Why aren’t more folks FIRE?

With regards to the lottery, I have never understood what purpose a billion dollars prize serves? Isn’t it better to have 200 $5 million winners? Even after taxes, EVERY one of those individuals could immediately FIRE as long as they lived modestly and probably maintained their current lifestyle.
I'm assuming the mindset of frequent lottery players is such that they fantasize more about the huge prizes. In the last 20-30 years it seems as though all of the big lotteries (Powerball and Mega Millions) have been adjusted by adding more balls to make them harder to win with a bigger prize as a result. This is what sucks the money in for the states that operate them and benefit from a huge cut out of the lottery pool before the winners are paid.
 
I'm assuming the mindset of frequent lottery players is such that they fantasize more about the huge prizes. In the last 20-30 years it seems as though all of the big lotteries (Powerball and Mega Millions) have been adjusted by adding more balls to make them harder to win with a bigger prize as a result. This is what sucks the money in for the states that operate them and benefit from a huge cut out of the lottery pool before the winners are paid.

I'm sure they've done market studies and found that one billion-dollar prize sells more tickets than 1,000 million-dollar prizes. Not sure what " do with $1 billion anyway.

Once I was behind someone checking out at the grocery store who was talking about what they'd do if they won the current jackpot, which was posted nearby. Retiring and moving to Florida was mentioned. I had to laugh- it was about my current net worth and I wasn't doing anything fancy at all.
 
After a lottery pot is won, it doesn't start at $1 billion the next week. It might be a couple (or 10) million, then it grows as it doesn't get won for a while. So, the premise that the pot would be better split 200 ways won't have the same big money appeal when there are (200) winners at $5,000 each.

Besides, if you win, you're more than welcome to give as much away as you choose. So, put big money into tickets so you can be benevolent.
 
How much money would it take to pull you away from the current prime directive of never withdrawing from your accounts and dying as rich as possible to spending to gain and wield influence?
It's less a question of money, than of age, and of sense of having done enough. The "enoughness" isn't pecuniary; it's psychological. I realize that it's utterly contrary to the ethos of FIRE to posit age as something that one needs to achieve, before license to let-go, but by age I mean less about age of cessation of full-time work; rather, age at which we can release ourselves to start spending, even if we've been retired already for a decade or two. For me, that age is "old age", which for discussion's sake might be 65+, or 70+.

An example might be, when a university professor goes emeritus. It's a mix of reaching some age (generally 70+), doing "enough" (graduating enough students, writing enough papers,...) and a general feeling of decline of one's powers.
 
I'm sure they've done market studies and found that one billion-dollar prize sells more tickets than 1,000 million-dollar prizes. Not sure what " do with $1 billion anyway.

Some years ago I listened to a podcast on the UK Premium Bonds lottery and how successful it is in getting folks to save. It has been around since the 1950s and has been duplicated by various banks in countries around the world including a bank in a State in the USA and always results in increased savings. However, it was too successful in the USA and money going to the State lottery dropped significantly so a law was passed banning the practice.

The system works like this. You buy individual bonds at £1 each, minimum purchase £25, and you can’t own more than £50k. The bonds are backed by the UK treasury so your capital is never at any real risk. There is a nominal interest rate and the interest is pooled and paid out each month in the form of prizes ranging from £25 to £1m. (There are always two £1m prizes each month). If you have average luck you will effectively “earn” the equivalent of the prevailing interest rate. There have been multiple articles on the scheme over the years and if you have at least £10k in bonds you are almost guaranteed to win at least one prize each month. It is fun and is where I stash my emergency fund (there is a fun app you can use to reveal your winnings each month or you can just be informed by email or wait until the winnings hit your bank account) . It only takes a couple of business days to withdraw some funds which I have done a couple of times in the last 3 years to buy a new roof and a new car.


No £1million jackpot winner won their prize with a holding of £500 or less since May 2020, but 12 people holding £1,000 and less have scooped the £1million jackpot prize since 1994, when the first £1million prize was launched.

James Blower, founder of website Savings Guru said: ‘There’s approximately 1.2million Premium Bond holders with the maximum £50,000 holding. Therefore, around £60billion of the almost £126billion saved in Premium Bonds is from those with the maximum holdings – just under 50 per cent.

'Given there are 177 £50,000 prizes each month, it isn’t surprising that some have been won by those with smaller holdings. Similarly, there are 883 £10,000 prizes each month so the odds do favour that smaller holders have a chance of winning at least some of those.
 
Fairydust. Besides I get tired of the scratchers holding up the line. They will always tell you how much they won but never how much they spent.
 
