Can 29yr old live off $1.5 million w/working?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Absolutely not. 1.5 is not enough to retire at 29. It's not enough to retire at 65!

It is feasible to do that, just not with the lifestyle most americans want.

Not really feasible for a 29 yo. You would hit financial ruins if you have any bumps in the road.

Plus, what 29yo just wants to sit around all day and do nothin. Because with living off of 1.5M for 50+ years, you won't have money to do anything. Work until 40, keep saving and see what you think then

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This board truly has no clue what the lifestyle of the average American is like.

Of course he can retire with 1.5mil and a paid off house! Of course it’s possible to squander it, but it’s also possible to live a nice, quiet, fulfilling life.

If he lives 60 more years, that's only 25k a year or basically 2k/month, in today's money. With this money he has to pay taxes, insurance, and upkeep on a home, plus maintenance and eventual replacement on a modest car. Plus food, clothing and healthcare. Even for a "nice, quiet, fulfilling life." I think your confidence is unfounded.

Never understand why DCUM people can’t understand buying bonds.

You buy $1.5MM of risk free bonds at 5% and you make $75k per year without touching the principal.

Many people can live on that per year.

This.

Once people understand this, it's like a lightbulb going off.

The average DCUM type doesn’t understand that 75K is the current MEDIAN American *household* income. Bunch of book smart idiots acting like 75K is poverty wages for a single man WITHOUT A MORTGAGE…

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.

You DO realize that people manage to save and even invest on a HHI of 75K, don’t you? Think about it.

The 75K number is unrealistic. More realistically he is looking at 45K/year, if the money has a chance of lasting him for 50 to 60 years. I'm not saying it's not doable, just difficult. My biggest concern would be healthcare, home maintenance and property taxes. If something goes wrong health wise and he doesn't have good insurance, with a 1.5mm portfolio, there will be no government-paid-for care. He will have to pay it out of assets, or go into collection.

[Anonymous]

Anonymous wrote:It’s possible. Sounds like his housing costs are just taxes and insurance…not sure where he lives but that might only be $600/month.

If he invests in highly rate 30 year municipal bonds at 5% (absolutely doable right now) in his home state, that’s $75,000 with zero taxes.

Hopefully, he would work some job that he enjoys for health insurance and also to increase social security at 65.

I would say it gives him financial freedom if he doesn’t do anything stupid.

He won't get SS if he never puts into the system. He needs 10 years of employment minimum. And he won't collect much if his earnings were low over that 10 years (and yes I'm assuming they are low otherwise he'd have millions in savings. )

Terrible plan to not continue working. He will run out of money and be miserable later in life

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This board truly has no clue what the lifestyle of the average American is like.

Of course he can retire with 1.5mil and a paid off house! Of course it’s possible to squander it, but it’s also possible to live a nice, quiet, fulfilling life.

If he lives 60 more years, that's only 25k a year or basically 2k/month, in today's money. With this money he has to pay taxes, insurance, and upkeep on a home, plus maintenance and eventual replacement on a modest car. Plus food, clothing and healthcare. Even for a "nice, quiet, fulfilling life." I think your confidence is unfounded.

Never understand why DCUM people can’t understand buying bonds.

You buy $1.5MM of risk free bonds at 5% and you make $75k per year without touching the principal.

Many people can live on that per year.

This.

Once people understand this, it's like a lightbulb going off.

This is in theory. Have you actually done this?

I have a now 8-year-ladder of tax free bonds paying 5%. The yield to maturity is not 5% due to the premium you have to pay to get them. And it is next to impossible to buy them directly. You have to go through a bond broker of some sort. I have them in an account that I manage. But before I moved them, I was paying .04 in a managed account. If I wanted to keep buying them (which I don't) I would have had to stay in that managed account.

And, as mentioned, they are not inflation adjusted.

First, I am not suggesting this 29 year old do this, but it absolutely can be done and there are plenty of people that can live off of $75k per year essentially indefinitely.

I can easily buy municipal bonds through my brokerage account for little to no fees.

I get that inflation eats up your $75k, however, at least housing costs are fixed at just property tax + insurance. In theory, your home appreciates, so minimal increases in housing costs + increase in house price are a nice hedge against inflation.

Also, one would maybe think that this kid can live off of less than $75k right now, so he can bank the difference and increase the $75k per year.

