And that’s the $5M point

[Anonymous]

Anonymous wrote:What is the point of this thread, really?

It's fun. I'm coming out as the 12 yo with $20mil. Take that!!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We just crossed it, this morning, based on this market price advance. (Investment portfolio, not counting house.)

That is nice. But I just heard you now need ten million to retire. It is a big milestone. But what gets me mad is I was told when did my first 401k if I hit one million I could retire rich!!, then around 10 years ago Suzie Orman started pushing you really need 5 million to retire. Ok, I get it inflation. Now in the last year or so people are pushing you need 10 million. They are staying 5 million is ok if you are 65 today but a 45 year old person will need at least 10 million by the time they retire.

When does it stop? I guess kids in college today will need 20 million to retire.

Both you and Suzue are idiots. $5m not enough? Really?

I think Suze and others say this to keep more workers on the treadmill. If the workers had leisure, they might become a problem...They might notice what's going on, not like it, and then have time to do do something about it. Better to keep them at a desk for 40-60 hours a week.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We recently retired at 61 with $5M in the bank - combination of investments and savings accounts. Primary house paid off, $1M in equity.

Monte Carlo simulations reflect 93% probability of success

Mortgage on second home, $1,750/month for another five years. Sell primary in five years, purchase downsize for $650K.

Plan on taking SS at age 67.

Financial plan reflects 2.75% inflation each year.

Our financial plan includes (each adjusted for inflation each year):
$200K LTC Insurance policy
$160K/year discretionary spending
$40K/year in travel up to age 75, $10K/year after that
$24K/year healthcare up to age 65, $12K/year after that
Two new cars every eight years.
Taxes on investment withdrawals

At 93, forecast is to have $5M left over, $2.5M with “bad timing” model, which reflects 12% portfolio downturn in first two years and increased inflation up to 4.75%.

Sounds great. Can you recommend who did this retirement plan/portfolio for you?

Early retired law firm partner here. I haven't been on here in a while. Some posters hate me for some odd reason ha ha. But anyway . . .

A couple years ago Schwab did something like this for us for free. It's something that many brokerage firms offer to clients with healthy balances in their accounts. I found it to be helpful, as least in confirming where I thought we were and where we were going.

When I retired about 11-12 years ago I was in the early 50s with a net worth (including home equity) of about $4 million. We were collecting modest rent from a condo and a basement apartment at the time. We've since sold the condo. I also took advantage of Rule 72(t) which another poster mentioned and withdrew without penalty a small amount from one of my smaller IRAs for a few years. I also received a pretty large cash payment (mid 6 figures, I recall) from my firm as a return of my capital; it was tax free at the time since it had already been taxed in the years that the firm held it back in the first place. Finally, the firm allowed us to stay on its health care plan with me paying the full premium (which I'd been doing the whole time I was a partner anyway). And I eventually rolled over my 401k to an IRA and agreed to allow Schwab to manage it and diversify it away from just the S&P 500, where I'd always kept my entirement retirement portfolio literally from the get go.

In the 11+ years since I retired our net worth has more than doubled to what today is about $9.2 million. $7.2 million of that is in liquid accounts (retirement and brokerage and money market); the remaining $2 million is equity in our primary and second homes. During all this time we have lived very well while budgeting about $250k a year.

Because of our diversified portfolio, most years we have been able to structure things so we ended up paying little to no federal income tax (last year's total was under $200). This hasn't always been the case. A couple years ago, for example, we stepped in without a whole lot of notice to fund a kid's down payment on a house, which required us sell some things and raise our taxable income. On the bright side, though, we learned a few things that we really hadn't focused on before and it's benefiting us now for future planning.

Specifically, there are various caps on taxable income where once crossed you loose significant tax breaks that taken together can really add up. To name a few, the senior citizen 50 percent discount on your DC property taxes; the $12,000 Trump addition to your standard deduction, and the lowest tier of monthly Medicare premiums. Knowing all this now made us realize that it's not smart to make Roth conversions in a vaccum while only paying attention to your tax rate. The math is far more complicated due to all the moving parts and frankly is pretty confusing.

Anyway, having said all this, the real point is that you definitely do not need $10 million or more to retire comfortably. We still don't have that and we've been more than fine for many years. You have to take into account not only how much you have but what your fixed costs are. If you don't have kids to put through college; if you don't have a heavy mortgage around your neck; and if you have access to some kind of reasonably priced health insurance you're three quarters of the way there already. (In our case, we still have a mortgage on our primary residence but the interest rate was set at 1.7 percent for the first seven years and we have a couple years left on it so we haven't touched it. We realize we're in an unusual situation on that score.)

We elected to take social security a few years early and still have basement rent coming in. With those income streams to supplement our withdraw rate from our retirement and brokerage accounts has been lower than 2.5 percent, which any financial advisor will tell you is extremely conservative and ultimately can only lead to the balance going up.

Many on DCUM will insist, of course, that $250k a year isn't enough. Personally, I disagree. We are comfortably maintaining two very nice homes, with cleaners and yard workers for both; we travel abroad frequently; help out the kids extensively, eat well and often out; etc. We really don't want for anything--we're not big on high end indulgences and never have been--and of course we've been conservative enough that if we ever did want or need something grand we could swing it.

Which brings me to my final point: long term care insurance. We elected not to buy a policy after being advised they're often not cost-effective and in our case we could comfortably self-fund long term care anyway if it came to that.

The bottom line is that everyone's situation is different, but personally I'd say that if your fixed costs are low (translation: your kids are launched and your mortgage isn't crazy) and you have a few million saved there's no reason why you can't retire if you really want to. You don't need $10 million for Pete's sake. Not even close.

