What a $5 Million Retirement Looks Like

[TheWizard]

If I had guaranteed annual income of $130k to $150k like a couple on the examples in the article, I wouldn't care if I only had 10 bucks in savings. I could live very well on that income while also paying for the appropriate insurance to maintain comfort until the end.

No offense, but it's hard to tell what that hypothetical situation really means.
Is the $10 in savings the result of spending the $150,000 per year on something, anything, as soon as it comes in?
What if we increased the amount to $180k per year, where would the additional income go?

With spendaholics, you see, enough is never enough.

While I don't have $5M+ in financial assets like the OP article's theme, I do have a large enough retirement income that allows me to invest the excess almost every month, a negative withdrawal rate.
So maybe I'll get to $5M in financial assets in several more years...

 

[DrRoy]

The general descriptions fit us to a reasonable level, mainly regarding a lot of travel. I've usually seen that ~$5M NW was about the top 1.5%.

 

[Markola]

There's a mindset, a mentality to dealing with money.
Some people look at their entire stash as available for spending. People with wisdom know better than to look at their wealth that way...

This is a crucial statement. A few people can sit there and look at the marshmallow all day. Most can’t help themselves but to gobble it immediately. That’s why wealth rarely lasts more than 3 generations maximum.

 

[Ronstar]

...So maybe I'll get to $5M in financial assets in several more years...

+1. Getting to $5M is not as far fetched as I imagined. I ran some calculations and it's probable. Of course, it's also probable that I would be too old to enjoy it.

 

[Koolau]

Except for the first person described, there wasn’t much detail on the investments.

Most had some in retirement funds and regular brokerage accounts.

I was a bit taken aback at the surgeon making $300K working part time per diem in “retirement” when our health care expenses are nearly unaffordable in the U.S. That really bothered me.

I had a doc who (clearly in his early 50s) was whining about still paying off his medical school bills. I'm sure he wasn't making $300K, but becoming a doc isn't cheap. So, though $300K for "part time" w*rk seems excessive, we don't know the whole story. The doc mentioned "per diem" so the $300K may include air fare and hotels, etc.

I have heard about amazing salaries for nurses willing to travel. There are always places that don't have enough medical people to meet needs. Personally, I wouldn't want to travel across the country to w*rk for a couple of weeks. So, they'd have to pay me well to do it.

 

[LateToFIRE]

You may be right and I can see why you'd think that based on the opening and some other references, not entirely sure that's true.

As with most articles of this type, the author was extremely sloppy with how they referenced the numbers. Really, the table was meaningless as it relates to the rest of the article.

 

[LateToFIRE]

I found the article interesting because I'd place myself in this range of age, retirement assets, and retirement spending (though not exactly quite retired yet...soon).

Most people imagine that at this level of assets, you would have zero financial worries. And while that is probably closer to the truth, I could identify with some of the anxiety leading up to retirement.

What also rang true was the LBYM approach, though at their level that might look like something very different than the norm. Largely, what I observe with retirees in this NW range is that they lean in on some spending categories and really skimp on others - they have a keen sense of what is important to them and what is not.

Myself as an example - I'll spend big on housing, but will run a car into the salvage yard [I have actually never owned a spanking brand new car]. I'd like a new car, but just can't bring myself to pull the trigger while my old car is still running reliably. Having been there, done that on most luxuries (often on somebody else's dime) has taken the shine off of those things that simply don't make a difference. I prefer to spend on lasting value and lasting experiences.

 

[copyright1997reloaded]

That’s what I was thinking, too. Stocks and stock index funds seemed to predominate over balanced AAs. One bought Home Depot at $3.

I bought Apple @ $0.35/share (adjusted for splits) in 2000, current price $189+.
I bought ADI @ $1.85/share (originally LLTC, acquired by ADI) in 1990, current price $185.
I bought MSFT @ $31.40/share in 2010, current price $322.
I bought MAR @ $2.62/share in 1990, current price $207 (plus it has spun off a bunch of stuff)
I bought ABT (now ABT + ABBVY) around $25/share in 2009/2010, ABT is $105, ABBV $152 (plus ABBV has a big fat dividend)

The question becomes how much of them and whether they've been kept. (Most of my LLTC went away when ADI acquired them, but at the time it was my biggest gain on a single stock in my life), and I've sold off more than half of my Apple purchase over the years. These were all (at the time) very modest investments. But all in all, these purchases (plus a couple not mentioned) are enough to be FI. [There have also been some clunker investments over the years...and I've managed to lose money both on Facebook and Netflix. For example, I was in the Facebook IPO and sold out a year or so later, pretty much at the low. Fortunately for the most part I've let winners run.]

 

[Midpack]

There's a mindset, a mentality to dealing with money.
Some people look at their entire stash as available for spending. People with wisdom know better than to look at their wealth that way...

+1. I know many of the former (friends & family all but one in law), and fewer of the latter (family, one BIL) - and there are clearly more of the latter here. And I don't think I have ever known anyone who jumped from one camp to the other.

 

[NW-Bound]

As with most articles of this type, the author was extremely sloppy with how they referenced the numbers. Really, the table was meaningless as it relates to the rest of the article.

I think the interviewees rarely bare all of their financial details to a reporter. They only volunteer tidbits here and there.

Hence, the latter has to make do with what she was told.

 

[LateToFIRE]

I think the interviewees rarely bare all of their financial details to a reporter. They only volunteer tidbits here and there.

Hence, the latter has to make do with what she was told.

Fair enough. I really can't fathom what would motivate anyone to be interviewed for this kind of article.

 

[COcheesehead]

Fair enough. I really can't fathom what would motivate anyone to be interviewed for this kind of article.

