This ER Group and Bell Curve

[Elbata]

(First of all, sorry for the title. I'm just not quite sure how I should title this post.)

Reading this forum, I'm going to assume many here have yearly spending between $100K-$200K. And in that Bell Curve, there will some with an even higher spending level, and those not far off on the other side of the curve.

What gets me, is I live in Southern CA, and I like to bike ride along So Cal's beaches. A few days ago, I was in Newport Beach biking along the peninsula. Those homes, the average homes along the water, and even inland, I'm assuming are all over $1MM minimum and the average ~$4MM.

So what gets me, is I see this incredible wealth, and though I may fall in the middle of the above Bell Curve, I do feel a sense a lacking when I'm in that environment. A friend owns a home down in Balboa and says he could get $5K/week if he wished to rent.

So you have those living in Newport Beach living that lifestyle, and many on this board living a very comfortable lifestyle, but not Newport Beachy. And yet, to me, this Bell Curve group, is living a life that is almost unimaginable in its luxury.

As an aside, I'm sure many of those people I saw in Newport Beach were tourists. And I'd love to know what percentage even bothered to get in the water. If I had my druthers, I'd be in a lake house with a boat, skis and doing a lot more fun stuff water activities.

 

[Totoro]

It's all relative.

Go to Egypt, and $25k gets you the same effect. Go to Nepal, .. you get the picture.

Small piece of unsolicited advice: stay away from more affluent neighborhoods, it is not conducive to your wallet or happiness. They aren't happier either.

 

[stepford]

Luxury is in the eye of the beholder. I live in SoCal too, but 12 miles from the coast. Home worth well under $1M and annual spend well under $100K (closer to half that on both counts). I ride my bike most days, often to the aforementioned beach, travel overseas for a month or more most years and am about to go camping in the Sierras, which I do whenever I feel like it. Feels pretty luxurious to me.

FWIW I really doubt that Newport Beach is near the center of any kind of income bell curve - even in spendy California.

 

[Nemo2]

Luxury is in the eye of the beholder. I live in SoCal too, but 12 miles from the coast. Home worth well under $1M and annual spend well under $100K (closer to half that on both counts).

We live, travel, on about $37K US a year.......no feelings of deprivation...(in fact we're currently talking about getting rid of 'stuff', rather than "I wish we had....").

 

[Danmar]

There is tremendous wealth in the US but there are many places where wealth is much less visible. Every major city has expensive areas. We were in Glencoe (north shore suburb of Chicago ) recently to visit friends. Talk about beautiful, very expensive homes. Our friends' place was worth $6million and it was comparatively modest. He said his property taxes are $140,000per year. Quite possible these places were bought/built decades ago at a much lower amount.

There will always be someone with more than you. Best not to think too much about that if you want to be happy. Most people get "happy" with their means whatever it is.

 

[marko]

Small piece of unsolicited advice: stay away from more affluent neighborhoods, it is not conducive to your wallet or happiness. They aren't happier either.

I look at it from the other end:
Being around extreme affluence always made me feel better.

We lived in Monaco for a while...obscene affluence! But you can have a nice lunch dockside sitting next to a 200 foot yacht and be part of the scene for the price of a meal. The guy at the next table could be some Saudi prince--and probably is!

We winter in Fort Lauderdale and the perspective is the same. Something sort of cool about sitting on the beach and have a $7MM yacht go by or having a Bentley or Rolls stop to let you cross the street. I'd rather have dinner looking at a $40MM home across the Intracoastal than some abandoned warehouse!

If you lose the envy aspect, you can be (a small) part of the experience without the price! Eye candy.

 

[Scuba]

There is tremendous wealth in the US but there are many places where wealth is much less visible. Every major city has expensive areas. We were in Glencoe (north shore suburb of Chicago ) recently to visit friends. Talk about beautiful, very expensive homes. Our friends' place was worth $6million and it was comparatively modest. He said his property taxes are $140,000per year. Quite possible these places were bought/built decades ago at a much lower amount.

There will always be someone with more than you. Best not to think too much about that if you want to be happy. Most people get "happy" with their means whatever it is.

+1
I learned this when I worked for megacorp in a senior management position. I was at a business dinner with the top corporate officers, most of whom owned expensive homes on multiple continents with cars/staff supporting each home. They got into a discussion about when was the last time they had seen their wives, and instead of lamenting their situation, it felt like they were in competition with each other - bragging about how long it had been (weeks or months) since they and their wives had been in the same place. A light bulb went off in my head that I didn't want that kind of life. Instead of pursuing the next rung on the corporate ladder which would have required nearly constant global travel, I pursued stepping off the treadmill to spend more time with family and friends. I wasn't yet ready to ER, but actively sought a less responsible position that would allow me to spend more time off the job. Took a large pay cut to do so. People thought I was crazy but I don't regret it.

So when I see huge waterfront homes, megayachts, and other displays of way more wealth than we'll ever have, if I feel any twinge of wishing I had whatever, I just remind myself that I could have had more, but chose to follow my heart and live my values.

