$1M acheived, now what?

[lem1955]

Try FIRECalc with a 6 or 7% growth assumption.

 

[copyright1997reloaded]

Just keep swimming!

In all seriousness, looking back I used achievements like these to 1) say to myself "Look at at". 2) have a beer and listen to some good music, 3) "Know" that if something unexpected/bad happens (like I lost my job) that I have a good backstop and then 4) JUST KEEP SWIMMING (keep at it).

p.s. 9% AFTER inflation is an unrealistic assumption. I personally used to assume that I could maybe do 2-4% real return. When it was better than that, great. But never assume it.

 

[pjigar]

If you spend everything you earn today then most likely your retirement expense will not be $100,000/year. You will get used to spending more and it will be very hard to pull back spending in the retirement. Like previous poster said, keep swimming and don't inflate your lifestyle. Keep saving like you have and keep investing like you have.

 

[Surewhitey]

But it would take about 14 years at Home Depot to equal 1 year at your current job...

Omy syndrome justified!

 

[HawkeyeNFO]

Why 70/30 split? In your case, I'd increase the stock allocation. A lot!
If the 30 is bonds, intended to hedge against a bad stock market, then you've already got that covered with the VA pension, which includes a COLA annually.

My Navy retirement pay and VA disability pay are the reason I'm 100% happy being 100% stocks, minus a couple of years worth of expenses in cash. The cash could serve as an emergency fund, although I also have a HELOC for that. I'd rather spend on the credit card, collecting the miles and points, and then pay it off. If I needed to, I could pull that out of the cash, but the cash is the hedge against having to sell in a down market.

 

[engineernerd]

Have you tried running your numbers in FIRECalc? I love that program. I believe its history-based approach is the most realistic possible, it focuses on the goal I am interested in (not being poor when I am old), and it has a lot of great features that enable useful what-if analyses.

I recommend playing with some of the options in the Investigate tab, including "Investigate changing my allocation" and the one that starts "Given a success rate..."

Only you can determine how much risk of becoming poor in your old age, or risk of your wife becoming poor in her old age, you are willing to tolerate in exchange for getting out of the rat race sooner.

 

[CSdot]

Some of you guys are rough on OP. Nine years to double his money seems very doable. If it doesn't, then maybe he works a few extra years.

I suspect he will be at $2M before 9 years, especially if he invests what he was using to pay off his mortgage.

Congrats to OP on hitting $1M and having a paid for home. Many will never accomplish those goals.

 

[Out of Steam]

How will you handle going from $288k to $100k in yearly spending?

My wife and I live pretty modestly, and our income peaked (inflation adjusted) at about 75% of OPs. We added less than $10K to after-tax savings on a $135K income last year. That post-retirement spending level would seem to need a close look, especially for two people young enough to be very active.

 

[aaronc879]

Thank you. Of course I will continue to save but its nice knowing I can bail when I want. The VA pension comes with a physical cost

Are you getting VA disability on top of the pension?

 

[aaronc879]

My wife and I live pretty modestly, and our income peaked (inflation adjusted) at about 75% of OPs. We added less than $10K to after-tax savings on a $135K income last year. That post-retirement spending level would seem to need a close look, especially for two people young enough to be very active.

I was thinking the opposite. I was thinking that with a $48K pension and $1M in savings there is no reason to continue working. They have a paid off house. How can they possibly need $100K/yr

 

[Stormy Kromer]

First and foremost, thank you all for any review and replies!

About Me

• Age 46
• Just broke the $1M milestone
• Asset allocation 70/30
• $50K cash Emergency Fund

Income
His

• $200,000 Annual
• $48,000 VA pension

Her

• $40,000

Total $288K

Debit / Loans / payments

• Home paid / Utilities only
• $0 annual Property tax (disabled veteran Florida)
• $750/yr Tricare Prime for Life Insurance
• $6000/yr Property Insurance

If I dont save another dime, can I retire in 9 years?

