"$5 Million is a Nightmare... the Poorest Rich Person in America."

[Anonymous]

Anonymous wrote:$5 million is enough to maintain a $250k/year draw, inflation-adjusted, for 40 years, assuming a 7% return, which is the long-term average of a 60/40, stock/bond portfolio. $4 million for $200k. $3 million for $150k. Of course, this doesn’t include pensions or social security, which have COLAs. In short, if you own your house and can’t get by on $5 million, you have a high-cost lifestyle: country clubs, golf multiple times/week, multiple luxury vacation/year, multiple luxury cars on lease, etc. In fact, you can do a lot of that on $250k with no mortgage payment, so you really need to be swinging it to need more. Of course, if your goal is to give lots of money to your kids, grandkids, and charities, you may need more.

Even if house is paid off, depending upon where you live, your house could have $20K+ in property taxes per year. If you are under 65, medical insurance and medical costs could run you $20-30K/year. The house has to be maintained, so add another $5K-10K/year. Things add up quickly. Yes, you could live on $250K/year, that is an obvious yes. But we would have to down grade our lifestyle and we dont' want to do so.

But it's likely many would need to downward adjust their lifestyle to do so. We want to travel the world and do things---so yes, golfing might be a part of that. 3-4 2 week luxury vacations are part of our plans. Hence we continue to work (at jobs we enjoy) to keep building our nest egg.

[Anonymous]

Not a problem I have encountered yet, but anecdotally, it seems like everyone thinks they are about 20% more money from being set. But then you get the 20% more, and there is lifestyle creep, and you realize if you had just another 20% you could not worry about X...and it continues.

It actually brings me comfort to think about the fact that most of the rich people who (to me) seem to have it made are still trying to get more money to keep up with the richer Joneses.

[Anonymous]

Anonymous wrote:

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Anonymous wrote:I’m not debating there can’t be wide swings. I’m just saying at the end of the day, when you’ve worked your last day, sitting on $10M is meaningfully different than sitting on $5M. I’m utterly baffled that several posters are disagreeing. If we had $10M, we’re set, could quit tomorrow. Not true at $5M. I get that others want more and that’s fine. So would you also say that $20M isn’t that different from $10M? It’s literally twice as much money!

I don't think anyone is saying that.. Everyone knows that $10M is 2X $5M based on simple math. Folks are only saying that $5M is nothing to scoff at and for many it would be enough to retire with. And for those that peg their expenses to a $5M base (say $150K @3% withdrawal), the additional $5M is just extra moat and not something they need and would not make a subjective difference.

+1, and might not be worth the additional work and stress to make.

Something a lot of people in this thread don't seem to get is that there are many people who can make themselves happy with less (especially when it is more than the vast majority of people on the planet) in order to save themselves time, energy, and effort. There are many things people are willing to give up in order to retire earlier, or even just downgrade to a lower stress job.

I would never work for the second $5m. It isn't worth it to me. I want to relax. I don't need a big house. I only have one kid to worry about helping out. I want to be able to take a couple great trips a year. I don't have expensive hobbies. I'm just a pretty content person and $5m would allow me to live exactly the life I want to live and never worry about money, and still probably leave quite a bit to my kid.

I get that $10m is twice as much as $5m. I'm not an idiot. In fact, I think I'm actually smarter than some of the people on this thread who seem to think $5m isn't enough to live a good life. I think I've figured out some things they haven't. But they obviously think the same in reverse. Ah well, such is life.

You're a single mom with one kid, so you have no use for a big house. Some of us have spouses and three kids, so that larger home in a good school district, college savings for three kids, food, clothing, activities, etc. for three kids costs a lot more. We have a NW of just over $5M and no way DH could stop working now without downgrading our current lifestyle. If I was a single mom with one kids in MS or HS, then sure I could stop working and make $5M work too.

