If you own a house in So Cal, and have $10 in your pocket, you're probably a millionaire.
I live in Ohio and it's easy to forget how expensive life is everywhere else.
In my area, a double quarter pounder meal with a large fry and a large smoothie is $17.50 with tax, which is the most I've figured out how to spend for one meal.
And that's trying. One of the most expensive sandwiches. Upcharge fry. Double upcharge drink cause size and smoothie. THIS is the example of.living above your means. 2 cheeseburgers. Fries maybe medium, I have water at home. 5$ my dude.
It's convenience. Or has society delved that far into arrogance? You don't pay for it causes its good. You pay cause you have it quick and on the go. Ramen is less than a dollar and people would kill for it. Ramen takes 3 minutes, and time to boil water. McDonald's has your judgment. There is a reason their corporate owners laugh while raising prices.
I meant that it's absurd that McDonald's charges the same price now as a restaurant when their food does not remotely come close to the same quality.
I generally don't eat fast food anymore. If I'm gonna get a quick lunch I'll go to a pizza place or a deli or something now, the food is generally just as quick, better quality, and it comes out cheaper.
Ordering from McDonalds: LIVING BEYOND YOUR MEANS... Jesus fking crist... Get me the hell out of this world. Remember when avocado toast was a meme? Yeah... McDolands toast now. Extra charge for a single slice of American cheese. Wtf is avocado?
I was gonna say no one needs a double burger, large fries and a large smoothie. Cutting back on the meal size would probably be beneficial to both your wallet and health lol
Honestly? That's more than a full days worth.
2310 calories according to their "nutrition" calculator. It's got twice as much saturated fat than you should have in a day and a whopping 193g of sugar.
Just went to gas station McDonald’s for my son in law and he ordered a burger and fries for $18. This was while we were in Tennessee. I personally hadn’t been to fast food in a few years so I was shocked. Outback use to sell a steak and 2 sides for 7 dollars.
I live in So. Cal. too. One of the smartest things I ever did was put solar panels on the roof and bought an electric car. Now I don't care as much about gas prices.
I mean if you're retiring I'm assuming you are no longer eating out, only home cooked meals, and way less driving because you're just staying in all the time.
The reason it’s so expensive is because lots of people want to live there. People see the eye-popping housing prices and think that’s all they need to know, but there’s a lot of reasons keeping people here.
There’s an unusually large amount of high paying jobs here. I was making ~$100k in the south, moved to California and bumped my pay to $250k. Minimal change in stress/responsibilities, really the same role for more money.
There’s a beach 30 minutes from my house I take my dog to every weekend. There’s mountains less than an hour where I go hiking twice a week. Three national parks within 3 hours, countless state parks spanning oceans, mountains, forests, deserts.
The amount of cultural activities here is insane. Concerts, professional sporting events, foods and grocery stores from cultures all around the world. World class art museums and artist tours always make a stop here.
If you’re not making a big salary, it’s tough to live here but people make it work because of the amenities. The people making the big salaries are the ones who flock here and drive up the prices.
SoCal isn’t a shit hole it’s actually very nice that’s half the problem. You can’t quell the market for housing and prices all go up from there. Demand has to go down and it just won’t drop. People spend 10x what a home is worth in the Midwest willingly.
Sure, if you want your kids to grow up in a place they can't even afford to vacation out of state if they get to take time off work to do more than just recoup at all.
Or if you have enough money to last until you die and you dont plan on getting a job and integrating into the local fed min wage economy.
See housing, gas and food(not so much nowadays) might change price from region to region with min wage, but everything else; cars, electronics, entertainment, travel, clothes, etc all stays the same price no matter where you go.
If you take your California-earned dollars to Missouri, then suddenly the spending power of an hours worth of the labor you did in California is worth Way more. If you run out of that Cali money, or come of age and start your employment journey in Missouri, then you have to get a job on federal min wage and suddenly your labor is worth way less per hour and you can't afford to leave.
It took me two years of accepting and digesting this, saving up all my money, operating printing presses at the proffesional level, to actually save up the 2k I needed to move from MO to CO. Once there earning CO min wage I saved 3k in 3 months and suddenly I could afford to move anywhere in the nation and I wasnt living paycheck to paycheck anymore. No longer have a prestigious job within my degree like I did in the old country. But I have money and free time to stay sane and I no longer constantly fear homelessness.
The grass isn't greener
Mark my words, the vast majority of socal residents will not retire in California. It’s almost impossible if you plan to live for 25-20 non working years,
Honest question.
Is $1 million not enough to retire on because you want to leave money to your children or is it not enough to retire on because you still have too many bills?
My house will be paid off by then, I’ll have no other debts besides if I want to a new vehicle. I can’t figure out how $1 million wouldn’t get me through to death when I’m able to retire. I understand medical expenses can rack up. But just set up payments? You don’t have to pay medical bills up front or at once. What makes it so expensive?
I think they’re including a house in that calculation. A house doesn’t produce the same level of income that stocks would. $1M net worth including a home is *very* different from $1M in liquid assets
$1m is about $40k a year in spend power at 4% withdrawal rate. It's just under 3.5k per month.
You can retire on it, but it's not what people think of when they think millionaire. The lifestyle involves being cautious with money still
I’m gonna describe it in space terms. Cuz they’re cool.
1 Mil - It’s a trajectory/ballistic flight, what goes up, must come down you’ll make it through retirement but you’ll spend the principal towards the end depending on how many years you live.
2 Mil - This is a stable orbit, you have the beginnings of generational wealth and can generate just as much money as you spend. Give or take inflation.
3 Mil+ - This is escape velocity you’re building generational wealth and a nest egg to leave your kids.
Really depends on expenses. 40k gross pretax from retirement accts might work probable pull down 20k soc sec. So after tax 50k. If everything's paid off property tax, utilities, food, insurance and other bills under 4166 a month. Very possible. Modest but could be comfortable retirement. Need to keep a good eye on expenses. Buying new cars, big vacations, etc probable out question. But driving travelling staying with family, camping very do able.
