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

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have to admit that we are at $5M and related to the dark humor from this scene in Succession.

We know we're in good shape, especially in our 30s, but we don't feel like $5M is enough to retire on and are still ambitious to achieve more in our careers and financially.

Part of this is because we are in a VHCOL where we hope to stay, and our current net worth and salary barely gets us an old condo that needs a lot of updates. We're also in a high achieving peer group from college and work, and we feel just average among (successful!) peers. Rich people problems, I know.

This isn't part of it. It's all of it.

5-10 million is objectively enough tho set yourself up for life, set your kids up, never have to worry about money again. If my DH and I had 5 million, he'd quit his job (which he hates) and get a job working less than full time doing something he enjoys (he knows what it would be, it's a low paying but rewarding career). I would continue in my job, which I like. We'd invest thoughtfully to ensure income. We'd upgrade our home, but not to a mansion -- we'd buy one of the 1-1.2m homes in our desired neighborhood that we cannot quite afford now, or potentially buy something cheaper and renovate. We only have one kid and have no desire for a huge house.

We'd make some small lifestyle upgrades (regular house cleaners, slightly nicer vacations, buy some items we now deem too pricy for us like an electric vehicle) but would not vastly overhaul our lifestyle. We'd still cook at home a lot, because we like to (though it would be thrilling not to worry about budgeting for groceries and to have a nicer kitchen to cook in). We would not change our friends, who now vary from MC to UMC and where incomes probably top out around 500k (and most well below that).

Kid might go to private school -- we could afford it on that income but we are aware it could change our peer set and our kid's peer set, so we'd really think hard about it. I could see us sending her to a private that is more UMC crunchy liberal families than super rich. But I could also see us just staying in public, especially if we could afford to ensure we were in bound for high quality public schools.

If 5-10m is "a nightmare" to you, that's entirely because of your peer group, personal ambition, and values. It's objectively "enough" money for most things that matter to most people. But if you belong to the subset of people for whom "owning a private jet" matters, then I'm not really sure any amount of money will ever make you happy. Good luck.

Not sure how old you guys are and how much money you make individually to be able to make this assessment. We are mid-50s, one of us doesn't work, net worth about $6.5 (excluding primary residence), HHI about $250K, one kid in expensive college ($80K/yr) and another in public HS, likely headed to a $50/yr. college. Our house (about 50 years old; could sell for about $900; mortgage balance of $300) could use some work to make it 'nicer', probably about a $100K.. Our cars are 20 and 12 years old and the 20 y.o needs to be replaced with an SUV, another $40-50K (don't care for electric).. We just are not able to bring ourselves to spend on these things.

Seriously.. I would like to borrow your 'thinking' and be able to spend to upgrade our life but just can't seem to bring ourself to do it!

PP here, and I think that just has to do with life stage. You guys are at a pinch point with college and retirement, that's always going to be a point at which upgrading lifestyle is unrealistic. Also, for us having one kid versus two, it simplifies a lot of things because we are one-and-done regarding college, so even if our kid winds up at an 80k/yr college, we just have to find a way to pay for it for 4 years and then it's over. It changes how we think about it.

We also have lifestyle difference that probably impact this. We live in a small home close in with nearby public transportation, and that's our genuine preference in life and not a compromise we've made -- we don't want to care for a large home, we prefer not to be car dependent. So we have a car but just one, and not an SUV. And since we don't drive a ton, having a 12 yr old car isn't a huge deal to us (we recently upgraded a 15 yr old car, but paid cash for a slightly used vehicle and it still feels like a huge upgrade simply because the old one was in rough condition by the time we switched).

But even setting aside these lifestyle preference/difference, I expect you are going to feel much different once your second kid is about halfway through college and you can see the other side. Even if you wind up out of pocket for 200k in tuition for them, you'll also be deeper into your mortgage. By the time the graduate, you'll be DONE with college costs, plus your house will be worth close to a million with most of that being equity. Plus 6m in the bank... I mean, what are you looking for here? In your situation, I'd start thinking about where and how I'd like to retire and running numbers. You should be well positioned to either upgrade your current home to make it just what you want for retirement, or sell and buy something (maybe a little smaller since you'll be empty nesters, with still some space for family visiting). I'd be looking for at least one source of passive income, like an investment property, but with intelligent investment and money management, I don't see why you won't be able to live very well in retirement with travel, hobbies, etc. No, you're not flying first class everywhere you go, or renting a 10k/night bungalow in the Swiss Alps. Oh well. You can still do a ton with what you have, be totally secure financially with set-asides for long term care and worst-case-scenario medical issues.

