Why wouldn't you retire on $5M?

[Anonymous]

Holy crap, I would love to have $5 million. I could happily retire on that much!!!

[Anonymous]

We retired at 60 with about $6M. Own our $1.5M house and cars- 0 debt. We spend about $20k/month. We spend mostly on travel and have/do everything we could want. Our investments seem to cover our spend so net worth hasn’t gone down and we haven’t started collecting SS yet. I’m pretty sure $5M would be plenty to retire with and have a very nice lifestyle.

[Anonymous]

Anonymous wrote:We retired at 60 with about $6M. Own our $1.5M house and cars- 0 debt. We spend about $20k/month. We spend mostly on travel and have/do everything we could want. Our investments seem to cover our spend so net worth hasn’t gone down and we haven’t started collecting SS yet. I’m pretty sure $5M would be plenty to retire with and have a very nice lifestyle.

I am in this exact situation, but still working b/c don’t feel like it is enough. I have no pension, but will get SS. Can you give some details on how you structured your investments?

[Anonymous]

Anonymous wrote:5 million is now the amount to retire on at 65. It is not enough to retire early. Why if we get a big bear market and recession a few years and Fed decides to go back to zero interest you are now liquidating assets at fire sale prices.

I know people who retired in 1999 and 2007 when stocks crash a year later and interest rates fell like a brick their money disappeared way quicker than anticipated.

My BIL semi retired 2007 quit his full time job took a 20 hour a week part time job with no benefits. He was getting great money in stock market and even his CDs and Money Markets paying great interest

By end of 2008 his stocks crashed 38 percent and his money markets, CDs and short term treasuries his "safe side" when interest rates fell like a brick in 2008 they money markets reset to near zero and every CD maturity and bond maturity reset to near zero.

By 2019 he had to sell his his wonderful big home to downsize a tiny home. This time he bought new constuction and got lucky bought at 2019 price in pre-construction and by time he sold old hom in spring 2021 was worth a lot more.

If that man only retired 5 years later he be a very rich man. He would have been pumping up 401ks and retirement funds in 2008-2012 when stocks were super low instead he was selling stocks. By time the 2019 to 2025 bull market came we are in now he had hardly any stocks. He was selling for a decade.

He also took a life time hit on his SS payments.

Might that be the issue? We plan on retiring early but that does not mean we’ll be selling stocks. (We aren’t in “stocks” we’re invested via index funds). We will have money set aside to cover 3 years of living expenses. The rest will stay invested in market with no plan of ever fully leaving market. 4M is our magic number.

[Anonymous]

Anonymous wrote:

Anonymous wrote:5 million is now the amount to retire on at 65. It is not enough to retire early. Why if we get a big bear market and recession a few years and Fed decides to go back to zero interest you are now liquidating assets at fire sale prices.

I know people who retired in 1999 and 2007 when stocks crash a year later and interest rates fell like a brick their money disappeared way quicker than anticipated.

My BIL semi retired 2007 quit his full time job took a 20 hour a week part time job with no benefits. He was getting great money in stock market and even his CDs and Money Markets paying great interest

By end of 2008 his stocks crashed 38 percent and his money markets, CDs and short term treasuries his "safe side" when interest rates fell like a brick in 2008 they money markets reset to near zero and every CD maturity and bond maturity reset to near zero.

By 2019 he had to sell his his wonderful big home to downsize a tiny home. This time he bought new constuction and got lucky bought at 2019 price in pre-construction and by time he sold old hom in spring 2021 was worth a lot more.

If that man only retired 5 years later he be a very rich man. He would have been pumping up 401ks and retirement funds in 2008-2012 when stocks were super low instead he was selling stocks. By time the 2019 to 2025 bull market came we are in now he had hardly any stocks. He was selling for a decade.

He also took a life time hit on his SS payments.

Might that be the issue? We plan on retiring early but that does not mean we’ll be selling stocks. (We aren’t in “stocks” we’re invested via index funds). We will have money set aside to cover 3 years of living expenses. The rest will stay invested in market with no plan of ever fully leaving market. 4M is our magic number.