PP here. Not a single mom, I'm married. But yes, I chose to just have one kid, and that means I don't feel as much pressure regarding money. It was a choice, because I didn't want to be sitting around thinking that FIVE MILLION DOLLARS was not enough for me to relax about money.

Why not just have zero kids and live in your car to save money.

This. But smug one-kid-mom has it all figured out lol.

I don’t know, I’m a mom of 3 and I actually share more of the only child mom’s viewpoint. I don’t see why 3 kids requires a big house and working until we have $10m. That is literally insane to me.

We have a small-ish house in a great close-in neighborhood. One car. Flexible jobs over super stressful, high paying ones which means we don’t have to spend $$$ on nannies and aftercare. It means more time with my kids. There are plenty of things to do in this area like museums, splash pads, hiking, etc. that don’t cost a ton. We’re aiming to save for state schools for college. DH and I both went to state flagship schools and had a nice experience. We do 3-4 domestic trips a year (usually 1 flying to visit out of state family, and then another 2-3 over school breaks to the beach/mountains/a fun city).

I feel bad for the families who are constantly trying to keep up with the big house, fancy cars, etc. etc. so that they wind up in a trap where $5m isn’t enough to stop working without “downgrading” their lifestyle.

[Anonymous]

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m not debating there can’t be wide swings. I’m just saying at the end of the day, when you’ve worked your last day, sitting on $10M is meaningfully different than sitting on $5M. I’m utterly baffled that several posters are disagreeing. If we had $10M, we’re set, could quit tomorrow. Not true at $5M. I get that others want more and that’s fine. So would you also say that $20M isn’t that different from $10M? It’s literally twice as much money!

I don't think anyone is saying that.. Everyone knows that $10M is 2X $5M based on simple math. Folks are only saying that $5M is nothing to scoff at and for many it would be enough to retire with. And for those that peg their expenses to a $5M base (say $150K @3% withdrawal), the additional $5M is just extra moat and not something they need and would not make a subjective difference.

+1, and might not be worth the additional work and stress to make.

Something a lot of people in this thread don't seem to get is that there are many people who can make themselves happy with less (especially when it is more than the vast majority of people on the planet) in order to save themselves time, energy, and effort. There are many things people are willing to give up in order to retire earlier, or even just downgrade to a lower stress job.

I would never work for the second $5m. It isn't worth it to me. I want to relax. I don't need a big house. I only have one kid to worry about helping out. I want to be able to take a couple great trips a year. I don't have expensive hobbies. I'm just a pretty content person and $5m would allow me to live exactly the life I want to live and never worry about money, and still probably leave quite a bit to my kid.

I get that $10m is twice as much as $5m. I'm not an idiot. In fact, I think I'm actually smarter than some of the people on this thread who seem to think $5m isn't enough to live a good life. I think I've figured out some things they haven't. But they obviously think the same in reverse. Ah well, such is life.

You're a single mom with one kid, so you have no use for a big house. Some of us have spouses and three kids, so that larger home in a good school district, college savings for three kids, food, clothing, activities, etc. for three kids costs a lot more. We have a NW of just over $5M and no way DH could stop working now without downgrading our current lifestyle. If I was a single mom with one kids in MS or HS, then sure I could stop working and make $5M work too.

PP here. Not a single mom, I'm married. But yes, I chose to just have one kid, and that means I don't feel as much pressure regarding money. It was a choice, because I didn't want to be sitting around thinking that FIVE MILLION DOLLARS was not enough for me to relax about money.

Why not just have zero kids and live in your car to save money.

This. But smug one-kid-mom has it all figured out lol.

I don’t know, I’m a mom of 3 and I actually share more of the only child mom’s viewpoint. I don’t see why 3 kids requires a big house and working until we have $10m. That is literally insane to me.

