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October 02, 2007


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Currently, it would be tough to live on the income from a million dollars in savings. Just health care, mortgage and transportation would eat up a lot of that. And I'm only 32, so inflation would probably kill that before I die.

Now, if I was say 65 or 70 and had no mortgage, I could probably swing it.

Well, if the Securities and Exchange Commission said 1 million 25 years ago, adjusting for inflation (1mil (1.035)^25 = 2.36 million. I think they need to update that!

If you have a million in savings/investments making an average of 5% and you live off the interest (50k year) at age 60, by the time your 85 your only living off 21k RIGHT?

Living off 21k adjusting for inflation that is...

Like Kevin, I'm 32, and $1,000,000 would be enough now (more than my salary, actually), but it's not nearly enough to live on. Sure, for the next ten years it would probably be sufficient, but when I'm 52, with inflation it might not be a comfortable salary (and that's not even taking health care into account). Beyond that, if I weren't at work 40 hours a week (plus lunch plus travel time), I'd have a lot more time I'd need to fill with...something. And doing things will usually cost at least some amount of money.

That being said, if anyone wants to give me $1,000,000, I promise I'll be responsible with it!

Based on my own calculations I'd need about $4.5 million in savings for my retirement in order to be comfortable. And, like the article states, I'm going to try to do that by a combination of real estate, owning businesses and market investing.

I think that I would be just fine on 1 million. Getting a 10% return on that is attainable making it easy to live of 100k since I am well below that right now. Granted there are expenses that I will have to pay when retired but there will also be expenses I won't have that I currently have.

While I would rather have more for a better cushion but making it to the 1M spot would make me more than happy.


If you salary is close to 1mil, please let us know what you do!!!

Under current conditions, I could live off of 1mil, however, like Geekman said, in 30 years when I plan to retire, that will equate to 4.5 million taking inflation into account. The 225k in interest if investments are making 5% would be about 80k in today's terms. I can handle that!!!

One thing to think about, I hope in 5, 10, 20 years, we have all electric cars so transportation costs should decrease!!!!!!!!!

Oops, my numbers were off...
4.5mil in 30 year is 1.6mil now....

I'm getting by on minimum wage; the "needs" expressed in this thread boggle my mind.

If the SEC raises the "accredited investor" bar to $2.5M, will investors with less than $2.5M be disaccredited?

It ALL depends in this scenario. One million to me, right now in my late 20's, I could handle, especially depending on how the money is managed. Yeah we keep throwing around 5%, but if your investments are making 11% a year, you collect your salary and the additional 6% continues to work hard for the next 30-years. Not saying you put this magical million into EFA or GOOG, but there is plenty of room to play with depending on your age.

And thanks for bringing us all down again Mr. Minimum Wage. Anything new to add?

My target net worth is $10 million. Of course by the time I get there it will probably be worth much less in today's dollars. Also it won't all be in cash giving me 5% or whatever--much of it will be in trusts for my kids/grandkids, in a charitable trust, in real estate, businesses, or other illiquid invesments.

You're usually "living off of" only a portion of your assets--so remember that when aiming for any kind of target.

I was aiming for $1 million by the time I retire, but I'm rethinking that. How about $2 million? I also hope I have no debt or any other monetary obligations. One can dream, right?! Also, I hope I'm still healthy & active and will work part-time to give me a purpose.

And thanks for bringing us all down again Mr. Minimum Wage. Anything new to add?

Um, be grateful for what you have? (I think FMF said something along those lines somewhere along the line.)


I will stop using this quality forum to complain about you if you stop repeating how bad your financial life is?

Deal? It really is tiresome, especially when you don't take an ounce of the good advice and keep posting the same whines all over the place, here and at iwillteachyoutoberich etc. etc. etc. STOP IT.

Back on topic.

When this topic comes up...Do you ladies and gents figure the $1 million or $2 million based on YOUR need or on both you AND your spouses needs?

Zook --

I agree. MW, either stop your continual whining/complaining or you'll be banned from the site.

