When a Million Dollars was serious wealth

[purplesky]

Very much agree.

I've often mentioned my friend who is $.5mil in debt at age 77. I estimate his two SS's (his and wife) plus his pension come to about $80K. That amount covers his debt service (so far) and leave him enough to spend and get more credit. He is happy, so who am I to say he has to have $1Mil (to the good) to be happy. When he dies, I have no idea what happens to his wife. I hope he has made some kind of arrangement for his debt, but I doubt it. At that point, it might become sad very quickly - yet bankruptcy laws will probably spare her a place to live and she will still have the higher of their two SSs plus half his pension. She should survive. All is well - and they definitely do NOT have $million! YMMV

You are in Hawaii? Not fair!

 

[Koolau]

You are in Hawaii? Not fair!

Yeah, every once in a while I talk to someone here on the mainland (my yearly sabbatical) and mention that I live in Hawaii. Sometimes they will say "You are so lucky!" I used to say "Luck had nothing to do with it." Of course, luck DID have at least something to do with it - but mostly we planned it that way. So, as always, YMMV.

 

[rwdflynavy]

You are confusing me. Having retirement expenses greater than income expenses imply a negative cash flow.

In any case. Your disposable income (income minus expenses) is what drive your standard of living. If your expenses are $3000 per month and your retirement income is is 10% more or $3300 month then your disposal income is $300 a month. 10% is OK. 25% is good. 50% is excellent. 100% is difficult to do. Most FIRE has low disposal income while a traditional retiree has much more. This is because your nest egg in the stock market generally double in 10 years. Triple if you continues to contribute. Wealth increases exponentially and not linearly due to the compounding effect.

My point was a simple change to your focus on income. My income is much less since I FIREd, but my expenses are also lower. I'm much more concerned with my expenses than my income. If I have enough to cover all my expenses I'm in great shape. The focus on income is the mistake IMHO.

 

[2177V]

Yeah, every once in a while I talk to someone here on the mainland (my yearly sabbatical) and mention that I live in Hawaii. Sometimes they will say "You are so lucky!" I used to say "Luck had nothing to do with it." Of course, luck DID have at least something to do with it - but mostly we planned it that way. So, as always, YMMV.

I was going to buy a condo near Waikiki as a second home because I love surfing the 3 foot beginner waves. I am age 70 and a wipe out on a 3 foot wave is no big deal. However after renting an Airbnb place for 30 days, I decided against it due to the heat, humility and high COL. I am from Northern California which is cooler, lower humility but similar high COL. Instead I decided to buy my second home condo in China where the COL is only 1/3 of California and Hawaii. I will spend 90 days in China in my second home condo, 30 days in Waikiki using Airbnb rental and the rest of the time in California. The low COL in China should pay for the airfare. A Chinese Condo in 4th tier city is only 1,000,000 RMB or $160K US dollars. $160K is similar to a small Waikiki condo but the title is a lease holder and there is a much higher monthly HOA and maintenance fee. Yes Hawaii lifestyle i really nice.....but I decided to have all three life styles during my retirement.

 

[RetiredHappy]

I was going to buy a condo near Waikiki as a second home because I love surfing the 3 foot beginner waves. I am age 70 and a wipe out on a 3 foot wave is no big deal. However after renting an Airbnb place for 30 days, I decided against it due to the heat, humility and high COL. I am from Northern California which is cooler, lower humility but similar high COL. Instead I decided to buy my second home condo in China where the COL is only 1/3 of California and Hawaii. I will spend 90 days in China in my second home condo, 30 days in Waikiki using Airbnb rental and the rest of the time in California. The low COL in China should pay for the airfare. A Chinese Condo in 4th tier city is only 1,000,000 RMB or $160K US dollars. $160K is similar to a small Waikiki condo but the title is a lease holder and there is a much higher monthly HOA and maintenance fee. Yes Hawaii lifestyle i really nice.....but I decided to have all three life styles during my retirement.

Long flights to another country to spend retirement for prolonged period each year is just not attractive to me.

 

[Koolau]

My point was a simple change to your focus on income. My income is much less since I FIREd, but my expenses are also lower. I'm much more concerned with my expenses than my income. If I have enough to cover all my expenses I'm in great shape. The focus on income is the mistake IMHO.