Ego

 

[Humbooster]

Ego

yes

 

[Midpack]

Fair enough. I really can't fathom what would motivate anyone to be interviewed for this kind of article.

Most (not all) people like to talk about themselves, they love others who volunteer to listen - if you approach them right. How else would the millions/billions of surveys get completed without compensation? My opinion is important is one of the main reasons...

 

[NW-Bound]

I understand when successful people like to share their story. Just like the posters here.

But when one failed, like the couple who blew $10M then had to take jobs paying as little as $12K, well, I would not want to share my life story as a lesson to others, unless it's anonymous. And definitely no photos.

 

[ncbill]

I understand when successful people like to share their story. Just like the posters here.

But when one failed, like the couple who blew $10M then had to take jobs paying as little as $12K, well, I would not want to share my life story as a lesson to others, unless it's anonymous. And definitely no photos.

I have requested Make Way for Tomorrow on DVD via my local library.

Will make the kids sit down & watch it with us to prepare for what might be in store for them.

 

[street]

I also understand sharing our journey to an ER and being able to talk about private financing here on this site. I feel like we are all in the same boat regardless of the amount our portfolios are.

I visit another site that has nothing to do with money. The subject comes up often and I would never ever talk or get involved with their discussions about money and wealth with them.

On ER it is a place I feel comfortable to visit openly with others with similar interests and journey through life to where it has gotten them. I wouldn't say that is boasting and do I want to just talk about me. What keeps me coming back here is that people like you talk about your financial well-being and about yourself and your journey to ER. I never once thought about anyone here bragging or wanting to highlight their wealth to make themselves look superior.

 

[brett]

We would fall into this category. Our vehicles are 16 and 17 years old. No plans to replace them. We buy a lot of our clothes at Costco. We eat well but seldom go to out to restaurants.

We carry on as we have before. Biggest expenditures are international travel (4-5 months per year), education funds for our four grandchildren, and donations to our local food bank.

We never thought we would have this much. Probably enough left over when we both die to provide some sort of retirement income for each of our two children.

What has not changed perceptibly is our day to day life and our friendships.

 

[NW-Bound]

I have requested Make Way for Tomorrow on DVD via my local library.

Will make the kids sit down & watch it with us to prepare for what might be in store for them.

I had to look up that 1937 movie. Sounds like a nice one, and it has gained recognition.

I hope you meant for them to learn to prepare for themselves in their own old age, and not to learn from the way people in the movie treat their parents.

 

[tenant13]

Interesting. While each case was different my overall take was that they all retired too late. The couple who’s 80 and has 6.1 mil: “ The Freys, despite their wealth, generally avoid its trappings. Bob said he hasn’t bought a new sports coat in about 20 years.” What trappings are those - the ability to live within your means before you pass your money to the family?

I feel like a significant portion of the (relatively) wealthy retirement crowd gets very limited enjoyment out of their lifetime long efforts and frugality.

 

[NW-Bound]

Interesting. While each case was different my overall take was that they all retired too late. The couple who’s 80 and has 6.1 mil: “ The Freys, despite their wealth, generally avoid its trappings. Bob said he hasn’t bought a new sports coat in about 20 years.” What trappings are those - the ability to live within your means before you pass your money to the family?

I feel like a significant portion of the (relatively) wealthy retirement crowd gets very limited enjoyment out of their lifetime long efforts and frugality.

Unless Bob's sports coat got holes in it, I can see how he feels no desire to buy a new one. I think he did not buy a new coat because he would not feel happier wearing one.

He would get no enjoyment out of a new coat, therefore he did not buy it. It's not the same as he deprived himself of a coat while drooling over it.

The article did note that these retirees spent money on travel, which they enjoyed.

 

[explanade]

I haven't made significant clothing purchases, a few things here and there as needed.

Often it's driven by travel clothing needs, like wool clothes which tend to go longer without needing to be washed.

Bought some shoes in anticipation of all the walking I'm going to be doing but didn't get the more expensive pair.

 

[tenant13]

Unless Bob's sports coat got holes in it, I can see how he feels no desire to buy a new one. I think he did not buy a new coat because he would not feel happier wearing one.

He would get no enjoyment out of a new coat, therefore he did not buy it. It's not the same as he deprived himself of a coat while drooling over it.

The article did note that these retirees spent money on travel, which they enjoyed.

Yes, that was the point of this particular example: Bob enjoys simple things. Not blowing thousands on travel.

So why bother accumulating 6 mil if 600k would make Bob perfectly happy? Whether it “just happened” because Bob enjoyed working or it was by design it seems like mismanagement of Bob’s time, health and energy. He converted all into a spreadsheet.

Having said that, I got triggered more by the word “trappings” which by its inherent negativity suggests that having enough money for a new coat is somehow to be dismissed as frivolous. The old coat is just fine as you pointed out.

 

[Gumby]

...
So why bother accumulating 6 mil if 600k would make Bob perfectly happy? ...

It's always better to have and not need than need and not have.

 

[NW-Bound]

Perhaps Bob should surf this forum and read the BTD thread to get some ideas.

PS. No, Bob does spend money on travel. However, his $35K travel expenses are only 0.6% of portfolio. He could spend more on travel, but at the age of 80 Bob's years of travel will not be for long.

The Freys, too, value travel and allocate about $35,000 a year to seeing the world. They have visited New Zealand five times, and Bob often combines his love for fly fishing and travel on trips to Alaska, Mexico and South America.

They also enjoy separate trips with their friends. Pat regularly travels to Europe and the Galápagos Islands with a friend. She skips Bob’s hunting trips.