What a $5 Million Retirement Looks Like

[Badger]

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.

If everything we own is considered then I guess we fit the description. This post sounds familiar except that we bought new cars 3-4 years ago as our last ones unless we live long enough to see electric driverless cars.
Travel for me is now more limited but my wife can still travel with her friends if she wants to.
We are enjoying giving maximum allowed money gifts to her 2 grown children split between birthdays and Christmas. They will get the rest eventually. We also enjoy donating to local rescue animal shelters with food, cat litter, and cleaning products.
Otherwise we are still frugal and enjoy our lifestyle. Not much has changed except for not being stressed with needing to save more or having to work.

Cheers!

 

[Rocky mtn high]

5m is awesome. Live in 30 yr old house, buy used cars although nice used Lexus. Can’t spend the earnings and now eligible for SSI. Been very lucky in life but also very frugal. Looking to buy new golf club but will probably buy a demo . Never ever thought I would accumulate this much but there it is.

 

[Rocky mtn high]

The money sitting in investment accounts hardly seems real to me. Maybe that’s part of the problem why we don’t spend. Have duc tape on my golf bag to make it last a little longer.��

 

[LateToFIRE]

The money sitting in investment accounts hardly seems real to me. Maybe that’s part of the problem why we don’t spend. Have duc tape on my golf bag to make it last a little longer.��

I think you're onto something. I'll retire with at least this much in bank & investment accounts - but it simply seems unreal.

 

[Rocky mtn high]

I think for me, I know it’s real but when it’s not in my checking account it’s not available, so I have been trying to increase my checking balance to make me spend more.

 

[NW-Bound]

5m is awesome. Live in 30 yr old house, buy used cars although nice used Lexus. Can’t spend the earnings and now eligible for SSI. Been very lucky in life but also very frugal. Looking to buy new golf club but will probably buy a demo . Never ever thought I would accumulate this much but there it is.

I think you mean SS and not SSI which you would not qualify.

 

[TheWizard]

I think for me, I know it’s real but when it’s not in my checking account it’s not available, so I have been trying to increase my checking balance to make me spend more.

Interesting concept, I suppose.
I target $10,000 as my checking account balance. This seems to be enough to buffer most of my travel and housing expenses which vary considerably some months.

I move excess funds beyond that $10k into my taxable investment account and my intent is for that to be mostly a one-way transfer, not having to move funds from investments back to checking every other month to pay a larger than usual CC bill.

I could be deceived, but I don't think that having that much in checking is really an incentive to SPEND more of it on things I wouldn't normally buy...

 

[anothercog]

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.

We sound similar. We are not retired yet but I do expect travel to be our single largest expense. I’m 53 now and expect to retire sometime between 53-60. I doubt we’ll see grandkids until I’m at least 70 so we plan to check off most of our travel bucket lists by then.

 

[Rocky mtn high]

Interesting concept, I suppose.
I target $10,000 as my checking account balance. This seems to be enough to buffer most of my travel and housing expenses which vary considerably some months.

I move excess funds beyond that $10k into my taxable investment account and my intent is for that to be mostly a one-way transfer, not having to move funds from investments back to checking every other month to pay a larger than usual CC bill.

I could be deceived, but I don't think that having that much in checking is really an incentive to SPEND more of it on things I wouldn't normally buy...

That is exactly what I was doing but now I am trying to force myself to be not so frugal by having more in checking which is available to spend.

 

[Koolau]

The money sitting in investment accounts hardly seems real to me.

Yeah, once a year, I add everything up. But somehow, it seems like numbers on a page, not money I could actually go out and spend. Strange.

 

[NW-Bound]

Back when I was still working and too busy to properly manage and invest my savings, I let my checking account accumulate to a very high balance. Same as Koolau, it never caused me to have an urge to go out to spend it.

Thinking back, it was just dumb for me to neglect my finance like that, and to spend too much time for work. Megacorp did not care that much about me. I should have at least moved that money, as much as $100K, to CD or money market fund, if not a stock fund. So dumb.

I now keep my checking balance in the $5K-10K range. It's high enough so that I don't have to refill the account too often. It actually should be even lower as we use mainly credit cards, and as my wife pays them in full each month, I do have plenty of advance warning to refill the checking account. I am forgetful though, plus I spend a lot more time looking at my investment accounts than the checking.

 

[indiajust]

https://awealthofcommonsense.com/2023/08/you-probably-need-less-money-than-you-think-for-retirement/

From a Bloomberg survey on retirement account wealth only, not the rest of the nest egg.

Deals with perception of wealth, in that same $5M increment.

 

[Rocky mtn high]

Yes, it probably won’t work but am now going to try the opposite as the checking balance I hope, will remind me that I need to be spending more. It won’t be wasteful but a reminder that I can actually spend more.

