$7M vs $10M

[Anonymous]

How do you make 7M? My HHI is not much so I have invested and saved but still only at 2M

Should I invest that more aggressively for the next 15 years of working

[Anonymous]

Anonymous wrote:It really depends on your level of spending and comfort with uncertainty. For me, the difference between those numbers is the security of being able to cover my mother’s elder care and potentially my own if I live as long as she has. I’m 58 and could easily live another 40 years. The $250,000 the $7M generates is before taxes and inflation. Yes, I will certainly tap principal at some point, but still, $250,000 30-some years from now will not be a fortune. It’s crazy and cruel what decent elder care costs.

I understand. The $7M is not static, its invested in a diversified portfolio, probably yield about 3.3% plus capital appreciation in the market near S&P 500 returns. Back to my point $7M or $10M today is really immaterial. If you don't have the skill set or a financial manager to tend to this sum it is pointless. As far as elder care, my plan is to stay at home and bring in hourly workers. Much cheaper than going into a specialized care facility. You can make it complicated if you wish.

[Anonymous]

Anonymous wrote:How do you make 7M? My HHI is not much so I have invested and saved but still only at 2M

Should I invest that more aggressively for the next 15 years of working

If you make an average of 7% over the next 15 years and don’t save another dime you’re at almost 6,000,000. Relax.

[Anonymous]

$7M is basically hand to mouth, and $10M is a scintilla of breathing room.

(Kidding ... I'm with the SWR crowd ... Projected expenses for most will be less than $280K/yr (our annual expenses are about $60K, so we'd scrape by somehow ...)

[Anonymous]

Anonymous wrote:10M at age 45-55, I’m comfortable retiring or scaling back work life to focus on things I enjoy.
7M at 40-45, I’m still grinding for the next 5 years before I feel comfortable.

This is where DH and I are. We plan to grind it out for another 5-10 years. It is ok if we don’t hit 10M by the end of that timeframe, we will be happy to hang it all up.

[Anonymous]

Anonymous wrote:

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Anonymous wrote:There is no difference between a net worth of $7M vs, a $10M net worth. Unless you are looking to buy some big expenditure like a $1.7M Beach house. Better off to do the beach rental for 2 weeks and let someone else deal with maintenance and upkeep. A diversified portfolio would easily generate about $250k off the $7M. For most people that would be enough. You need more cash flow............you are a spender. Maybe that should be the focus and not the nest egg. Curb your spending. This is coming from a 63 yo man with a net worth of $4M. No worries at all.

The 2 week beach rental is so true. We have researched and concluded that a "vacation home" is not worth the purchase unless you plan to actually be there for 4-5 months of the year. If you plan to rent it out, that means you have to plan your scheduled times a year in advance and if you can do that, you can plan and find a rental just as easily. When you add maintenance and all costs you likely come out ahead just renting when needed

Except that if you keep the second home long enough, there’s a good chance the asset appreciation will cover the carrying costs or even net you a profit. We’ve had our vacation home 12 years and in that time it has tripled in value. I would have been happy breaking even, but if we sold it right now we’d come out have doubled our investment after expenses.

That's recency bias. I don't think RE has returned more than the stock market over the long-term.

