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How much is the new million?


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2021 Aug 3, 7:32pm   927 views  67 comments

by Tenpoundbass   ➕follow (7)   💰tip   ignore  

I remember as a kid throughout my teens and tweens, a million dollars was enough to make someone set for life. If they didn't try to live like a millionaire and lived frugally comfortable. I don't think 1 million dollars would go very far today. For starters we don't have the interest earning what it once would. So it's not like you can take 1 million and put it in the bank and get a return, that could be deemed as any suitable income. Let alone grow the nest egg. So without having a specific business plan with 1 million to convert it into an investment that will produce income. 1 million would be gone in less than 5 years, unless you have the kind of strict discipline, it takes to spend money from a sock under your mattress.

It's hard to say what the new million is, until you put it in terms, "How much would it take to corrupt a high official?". Like all of the officials it took to sell the Corona Virus hoax, and the Election steal. Then you can start to fathom all of the millions that were donated to the 2020 election and all of the millions the US pays the CDC to implement their policy.
I think the magic number is 3 million. 1 billion dollars will buy 300 officials to go along with any NWO bullshit you throw their way. 300 million will buy you 100 officials spread throughout 6 cities in the United States. That will make sure no anomaly is formally investigated, and will be the public spokes person the complicit MSM cites as the official with the truth.

So when Mike Bloomberg puts on a show Presidential election even though he's polling at 2%, don't laugh at him for dumping 100 million in a market every other week of the billion he pledged for his election campaign effort. He was never running to win the election, he was laying the foundation for the Election night steal. He was stuffing the pay envelopes, and getting them ready for Dude that does the thing.

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1   mell   2021 Aug 3, 8:10pm  

Agree on 3 million. Total assets minus debt - of course it can't be one asset worth 3 million unless it's cash, needs to be diversified/spread out between liquid and other assets. Also that is for a family man. Singles can do it with 1.5MM to 2MM.
2   just_passing_through   2021 Aug 3, 8:14pm  

About 15 years ago from what I kept reading 2mill was the new 1mill as far as retirement goes. I agree, it's at least 3 now.
3   FortWayneAsNancyPelosiHaircut   2021 Aug 3, 8:37pm  

just_passing_through says
About 15 years ago from what I kept reading 2mill was the new 1mill as far as retirement goes. I agree, it's at least 3 now.


That's after tax. Before tax its like 6.

I remember when houses were only 60k around here, and you could fill up your car for $10
4   SumatraBosch   2021 Aug 3, 8:41pm  

By this time next year in Stockton, a million dollars will be almost the downpayment on a 3/2 in a neighborhood in which your chances of surviving any given day is better than 50 50
5   ChauvinsKnee   2021 Aug 3, 9:04pm  

If you follow the 4% rule, $1M gives you $40K per year to live on. Hardly Caligulan splendor. With $3M it goes up to $120K. Not bad, but not something to write home about either.
7   just_passing_through   2021 Aug 3, 9:10pm  

ChauvinsKnee says
If you follow the 4% rule


I think that applies, and maybe not so much anymore, to boomers only.
8   Tenpoundbass   2021 Aug 3, 9:13pm  

ChauvinsKnee says
If you follow the 4% rule, $1M gives you $40K per year to live on.


What's the 4% rule. Math doesn't have any laws when there isn't any values present in the parameters you are using for calculations.
I grew up hearing "Pay yourself first!" by investing x amount of your income in something that returned a set amount of interest.
Those guaranteed annual return financial vehicles have become as extinct as the Passenger Pigeon.
The only people making money today are those with a successful business model or a scheme. All of the investors, are paying people to run a cool franchise for a while into the ground. The only caveat of course is the exception to the rule.
10   Tenpoundbass   2021 Aug 3, 9:25pm  

FuckCCP89 says
Tenpoundbass says
What's the 4% rule.


https://en.wikipedia.org/wiki/William_Bengen?wprov=sfti1


Criticism of the 4% withdrawal rule include references to its assumption of one's investment portfolio, the differences in historical and current interest rates, as well as the reality that most people's spending habits are not consistently linear.
11   RWSGFY   2021 Aug 3, 9:33pm  

Tenpoundbass says
FuckCCP89 says
Tenpoundbass says
What's the 4% rule.


https://en.wikipedia.org/wiki/William_Bengen?wprov=sfti1


Criticism of the 4% withdrawal rule include references to its assumption of one's investment portfolio, the differences in historical and current interest rates, as well as the reality that most people's spending habits are not consistently linear.


