$2.27 million to feel wealthy - 3% withdrawal rate

[daylatedollarshort]

And while on the subject of being able to eat, I am just as guilty for the food hoarding.

Because we have time to go grocery shopping and to look around, we would occasionally find some exotic "good stuff" on sales. Don't know about you, but we do not see wild-caught Alaskan salmon that often. Nor veal shank. Nor elk frenched rack. Nor duck prosciutto. And I am the one who said we needed to stock up on exotic deals because they were rare.

This week a local dollar store had bunches of asparagus, fresh parsley, jars of pesto, large heads of cauliflower, blueberries, blackberries, raspberries, bags of organic peppers and all sorts of healthy foods for $1 each, and yams for 50 cents a pound because they were odd sized. I'm using the yams in soup and steamed veggie dishes cubed so it doesn't really matter to me what size they were pre-cubed.

I've got home made soup going in a thermal cooker and veggies steaming in a stack tray for low energy cooking, too.

 

[NW-Bound]

The standard of living is generally lower in Europe than in the US, although real poverty exists everywhere.

For example, it is quite common for young European adults to live with their parents because they cannot afford their own place.

... The share of young people aged 16-29 living with their parents in 2017 was 68.2 % in the EU-28. For young men the share was 73.3 %, while for young women it was 62.9 %, a gap of 10.4 percentage points.

In every EU Member State, the proportion of young women living in the parental home was lower than that of young men. The largest gender gaps were observed in Bulgaria (19.3 percentage points (pp)) and Romania (17.2 pp), while the lowest were recorded in Spain (5.7 pp), Sweden (4.7 pp) and Malta (4.6 pp).

The largest shares of young men living with their parents were recorded in Croatia (93.1 %), Slovakia (89.2 %), Italy (88.3 %) and Malta (87.0 %), while for young women the largest shares were recorded in Malta (82.4 %) and Croatia (82.3 %). The lowest percentages for both sexes were recorded in Finland (40.8 % for young men and 30.1 % for young women) and Denmark (39.5 % for young men and 31.9 % for young women)...

Compare the above to the US statistics below.

... Parents in the US cannot get rid of their kids. The share of young adults in their late 20s living with their parents is the highest it's been in 75 years. According to a recent study by the Pew Research Center, 33% of 25-29 year olds lived with their parents or grandparents in 2016...

 

[RobbieB]

I packed up my Chevy and drove to California when I was 23. The start of a grand adventure!

 

[Teacher Terry]

When I mentioned real poverty I meant Caribbean islands, Mexico, etc. I just noticed that the standard of living in Europe wasn’t as high as ours especially in Poland.

 

[street]

I did not spend anywhere near that the last 12 months.

But my portfolio "lost" more than that in the month of May.

Which is worse?

You had a great April "2019 YTD Investment Performance" May must have went the other way?

 

[NW-Bound]

Ah, you remember.

What happened was that my "hot" stocks turned "cold". Remember that I said I had a bit of chip (semiconductor) stocks? I suspected that they went too high, sold a bunch of out-of-the-money April call options on them, and many of them went way past the strike prices.

The calls got exercised, and I had a lot of stocks turned into cash. I had a good gain. But they continued to go even higher. I then sold May put options to buy them back at the price I sold them at. They dropped and dropped. One by one, the put options got exercised and I had all my stinkin' shares back.

If nothing else, I should be still ahead because I got all the shares back, PLUS the premiums I got from the calls AND the puts. Right?

But, but, but the commander-in-chief put the axe down on Huawei. That blow devastated the entire semiconductor sector. Oh pain!

Of course not all of my loss was due to these chip stock shares, as the total market went down too. The semiconductors just went down more than the market.

And that's the story. They are slowly climbing back up. I am watching.

PS. In hindsight, if I just stayed in cash after the call options got exercised, I would have a lot of cash to buy many shares back at lower prices than when I sold. But, but, but greed got the best of me, and I just loved my stocks, and had to sell put options to buy them back. Yep, greed.

PPS. I am still up nicely for the year though. It might be gone again. Tough business, this stock market.