We have no idea where this kid lives. I get that that if this kid lives in the DMV it will be hard...but then the kid can always sell the house today for probably a decent amount (again, if it is in the DMV) and move to any number of low-cost areas.

I don't recommend it, but it's definitely doable.

Interesting. Actual coupons? No premium to get the 5% on high quality munis? Where is this? We bought them at 100K/bond, from 2 different sources, and there was always a premium.

ML. Possible because they are a primary dealer in many municipals that it is a perk for clients. Also, I have highest status.

Interesting. I am the same and have several mm in munis over and above several different accounts within our brokerage account. I will be talking to my FA about this. My brokerage also is a primary dealer.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Can my brother live the rest of his life without working? He is 29 years old and inherited a modest house and about $1.5 million. He has no intention to ever work again. He is not a big spender, no lavish vacations or expensive shopping sprees. He does make questionable financial choices sometimes such as paying way too much for something because he didn’t do any research. He is not great at “adulting” like remembering to paying bills and frequently lets his Obama insurance lapse. Overall a functioning person who has no interest in working. He has “done the math” and has determined that he never needs to work again and can live off the money we inherited from our parents. I’m not convinced but he is not open to discussion.

I inherited the same amount of money minus the house. I put it in an investment account. I don’t think it is enough to live on but maybe my life is just very different? I have a wife and a baby. We own a house and want to save for school and college. I did tell my brother that he is going to have a hard time finding a woman with his situation but he always seems to have a new girl he met on Tinder so who knows?

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.

Lol, no. 3% is considered a "permanent withdrawal rate" (i.e., you NEVER run out of money). So he can take out $1.5M x 0.03 = $45K the first year and adjust that up for inflation forever. If he sells the house and nets another $500K, he can bump that up to $60K forever. Only on DCUM can people not understand how *one person* can live off that.

How is 3% withdrawal rate out of 1.5 million "permanent" for a 29 year old AND a 67 year old? Don't you have to adjust the percent for age? Please explain the math.

[Anonymous]

Anonymous wrote:Doable with a certain lifestyle. I agree he will have a hard time finding a woman who will go for it.

It's not doable. You have to pay for health insurance, taxes/maintenance on the house. He's only worked 8-9 years? You have to work min 10 to get any social security, and then it's on the average earnings over those 10+ years. He's not likely to get much.

99% chance this doesn't end well and he's a burden to you and society.

Why not work a job making $40K and live the extremely frugal lifestyle while saving. Then see if you really like the lifestyle?

[Anonymous]

Can OP tell us what area the brother lives in? What kind of unwise purchases he has made in the past? What condition the house is in? More details would help...

[Anonymous]

Anonymous wrote:

Anonymous wrote:If he doesn't pay SS tax, he's not going to be rescued by SS payouts at 65.

+1 At 29 he may not have ten years of work history.

Also, he may need to pay for Medicare Part A. Part A is free for people meet the work requirement of 40 credits (roughly 10 years), but if haven't worked long enough (or never had a spouse who worked) you don't get that for free.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Doable with a certain lifestyle. I agree he will have a hard time finding a woman who will go for it.

It's not doable. You have to pay for health insurance, taxes/maintenance on the house. He's only worked 8-9 years? You have to work min 10 to get any social security, and then it's on the average earnings over those 10+ years. He's not likely to get much.

99% chance this doesn't end well and he's a burden to you and society.

Why not work a job making $40K and live the extremely frugal lifestyle while saving. Then see if you really like the lifestyle?

Geez...so fine, you convince the kid he has to work two more years for SS and Medicare. Doubt that is a super-hard sell.

However, the median income in the United States today is only like $39,000 per person. I doubt that the median worker making $39k has any savings at all. I guess your view is the median person out there is just a future burden to society.

There are plenty of FIRE advocates out there who can easily sustain their lives on a $75,000/year income and $1.5MM in the bank that you will try not to touch.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Doable with a certain lifestyle. I agree he will have a hard time finding a woman who will go for it.

It's not doable. You have to pay for health insurance, taxes/maintenance on the house. He's only worked 8-9 years? You have to work min 10 to get any social security, and then it's on the average earnings over those 10+ years. He's not likely to get much.

99% chance this doesn't end well and he's a burden to you and society.

Why not work a job making $40K and live the extremely frugal lifestyle while saving. Then see if you really like the lifestyle?

Geez...so fine, you convince the kid he has to work two more years for SS and Medicare. Doubt that is a super-hard sell.

