Does everyone here have millions saved?

[2B]

City mgr. med sized city of 70k. Welcome to the coast of So Cal.
Public records are public. 250k / yr. Am guessing on the CalPERS pension.
Just an example. I am now happy living on a 3rd of that. It was fun to cut back. No problem.

Calpers isn't as poorly funded as some plans but it is still underfunded.

 

[Independent]

In terms of the book, the authors define the group they are referring to: "We have an average household net worth of $3.7 million. Of course, some of our cohorts have accumulated much more. Nearly 6 percent have a net worth of over $10 million. Again, these people skew our average upward. The typical (median, or 50th percentile) millionaire household has a net worth of $1.6 million." (1996 copyright edition)

The Millionaire Next Door

Okay, we can use $1 million net worth as the threshold. At a 4% SWR, that generates a retirement income of $40,000.
(Prices have gone up about 50% since that book was written, so maybe we should say $1.5 million and $60,000 today.)

According to the book,

Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires. Also, three out of four of us who are self-employed consider ourselves to be entrepreneurs. Most of the others are self-employed professionals, such as doctors and accountants.

Also, 80% of the millionaires have college degrees, and 38% have a master's or higher.

The words that describe the affluent aren't just "frugal, frugal", but also "successful entrepreneurs" or "high income workers".

Yes, they also have to decide to LBYM. I'm sure that plenty of their peers spent everything they earned. But I'm thinking most of them have higher gross incomes than typical Americans.

 

[daylatedollarshort]

But I'm thinking most of them have higher gross incomes than typical Americans.

From the first chapter -

"Our household's total annual realized (taxable) income is $131,000 (median, or 50th percentile), while our average income is $247,000. Note that those of us who have incomes in the $500,000 to $999,999 category (8 percent) and the $1 million or more category (5 percent) skew the average upward. " (1997 copyright year/dollars excerpt). "

There is a long list of traits in the chapter:
washingtonpost.com: The Millionaire Next Door

 

[daylatedollarshort]

The words that describe the affluent aren't just "frugal, frugal", but also "successful entrepreneurs" or "high income workers".

Obviously the whole books is on the various MND traits, but from the book itself:
"What are three words that profile the affluent? Frugal, frugal, frugal." Frugal, Frugal, Frugal is the title of chapter 2.
http://davidbeitler.com/temp/The%20Millionaire%20Next%20Door%20%5BBook%5D-MANTESH.PDF.pdf

They also tend to love their jobs and tend to have a lower percent of NW in the stock market than it seems is generally popular on this forum:
http://www.thomasjstanley.com/blog-articles/493/The_Top_Ten_Assets_Owned_by_Millionaires.html

 

[Independent]

From the first chapter -

"Our household's total annual realized (taxable) income is $131,000 (median, or 50th percentile), while our average income is $247,000. Note that those of us who have incomes in the $500,000 to $999,999 category (8 percent) and the $1 million or more category (5 percent) skew the average upward. " (1997 copyright year/dollars excerpt). "

There is a long list of traits in the chapter:
washingtonpost.com: The Millionaire Next Door

Yes. Did you notice that the statement I quoted is one of the traits on that list? See the second bullet point.

I think the authors did a good job of pointing out that working people who build assets generally live below their means. They did a service by writing the book. But, I think the "frugal, frugal, frugal" statement can be an overstatement, it ignores some of their data.

The median millionaire household had an income of $131,000 in 1997. In that same year, the median US household income was $37,000. The millionaires were operating with 3.5 times the aggregate median.

Now, the difference probably wasn't that great. The millionaires may have had more people per household, they may not have had as much income in their earlier years, and we might be more interested in the threshold (the lowest tier of millionaires) rather than the median millionaire. But, I think their data shows that it's a combination of two things, not just one.

https://www.census.gov/hhes/www/income/data/incpovhlth/1997/highlights.html

 

[Texconsin]

My neighbor might not have a dime in the bank, but retired with a city Gov. pension of $150k per yr.

The downside of a city pension is that cities can't print money. If the city gets into trouble, all bets (and promises) are off.

 

[LeavingOhio]

I definitely don't have millions, but I'm not retired yet...just 48 and planning to retire at 60. I will not have millions then either.

I agree with those who say there's really no set amount you need to have. US News and World Report annually puts out a list of the best places to live on just Social Security alone. They use the average amount a married couple would get at age 65 and then list desirable places where the cost of living is at or below that level. So, you COULD do it on MUCH less than "millions".

For 2013, median household income in the US was $51,939. If you were retired, could you live on that? I say yes.

