Can 29yr old live off $1.5 million w/working?

[Anonymous]

Anonymous wrote:Where are people getting 5% municipal bonds? Based on a quick Google search—and admittedly no other research—I just saw a T. Rowe Price Maryland municipal bond fund paying 3.3%.

To start with, a municipal bond FUND is different than buying actual municipal bond coupons. To buy actual municipal bonds you have to go to a broker to buy them, preferably a broker who works for an institution that originates them.

[Anonymous]

His best plan would be to fully invest in domestic and international equities the entire 1.5. Using 3% he could pull 45k a year. Equities over the long haul should produce a return in excess of inflation of 4-6%. Can he live on 45k a year. I can easily see the house being under 1k a month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:This board truly has no clue what the lifestyle of the average American is like.

Of course he can retire with 1.5mil and a paid off house! Of course it’s possible to squander it, but it’s also possible to live a nice, quiet, fulfilling life.

If he lives 60 more years, that's only 25k a year or basically 2k/month, in today's money. With this money he has to pay taxes, insurance, and upkeep on a home, plus maintenance and eventual replacement on a modest car. Plus food, clothing and healthcare. Even for a "nice, quiet, fulfilling life." I think your confidence is unfounded.

Never understand why DCUM people can’t understand buying bonds.

You buy $1.5MM of risk free bonds at 5% and you make $75k per year without touching the principal.

Many people can live on that per year.

This.

Once people understand this, it's like a lightbulb going off.

The average DCUM type doesn’t understand that 75K is the current MEDIAN American *household* income. Bunch of book smart idiots acting like 75K is poverty wages for a single man WITHOUT A MORTGAGE…

You also don't seem to understand that the average person making $75k also has some type of health insurance and will be collecting some social security at some point.

A 75 yr old today can easily live off of $75k because of medicare and they don't do or eat much.

A 29 yr old may say they have a simple lifestyle, but they are going to want things, unlike a 75 yr old. As a PP mentioned, home maintenance, property tax, etc.. will eat up some of that $75K.

29 is very young. Who the heck knows what inflation will be like in 30 years when they are 59, still not able to get medicare and start getting middle aged illnesses. That $75k/yr is fixed and won't go far in 30 years, and especially if they need medical care.

People who earn $75K now may make more later. They have the potential to increase their income and get social security. OP's brother does not.

OP's brother is clearly not thinking about retirement. Most 29 yr olds cannot fathom what a 59, 69, 79 yr old's life is like, and how much it will cost to live in 30+yrs.

First 75 k too high. 45k is safer. But you index that for inflation. It goes up -- when he is 59 it will be the purchasing power of 45k today not 45 k when he is 59.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This board truly has no clue what the lifestyle of the average American is like.

Of course he can retire with 1.5mil and a paid off house! Of course it’s possible to squander it, but it’s also possible to live a nice, quiet, fulfilling life.

If he lives 60 more years, that's only 25k a year or basically 2k/month, in today's money. With this money he has to pay taxes, insurance, and upkeep on a home, plus maintenance and eventual replacement on a modest car. Plus food, clothing and healthcare. Even for a "nice, quiet, fulfilling life." I think your confidence is unfounded.

Never understand why DCUM people can’t understand buying bonds.

You buy $1.5MM of risk free bonds at 5% and you make $75k per year without touching the principal.

Many people can live on that per year.

This.

Once people understand this, it's like a lightbulb going off.

The average DCUM type doesn’t understand that 75K is the current MEDIAN American *household* income. Bunch of book smart idiots acting like 75K is poverty wages for a single man WITHOUT A MORTGAGE…

The plan you think is so tractable erodes away every year with inflation. In 60 years, that $75K will be the equivalent of $13K today. Nowhere near the median HHI. Instead, OP would find their quality of life significantly degraded after just 10 years, thereby increasing withdrawals and cutting into principal. Maintaining a $75K lifestyle in today’s dollars would last until OP reaches 50 years old. Then…all money is gone and no pension or SS to cover expenses.

You DO realize that people manage to save and even invest on a HHI of 75K, don’t you? Think about it.

But their HHI keeps pace with inflation.

So would his draw down.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This board truly has no clue what the lifestyle of the average American is like.

Of course he can retire with 1.5mil and a paid off house! Of course it’s possible to squander it, but it’s also possible to live a nice, quiet, fulfilling life.

If he lives 60 more years, that's only 25k a year or basically 2k/month, in today's money. With this money he has to pay taxes, insurance, and upkeep on a home, plus maintenance and eventual replacement on a modest car. Plus food, clothing and healthcare. Even for a "nice, quiet, fulfilling life." I think your confidence is unfounded.

Never understand why DCUM people can’t understand buying bonds.