I get feeling crunched when you have one kid in college and one almost there, and are on one income. But it's a totally reasonable income and you've got significant assets. You are in a great situation. I can't see what you are feeling so pessimistic about!

[Anonymous]

Also, for us having one kid versus two, it simplifies a lot of things because we are one-and-done regarding college, so even if our kid winds up at an 80k/yr college, we just have to find a way to pay for it for 4 years and then it's over. It changes how we think about it.

What if your kid goes to medical school, law school or other expensive grad school?

[Anonymous]

We're planning for 7 years of "college" to include grad. It may be more or less but 7 seemed like a reasonable #.

[Anonymous]

Anonymous wrote:

Also, for us having one kid versus two, it simplifies a lot of things because we are one-and-done regarding college, so even if our kid winds up at an 80k/yr college, we just have to find a way to pay for it for 4 years and then it's over. It changes how we think about it.

What if your kid goes to medical school, law school or other expensive grad school?

What if they do? Is your fear that if you don't have at least $20m (or more I guess) then you won't be able to fund endless education for your child? Presumably if my kid was going to law, medical, or business school, we'd look look into financing it in an intelligent way that would involve some funding from us as well as some loans for them that were reasonable based on their career plans and trajectory. I am a lawyer so understand some of the dynamics here and how to do it in a way that doesn't totally handicap you with loan payments for the rest of your life.

I would also dissuade an kid from attending a professional school like that without working for at least a couple years first.

Also, my kid has been saving and investing since she was 5 years old, is extremely financially literate, and will make smart choices. She's not going to flounder and then demand we pay for law school for her when she can't figure out what to do with her life at age 30, which is I guess the fear some people have (also you can just say no in that situation, and it would probably be the right parenting decision as well as the right financial choice).

Is the issue that some people think that if you don't have an obscene amount of wealth, you will be bankrupted by your children or your own poor financial planning? Do you see how there is an alternative to that possible outcome, maybe?

[Anonymous]

Anonymous wrote:We're planning for 7 years of "college" to include grad. It may be more or less but 7 seemed like a reasonable #.

If you had 5-10 million in net worth and planned thoughtfully, this would not be hard to do for 1 or 2 kids (would need to make some compromises on your own lifestyle, but if education is what you value, that shouldn't be a big deal). More than 2 kids and that's really hard without more money, but then more than 2 kids is a choice.

You could also tell your kids "We pay for undergrad, we will help to support you through further education but you will need to figure out bulk of funding on your own," and this would not be unreasonable plus might have the added benefit of encouraging kids to think of the ROI on further education, something too few students consider.

A theme of this thread seems to be "I need more money because I am bad at life decisions/don't know how to make good choices for myself for my family." No one will feel bad for you if 5-10 million is inadequate due to stupidity and poor judgment.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I’m at just over $7 million. I retired early from big law when my net worth hit $4 million. That was nearly a decade ago. I’m very happy and comfortable with my position today and the decision to retire when I did and with what I had. It’s pretty great.

Did you retire from biglaw as a partner?

Yes, I was an equity partner in a very well known DC-based firm. I retired well over a decade before typical retirement age.

[Anonymous]

My point is that if you're paying for undergrad, why not plan for grad? What you say is perfectly reasonable - that you can support them fully through undergrad and expect them to stand on their own to some degree after. That is a reasonable position but so is, if I can provide support for their education, they can concentrate fully on their studies to the end.

As a parent I feel like I have an obligation to support my kids to the extent that I am able. Having said that, if they are squandering the opportunity before them I would want to cut them off, but I also think it will be a difficult decision if that moment comes.

[Anonymous]

I went to school with a guy who was passed out drunk every weekend on the front lawn of his frat house. I'm sure that he barely graduated. He went on to become a very successful CEO of a Fortune 500 company and was very generous in philanthropy. He was born on 3rd base but he really got his act together after a disastrous start. This sort of thing makes it very difficult to cut off your kids when they stumble. You never know whether stumbles are permanent or just temporary setbacks. The former is more likely, but as parents, we always hold out hope for our kids and sometimes they surprise us pleasantly.