However, the median income in the United States today is only like $39,000 per person. I doubt that the median worker making $39k has any savings at all. I guess your view is the median person out there is just a future burden to society.

There are plenty of FIRE advocates out there who can easily sustain their lives on a $75,000/year income and $1.5MM in the bank that you will try not to touch.

This. He'll be fine for a while. One day, he may get a job or not. This board and this town is full of workahilics who work their lives away.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Doable with a certain lifestyle. I agree he will have a hard time finding a woman who will go for it.

It's not doable. You have to pay for health insurance, taxes/maintenance on the house. He's only worked 8-9 years? You have to work min 10 to get any social security, and then it's on the average earnings over those 10+ years. He's not likely to get much.

99% chance this doesn't end well and he's a burden to you and society.

Why not work a job making $40K and live the extremely frugal lifestyle while saving. Then see if you really like the lifestyle?

Geez...so fine, you convince the kid he has to work two more years for SS and Medicare. Doubt that is a super-hard sell.

However, the median income in the United States today is only like $39,000 per person. I doubt that the median worker making $39k has any savings at all. I guess your view is the median person out there is just a future burden to society.

There are plenty of FIRE advocates out there who can easily sustain their lives on a $75,000/year income and $1.5MM in the bank that you will try not to touch.

This. He'll be fine for a while. One day, he may get a job or not. This board and this town is full of workahilics who work their lives away.

I'd rather be a workaholic than a perfectly healthy deadbeat 29 year old living off of a meager income stream.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Doable with a certain lifestyle. I agree he will have a hard time finding a woman who will go for it.

It's not doable. You have to pay for health insurance, taxes/maintenance on the house. He's only worked 8-9 years? You have to work min 10 to get any social security, and then it's on the average earnings over those 10+ years. He's not likely to get much.

99% chance this doesn't end well and he's a burden to you and society.

Why not work a job making $40K and live the extremely frugal lifestyle while saving. Then see if you really like the lifestyle?

Since you’re so confident that it’s not possible I would absolutely LOVE to see your sample budget showing what you think his expenses might be.

[Anonymous]

Anonymous wrote:Absolutely not. 1.5 is not enough to retire at 29. It's not enough to retire at 65!

ffs.. of course it is enough to retire at 65.

But, at 29, no. He should read all those articles of those people who retired early with more than that. Any health issues and/or inflation will take a chunk out of the 1.5 mil easily.

If he was in his 50s, I would say yes. But, not at 29.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Can my brother live the rest of his life without working? He is 29 years old and inherited a modest house and about $1.5 million. He has no intention to ever work again. He is not a big spender, no lavish vacations or expensive shopping sprees. He does make questionable financial choices sometimes such as paying way too much for something because he didn’t do any research. He is not great at “adulting” like remembering to paying bills and frequently lets his Obama insurance lapse. Overall a functioning person who has no interest in working. He has “done the math” and has determined that he never needs to work again and can live off the money we inherited from our parents. I’m not convinced but he is not open to discussion.

I inherited the same amount of money minus the house. I put it in an investment account. I don’t think it is enough to live on but maybe my life is just very different? I have a wife and a baby. We own a house and want to save for school and college. I did tell my brother that he is going to have a hard time finding a woman with his situation but he always seems to have a new girl he met on Tinder so who knows?

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.

Lol, no. 3% is considered a "permanent withdrawal rate" (i.e., you NEVER run out of money). So he can take out $1.5M x 0.03 = $45K the first year and adjust that up for inflation forever. If he sells the house and nets another $500K, he can bump that up to $60K forever. Only on DCUM can people not understand how *one person* can live off that.

How is 3% withdrawal rate out of 1.5 million "permanent" for a 29 year old AND a 67 year old? Don't you have to adjust the percent for age? Please explain the math.

yeah I don’t understand that either unless the assumption is that the rate of investment return is going to perpetually be more than inflation?

[Anonymous]

Anonymous wrote:I know a guy who basically did this many years ago. He was a woodsy guy who just wanted to live in a quiet place in Michigan. He never traveled overseas, never had a family and always lived rather modestly. Last time I saw him, he was still quiet happy with his life!

I have a family and live in the Washington area, so it would not be enough for me to quit.

Yeah. I know people who live on very little by inheriting a house with low property tax and living abroad part of the year. But they are extremely frugal and handy types who gravitate to living off the grid. Doesn’t sound like OP’s brother.