maybe it would be easier to pull off by purchasing annuities instead of taking market risk?

And taxes would eat into the $50 K.

If you would not do it, that is fine. I have already stated in detail how it could be done. If you don't agree that is fine. No problem.

 

[purplesky]

So a $150,000 bear market Cash emergency fund would be a really good idea to help with making withdrawals in a very down market
The bucket strategy To help preserve the $1 million

 

[OrganicRain]

Maybe you mentioned this in the past but how do you live on $17K/yr in SF.? Would I be correct to assume you have a paid off house or multiple roommates? I live on under $17K most years but I live in small town Wisconsin where I get a 2 bedroom, 1000 sq ft, top floor apartment for $560/mo.

Why would one want to live on only 17k = boring.

 

[Major Tom]

Maybe you mentioned this in the past but how do you live on $17K/yr in SF.? Would I be correct to assume you have a paid off house or multiple roommates? I live on under $17K most years but I live in small town Wisconsin where I get a 2 bedroom, 1000 sq ft, top floor apartment for $560/mo.

Apologies for not replying to this sooner aaronc879. I didn't see this post originally, and only saw it when OrganicRain quoted it in his/her post above.

My trick is to have rent that is not much more than yours. I have a small (285 sq ft) studio in a lovely old house with a bay window looking out onto the local dog park. Lots of views of dogs, birds and squirrels, which my 3 cats love. It's small, but comfortable. The house is owned by an older gentleman who is aware that he could be charging more, but doesn't. For the first 5 years, the rent was constant, at $640/month including electricity. A couple of months ago, he apologized profusely that, due to the rising cost of everything, he had no choice but to raise the rent - to $651. Needless to say, I'm quite happy with my first rent increase in 5 years

The biggest difference in cost of living in high COL areas is due to housing, so I have that one taken care of, at least for the time being. I don't own a car, but a bicycle and public transport get me everywhere I need to go. The rest of it is the usual frugal living, as I know you are well familiar with, and a true artist at!

Why would one want to live on only 17k = boring.

I have told my story several times here, and don't feel like doing so again, especially as the wording of your post doesn't seem to indicate genuine curiosity. I think it takes a certain personality type - the ability to be satisfied with a low material standard of living, and a tendency toward frugality. In many major metropolitan areas, once you have the cost of housing taken care of, there are a lot of things to do that cost very little. We're lucky in the SF Bay Area that we have a lot of opportunities for outdoor recreation at minimal or no cost.

Last week, my SIL took me as a guest on her membership to SFMOMA. It has recently re-opened, and is well worth a visit. As a thanks for getting me in, I bought her lunch. I have spent the last few days building some neat portable ham radio gear (my hobby). This morning, I built and tested a lightweight antenna. Next week, I'll stuff it into my backpack and cycle to Volmer Peak, a local high spot up in the hills above Berkeley, with a great view of the Bay Area, and test out the radio gear. This weekend, my best friend is coming over. We'll have some snacks, drink a little wine (well, maybe more than a little), watch the new episode of SVU, listen to music, and generally chat and have fun. She is staying over the night. I'm sure you'd find that terribly boring, but it doesn't cost much, and we like it

Yes, it's a very dull life