"Nobody's perfect"
12   Tenpoundbass   2021 Aug 3, 9:36pm  

The successful American class that became the model of the American dream. Was created by Banks paying Savers to save money. Not by investing in stock markets.

Americas Historically epic peak Middle Class was fueled by the workers putting their money in Saving institutions, backed by the Federal Reserve, paying market interest rates. Rates that were not manipulated by the Fed. When interest rates went down, the value of their savings didn't contract, like it does with investment portfolios. They simply earned less interest for that month.

The late 80's S&L false flag crises about destroying the institution. For years, the media was fear mongering how a financial calamity could cause a run on the banks, then all of the Depositors would be left holding the bag. Then in 2008, they showed us how Banks are too big to fail. Bush Sr. could have looked at the S&L as too big to fail, if he wasn't part of the collapse.
13   zzyzzx   2021 Aug 4, 4:58am  

ChauvinsKnee says
If you follow the 4% rule, $1M gives you $40K per year to live on. Hardly Caligulan splendor. With $3M it goes up to $120K. Not bad, but not something to write home about either.


Actually 120K is pretty good if it's after tax. I will assume that you mean before tax.
14   zzyzzx   2021 Aug 4, 5:01am  

Tenpoundbass says
as well as the reality that most people's spending habits are not consistently linear.


According to all the retirement stuff I've read, they claim that your spending decreases with time and the most expensive year of retirement will be the first year. Presumably that's because when you first retire is when you are likely to move and buy all the toys that you never had the time to use before, and after some point you are going to be too old to travel.
15   zzyzzx   2021 Aug 4, 5:02am  

FortWayneAsNancyPelosiHaircut says
I remember when houses were only 60k around here


You can still buy houses for 60K in my neighborhood.
16   zzyzzx   2021 Aug 4, 5:18am  

How much is the new million?

My guess is 6-7.5 Million. What's the point in retiring unless you can do it in Caligulan Splendor?
Seriously, I just want a decent house on at least a 1/2 acre. 3 car garage or 2 car garage and storage shed, geothermal heat pump and enough solar to be self sufficient. Well and septic are fine and may be preferred at this point as well. Close enough to the beach so that I can go there any time I want to (but not too close), All paid for and enough income from investments to not have to worry about money, even in a down market (which means enough dividend income). At some point I plan on just taking (instead of reinvesting) my capital gains distributions, and just waiting as long as I can to take SS because why not.

https://www.financialsamurai.com/are-you-a-real-millionaire-3-million-new-1-million/

You will need much more than $1 million. With $3 million, you can withdraw at a more appropriate 2% or 3% and generate $60,000 – $90,000 a year. $60,000 – $90,000 a year still isn’t living a rich lifestyle. But it’s inline with the real median household income of roughly $68,000.

https://www.annuityexpertadvice.com/how-to-retire-on-3-million-dollars/
17   Al_Sharpton_for_President   2021 Aug 4, 6:11am  

You have to factor in the growth of your portfolio versus the draw down. If you have $3 million and withdraw 6% per year, and your portfolio grows at least at an average of 6% per year, you are leaving the money to your heirs.



18   clambo   2021 Aug 4, 6:35am  

Financial net worth helps you sleep at night, but income makes you feel wealthy.

Others have mentioned a 6%, 5%, or 4% safe spending rate. They are of course before tax.

I’m dealing with the dilemma today, because my inner cheapskate makes it difficult for me to sell even $500 of a mutual fund, but I do take some out.

A guy who has no debt and $100,000 annual pension probably feels pretty good, that’s like a $2 million annuity.

If you have a large portfolio of mutual funds, you can live off dividends, capital gains and interest from a bond fund.

Roth IRA is the way to go, max it out.