And I'm the PP. We already have two homes within a 90 min drive from each other. So I have plenty in real estate to get any appreciation. We've looked at purchasing a condo in Hawaii. But we have even had a RE agent tell us it is not worth it unless you plan to use it 4-5 months of the year. Look at what happened to all the condo owners in Hawaii for almost 2 years with covid---they had to sell because they couldn't afford it without renters. And condos in Hawaii appreciate, but not that rapidly. Then you have the risk of hurricane hitting it, you have to pay someone to manage the renters, the cleaners, the repairs, boarding it up if a storm is going to hit, etc. If you need the rental income to afford it, then count out going over thanksgiving or xmas because that is when you get extra high rental rates and pay for much of your costs. But if you want to go then, you loose that chance. Also, to rent it out successfully, you have to plan when you go a full year in advance. If I'm going to do that I will just pay for the 2-3 weeks I want to go and not worry about the costs and hassle. Also, In Jan I want to go to Maui, in July I want to go to Kauai next year I want to visit the Big Island and Europe. So I'm not really using it as a vacation home for more than 2-3 weeks per year at most. If it sits vacant for more than X days per month, then I'm not breaking even. And I've tracked condos on all 4 major islands in Hawaii for over a decade----most of them have not appreciated as much as DCUM/SF/LA/Seattle/Boston area. I've had two real estate agents in Hawaii tell me not to buy unless we plan to actually live in it or it will cost us

Hawaii hurricane risk is much lower than many assume. To be sure, a tropical storm or low end category 1 may occasionally make landfall on one of the islands, but the ones that cause real serious wind/water damage (category 2+) are extremely rare in Hawaii. The last major one was hurricane Iniki in 1992, which made landfall in Kuai. Compared with the Caribbean, Gulf and East coasts of the U.S., Hawaii has pretty low risk. The ocean surface temperatures, while seemingly warm for swimming, are not adequate to support high end hurricanes, nor is the background hostile atmospheric environment on account of strong vertical wind shear over this part of the Pacific.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It really depends on your level of spending and comfort with uncertainty. For me, the difference between those numbers is the security of being able to cover my mother’s elder care and potentially my own if I live as long as she has. I’m 58 and could easily live another 40 years. The $250,000 the $7M generates is before taxes and inflation. Yes, I will certainly tap principal at some point, but still, $250,000 30-some years from now will not be a fortune. It’s crazy and cruel what decent elder care costs.

I understand. The $7M is not static, its invested in a diversified portfolio, probably yield about 3.3% plus capital appreciation in the market near S&P 500 returns. Back to my point $7M or $10M today is really immaterial. If you don't have the skill set or a financial manager to tend to this sum it is pointless. As far as elder care, my plan is to stay at home and bring in hourly workers. Much cheaper than going into a specialized care facility. You can make it complicated if you wish.

bringing in hourly workers for elder care is not cheaper than a facility. Get yourself into a CCRC by early to mid 70s, then you are covered for much less

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It really depends on your level of spending and comfort with uncertainty. For me, the difference between those numbers is the security of being able to cover my mother’s elder care and potentially my own if I live as long as she has. I’m 58 and could easily live another 40 years. The $250,000 the $7M generates is before taxes and inflation. Yes, I will certainly tap principal at some point, but still, $250,000 30-some years from now will not be a fortune. It’s crazy and cruel what decent elder care costs.

I understand. The $7M is not static, its invested in a diversified portfolio, probably yield about 3.3% plus capital appreciation in the market near S&P 500 returns. Back to my point $7M or $10M today is really immaterial. If you don't have the skill set or a financial manager to tend to this sum it is pointless. As far as elder care, my plan is to stay at home and bring in hourly workers. Much cheaper than going into a specialized care facility. You can make it complicated if you wish.

bringing in hourly workers for elder care is not cheaper than a facility. Get yourself into a CCRC by early to mid 70s, then you are covered for much less

I would rather blow my head off than go into a CCRC in my mid 70s - particularly if i have $10M liquid. I'll pay for in-home care, if/when I need it.

If your 58 today and have $10M and don't touch it, that 10M will be easily 25M + by the time you're in your late 70s. That would throw off safely $1M of cash flow, and you could spend more if needed considering at that point in time (if you need care) your life expectancy won't be too long.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It really depends on your level of spending and comfort with uncertainty. For me, the difference between those numbers is the security of being able to cover my mother’s elder care and potentially my own if I live as long as she has. I’m 58 and could easily live another 40 years. The $250,000 the $7M generates is before taxes and inflation. Yes, I will certainly tap principal at some point, but still, $250,000 30-some years from now will not be a fortune. It’s crazy and cruel what decent elder care costs.