We have a small-ish house in a great close-in neighborhood. One car. Flexible jobs over super stressful, high paying ones which means we don’t have to spend $$$ on nannies and aftercare. It means more time with my kids. There are plenty of things to do in this area like museums, splash pads, hiking, etc. that don’t cost a ton. We’re aiming to save for state schools for college. DH and I both went to state flagship schools and had a nice experience. We do 3-4 domestic trips a year (usually 1 flying to visit out of state family, and then another 2-3 over school breaks to the beach/mountains/a fun city).

I feel bad for the families who are constantly trying to keep up with the big house, fancy cars, etc. etc. so that they wind up in a trap where $5m isn’t enough to stop working without “downgrading” their lifestyle.

I agree. I grew up with 2 siblings in a 2,000sf house and went to public school. Believe it or not, it's not torture or abuse, in fact it's perfectly fine and normal.

This thread is such a good example of how entitled and out of touch DCUM users are. How selfish do you have to be to feel like a giant house in a perfect neighborhood is somehow a requirement just because you chose to have three kids?

[Anonymous]

Anonymous wrote:

Anonymous wrote:$5 million is enough to maintain a $250k/year draw, inflation-adjusted, for 40 years, assuming a 7% return, which is the long-term average of a 60/40, stock/bond portfolio. $4 million for $200k. $3 million for $150k. Of course, this doesn’t include pensions or social security, which have COLAs. In short, if you own your house and can’t get by on $5 million, you have a high-cost lifestyle: country clubs, golf multiple times/week, multiple luxury vacation/year, multiple luxury cars on lease, etc. In fact, you can do a lot of that on $250k with no mortgage payment, so you really need to be swinging it to need more. Of course, if your goal is to give lots of money to your kids, grandkids, and charities, you may need more.

Even if house is paid off, depending upon where you live, your house could have $20K+ in property taxes per year. If you are under 65, medical insurance and medical costs could run you $20-30K/year. The house has to be maintained, so add another $5K-10K/year. Things add up quickly. Yes, you could live on $250K/year, that is an obvious yes. But we would have to down grade our lifestyle and we dont' want to do so.

But it's likely many would need to downward adjust their lifestyle to do so. We want to travel the world and do things---so yes, golfing might be a part of that. 3-4 2 week luxury vacations are part of our plans. Hence we continue to work (at jobs we enjoy) to keep building our nest egg.

That's all fine. But what you seem to miss is that what you consider a downgrade is not a downgrade for other people. It might even be an upgrade. For instance, while I share your love of luxury travel, I have no interest in owning a home in retirement that requires 30k+ per year in taxes and maintenance. That's a cost center that I'd view as unnecessarily burdensome with limited benefit to me. It would be one thing to maintain a house like that while raising kids, but once it's just DH and I, it would be more of a burden than a benefit. So in our case, moving to a home with lower taxes/fewer maintenance costs would be a lifestyle upgrade. Lots of people feel this way -- we poured time and energy into homes for years to raise kids, but in retirement want something easier so that we can focus our energy on other things, like travel or hobbies.

This is not to say you are wrong in your approach, just wrong in assuming it's universal. Not everyone values the same things you do, so might be able to retire sooner with less money than you feel you need without accepting a "downgrade" in lifestyle. I have an aunt who retired to a small apartment in Paris after her last child finished graduate school -- sold the large family compound in the US and found a lovely two bedroom apartment. She travels in Europe and her kids come visit her, she comes back to the US once or twice a year and stays with her successful kids or in a nice hotel. She has set up trusts for her kids and clearly has more than enough money to do pretty much everything she wants. DH and I have observed this and thought about doing some version of it -- it looks great.

[Anonymous]

Not everyone is chasing a lavish lifestyle. Maybe they want to be the CEO of a company leading it to their leadership goals, or maybe run for Congress or the WH. You need to live on something while unpaid and running for office or vying for a job and maybe your family will only put up with it if you don't disrupt your childrens' lives and education. Maybe their goal is to feed 100,000 children. Not every money goal needs to be decadent.