• If I don’t save another dime, my $1M next egg wil be worth approx. $2.2M in 9 years (age55) (In todays dollars)
  • Assumptions = $1M x 9years @ 9% return
• My annual retirement expenses will be $100,000 annually (In today’s dollars) at age 55 Spreadsheet attached
• I will continue to draw VA pension $48,000 for life (In todays Money, adjusted for cost of living annually)

$1M saved now what? Not to be a smart aleck, but my answer at your age is go back to work and ask when you have $2 million.

You're doing well, keep working and saving and soon you won't have to ask anybody. Keep going friend.

 

[Out of Steam]

I was thinking the opposite. I was thinking that with a $48K pension and $1M in savings there is no reason to continue working. They have a paid off house. How can they possibly need $100K/yr

In many parts of the US, a paid-for house of ordinary size can still run up $25K in annual costs.

 

[Diogenes]

Some of you guys are rough on OP. Nine years to double his money seems very doable. If it doesn't, then maybe he works a few extra years.

I suspect he will be at $2M before 9 years, especially if he invests what he was using to pay off his mortgage.

Congrats to OP on hitting $1M and having a paid for home. Many will never accomplish those goals.

Nine years to double, means 8% CAGR... doable, with an equity-heavy portfolio... and very doable, if there are additional annual savings. With a more conservative portfolio and no additional savings, it becomes... considerably less doable.

Two important lessons here. First, upon attaining a certain amount of money, it's only too easy to submerge into "I've won the game mode", transitioning to a more conservative portfolio. This might be a mistake! The result is probably smaller cumulative gains. Are we prepared to accept that?

Second, as our portfolios grow, our incremental capacity to goose them further, with more annual savings, wanes. A $1M portfolio's apparent annual gains can be nicely improved by saving an extra $50K annually. But that extra $50K won't substantially help a $10M portfolio.

 

[Koolau]

I was thinking the opposite. I was thinking that with a $48K pension and $1M in savings there is no reason to continue working. They have a paid off house. How can they possibly need $100K/yr

I suppose it's a matter of how much they need/want to spend. We could get by on 100K/yr but that would mean cut-backs.

 

[pjigar]

Some of you guys are rough on OP. Nine years to double his money seems very doable. If it doesn't, then maybe he works a few extra years.

I suspect he will be at $2M before 9 years, especially if he invests what he was using to pay off his mortgage.

Congrats to OP on hitting $1M and having a paid for home. Many will never accomplish those goals.

We are not rough but realist. It would be a different matter if someone amassed a 1M portfolio with $70K annual income. That person can probably stop working altogether because his/her spending would be $40-45K. Retirement is more about how much you spend than what you have and most of us here have realized that fact a long time ago.

 

[Surewhitey]

Nine years to double, means 8% CAGR... doable, with an equity-heavy portfolio... and very doable, if there are additional annual savings. With a more conservative portfolio and no additional savings, it becomes... considerably less doable.

Two important lessons here. First, upon attaining a certain amount of money, it's only too easy to submerge into "I've won the game mode", transitioning to a more conservative portfolio. This might be a mistake! The result is probably smaller cumulative gains. Are we prepared to accept that?

Second, as our portfolios grow, our incremental capacity to goose them further, with more annual savings, wanes. A $1M portfolio's apparent annual gains can be nicely improved by saving an extra $50K annually. But that extra $50K won't substantially help a $10M portfolio.

Made me look at our last "double". It took ~6.5 years with income and high savings rate. A lower starting point is easier to double in a short time with a big income like OP...

 

[G POP]

Are you getting VA disability on top of the pension?

The 48K is his VA disability. 100% I'm guessing. Doesn't look like he gets a retired military pension. We only receive a "military pension" if we complete 20 years or more. There are a few exceptions.

 

[aaronc879]

The 48K is his VA disability. 100% I'm guessing. Doesn't look like he gets a retired military pension. We only receive a "military pension" if we complete 20 years or more. There are a few exceptions.

I didn't see any post that said he didn't retire with a $48K pension. He is 46 so he could have a pension and now work private sector. He could also be eligible for disability on top of the pension. If he is using the word pension when he is talking about disability then that is very confusing. My Dad has a pension and 100% disability. He doesn't have a pension and a pension.