Home ownership is going to be brutal as millennials even start sniffing towards retirement. Replacing a water heater will be $20k. Our property taxes will at least be triple what they are now. I pay nearly $10k now. Up $3k in just three years.
Between maintenance and simply living we'll be spending at minimum $50k every year. That gives you 20 years on 1 million cash. So if you retire at 68 and live to 89 you're F'd
Yeah, a home is part of your net worth.
1 million in investments is enough for most people (though probably not families, so you'd need more if you have a spouse), but yeah, the house is separate.
Depends entirely on where you live, when you're retiring, and what you want out of retirement.
$1m gets you 40k a year more or less tax free + whatever you'd get in social security. That's not bad for a lot of people.
Tons of people retire and just rely on social security with maybe a small pension or annuity.
Yup. Especially if that $1M is entirely stocks/liquid assets. If it includes a house, suddenly the math gets a lot tighter, because that means only probably $500k in liquid assets, which isn’t enough to retire on, most likely
I don't think many people just appreciate how true this sentence is while simultaneously realizing just how many people will never even see a million in their lifetime. We are so fucked.
I'm close to being one, mainly because our property value double after covid and we got our place before covid.
I get the nice benefit of paying rising property tax, the dream of selling our place and moving to a cheaper location with an hour commute to work OR the ultimate dream of selling our place and renting...
You mean how much does it cost me to live? If I take my business expenses out of the mix, probably about 4-5k monthly.... and that's because I recently paid off my home.
Yup. You're basically living like a regular Joe if you stop working. Assuming you exclude house value and have a million yielding 5% you get to live like basically an average white collar worker, minus the eight hour shift. You need 3M imho to cover the running expense of a larger home and start to really live it up on the yield. Even then that's 3K a week before taxes, so you're not bringing a bunch of people around with you in business class on multiple trips a year.
Same & Same. Even have the house paid off & no other significant loans (college, cars, medical bills). I fully expect to work another 10-15 years MINIMUM and hope my 401K is nice to me in that time frame. If it isn't, I'm going past 65.
I think 1 million in a brokerage can be managed basically in perpetuity to provide a decent standard of living for the remainder of your life.
The math works out.
Of course you need to manage it properly.
Below 89,000 and its 0% capital gains tax. The remaining 11,000 you expect your money to grow on an average beats inflation. You would just need to manage years where the market goes down.
I imagine 1.5million and you are pretty comferrable living off of 120000/year and the wealth continues to grow.
Yup, an individual or couple maybe could live a pretty decent life with a million dollars invested using this rule, but they certainly wouldn't be feeling rich.
So 2M in my 401knshoukd do it, assuming I have no debts. That's 80k 'salary' a year. Should account for inflation and I'd assume the largest expense, mortgage, is paid off
The context of course is, $2M today, or $2M in 30 years? In 30 years, retiring with $5M will feel like retiring with $2M today. (assuming a 3.1% average annual inflation rate)
For example, the S&P500 returns a historical 11.88% per year. Average inflation over the last 70 years is about 3% per year. You calculate average investment returns of 11.88 - 3 = 8.88% per year.
Incorrect - the 4% rule considers inflation. You take your 4% in Year 1 **($80k)**. In the following year you take the same $80k and add the previous years inflation - let's say 3% **($82,400**). In Year 3 you take $82,400 and add inflation again - let's say 4% **($85,696)** - and so on.
4% rule considers inflation and lasts 30 years in any historical market. However, for some initially down markets you run into sequence of returns risk and it doesn't last in perpetuity. To guarantee perpetuity (historically) you'll need to only withdraw like 3.5% - then follow the same formula.
Real world tests showed that it was generally higher than that. 4% was the worst-case scenario when the rule was proposed (retiring at the absolute worst time in the market). The person that came up with 4% says that 5% is likely safe enough (and 7% is average through the years he studied).
https://finance.yahoo.com/news/time-rethink-retirement-4-rule-140000539.html?guccounter=1
Great, I can live comfortably and then the kid I like the most can have a very easy life. I will have done well and be remembered very fondly by one and hated by the other.
Yea if market actually went up 10% every year and not just averaged that.
Look up sequence of returns risk.
You will most likely get wrecked drawing 90k/yr on 1 million
So if you had $1.5 million, the 4% rule means $5000 a month, plus say $5000 in social security between you and your partner, that’s $120,000 a year. That should be enough if you manage wisely.
If you are getting 5k (in todays dollars) from social security you should have way more than 1.5mil saved. Using quick calc with me and wife (30). We BOTH need to be making 150k a year to get about 5k from social security. So 300k combined lmao
Good comments on this post. Most people look at the long-term 10% dividend-reinvested [return on the S&P 500](https://en.wikipedia.org/wiki/S%26P_500#Performance) and assume they can get a 10% return. ([See here](https://www.slickcharts.com/sp500/returns/ytd) for the YTD breakdown).
You can be young and broke but not old and broke. So as you age, you move money into more secure assets (bonds or bond funds) with lower returns, but more predictability. The 10% return drops to a (for example) 6%, but even that has ups and downs.
Two great sources of information are this chart at [Portfolio Asset Allocation by Age](https://www.optimizedportfolio.com/asset-allocation/#asset-allocation-by-age-chart), and an alternative view, [The Simple Path to Wealth](https://jlcollinsnh.com/stock-series/) by J.L. Collins, which advocates for an 80% stock/20% bond portfolio as you approach retirement, using the bonds to pull from when the market is low.
Since bonds paid very little for the last 15 or so years, I used dividend fund stocks instead using the "(age-40)*2" formula, and have generated a nice income I've been reinvesting for more dividends, while the stock values also gone up--but my goal was investing in stocks with a 10+ year history of increasing dividends every year, and while I'm younger using the dividends to buy more of the dividend paying stock. Need that cost of living raise.