[Anonymous]

Anonymous wrote:Not everyone is chasing a lavish lifestyle. Maybe they want to be the CEO of a company leading it to their leadership goals, or maybe run for Congress or the WH. You need to live on something while unpaid and running for office or vying for a job and maybe your family will only put up with it if you don't disrupt your childrens' lives and education. Maybe their goal is to feed 100,000 children. Not every money goal needs to be decadent.

I agree, but it's notable that in reading (I think) most of the posts in this thread, you are the first person to say that you (or someone) might want more than $5m in order to accomplish broader career, political, or charitable goals. The vast majority of posts focusing on how $5m is not enough have been focused on the idea that it is an insufficient amount of money to maintain a certain lifestyle. Most people are not running for Congress or founding a major company or trying to address hunger or poverty. People have mostly argued for more money to pay for nice homes, more travel, education/activities/inheritance for kids, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:$5 million is enough to maintain a $250k/year draw, inflation-adjusted, for 40 years, assuming a 7% return, which is the long-term average of a 60/40, stock/bond portfolio. $4 million for $200k. $3 million for $150k. Of course, this doesn’t include pensions or social security, which have COLAs. In short, if you own your house and can’t get by on $5 million, you have a high-cost lifestyle: country clubs, golf multiple times/week, multiple luxury vacation/year, multiple luxury cars on lease, etc. In fact, you can do a lot of that on $250k with no mortgage payment, so you really need to be swinging it to need more. Of course, if your goal is to give lots of money to your kids, grandkids, and charities, you may need more.

Even if house is paid off, depending upon where you live, your house could have $20K+ in property taxes per year. If you are under 65, medical insurance and medical costs could run you $20-30K/year. The house has to be maintained, so add another $5K-10K/year. Things add up quickly. Yes, you could live on $250K/year, that is an obvious yes. But we would have to down grade our lifestyle and we dont' want to do so.

But it's likely many would need to downward adjust their lifestyle to do so. We want to travel the world and do things---so yes, golfing might be a part of that. 3-4 2 week luxury vacations are part of our plans. Hence we continue to work (at jobs we enjoy) to keep building our nest egg.

Wut? All depends on what you lived on most of your life as you built your wealth. We've lived on between $100 - $150K over the years (approx. we don't budget or track). This is in a great neighborhood, 2 kids, both at $80K college, etc. A net worth of $5M will actually put out enough money to allow us to *upgrade* our lifestyle.

If you spend $500K/yr, then sure $5M is not enough and retiring at that point would be a downgrade. But that's not the majority of people. To me the choice is between everyday being an average vacation vs. working hard most of the year to enjoy a 3-4 luxury vacations. Most would pick the former, some the latter.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Not everyone is chasing a lavish lifestyle. Maybe they want to be the CEO of a company leading it to their leadership goals, or maybe run for Congress or the WH. You need to live on something while unpaid and running for office or vying for a job and maybe your family will only put up with it if you don't disrupt your childrens' lives and education. Maybe their goal is to feed 100,000 children. Not every money goal needs to be decadent.

I agree, but it's notable that in reading (I think) most of the posts in this thread, you are the first person to say that you (or someone) might want more than $5m in order to accomplish broader career, political, or charitable goals. The vast majority of posts focusing on how $5m is not enough have been focused on the idea that it is an insufficient amount of money to maintain a certain lifestyle. Most people are not running for Congress or founding a major company or trying to address hunger or poverty. People have mostly argued for more money to pay for nice homes, more travel, education/activities/inheritance for kids, etc.