 

[NW-Bound]

Just looked to see that I have collected $48K cash YTD from selling these options. That pays for my groceries. And travel expenses. And utility bills. And booze, and what have you.

But, but, but the shares lose values. Argh!

 

[cyber888]

I read that article. If I lived in Chicago, New York, or California, I would need $2.5 - $3.0 mil to feel ok (for 2 persons). Living in NC, I'll be fine with a NW of $1.5 - $1.7 mil to FIRE .. with $1 mil liquid at least.

 

[street]

Ah, you remember.

What happened was that my "hot" stocks turned "cold". Remember that I said I had a bit of chip (semiconductor) stocks? I suspected that they went too high, sold a bunch of out-of-the-money April call options on them, and many of them went way past the strike prices.

The calls got exercised, and I had a lot of stocks turned into cash. I had a good gain. But they continued to go even higher. I then sold May put options to buy them back at the price I sold them at. They dropped and dropped. One by one, the put options got exercised and I had all my stinkin' shares back.

If nothing else, I should be still ahead because I got all the shares back, PLUS the premiums I got from the calls AND the puts. Right?

But, but, but the commander-in-chief put the axe down on Huawei. That blow devastated the entire semiconductor sector. Oh pain!

Of course not all of my loss was due to these chip stock shares, as the total market went down too. The semiconductors just went down more than the market.

And that's the story. They are slowly climbing back up. I am watching.

PS. In hindsight, if I just stayed in cash after the call options got exercised, I would have a lot of cash to buy many shares back at lower prices than when I sold. But, but, but greed got the best of me, and I just loved my stocks, and had to sell put options to buy them back. Yep, greed.

PPS. I am still up nicely for the year though. It might be gone again. Tough business, this stock market.

I remembered those great gains for April! Lol Interesting stuff NW-Bound but it is so over my head if I tried that I would have to go back to work. Thanks

 

[audreyh1]

Yikes! $20M at 3.5% withdrawal, which is generally considered a perpetual withdrawal rate, is $700K per year. That is your standard for "comfortable"?

Agreed - a that income you can most certainly fly first class anywhere, and you can even afford to charter a private jet for trips.

 

[NW-Bound]

Agreed - a that income you can most certainly fly first class anywhere, and you can even afford to charter a private jet for trips.

First class yes. Dunno about chartered jets. It depends on where you want to go.

Domestic trips can be made with little jets at the cost of $4K/hr. However, long-range flights need to be made with bigger jets, and they run $11K/hr.

At the above rate, just flying from US West Coast to Paris and back will blow a huge hole in the $700K/year budget.

 

[aja8888]

First class yes. Dunno about chartered jets. It depends on where you want to go.

Domestic trips can be made with little jets at the cost of $4K/hr. However, long-range flights need to be made with bigger jets, and they run $11K/hr.

At the above rate, just flying from US West Coast to Paris and back will blow a huge hole in the $700K/year budget.

Somehow, I am sure, that chartering cost can be turned into a business write off!

 

[Music Lover]

Haha, I wish. I just happen to live in a HCOL area, where property tax starts at ~$10k for a small fixer upper and easily runs to $20k for an average home. Our HC premium is $25k with a $11k deductible for a family of four. That does not include any dental expenses, or orthodontist treatment for children. Adding food, utilities, cars/gas, insurance, etc., it would be quite heroic for a family of four to maintain a normal living on $38k/year (or even $75k/year) budget in the area, without receiving something (food, housing, health care, etc) that is heavily subsidized.

Now, that is just basic living. To achieve a middle class living, there are additional expenses such as entertainment, travel, kids EC activities (sports, music, summer camps, etc.). That could be easily $20-30k. Those may not be absolute necessities, but we all incur those expenses.

I suppose it all comes down to where you live. $4-5mm NW might be a large sum in some areas, but may not be quite as reassuring in others. I remember reading an article on financial samurai. A two income family with children in Brooklyn, making $500k (I think). After all said and done they do not have much $ left after expenses. The article went through a detailed run down of their expenses / cash flows. The conclusion is that they are actually doing slightly better than breaking even (eg, in fact they are saving something through 401k), but their “core” expenses are indeed quite high. At that level of expenses, $4-5mm NW certainly would not make that couple feel wealthy.