Nice to see you back! I responded to a post of yours last year to let you know you that your contributions to this forum made me less anxious about taking a VERA/early out from the Federal government last year. 14 months later, I’m beyond thrilled with this decision.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You can retire with basically nothing if you have a big enough pension or real estate. If you think that you need more than 5 mil, you probably have a spending/mental problem.

For those without a pension, $5M is only $150k a year on the 3% rule.

We do not even spend $150k now for family of 4. I would dream about it if we can spend $150k including taxes, healthcare & everything but not housing for two of us.
Aim low, anything above will be cherry on top.

Do you have health insurance paid for? I'm paying a huge sum for that and think it'll be my biggest expense in retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You can retire with basically nothing if you have a big enough pension or real estate. If you think that you need more than 5 mil, you probably have a spending/mental problem.

For those without a pension, $5M is only $150k a year on the 3% rule.

3% is very conservative. You can draw more than 3% and still be very safe.
But even $150k a year to use is more than enough once you stop saving.
We earn $300k and enjoy a very comfortable lifestyle in Arlington. We save around a third of our earnings. If our house were fully paid off, we could maintain the same comfortable lifestyle we have now with just $150k.

Yes, 3% is very conservative. It started out as the 4% rule. Then some wanted to be more conservative but most advisors that I listen to/follow now think that even 4% is too conservative. Some go up to 5% as long as you keep a 60/40 split between stocks and bonds. And these rules are supposed to be so your money lasts at least 30 years.

That's good to know some advisors think 4 percent is too conservative. I calculated ours using 3 percent because I wanted my numbers not to fail. However, I understood I also ran the risk of us working longer than needed. It's a delicate calculation.

Now, I look at 3 and 4 percent to see both scenarios.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We recently retired at 61 with $5M in the bank - combination of investments and savings accounts. Primary house paid off, $1M in equity.

Monte Carlo simulations reflect 93% probability of success

Mortgage on second home, $1,750/month for another five years. Sell primary in five years, purchase downsize for $650K.

Plan on taking SS at age 67.

Financial plan reflects 2.75% inflation each year.

Our financial plan includes (each adjusted for inflation each year):
$200K LTC Insurance policy
$160K/year discretionary spending
$40K/year in travel up to age 75, $10K/year after that
$24K/year healthcare up to age 65, $12K/year after that
Two new cars every eight years.
Taxes on investment withdrawals

At 93, forecast is to have $5M left over, $2.5M with “bad timing” model, which reflects 12% portfolio downturn in first two years and increased inflation up to 4.75%.

Sounds great. Can you recommend who did this retirement plan/portfolio for you?

Early retired law firm partner here. I haven't been on here in a while. Some posters hate me for some odd reason ha ha. But anyway . . .

A couple years ago Schwab did something like this for us for free. It's something that many brokerage firms offer to clients with healthy balances in their accounts. I found it to be helpful, as least in confirming where I thought we were and where we were going.

When I retired about 11-12 years ago I was in the early 50s with a net worth (including home equity) of about $4 million. We were collecting modest rent from a condo and a basement apartment at the time. We've since sold the condo. I also took advantage of Rule 72(t) which another poster mentioned and withdrew without penalty a small amount from one of my smaller IRAs for a few years. I also received a pretty large cash payment (mid 6 figures, I recall) from my firm as a return of my capital; it was tax free at the time since it had already been taxed in the years that the firm held it back in the first place. Finally, the firm allowed us to stay on its health care plan with me paying the full premium (which I'd been doing the whole time I was a partner anyway). And I eventually rolled over my 401k to an IRA and agreed to allow Schwab to manage it and diversify it away from just the S&P 500, where I'd always kept my entirement retirement portfolio literally from the get go.

In the 11+ years since I retired our net worth has more than doubled to what today is about $9.2 million. $7.2 million of that is in liquid accounts (retirement and brokerage and money market); the remaining $2 million is equity in our primary and second homes. During all this time we have lived very well while budgeting about $250k a year.

Because of our diversified portfolio, most years we have been able to structure things so we ended up paying little to no federal income tax (last year's total was under $200). This hasn't always been the case. A couple years ago, for example, we stepped in without a whole lot of notice to fund a kid's down payment on a house, which required us sell some things and raise our taxable income. On the bright side, though, we learned a few things that we really hadn't focused on before and it's benefiting us now for future planning.

Specifically, there are various caps on taxable income where once crossed you loose significant tax breaks that taken together can really add up. To name a few, the senior citizen 50 percent discount on your DC property taxes; the $12,000 Trump addition to your standard deduction, and the lowest tier of monthly Medicare premiums. Knowing all this now made us realize that it's not smart to make Roth conversions in a vaccum while only paying attention to your tax rate. The math is far more complicated due to all the moving parts and frankly is pretty confusing.

Anyway, having said all this, the real point is that you definitely do not need $10 million or more to retire comfortably. We still don't have that and we've been more than fine for many years. You have to take into account not only how much you have but what your fixed costs are. If you don't have kids to put through college; if you don't have a heavy mortgage around your neck; and if you have access to some kind of reasonably priced health insurance you're three quarters of the way there already. (In our case, we still have a mortgage on our primary residence but the interest rate was set at 1.7 percent for the first seven years and we have a couple years left on it so we haven't touched it. We realize we're in an unusual situation on that score.)

We elected to take social security a few years early and still have basement rent coming in. With those income streams to supplement our withdraw rate from our retirement and brokerage accounts has been lower than 2.5 percent, which any financial advisor will tell you is extremely conservative and ultimately can only lead to the balance going up.

Many on DCUM will insist, of course, that $250k a year isn't enough. Personally, I disagree. We are comfortably maintaining two very nice homes, with cleaners and yard workers for both; we travel abroad frequently; help out the kids extensively, eat well and often out; etc. We really don't want for anything--we're not big on high end indulgences and never have been--and of course we've been conservative enough that if we ever did want or need something grand we could swing it.