You buy $1.5MM of risk free bonds at 5% and you make $75k per year without touching the principal.

Many people can live on that per year.

This.

Once people understand this, it's like a lightbulb going off.

The average DCUM type doesn’t understand that 75K is the current MEDIAN American *household* income. Bunch of book smart idiots acting like 75K is poverty wages for a single man WITHOUT A MORTGAGE…

The plan you think is so tractable erodes away every year with inflation. In 60 years, that $75K will be the equivalent of $13K today. Nowhere near the median HHI. Instead, OP would find their quality of life significantly degraded after just 10 years, thereby increasing withdrawals and cutting into principal. Maintaining a $75K lifestyle in today’s dollars would last until OP reaches 50 years old. Then…all money is gone and no pension or SS to cover expenses.

You DO realize that people manage to save and even invest on a HHI of 75K, don’t you? Think about it.

But their HHI keeps pace with inflation.

Agreed. Plus, 75K on 1.5M is not a realistic number.

Wait, are you trying to tell me that no risk 5% bonds won't be available forever and that it's not a good idea to base your entire financial future on the assumption that they will be?

Again, put all the money into a 30-year treasury that as of today yields 4.74%. That's about as close to 30-years of no-risk as anyone can ever get.

So, you can at least base your next 30 years on that assumption.

[Anonymous]

Anonymous wrote:Reading through the thread, the 75K # came from 5% municipal bonds.

It is doubtful that this 29 year old has the type of account that would allow him to direct buy MB on par value, and even if he did, it would take a good deal of research to understand what and which bonds to buy himself.

More realistically, he is looking at 45K/year (3%), and hope he doesn't hit major, unexpected expenses along the way, and stays healthy until he drops dead before his money runs out.

You can't compare a young person with 1.5M and never working again to a person who is gainfully employed for even a decade or two.

This is the real danger. What happens when the house needs a new roof? What happens when he needs an expensive prescription that is only partially covered by insurance? What happens when he's in a car accident? There are innumerable things that could cause this "plan" to fail.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This board truly has no clue what the lifestyle of the average American is like.

Of course he can retire with 1.5mil and a paid off house! Of course it’s possible to squander it, but it’s also possible to live a nice, quiet, fulfilling life.

If he lives 60 more years, that's only 25k a year or basically 2k/month, in today's money. With this money he has to pay taxes, insurance, and upkeep on a home, plus maintenance and eventual replacement on a modest car. Plus food, clothing and healthcare. Even for a "nice, quiet, fulfilling life." I think your confidence is unfounded.

Never understand why DCUM people can’t understand buying bonds.

You buy $1.5MM of risk free bonds at 5% and you make $75k per year without touching the principal.

Many people can live on that per year.

This.

Once people understand this, it's like a lightbulb going off.

The average DCUM type doesn’t understand that 75K is the current MEDIAN American *household* income. Bunch of book smart idiots acting like 75K is poverty wages for a single man WITHOUT A MORTGAGE…

The plan you think is so tractable erodes away every year with inflation. In 60 years, that $75K will be the equivalent of $13K today. Nowhere near the median HHI. Instead, OP would find their quality of life significantly degraded after just 10 years, thereby increasing withdrawals and cutting into principal. Maintaining a $75K lifestyle in today’s dollars would last until OP reaches 50 years old. Then…all money is gone and no pension or SS to cover expenses.

You DO realize that people manage to save and even invest on a HHI of 75K, don’t you? Think about it.

But their HHI keeps pace with inflation.

Agreed. Plus, 75K on 1.5M is not a realistic number.

Wait, are you trying to tell me that no risk 5% bonds won't be available forever and that it's not a good idea to base your entire financial future on the assumption that they will be?

Again, put all the money into a 30-year treasury that as of today yields 4.74%. That's about as close to 30-years of no-risk as anyone can ever get.

So, you can at least base your next 30 years on that assumption.

I'm going to show my lack of knowledge about bonds. But, are you referring to treasury bonds, bills, TIPS?? Also, is the rate of 4.75 inflation adjusted? Or will it stay 4.75 for the life of the bond/bill/TIPS?? Thanks.

[Anonymous]

Why do so many people think he needs a car? He doesn't plan to work so there's no commute. Perhaps the house he inherited is walking distance from any shops he might need. Or biking distance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Reading through the thread, the 75K # came from 5% municipal bonds.

It is doubtful that this 29 year old has the type of account that would allow him to direct buy MB on par value, and even if he did, it would take a good deal of research to understand what and which bonds to buy himself.

More realistically, he is looking at 45K/year (3%), and hope he doesn't hit major, unexpected expenses along the way, and stays healthy until he drops dead before his money runs out.