So the money you “set aside”, do you plan to spend all the principle and interest generated by that over the 3 years? And then you pull from the index funds for the next 3 years?

[Anonymous]

Anonymous wrote:You can spend 10k+ a month forever on a portfolio of this size. Seems like I could retire comfortably on this amount, even needing to pay for health insurance and having 2 kids. We are 30/31 with $2M so not at this level yet.

Asking because there are a lot of rich people on here with way more than 5M who still work.

$10k a month.

Gtfu

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:5 million is now the amount to retire on at 65. It is not enough to retire early. Why if we get a big bear market and recession a few years and Fed decides to go back to zero interest you are now liquidating assets at fire sale prices.

I know people who retired in 1999 and 2007 when stocks crash a year later and interest rates fell like a brick their money disappeared way quicker than anticipated.

My BIL semi retired 2007 quit his full time job took a 20 hour a week part time job with no benefits. He was getting great money in stock market and even his CDs and Money Markets paying great interest

By end of 2008 his stocks crashed 38 percent and his money markets, CDs and short term treasuries his "safe side" when interest rates fell like a brick in 2008 they money markets reset to near zero and every CD maturity and bond maturity reset to near zero.

By 2019 he had to sell his his wonderful big home to downsize a tiny home. This time he bought new constuction and got lucky bought at 2019 price in pre-construction and by time he sold old hom in spring 2021 was worth a lot more.

If that man only retired 5 years later he be a very rich man. He would have been pumping up 401ks and retirement funds in 2008-2012 when stocks were super low instead he was selling stocks. By time the 2019 to 2025 bull market came we are in now he had hardly any stocks. He was selling for a decade.

He also took a life time hit on his SS payments.

Might that be the issue? We plan on retiring early but that does not mean we’ll be selling stocks. (We aren’t in “stocks” we’re invested via index funds). We will have money set aside to cover 3 years of living expenses. The rest will stay invested in market with no plan of ever fully leaving market. 4M is our magic number.

So the money you “set aside”, do you plan to spend all the principle and interest generated by that over the 3 years? And then you pull from the index funds for the next 3 years?

Haven’t nailed down exact plan yet but the “set aside” pile will be combination of cash, CDs, Tbills and the like. The “set aside” pile will be flexible in that 3 years is our ideal but it could be 2 or 4 depending on market conditions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s all about what works for you. I went back to work full time a year ago at 58 after almost 30 years as a sahm and PT consultant. What nobody tells you is staying busy and happy and fulfilled takes a lot of work. I wasn’t happy once my kids were grown, parents died and husband returned to the office. Lunching, Yoga, pickleball and travel got old and having my life’s purpose on most days being making dinner walking the dog was honestly depressing. I couldn’t imagine doing just that and volunteering for 30 more years. I love the structure and camaraderie of work and the paycheck. My job is not high stress but it’s interesting. I’d like to work til 65-67. Just my perspective - and we have a little over 5 mil now.

If you need a job to feel important and fulfilled then go for it. But I find it a bit sad that you cannot find ways to fill your day "meaningfully" without a job at age 60

lol! Im sorry this choice seems so sad and pathetic to you. But we are likely coming from very different places. After being at home taking care of others for 25 years, and also working from home PT a few hours a week in order to be flexible and available, it has been a treat to go back to work on my own terms and have a nice paycheck even though I don’t really need one. I need purpose and structure and love the camaraderie. If you work currently and are ready for a break, I can see this perspective being unimaginable, or sad for a “60 year old”. But just like working gets old, so does staying home and not working. This is my personal journey; and I absolutely disagree that it is sad. My life feels pretty perfect and fulfilled honestly.

+1. COVID work at home made me never want to retire - until it becomes a physical challenge. There is only so much golf, walk dog, yoga, travel, gardening, etc you can do until you get bored out of your mind. The most successful people I know continue to stay engaged with real work of some sort.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:5 million is now the amount to retire on at 65. It is not enough to retire early. Why if we get a big bear market and recession a few years and Fed decides to go back to zero interest you are now liquidating assets at fire sale prices.

I know people who retired in 1999 and 2007 when stocks crash a year later and interest rates fell like a brick their money disappeared way quicker than anticipated.

