Is Everyone a Multi-Millionaire?

[ERhoosier]

If you had inflation adjusted pension of more then 50k at 55 or more then 40k at 40 you would also be millionaire.

So retired O4/O5 at age 44 with pension backed up by Federal Government is in a way millionaire even if he/she has empty bank account.

Very true.
And yet many politicians view these folks as "hard working ave Americans" while blasting the industrious small business owner with no govt' or corp pension (or benefits) and a similar REAL net worth as "greedy rich".

 

[nuke_diver]

A 50yo male with 2 million could buy an immediate annuity and get $108,720 a year until they die. Who needs 108k/year for a retirement?

Depends where you live and how you live. Seems like most folks on this board LBYM but I know that there are may people who do not. One argument my wife has used in the "why I cannot retire yet" discussion is that she might want to up our standard of living. That is actually unlikely because it is not who we are but for people who always buy a new car ever couple of years, new electronics going out for fancy meals and have extravagant vacations dialing it back is much much harder.

Actually I estimate retirement expensive for us to be between 100-120K/yr. Tax, HC will be about 40% of that in my estimates...probably too much but I'd rather have too much than not enough

 

[daylatedollarshort]

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

$2m goes a lot father in some areas than others and some people with that kind of NW may be used to living on much more than $108K.

 

[robnplunder]

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

Here in Bay Area, CA, 2M asset isn't saying much. Median house price can be over $1M in most places. Sure, people can retire and make a decent living but it may not be enough if you have high mortgage, kids in college, etc.. (I have no such excuses other than just adding more to my RE travel budget.)

 

[NW-Bound]

Here in Bay Area, CA, 2M asset isn't saying much. Median house price can be over $1M in most places...

True. Hence my brother left a prominent tech company, then refused a generous offer to come back when he considered what a home of 3,500 sq.ft. as he has now would cost. They could not pay him enough.

 

[W2R]

Once you have reached escape velocity, as described in this thread, your nestegg keeps growing while you are off living your life.

So, for those in that situation, it is just a matter of time and of how long they have been retired.

 

[ESRwannabe]

My observation is that to hit $1 million you really have to do something extraordinary. For most people that would be making a high wage ($100k or more). For others, like myself, it could be extreme live below your means. My highest income so far is $65k year, but I live on roughly $24k. So I am sure I will hit $1 million eventually.

If you are just an average Joe/Jane you simply can't get from here to there. Most people make wages similar to mine and can only save 10% or so a year. So its just not going to happen for them.

The way things are setup it is almost impossible to get out of the rat race until you are 65+.

You will notice a lot of DINKs here where each one is making $100k+ and saving aggressively. That's not typical compared to average Jane/John. This message board is made up of atypical people.

However there is hope. The birthrate has tanked all over the planet and that is good. Large populations make people worthless and keep us stuck in a feudal hierarchy. As an example, I am convinced that the Renaissance never would have happened without the plague.

I'm doing my part to help. I have no children and will not reproduce. Thankfully other people all over the globe are doing likewise, although perhaps not consciously. If global population got down to a low enough number then everyone could enjoy the fruits of scientific progress and increased productivity. As it is right now only a tiny fraction of homo sapiens get the benefits.

If people want a bright future for everyone then they should stick to one child or less. Whoever made the one child policy in China was very wise.

 

[aim-high]

$2 million in DC with a family won't cut it for pre-50 early retirement. At least given the things we'd like to do. Not counting on SS and no pension.

 

[athena53]

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

A 50yo male with 2 million could buy an immediate annuity and get $108,720 a year until they die. Who needs 108k/year for a retirement?

Some of us are very risk-averse! I finally retired at age 61 with over $2 million (had planned to work to 65 but it wasn't fun anymore) and still worry. I just did a cash flow projection today and using a 2% withdrawal rate, 6% investment return, 4% inflation, and starting SS at age 67, I'm gonna be a very rich old lady. That tells me I could splurge wildly and maybe withdraw 3%.

Still, medical care is a biq question mark. DH and I are paying about $7K/year in premiums (he's Medicare-eligible, I'm not) for our various coverages and I have a $6K annual deductible. I've also been though some awful market downturns. You want some cushion so you can withdraw as little as possible and let the rest recover.

And, while $108,000 looks good now (DH And I certainly don't spend that much and we live well), in 30 years at 4% inflation, that would buy what $33K buys now.

 

[2B]

I'm doing my part to help. I have no children and will not reproduce. Thankfully other people all over the globe are doing likewise, although perhaps not consciously. If global population got down to a low enough number then everyone could enjoy the fruits of scientific progress and increased productivity. As it is right now only a tiny fraction of homo sapiens get the benefits.

If people want a bright future for everyone then they should stick to one child or less. Whoever made the one child policy in China was very wise.

Unfortunately, the ones best prepared financially and emotionally to reproduce are the people that have reduced their number of children or decided not to have any as you have.

If you like the effects of 1 child, go check out China. They are in the process of having a reverse population bomb.