[Anonymous]

I’m the early retired big law partner above. It worked for us because we got married young, had kids (four) young, avoided the private school money pit, and lived well within our means when I was making good money. When our youngest was late into their college years (UVA) the light was very clear at the other end of the tunnel so I decided to quit messing around and just walked away.

When you’re not paying for the kids’ educations, have a nice chunk of equity in your house after years of ownership, and no longer saving for retirement $200k to $250k goes a surprisingly long way. We have a nice house in the city, a nice house in the country, and a rental property in a desirable part of the DMV. We travel extensively and well - not luxuriously, but well - and don’t want for much of anything. And, as I said, our net worth has actually almost doubled in the last decade despite neither one of us working. The key to really is to live below your means when making good money. We never lived like millionaires even when we were actually making (close to) that amount of money, so we didn’t have to change our lifestyle at all once we stopped pulling that kind of money in.

[Anonymous]

"Earn to live not live to earn" is so simple yet so few are able to follow through on. Thanks for sharing that it can be done.

[Anonymous]

if you have 5 million you aren't rich you live like upper middle class to avoid over extending yourself

[Anonymous]

Anonymous wrote:if you have 5 million you aren't rich you live like upper middle class to avoid over extending yourself

At what NW does rich begin in your view? I agree that $5M isn't rich in VHCOL but it certainly is, in my view, in most other parts of the country.

[Anonymous]

Anonymous wrote:I’m the early retired big law partner above. It worked for us because we got married young, had kids (four) young, avoided the private school money pit, and lived well within our means when I was making good money. When our youngest was late into their college years (UVA) the light was very clear at the other end of the tunnel so I decided to quit messing around and just walked away.

When you’re not paying for the kids’ educations, have a nice chunk of equity in your house after years of ownership, and no longer saving for retirement $200k to $250k goes a surprisingly long way. We have a nice house in the city, a nice house in the country, and a rental property in a desirable part of the DMV. We travel extensively and well - not luxuriously, but well - and don’t want for much of anything. And, as I said, our net worth has actually almost doubled in the last decade despite neither one of us working. The key to really is to live below your means when making good money. We never lived like millionaires even when we were actually making (close to) that amount of money, so we didn’t have to change our lifestyle at all once we stopped pulling that kind of money in.

This, exactly. The perception that 5-10 million is not enough, or is even a liability, is driven entirely by the tendency to always be looking up and wanting to have what even richer people have, or to be seen as peers of richer people. At that point, it has nothing to do with your actual needs or even material wants -- if you are feel that 10 million is insufficient, the problem is in your mentality and insecurity.

And the point about "living well within our means" is central. If you have a high income and millions in the bank, there is a very nice lifestyle to be had that is still well within your means and allows you to continue to bank money and invest creatively and aggressively. The mistake people make (and that someone like Greg on Succession, and all those fools, would definitely make) is getting your 5-10 million and immediately trying to live like you're a billionaire. Why? Do you really think you can't achieve personal satisfaction and happiness unless you have a personal chef and can take private jets everywhere and multiple homes in very expensive locations, etc.? If that's where your head is at, then you will never, ever be happy or satisfied. Not at 20m, not at 500m, not at 1b. You are looking for something money can't buy. You'll be looking around your custom built yacht and thinking "this isn't good enough." The problem is you.

I feel like a lot of people don't understand that Succession is not a guide, it's a cautionary tale. The stuff they say on that show is not funny because it's true, it's funny because it's so unbelievably stupid.

[Anonymous]

I don't think that anyone is saying that a TV show is their guide to life. But sometimes a TV show shows something that resonates with their lives. That if you are at the lower end of the wealth distribution among rich people, there is a certain level of anxiety about maintaining and advancing your place in that order. People are aware of their position and there will always be jockeying for position. That is one of the features of our society, that it is fluid and dynamic compared to aristocracies in places like England where status comes from more than money, although that is also changing.

[Anonymous]

Anonymous wrote:I don't think that anyone is saying that a TV show is their guide to life. But sometimes a TV show shows something that resonates with their lives. That if you are at the lower end of the wealth distribution among rich people, there is a certain level of anxiety about maintaining and advancing your place in that order. People are aware of their position and there will always be jockeying for position. That is one of the features of our society, that it is fluid and dynamic compared to aristocracies in places like England where status comes from more than money, although that is also changing.

Sure, all true.

That said, if there are real people, not Succession characters, who believe that having 5-10m in net worth is "a nightmare", I think that person is hopelessly out of touch and is unlikely to be truly happy with any amount of money.