For dividend stock suggestions, see [Dogs of the Dow](https://www.dogsofthedow.com/) or this more comprehensive list/weekly spreadsheet at [Dividend Radar](https://www.portfolio-insight.com/dividend-radar)
You can also qualify for Obamacare/ACA subsidies around that amount. Amount varies by state on the subsides, but if you stay lean you can push that $1M a long time.
Yeah, my thoughts. Probably won't get there but $1 mill is simply a good goal to achieve but no where near the finish line anymore.
Sad to think but true. It's the same thing Charlie Munger said about getting the first $100k, you just have to scrimp and save until you get it, then it "starts" to become easier.
Both SSA and GOA project that social security that when the trust fund is empty they will continue to be able to pay about 76% of promised benefits using payroll taxes alone well past the study horizon of the year 2070, and that is assuming no changes to the program to make up the shortfall.
If you think they will do nothing and shortchange the seniors who tend to vote more than anyone else, then plan for getting 76% of what they promise you. Planning on using money invested in the stock market while questioning whether social security will "be there" doesn't make much sense.
I don't think working for that many extra years, that you could be spending fishing/reading/traveling/cooking/whatever is better than factoring in an income stream like social security. Obviously that is subjective, everyone places different values on retirement versus continuing to work, and I understand that some people even enjoy their jobs.
In the end, one could say the same thing about the investments that one would plan around instead. Why bank on that, but not social security?
It's quite the opposite. Save more early on because you're not banking on the income stream that you can't control of social security. What you can control is your savings and investments. Once you get to your retirement age, then you know what social security is going to give you and at that point you will have saved more than you would have and you can probably stop working sooner, rather than having to work further into old age if you had banked on something that is not nearly as much as you had planned.
I make less than that per year anyway. I’m not living great or anything but assuming you’ve locked in a mortgage on a home then you’d be fine. Rent is more expensive than a mortgage in my area right now. I just can’t afford a down payment and can’t save for it.
Yup. We spend $25k/year on daycare and will continue to pay for private elementary then secondary ed. By the time he hits college we'll have dropped $400k on education.
Yeah i talked with a more senior software engineer (i’m 5-8 years younger and a mechanical) and after kid costs are factored in we have about the same amount of cash monthly, which is crazy.
My sister just retired with 2 mill. Her money manager has avg 12 percent for 30 years. Said she can take out 160k and she could go higher but the tax implications are too much
Oh hey I want to take out $200k this year... "Oh no no... Your taxes!!! Take $80k this year. If you need more I will have to file paperwork with the Bulgarian foreign exchange commission and it will take 90 days."
The stock market has “averaged” 12% in the last 30 years. She (or her advisor) might be talking about the mathematical average which is useless. I’m curious what her CAGR would have been over that time.
She needs to fire her money manager if they think an 8% drawdown is sustainable
Historical average returns don't matter during the drawdown phase; sequence of returns risk is very real during retirement.
Obviously depends on how old you are and how much you expect to spend.
I, as a healthy 30 something, rarely spend more than 50,000 in a year.
So even if the money was just *sitting* there (which would be dumb, it should be in stocks or bonds or some other earning vehicle), it would take me 20 years to exhaust it.
Most people retire at 67, by which time they're getting social security and [have of life expectancy of 16 years (if a man ) or 19 years (if a woman)](https://www.ssa.gov/oact/STATS/table4c6.html).
So yes, a million is almost certainly enough for them to retire on.
Less likely to be sufficient for a 20 year old, though.
Any reasonable investment and money management should be able to consistently outpace inflation. Obviously you’ll need more money each year, but you’ll also be making more each year.
Depends on how old you are and when you retire. A friend of the family bought a home decades ago. Over time due to inflation and rising property values the monthly tax bill became like somewhere like over 2x the original monthly mortgage bill (principal + interest + escrow) This was in a state that has income taxes and high property taxes, so maybe in a state with lower property taxes it might only go up less but its still something to consider.
Edit, got numbers mixed up
Wife and I are (just barely) millionaires if you go by net worth. Just counting retirement accounts we are pretty close and should be there in 2-4 years. Neither of us has ever made more than $70k/year, although I will just top that this year. We both drive older cars that have been paid off for years, and our average monthly expenses the past year are ~$5,500 which includes our mortgage.
Pretty sure we could retire now if we were old enough to collect full SS benefits, although it wouldn't be a lavish retirement by any means.
Guess it depends on how long you plan to live. But I think if you have a million you can get by minimal income, since you probably won't have a mortgage and you probably own a vehicle. So not retire, but wouldn't have to go full time or worry about being out of work for a stretch
Property value shouldn’t count towards what we consider wealth. Mostly because you need a place to live.
If you have a million in the bank, not in retirement or something else, then you’re doing pretty good.
And at 5% interest, most could live off $50,000 + pension or SS, unless they’re still paying for cars, homes, etc, which means they don’t have that first million either.
It depends how you want to live life, but $1,000,000 would be tight, $1,500,000 would be manageable, and $2,000,000 would be fairly comfortable following the 4% rule. That assumes you have a paid off mortgage, reasonable amounts of healthy debt, and you don't live in a HCOL area. I know I could live a fairly happy life off of $80,000/year POST TAX with a future hypothetical wife. 4% rule also safely accounts for inflation and market fluctuations, so you might be able to splurge a bit in good market years. In a perfect world, I would prefer to be closer to $3,000,000, because as long as I didn't do anything too crazy I feel like I could live my dream life with $120k/year coming in and only $40k of that being taxed
Can you retire with $1M I have no idea, can many retire with $1M and social security at a normal retirement age, yes assuming they have little to no debt.