There is also an angry narrative that says that all rich people are bad, corrupt, etc. I've met my share of selfish, immoral and criminal rich people but not everyone is like that. Rich people have opportunities to do the right and wrong thing just like everyone else, but the impact of their choices may sometimes be broader. But there are many rich people who struggle and try to do the right thing within their set of values. All people, whether rich or poor, face choices, incentives and pressures in life. There are a lot of complications in life and we navigate them trying to avoid the traps that limit our choices and find our paths to happiness.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$5 million is enough to maintain a $250k/year draw, inflation-adjusted, for 40 years, assuming a 7% return, which is the long-term average of a 60/40, stock/bond portfolio. $4 million for $200k. $3 million for $150k. Of course, this doesn’t include pensions or social security, which have COLAs. In short, if you own your house and can’t get by on $5 million, you have a high-cost lifestyle: country clubs, golf multiple times/week, multiple luxury vacation/year, multiple luxury cars on lease, etc. In fact, you can do a lot of that on $250k with no mortgage payment, so you really need to be swinging it to need more. Of course, if your goal is to give lots of money to your kids, grandkids, and charities, you may need more.

Even if house is paid off, depending upon where you live, your house could have $20K+ in property taxes per year. If you are under 65, medical insurance and medical costs could run you $20-30K/year. The house has to be maintained, so add another $5K-10K/year. Things add up quickly. Yes, you could live on $250K/year, that is an obvious yes. But we would have to down grade our lifestyle and we dont' want to do so.

But it's likely many would need to downward adjust their lifestyle to do so. We want to travel the world and do things---so yes, golfing might be a part of that. 3-4 2 week luxury vacations are part of our plans. Hence we continue to work (at jobs we enjoy) to keep building our nest egg.

That's all fine. But what you seem to miss is that what you consider a downgrade is not a downgrade for other people. It might even be an upgrade. For instance, while I share your love of luxury travel, I have no interest in owning a home in retirement that requires 30k+ per year in taxes and maintenance. That's a cost center that I'd view as unnecessarily burdensome with limited benefit to me. It would be one thing to maintain a house like that while raising kids, but once it's just DH and I, it would be more of a burden than a benefit. So in our case, moving to a home with lower taxes/fewer maintenance costs would be a lifestyle upgrade. Lots of people feel this way -- we poured time and energy into homes for years to raise kids, but in retirement want something easier so that we can focus our energy on other things, like travel or hobbies.

This is not to say you are wrong in your approach, just wrong in assuming it's universal. Not everyone values the same things you do, so might be able to retire sooner with less money than you feel you need without accepting a "downgrade" in lifestyle. I have an aunt who retired to a small apartment in Paris after her last child finished graduate school -- sold the large family compound in the US and found a lovely two bedroom apartment. She travels in Europe and her kids come visit her, she comes back to the US once or twice a year and stays with her successful kids or in a nice hotel. She has set up trusts for her kids and clearly has more than enough money to do pretty much everything she wants. DH and I have observed this and thought about doing some version of it -- it looks great.

How did she manage to get residency?

[Anonymous]

Anonymous wrote:$5 million is enough to maintain a $250k/year draw, inflation-adjusted, for 40 years, assuming a 7% return, which is the long-term average of a 60/40, stock/bond portfolio. $4 million for $200k. $3 million for $150k. Of course, this doesn’t include pensions or social security, which have COLAs. In short, if you own your house and can’t get by on $5 million, you have a high-cost lifestyle: country clubs, golf multiple times/week, multiple luxury vacation/year, multiple luxury cars on lease, etc. In fact, you can do a lot of that on $250k with no mortgage payment, so you really need to be swinging it to need more. Of course, if your goal is to give lots of money to your kids, grandkids, and charities, you may need more.

So, $5 million provides $250k/year, inflation-adjusted for 40 years + SS + pension(s). For many, the last two, which include COLAs, take the spending to another level of ridiculousness. Or, you could save part of your $5million for bequests and have the last two fill the income gap. Also, the later one retires, the less you need. To have the same $250k inflation-adjusted for only 20 years (65 to 85), one needs only $3.3 million (then correct for SS and pensions).

[Anonymous]

A 5% withdrawal rate (250k on $5M) is aggressive and not recommended.