Which brings me to my final point: long term care insurance. We elected not to buy a policy after being advised they're often not cost-effective and in our case we could comfortably self-fund long term care anyway if it came to that.

The bottom line is that everyone's situation is different, but personally I'd say that if your fixed costs are low (translation: your kids are launched and your mortgage isn't crazy) and you have a few million saved there's no reason why you can't retire if you really want to. You don't need $10 million for Pete's sake. Not even close.

Nice to see you back! I responded to a post of yours last year to let you know you that your contributions to this forum made me less anxious about taking a VERA/early out from the Federal government last year. 14 months later, I’m beyond thrilled with this decision.

+1 from another fan of retired law firm partner

[Anonymous]

Anonymous wrote:

Anonymous wrote:Can I retire if I have real estate portfolio that generates $330k/year gross, no debt and $1m in brokerage ?

It all depends on how much you spend!! I chuckle when people ask this question with no context.

We spend over $300K a year. Our investments are around $15K a year. We had an analysis done recently that showed at that rate, we would leave a good fortune to our heirs. If we wanted to completely spend down our money, we would need to spend about a half million a year every year.

I’m single, spend $120-170k a year. Highest years is when I still help my child in college

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We recently retired at 61 with $5M in the bank - combination of investments and savings accounts. Primary house paid off, $1M in equity.

Monte Carlo simulations reflect 93% probability of success

Mortgage on second home, $1,750/month for another five years. Sell primary in five years, purchase downsize for $650K.

Plan on taking SS at age 67.

Financial plan reflects 2.75% inflation each year.

Our financial plan includes (each adjusted for inflation each year):
$200K LTC Insurance policy
$160K/year discretionary spending
$40K/year in travel up to age 75, $10K/year after that
$24K/year healthcare up to age 65, $12K/year after that
Two new cars every eight years.
Taxes on investment withdrawals

At 93, forecast is to have $5M left over, $2.5M with “bad timing” model, which reflects 12% portfolio downturn in first two years and increased inflation up to 4.75%.

Sounds great. Can you recommend who did this retirement plan/portfolio for you?

Early retired law firm partner here. I haven't been on here in a while. Some posters hate me for some odd reason ha ha. But anyway . . .

A couple years ago Schwab did something like this for us for free. It's something that many brokerage firms offer to clients with healthy balances in their accounts. I found it to be helpful, as least in confirming where I thought we were and where we were going.

When I retired about 11-12 years ago I was in the early 50s with a net worth (including home equity) of about $4 million. We were collecting modest rent from a condo and a basement apartment at the time. We've since sold the condo. I also took advantage of Rule 72(t) which another poster mentioned and withdrew without penalty a small amount from one of my smaller IRAs for a few years. I also received a pretty large cash payment (mid 6 figures, I recall) from my firm as a return of my capital; it was tax free at the time since it had already been taxed in the years that the firm held it back in the first place. Finally, the firm allowed us to stay on its health care plan with me paying the full premium (which I'd been doing the whole time I was a partner anyway). And I eventually rolled over my 401k to an IRA and agreed to allow Schwab to manage it and diversify it away from just the S&P 500, where I'd always kept my entirement retirement portfolio literally from the get go.

In the 11+ years since I retired our net worth has more than doubled to what today is about $9.2 million. $7.2 million of that is in liquid accounts (retirement and brokerage and money market); the remaining $2 million is equity in our primary and second homes. During all this time we have lived very well while budgeting about $250k a year.

Because of our diversified portfolio, most years we have been able to structure things so we ended up paying little to no federal income tax (last year's total was under $200). This hasn't always been the case. A couple years ago, for example, we stepped in without a whole lot of notice to fund a kid's down payment on a house, which required us sell some things and raise our taxable income. On the bright side, though, we learned a few things that we really hadn't focused on before and it's benefiting us now for future planning.

Specifically, there are various caps on taxable income where once crossed you loose significant tax breaks that taken together can really add up. To name a few, the senior citizen 50 percent discount on your DC property taxes; the $12,000 Trump addition to your standard deduction, and the lowest tier of monthly Medicare premiums. Knowing all this now made us realize that it's not smart to make Roth conversions in a vaccum while only paying attention to your tax rate. The math is far more complicated due to all the moving parts and frankly is pretty confusing.

Anyway, having said all this, the real point is that you definitely do not need $10 million or more to retire comfortably. We still don't have that and we've been more than fine for many years. You have to take into account not only how much you have but what your fixed costs are. If you don't have kids to put through college; if you don't have a heavy mortgage around your neck; and if you have access to some kind of reasonably priced health insurance you're three quarters of the way there already. (In our case, we still have a mortgage on our primary residence but the interest rate was set at 1.7 percent for the first seven years and we have a couple years left on it so we haven't touched it. We realize we're in an unusual situation on that score.)

We elected to take social security a few years early and still have basement rent coming in. With those income streams to supplement our withdraw rate from our retirement and brokerage accounts has been lower than 2.5 percent, which any financial advisor will tell you is extremely conservative and ultimately can only lead to the balance going up.

Many on DCUM will insist, of course, that $250k a year isn't enough. Personally, I disagree. We are comfortably maintaining two very nice homes, with cleaners and yard workers for both; we travel abroad frequently; help out the kids extensively, eat well and often out; etc. We really don't want for anything--we're not big on high end indulgences and never have been--and of course we've been conservative enough that if we ever did want or need something grand we could swing it.

Which brings me to my final point: long term care insurance. We elected not to buy a policy after being advised they're often not cost-effective and in our case we could comfortably self-fund long term care anyway if it came to that.

The bottom line is that everyone's situation is different, but personally I'd say that if your fixed costs are low (translation: your kids are launched and your mortgage isn't crazy) and you have a few million saved there's no reason why you can't retire if you really want to. You don't need $10 million for Pete's sake. Not even close.