Oddly, my income has increased significantly - depending on how you calculate it. We have 2 SS and a modest pension. Together, they are about what I used to make on my own. DW never made much though she managed a small business. If you count RMDs then we are well above our old income - even if I include the dividends we were able to take from the small business. Our expenses are higher as we moved to a HCOL area. We planned it all this way, so I guess all is well - assuming inflation doesn't go wild. YMMV

 

[Koolau]

I was going to buy a condo near Waikiki as a second home because I love surfing the 3 foot beginner waves. I am age 70 and a wipe out on a 3 foot wave is no big deal. However after renting an Airbnb place for 30 days, I decided against it due to the heat, humility and high COL. I am from Northern California which is cooler, lower humility but similar high COL. Instead I decided to buy my second home condo in China where the COL is only 1/3 of California and Hawaii. I will spend 90 days in China in my second home condo, 30 days in Waikiki using Airbnb rental and the rest of the time in California. The low COL in China should pay for the airfare. A Chinese Condo in 4th tier city is only 1,000,000 RMB or $160K US dollars. $160K is similar to a small Waikiki condo but the title is a lease holder and there is a much higher monthly HOA and maintenance fee. Yes Hawaii lifestyle i really nice.....but I decided to have all three life styles during my retirement.

For the right person, this seems like a very good plan - especially if you do Hawaii in the winter (cooler by about 5 degrees.)

Long flights to another country to spend retirement for prolonged period each year is just not attractive to me.

I agree to this extent: We still travel back and forth from Hawaii to the mainland each year (except last). The trip seems a bit more unpleasant each time. Maybe we'll upgrade to first class. Naaaaaaahhhh! YMMV

 

[2177V]

My point was a simple change to your focus on income. My income is much less since I FIREd, but my expenses are also lower. I'm much more concerned with my expenses than my income. If I have enough to cover all my expenses I'm in great shape. The focus on income is the mistake IMHO.

If you read my previous post that my retirement life style will consist of living in Hawaii, China and California, then my focus on income is NOT a mistake IMHO.

During my retirement planning....I knew that if my retirement income is equal or greater than my pre-retirement income, then my retirement standard of living will be higher than my pre-retirement standard of living. This is because the mandatory retirement expenses will decrease but my disposable income will increase.

Focusing on expenses is just OK to maintain your standard of living pre-retirement and post-retirement. However, my original retirement objective was to have a standard of living in retirement that is GREATER than my standard of living pre-retirement. We had two different objectives and two different outcomes.

 

[2177V]

For the right person, this seems like a very good plan - especially if you do Hawaii in the winter (cooler by about 5 degrees.)



I agree to this extent: We still travel back and forth from Hawaii to the mainland each year (except last). The trip seems a bit more unpleasant each time. Maybe we'll upgrade to first class. Naaaaaaahhhh! YMMV

I take a sleeping pill during a long flight. When I wake up, I am there! Sleeping in first class and sleeping in economy class makes very little difference. Get a strong sleeping pill that knocks you out!

 

[RetiredHappy]

For the right person, this seems like a very good plan - especially if you do Hawaii in the winter (cooler by about 5 degrees.)



I agree to this extent: We still travel back and forth from Hawaii to the mainland each year (except last). The trip seems a bit more unpleasant each time. Maybe we'll upgrade to first class. Naaaaaaahhhh! YMMV

We only fly first class and business class anymore but it is still miserable being on the plane for prolonged period. Having to go back each year to a "retirement home" that requires a airplane makes me feel trapped/stuck. We fly to Hawaii every couple of years for vacation but even then we try not to go too often as we simply hate flying.

 

[Koolau]

I take a sleeping pill during a long flight. When I wake up, I am there! Sleeping in first class and sleeping in economy class makes very little difference. Get a strong sleeping pill that knocks you out!