But some of these women just want their husbands to keep working until they drop dead.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$5 million is enough to maintain a $250k/year draw, inflation-adjusted, for 40 years, assuming a 7% return, which is the long-term average of a 60/40, stock/bond portfolio. $4 million for $200k. $3 million for $150k. Of course, this doesn’t include pensions or social security, which have COLAs. In short, if you own your house and can’t get by on $5 million, you have a high-cost lifestyle: country clubs, golf multiple times/week, multiple luxury vacation/year, multiple luxury cars on lease, etc. In fact, you can do a lot of that on $250k with no mortgage payment, so you really need to be swinging it to need more. Of course, if your goal is to give lots of money to your kids, grandkids, and charities, you may need more.

Even if house is paid off, depending upon where you live, your house could have $20K+ in property taxes per year. If you are under 65, medical insurance and medical costs could run you $20-30K/year. The house has to be maintained, so add another $5K-10K/year. Things add up quickly. Yes, you could live on $250K/year, that is an obvious yes. But we would have to down grade our lifestyle and we dont' want to do so.

But it's likely many would need to downward adjust their lifestyle to do so. We want to travel the world and do things---so yes, golfing might be a part of that. 3-4 2 week luxury vacations are part of our plans. Hence we continue to work (at jobs we enjoy) to keep building our nest egg.

That's all fine. But what you seem to miss is that what you consider a downgrade is not a downgrade for other people. It might even be an upgrade. For instance, while I share your love of luxury travel, I have no interest in owning a home in retirement that requires 30k+ per year in taxes and maintenance. That's a cost center that I'd view as unnecessarily burdensome with limited benefit to me. It would be one thing to maintain a house like that while raising kids, but once it's just DH and I, it would be more of a burden than a benefit. So in our case, moving to a home with lower taxes/fewer maintenance costs would be a lifestyle upgrade. Lots of people feel this way -- we poured time and energy into homes for years to raise kids, but in retirement want something easier so that we can focus our energy on other things, like travel or hobbies.

This is not to say you are wrong in your approach, just wrong in assuming it's universal. Not everyone values the same things you do, so might be able to retire sooner with less money than you feel you need without accepting a "downgrade" in lifestyle. I have an aunt who retired to a small apartment in Paris after her last child finished graduate school -- sold the large family compound in the US and found a lovely two bedroom apartment. She travels in Europe and her kids come visit her, she comes back to the US once or twice a year and stays with her successful kids or in a nice hotel. She has set up trusts for her kids and clearly has more than enough money to do pretty much everything she wants. DH and I have observed this and thought about doing some version of it -- it looks great.

How did she manage to get residency?

Dual citizenship with another EU country, I don’t know the details of her visa but I guess much easier if you are an EU citizen.

[Anonymous]

Anonymous wrote:A 5% withdrawal rate (250k on $5M) is aggressive and not recommended.

But some of these women just want their husbands to keep working until they drop dead.

+1, I had to laugh a few pages ago when a PP was ranting about how of course $5m wasn’t enough, and noted that her DH could not possibly retire until they had more.

I think some of these women just don’t want their Big Law or corporate husbands back in their homes and placing demands in their time, just as the kids are finally becoming independent. “Oh honey we can’t possibly retire on $8m — what if Larlo goes to med school or one of us requires long term care? Better keep at it.”

If these men ever do retire, they’ll probably divorce them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A 5% withdrawal rate (250k on $5M) is aggressive and not recommended.

But some of these women just want their husbands to keep working until they drop dead.

+1, I had to laugh a few pages ago when a PP was ranting about how of course $5m wasn’t enough, and noted that her DH could not possibly retire until they had more.

I think some of these women just don’t want their Big Law or corporate husbands back in their homes and placing demands in their time, just as the kids are finally becoming independent. “Oh honey we can’t possibly retire on $8m — what if Larlo goes to med school or one of us requires long term care? Better keep at it.”

If these men ever do retire, they’ll probably divorce them.

And take away more than half of what those men earned!