You can also swap an IRA for an income annuity, or choose systematic liquidation, or take dividends and capital gains.

I found that it is hard for me to spend money on frivolities even though I can afford it.

Sometimes I give a few bucks to someone who is in a jam, but I figure someday I’ll need a favor or it’s in lieu of a birthday present.
19   zzyzzx   2021 Aug 4, 6:43am  

clambo says
Roth IRA is the way to go, max it out.


You have to make less than 140K to contribute to a Roth, unless you do a backdoor.
20   WookieMan   2021 Aug 4, 7:04am  

This is a large window but we're shooting for $5-10M. I'm guessing I'm younger than most here at 38. We'll make $200-$400k/yr for the foreseeable future living in a house that costs us $1,200/mo PITI. So it's not unrealistic, assuming no decades long depression.

We spend way more on travel than we should but we max everything out that we can savings wise. Because my wife expenses work, we also maximize CC points and get about $8/yr back from that. The kids are a bit pricey and only will get more pricey in the coming years. But we're about 11 years from booting them out of the house. And they WILL be booted and go become actual men.

We're gonna look at some houses/condos (probably condos) in the Caribbean in October. We wouldn't live there in hurricane season. Run that as a vacation rental and hopefully have that as our 2nd retirement home all paid off by that time. Depending on how fast my area grows might turn our current house into a VRBO/Airbnb when retirement hits and same for the condo when we're not occupying either. Then we'd be at minimum covering expenses and hopefully pulling in $30-40k between the two assuming future inflation.

With no housing costs we could easily live on $80k/yr which if we hit the low end of our target and the extra $30-40k, I assume we'd be good. $80k/yr drawdown would keep the 401k accounts a positive growth vehicle even at only 3% growth. So we'd have something solid to give to the kids when we die.

Biggest concern for us is inflation. $5-10M sounds big, but not for us given age. Much of that we'd pay taxes on as well (we do have Roth accounts), so who the hell knows what rates looks like in 21 years. We could always reverse mortgage the property that has the most value once we get really old. Hopefully SS still exist by then as well. Ideally we'd be able to spend $40-50k/yr on travel is the goal and housing costs paid for. Rest would be health insurance, groceries, going to restaurants and pursuing hobbies/fun stuff.

We shall see. But $1M is nothing now. If you're 50-55 right now I'd think you'd need $3M to live average assuming you live to say 90. My average is different, so some might be able to pull it off with $2M. We're above $1M now (moving target), but with compounding I think we'll be good. We've got a good 12 years left in hardcore growth phase. I don't look at the accounts anymore because I don't want to freak out when the eventual crash comes. Set and forget. I don't like the fees, but we get a solid match and don't have to think about it.
21   clambo   2021 Aug 4, 7:17am  

I would much prefer to have a bunch of investments than a place in the Caribbean.
Then I could rent in different places.
I once spent a whole month in Tobago, and boy was I ready to leave.
I once spent 3 weeks in the Bahamas and it was almost the same deal.
For the case above, 5 million bucks between 2 people isn’t going to feel like a real lot of money probably.

Tip: watch your health. I had a mysterious problem with my muscles after scuba diving in California, it hurt like a bitch. It didn’t go away and it turned out to be arthritis, “prognosis negative”.

Don’t smoke, drink or be a lazy fat slob; you’ll regret it later.

Be cautious so you can actually spend the dough when you are ready to. I’m unable to go backpacking now, and hiking in Switzerland will be a problem.

Edit
Tip 2: You will be surprised that dealing with paperwork and things are not fun anymore. You will resent things that require you to respond.
22   zzyzzx   2021 Aug 4, 7:24am  

WookieMan says
But $1M is nothing now. If you're 50-55 right now I'd think you'd need $3M to live average assuming you live to say 90.


$3M In before or after tax dollars?
23   clambo   2021 Aug 4, 7:34am  

My father’s accountant told me about a guy in Florida who lived off $10 million bucks in municipal bonds, sounded like a decent “strategery”.
24   mell   2021 Aug 4, 7:42am  

clambo says
I would much prefer to have a bunch of investments than a place in the Caribbean.
Then I could rent in different places.
I once spent a whole month in Tobago, and boy was I ready to leave.
I once spent 3 weeks in the Bahamas and it was almost the same deal.
For the case above, 5 million bucks between 2 people isn’t going to feel like a real lot of money probably.