I actually seem to be able to drift off for a while on most flights. Unfortunately, even with my neck-collar pillow, I get stiff rather easily under such circumstances. Honestly, for me, I can deal with the flight itself. I just hate all the rigamarole before and after (For instance, this year, I dread returning to HNL and needing to prove that I've been vaxed.) We have no direct flights, so we always have to change planes. It seems every flight is the longest distance between terminals and gates. But, I'm just whining. Realistically, to think that I can leave home at say 2PM for a 5PM flight and arrive at the homestead 14 to 16 hours (door to door) after a nearly 5000 mile flight, I shouldn't complain.

 

[2177V]

I actually seem to be able to drift off for a while on most flights. Unfortunately, even with my neck-collar pillow, I get stiff rather easily under such circumstances. Honestly, for me, I can deal with the flight itself. I just hate all the rigamarole before and after (For instance, this year, I dread returning to HNL and needing to prove that I've been vaxed.) We have no direct flights, so we always have to change planes. It seems every flight is the longest distance between terminals and gates. But, I'm just whining. Realistically, to think that I can leave home at say 2PM for a 5PM flight and arrive at the homestead 14 to 16 hours (door to door) after a nearly 5000 mile flight, I shouldn't complain.

Here are my overseas vacations to date: Paris, London, Amsterdam, Rome, Venice, Florence, Dubai, Afghanistan, Seoul, Beijing, Shanghai, Shenyang, Hawaii, Seorak Mountain, Hangzhou and all of these trips are 11 hours plus from California, except for Hawaii.

One of the reasons for me buying a condo in China is that I can now easily fly to Thailand, Philipines, Tokyo, Hong Kong, Manila, etc which are much closer closer than California. I love to travel and the long distance on an airline does not bother me a bit since I am asleep most of the time. I have my proof of vaccine card so I am ready to go.

Of all the places I've been to Hawaii beats them all...except for California and China. Once i hit 80 or 85, I may stay in China due to the low health cost which is so low that you do not even need health insurance. I truly believe the US health industry is ripping off the US public. My wife had a heart procedure in China which they snaked a camera and electrical probe into her heart via her thigh artery to stop severe Atrial Fibrillation. The total procedure and hospital cost was less than $5K. That same procedure would have cost $30K plus in California.

 

[FREE866]

Interesting comments on this topic. I know people that are worth close to 8 figures and I know some people that live check to check so I think it all depends on the eye of the beholder as they say. For me, given I don't have big expenses, a million dollars + is a really nice cushion and provides me with a great deal of mental/financial security.

 

[Time2]

Lol, I have to laugh, when mrs 55 and I were first married… we said if we could make 20K we would be on easy Street!
Here we are 44 years later with a 2.7 million net worth! How lucky are we! We are very blessed.

Ha! Our first year of marriage, ("81") we earned $18k and saved $5,380. I knew we were on our way. 40 years later we are at the same $2.7 million.
Things have just been great after the 2008 crash. It has been a fabulous time to have some already established some wealth. Yes, we are lucky with our timing, just born at the right time.

 

[2177V]

Interesting comments on this topic. I know people that are worth close to 8 figures and I know some people that live check to check so I think it all depends on the eye of the beholder as they say. For me, given I don't have big expenses, a million dollars + is a really nice cushion and provides me with a great deal of mental/financial security.

There is a Buddha saying: live your life as if you are going to die tomorrow. Both people ($1M versus paycheck to paycheck) can be equally happy depending what they do today…and not tomorrow. I make sure that I share my wealth with my family and my community which I work as an unpaid volunteer. If I die tomorrow then I will be satisfied that I made a positive impact on other people’s lives. I made a lot of friends in Afghanistan but they recently told me not to contact them. My wealth cannot help them so money is not everything. I now realize enduring friendships and my community matters more.

 

[FREE866]

There is a Buddha saying: live your life as if you are going to die tomorrow. Both people ($1M versus paycheck to paycheck) can be equally happy depending what they do today…and not tomorrow. I make sure that I share my wealth with my family and my community which I work as an unpaid volunteer. If I die tomorrow then I will be satisfied that I made a positive impact on other people’s lives. I made a lot of friends in Afghanistan but they recently told me not to contact them. My wealth cannot help them so money is not everything. I now realize enduring friendships and my community matters more.

I like what you said , however as far as this topic if I thought I was going to die tomorrow I would hand over all my money to causes I believe in so from a planning standpoint that would be foolish. I do however , on an ongoing basis , devote time and money to those in need.