 

[Koolau]

https://awealthofcommonsense.com/2023/08/you-probably-need-less-money-than-you-think-for-retirement/

From a Bloomberg survey on retirement account wealth only, not the rest of the nest egg.

Deals with perception of wealth, in that same $5M increment.

That article has such truth. I recall my first visit to the Islands. I was so taken that I started to look for ways to move right away. I saw people living under blue tarps and thought "I could do that."

Of course, FF to now and I live in a decent condo and lack for nothing. Perspectives do shift over time.

 

[TheWizard]

Yeah, once a year, I add everything up. But somehow, it seems like numbers on a page, not money I could actually go out and spend. Strange.

Not strange at all.
If you go out and spend your entire nest egg next week, you will henceforth be destitute.
Not a good idea...

 

[NW-Bound]

https://awealthofcommonsense.com/2023/08/you-probably-need-less-money-than-you-think-for-retirement/

From a Bloomberg survey on retirement account wealth only, not the rest of the nest egg.

Deals with perception of wealth, in that same $5M increment.

From the above article:

Despite owning a home worth almost $400,000 in Dallas and a condo in Hawaii, Tom Thompson and his wife don’t feel rich. In fact, having more money has just resulted in more bills. The 54-year-old is feeling the pressure of inflation, especially as he prepares to pay for his 18-year-old son’s college tuition.

Despite an annual household income of about $450,000, Thompson worries about his job stability at an ad agency where losing a big client could mean a layoff.

“We’re not living paycheck to paycheck, but I feel like we have looming expenses,” he said. “My personal definition of rich is the ability to buy or participate without concern, and I do not have that.”

Out of the income of $450K, how much does he take home, and how much of it he spends?

In order to have a gross income of $400K, he would need a stash of $10M, else he's not FI.

He most likely does not have that much saved. So, of course, he's worried of losing his job.

 

[REWahoo]

If you go out and spend your entire nest egg next week, you will henceforth be destitute.
Not a good idea...

Depends:

If you spend it on a boat, yes you will be destitute.

If you spend it on a SPIA, no you probably won't.

Note that I do agree neither purchase is a good idea.

 

[NW-Bound]

https://awealthofcommonsense.com/2023/08/you-probably-need-less-money-than-you-think-for-retirement/

From a Bloomberg survey on retirement account wealth only, not the rest of the nest egg.

Deals with perception of wealth, in that same $5M increment.

And the author of that Web site wrote:

Look, I’m not saying everyone has to die with zero. Having a low burn rate is certainly the best hedge against longevity risk in retirement.

But what’s the point of saving in the first place if you’re not going to spend some of it?

Spending some of it? Of course these retirees all spend some of their stash.

What the public says is that they should spend even more. But if they don't get more pleasure out of spending more, then why do it? Just to BTD?

 

[street]

^ I'm not wired to spend more just to burn it away either. BTD doesn't and won't make me happier either. I would get more satisfaction giving it in an inheritance.

 

[Badger]

^ I'm not wired to spend more just to burn it away either. BTD doesn't and won't make me happier either. I would get more satisfaction giving it in an inheritance.

+1

Cheers!

 

[Koolau]

^ I'm not wired to spend more just to burn it away either. BTD doesn't and won't make me happier either. I would get more satisfaction giving it in an inheritance.

I feel the same. Making a difference with my money means more to me than owning something new.



What I HAVE been BTD on of late is repairs to my condo due to water leaks. THAT is a very unpleasant way to BTD.

 

[RetiriusMinimus]

I found the comments here much more interesting than the article itself. At 62 and 64 my DW and me are about 12-18 months til retirement.

As of yesterday our total portfolio (tax/taxable) isn’t at $5, but $3.5. For us we’re comfortable given our priorities, interests, and expected retirement budget. I don’t have the luxe of a pension, well a comically tiny one of $10k/year, and probably $53K in godwilling a stable SS stream…. I’m not wealthy but feel ok…

 

[NW-Bound]

^^^ Well, there's practically no difference between a $5M retirement and a $3.5M retirement, and then even less difference after considering SS and pensions.

 

[RetiriusMinimus]

@NW-Bound Yah, we are relatively frugal. There’s truth in the saying wealth is more than money. Being happy and productive, and giving back should be the metric of wealth.

 

[SunGuy]

Yes, the common spending themes are evident. Interesting though, some have mortgages that they do not intend to pay off early and social security will be delayed until full retirement age - a couple things counter to what is usually posted on here.

If you have the stability, it makes sense to always have a mortgage so you can invest and leverage the loans.

Waiting to get the maximum benefit from social security is also very smart. Why you need a blend of investment accounts to maximize the taxes and income sources etc.