So the key seems to be, accumulate the nest egg as quickly as possible, and move to LCOL area to make the most of it

I read the article about the Brooklyn family. Then they toss in stuff like $12k a year on a personal trainer, $35k for 3 or 4 gowns, $45k for a nanny, $64k private school, etc.

I live very comfortably on less than what wife pays for her gowns.

 

[Scuba]

I hit the bank site and added up the last 12 months. Two hundred and thirty five grand!

Woo-Hoo, Blow That Dough!

Wow, that’s some impressive dough blowing! Enjoy!! [emoji322]

 

[Scuba]

We 'snowbird' to Hawaii. COL a bit more than the Seattle area, but the water/beaches make it worth every penny to us. The diving is not world class, but nice.

Yes Hawaii is nice for sure. We somewhat prefer the Caribbean but need to spend more time in Hawaii.

 

[Scuba]

When I mentioned real poverty I meant Caribbean islands, Mexico, etc. I just noticed that the standard of living in Europe wasn’t as high as ours especially in Poland.

Depends how you define standard of living. Yes we have more luxuries in the US, but one could argue that Europeans have a better standard of living with their easy access to multiple cultures, better appreciation for work/life balance, and access to low cost quality healthcare.

 

[marko]

Depends how you define standard of living. Yes we have more luxuries in the US, but one could argue that Europeans have a better standard of living with their easy access to multiple cultures, better appreciation for work/life balance, and access to low cost quality healthcare.

Agree. I think 'standard of living' and 'quality of life' are also slightly different things.

If your measure is how many TV's, dishwashers and cars you own that's a different standard. We had neighbors in France who's lifestyle most in the US would envy but they had a tiny apartment, no car but very little stress, great food (and wine) and lots of diversions.

Having worked there for years I can say that nobody breaks a sweat on the job, or 'sweats' the job.

 

[aja8888]

I hit the bank site and added up the last 12 months. Two hundred and thirty five grand!

Woo-Hoo, Blow That Dough!

Just think, Robby, if you would have blown another $15K you could be sayin' you "blew a quarter of a Million"!

 

[ncbill]

Exactly!

What's most important here (from my point of view), is not that those in HCOL areas could spend less for the same lifestyle in an LCOL area. We all know that can be done. But many people have very good reasons to live in HCOL locations, such as family, friends, surroundings that they enjoy, and many other reasons.

What I am trying to say is that I regard HCOL location as being a purchase and the important thing for all of us to realize what we are purchasing and for how much. For example, if someone lives in an area that costs them $20K/year more than another area, are they getting sufficient value for their money out of that $20K/year purchase? If so, great! Often it is. If not, relocating is always an option.

By discussions like the present one, we can figure out how much we are paying for location and figure out if it is worth it for us.

But a HCOL area probably means your annual spend (and mAGI from withdrawals to support that spend) can't be low enough for ACA subsidies.

We are fortunate that my wife's employer picks up most of the cost of our family plan...we 'only' pay ~$10k/year vs. ~$25k unsubsidized ACA.

Living a LCOL lifestyle in our MCOL area means if she lost her job it would be relatively easy to 'manage' our mAGI for significant ACA subsidies.

Doesn't apply to early retirees, but property taxes here are also cut in half for those 65+ with annual income (counting SS) under $30,000.

 

[NW-Bound]

Agree. I think 'standard of living' and 'quality of life' are also slightly different things.

If your measure is how many TV's, dishwashers and cars you own that's a different standard. We had neighbors in France who's lifestyle most in the US would envy but they had a tiny apartment, no car but very little stress, great food (and wine) and lots of diversions.

Having worked there for years I can say that nobody breaks a sweat on the job, or 'sweats' the job.

I agree that American culture is too materialistic. But speaking of sweat, I do not mind working a bit harder to have A/C for the summer.