According to US News and World Report, the average annual amount a married couple got from Social Security is $31,056. Could you live on THAT? Perhaps. They suggest you could in these fine towns - 10 Best Places to Retire on Social Security Alone - US News

Let's say you want to almost double your retirement income. Well, $750,000 at 4% is $30,000. Add that to $31,056 and now you're up to $61,056. IF you retire with zero debt and own your home outright and you don't have children still living with you and have no other extreme circumstances, you could easily live a decent life on that. You couldn't go crazy with spending, but that's true even if you have $10 million.

 

[Tadpole]

Each person here is different with one possible exception - they are trying to achieve that magic financial situation permitting them to sustain their own chosen lifestyle for the remainder of their life (with a cushion for the unexpected).


A person with kids still at home might use different assumptions to base an estimate than someone without dependent children. The same is true of a mortgage, a long term care policy, a COLAed or non-COLAed pension, an inheritance, a frugal or expensive lifestyle, etc.


Even though it is fun to talk about multi-millionaires, there are many ways to plan for and achieve financial goals in retirement. The younger you factor retirement into your decisions, the better.

 

[Options]

Calpers isn't as poorly funded as some plans but it is still underfunded.

Edit: I realize this does not pertain to Calpers or other public pension plans...at this time.

Did anyone else catch Michelle Singletary's latest Washington Post column regarding the law just passed granting some multi-employer pension plans permission to cut benefits for retirees (sorry can't post the link on this IPAD, but google and you'll find it)? According to this law, retirees as old as age 75 can have their benefits cut.

Her column includes a link to Pension Rights Center which has a calculator where you can estimate how much your benefits might be cut. AS an exercise, I entered $3K/mo for an individual with 35 years of sservice and the calculator showed the benefits could be cut to $1376 monthly, or about 60%. As Singletary points out, this law is significant because it "signals a crack in the door that so many people felt couldn't be opened".

More significantly, if Congress can pass a law that reneges on pension benefits for those under 75, I brelieve it has significance for what might be possible in future social security reforms.

 

[braumeister]

Did anyone else catch Michelle Singletary's latest Washington Post column regarding the law just passed granting some multi-employer pension plans permission to cut benefits for retirees.

Yes, there was a recent thread here about that.

 

[Options]

Which thread? I find nothing when I search for it.

 

[RetireBy90]

There is more than one way to skin a cat. I have about a 4 prong approach, not one is all that huge, but combined I have a feeling it will work.

Same here. DW and I both have small military pensions, she has a even smaller pension from local school district, we have a rental property, a small pile in 401K/IRA and then SSA. My plan is to live off SSA/Rental/Pensions once we hit 70 and SS starts, but we could take a hit to any of them and still be good if the others keep going.

Wish I could say I was smart enough to have planned it this way, with may small sources but alas, being a procrastinator has put us here.

 

[Lakewood90712]

Which thread? I find nothing when I search for it.

Might be this thread http://www.early-retirement.org/forums/f52/pension-erisa-anti-cutback-rule-at-risk-74842.html

 

[Options]

Thanks Lakewood. I'm surprised there weren't any more posts to it. I'll reply there.

 

[braumeister]

Actually, this is the one I was thinking of.
http://www.early-retirement.org/forums/f28/pension-plan-cuts-74869.html

 

[ESRwannabe]

I'm not a millionaire but I'm sure I will be eventually (probably within 10 years). Maybe even a multimillionaire one day.

Saving money is a hard slog at first, but it gets easier because eventually your investment returns start to bring in more than your contributions. That happened to me a few years ago, maybe when I was 36 or so. From then on it has gotten easier each year.

I actually made more off of my investments recently than my entire w-2 income. Its taken about 13 years of saving to get to this point.

I do not make a lot of money. Current w-2 income is around $60k and I haven't had a raise pretty much since 2008. My living expenses are only about $24k a year though. Its not how much you make. It is how high of a percentage can you save that is important.

I'm on track to be able to ESR sometime between 40 and 45, i.e. switch to part time work until 59.5 and then fully retire.

 

[DJRR]

No worries about people worrying about needing millions to support their lifestyle. What bothers me are the people who say that they are literally dying from their job and they only have $6M saved.

Not only is that more than what most people earn in their 40 year working life, but you could reasonably pull out six figures forever.

Either you are just complaining or you really have zero self awareness. You would rather die than change your lifestyle? really?? I realize that sometimes this involves a spouse who will leave you, but is that really worth dying for?

For OP, currently have $600k (all LBYM and savings from $0) at 50 and expect to have at least $1M by retirement. Won't be as early as many here, but on target for 65 at modest returns and hoping to back it up by 5 years or so if things work out.

 

[Senator]

Originally Posted by Senator View Post
Here in the USA, anyone can be a millionaire.