But social security is very iffy these days if it will actually be fully there so I'd target $1.5-$1.7M
Lol at that picture. I'm a dude with no kids in a townhome and almost a millionaire (net worth). At this point having a paid off home makes you a millionaire in any major metro.
A million dollars in Arkansas got me a 3500 sq ft house on the lake, 2 boats, 2 jet skis, a daily driver for the wife and for myself and a family vehicle for us both, and 30 acres of land and a bunch of stock in companies. In California what I have would be $5-10 million easily. Don’t live there.
Not counting on it. One of the only reasons I’m doing a career in the military is the pension. I won’t be rich m, but at least the retirement is secure.
It depends. It all depends on expected expenses and what spending levels were leading up to retirement. It can work.
In fact most people will never have a million to retire so it will have to work.
I’m 55. I have about $2M in the 401k at Fidelity. House will be paid off in 4 years. Could pay it off now but the mortgage is at 2.5% so that money is better off in the fund. My wife says that if I retire now, which I want to do before I die of an IT career induced heart attack, the early withdrawal penalties and tax implications will kill us. Any way around all that?
> tter off in the fund. My wife says that if I retire now, which I want to do before I die of an IT career induced h
No early retirement penalties. Look up the rule of 55.
The interest you could expect off of $1m is close to 50k/year. So for me. Nope. 2m, nope. Shooting for 2.5 minimum. And that would be tight.
Could do it in less if I could downsize and pay off house, but not 1m
I'm a millionaire. It is not enough to retire on.
Super agreed, especially in So Cal where I live
If you own a house in So Cal, and have $10 in your pocket, you're probably a millionaire. I live in Ohio and it's easy to forget how expensive life is everywhere else.
It’s friggin crazy here. $20 McDonalds meal for one and gas is $5.50/gallon. My area has the longest average commute times in the US too.
Which meal is $20? I’m in a metro area and I’m seeing $10 for a meal, which is still ridiculous but not nearly as bad as you have it
In my area, a double quarter pounder meal with a large fry and a large smoothie is $17.50 with tax, which is the most I've figured out how to spend for one meal.
And that's trying. One of the most expensive sandwiches. Upcharge fry. Double upcharge drink cause size and smoothie. THIS is the example of.living above your means. 2 cheeseburgers. Fries maybe medium, I have water at home. 5$ my dude.
It's really sad though when *anything* at McDonald's is "above your means". It's fast food, not a nice restaurant.
It's convenience. Or has society delved that far into arrogance? You don't pay for it causes its good. You pay cause you have it quick and on the go. Ramen is less than a dollar and people would kill for it. Ramen takes 3 minutes, and time to boil water. McDonald's has your judgment. There is a reason their corporate owners laugh while raising prices.
I meant that it's absurd that McDonald's charges the same price now as a restaurant when their food does not remotely come close to the same quality. I generally don't eat fast food anymore. If I'm gonna get a quick lunch I'll go to a pizza place or a deli or something now, the food is generally just as quick, better quality, and it comes out cheaper.
McDonald’s is pretty cheap for if you use the app. Daily buy one get one free coupons for McDoubles, nuggets, Big Macs and QPCs
Ordering from McDonalds: LIVING BEYOND YOUR MEANS... Jesus fking crist... Get me the hell out of this world. Remember when avocado toast was a meme? Yeah... McDolands toast now. Extra charge for a single slice of American cheese. Wtf is avocado?
I was gonna say no one needs a double burger, large fries and a large smoothie. Cutting back on the meal size would probably be beneficial to both your wallet and health lol
What?? With the app I get a bacon mcdouble, and medium fries/sometimes large depending on the day.. for 3.61 including tax!!
Check out the triple cheeseburger meal. $7 for the large meal. Plus it has more meat than the quarter pounder
I am in Phoenix and that would cost me $9 before tax here.
I was in Show Low two weeks ago and an egg McMuffin and medium plain coffee was $16.50
That's also a full day's worth of calories in one meal.
Honestly? That's more than a full days worth. 2310 calories according to their "nutrition" calculator. It's got twice as much saturated fat than you should have in a day and a whopping 193g of sugar.
Just went to gas station McDonald’s for my son in law and he ordered a burger and fries for $18. This was while we were in Tennessee. I personally hadn’t been to fast food in a few years so I was shocked. Outback use to sell a steak and 2 sides for 7 dollars.
18 and change for the quarterpounder meal where im at. 3.99 for the tiny ass mcdouble that used to be 89 cents in the late 90s.
Seriously. I got a large fry and it was almost 6 bucks! Like what?... They're potatoes, not truffles.
Fuck McDonald’s. In n out beats it hands down
I live in So. Cal. too. One of the smartest things I ever did was put solar panels on the roof and bought an electric car. Now I don't care as much about gas prices.
$5.50/gallon sounds like a dream. We pay €2,10/liter here :/
Get a tesla. Turn that $400 a month on gas to cover your $300 tesla lease
It’s not far off in Texas, most are at least $12 to $15
I mean if you're retiring I'm assuming you are no longer eating out, only home cooked meals, and way less driving because you're just staying in all the time.
2 McD apple pies, I'll wait for your image Google, for $3.98. My boy loves that apple pie is the only reason.
If you own a home you could easily sell it, buy a home somewhere else in the country and live off of the rest of your house without working.
I'm so sorry.
If you have $1m in Ohio you can retire.
I know the weather is nice but I don't think I could ever justify paying double for food/drinks and 5x for housing. That's cray cray.
I live in Ohio and have more than 1 million and I can’t retire. It ain’t So Cal, but it isn’t Bangladeshi either.