Nice to see you back! I responded to a post of yours last year to let you know you that your contributions to this forum made me less anxious about taking a VERA/early out from the Federal government last year. 14 months later, I’m beyond thrilled with this decision.

Can you elaborate on structuring your portfolio so no federal income tax was paid ? Is it due to real estate depreciation or managing your stock portfolio in a specific way ?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We recently retired at 61 with $5M in the bank - combination of investments and savings accounts. Primary house paid off, $1M in equity.

Monte Carlo simulations reflect 93% probability of success

Mortgage on second home, $1,750/month for another five years. Sell primary in five years, purchase downsize for $650K.

Plan on taking SS at age 67.

Financial plan reflects 2.75% inflation each year.

Our financial plan includes (each adjusted for inflation each year):
$200K LTC Insurance policy
$160K/year discretionary spending
$40K/year in travel up to age 75, $10K/year after that
$24K/year healthcare up to age 65, $12K/year after that
Two new cars every eight years.
Taxes on investment withdrawals

At 93, forecast is to have $5M left over, $2.5M with “bad timing” model, which reflects 12% portfolio downturn in first two years and increased inflation up to 4.75%.

Sounds great. Can you recommend who did this retirement plan/portfolio for you?

Early retired law firm partner here. I haven't been on here in a while. Some posters hate me for some odd reason ha ha. But anyway . . .

A couple years ago Schwab did something like this for us for free. It's something that many brokerage firms offer to clients with healthy balances in their accounts. I found it to be helpful, as least in confirming where I thought we were and where we were going.

When I retired about 11-12 years ago I was in the early 50s with a net worth (including home equity) of about $4 million. We were collecting modest rent from a condo and a basement apartment at the time. We've since sold the condo. I also took advantage of Rule 72(t) which another poster mentioned and withdrew without penalty a small amount from one of my smaller IRAs for a few years. I also received a pretty large cash payment (mid 6 figures, I recall) from my firm as a return of my capital; it was tax free at the time since it had already been taxed in the years that the firm held it back in the first place. Finally, the firm allowed us to stay on its health care plan with me paying the full premium (which I'd been doing the whole time I was a partner anyway). And I eventually rolled over my 401k to an IRA and agreed to allow Schwab to manage it and diversify it away from just the S&P 500, where I'd always kept my entirement retirement portfolio literally from the get go.

In the 11+ years since I retired our net worth has more than doubled to what today is about $9.2 million. $7.2 million of that is in liquid accounts (retirement and brokerage and money market); the remaining $2 million is equity in our primary and second homes. During all this time we have lived very well while budgeting about $250k a year.

Because of our diversified portfolio, most years we have been able to structure things so we ended up paying little to no federal income tax (last year's total was under $200). This hasn't always been the case. A couple years ago, for example, we stepped in without a whole lot of notice to fund a kid's down payment on a house, which required us sell some things and raise our taxable income. On the bright side, though, we learned a few things that we really hadn't focused on before and it's benefiting us now for future planning.

Specifically, there are various caps on taxable income where once crossed you loose significant tax breaks that taken together can really add up. To name a few, the senior citizen 50 percent discount on your DC property taxes; the $12,000 Trump addition to your standard deduction, and the lowest tier of monthly Medicare premiums. Knowing all this now made us realize that it's not smart to make Roth conversions in a vaccum while only paying attention to your tax rate. The math is far more complicated due to all the moving parts and frankly is pretty confusing.

Anyway, having said all this, the real point is that you definitely do not need $10 million or more to retire comfortably. We still don't have that and we've been more than fine for many years. You have to take into account not only how much you have but what your fixed costs are. If you don't have kids to put through college; if you don't have a heavy mortgage around your neck; and if you have access to some kind of reasonably priced health insurance you're three quarters of the way there already. (In our case, we still have a mortgage on our primary residence but the interest rate was set at 1.7 percent for the first seven years and we have a couple years left on it so we haven't touched it. We realize we're in an unusual situation on that score.)

We elected to take social security a few years early and still have basement rent coming in. With those income streams to supplement our withdraw rate from our retirement and brokerage accounts has been lower than 2.5 percent, which any financial advisor will tell you is extremely conservative and ultimately can only lead to the balance going up.

Many on DCUM will insist, of course, that $250k a year isn't enough. Personally, I disagree. We are comfortably maintaining two very nice homes, with cleaners and yard workers for both; we travel abroad frequently; help out the kids extensively, eat well and often out; etc. We really don't want for anything--we're not big on high end indulgences and never have been--and of course we've been conservative enough that if we ever did want or need something grand we could swing it.

Which brings me to my final point: long term care insurance. We elected not to buy a policy after being advised they're often not cost-effective and in our case we could comfortably self-fund long term care anyway if it came to that.

The bottom line is that everyone's situation is different, but personally I'd say that if your fixed costs are low (translation: your kids are launched and your mortgage isn't crazy) and you have a few million saved there's no reason why you can't retire if you really want to. You don't need $10 million for Pete's sake. Not even close.

Nice to see you back! I responded to a post of yours last year to let you know you that your contributions to this forum made me less anxious about taking a VERA/early out from the Federal government last year. 14 months later, I’m beyond thrilled with this decision.

Wow, congrats! Happy I was able to help in a small way!

[Anonymous]

Does that include your retirement?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We recently retired at 61 with $5M in the bank - combination of investments and savings accounts. Primary house paid off, $1M in equity.

Monte Carlo simulations reflect 93% probability of success

Mortgage on second home, $1,750/month for another five years. Sell primary in five years, purchase downsize for $650K.

Plan on taking SS at age 67.

Financial plan reflects 2.75% inflation each year.