Tip: watch your health. I had a mysterious problem with my muscles after scuba diving in California, it hurt like a bitch. It didn’t go away and it turned out to be arthritis, “prognosis negative”.

Don’t smoke, drink or be a lazy fat slob; you’ll regret it later.

Be cautious so you can actually spend the dough when you are ready to. I’m unable to go backpacking now, and hiking in Switzerland will be a problem.

Edit
Tip 2: You will be surprised that dealing with paperwork and things are not fun anymore. You will resent things that require you to respond.


What have you tried for arthritis - high dose curcumin doesn't work? You should be able to treat this, can be trial and error but there are most likely root causes that can be treated.
25   zzyzzx   2021 Aug 4, 7:50am  

clambo says
My father’s accountant told me about a guy in Florida who lived off $10 million bucks in municipal bonds, sounded like a decent “strategery”.


At today's 30 year rates, yeah you would need 10M to retire.
26   clambo   2021 Aug 4, 8:01am  

At risk of boring readers, herewith my arthritis story.

I’m in good shape and healthy. I was very active but cautious using weights, walking for hours and gym several days per week, with a trainer for a year (my vanity project).

The symptoms of arthritis in my hips were suddenly sore groin muscles that did not heal.
The only thing I previously noticed was the lack of ability to reach my feet easily, my range of motion is limited, I thought it was stiff muscles.

I saw the X rays recently and the joints themselves are missing the cartilage. Also, growths of bone are where there should be nothing.

The PT guy can push my leg and he feels the resistance of the joint before I feel pain, it’s not going to fully rotate as a normal joint would.

What helps me is Meloxicam, it reduces the inflammation of my muscles so I feel better.

The joint itself rarely hurts, but the muscles do.

I’m going to have a hip replacement eventually, but I’m in no hurry since lack of range of motion isn’t painful.
If you dropped a gold bar at my feet, I couldn’t pick it up but I would get close.
27   WookieMan   2021 Aug 4, 8:02am  

clambo says
I would much prefer to have a bunch of investments than a place in the Caribbean.
Then I could rent in different places.

This idea makes sense. I worry about rental costs though. We'd still have a place in the states and travel to other places. I have no interest in Europe. SE Asia, Australia, and N. Zealand are really only ones on the bucket list. Maybe something like Maldives I guess. And we'll get to others before retirement years.

So we'd still be able to travel, I just love the Caribbean as someone that lives half the year in cold and SJU is a major international airport we'd be close to. No passport needed. The cold is fine, but if I don't have to, I can live down there 4-6 months a year during non-hurricane season. It would still be a potentially profitable investment as well. Then travel a month or two a year to other places. We're not handcuffed technically. Just gives us another jumping off point to get to other places.

Covid has made me question the own a place vs. renting down there or any vacation property. Vacation rental rates in places we like to visit in FL have jumped 100% over the last 5-6 years. St. George Island, Pensacola, Navarre Beach. Hotel rates are going insane now. It would be nice to know I have a place to visit, that we love, with a fixed cost known forever basically besides airfare getting there and back. I'd literally just buy 10 shirts and shorts, put it in an owners closet and fly without a bag. That's another advantage.

We'll see. Plans change, but I've been wanting to get back into some sort of RE investment as a piece to the retirement puzzle.
28   Dholliday126   2021 Aug 4, 8:09am  

If you talking about daddy warbucks fuck you 1 million in 1920, based on the inflation calculator that is 14 million in today's dollars. But since government underreports inflation, you're probably really talking about 20-30 million.

Also, let's not conflate net worth and cash. If you're talking about a normal retirement with no worries, I would say networth of 5 - 10 million based on your monthly spending. A 2 million house paid off and 3 million in the bank "safely" yielding 3% in muni's would be OK. But 100K a year goes fast, so I would say paid off house and 5 million in the bank @ 3%, $150,000/yr cash flow would be considered "rich".

