Anonymous wrote:

Anonymous wrote:

Anonymous wrote:He should get a vasectomy, sell the house and move to Thailand ASAP. He’ll be fine on 4% a year

Until he pisses some gangster off and gets whacked

Hah this is actually good advice. I'm surprised more single guys aren't expats. I know several people living in Colombia on 20-30k per year.

Actually, the best advice of the entire thread. OP's brother needs to sell the house and move to another country.

+1

Invest the 1.5 mil in vtsax or VT and withdrawal 3%/yr. More than enough (45k) to have a decent lifestyle, and even though this guy is a slug, he should be able to date women significantly better than your average woman in the US.

Scrub gets the house and 1.5. He’s a financial fool as OP points out. Makes poor financial decisions. Don’t bail him out OP. And make sure he knows this.

Anonymous wrote:

Anonymous wrote:He should get a vasectomy, sell the house and move to Thailand ASAP. He’ll be fine on 4% a year

Until he pisses some gangster off and gets whacked

Hah this is actually good advice. I'm surprised more single guys aren't expats. I know several people living in Colombia on 20-30k per year.

Actually, the best advice of the entire thread. OP's brother needs to sell the house and move to another country.

Anonymous wrote:He should get a vasectomy, sell the house and move to Thailand ASAP. He’ll be fine on 4% a year

Until he pisses some gangster off and gets whacked

Hah this is actually good advice. I'm surprised more single guys aren't expats. I know several people living in Colombia on 20-30k per year.

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…

I don’t understand how people can be so stupid. Even if they never leave their little area and don’t have a variety of friends, this is beyond idiocy.

If someone in this bubble makes $400,000 and with that they bought a large home, two cars, maybe private school, kids activities, vacations, health care and taxes. How can someone not easily figure out that a single man who lives very frugally can manage on 75,000 and even save some of that?

You clearly can't read, or are too caught up in your own issues, because it has been stated REPEATEDLY that the PP who threw out 75K/year was wrong. The 29 year old is looking at 45K/year if he's lucky, and probably won't get SS benefits or won't have paid into Medicare.

Someone working, even making 45K is paying into SS and Medicare.

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.

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.

Withdrawing $75K in savings per year is not at all equivalent to an earned HHI of $75K. The former generates no opportunity to earn SS credits, acquire employer-sponsored benefits, contribute to a 401k, receive employer-sponsored pay raises, etc…. Why is everyone here so stupid?

Nobody is saying it is the same. That’s not the question posed by OP.

The question is can you live off of $1.5MM of inheritance plus free house. The answer is sure you can. Invest the $1.5MM in a safe asset…live off just the interest as long as you can (maybe even save some in early years and grow the principal). You earn $70k in annual interest.

Also, nobody is saying it’s a great idea…but I bet plenty of working stiffs that earn $40k a year with no savings would trade places with this kid in a heartbeat

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Reading through the thread, the 75K # came from 5% municipal bonds.

It is doubtful that this 29 year old has the type of account that would allow him to direct buy MB on par value, and even if he did, it would take a good deal of research to understand what and which bonds to buy himself.

More realistically, he is looking at 45K/year (3%), and hope he doesn't hit major, unexpected expenses along the way, and stays healthy until he drops dead before his money runs out.

You can't compare a young person with 1.5M and never working again to a person who is gainfully employed for even a decade or two.

This is the real danger. What happens when the house needs a new roof? What happens when he needs an expensive prescription that is only partially covered by insurance? What happens when he's in a car accident? There are innumerable things that could cause this "plan" to fail.

There’s no guarantees safe path through life. Every plan has risk (yes, even working) - you just have to be okay with the immediate tradeoffs and accept the uncertainty.

This goes without saying. The discussion is about options and plans given the circumstances. Not everyone is a: Well, it's going to be what it's going to be person. Clearly that is not OP, but is OP's brother. And if I was OP, I could see OP's brother showing up on his doorstep in 20 years with: Dude, I am broke. Need money.

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.

Withdrawing $75K in savings per year is not at all equivalent to an earned HHI of $75K. The former generates no opportunity to earn SS credits, acquire employer-sponsored benefits, contribute to a 401k, receive employer-sponsored pay raises, etc…. Why is everyone here so stupid?

