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

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

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]$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. [/quote]

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.  [/quote]

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 [b]retired to a small apartment in Paris[/b] 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.[/quote]

How did she manage to get residency?[/quote]

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