 

[2177V]

I like what you said , however as far as this topic if I thought I was going to die tomorrow I would hand over all my money to causes I believe in so from a planning standpoint that would be foolish. I do however , on an ongoing basis , devote time and money to those in need.

I forgot the point Buddha was trying to say: If this was your last day, would you be a good person or a bad person? In any case, I agree with your rationale that you can’t give away your money since you are likely to live beyond today.

 

[Koolau]

I forgot the point Buddha was trying to say: If this was your last day, would you be a good person or a bad person? In any case, I agree with your rationale that you can’t give away your money since you are likely to live beyond today.

We are struggling with what happens to our $Million (or whatever) AFTER we die as we wish to bless our charities, more than our very independent family members (beyond decent sized "tokens.") It's not as easy as we thought. Finding the right fiduciary to carry on our wishes is proving problematic. YMMV

 

[2177V]

We are struggling with what happens to our $Million (or whatever) AFTER we die as we wish to bless our charities, more than our very independent family members (beyond decent sized "tokens.") It's not as easy as we thought. Finding the right fiduciary to carry on our wishes is proving problematic. YMMV

Have you considered POD or payable upon death accounts? Most financial institutions allow converting accounts into POD. My mom set up numerous accounts for family members which a specific beneficiary on that account. In California, POD accounts are distributed outside of probate. Impossible to challenge since it is similar to a named beneficiary on a life insurance policy. A POD account is called a poor man’s living trust in that an attorney is not necessary to set it up. I suggest contacting your local county probate court on the local rules of POD accounts and whether charity organizations can be named as a beneficiary. Probate court clerk will provide this information because the courts prefer less probate court cases. The designated exsecutor must distribute any wealth outside of POD accounts according to your will. If the total value of this wealth (outside POD accounts) is less than a certain amount, the distribution can be done without probate court supervision. These rules should also written down online in the probate regulations for your state. A beneficiary goes to the financial institution of the POD account with their ID and a copy of the death certificate and the financial institution transfer the POD account in their name which can then be withdrawn by the beneficiary.

 

[2177V]

We are struggling with what happens to our $Million (or whatever) AFTER we die as we wish to bless our charities, more than our very independent family members (beyond decent sized "tokens.") It's not as easy as we thought. Finding the right fiduciary to carry on our wishes is proving problematic. YMMV

For property, you can change the title to what is called a “lady bird” deed which also named beneficiaries to that property. Lady bird property and POD accounts are excluded from probate court in California. This gets a little tricky because POD accounts can easily be done in person while changing title, you may need an real estate expert or attorney to make sure the title cannot be challenged in probate court. A lady bird title means that the beneficiary owns the title to the property after you pass away but gives you the right to revoke the “lady bird” deed at any time before your passing. Lady bird deed is named after the wife of LBJ and you can read about it online.

 

[Koolau]

For property, you can change the title to what is called a “lady bird” deed which also named beneficiaries to that property. Lady bird property and POD accounts are excluded from probate court in California. This gets a little tricky because POD accounts can easily be done in person while changing title, you may need an real estate expert or attorney to make sure the title cannot be challenged in probate court. A lady bird title means that the beneficiary owns the title to the property after you pass away but gives you the right to revoke the “lady bird” deed at any time before your passing. Lady bird deed is named after the wife of LBJ and you can read about it online.

Have you considered POD or payable upon death accounts? Most financial institutions allow converting accounts into POD. My mom set up numerous accounts for family members which a specific beneficiary on that account. In California, POD accounts are distributed outside of probate. Impossible to challenge since it is similar to a named beneficiary on a life insurance policy. A POD account is called a poor man’s living trust in that an attorney is not necessary to set it up. I suggest contacting your local county probate court on the local rules of POD accounts and whether charity organizations can be named as a beneficiary. Probate court clerk will provide this information because the courts prefer less probate court cases. The designated exsecutor must distribute any wealth outside of POD accounts according to your will. If the total value of this wealth (outside POD accounts) is less than a certain amount, the distribution can be done without probate court supervision. These rules should also written down online in the probate regulations for your state. A beneficiary goes to the financial institution of the POD account with their ID and a copy of the death certificate and the financial institution transfer the POD account in their name which can then be withdrawn by the beneficiary.