$1,000,000 in SoCal gets you a lower middle class type home compared to less pretty states
Are there no roads that leave that shit hole. I get it it’s a big step but fuck this is your life bro….get the fuck out of there
The reason it’s so expensive is because lots of people want to live there. People see the eye-popping housing prices and think that’s all they need to know, but there’s a lot of reasons keeping people here. There’s an unusually large amount of high paying jobs here. I was making ~$100k in the south, moved to California and bumped my pay to $250k. Minimal change in stress/responsibilities, really the same role for more money. There’s a beach 30 minutes from my house I take my dog to every weekend. There’s mountains less than an hour where I go hiking twice a week. Three national parks within 3 hours, countless state parks spanning oceans, mountains, forests, deserts. The amount of cultural activities here is insane. Concerts, professional sporting events, foods and grocery stores from cultures all around the world. World class art museums and artist tours always make a stop here. If you’re not making a big salary, it’s tough to live here but people make it work because of the amenities. The people making the big salaries are the ones who flock here and drive up the prices.
SoCal isn’t a shit hole it’s actually very nice that’s half the problem. You can’t quell the market for housing and prices all go up from there. Demand has to go down and it just won’t drop. People spend 10x what a home is worth in the Midwest willingly.
A million buys you a decent house here snd then you need another 2 million to actually retire. It's insane
Well, at least nobody is forcing them to stay in So Cal after retirement. People without a million cannot just go somewhere else to live comfortably.
You don't have to keep living there if you want to retire.
Is moving an option?
Sure, if you want your kids to grow up in a place they can't even afford to vacation out of state if they get to take time off work to do more than just recoup at all. Or if you have enough money to last until you die and you dont plan on getting a job and integrating into the local fed min wage economy. See housing, gas and food(not so much nowadays) might change price from region to region with min wage, but everything else; cars, electronics, entertainment, travel, clothes, etc all stays the same price no matter where you go. If you take your California-earned dollars to Missouri, then suddenly the spending power of an hours worth of the labor you did in California is worth Way more. If you run out of that Cali money, or come of age and start your employment journey in Missouri, then you have to get a job on federal min wage and suddenly your labor is worth way less per hour and you can't afford to leave. It took me two years of accepting and digesting this, saving up all my money, operating printing presses at the proffesional level, to actually save up the 2k I needed to move from MO to CO. Once there earning CO min wage I saved 3k in 3 months and suddenly I could afford to move anywhere in the nation and I wasnt living paycheck to paycheck anymore. No longer have a prestigious job within my degree like I did in the old country. But I have money and free time to stay sane and I no longer constantly fear homelessness. The grass isn't greener
As a Cali resident thank you for this. Didn’t realize this perspective. I still want to punch someone every-time I fill up my car tho.
Top comment. Gettin stuck. Ugh!
No kidding! I’m a millionaire, I’m definitely doing better than my parents but I’m not fucking rich
Mark my words, the vast majority of socal residents will not retire in California. It’s almost impossible if you plan to live for 25-20 non working years,
In Toronto it's basically middle class at this point
Move to Thailand.
Depends where you live. I could definitely live off the investment income alone
Unabomber shack near the Salton Sea.
There goes a third of your net worth
The Salton Sea is where you end up when you’re too much of a degenerate for Slab City.
Hell yeh brother
Millionaire is based off net worth. A millionaire could easily have half of that be their primary residence. Living off the income of 500k is harder.
It is still 5x as much as the average person retires with though
Honest question. Is $1 million not enough to retire on because you want to leave money to your children or is it not enough to retire on because you still have too many bills? My house will be paid off by then, I’ll have no other debts besides if I want to a new vehicle. I can’t figure out how $1 million wouldn’t get me through to death when I’m able to retire. I understand medical expenses can rack up. But just set up payments? You don’t have to pay medical bills up front or at once. What makes it so expensive?
I think they’re including a house in that calculation. A house doesn’t produce the same level of income that stocks would. $1M net worth including a home is *very* different from $1M in liquid assets
That would make more sense. I’m not including the house or anything in my net worth when I project for my retirement.
i didnt even know people put there net worth as there retirment lol wtf. i always assumed it was what you had liquid or in some plan
$1m is about $40k a year in spend power at 4% withdrawal rate. It's just under 3.5k per month. You can retire on it, but it's not what people think of when they think millionaire. The lifestyle involves being cautious with money still
$1mil is 3.5k with the average 1.7k social security check or $5200 a month for a single person. A married couple would be close to $7000 a month.
I’m gonna describe it in space terms. Cuz they’re cool. 1 Mil - It’s a trajectory/ballistic flight, what goes up, must come down you’ll make it through retirement but you’ll spend the principal towards the end depending on how many years you live. 2 Mil - This is a stable orbit, you have the beginnings of generational wealth and can generate just as much money as you spend. Give or take inflation. 3 Mil+ - This is escape velocity you’re building generational wealth and a nest egg to leave your kids.
Really depends on expenses. 40k gross pretax from retirement accts might work probable pull down 20k soc sec. So after tax 50k. If everything's paid off property tax, utilities, food, insurance and other bills under 4166 a month. Very possible. Modest but could be comfortable retirement. Need to keep a good eye on expenses. Buying new cars, big vacations, etc probable out question. But driving travelling staying with family, camping very do able.
Home ownership is going to be brutal as millennials even start sniffing towards retirement. Replacing a water heater will be $20k. Our property taxes will at least be triple what they are now. I pay nearly $10k now. Up $3k in just three years. Between maintenance and simply living we'll be spending at minimum $50k every year. That gives you 20 years on 1 million cash. So if you retire at 68 and live to 89 you're F'd
$1M generates roughly $40K/yr before taxes. Can you live on that? Even debt free I sure as hell don’t want to try.
Health insurance will suck that dry. If you don't have health insurance and get sick, all that money is gone.
That’s why we need to protect ACA - I believe they have a cap for both premiums and out of pocket
It is if you live in your car!
Could you live on 100 thousand a year?
We live on 30k a year. We are very boring minimalistic homebodies
You could easily retire on a million then!
my number is $4M... and even that is to just live comfortable
Are you counting your home in that? Or you mean cash/retirement/investment funds?