 

[TickTock]

Some of you guys are rough on OP. Nine years to double his money seems very doable.

I don't think so. From 1926-2018 a 70/30 AA produces a 5.9% real average compounded return. Nine-year returns are much more variable that that, so it's possible but not likely. Also consider the current high valuations for both US and foreign equities.

Congrats to OP on hitting $1M and having a paid for home. Many will never accomplish those goals.

Absolutely! Congrats are in order, as well as more reasonable outlook for the future.

 

[TickTock]

Does someone more conversant with FireCalc than me know if it will show historical 9-year period real outcomes for a 70/30 AA split? I'd be interested in in the probability of 9%+ real returns as well as the overall final distribution.

 

[imjustawarrior]

Does someone more conversant with FireCalc than me know if it will show historical 9-year period real outcomes for a 70/30 AA split? I'd be interested in in the probability of 9%+ real returns as well as the overall final distribution.

On the start here tab, set 0 spending, 100 portfolio, 9 full years. Go to the your portfolio tab, and change equities from 75 to 70. Run the calculations. You will see the spread of outcomes.

 

[TickTock]

^ ^ ^
Thanks. Result below.

If I understand this correctly "(Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)" the results are in real dollars.

 

[PERSonalTime]

First and foremost, thank you all for any review and replies!

About Me

• Age 46
• Just broke the $1M milestone
• Asset allocation 70/30
• $50K cash Emergency Fund

Income
His

• $200,000 Annual
• $48,000 VA pension

Her

• $40,000

Total $288K

Debit / Loans / payments

• Home paid / Utilities only
• $0 annual Property tax (disabled veteran Florida)
• $750/yr Tricare Prime for Life Insurance
• $6000/yr Property Insurance

If I dont save another dime, can I retire in 9 years?

• If I don’t save another dime, my $1M next egg wil be worth approx. $2.2M in 9 years (age55) (In todays dollars)
  • Assumptions = $1M x 9years @ 9% return
• My annual retirement expenses will be $100,000 annually (In today’s dollars) at age 55 Spreadsheet attached
• I will continue to draw VA pension $48,000 for life (In todays Money, adjusted for cost of living annually)

How do you have $200k income and VA disability?

 

[Waynew]

If you cannot double your account in eight years, then you probably have the wrong mix (70/30). I'm 74 and my portfolio is 95/5, with the five being cash and money market funds. I used to own bonds and bond funds and came to the conclusion that you cannot match or beat true inflation with a higher allocation to bonds.
I did not come to my senses until about fifteen years ago when I decided to exit bonds and focus on dividend growth.
Our total account balance is about $3.3M, but most of that is in my rollover traditional IRA at $1.8M. I have been doing ROTH conversions and have been withdrawing from the rollover IRA. Most of the withdrawals are now tax-free using QCD giving. Our dividends have been growing at about 15% per year on average.

 

[Musica40]

First and foremost, thank you all for any review and replies!

About Me

• Age 46
• Just broke the $1M milestone
• Asset allocation 70/30
• $50K cash Emergency Fund

Income
His

• $200,000 Annual
• $48,000 VA pension

Her

• $40,000

Total $288K

Debit / Loans / payments

• Home paid / Utilities only
• $0 annual Property tax (disabled veteran Florida)
• $750/yr Tricare Prime for Life Insurance
• $6000/yr Property Insurance

If I dont save another dime, can I retire in 9 years?

• If I don’t save another dime, my $1M next egg wil be worth approx. $2.2M in 9 years (age55) (In todays dollars)
  • Assumptions = $1M x 9years @ 9% return
• My annual retirement expenses will be $100,000 annually (In today’s dollars) at age 55 Spreadsheet attached
• I will continue to draw VA pension $48,000 for life (In todays Money, adjusted for cost of living annually)

Hello, not sure wheree you live but it seems your husband is 100% VA disabled, I live in TX and I am also 100% VA disabled. I pay no property taxes. Suggest you check for your state.