Agree completely. If you work hard for something, you do not want it to be gone. You value it more.
That's why I'm a big proponent of living off the income/growth those life's savings generate instead of drawing down what you've worked so hard to set aside.

That way you're not spending your savings, but maybe just a much smaller percentage of it, or none at all.

People can get hung up on CDs etc. not realizing that there's considerably more cash generating opportunities out there.
 
Some years ago I listened to a podcast on the UK Premium Bonds lottery and how successful it is in getting folks to save. It has been around since the 1950s and has been duplicated by various banks in countries around the world including a bank in a State in the USA and always results in increased savings. However, it was too successful in the USA and money going to the State lottery dropped significantly so a law was passed banning the practice.

I'm all for anything that entices people to save but the GBP 50K max won't go very far. Didn't know they even tried it in the USA.

Fairydust. Besides I get tired of the scratchers holding up the line.

And it's a tax I can choose not to pay.
 
That's why I'm a big proponent of living off the income/growth those life's savings generate instead of drawing down what you've worked so hard to set aside.

That way you're not spending your savings, but maybe just a much smaller percentage of it, or none at all.

People can get hung up on CDs etc. not realizing that there's considerably more cash generating opportunities out there.
This is why I set up my ER plan so that I would cash out my company stock, invest it in a bond fund with a good return, and live off its monthly dividends, all without needing to touch any principal. Even if I had to touch principal at some point in my first 15 years of ER (age 45 to 60), I would have my reinforcements available starting at age 60 - unfettered access to my rollover IRA, frozen company pension at 65, and SS.

I am 62 now and haven't had to change any part of my original ER plan.
 
That's why I'm a big proponent of living off the income/growth those life's savings generate instead of drawing down what you've worked so hard to set aside.

That way you're not spending your savings, but maybe just a much smaller percentage of it, or none at all. ...
Seems to me there is a thin line between what you describe above and hoarding money.
 
Fairydust. Besides I get tired of the scratchers holding up the line. They will always tell you how much they won but never how much they spent.
Same with Vegas. Many folks state that they won overall.
 
Seems to me there is a thin line between what you describe above and hoarding money.
A lot of people seem to have a hard time transitioning from savers to spending that hard earned cash. They can become so protective that they are the money hoarders.

If you're simply sitting in CDs withdrawing what you need and watching that balance go down, down, down, I'd imagine that would be terrifying.

What I'm describing is creating a portfolio where serious dividends, interest, and growth can be withdrawn to greatly mitigate that downward slope. Done right, one's "income" generated can exceed the need so that the original balance grows (or at least stays steady) despite withdrawals.

I'd guess that most folks here are in the realm where their portfolio performs in this way. My observation was simply on how it can be hard for some to make the transition. Creating a strategy where you're not withdrawing your principal, but merely the income derived can help in making that mental shift.

I'm dealing right now with two retired school teacher friends who, at age 64 have all their money in a savings bank account earning 1.5%. A fairly large amount. Mentioning even very safe, more aggressive alternatives and their eyes glaze over, yet they're awake at night wondering how they're going to go forward. They had no idea what Fidelity does.
 
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A lot of people seem to have a hard time transitioning from savers to spending that hard earned cash. They can become so protective that they are the money hoarders.

If you're simply sitting in CDs withdrawing what you need and watching that balance go down, down, down, I'd imagine that would be terrifying.

What I'm describing is creating a portfolio where serious dividends, interest, and growth can be withdrawn to greatly mitigate that downward slope. Done right, one's "income" generated can exceed the need so that the original balance grows (or at least stays steady) despite withdrawals.

I'd guess that most folks here are in the realm where their portfolio performs in this way. My observation was simply on how it can be hard for some to make the transition. Creating a strategy where you're not withdrawing your principal, but merely the income derived can help in making that mental shift.

I'm dealing right now with two retired school teacher friends who, at age 64 have all their money in a savings bank account earning 1.5%. A fairly large amount. Mentioning even very safe, more aggressive alternatives and their eyes glaze over, yet they're awake at night wondering how they're going to go forward. They had no idea what Fidelity does.
Marko, I couldn't agree more. I have given up trying to help my friends.

You mention Fidelity, my choice is Vanguard. Their MM is paying about 3.6% today. For your more adventuresome friends, I'd suggest VG Balanced Fund. Its pretty conservative mix of stocks and bonds and has averaged about 7-8% forever.

You'd think teachers would be more open minded and seek wisdom...its not a secret.

Some people think that anything that isn't FDIC insured is going to loose all its value someday. I appreciate you trying to help your friends, I gave up a long time ago. And I like my friends.
 