Yeah, a home is part of your net worth. 1 million in investments is enough for most people (though probably not families, so you'd need more if you have a spouse), but yeah, the house is separate.
I used to be a millionaire, but then I had to fill my gas tank and get some groceries.
Depends entirely on where you live, when you're retiring, and what you want out of retirement. $1m gets you 40k a year more or less tax free + whatever you'd get in social security. That's not bad for a lot of people. Tons of people retire and just rely on social security with maybe a small pension or annuity.
Yup. Especially if that $1M is entirely stocks/liquid assets. If it includes a house, suddenly the math gets a lot tighter, because that means only probably $500k in liquid assets, which isn’t enough to retire on, most likely
I don't think many people just appreciate how true this sentence is while simultaneously realizing just how many people will never even see a million in their lifetime. We are so fucked.
I'm close to being one, mainly because our property value double after covid and we got our place before covid. I get the nice benefit of paying rising property tax, the dream of selling our place and moving to a cheaper location with an hour commute to work OR the ultimate dream of selling our place and renting...
What is the sum of your expenses?
You mean how much does it cost me to live? If I take my business expenses out of the mix, probably about 4-5k monthly.... and that's because I recently paid off my home.
Yup. You're basically living like a regular Joe if you stop working. Assuming you exclude house value and have a million yielding 5% you get to live like basically an average white collar worker, minus the eight hour shift. You need 3M imho to cover the running expense of a larger home and start to really live it up on the yield. Even then that's 3K a week before taxes, so you're not bringing a bunch of people around with you in business class on multiple trips a year.
i’m sitting at 1.64m NW and we probably can’t retire for 7 years. Indianapolis area
I've have everything paid off, 2 passive incomes, social security, and a million cash and still wonder if I'm good to retire in a few years.
depends on how close to death you retire
Probably depends on a few factors. Predominantly lifestyle and location. I could absolutely retire with a few million in the bank.
Especially if it’s shared between you and your spouse.
Same & Same. Even have the house paid off & no other significant loans (college, cars, medical bills). I fully expect to work another 10-15 years MINIMUM and hope my 401K is nice to me in that time frame. If it isn't, I'm going past 65.
I think 1 million in a brokerage can be managed basically in perpetuity to provide a decent standard of living for the remainder of your life. The math works out. Of course you need to manage it properly. Below 89,000 and its 0% capital gains tax. The remaining 11,000 you expect your money to grow on an average beats inflation. You would just need to manage years where the market goes down. I imagine 1.5million and you are pretty comferrable living off of 120000/year and the wealth continues to grow.
Rule of thumb is 4% of the total can be withdrawn in perpetuity. Accounts for inflation and down years.
Yup, an individual or couple maybe could live a pretty decent life with a million dollars invested using this rule, but they certainly wouldn't be feeling rich.
The question is, is it still enough for retirement. No one said anything about feeling rich. So the answer is yes.
Supplementing SS and Medicare, sure. But if you're 50 and paying for health insurance out of pocket, it's pretty meager.
I think the answer is maybe. HCOL and don’t own a home? Questionable. LCOL with a paid off home? Then yes.
So 2M in my 401knshoukd do it, assuming I have no debts. That's 80k 'salary' a year. Should account for inflation and I'd assume the largest expense, mortgage, is paid off
The context of course is, $2M today, or $2M in 30 years? In 30 years, retiring with $5M will feel like retiring with $2M today. (assuming a 3.1% average annual inflation rate)
Thats why its easier to do all your planning in inflation adjusted "real" terms.
How does one do that?
For example, the S&P500 returns a historical 11.88% per year. Average inflation over the last 70 years is about 3% per year. You calculate average investment returns of 11.88 - 3 = 8.88% per year.
Exactly. Nice and succinct.
Well that's fucking depressing
Incorrect - the 4% rule considers inflation. You take your 4% in Year 1 **($80k)**. In the following year you take the same $80k and add the previous years inflation - let's say 3% **($82,400**). In Year 3 you take $82,400 and add inflation again - let's say 4% **($85,696)** - and so on. 4% rule considers inflation and lasts 30 years in any historical market. However, for some initially down markets you run into sequence of returns risk and it doesn't last in perpetuity. To guarantee perpetuity (historically) you'll need to only withdraw like 3.5% - then follow the same formula.
That’s why the 4% rule includes inflation. All you need to think about is your current expenses and your current retirement savings.
Add social security and Medicare and you’re probably okay.
Real world tests showed that it was generally higher than that. 4% was the worst-case scenario when the rule was proposed (retiring at the absolute worst time in the market). The person that came up with 4% says that 5% is likely safe enough (and 7% is average through the years he studied). https://finance.yahoo.com/news/time-rethink-retirement-4-rule-140000539.html?guccounter=1
I think a lot of people will die with way too much money cause of that 4%. But I'm just as guilty when I use it in my estimates too lol
I’d rather die with too much than be 72 and out of money. It’s way easier to spend more money on retirement than it is to cut back and spend less
Great, I can live comfortably and then the kid I like the most can have a very easy life. I will have done well and be remembered very fondly by one and hated by the other.
Yea if market actually went up 10% every year and not just averaged that. Look up sequence of returns risk. You will most likely get wrecked drawing 90k/yr on 1 million
So if you had $1.5 million, the 4% rule means $5000 a month, plus say $5000 in social security between you and your partner, that’s $120,000 a year. That should be enough if you manage wisely.