Our financial plan includes (each adjusted for inflation each year):
$200K LTC Insurance policy
$160K/year discretionary spending
$40K/year in travel up to age 75, $10K/year after that
$24K/year healthcare up to age 65, $12K/year after that
Two new cars every eight years.
Taxes on investment withdrawals

At 93, forecast is to have $5M left over, $2.5M with “bad timing” model, which reflects 12% portfolio downturn in first two years and increased inflation up to 4.75%.

Sounds great. Can you recommend who did this retirement plan/portfolio for you?

Early retired law firm partner here. I haven't been on here in a while. Some posters hate me for some odd reason ha ha. But anyway . . .

A couple years ago Schwab did something like this for us for free. It's something that many brokerage firms offer to clients with healthy balances in their accounts. I found it to be helpful, as least in confirming where I thought we were and where we were going.

When I retired about 11-12 years ago I was in the early 50s with a net worth (including home equity) of about $4 million. We were collecting modest rent from a condo and a basement apartment at the time. We've since sold the condo. I also took advantage of Rule 72(t) which another poster mentioned and withdrew without penalty a small amount from one of my smaller IRAs for a few years. I also received a pretty large cash payment (mid 6 figures, I recall) from my firm as a return of my capital; it was tax free at the time since it had already been taxed in the years that the firm held it back in the first place. Finally, the firm allowed us to stay on its health care plan with me paying the full premium (which I'd been doing the whole time I was a partner anyway). And I eventually rolled over my 401k to an IRA and agreed to allow Schwab to manage it and diversify it away from just the S&P 500, where I'd always kept my entirement retirement portfolio literally from the get go.

In the 11+ years since I retired our net worth has more than doubled to what today is about $9.2 million. $7.2 million of that is in liquid accounts (retirement and brokerage and money market); the remaining $2 million is equity in our primary and second homes. During all this time we have lived very well while budgeting about $250k a year.

Because of our diversified portfolio, most years we have been able to structure things so we ended up paying little to no federal income tax (last year's total was under $200). This hasn't always been the case. A couple years ago, for example, we stepped in without a whole lot of notice to fund a kid's down payment on a house, which required us sell some things and raise our taxable income. On the bright side, though, we learned a few things that we really hadn't focused on before and it's benefiting us now for future planning.

Specifically, there are various caps on taxable income where once crossed you loose significant tax breaks that taken together can really add up. To name a few, the senior citizen 50 percent discount on your DC property taxes; the $12,000 Trump addition to your standard deduction, and the lowest tier of monthly Medicare premiums. Knowing all this now made us realize that it's not smart to make Roth conversions in a vaccum while only paying attention to your tax rate. The math is far more complicated due to all the moving parts and frankly is pretty confusing.

Anyway, having said all this, the real point is that you definitely do not need $10 million or more to retire comfortably. We still don't have that and we've been more than fine for many years. You have to take into account not only how much you have but what your fixed costs are. If you don't have kids to put through college; if you don't have a heavy mortgage around your neck; and if you have access to some kind of reasonably priced health insurance you're three quarters of the way there already. (In our case, we still have a mortgage on our primary residence but the interest rate was set at 1.7 percent for the first seven years and we have a couple years left on it so we haven't touched it. We realize we're in an unusual situation on that score.)

We elected to take social security a few years early and still have basement rent coming in. With those income streams to supplement our withdraw rate from our retirement and brokerage accounts has been lower than 2.5 percent, which any financial advisor will tell you is extremely conservative and ultimately can only lead to the balance going up.

Many on DCUM will insist, of course, that $250k a year isn't enough. Personally, I disagree. We are comfortably maintaining two very nice homes, with cleaners and yard workers for both; we travel abroad frequently; help out the kids extensively, eat well and often out; etc. We really don't want for anything--we're not big on high end indulgences and never have been--and of course we've been conservative enough that if we ever did want or need something grand we could swing it.

Which brings me to my final point: long term care insurance. We elected not to buy a policy after being advised they're often not cost-effective and in our case we could comfortably self-fund long term care anyway if it came to that.

The bottom line is that everyone's situation is different, but personally I'd say that if your fixed costs are low (translation: your kids are launched and your mortgage isn't crazy) and you have a few million saved there's no reason why you can't retire if you really want to. You don't need $10 million for Pete's sake. Not even close.

Nice to see you back! I responded to a post of yours last year to let you know you that your contributions to this forum made me less anxious about taking a VERA/early out from the Federal government last year. 14 months later, I’m beyond thrilled with this decision.

Can you elaborate on structuring your portfolio so no federal income tax was paid ? Is it due to real estate depreciation or managing your stock portfolio in a specific way ?

My situation may be somewhat unique. I also know it's not going to last forever. Eventually I'll be faced with some pretty hefty RMDs no matter what I do.

Having said all that . . .

I was an equity partner in my DC firm for about a decade. My capital contributions were withheld from my end of year distributions each year, but were still required to be reported as income each year and therefore taxed each year. After I retired all of my capital contributions were refunded to me in a lump sum. It was a large amount, somewhere in the mid six figures, and having already been taxed it was returned tax "free." Beyond that, I had maybe a few hundred thousand in a brokerage account outside of retirement, all in the S&P 500. I added the capital account refund to that account and again put it all in the S&P 500.

Add all that up, and I basically started out my early retirement with around $1 million outside of retirement accounts. At the time, I was also bringing in about 60-70k a year in rents on the basement apartment and a condo that I've since sold.

Because my initial withdrawals from my brokerage account these first years of retirement were largely "new" money, the capital gains were minimal and I stayed in the zero percent capital gains tax bracket. And on paper at least the rents were largely offset by legally claimed expenses, resulting in very little potentially taxable income there as well. In the end, what little income I ended up having to report was erased by either the standard deduction or itemized deductions, depending on the year.