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…

I don’t understand how people can be so stupid. Even if they never leave their little area and don’t have a variety of friends, this is beyond idiocy.

If someone in this bubble makes $400,000 and with that they bought a large home, two cars, maybe private school, kids activities, vacations, health care and taxes. How can someone not easily figure out that a single man who lives very frugally can manage on 75,000 and even save some of that?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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.

But their HHI keeps pace with inflation.

So would his draw down.

explain this to me like I’m stupid. If he’s basically drawing down all of the interest income and not adding more to the principal, how does his draw down keep pace with inflation?

DP. The assumption is the initial balance will continue to grow, covering the drawdown. I think the studies are based on 60/40 asset allocation.

The problem with bonds, while you might preserve the initial principal, most low risk bonds are not inflation adjusted--very much like a pension that is NOT inflation adjusted--but your expenses ARE inflation adjusted.

I think the 4% rule works with a bigger portfolio and fewer years. I'm doubtful a 3% drawdown could work for 50 - 60 years.

I should clarify: Interest, dividends and growth is what the study is dependent on for the drawdown to work.

Anonymous wrote:

Anonymous wrote:

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.

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.

But their HHI keeps pace with inflation.

So would his draw down.

explain this to me like I’m stupid. If he’s basically drawing down all of the interest income and not adding more to the principal, how does his draw down keep pace with inflation?

DP. The assumption is the initial balance will continue to grow, covering the drawdown. I think the studies are based on 60/40 asset allocation.

The problem with bonds, while you might preserve the initial principal, most low risk bonds are not inflation adjusted--very much like a pension that is NOT inflation adjusted--but your expenses ARE inflation adjusted.

I think the 4% rule works with a bigger portfolio and fewer years. I'm doubtful a 3% drawdown could work for 50 - 60 years.

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

Yes it is. What made you think that?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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.

But their HHI keeps pace with inflation.

Agreed. Plus, 75K on 1.5M is not a realistic number.

Wait, are you trying to tell me that no risk 5% bonds won't be available forever and that it's not a good idea to base your entire financial future on the assumption that they will be?

Again, put all the money into a 30-year treasury that as of today yields 4.74%. That's about as close to 30-years of no-risk as anyone can ever get.

So, you can at least base your next 30 years on that assumption.

I'm going to show my lack of knowledge about bonds. But, are you referring to treasury bonds, bills, TIPS?? Also, is the rate of 4.75 inflation adjusted? Or will it stay 4.75 for the life of the bond/bill/TIPS?? Thanks.

Treasury bond. You can buy TIPS, which gives you some inflation hedge. Not sure what those are yielding. However the yield can also drop to something quite low if you have little to no inflation (basically 2008-2020).

The 4.75 was for the life of the bond.

Anonymous wrote:

Anonymous wrote:Why do so many people think he needs a car? He doesn't plan to work so there's no commute. Perhaps the house he inherited is walking distance from any shops he might need. Or biking distance.

I mean, I’m car free. But is he really going to sit in his house for 60 years? Seems doubtful.

Do YOU just sit in YOUR house? Is that a requirement of being “car-free”?

Anonymous wrote:

Anonymous wrote:Reading through the thread, the 75K # came from 5% municipal bonds.

It is doubtful that this 29 year old has the type of account that would allow him to direct buy MB on par value, and even if he did, it would take a good deal of research to understand what and which bonds to buy himself.

More realistically, he is looking at 45K/year (3%), and hope he doesn't hit major, unexpected expenses along the way, and stays healthy until he drops dead before his money runs out.

You can't compare a young person with 1.5M and never working again to a person who is gainfully employed for even a decade or two.

This is the real danger. What happens when the house needs a new roof? What happens when he needs an expensive prescription that is only partially covered by insurance? What happens when he's in a car accident? There are innumerable things that could cause this "plan" to fail.

There’s no guarantees safe path through life. Every plan has risk (yes, even working) - you just have to be okay with the immediate tradeoffs and accept the uncertainty.