clifp
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Oct 27, 2006
- Messages
- 7,733
I have been seeing a lot of threads where people are discussing very conservative withdrawal rates 1.5-2.5% and equally conservative portfolios with equity ratios in the 10-40% range.
Now yes these will fund an adequate perhaps even a comfortable retirement if you start with enough money. But you won't become really rich with that conservative of a portfolio.
I understand rule #1 is don't run out of money before you die. Still I am surprised that there doesn't seem to be a lot of interest in moving from being affluent to the rich stage. I realize that those terms are vague and you can define them how you want.
But for my purpose I'm going to say that somebody who has $5 million after age 75, and typically spends 100K or so is rich. In that they aren't going to run out of money even if they live to 100 and you can easily afford spend a million or even two million on extravagant things.
So that means if your grandkids want to go to Harvard or Stanford you can send them.
If you kids needs a million dollar to start there dream business you can make it happen.
If you don't have kids or don't think giving them a lot of money is good idea.
It means you can make a $1 million gift to your favorite organization.
Book a round the world cruise, first class.
Dine at the finest restaurants
Hire the best doctors or nurses.
Hire the best cooks, yogi instructors or whatever.
Buy your dream car, plane, boat or in some places dream house.
Fly in outer space.
If you are widowed or single have a young cute companion
One of the few pleasure my 89 year mom has left is helping out her favorite granddaughter and her great grandkids who certainly appreciate the generosity. Since she just hit a $1 million it made me realize that it isn't bad being wealthy when you are old.
Anyway I am curious if any of these items are people bucket list?
I looked at three different Firecalc runs for 50 year early retirees. I am assuming that all withdrawal $40,000 a year I also assume that at 67 they will collect social security of $20,000 a year (I think this is lower that they will get but who knows maybe a SS will be taxed more heavily).
What I varied is the equity percentage and the initial portfolio values.
In each case they all had 100% success rate in Firecalc over 49 years. (The social security matter a lot in making a 100% success)
I redefined success as having $5,000,000 in your first 30 years
35% Equities starting $1,000,000 average value. $1,114K percentage chance that you'd have $5 million by age 80 0%
80% Equities starting $1,000,000 average value $2,425K, and it looks like about 10-15% of getting to $5 million before age 80.
10% Equities $2,000,000 starting value Average Value $2,796K and about a 10% chance of getting to $5 million before age 80.
What was interesting to me is that even with starting out at 1/2 the size the 80% equity had almost the same average ending value and a slightly higher chance of getting over $5 million. Now because of the addition of social security each of these portfolio had 100% success rates over the full 40 year run.
It seem that many/most people are advocating taking the most conservative portfolio with a 100% success rate. My question is why not take the most aggressive portfolio with a 100% success rate in order to maximize your changes of becoming rich?
Now yes these will fund an adequate perhaps even a comfortable retirement if you start with enough money. But you won't become really rich with that conservative of a portfolio.
I understand rule #1 is don't run out of money before you die. Still I am surprised that there doesn't seem to be a lot of interest in moving from being affluent to the rich stage. I realize that those terms are vague and you can define them how you want.
But for my purpose I'm going to say that somebody who has $5 million after age 75, and typically spends 100K or so is rich. In that they aren't going to run out of money even if they live to 100 and you can easily afford spend a million or even two million on extravagant things.
So that means if your grandkids want to go to Harvard or Stanford you can send them.
If you kids needs a million dollar to start there dream business you can make it happen.
If you don't have kids or don't think giving them a lot of money is good idea.
It means you can make a $1 million gift to your favorite organization.
Book a round the world cruise, first class.
Dine at the finest restaurants
Hire the best doctors or nurses.
Hire the best cooks, yogi instructors or whatever.
Buy your dream car, plane, boat or in some places dream house.
Fly in outer space.
If you are widowed or single have a young cute companion
One of the few pleasure my 89 year mom has left is helping out her favorite granddaughter and her great grandkids who certainly appreciate the generosity. Since she just hit a $1 million it made me realize that it isn't bad being wealthy when you are old.
Anyway I am curious if any of these items are people bucket list?
I looked at three different Firecalc runs for 50 year early retirees. I am assuming that all withdrawal $40,000 a year I also assume that at 67 they will collect social security of $20,000 a year (I think this is lower that they will get but who knows maybe a SS will be taxed more heavily).
What I varied is the equity percentage and the initial portfolio values.
In each case they all had 100% success rate in Firecalc over 49 years. (The social security matter a lot in making a 100% success)
I redefined success as having $5,000,000 in your first 30 years
35% Equities starting $1,000,000 average value. $1,114K percentage chance that you'd have $5 million by age 80 0%
80% Equities starting $1,000,000 average value $2,425K, and it looks like about 10-15% of getting to $5 million before age 80.
10% Equities $2,000,000 starting value Average Value $2,796K and about a 10% chance of getting to $5 million before age 80.
What was interesting to me is that even with starting out at 1/2 the size the 80% equity had almost the same average ending value and a slightly higher chance of getting over $5 million. Now because of the addition of social security each of these portfolio had 100% success rates over the full 40 year run.
It seem that many/most people are advocating taking the most conservative portfolio with a 100% success rate. My question is why not take the most aggressive portfolio with a 100% success rate in order to maximize your changes of becoming rich?
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