I understand. The $7M is not static, its invested in a diversified portfolio, probably yield about 3.3% plus capital appreciation in the market near S&P 500 returns. Back to my point $7M or $10M today is really immaterial. If you don't have the skill set or a financial manager to tend to this sum it is pointless. As far as elder care, my plan is to stay at home and bring in hourly workers. Much cheaper than going into a specialized care facility. You can make it complicated if you wish.

bringing in hourly workers for elder care is not cheaper than a facility. Get yourself into a CCRC by early to mid 70s, then you are covered for much less

I would rather blow my head off than go into a CCRC in my mid 70s - particularly if i have $10M liquid. I'll pay for in-home care, if/when I need it.

If your 58 today and have $10M and don't touch it, that 10M will be easily 25M + by the time you're in your late 70s. That would throw off safely $1M of cash flow, and you could spend more if needed considering at that point in time (if you need care) your life expectancy won't be too long.

+1. One of my aha moments was when I went to visit my colleague's grandfather who was at an elder care facility back in the mid '90s. We were traveling on work and the grandpa happened to be in the city we were traveling to. My colleague praised his grandpa and how he sponsors an annual cruise vacation for the extended family (20+ people), etc. When I asked why one of the kids or grandkids were not taking care or grandpa, he just laughed and said 'no f'ing way!'. The facility itself was nice, high-end but depressing. Where I come from, there are no eldercare facilities. Your family is it. Yep.. No way, I want my end of days to be in one of those places.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It really depends on your level of spending and comfort with uncertainty. For me, the difference between those numbers is the security of being able to cover my mother’s elder care and potentially my own if I live as long as she has. I’m 58 and could easily live another 40 years. The $250,000 the $7M generates is before taxes and inflation. Yes, I will certainly tap principal at some point, but still, $250,000 30-some years from now will not be a fortune. It’s crazy and cruel what decent elder care costs.

I understand. The $7M is not static, its invested in a diversified portfolio, probably yield about 3.3% plus capital appreciation in the market near S&P 500 returns. Back to my point $7M or $10M today is really immaterial. If you don't have the skill set or a financial manager to tend to this sum it is pointless. As far as elder care, my plan is to stay at home and bring in hourly workers. Much cheaper than going into a specialized care facility. You can make it complicated if you wish.

bringing in hourly workers for elder care is not cheaper than a facility. Get yourself into a CCRC by early to mid 70s, then you are covered for much less

I would rather blow my head off than go into a CCRC in my mid 70s - particularly if i have $10M liquid. I'll pay for in-home care, if/when I need it.

If your 58 today and have $10M and don't touch it, that 10M will be easily 25M + by the time you're in your late 70s. That would throw off safely $1M of cash flow, and you could spend more if needed considering at that point in time (if you need care) your life expectancy won't be too long.

+1. One of my aha moments was when I went to visit my colleague's grandfather who was at an elder care facility back in the mid '90s. We were traveling on work and the grandpa happened to be in the city we were traveling to. My colleague praised his grandpa and how he sponsors an annual cruise vacation for the extended family (20+ people), etc. When I asked why one of the kids or grandkids were not taking care or grandpa, he just laughed and said 'no f'ing way!'. The facility itself was nice, high-end but depressing. Where I come from, there are no eldercare facilities. Your family is it. Yep.. No way, I want my end of days to be in one of those places.

CcRC are not your typical elder care facility. These are ones you pay 400k+ to even enter into a regular condo/house. The memory care, assisted living and healthcare facilities an are typically 1000x better than what you are imagining. Hence why some pay close to a million entry fee.
But for that you are never charged more for the higher levels of care

[Anonymous]

Anonymous wrote:

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Anonymous wrote:I don't think I'd have any lifestyle change between those two numbers. At $25M I think I'd start incorporating a few stupid-rich things, like chartering planes for travel. But at those numbers I'd be retired, relaxed, and still focusing on preservation.