You can't compare a young person with 1.5M and never working again to a person who is gainfully employed for even a decade or two.

This is the real danger. What happens when the house needs a new roof? What happens when he needs an expensive prescription that is only partially covered by insurance? What happens when he's in a car accident? There are innumerable things that could cause this "plan" to fail.

Agreed, and for those who say that 75K (which isn't realistic in this scenario) is what many people live on, they also can be taken out by these unexpected challenges. But these people don't have a choice. They are just working hard, trying to create a good life for their family. If you are a 29 year old able bodied man, why stop working at this point when there are so many unknowns? There is a choice here.

[Anonymous]

OP said the brother is known to make bad money decisions. Give than, plus the fact that he is 29, it isn't smart to stop working for many reasons. Is it possible? Sure. Can it work? Sure. Is it highly likely to work? Probably not.

OP can go to Firecalc.com, put in all the brother's info, and better understand how likely it is that it will work.

[Anonymous]

No, OP.

It's not enough.

Only a financial adviser will be able to convince him, and even then, maybe not.

Does he have autism (with all the anxiety and socio-communication issues that implies) and find it hard to interview and hold down jobs? It sounds like it.

[Anonymous]

Anonymous wrote:Why do so many people think he needs a car? He doesn't plan to work so there's no commute. Perhaps the house he inherited is walking distance from any shops he might need. Or biking distance.

More than likely a 29 yr old who has nothing else to do all day will want a car so he can go have some fun. If he's living in the city where he may not need a car, the col will be higher. If he lives in the burbs or rural area where it's cheaper, he'll need a car to go buy food, at the least. Not everywhere has uber eats.

Who is biking when it's windy, rainy, snowing outside? I assume he's living in a lcol area, and those areas tend to have bad weather in the winter.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This board truly has no clue what the lifestyle of the average American is like.

Of course he can retire with 1.5mil and a paid off house! Of course it’s possible to squander it, but it’s also possible to live a nice, quiet, fulfilling life.

If he lives 60 more years, that's only 25k a year or basically 2k/month, in today's money. With this money he has to pay taxes, insurance, and upkeep on a home, plus maintenance and eventual replacement on a modest car. Plus food, clothing and healthcare. Even for a "nice, quiet, fulfilling life." I think your confidence is unfounded.

Never understand why DCUM people can’t understand buying bonds.

You buy $1.5MM of risk free bonds at 5% and you make $75k per year without touching the principal.

Many people can live on that per year.

This.

Once people understand this, it's like a lightbulb going off.

The average DCUM type doesn’t understand that 75K is the current MEDIAN American *household* income. Bunch of book smart idiots acting like 75K is poverty wages for a single man WITHOUT A MORTGAGE…

The plan you think is so tractable erodes away every year with inflation. In 60 years, that $75K will be the equivalent of $13K today. Nowhere near the median HHI. Instead, OP would find their quality of life significantly degraded after just 10 years, thereby increasing withdrawals and cutting into principal. Maintaining a $75K lifestyle in today’s dollars would last until OP reaches 50 years old. Then…all money is gone and no pension or SS to cover expenses.

You DO realize that people manage to save and even invest on a HHI of 75K, don’t you? Think about it.

But their HHI keeps pace with inflation.

So would his draw down.

explain this to me like I’m stupid. If he’s basically drawing down all of the interest income and not adding more to the principal, how does his draw down keep pace with inflation?

[Anonymous]

Anonymous wrote:Why do so many people think he needs a car? He doesn't plan to work so there's no commute. Perhaps the house he inherited is walking distance from any shops he might need. Or biking distance.

I mean, I’m car free. But is he really going to sit in his house for 60 years? Seems doubtful.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This board truly has no clue what the lifestyle of the average American is like.

Of course he can retire with 1.5mil and a paid off house! Of course it’s possible to squander it, but it’s also possible to live a nice, quiet, fulfilling life.

If he lives 60 more years, that's only 25k a year or basically 2k/month, in today's money. With this money he has to pay taxes, insurance, and upkeep on a home, plus maintenance and eventual replacement on a modest car. Plus food, clothing and healthcare. Even for a "nice, quiet, fulfilling life." I think your confidence is unfounded.

Never understand why DCUM people can’t understand buying bonds.

You buy $1.5MM of risk free bonds at 5% and you make $75k per year without touching the principal.

Many people can live on that per year.

$75k a year in 2024 is a lot different than $75k per year in 2064. Bonds mature and so this plan assumes he always has a low risk way to make 5%.

Isn’t more realistic to work somewhere that provides benefits and pays $25-40k/yr? it’s a lot easier to front load the principal now than to wake up at age 60 and explain why you have a 3 decade gap in your resume. Also - wouldn’t he want to make sure he has maxed out his social security credits?