That's basically how things worked for many years. And, thanks to the bull market, all of this time the balance in the account remained steady. In fact, it's still $1 million+ today.

In more recent years my success in avoiding federal taxes completely has been more varied. As I said earlier, I took a hit in 2024 from helping a kid out. In 2025, though, paid virtually nothing. Glancing now at my return, I reported around $150k in income, but more than half of that was capital gains taxed at zero and another 1/3 was social security (which we elected to take early). Rents were zeroed out by expenses and not subject to tax. And I itemized and had 43k in deductions. Bottom line: virtually no federal taxes due, although I did pay DC taxes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We recently retired at 61 with $5M in the bank - combination of investments and savings accounts. Primary house paid off, $1M in equity.

Monte Carlo simulations reflect 93% probability of success

Mortgage on second home, $1,750/month for another five years. Sell primary in five years, purchase downsize for $650K.

Plan on taking SS at age 67.

Financial plan reflects 2.75% inflation each year.

Our financial plan includes (each adjusted for inflation each year):
$200K LTC Insurance policy
$160K/year discretionary spending
$40K/year in travel up to age 75, $10K/year after that
$24K/year healthcare up to age 65, $12K/year after that
Two new cars every eight years.
Taxes on investment withdrawals

At 93, forecast is to have $5M left over, $2.5M with “bad timing” model, which reflects 12% portfolio downturn in first two years and increased inflation up to 4.75%.

Sounds great. Can you recommend who did this retirement plan/portfolio for you?

Early retired law firm partner here. I haven't been on here in a while. Some posters hate me for some odd reason ha ha. But anyway . . .

A couple years ago Schwab did something like this for us for free. It's something that many brokerage firms offer to clients with healthy balances in their accounts. I found it to be helpful, as least in confirming where I thought we were and where we were going.

When I retired about 11-12 years ago I was in the early 50s with a net worth (including home equity) of about $4 million. We were collecting modest rent from a condo and a basement apartment at the time. We've since sold the condo. I also took advantage of Rule 72(t) which another poster mentioned and withdrew without penalty a small amount from one of my smaller IRAs for a few years. I also received a pretty large cash payment (mid 6 figures, I recall) from my firm as a return of my capital; it was tax free at the time since it had already been taxed in the years that the firm held it back in the first place. Finally, the firm allowed us to stay on its health care plan with me paying the full premium (which I'd been doing the whole time I was a partner anyway). And I eventually rolled over my 401k to an IRA and agreed to allow Schwab to manage it and diversify it away from just the S&P 500, where I'd always kept my entirement retirement portfolio literally from the get go.

In the 11+ years since I retired our net worth has more than doubled to what today is about $9.2 million. $7.2 million of that is in liquid accounts (retirement and brokerage and money market); the remaining $2 million is equity in our primary and second homes. During all this time we have lived very well while budgeting about $250k a year.

Because of our diversified portfolio, most years we have been able to structure things so we ended up paying little to no federal income tax (last year's total was under $200). This hasn't always been the case. A couple years ago, for example, we stepped in without a whole lot of notice to fund a kid's down payment on a house, which required us sell some things and raise our taxable income. On the bright side, though, we learned a few things that we really hadn't focused on before and it's benefiting us now for future planning.

Specifically, there are various caps on taxable income where once crossed you loose significant tax breaks that taken together can really add up. To name a few, the senior citizen 50 percent discount on your DC property taxes; the $12,000 Trump addition to your standard deduction, and the lowest tier of monthly Medicare premiums. Knowing all this now made us realize that it's not smart to make Roth conversions in a vaccum while only paying attention to your tax rate. The math is far more complicated due to all the moving parts and frankly is pretty confusing.

Anyway, having said all this, the real point is that you definitely do not need $10 million or more to retire comfortably. We still don't have that and we've been more than fine for many years. You have to take into account not only how much you have but what your fixed costs are. If you don't have kids to put through college; if you don't have a heavy mortgage around your neck; and if you have access to some kind of reasonably priced health insurance you're three quarters of the way there already. (In our case, we still have a mortgage on our primary residence but the interest rate was set at 1.7 percent for the first seven years and we have a couple years left on it so we haven't touched it. We realize we're in an unusual situation on that score.)

We elected to take social security a few years early and still have basement rent coming in. With those income streams to supplement our withdraw rate from our retirement and brokerage accounts has been lower than 2.5 percent, which any financial advisor will tell you is extremely conservative and ultimately can only lead to the balance going up.

Many on DCUM will insist, of course, that $250k a year isn't enough. Personally, I disagree. We are comfortably maintaining two very nice homes, with cleaners and yard workers for both; we travel abroad frequently; help out the kids extensively, eat well and often out; etc. We really don't want for anything--we're not big on high end indulgences and never have been--and of course we've been conservative enough that if we ever did want or need something grand we could swing it.

Which brings me to my final point: long term care insurance. We elected not to buy a policy after being advised they're often not cost-effective and in our case we could comfortably self-fund long term care anyway if it came to that.

The bottom line is that everyone's situation is different, but personally I'd say that if your fixed costs are low (translation: your kids are launched and your mortgage isn't crazy) and you have a few million saved there's no reason why you can't retire if you really want to. You don't need $10 million for Pete's sake. Not even close.

Nice to see you back! I responded to a post of yours last year to let you know you that your contributions to this forum made me less anxious about taking a VERA/early out from the Federal government last year. 14 months later, I’m beyond thrilled with this decision.

Can you elaborate on structuring your portfolio so no federal income tax was paid ? Is it due to real estate depreciation or managing your stock portfolio in a specific way ?

My situation may be somewhat unique. I also know it's not going to last forever. Eventually I'll be faced with some pretty hefty RMDs no matter what I do.

Having said all that . . .

