I will add, that while they are tax free (federal, state, local if you buy them for the state where you live) the amount is taken into consideration for how much you pay for healthcare--ACA or Medicare. |
Can he live in a cheaper country? |
Are you agreeing with the PP, because they are basically saying what you are saying. That 75K would be plenty. |
But 1.5mm making 75K in a low risk way is not realistic. |
Or maybe camp out in Nevada? |
"Safe withdrawal rate" of 3-4% on $1.5M is somewhere in the $45K-$60K a year range. If he lives modestly and doesn't have to pay rent or mortgage, that seems doable to me (assuming he can find some reasonably affordable health insurance.) Probably a little too close for comfort for me personally, but I don't think it's way out of line. |
A 29 year old needs a nest egg that can last 61 years by most traditional measures. Negligible social security and pension. Such a person would need to be able to live off an initial withdrawal of 1/61 of available savings, with subsequent withdrawals indexed for inflation. That’s basically $1.5M / 61 = $24,600. Even if we’re talking after-tax money, this is a pretty LMC lifestyle. |
Need to step up your mathematics game, my friend. Totally ignoring inflation. |
It makes total sense when you consider that each subsequent year’s withdrawal needs to index with inflation just to maintain the same standard of living. In 60 years, the equivalent withdrawal is about $150K. $1.5M doesn’t last as long as you might think. |
Yes I agree with them that it’s plenty. I disagree that the average DCUMer will ever experience that lightbulb moment. |
Maybe he invested some in the market, maybe he deals drugs on the side, who knows. He doesn't have to tell his sibling everything. Without kids or extravagant hobbies and a paid house, it's more than enough. This is coming from a woman who loves expensive jewelry and bought a $400 fragrance today, so I'm not a frugality advocate btw. |
The plan you think is so tractable erodes away every year with inflation. In 60 years, that $75K will be the equivalent of $13K today. Nowhere near the median HHI. Instead, OP would find their quality of life significantly degraded after just 10 years, thereby increasing withdrawals and cutting into principal. Maintaining a $75K lifestyle in today’s dollars would last until OP reaches 50 years old. Then…all money is gone and no pension or SS to cover expenses. |
Maybe, but it all goes south very fast if he has medical or care needs insurance won't cover. He needs long term care insurance or he could easily run our of money or be on your couch. |
He needs 10 years of work history to get Medicare when he’s 65. Same requirement for social security. Does he have that?
He could just take a small low-stress job that provides health insurance and be in a much better position than he would be if he forgoes work entirely. I don’t really understand dropping out of the workforce before he’s 30. |
Do you know what interest bonds were paying a couple of years ago? |