I'll look into these potential options. So far, I've been looking into a trust - but can't seem to figure out what happens AFTER we are both gone. Lawyer suggests a family member as trustee but that seems a bit dicey. Thanks to all. Aloha

 

[2177V]

I'll look into these potential options. So far, I've been looking into a trust - but can't seem to figure out what happens AFTER we are both gone. Lawyer suggests a family member as trustee but that seems a bit dicey. Thanks to all. Aloha

The beneficiaries in a POD account and a lady bird deed CANNOT be changed by a trustee, a relative, or anyone else after you have passed away. Anything outside POD accounts and a lady bird deed has to be distributed according to a will or trust. If you do not want a family member to distribute property according to a will or trust, you have to identify a friend, a church member, another lawyer, or even a neighbor who you can trust. You may have to set aside some money in your will or trust to compensate the trustee in your will or trust. The trustee should co-sign the will or trust. A secondary trustee should also be named if the primary trustee passes away or the primary trustee can not perform this duty. Another lawyer can be a trustee if you compensate that lawyer with enough money but he may want that money upfront.

 

[Surewhitey]

Have you considered POD or payable upon death accounts? Most financial institutions allow converting accounts into POD. My mom set up numerous accounts for family members which a specific beneficiary on that account. In California, POD accounts are distributed outside of probate. Impossible to challenge since it is similar to a named beneficiary on a life insurance policy. A POD account is called a poor man’s living trust in that an attorney is not necessary to set it up. I suggest contacting your local county probate court on the local rules of POD accounts and whether charity organizations can be named as a beneficiary. Probate court clerk will provide this information because the courts prefer less probate court cases. The designated exsecutor must distribute any wealth outside of POD accounts according to your will. If the total value of this wealth (outside POD accounts) is less than a certain amount, the distribution can be done without probate court supervision. These rules should also written down online in the probate regulations for your state. A beneficiary goes to the financial institution of the POD account with their ID and a copy of the death certificate and the financial institution transfer the POD account in their name which can then be withdrawn by the beneficiary.

We've been working on this lately too. Basically all of our IRA's, 401ks have beneficiaries, primary and contingent.

Our bank accounts & after tax brokerage account now have a POD document tied to them too. Not sure why they don't have the same easy setup as the retirement accounts...

The last thing we need to do is a will for all properties & an executor. If we left anything out, it's small enough to not care...

 

[2177V]

We've been working on this lately too. Basically all of our IRA's, 401ks have beneficiaries, primary and contingent.

Our bank accounts & after tax brokerage account now have a POD document tied to them too. Not sure why they don't have the same easy setup as the retirement accounts...

The last thing we need to do is a will for all properties & an executor. If we left anything out, it's small enough to not care...

Your strategy is exactly what I advocate. If any bank account or retirement account that does NOT have a designated beneficiary, it usually goes to probate court where relatives fight over money and the lawyers eat away at the estate. Any assets outside of POD accounts and Lady Bird deeds and are less than $100K (in California) can be distributed by the trustee without probate court supervision. All major assets should have a beneficiary.

The name of the game is setup your estate so anything left over should be handled by the trustee which should be nickel and dime stuff such as cars, furniture, tools, clothes, etc. Even the ownership of a car can be changed to joint ownership by the DMV. A will can be challenged in court so you want to set up the will so that the value distributed by the will is so low that it is not worth the effort to challenge the will in a lawsuit. POD accounts and Lady Bid deeds are generally bulletproof against anyone who wants to challenge the beneficiary. This thread is about the relative worth of $1M but any estate over $1M without any named beneficiaries will likely attract lawsuits in Probate Court.

One final note: My mom set up $15K in an separate account to pay for her funeral expenses by the trustee (her oldest son). My Mom hired a good estate lawyer who guided her toward POD accounts, Lady Bird Deeds and paying for her funeral expenses.

 

[thatguy]

Given that 4% is often quoted safe withdrawal rate, anyone who has $40k of income from wages, social security & pension, or whatever source, is living like a millionaire, whether they know it or not.