Really? I'm going to reach that net worth in a few years, the way my portfolio is going, and there's no way I'd charter a plane, unless to get somewhere a commercial route can't go. I just want a normal middle class life, and preserve wealth for my descendants.

If you are close to $25 million, the words normal middle class do not describe you

They do, and this what a lot of people don't understand. I have a middle class income. Income and assets can be VERY different things. I happen to have lucked out in my stock portfolio, but that doesn't make my job high-earning. And since I'm still quite young, there is no way I'm quitting my life to gobble up my capital. I have kids to put through college, parents to look out for and spending on luxury just isn't my thing. Maybe I will re-evaluate when my kids are finished with college. But certainly not now.

I think you some of you, who probably all out-earn me, just don't quite understand what it's like to actually have 10M+ in a stock portfolio in your early 40s. It's not "Woohoo! Free money! Let's spend it". It's "Hmm, OK. My oldest's college is 85K a year. My father has dementia. Let's wait and see."

STHU you have wealth, money already accumulated, and from what I gather, you know how to invest and grow it. That trumps any high paying job, it's money you already have. And do you think poor people don't have the same problems like college and elder care? Your think your struggles (that don't allow you to enjoy your money and make you live miserly) are unique? These aren't struggles. If you have this much and invest, you easily pay for your kids college and then some without noticing. Same with parents, they will get SS and Medicare, everyone does. And kids even if rich are not obligated to pay for extra care for the parents to collect government benefits. If your parents qualify for benefits they get it, government isn't coming after your millions forcing you to pay for them. Whatever you do, it's your preference and anxieties, doesn't reflect reality.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't think I'd have any lifestyle change between those two numbers. At $25M I think I'd start incorporating a few stupid-rich things, like chartering planes for travel. But at those numbers I'd be retired, relaxed, and still focusing on preservation.

Really? I'm going to reach that net worth in a few years, the way my portfolio is going, and there's no way I'd charter a plane, unless to get somewhere a commercial route can't go. I just want a normal middle class life, and preserve wealth for my descendants.

If you are close to $25 million, the words normal middle class do not describe you

They do, and this what a lot of people don't understand. I have a middle class income. Income and assets can be VERY different things. I happen to have lucked out in my stock portfolio, but that doesn't make my job high-earning. And since I'm still quite young, there is no way I'm quitting my life to gobble up my capital. I have kids to put through college, parents to look out for and spending on luxury just isn't my thing. Maybe I will re-evaluate when my kids are finished with college. But certainly not now.

I think you some of you, who probably all out-earn me, just don't quite understand what it's like to actually have 10M+ in a stock portfolio in your early 40s. It's not "Woohoo! Free money! Let's spend it". It's "Hmm, OK. My oldest's college is 85K a year. My father has dementia. Let's wait and see."

I get what you are saying, but normal middle class can’t fund $85000 a year for their child’s college.

$1Mx2 for super premium college and grad school for 2 kids, $2M for a decade of premium memory care, for dad, another $2 for self and spouse, $2M x2 for a modest house for each kids to inherit, and boom, $10M gone. Middle class can't make it in this country. The pandemic* hit us hard.


*affluenza pandemic

Haha, you nailed it! This is just all plain greed. Ya all greedy and/or anxious and don't know what you have. Also hogging all these well paying jobs making it difficult for younger generation to get paid too. Just quit already, live your lives and enjoy and let those behind you advance and make their nut too. What are you doing exactly with your loads of cash? Playing markets to make sure you got these millions to afford a "better" nurse to wipe your a$$? Waiting to travel? Hey, travel overseas isn't super fun with a cane or a wheelchair and a bag of pills you have to take around the clock. Looking at the world through the window of a boat or an SUV because you cannot walk much or climb or swim isn't experiencing it. Broke young people enjoy travel more.

