120K year Lifestyle

[RetiredHappy]

But not likely by half - two really can't live as cheaply as one, regardless of the saying.

But income aren't halved either.

 

[marko]

Update: Somehow, Jenny eventually found an advisor who explained the basic financial facts of life to her. "I can't believe how clueless I was!" she exclaimed.

The very next day, she told her boss to go to h*ll, bought a brand new Mercedes, paid her rent off for the rest of the year and a week later, flew (private) to the Miami area and bought a very nice, very expensive, very private beachfront condo penthouse and also finally realized her dream of getting much needed breast implants!

Along with the help of her advisor, she's now earning almost a million a year (oops! Gotta pay taxes on that!!) and has slowly gained a lot of experience in investing herself. She'd like to own an Alpaca farm in Vermont at some point, she says.

She's also met a very nice, good looking "friend" who has no idea of her wealth (but the condo is sort of a hint) but is equally well off...daddy owns a well-known liquor distribution company. Could wedding bells (and dual pre-nups) be in her future?

Stay tuned.

 

[pb4uski]

I'll give an example/analogy. Jenny is a waitress in a cocktail bar, earning very modest wages. She shares an apartment with her roommate, and does her best to contribute to her Roth IRA. One day, Jenny's rich uncle Rufus dies, and leaves to her $10M. Jenny puts the $10M into the Vanguard S&P 500 index fund. The calendar rolls over, and now it's tax-season in the following year. Vanguard sends to Jenny a 1099R, showing that hey, over the months that she's had that account, it has generated $100K in taxable dividends. Now she needs to scramble to pay her tax bill... take extra hours at the bar, maybe get a second job... except that those extra hours or job, also mean more income tax. By becoming richer, Jenny has become... poorer.

The peanut gallery might yell, "Hey Jenny, you dumb [expletive]! Don't ya know, ya gotta pay taxes on that them thar gains?" Yeah, Jenny knows. Now she makes quarterly estimated payments to the IRS (next one is due tomorrow, BTW)... meaning, that even less of her paycheck is hers to keep.

OK. The solution is right under Jenny's nose, yes? She can withdraw some of that money from her account, using it to pay her taxes, yes? She can. But she wants to keep contributing to her retirement... or at very least, not withdrawing from her accounts. Now suddenly she has to! She never earned much, but she spent a lifetime trying to be frugal and diligent and set money aside. Now, she can't.

I'm not Jenny. I don't work in a cocktail bar. I don't have a rich uncle Rufus. No stupendous windfalls here... just gradual accumulation. But eventually one wakes up, and realizes: "Holy [expletive!]! I have become just like Jenny!"

WADR, I think Jenny would be smarter about this than you are. She would very likely decide that she no longer needs to hustle waitressing since she has $10m in investments. She would quit her job and live off the income from her inheritance. Same path that many normal income people do after a financial windfall.

 

[TickTock]

Stay tuned.

[TV Voice] "Next week, on the new episode of 'Jenny's Journey'..." [/Voice]

 

[ncbill]

Heh, heh, I think the fly in the ointment would be that IRS wouldn't be blind to the winner's name. I'm guessing some low-level staffer would gladly spill the beans for a price but maybe I'm too harsh.

Yep, best to win in a state that lets you claim the prize via an irrevocable trust.

 

[Music Lover]

So if Smith has $200K AGI, maybe $160K of that is from his Fidelity account, and the rest as a part-time consultant on 1099. The amount left to "spend" is paltry, because the whole point is to keep the Fidelity account whole... namely, use W2 or 1099 earnings to absolutely positively never make a withdrawal. As the account grows, so does its annual tax expense, which has to be covered from additional work - hence only barista FIRE and not outright FIRE.

Did you forget that this is an early retirement forum?

Most people here that have enough money to retire with will actually retire with a plan to spend down their savings/investments.

 

[ShokWaveRider]

Many folks like us who have been on this site, early retired 20 years ago. So now they are older retirees. This site has always catered to both. Oldies sharing their journeys with the younger early retirees and wannabees.

 

[Dtail]

Did you forget that this is an early retirement forum?

Most people here that have enough money to retire with will actually retire with a plan to spend down their savings/investments.

Just continuous philosophical what if scenarios. Respond if you must.

 

[Koolau]

What would you do with a C8 Vette living in a tower and only driving a few miles on a good day? And, can you still get in and out of it without help? (Of course, I am jesting!)

Heh, heh, you're so right about the C-8. Not many places to "open-her-up" on our Island and ingress-egress is a pain (literally). I might simply keep my C-8 on the mainland and play with it there when ever I travel "home."

I was able to get in and out last year when I tried it, but it was a painful experience - but worth it.

But fear not. I'll not be playing the Lotto so I won't be winning enough to buy a C-8. I always try to look on the bright side.

 

[bonvoyage]

I have been retired for nearly five years while wife is still working and may retire next year. We live in northern NJ right across the Hudson river from NYC. Our base living expenses, with no mortgage, are about $90k (housing, food, cars, hobbies, insurance etc). But we have been traveling around the world a lot for the past couple of years and spend about $60k a year on travel. We thoroughly enjoy traveling in luxury and take a couple of big trips every year. I don't expect this to continue indefinitely: We will stop we get bored or health doesn't permit it. And yet, even at $150k per year our withdrawal rate will be less than 2% a year.

 

[CO-guy]

For comparison, we just spent the month of June in Italy. We stayed in charming bed and breakfasts, ate out the other two meals each day and otherwise enjoyed ourselves while wondering around the countryside.

Excluding flights (and the dog sitter), we spent $5K for the month on lodging, food and transportation.

A long-term rental, dining out only 1x per day, and no rental car would cut those costs nearly in half ($2500-$3000/month). That wouldn't cover rent on a 2-br apartment where we live in Colorado.

 

[Slim11]

So for the op, a little late I know, I retired about 2 and a half years ago. I make about 120 before taxes. For me, I spend through it all. But I am still paying a morgage and in ny property taxes are high , mine arnt that bad at 10k. But food, energy, and fuel for a family of 2 adults and 1 teen eats up the money. I do get a subsidized health insurance, but its 1k a month. Can you do it , sure , especially if your home is paid off. Our morgage isn't a lot at 1500 a month, insurance and payments, add a thousand for taxes. Once the home is paid off it will be easier. I do blow 1k on non essentials almost monthly. For me or the kido. I do have other money, but I am not tapping that yet.