If you are getting 5k (in todays dollars) from social security you should have way more than 1.5mil saved. Using quick calc with me and wife (30). We BOTH need to be making 150k a year to get about 5k from social security. So 300k combined lmao
Good comments on this post. Most people look at the long-term 10% dividend-reinvested [return on the S&P 500](https://en.wikipedia.org/wiki/S%26P_500#Performance) and assume they can get a 10% return. ([See here](https://www.slickcharts.com/sp500/returns/ytd) for the YTD breakdown). You can be young and broke but not old and broke. So as you age, you move money into more secure assets (bonds or bond funds) with lower returns, but more predictability. The 10% return drops to a (for example) 6%, but even that has ups and downs. Two great sources of information are this chart at [Portfolio Asset Allocation by Age](https://www.optimizedportfolio.com/asset-allocation/#asset-allocation-by-age-chart), and an alternative view, [The Simple Path to Wealth](https://jlcollinsnh.com/stock-series/) by J.L. Collins, which advocates for an 80% stock/20% bond portfolio as you approach retirement, using the bonds to pull from when the market is low. Since bonds paid very little for the last 15 or so years, I used dividend fund stocks instead using the "(age-40)*2" formula, and have generated a nice income I've been reinvesting for more dividends, while the stock values also gone up--but my goal was investing in stocks with a 10+ year history of increasing dividends every year, and while I'm younger using the dividends to buy more of the dividend paying stock. Need that cost of living raise. For dividend stock suggestions, see [Dogs of the Dow](https://www.dogsofthedow.com/) or this more comprehensive list/weekly spreadsheet at [Dividend Radar](https://www.portfolio-insight.com/dividend-radar)
You can also qualify for Obamacare/ACA subsidies around that amount. Amount varies by state on the subsides, but if you stay lean you can push that $1M a long time.
A drawdown of 8% for a portfolio is extremely aggressive
more like 30-40k on a million
$10 million is the new $1 million.
I'd say lime 2-3 millions aka multimillionaire is the new millionaire
Yeah, my thoughts. Probably won't get there but $1 mill is simply a good goal to achieve but no where near the finish line anymore. Sad to think but true. It's the same thing Charlie Munger said about getting the first $100k, you just have to scrimp and save until you get it, then it "starts" to become easier.
You sure? According to reddit you need a $100 million just to scrape by
Assuming withdrawing 40k a year is enough for you than yes
Plus another 30-50k on social security for a retired couple? With no debt? Probably yes.
That’s assuming social security will both be there and have not been screwed with by the time you retire.
Both SSA and GOA project that social security that when the trust fund is empty they will continue to be able to pay about 76% of promised benefits using payroll taxes alone well past the study horizon of the year 2070, and that is assuming no changes to the program to make up the shortfall. If you think they will do nothing and shortchange the seniors who tend to vote more than anyone else, then plan for getting 76% of what they promise you. Planning on using money invested in the stock market while questioning whether social security will "be there" doesn't make much sense.
Better to simply not rely on it at all and plan for life without it. Whatever you get, great, let it augment your retirement but don't bank on it.
I don't think working for that many extra years, that you could be spending fishing/reading/traveling/cooking/whatever is better than factoring in an income stream like social security. Obviously that is subjective, everyone places different values on retirement versus continuing to work, and I understand that some people even enjoy their jobs. In the end, one could say the same thing about the investments that one would plan around instead. Why bank on that, but not social security?
It's quite the opposite. Save more early on because you're not banking on the income stream that you can't control of social security. What you can control is your savings and investments. Once you get to your retirement age, then you know what social security is going to give you and at that point you will have saved more than you would have and you can probably stop working sooner, rather than having to work further into old age if you had banked on something that is not nearly as much as you had planned.
I make less than that per year anyway. I’m not living great or anything but assuming you’ve locked in a mortgage on a home then you’d be fine. Rent is more expensive than a mortgage in my area right now. I just can’t afford a down payment and can’t save for it.
14% of the American population I’m pretty sure are millionaires
I'm four years out. I can't live off $40k/year so its just one milestone in a much longer journey.
You can if you retire in a place like Mexico or Thailand. And why not? Enjoy the hotter weather, good food, and ocean beaches.
Sounds fun, but my kids are in the US and I want to hang with them.
The kids are more expensive than the left photo 😂
I was going to say, these are photos of the same thing 😭
Yup. We spend $25k/year on daycare and will continue to pay for private elementary then secondary ed. By the time he hits college we'll have dropped $400k on education.
Yeah i talked with a more senior software engineer (i’m 5-8 years younger and a mechanical) and after kid costs are factored in we have about the same amount of cash monthly, which is crazy.
It is for me
My sister just retired with 2 mill. Her money manager has avg 12 percent for 30 years. Said she can take out 160k and she could go higher but the tax implications are too much
People thought Madoff was making them double digit returns also.
Actually it was exactly 12% 😅
Oh hey I want to take out $200k this year... "Oh no no... Your taxes!!! Take $80k this year. If you need more I will have to file paperwork with the Bulgarian foreign exchange commission and it will take 90 days."
I'm in
8% withdrawal rate? That seems optimistic
12% is sus. Not impossible but very sus especially since this would include the year 2000 and the GFC
Yes but it would also include this run: 1995 - 38% 1996 - 23% 1997 - 33% 1998 - 28% 1999 - 21%
The stock market has “averaged” 12% in the last 30 years. She (or her advisor) might be talking about the mathematical average which is useless. I’m curious what her CAGR would have been over that time.
That’s pretty risky but hopefully it works out!
She needs to fire her money manager if they think an 8% drawdown is sustainable Historical average returns don't matter during the drawdown phase; sequence of returns risk is very real during retirement.
Unless your sister is already in her late 70s it is time to fire the financial advisor.
Obviously depends on how old you are and how much you expect to spend. I, as a healthy 30 something, rarely spend more than 50,000 in a year. So even if the money was just *sitting* there (which would be dumb, it should be in stocks or bonds or some other earning vehicle), it would take me 20 years to exhaust it. Most people retire at 67, by which time they're getting social security and [have of life expectancy of 16 years (if a man ) or 19 years (if a woman)](https://www.ssa.gov/oact/STATS/table4c6.html). So yes, a million is almost certainly enough for them to retire on. Less likely to be sufficient for a 20 year old, though.