[Anonymous]

Anonymous wrote:I have NW of $10+m although $3.5m is tied up in 2 houses which have increased substantially in value in recent years. And no plans to sell either of them, so our non house NW is closer to $7m. I expect to get about $1.5m in inheritance at some point, but not relying on that. And we are still saving a lot. The only thing that really changes is that I am more willing to spend current income since I am pretty comfortable with our financial position from a future retirement perspective. So I don't sweat travel expenses or home improvement investments the way I once did.

You are funny. People with way less than your NW also don't sweat travel expenses and home repairs/improvement. All depends on the scale of luxury for travel and scale of improvements. If you think you need over 10+m to "not sweat it", then it means that you DO live in luxury and definitely not MC life like someone here said.

[Anonymous]

Anonymous wrote:

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Anonymous wrote:I don't think I'd have any lifestyle change between those two numbers. At $25M I think I'd start incorporating a few stupid-rich things, like chartering planes for travel. But at those numbers I'd be retired, relaxed, and still focusing on preservation.

Really? I'm going to reach that net worth in a few years, the way my portfolio is going, and there's no way I'd charter a plane, unless to get somewhere a commercial route can't go. I just want a normal middle class life, and preserve wealth for my descendants.

If you are close to $25 million, the words normal middle class do not describe you

They do, and this what a lot of people don't understand. I have a middle class income. Income and assets can be VERY different things. I happen to have lucked out in my stock portfolio, but that doesn't make my job high-earning. And since I'm still quite young, there is no way I'm quitting my life to gobble up my capital. I have kids to put through college, parents to look out for and spending on luxury just isn't my thing. Maybe I will re-evaluate when my kids are finished with college. But certainly not now.

I think you some of you, who probably all out-earn me, just don't quite understand what it's like to actually have 10M+ in a stock portfolio in your early 40s. It's not "Woohoo! Free money! Let's spend it". It's "Hmm, OK. My oldest's college is 85K a year. My father has dementia. Let's wait and see."

This, exactly.

+1

$10M in the bank when you are 60 is very different than when you are 40, still have kids at home and college to consider, aging parents who might need assistance, etc. $500K of that could easily go to the kid's college.

MOST people with 10m in their 40s won't have to support their parents and no one is telling you to send you kid to Georgetown. Send them to Maryland if you're worried about college costs.

If you need to drop 500k as a one-off, who cares, that is 5% of your liquid portfolio, which will be a drop in the bucket long term assuming you invest the money.

How the hell do you know that "MOST people with 10m in their 40s wont have to support their parents"? Are you implying that most people only have the $10M from family wealth? If so, you are sorely mistaken. Everyone I know with that much in their 40s is self made, and I know over 10 people like that.

Sure you can send them to state school for $40K per year, but this person would prefer to use their money to send them to whatever school the kids wants to attend and that includes those costing $85K+/year. Obviously he is an excellent money manager, and has managed to save and amass $10M in early 40s, so he knows what he is doing.

Your attitude that dropping 5% of your portfolio (he never said it is liquid---most likely it's not, it's in the market or he wouldn't have it at $10M if it was sitting in a bank earning 1-2% the past decade until interest rates just soared) is exactly why so many don't have money---you would blow thru it without a care.

This family is set for life, but will be even better off if they manage it well and continue working for another decade/until kids are out of college.

Your attitude does explain why so many have so little, the second you would get any money you'd blow thru it, thinking it's just 10% I can spend it.

stocks are liquid... i can have any amount of money in my checking account in 2 business days.

who ever said it was in cash?

I am a professional money manager with a similar net worth in my 40s. and YES, MOST people in their 40s with a 10M net worth had a leg up from mom and dad -- usually through college and grad school paid for. If your parents could afford to pay your way through college, odds are they will be just fine in retirement. Again...most. I see this in practice, you read about this on DCUM.