At 10% inflation a year, those amounts double every 7 years.
29   HeadSet   2021 Aug 4, 8:11am  

WookieMan says
But we're about 11 years from booting them out of the house. And they WILL be booted and go become actual men.

Are you going to cover the kid's college? My one child will finish next year, and the cost to me will be around $120k. I started putting money away for her college from when she was born. When she was in High School, pricing colleges looked like $80k would do it. But all that easy loan nonsense ran the prices up to that $120k. I suspect the price will be even higher by the time your kids are old enough.
30   WookieMan   2021 Aug 4, 8:31am  

HeadSet says
WookieMan says
But we're about 11 years from booting them out of the house. And they WILL be booted and go become actual men.

Are you going to cover the kid's college? My one child will finish next year, and the cost to me will be around $120k. I started putting money away for her college from when she was born. When she was in High School, pricing colleges looked like $80k would do it. But all that easy loan nonsense ran the prices up to that $120k. I suspect the price will be even higher by the time your kids are old enough.

Don't think they'll go to college. At least I'm not promoting it. And if they want to, go ahead, get loans. They'd technically be adults and I hope to raise them well enough for them to figure it out. I'm not giving some state uni my fucking money for a trash degree in 90% of the cases. Remember, professors are people that failed to succeed in the thing they're teaching, outside of those for which that was the goal to teach.

I was a country club brat. Besides attorneys and docs, pretty much 70-80% of members weren't college educated. It's all about who you know in the game of life and income. Everyone thinks my wife is a public works engineer (roads, bridges, etc.) She's not. She studied marketing. It got her in the door, but it was completely useless. Waste of money. Mine was a waste of money.

Probably a topic for another thread, but I see almost zero value on college degrees outside of STEM. My uncle can barely read. Not a joke. Built a house for $7m in Desert Mountain, AZ (Scottsdale) that's probably worth $15-20M now. Collects $100k/mo from his properties he owns. He's a book smarts dumb ass if that makes sense. But he's banked more than 99.8% of this country that thinks college will make you money.

He's not raising his adult kids well now, as he owns all their houses outright. So they've never had adversity or worry about money their entire life. Hence why I'm not paying for college. I'm not knocking the decision to do so for those that do, I just have seen the other end of it is all. As a parent I'm not obligated to send and pay for it. If they want it, go get it. I'm confused why it became normal for parents to pay for college. I had to and so did my wife.
31   krc   2021 Aug 4, 9:51am  

Interesting comments on college. One kid is not a student (will not bother doing anything outside of what he likes, and remote learning was a disaster - no accountability) but loves programming ever since he was in grade school. He worked the past year for a couple of different small programming companies (50-70 staff) and they want him to go work full time for them and skip college. I am fine with that, but I run a dev team for a very large company and I know that HR would not take a resume from a junior programmer without a CS degree - so to me there are certain jobs that without a degree you get restricted in where you can apply. Sure - 10+ years experience and college doesn't really matter - but that is time wasted in jobs that likely don't pay as well. So he is off to college - with the deal that for classes he doesn't pass then he pays the corresponding tuition. State school - no private.

And, I always required a BS degree for all my kids that went to college - if they wanted our support. And no private schools unless they kicked in $. BS degree at least gets some flexibility for other opportunities. BS has a level of rigor. And look at going overseas. No woke BS diversity classes - just focused on the degree.

As to cost of college - sure - 20 years ago you could indeed work and go to a state college and be fine. That is no longer the case without taking large loans. If you look at tuition even for a state school, and corresponding dorm/housing costs, you can no longer work part time and go to college. Best idea is to go the JC route and live at home for two years - and transfer. Community college is a legit deal, and in CA there are programs that guarantee access to UC if you meet a GPA threshold. JC is affordable while you work.
32   Shaman   2021 Aug 4, 10:58am  

Planning to send my kids to community college for their first two years, regardless. It’s dirt cheap and nobody cares where you did your first few credits. Then transfer them to state university and let them finish a degree there. California still has pretty affordable state university, most of them. Some are stupidly expensive like UCIrvine but no point in going there. I plan to cover these costs for my kids. If they want to go further to professional schools, or get advanced degrees, I can provide free room and board but not much else.
I’ve been saving in a 529 plan for kids college but it won’t ever be enough by itself. It will defray the the out of pocket costs. If they can get an undergraduate degree done without debt, they’ll be at a good starting point for either a career or an advanced degree. Depends on what they want to do.
33   Dholliday126   2021 Aug 4, 11:18am  

RE: College

Hopefully, the paradigm will change and there will be trade academies, like in Germany, so instead of fleecing young adults, they get a cheap education/training and go straight into the workforce or trade and start earning money.