My BIL semi retired 2007 quit his full time job took a 20 hour a week part time job with no benefits. He was getting great money in stock market and even his CDs and Money Markets paying great interest

By end of 2008 his stocks crashed 38 percent and his money markets, CDs and short term treasuries his "safe side" when interest rates fell like a brick in 2008 they money markets reset to near zero and every CD maturity and bond maturity reset to near zero.

By 2019 he had to sell his his wonderful big home to downsize a tiny home. This time he bought new constuction and got lucky bought at 2019 price in pre-construction and by time he sold old hom in spring 2021 was worth a lot more.

If that man only retired 5 years later he be a very rich man. He would have been pumping up 401ks and retirement funds in 2008-2012 when stocks were super low instead he was selling stocks. By time the 2019 to 2025 bull market came we are in now he had hardly any stocks. He was selling for a decade.

He also took a life time hit on his SS payments.

Might that be the issue? We plan on retiring early but that does not mean we’ll be selling stocks. (We aren’t in “stocks” we’re invested via index funds). We will have money set aside to cover 3 years of living expenses. The rest will stay invested in market with no plan of ever fully leaving market. 4M is our magic number.

So the money you “set aside”, do you plan to spend all the principle and interest generated by that over the 3 years? And then you pull from the index funds for the next 3 years?

Haven’t nailed down exact plan yet but the “set aside” pile will be combination of cash, CDs, Tbills and the like. The “set aside” pile will be flexible in that 3 years is our ideal but it could be 2 or 4 depending on market conditions.

So you have maybe 10% of your portfolio in bonds or cash. That's kind of risky if you end up retiring before a downturn. A bear market could last over 10 years and there might be significant inflation as well.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:5 million is now the amount to retire on at 65. It is not enough to retire early. Why if we get a big bear market and recession a few years and Fed decides to go back to zero interest you are now liquidating assets at fire sale prices.

I know people who retired in 1999 and 2007 when stocks crash a year later and interest rates fell like a brick their money disappeared way quicker than anticipated.

My BIL semi retired 2007 quit his full time job took a 20 hour a week part time job with no benefits. He was getting great money in stock market and even his CDs and Money Markets paying great interest

By end of 2008 his stocks crashed 38 percent and his money markets, CDs and short term treasuries his "safe side" when interest rates fell like a brick in 2008 they money markets reset to near zero and every CD maturity and bond maturity reset to near zero.

By 2019 he had to sell his his wonderful big home to downsize a tiny home. This time he bought new constuction and got lucky bought at 2019 price in pre-construction and by time he sold old hom in spring 2021 was worth a lot more.

If that man only retired 5 years later he be a very rich man. He would have been pumping up 401ks and retirement funds in 2008-2012 when stocks were super low instead he was selling stocks. By time the 2019 to 2025 bull market came we are in now he had hardly any stocks. He was selling for a decade.

He also took a life time hit on his SS payments.

Might that be the issue? We plan on retiring early but that does not mean we’ll be selling stocks. (We aren’t in “stocks” we’re invested via index funds). We will have money set aside to cover 3 years of living expenses. The rest will stay invested in market with no plan of ever fully leaving market. 4M is our magic number.

So the money you “set aside”, do you plan to spend all the principle and interest generated by that over the 3 years? And then you pull from the index funds for the next 3 years?

Haven’t nailed down exact plan yet but the “set aside” pile will be combination of cash, CDs, Tbills and the like. The “set aside” pile will be flexible in that 3 years is our ideal but it could be 2 or 4 depending on market conditions.

So you have maybe 10% of your portfolio in bonds or cash. That's kind of risky if you end up retiring before a downturn. A bear market could last over 10 years and there might be significant inflation as well.

Maybe closer to 25% but you’re right, no idea what future brings. Have to be able adjust a little. But we’ll still have much in market.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s all about what works for you. I went back to work full time a year ago at 58 after almost 30 years as a sahm and PT consultant. What nobody tells you is staying busy and happy and fulfilled takes a lot of work. I wasn’t happy once my kids were grown, parents died and husband returned to the office. Lunching, Yoga, pickleball and travel got old and having my life’s purpose on most days being making dinner walking the dog was honestly depressing. I couldn’t imagine doing just that and volunteering for 30 more years. I love the structure and camaraderie of work and the paycheck. My job is not high stress but it’s interesting. I’d like to work til 65-67. Just my perspective - and we have a little over 5 mil now.