Taking a measly 5% withdrawal to fund college is not a huge deal with proper planning. Additionally, MOST (if you can grasp that word) with $10M have college costs covered and do NOT include those funds in their net worth or retirement planning.

Some people need Xanax when it comes to money management.

+1. And for the record, the poster that started this chain of discussion claimed to have $25M and one of the responded said that if you have $10M+, it's time to step back and the argument began.

Regardless of the parental situation, $25M is plenty of money to call it quits, especially if one leads a middle class life and has associated expectations, regardless of age.

I have to keep highlighting all these triggering posts. "especially if one leads MC lifestyle"

Hon, people afford basic MC lifestyle on 1/10th of this at retirement. She can afford *nice* UMC lifestyle without working or even doing any chores, with luxury travel, with paying her kids college and leaving them some, with getting nicer nursing home care or whatever she is paranoid about, with having a nice house and a vacation home (or even 2 if not expensive) or some toys like a boat, race car, etc, and donating to charity. At some point money makes money and you rely on a job a lot less. You are all here at this point

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:There is no difference between a net worth of $7M vs, a $10M net worth. Unless you are looking to buy some big expenditure like a $1.7M Beach house. Better off to do the beach rental for 2 weeks and let someone else deal with maintenance and upkeep. A diversified portfolio would easily generate about $250k off the $7M. For most people that would be enough. You need more cash flow............you are a spender. Maybe that should be the focus and not the nest egg. Curb your spending. This is coming from a 63 yo man with a net worth of $4M. No worries at all.

The 2 week beach rental is so true. We have researched and concluded that a "vacation home" is not worth the purchase unless you plan to actually be there for 4-5 months of the year. If you plan to rent it out, that means you have to plan your scheduled times a year in advance and if you can do that, you can plan and find a rental just as easily. When you add maintenance and all costs you likely come out ahead just renting when needed

Except that if you keep the second home long enough, there’s a good chance the asset appreciation will cover the carrying costs or even net you a profit. We’ve had our vacation home 12 years and in that time it has tripled in value. I would have been happy breaking even, but if we sold it right now we’d come out have doubled our investment after expenses.

That's recency bias. I don't think RE has returned more than the stock market over the long-term.

And I'm the PP. We already have two homes within a 90 min drive from each other. So I have plenty in real estate to get any appreciation. We've looked at purchasing a condo in Hawaii. But we have even had a RE agent tell us it is not worth it unless you plan to use it 4-5 months of the year. Look at what happened to all the condo owners in Hawaii for almost 2 years with covid---they had to sell because they couldn't afford it without renters. And condos in Hawaii appreciate, but not that rapidly. Then you have the risk of hurricane hitting it, you have to pay someone to manage the renters, the cleaners, the repairs, boarding it up if a storm is going to hit, etc. If you need the rental income to afford it, then count out going over thanksgiving or xmas because that is when you get extra high rental rates and pay for much of your costs. But if you want to go then, you loose that chance. Also, to rent it out successfully, you have to plan when you go a full year in advance. If I'm going to do that I will just pay for the 2-3 weeks I want to go and not worry about the costs and hassle. Also, In Jan I want to go to Maui, in July I want to go to Kauai next year I want to visit the Big Island and Europe. So I'm not really using it as a vacation home for more than 2-3 weeks per year at most. If it sits vacant for more than X days per month, then I'm not breaking even. And I've tracked condos on all 4 major islands in Hawaii for over a decade----most of them have not appreciated as much as DCUM/SF/LA/Seattle/Boston area. I've had two real estate agents in Hawaii tell me not to buy unless we plan to actually live in it or it will cost us

Totally agree, far away and expensive vacation homes may not be worth it, having something driving distance away is more practical and usable. On another note, all this travel you describe staying for 2-3 weeks somewhere expensive and going to Europe isn't out of reach of people with a lot more modest NW, and is something people do while working, don't need to wait to retire.