Why?
Because society is really good at what it does. Marketing is a finely tuned game and it’s been around for so long that we don’t realize our entire environment is filled with it/consumed by it.
We are taught early on to strive for stuff/things above all else and that “success” is defined by who has the most of them. That keeps us on the hamster wheel chasing the ability to have more of them.

I’m not sure most know anymore that there is even a choice… but I remember the single day that I/we realized that there was.

The choice between:
- Continuing along the path of working more to buy more (and having zero dollars ad time at the end of every year), or
- Giving up the idea/expectation of stuff and putting those dollars towards buying freedom (a life of it rather than tasting it for 2weeks every year).

For us that was easy and our entire life changed in less than 24hours.
I assume if the facts were laid out well enough most would choose it - but it’s pretty hard to make a case against what (almost literally) everyone else is doing - at least until people start to wear thin, feel run down and exhausted with the cycle - and sadly, by then they’ve like got mountains of debt to dig out of, and it’s also hard to find the energy to go make massive change quickly, much less when everyone/everything around you is still telling you you’re “going the wrong way”
 
A lot of people seem to have a hard time transitioning from savers to spending that hard earned cash. They can become so protective that they are the money hoarders.

If you're simply sitting in CDs withdrawing what you need and watching that balance go down, down, down, I'd imagine that would be terrifying.

What I'm describing is creating a portfolio where serious dividends, interest, and growth can be withdrawn to greatly mitigate that downward slope. Done right, one's "income" generated can exceed the need so that the original balance grows (or at least stays steady) despite withdrawals.

I'd guess that most folks here are in the realm where their portfolio performs in this way. My observation was simply on how it can be hard for some to make the transition. Creating a strategy where you're not withdrawing your principal, but merely the income derived can help in making that mental shift.

I'm dealing right now with two retired school teacher friends who, at age 64 have all their money in a savings bank account earning 1.5%. A fairly large amount. Mentioning even very safe, more aggressive alternatives and their eyes glaze over, yet they're awake at night wondering how they're going to go forward. They had no idea what Fidelity does.
When you're 64 is probably not the time to start learning about mutual funds, ETFs, risk tolerance and all that fun stuff...
 
Seems to me there is a thin line between what you describe above and hoarding money.
I'm not sure "hoarding" is an accurate assessment in all cases. I "spent" a large amount of my tax-deferred $$$ at start of retirement in 2013 to get lifetime monthly income from TIAA, rather than retain the entire tax-deferred amount and live off 3%+ withdrawals and eventual RMDs.

So even though I spend a lot in retirement, my investment portfolio is rebuilding itself back toward where it might have been.

It's nice having excess money that I can spend when a need or desire arises without having to blink twice...
 
This showed up on X this morning FWIW:
....The 4% rule? Yeah, I skipped that.
Why sell off your portfolio when you can live off it instead?
I built a 7-figure dividend portfolio that pays me ~$8,200/month
without touching the principal.....



We can argue the minutia but this is sort of what I was referring to.
 
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But if you save for retirement until you can live off of income only and NEVER dip into principal then 1) you'll have very happy heirs and 2) you should wonder how much longer you worked than you would have needed to if you were open to occasionally dipping into principal.
 
But if you save for retirement until you can live off of income only and NEVER dip into principal then 1) you'll have very happy heirs and 2) you should wonder how much longer you worked than you would have needed to if you were open to occasionally dipping into principal.
As noted, I'd wager that most/many folks on this forum have portfolios that deliver that outcome. I certainly do and retired at 52.

It doesn't have to be 100% but enough to seriouly mitigate the downward slope and ease the hesitation to make withdrawals. If the "income" covers 80% of your needs, withdrawing another 20% more doesn't hurt as much as pulling that 100% directly from those hard earned savings that you've set aside.
 
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As noted, I'd wager that most/many folks on this forum have portfolios that deliver that outcome. I certainly do and retired at 52.

It doesn't have to be 100% but enough to seriouly mitigate the downward slope.
I would say many but not most folks on this forum just live off their income. I WOULD say that not many folks on this forum average a 4% withdrawal rate.
Where is RobbieB.........
 
I would say many but not most folks on this forum just live off their income. I WOULD say that not many folks on this forum average a 4% withdrawal rate.
Where is RobbieB.........
If I had the time and know-how, this might make for an interesting poll. Maybe someday I'll give it a try..."How much of your expenses are covered just by your portfolio income and SS?"
 
If you do that poll, add in pensions.

However, spending can be subject to interpretation. If I buy a vacation home or condo, is that spending or just an additional investment in real estate? Same with car replacements, etc.
 
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