If you need a job to feel important and fulfilled then go for it. But I find it a bit sad that you cannot find ways to fill your day "meaningfully" without a job at age 60

The reality is that most people cannot - which is why people massively cognitively decline after just a few years of retirement.

This. The research is now pretty strong about the cognitive decline after retirement almost regardless of age (after 50). You cannot get it back.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s all about what works for you. I went back to work full time a year ago at 58 after almost 30 years as a sahm and PT consultant. What nobody tells you is staying busy and happy and fulfilled takes a lot of work. I wasn’t happy once my kids were grown, parents died and husband returned to the office. Lunching, Yoga, pickleball and travel got old and having my life’s purpose on most days being making dinner walking the dog was honestly depressing. I couldn’t imagine doing just that and volunteering for 30 more years. I love the structure and camaraderie of work and the paycheck. My job is not high stress but it’s interesting. I’d like to work til 65-67. Just my perspective - and we have a little over 5 mil now.

If you need a job to feel important and fulfilled then go for it. But I find it a bit sad that you cannot find ways to fill your day "meaningfully" without a job at age 60

lol! Im sorry this choice seems so sad and pathetic to you. But we are likely coming from very different places. After being at home taking care of others for 25 years, and also working from home PT a few hours a week in order to be flexible and available, it has been a treat to go back to work on my own terms and have a nice paycheck even though I don’t really need one. I need purpose and structure and love the camaraderie. If you work currently and are ready for a break, I can see this perspective being unimaginable, or sad for a “60 year old”. But just like working gets old, so does staying home and not working. This is my personal journey; and I absolutely disagree that it is sad. My life feels pretty perfect and fulfilled honestly.

+1. COVID work at home made me never want to retire - until it becomes a physical challenge. There is only so much golf, walk dog, yoga, travel, gardening, etc you can do until you get bored out of your mind. The most successful people I know continue to stay engaged with real work of some sort.

The world is big. There are so many places I want to travel to for months at a time. And I want to do that while I'm young enough to really enjoy it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s all about what works for you. I went back to work full time a year ago at 58 after almost 30 years as a sahm and PT consultant. What nobody tells you is staying busy and happy and fulfilled takes a lot of work. I wasn’t happy once my kids were grown, parents died and husband returned to the office. Lunching, Yoga, pickleball and travel got old and having my life’s purpose on most days being making dinner walking the dog was honestly depressing. I couldn’t imagine doing just that and volunteering for 30 more years. I love the structure and camaraderie of work and the paycheck. My job is not high stress but it’s interesting. I’d like to work til 65-67. Just my perspective - and we have a little over 5 mil now.

If you need a job to feel important and fulfilled then go for it. But I find it a bit sad that you cannot find ways to fill your day "meaningfully" without a job at age 60

The reality is that most people cannot - which is why people massively cognitively decline after just a few years of retirement.

This. The research is now pretty strong about the cognitive decline after retirement almost regardless of age (after 50). You cannot get it back.

As usual the research is much more nuanced than a five word description-- really depends on the person and the aspect of cognition your are talking about.

Meanwhile, research also suggests that happiness goes for many retired people.

[Anonymous]

*goes up for many people

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Very simple reason. My spend is way higher than $10,000 a month. In retirement looking to match current spend. Around $30,000 to $35,000 a month. Need to hit $12 million or perhaps $15 million.

This. $10k a month is really not much. We have $9M in cash/investments and no where near retirement (young 50s). Sure we could retire but I’m not living frugally in retirement

For a normal person it’s a lot of money especially for not having to work. Assuming no mortgage or other debt, that’s a ton of money for me and most other people. We live in a TH and send our kids to public school though.

Yeah, I am divorced no kids, and with my mortgage ($2k/month) my monthly spend is ~$5k to 6k. I have no other debt. I eat good, look good, travel good, save a lot. $10K would absolutely be more than enough.