I would retire tomorrow if I had $1M (after tax). Hubby would have to keep working though :-)

Seriously though, $2.5M (in today's dollars) is my retirement goal. However, that is assuming that we won't get any social security benefits and that we retire at age 50/53 and the mortgage has been paid off.

I admit I'm surprised by the big numbers. I was aiming for $1.5 million, retiring at 55, and living a very simple life in the small town Midwest.

I admire that you feel you can reach these big dollar goals. Good luck to all.

The safe withdrawal rate for a portfolio with substantial equities is 4% which would be better for a retirement lasting decades. There really wouldn't be one for bonds lasting indefinitely. It is nice to have goals and you may even get there, although more likely after you retire, but it is possible to get by with little if you control your costs. A $100k income would put you somewhere in the 90-95th percentile, ISFAIR.

Being 23, I'd like to see myself with $100,000 before even thinking about 1, 2, or 5 mil. It sounds so far away but hopefully I'll get to one of these amounts before too long.

Good question. For us the tricky part of quiting a job isn't so much the amount we would need... but the issue of health insurance. Right now the only way for us to get it is through an employer (we were denied coverage, even though we could pay for it due to conditions). It's something people sometimes forget to add to the dream of quitting.

I would like to have 5 million earning interest for life though! :)

No offense FMF it's your blog, but a ban of Min Wage seems a little harsh. Yes, he/she is negative most of the time, but is that really a valid reason for a ban? He's not insulting others, being rude or "trolling" by my judgment.

And to you MW, instead of being so negative, why not try to contribute a little more to the discussion and maybe you will be able to get more out of it. There are some pretty intelligent people reading this it seems. I think you even said you have a college degree, so you should be capable of contributing more than complaints about your earnings.

Kevin --

Yes, he is trolling. I've warned him several times on several posts over several months about the same sort of comments. I've offered to help him and had readers offer the same. He doesn't want help. He wants to complain and let that be it. I don't like it and others don't as well and if it keeps up, he's gone.

Of course, if he wants to contribute to discussions in a meaningful way, he's free to stay.

A few years ago, I would have thought that $1 million is a lot of money. But after seeing blogs such as this and running the numbers, myself. $1 million is very attainable by a large majority of the population. $1 million is always changing; just depends on what period of time you choose to present it with.
I have seen where a lot of parents are leaving more to their kids than they used to. Several of my friends have started out a lot better than I have.
Some have started with new homes and no mortgage.
No student loans
Or $100,000 salary (their parents own a business).
One friend bought and sold a house after 2 years ($50,000 profit).
Alot of people are benefitting from being in right place at the right time and living by the principles suggested on this website.
I would say 10 million is more of what $1 million used to be. Again depends on what period of time? $10 million now compared to $1 million in 1990.

Here's a 69 year old guy: makes $20k/year and still invests nickels and dimes. Found on Kiplinger's:

Brad - I was going to lie (or is it lay? i forget) low for awhile, but I read that Kiplinger article and have a few observations: He presumably didn't start out with any student loan debt like I did (a big advantage right there), he makes more than minimum wage, he lives in a city with a (slightly) lower cost of living (I looked it up), and he presumably also didn't have an extended uninsured illness during which he ran up a lot of debt. Also, I thhink he has a 401(k) plan at work, and I have never had anything like that. Just pointing that out, I'll shut up now

FMF: I support with your proposed ban. I enjoy reading your articles and the comments. A good, spirited discussion has much to teach, and it wouldn't be any fun, or very illuminating, to simply read comments from a bunch of yes-men. However, there isn't much to be gained from reading complaints. Just my two cents.

On to the topic, I am 34, my hub is 43, and we certainly would not be able to quit our jobs on a $1 million windfall, even if that was after taxes, and have the sort of lifestyle we want. I also won't feel like I've made it once I hit that milestone, although I am looking forward to it. I think $3 mill is the new benchmark, at least to me.

I guess we see things differently.
I see a guy that didn't make much but worked hard for what he had and picked up extra jobs to have a comfortable lifestyle, to ACHIEVE something he wanted to do.
401(k)? Doesn't say but he did LISTEN to advice that he was given and started investing.
Sounds to me, that he doesn't complain about his particular situation, either.
There is a lot to be said about a positive outlook on life!