Regardless of specific wealth level, anyone who voluntarily ER's likely traded off time for cash - by definition, volunteering to ER is leaving some money on the table in exchange for spending one's time on activities one values.

 

[marko]

Regardless of specific wealth level, anyone who voluntarily ER's likely traded off time for cash - by definition, volunteering to ER is leaving some money on the table in exchange for spending one's time on activities one values.

+1
And in one sentence, there it is!! Bravo.

 

[Nemo2]

He said his property taxes are $140,000per year. Quite possible these places were bought/built decades ago at a much lower amount.

I was in Cairns, Northern Queensland, in 1962.....at that time a fair percentage of the (then small) population were 'escapees' from the major Australian cities who bought properties at dirt cheap prices.

As the town turned into a tourist Makkah, house prices rose...the now 'house rich, cash poor' (often jobless) initial residents couldn't afford to pay their rapidly increasing/highly inflated property taxes.

"All grandiose and nowhere to go."

 

[Gumby]

You can own your possessions or your possessions can own you. Your choice.

 

[Danmar]

You can own your possessions or your possessions can own you. Your choice.

Agree, but there is no evidence that wealthly people are "owned" by their possessions. Probably just another way to feel satisfied with your own position? Not a bad thing to internalize this idea, but projecting it on others? Not so much.

 

[target2019]

So you have those living in Newport Beach living that lifestyle, and many on this board living a very comfortable lifestyle, but not Newport Beachy. And yet, to me, this Bell Curve group, is living a life that is almost unimaginable in its luxury.

I think the bell curve sorta begins at 50K spending per year, and might skew out to 150-200K. Just a WAG. I know there are polls that covered this.

A few weekends ago we visited the NJ shore. We went from a smallish 1950's style bay front home to a newer multi-million dollar home in an afternoon. It had all the whiz-bang you or I would need. The family business is billboards. Go figure. Was he happy? After taking a slice of bakery pie we brought, he seemed to smile.

 

[LRDave]

There is tremendous wealth in the US but there are many places where wealth is much less visible. Every major city has expensive areas. We were in Glencoe (north shore suburb of Chicago ) recently to visit friends. Talk about beautiful, very expensive homes. Our friends' place was worth $6million and it was comparatively modest. He said his property taxes are $140,000per year. Quite possible these places were bought/built decades ago at a much lower amount.

There will always be someone with more than you. Best not to think too much about that if you want to be happy. Most people get "happy" with their means whatever it is.

^^^Whoa. Really??^^^^

That just made me throw up in my mouth a little bit.....

 

[Gumby]

Agree, but there is no evidence that wealthly people are "owned" by their possessions. Probably just another way to feel satisfied with your own position. Not a bad thing to internalize this idea, but projecting it on others? Not so much.

I would agree that if you are truly wealthy and you can easily afford to have all the nice possessions, then you are not owned by them. Heck, I have many things others would deem overly luxurious. But I have known many people who are not wealthy enough to support their possessions without continually working until they drop. In that case, it seems to me that they are indeed owned by their possessions. As with anything, opinions vary.

 

[audreyh1]

Reading this forum, I'm going to assume many here have yearly spending between $100K-$200K. And in that Bell Curve, there will some with an even higher spending level, and those not far off on the other side of the curve.

I think your assumption would be a little off, and most here would have yearly spend below $100K shifting the Bell Curve downwards.

 

[Danmar]

I would agree that if you are truly wealthy and you can easily afford to have all the nice possessions, then you are not owned by them. Heck, I have many things others would deem overly luxurious. But I have known many people who are not wealthy enough to support their possessions without continually working until they drop. In that case, it seems to me that they are indeed owned by their possessions. As with anything, opinions vary.

I think we would all agree that one should live within their means. There are a lot of people in the US with very high means. Many of these people have very nice things.

Sometimes we might think that people with nice things can't really afford them and surely there are many that can't. Generalizing this might be a convenient way to feel better about oneself? But I have to think, based on my personal experience and circle of friends, that most people can afford their lifestyle. There are certainly many anecdotes about those that can't though. Should we list a few? Might make the OP feel better.

 

[2017ish]

+1
I learned this when I worked for megacorp in a senior management position. I was at a business dinner with the top corporate officers .... They got into a discussion about when was the last time they had seen their wives.... A light bulb went off in my head that I didn't want that kind of life. ....

This was us. We would often go weeks without seeing each other due to work travel and her call schedule; got much tougher with small kids. We chose for me to step off, rather than accept BigLaw partnership; some of my peers chose to stay for career. Hopefully they are as happy with their choice as we are with mine.

To the original point, whichever data set is the source for the curve, we are content.