I was an equity partner in my DC firm for about a decade. My capital contributions were withheld from my end of year distributions each year, but were still required to be reported as income each year and therefore taxed each year. After I retired all of my capital contributions were refunded to me in a lump sum. It was a large amount, somewhere in the mid six figures, and having already been taxed it was returned tax "free." Beyond that, I had maybe a few hundred thousand in a brokerage account outside of retirement, all in the S&P 500. I added the capital account refund to that account and again put it all in the S&P 500.

Add all that up, and I basically started out my early retirement with around $1 million outside of retirement accounts. At the time, I was also bringing in about 60-70k a year in rents on the basement apartment and a condo that I've since sold.

Because my initial withdrawals from my brokerage account these first years of retirement were largely "new" money, the capital gains were minimal and I stayed in the zero percent capital gains tax bracket. And on paper at least the rents were largely offset by legally claimed expenses, resulting in very little potentially taxable income there as well. In the end, what little income I ended up having to report was erased by either the standard deduction or itemized deductions, depending on the year.

That's basically how things worked for many years. And, thanks to the bull market, all of this time the balance in the account remained steady. In fact, it's still $1 million+ today.

In more recent years my success in avoiding federal taxes completely has been more varied. As I said earlier, I took a hit in 2024 from helping a kid out. In 2025, though, paid virtually nothing. Glancing now at my return, I reported around $150k in income, but more than half of that was capital gains taxed at zero and another 1/3 was social security (which we elected to take early). Rents were zeroed out by expenses and not subject to tax. And I itemized and had 43k in deductions. Bottom line: virtually no federal taxes due, although I did pay DC taxes.

Thank you this is very helpful

[Anonymous]

Anonymous wrote:Folks in dcumland are in a bubble and completely out of touch with how most Americans are living. The vast majority of people have very little if anything in retirement accounts and no pension.

Yes, we are comparing against our peers. Why would we compare to the rest of America?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We recently retired at 61 with $5M in the bank - combination of investments and savings accounts. Primary house paid off, $1M in equity.

Monte Carlo simulations reflect 93% probability of success

Mortgage on second home, $1,750/month for another five years. Sell primary in five years, purchase downsize for $650K.

Plan on taking SS at age 67.

Financial plan reflects 2.75% inflation each year.

Our financial plan includes (each adjusted for inflation each year):
$200K LTC Insurance policy
$160K/year discretionary spending
$40K/year in travel up to age 75, $10K/year after that
$24K/year healthcare up to age 65, $12K/year after that
Two new cars every eight years.
Taxes on investment withdrawals

At 93, forecast is to have $5M left over, $2.5M with “bad timing” model, which reflects 12% portfolio downturn in first two years and increased inflation up to 4.75%.

Sounds great. Can you recommend who did this retirement plan/portfolio for you?

Early retired law firm partner here. I haven't been on here in a while. Some posters hate me for some odd reason ha ha. But anyway . . .

A couple years ago Schwab did something like this for us for free. It's something that many brokerage firms offer to clients with healthy balances in their accounts. I found it to be helpful, as least in confirming where I thought we were and where we were going.

When I retired about 11-12 years ago I was in the early 50s with a net worth (including home equity) of about $4 million. We were collecting modest rent from a condo and a basement apartment at the time. We've since sold the condo. I also took advantage of Rule 72(t) which another poster mentioned and withdrew without penalty a small amount from one of my smaller IRAs for a few years. I also received a pretty large cash payment (mid 6 figures, I recall) from my firm as a return of my capital; it was tax free at the time since it had already been taxed in the years that the firm held it back in the first place. Finally, the firm allowed us to stay on its health care plan with me paying the full premium (which I'd been doing the whole time I was a partner anyway). And I eventually rolled over my 401k to an IRA and agreed to allow Schwab to manage it and diversify it away from just the S&P 500, where I'd always kept my entirement retirement portfolio literally from the get go.

In the 11+ years since I retired our net worth has more than doubled to what today is about $9.2 million. $7.2 million of that is in liquid accounts (retirement and brokerage and money market); the remaining $2 million is equity in our primary and second homes. During all this time we have lived very well while budgeting about $250k a year.

Because of our diversified portfolio, most years we have been able to structure things so we ended up paying little to no federal income tax (last year's total was under $200). This hasn't always been the case. A couple years ago, for example, we stepped in without a whole lot of notice to fund a kid's down payment on a house, which required us sell some things and raise our taxable income. On the bright side, though, we learned a few things that we really hadn't focused on before and it's benefiting us now for future planning.

Specifically, there are various caps on taxable income where once crossed you loose significant tax breaks that taken together can really add up. To name a few, the senior citizen 50 percent discount on your DC property taxes; the $12,000 Trump addition to your standard deduction, and the lowest tier of monthly Medicare premiums. Knowing all this now made us realize that it's not smart to make Roth conversions in a vaccum while only paying attention to your tax rate. The math is far more complicated due to all the moving parts and frankly is pretty confusing.

Anyway, having said all this, the real point is that you definitely do not need $10 million or more to retire comfortably. We still don't have that and we've been more than fine for many years. You have to take into account not only how much you have but what your fixed costs are. If you don't have kids to put through college; if you don't have a heavy mortgage around your neck; and if you have access to some kind of reasonably priced health insurance you're three quarters of the way there already. (In our case, we still have a mortgage on our primary residence but the interest rate was set at 1.7 percent for the first seven years and we have a couple years left on it so we haven't touched it. We realize we're in an unusual situation on that score.)

We elected to take social security a few years early and still have basement rent coming in. With those income streams to supplement our withdraw rate from our retirement and brokerage accounts has been lower than 2.5 percent, which any financial advisor will tell you is extremely conservative and ultimately can only lead to the balance going up.