I read some statistics I liked: for you to live without working, you need to calculate how much you spend per month, and then multiply it by 200. Say you spend 1,000 a month. You'd only need 200,000 to live for the rest of your life, without working. That's because, if you get a fund that pays 10% interest a year, and you only get 5% of that interest, the money continues in the bank.

Using the social security site, I found out how much I would get from them today if I were eligible to retire, which is about $2,100/month, and how much I'll get from them when I am actually able to retire, which is about $5,000/month. Today, I would need an additional 1.5 to 2 times what social security would pay me, so I am using the same figure for the future. (I won't have a house payment then, but property taxes aren't going away and I expect health care to be astonomical. Plus, I want to spend more on traveling than I do now. I figure it's a wash.) That means I need to make up $7,500 to $10K/month on my own (for total spending power of $12-15K/month).

As a result, $1.8M is the minimum I feel I will need to retire.

one million dollars is certainly a hefty amount to have in investments. even 500k is quite well. i think the majority of the members are missing several other options...

most of you are assuming that $1,000,000 will only deliver you $50,000/yr. you can make $50k guaranteed in an online savings bank such as with ZERO risk. invest this money in different investments and your annual "salary" goes up sunstantially. i have some income real estate producing about 20% ROI after expenses that ALSO gives me tax breaks. so assuming you are ok managing real tenants/properties, thats $200k a year for you.
you could also invest in stocks, businesses, oil/gas, etc. and likely make 10+% annually although it will differ every year.

also, cost of living is different everywhere. what kind of lifestyle do you currently live? are you happy with it or do you need more material things to complicate your life? everyone is different. i am young (23) and know that i could get by on $50k a year while supporting a wife and i live in New Jersey. but i am happy driving a pickup truck, hanging out at the beach, watching movies, hiking, etc...if you are driving a new car every 3 years, taking $10,000 vacations, etc. you are correct in that $1M is nowhere near enough for your situation...

one final thought... most people that posted are under 40 and assume that retirement means that they will no longer bring in any active income. when you start dedicating more of your free time (which you will have a lot of) to your real interests and talents, you are developing something that can be marketable and profitable. you can sell paintings, perform music, start a small business, maybe make minimum wage working part time at an animal shelter, etc. you will probably earn $2500-$10,000 a year without even trying.

those are just my thoughts.

sorry about all of the spelling/grammar errors

I definitely agree that $1M or $2.5M or $5M completely depends on your age, your profile, your expenses, your goals and of course your current assets.

I am in the 40's and have accumulated over $1.5M in investments, but based on my goals, future disbursements coming and amounts needed to live off this money, it is NOT enough. Why? If I assume that I end working at 62, then I need enough to spend for my goals in retirement (again it is dependent on goals).

A friend of mine and I have done a TON of research on this topic and he has helped me bring it down to VERY SIMPLE calculations, and it is simple:

1. Put $1M in 2007 against all goals (kids education, kids marriage, health care co-payments, kids home-down-payment-help, vacations, and many small one time expenses between 40's and 62). This has a 25% buffer to handle kids asking for education funds for MIT vs PennState, or getting married in Las Vegas vs a wedding with 600 people (400 is normal for us).

2. Put $1M in 2007 against investments (real estate income, dividend income, stock gains (ST and LT), interest income, US and international growth etc). The original $1M serves as money that will pass over to the kids. This has a 10% buffer since most calculations are done based on a low to high return rate. Some years it will be on the low end, and others will be on a high end. God knows what the reality would be.

That is all there is to it. Of course, it seems simple, cause I am almost here, but many of the young folks will seem this easily achievable or just a dream.

I have put all of my efforts in pulling many sacrifices to get here, including driving a 1992 Mazda in 2007. Many responses above had too much pessimism in it, but they are already left behind and we should keep this discussion very productive and moving forward.

In the end, it will be dependent on God's wishes, while I continue to push hard to achieve my well-designed-goals.

Do you guys have any suggestions on how to generate income?


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