Anyone can be but we ALL can't be! If everyone tried, the economy would crash! We need all the fools spending there money on the silly things that drive the market.

I was actually referring to the opportunities here in the USA to start a business and succeed. Or work two jobs and save the money from the extra job. Work extra hours at your hourly job. Or provide some services to your friends and neighbors, such as lawn mowing, house cleaning, hauling junk, handyman services, etc.

Anything you can provide, that be used by anyone, can be your path to being a millionaire. Sitting in front of a video game console never made anyone rich. Nor in front of a TV.

Swapping hours for dollars is the first step in becoming financially independent. Then, having your investments doing it for you is the next step.

 

[Al18]

Senator, you CAN make a lot of money playing video games. The top ranked player made $1.18 million and the 100th ranked player made $194K according to www.esportsearnings.com/players

 

[Alan]

Senator, you CAN make a lot of money playing video games. The top ranked player made $1.18 million and the 100th ranked player made $194K according to www.esportsearnings.com/players

+1
There are a lot of professional gamers. This year's League of Legends finals were held in Seoul, prior to that it had been held in the Staples Center, LA. Riot Games, based in Santa Monica, grossed $600M last year.

BBC News - League of Legends gaming final fills Seoul stadium

It had all the sound and fury of a big sporting event: 40,000 fans roaring in the cauldron of a huge football stadium.
There were corporate sponsors, young superstar players and a million dollar prize to the winner.
And yet this raucous contest involved barely a drop of sweat and absolutely no muscular exertion beyond the furious clicking of fingers on a computer mouse.
The final of the 2014 League of Legends World Championship may only have been an online game - or e-sport, as the players and promoters prefer to call it - but it had all the feel of any traditional major sporting drama.
The World Cup stadium in Seoul was packed for this year's final between the Star Horn Royal Club from China and Samsung White.
At the previous final a year ago, 32 million people watched around the world, online, or in cinemas.

Their hyper-speed on the mouse earned a prize of $1m (£621,267).

 

[2B]

+1
There are a lot of professional gamers. This year's League of Legends finals were held in Seoul, prior to that it had been held in the Staples Center, LA. Riot Games, based in Santa Monica, grossed $600M last year.

The son of a friend of mine was highly world ranked in some video game I never heard of since I don't play anything but the standard games that come with the computer. Microsoft hired him to go to meetings and conventions for them. That went on for a little while, he lost his ranking and job. He was paid just under six figures and expenses. It was nice while it lasted but it didn't last long.

Professional video gamers are probably treated pretty much like professional athletes. They better make money while the sun shines. Most won't ever make a dime but I don't think many get concussions.

 

[jerome len]

150k a year? He must had been a mayor of some big city. Not many people get this kind of the pension. I think having Government pension of 150k is much much rarer then having 3-5 Million in investments.

But I would prefer 3-5 million, because one can not inherit pension.

My former California neighbor retired at age 48 with well over $125,000 a year as a fireman then went back to work as a supervisor at over 100k a year. Lots of stories like this in the LA Times and Orange County Register.

 

[Alan]

The son of a friend of mine was highly world ranked in some video game I never heard of since I don't play anything but the standard games that come with the computer. Microsoft hired him to go to meetings and conventions for them. That went on for a little while, he lost his ranking and job. He was paid just under six figures and expenses. It was nice while it lasted but it didn't last long.

Professional video gamers are probably treated pretty much like professional athletes. They better make money while the sun shines. Most won't ever make a dime but I don't think many get concussions.

The video game pros usually burn out in their early to mid 30's as their reactions slow so just like physical sports pros they need to invest their money and/or work on a continuing career before they fade.

There are big money physical sports that have few concussions, such as snooker, pool and darts but like all these things there are very few who get into really big money.

 

[Senator]

Senator, you CAN make a lot of money playing video games. The top ranked player made $1.18 million and the 100th ranked player made $194K according to www.esportsearnings.com/players

As I said, anyone in the USA can be a millionaire if they put the time and ambition into it.

No doubt there are millionaire video game players, golfers, bowlers, skateboarders, etc. One of my friends was a professional Foosball payer, although he is not a millionaire.

Just remember, when your daughter asks you for money, because your son quit his job and plays video games all day rather than look for a job, he is on the path to millions and your money will be repaid.

Or when your kid that is still in school drops out and plays video games all day, you will know they are on the right path.

 

[2B]

The video game pros usually burn out in their early to mid 30's as their reactions slow so just like physical sports pros they need to invest their money and/or work on a continuing career before they fade.

He burned out in his mid-20s. The theory from his father is that he spent too much time chasing the women he met at the conferences to really keep up his gaming skills.