 

[daylatedollarshort]

The average tech worker in the Bay Area now makes over $100K so it may not be typical for the country as a whole but it is actually not atypical here at all.

But a lot of the people we know with incomes like that have expenses to match and worry about money as much as those making much less, if not more, because of high expenses. A family with annual expenses of $50K can replace most of that with two CA minimum wage jobs, but unemployment benefits or two minimum wage jobs do not help much when a household has $4k a month in rent or mortgage payments alone plus two leased $80K cars in the driveway.

 

[FIREd]

Here in Bay Area, CA, 2M asset isn't saying much.

+1. I just feel average here.

 

[scrabbler1]

My observation is that to hit $1 million you really have to do something extraordinary. For most people that would be making a high wage ($100k or more). For others, like myself, it could be extreme live below your means. My highest income so far is $65k year, but I live on roughly $24k. So I am sure I will hit $1 million eventually.

If you are just an average Joe/Jane you simply can't get from here to there. Most people make wages similar to mine and can only save 10% or so a year. So its just not going to happen for them.

The way things are setup it is almost impossible to get out of the rat race until you are 65+.

You will notice a lot of DINKs here where each one is making $100k+ and saving aggressively. That's not typical compared to average Jane/John. This message board is made up of atypical people.

However there is hope. The birthrate has tanked all over the planet and that is good. Large populations make people worthless and keep us stuck in a feudal hierarchy. As an example, I am convinced that the Renaissance never would have happened without the plague.

I'm doing my part to help. I have no children and will not reproduce. Thankfully other people all over the globe are doing likewise, although perhaps not consciously. If global population got down to a low enough number then everyone could enjoy the fruits of scientific progress and increased productivity. As it is right now only a tiny fraction of homo sapiens get the benefits.

If people want a bright future for everyone then they should stick to one child or less. Whoever made the one child policy in China was very wise.

We think a lot alike.

I worked full-time for 16 years before working part-time for 7 more years before I ERed back in 2008 at age 45. My highest wage earnings year was my last full-time one, in 2000, when I made about $75k.

I live on about $20k a year, including income taxes. I am single and childfree, knowing at age 20 I never wanted kids but not realizing until I was about 35 that I could parlay that wonderful choice into an ER 10 years later.

I combined my single, childfree status with LBYM and an exploding company stock value to cash out about $300k worth in 2008 at low (NUA) tax rates and ER even though my taxable account had, with the company stock's proceeds, about $600k. This was when the markets were crashing in 2008, a huge benefit for me starting my ER. Yes, everything in my life seems backwards at times compared to others - when people were getting all upset and nervous about the crashing markets, I was overjoyed!

Then again, I'm an outlier in so many areas it makes perfect sense that I would see the 2008 crash as a huge break toward starting my ER.

Now that the markets have bounced back nicely, that $600K in my taxable accounts has risen to more than $800k despite pulling out about $22k every year in dividends. And the rollover IRA I began in 2008 has doubled, waiting for me to have unfettered access to it in about 8 years.

I am at about $1.3M now between the 2 accounts even though I am using only 2/3 of it to pay my bills with plenty left over. In fact, I have a surplus in my bank account sitting around waiting for me to invest it somewhere. Oh dear, what shall I do with it??

 

[audreyh1]

Don't forget that $108K per year is not inflation adjusted! So in 20 years it will seem like considerably less. Then there is the cut for taxes - not large, since it's an annuity, but it will still cut into the spendable income.

But the biggie is that that annuity payout is not adjusting for inflation. Even after 10 years it will seem like considerably less. After 15 years since we retired, cumulative inflation has reached 40%. That would be a huge cut in standard of living.

 

[calmloki]

With over 36 years together I think "we" when talking net worth. We are over 2 and under 5, never had reasonable paying jobs (think I topped out at under $16,000 salary as a mushroom grower for a while, while she worked very hard and with great loyalty thinking that owners would compensate her - instead she was the one - one - among the car dealership managers who offered to and took a salary cut when the dealership was in trouble. This after working for over 10 years without a raise. Yeah - no big incomes here.)

Instead we both liked old stuff and surround ourselves with it, bought old places and put in the effort to make them decent and rentable, and lo and behold, we seem to have stacked up some ducats. Really looking forward to Medicare in a few months, which I'll pay a substantially higher amount than the norm for, but it will still be $400 hundred less than my current insurance. Almost as big a monthly income bump as when I started taking my piddly SS checks at 62.

 

[2B]

I went to a popular annuity calculator on the web and a male at 62yo today could buy a 15k/year annuity for about 235k today. Since you have many years to go to get to 62 this amount should be discounted for net present value from your age now to age 62.

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

A 50yo male with 2 million could buy an immediate annuity and get $108,720 a year until they die. Who needs 108k/year for a retirement?

When I first calculated my NW in 2006 I had over $1MM (renting) and decided I was FI. The last of my kids were finishing college. I was in a lower paying job than what I had before and DW and I were discussing retirement then. I was 55 so it was only a little early.

We then had an elder crisis with both DWs parents which made retirement for me pretty meaningless if it revolved around going to the nursing home and doing home health care for my Alzheimer FIL.