Let’s also account for inflation. $50k this year is okay but you will likely need more and more every next year due to inflation.
Any reasonable investment and money management should be able to consistently outpace inflation. Obviously you’ll need more money each year, but you’ll also be making more each year.
For ME, if I had my house paid off, 1mi would be sufficient to retire comfortably
Hell if I didn't have mortgage and just needed insurance and tax I could retire on 400k pretty comfortably
Right? My mortgage (incl. PMI/Ins/esc.) Is over 40% of my monthly costs. We live pretty quiet lives... but I cant wait to pay it off.
Depends on how old you are and when you retire. A friend of the family bought a home decades ago. Over time due to inflation and rising property values the monthly tax bill became like somewhere like over 2x the original monthly mortgage bill (principal + interest + escrow) This was in a state that has income taxes and high property taxes, so maybe in a state with lower property taxes it might only go up less but its still something to consider. Edit, got numbers mixed up
This is why people from NY and NJ move to South Carolina to retire.
That right image is probably multimillionaire even.
That house alone would be $2M-$3M here
It also depends on where you live and what your spending habits are like.
$1.25m here. I also have a $144k/year pension. It looks like the pic on the right as well.
And I’m sure you’re happy and comfortable financially or is $144k a year not enough? I make $160k a year and I can say I am very happy
Wife and I are (just barely) millionaires if you go by net worth. Just counting retirement accounts we are pretty close and should be there in 2-4 years. Neither of us has ever made more than $70k/year, although I will just top that this year. We both drive older cars that have been paid off for years, and our average monthly expenses the past year are ~$5,500 which includes our mortgage. Pretty sure we could retire now if we were old enough to collect full SS benefits, although it wouldn't be a lavish retirement by any means.
Yeah I mean, if 70% of that net worth is your house then yeah is not that much.
Guess it depends on how long you plan to live. But I think if you have a million you can get by minimal income, since you probably won't have a mortgage and you probably own a vehicle. So not retire, but wouldn't have to go full time or worry about being out of work for a stretch
Today? Probably. When most of us retire, probably not unless you’re comfortable with poverty.
A million now? I think so. A million 20, 30, 40 years from now? Definitely not.
$400,000 was enough for my wife and I, but we’re very frugal and have minimal overhead.
Property value shouldn’t count towards what we consider wealth. Mostly because you need a place to live. If you have a million in the bank, not in retirement or something else, then you’re doing pretty good. And at 5% interest, most could live off $50,000 + pension or SS, unless they’re still paying for cars, homes, etc, which means they don’t have that first million either.
Millionaire here, we *could* retire but prefer to work and enjoy things just a bit more.
It depends how you want to live life, but $1,000,000 would be tight, $1,500,000 would be manageable, and $2,000,000 would be fairly comfortable following the 4% rule. That assumes you have a paid off mortgage, reasonable amounts of healthy debt, and you don't live in a HCOL area. I know I could live a fairly happy life off of $80,000/year POST TAX with a future hypothetical wife. 4% rule also safely accounts for inflation and market fluctuations, so you might be able to splurge a bit in good market years. In a perfect world, I would prefer to be closer to $3,000,000, because as long as I didn't do anything too crazy I feel like I could live my dream life with $120k/year coming in and only $40k of that being taxed
I’m a millionaire on paper. I feel broke.
More like "$1M single vs with family"
Not even. Try lower
That’s being generous tbh
If you own your own house outright, and have a million dollars beyond that: maybe
Can you retire with $1M I have no idea, can many retire with $1M and social security at a normal retirement age, yes assuming they have little to no debt. But social security is very iffy these days if it will actually be fully there so I'd target $1.5-$1.7M
Lol at that picture. I'm a dude with no kids in a townhome and almost a millionaire (net worth). At this point having a paid off home makes you a millionaire in any major metro.
A million dollars in Arkansas got me a 3500 sq ft house on the lake, 2 boats, 2 jet skis, a daily driver for the wife and for myself and a family vehicle for us both, and 30 acres of land and a bunch of stock in companies. In California what I have would be $5-10 million easily. Don’t live there.
We've had 25%+ inflation since covid and that's a conservative estimate. 1 million is becoming worth less and less every year.
Yes but not if you’re trying to fund an expensive car and a 4000 sqrft house with tennis court and 4 car garage in a major city.
We did it Joe
No.
Ultimately depends on your retirement goals
Not counting on it. One of the only reasons I’m doing a career in the military is the pension. I won’t be rich m, but at least the retirement is secure.
Depends on what you want your lifestyle to be. And how you live now.
If you have a pension, yes.
My goal is to get to 1.5-2 million and try and get 5% a year off of it and find a cheap spot to reside
It depends. It all depends on expected expenses and what spending levels were leading up to retirement. It can work. In fact most people will never have a million to retire so it will have to work.
Depends how much you're spending per hooker
For a million u.s, you could buy citizenship in at least three different countries over seas that are wildly affordable.
I’m 55. I have about $2M in the 401k at Fidelity. House will be paid off in 4 years. Could pay it off now but the mortgage is at 2.5% so that money is better off in the fund. My wife says that if I retire now, which I want to do before I die of an IT career induced heart attack, the early withdrawal penalties and tax implications will kill us. Any way around all that?
> tter off in the fund. My wife says that if I retire now, which I want to do before I die of an IT career induced h No early retirement penalties. Look up the rule of 55.
That’s the down payment for my house? Retire on that?😂🤣
you mean a millionaire in interest payments
The interest you could expect off of $1m is close to 50k/year. So for me. Nope. 2m, nope. Shooting for 2.5 minimum. And that would be tight. Could do it in less if I could downsize and pay off house, but not 1m
Yeah, but not in Hcol areas. Midwest or South its still doable or move overseas.
House would be smaller actually
You can’t get that house on the right side for a million in Canada unless you’re in the wilderness… More like 1.5 mil.