Many on DCUM will insist, of course, that $250k a year isn't enough. Personally, I disagree. We are comfortably maintaining two very nice homes, with cleaners and yard workers for both; we travel abroad frequently; help out the kids extensively, eat well and often out; etc. We really don't want for anything--we're not big on high end indulgences and never have been--and of course we've been conservative enough that if we ever did want or need something grand we could swing it.

Which brings me to my final point: long term care insurance. We elected not to buy a policy after being advised they're often not cost-effective and in our case we could comfortably self-fund long term care anyway if it came to that.

The bottom line is that everyone's situation is different, but personally I'd say that if your fixed costs are low (translation: your kids are launched and your mortgage isn't crazy) and you have a few million saved there's no reason why you can't retire if you really want to. You don't need $10 million for Pete's sake. Not even close.

How do you keep your federal taxes at $200 on an income of $250,000? Do you have any advice for other retirees on how to pay lower taxes?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We recently retired at 61 with $5M in the bank - combination of investments and savings accounts. Primary house paid off, $1M in equity.

Monte Carlo simulations reflect 93% probability of success

Mortgage on second home, $1,750/month for another five years. Sell primary in five years, purchase downsize for $650K.

Plan on taking SS at age 67.

Financial plan reflects 2.75% inflation each year.

Our financial plan includes (each adjusted for inflation each year):
$200K LTC Insurance policy
$160K/year discretionary spending
$40K/year in travel up to age 75, $10K/year after that
$24K/year healthcare up to age 65, $12K/year after that
Two new cars every eight years.
Taxes on investment withdrawals

At 93, forecast is to have $5M left over, $2.5M with “bad timing” model, which reflects 12% portfolio downturn in first two years and increased inflation up to 4.75%.

Sounds great. Can you recommend who did this retirement plan/portfolio for you?

Early retired law firm partner here. I haven't been on here in a while. Some posters hate me for some odd reason ha ha. But anyway . . .

A couple years ago Schwab did something like this for us for free. It's something that many brokerage firms offer to clients with healthy balances in their accounts. I found it to be helpful, as least in confirming where I thought we were and where we were going.

When I retired about 11-12 years ago I was in the early 50s with a net worth (including home equity) of about $4 million. We were collecting modest rent from a condo and a basement apartment at the time. We've since sold the condo. I also took advantage of Rule 72(t) which another poster mentioned and withdrew without penalty a small amount from one of my smaller IRAs for a few years. I also received a pretty large cash payment (mid 6 figures, I recall) from my firm as a return of my capital; it was tax free at the time since it had already been taxed in the years that the firm held it back in the first place. Finally, the firm allowed us to stay on its health care plan with me paying the full premium (which I'd been doing the whole time I was a partner anyway). And I eventually rolled over my 401k to an IRA and agreed to allow Schwab to manage it and diversify it away from just the S&P 500, where I'd always kept my entirement retirement portfolio literally from the get go.

In the 11+ years since I retired our net worth has more than doubled to what today is about $9.2 million. $7.2 million of that is in liquid accounts (retirement and brokerage and money market); the remaining $2 million is equity in our primary and second homes. During all this time we have lived very well while budgeting about $250k a year.

Because of our diversified portfolio, most years we have been able to structure things so we ended up paying little to no federal income tax (last year's total was under $200). This hasn't always been the case. A couple years ago, for example, we stepped in without a whole lot of notice to fund a kid's down payment on a house, which required us sell some things and raise our taxable income. On the bright side, though, we learned a few things that we really hadn't focused on before and it's benefiting us now for future planning.

Specifically, there are various caps on taxable income where once crossed you loose significant tax breaks that taken together can really add up. To name a few, the senior citizen 50 percent discount on your DC property taxes; the $12,000 Trump addition to your standard deduction, and the lowest tier of monthly Medicare premiums. Knowing all this now made us realize that it's not smart to make Roth conversions in a vaccum while only paying attention to your tax rate. The math is far more complicated due to all the moving parts and frankly is pretty confusing.

Anyway, having said all this, the real point is that you definitely do not need $10 million or more to retire comfortably. We still don't have that and we've been more than fine for many years. You have to take into account not only how much you have but what your fixed costs are. If you don't have kids to put through college; if you don't have a heavy mortgage around your neck; and if you have access to some kind of reasonably priced health insurance you're three quarters of the way there already. (In our case, we still have a mortgage on our primary residence but the interest rate was set at 1.7 percent for the first seven years and we have a couple years left on it so we haven't touched it. We realize we're in an unusual situation on that score.)

We elected to take social security a few years early and still have basement rent coming in. With those income streams to supplement our withdraw rate from our retirement and brokerage accounts has been lower than 2.5 percent, which any financial advisor will tell you is extremely conservative and ultimately can only lead to the balance going up.

Many on DCUM will insist, of course, that $250k a year isn't enough. Personally, I disagree. We are comfortably maintaining two very nice homes, with cleaners and yard workers for both; we travel abroad frequently; help out the kids extensively, eat well and often out; etc. We really don't want for anything--we're not big on high end indulgences and never have been--and of course we've been conservative enough that if we ever did want or need something grand we could swing it.

Which brings me to my final point: long term care insurance. We elected not to buy a policy after being advised they're often not cost-effective and in our case we could comfortably self-fund long term care anyway if it came to that.

The bottom line is that everyone's situation is different, but personally I'd say that if your fixed costs are low (translation: your kids are launched and your mortgage isn't crazy) and you have a few million saved there's no reason why you can't retire if you really want to. You don't need $10 million for Pete's sake. Not even close.

How do you keep your federal taxes at $200 on an income of $250,000? Do you have any advice for other retirees on how to pay lower taxes?

I tried to address this in a later post. You might want to take a look. But I'll now add that, for starters, I don't have a $250k "income." I have a $250k spend.