I also got offerred a well paying job located near my in-laws. We moved and the next 6 years were totally tied up with DW not wanting to leave Houston for fear of the next crisis. Unfortunately, she was right which was proven the one time we tried.

I make very good money doing an easy job. I have 5 weeks PTO and can take off unpaid time if I want to do that. Because of DWs inability to leave town, I still have many weeks of PTO banked.

Over the last 2 years, we've moved to our paid for retirement abode. We've taken multiple vacations both domestically and international that I may not feel as comfortable doing when the cash flow stops. So, at 63 I will end my OMY status and leave. We have much more than we "need" for retirement but I've waited until the RE part is no longer applicable.

 

[trixs]

Very true.
And yet many politicians view these folks as "hard working ave Americans" while blasting the industrious small business owner with no govt' or corp pension (or benefits) and a similar REAL net worth as "greedy rich".

These individuals are a very small part of the military. Personally I am an E-7 with 12 years in service. I have been flying and doing the same exact job as the O1-04 the entire time. I work in a training squadron and it always amazes me that I have to teach someone, who is much better payed, how to actually do their job. Then a year later I evaluate them during a checkride. The military wastes so much money on the antiquated enlisted/officer system.

Anyway, becoming a millionaire is not that difficult. I am 33 (Just turned ) and pretty much started saving when I joined this forum. It really does come down to LBYM. Currently I have just over $300K investable assets and have never made more than $60k/year. Imagine if I don't save another penny but let compounding do its job for the next 30 years.

 

[NW-Bound]

...If you like the effects of 1 child, go check out China. They are in the process of having a reverse population bomb.

Back when China economy was still in the Dark Ages, childbirth limit might have made sense. Now, they are worrying about having a boatload of retirees without the support of workers. A couple (2 persons) down to one child. That single child has to change his/her parents' diapers while also works in the farm for food, builds gadgets in factories, then drives trucks to make Amazon-like deliveries to the non-producing geezers. I pity that younger generation. Or perhaps not, as they may just revolt and leave the geezers out to rot.

The same thing happens if there are too many savers and early retirees like people in this forum. Somebody has to work and to buy "stuff", so that corporations can make money and send out dividends to us.

See: Paradox of thrift - Wikipedia, the free encyclopedia.

 

[Live And Learn]

I am puzzling about the 2 mil plus group, why they didn't retire sooner?? I guess they have a high expense life style or something. Since I am in the "frugal" category 2 mill plus seems gigantic.

I am planning to retire at age 52. I couldn't sleep with a withdrawal rate greater than 3%. 3% of 2mm = 60k / year. My budget includes 6k for Income Tax, 3k for Property Tax and 28k for HI / OOP (total 37k). That would leave me 23k for living expenses plus travel. Doable, but not the kind of life I want in retirement. Its all a compromise.

 

[marko]

Senator, the answer is no: Early Retirement & Financial Independence Community - Net Worth Poll

Looks like ~50% have less than $2M, the minimum amount necessary to reach "multi" status.

I'm not sure everyone here with assets over $2M would want to take the poll, so the results could be skewed. As we've learned, you never know who is watching.

I had a great-uncle who wouldn't smoke cigars in public "in case someone thought I was rich" (which he was).

 

[Major Tom]

If it makes you feel any better Senator, I stopped work a few years ago and only have 750K, not counting the value of my future social security. All of that is in investable assets. I don't own a house, but I do have a bicycle that I bought for $100 off Craigslist and a 24 year-old microwave that still works

 

[NW-Bound]

Hey, Major Tom, in case that old microwave of yours stops working, I'd like you to know that I have seen new microwaves selling for $50.

Or was it $39.99? Ah, I am getting old and my superior memory has started to decline.

 

[WannabeRetired]

I am planning to retire at age 52. I couldn't sleep with a withdrawal rate greater than 3%. 3% of 2mm = 60k / year. My budget includes 6k for Income Tax, 3k for Property Tax and 28k for HI / OOP (total 37k). That would leave me 23k for living expenses plus travel. Doable, but not the kind of life I want in retirement. Its all a compromise.

Your budget is $37k for health insurance premiums and total out-of-pocket costs per year? Is that what the ACA insurance will cost you? Crazy to think that the median household income is $53k or so in the U.S. and your health insurance in retirement will cost you $28k-$37k per year.

 

[robnplunder]

I am at about $1.3M now between the 2 accounts even though I am using only 2/3 of it to pay my bills with plenty left over. In fact, I have a surplus in my bank account sitting around waiting for me to invest it somewhere. Oh dear, what shall I do with it??

Go have that kid, start a family .

 

[marko]

My take on this community is that it runs the gambit ranging from multi-multi millionaires, trust-funders and military/gov't pensionaires all the way to young folks who would rather live more simply than 'work for the man night and day'. Some are just taking a few years off.

What I"ve learned here is that RE means different things to different people; a different perspective than my original view of wealthy folks who no longer (if ever) have to work. As someone noted, it is more about behavior and attitude than a certain amount of money.