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

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

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. [/quote]

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.[/quote]

This.

Once people understand this, it's like a lightbulb going off. [/quote]

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.

[/quote]

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.

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

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.[/quote]

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.[/quote]

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