Instead of 529s, I just gift to my kids Coverdell (college expenses), then UGMA/UTMA(college/down payment/whatever they want). You get a lot more investment choices than 529, i.e. outperform the market. When they turn 18, they will have their own money and they can make an informed decision.
34   krc   2021 Aug 4, 11:24am  

Coverdells are limited to amount you can contribute and have income restrictions for contribution as well.
529 plans vary by state - but there are sites that can guide you into the best plans (i.e. lower fees on funds, etc...).
Coverdells are more flexible for paying for K-12.
35   Dholliday126   2021 Aug 4, 11:27am  

529, Coverdell, UGMA/UTMA are all subject to the gift tax. You want the most going to UGMA/UTMA because that will give them the best investments options and life options. I like Coverdells because you can outperform 529.


So quick math:
Gift max 15,000
Coverdell - 2,000 max per year
UGMA/UTMA - 13,000 per year

10 years to go till college

Coverdell @ 2,000/yr x 10 years, compounding at 20%/yr = $64,404.67
UGMA/UTMA @ 13,000/yr x 10 years, compounding at 20%/yr = $391,996.76
Total: $456,401.43
36   krc   2021 Aug 4, 12:12pm  

UGMA though have no control over direction of expenditures - right? Once the minor reaches 18, they can do whatever they want. Sure - 529/Coverdells you "can" use it for anything - but the penalties make it prohibitive. Also, gains are UGMA are taxed at the minor's tax bracket IIRC.
37   Dholliday126   2021 Aug 4, 1:00pm  

Correct, UGMA control is all up to the recipient, so you better raise good kids ;) The way I figure it, you can teach your kid about investing, spending, and money control early. This is the stuff they never teach in high school. If I can make them financially literate before their 20, that'll be the biggest investment payoff of all.
38   SunnyvaleCA   2021 Aug 4, 1:22pm  

As far as I can tell, the 4% number assumes your investments return enough over 4% to deal with inflation. If your portfolio returned 6% in a world of 2% inflation, then 4% was safe to withdraw, as your portfolio value would still increase at the rate of inflation after your withdraw. You could live forever and still not run out of money.

There's also the "rule" that you bond percentage (AAA and AA "safe" bonds) should match your age. i.e.: at age 70, you should be 70% in bonds and the remaining in stocks. As you get older the low-risk-low-return bond yields aren't quite giving you the full 4%+inflation returns needed to live in perpetuity. However, this is balanced by the fact that, as you get older, your remaining life expectancy decreases and so it's OK to start drawing down the principal. When you are older you can safely start drawing down the principal, which means you can seek the safety of bonds.

What has changed in the 30+ years since the popularization of the 4% rule is that AAA and AA-rated bonds aren't paying anything close to what they once did. In fact, these bonds are often not paying even the inflation rate. That probably means you should be budgeting for less than 4% withdraw. How much less? Who knows! But it seems clear the withdraw is closely related to the difference between the AAA-bond rate and the inflation rate, which has gone very very against retirees.
39   HeadSet   2021 Aug 4, 1:28pm  

Dholliday126 says
compounding at 20%/yr

Please share with us how you can get 20% compounded.
40   FarmersWon   2021 Aug 4, 1:33pm  

https://www.financialsamurai.com/the-average-net-worth-for-the-above-average-person/
I sometimes look at this site. The site always have hilarious commenters who will ask questions like :
"I have $10M in bank and few million in stocks.. Can I retire comfortably?"
.... In the end sense of insecurity is internal. We don't even know if we will survive another day..
Too much worry is not good. Center of the road is always best approach.

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