 

[traineeinvestor]

Living in the heart of the world's highest Gini co-efficient, I'm surrounded by wealthy people who aren't shy about living a far more affluent lifestyle than we do. I also live with the knowledge that I could have kept working in my high paying career and had a bigger home, a holiday villa in Phuket (or wherever), a farm in NZ, a couple of high end cars and a whatever. I'm also living with the knowledge that by walking away from these things I gained a fantastic early retirement. Three years in, I wouldn't think any amount of material affluence would be worth losing what I gained when I left the rat race. If other people make different decisions I neither envy them nor regret my choices.

YMMV (but probably not on this forum).

 

[scrabbler1]

Reading this forum, I'm going to assume many here have yearly spending between $100K-$200K. And in that Bell Curve, there will some with an even higher spending level, and those not far off on the other side of the curve.

I think that's a little high. Per capita, I'd guess it is closer to $30k-$50k. I'm around $25k, at the low end.

 

[scrabbler1]

Regardless of specific wealth level, anyone who voluntarily ER's likely traded off time for cash - by definition, volunteering to ER is leaving some money on the table in exchange for spending one's time on activities one values.

+2.

If I kept working, I'd have a lot more money, from both my salary (which would be over $100k FT, much less if still PT) and from my company stock (at least $500k). But I would be so miserable I can't comprehend. And that doesn't include how awful things would have become if I tried to keep working through my health issues 2 years ago. Being ERed greatly helped my getting over my health issues.

 

[bradaz2488]

This is why I like using "X" time expenses for NW, %WR for expenses and # years in plan. These 3 things help me compare myself to other people's ER plans. When I see 100X expenses for NW with 2% WR then I know those people are on the far end of the curve and will leave lots of money to their heirs. People with 20X and 4% WR are probably on the other end of the curve. Not sure we would have a perfect bell curve in this group. I wonder if it would actually be a bi-modal distribution. I'm currently sitting at 51X expenses with and 2.5% WR on a 44 year plan. Based on other treads I think I would fall in the middle or just right of middle, but I really do not know for sure. However, based on my 44 plan I would move to the left of the curve as I spend down my NW if we do live to age 95.

 

[kcowan]

I think we would all agree that one should live within their means. There are a lot of people in the US with very high means. Many of these people have very nice things.

Sometimes we might think that people with nice things can't really afford them and surely there are many that can't. Generalizing this might be a convenient way to feel better about oneself? But I have to think, based on my personal experience and circle of friends, that most people can afford their lifestyle. There are certainly many anecdotes about those that can't though. Should we list a few? Might make the OP feel better.

I think the Gumby saying can have a couple of interpretations. One is the direct need to work to pay for them. But the other is that you have to spend time and money on them whether you want to or not. I suspect neither of these are you but I know a guy who is kept busy by relaxing in PV where he only has a new car, a share in a yacht, and his $600k condo. But up north, he has a 65 foot yacht, a deep water dock in front of his summer home in Pender Harbour, a large home in West Van, several cars, a Harley, a motor home, a condo in The Okanagan where he races his own car and a few other things, all owned outright.

He admits that his stuff owns him because he has to,look,after them all! Compared to him, I feel like a slug while I enjoy retired life.

(And I suspect most people in Newport Beach are paying for all that opulence every month to the bank!)

 

[Danmar]

(And I suspect most people in Newport Beach are paying for all that opulence every month to the bank!)

Not sure why you would think this, other than the fact that many(maybe most) people have mortgages(as do many/most less wealthy people). I think the real test would be can they afford it?

I certainly agree that affluent people can have complicated lives. But to suggest that most or many? are "owned by their possessions" seems like a generalization to me that is designed to make the generalizer feel better.

I can even see how some affluent people might suggest this. Maybe they (like other less wealthy people) are getting on and want to simplify their lives. I can see being in this position eventually. But at this point, I'm very content with the ways things are.

 

[euro]

+1- by definition, volunteering to ER is leaving some money on the table in exchange for spending one's time on activities one values.

Right on!

 

[scrabbler1]

This is why I like using "X" time expenses for NW, %WR for expenses and # years in plan. These 3 things help me compare myself to other people's ER plans. When I see 100X expenses for NW with 2% WR then I know those people are on the far end of the curve and will leave lots of money to their heirs. People with 20X and 4% WR are probably on the other end of the curve. Not sure we would have a perfect bell curve in this group. I wonder if it would actually be a bi-modal distribution. I'm currently sitting at 51X expenses with and 2.5% WR on a 44 year plan. Based on other treads I think I would fall in the middle or just right of middle, but I really do not know for sure. However, based on my 44 plan I would move to the left of the curve as I spend down my NW if we do live to age 95.

We're pretty similar in terms of the parameters you laid out. I have a SWR of around 2.5% and have about 56x expenses for a (hopefully) 40+ year plan (I am 54 now).

But one thing those of use ERs need to include in the equation, and I'm not sure if there is a good formula for it, is how to include future expected payouts I often describe as my "reinforcements." My IRA (which I can't access in an unfettered manner) is already part of my SWR because I have included its value in my NW (if I exclude my IRA, the SWR rises to about 3.7%). But I have a frozen company pension and SS available to me in 8-13 years from now, both of which will put downward pressure on my SWR.