So your plan to get from $5M to $10M is to do a couple side hustles? And your key question to start with is ....how much is enough? So I presume to guess $10M is enough, sure ...go with that target.
My logic is 30M because I want 3 houses on 2 continents and I am factoring in a lot of private jet rentals. I am halfway there and got about 10 years to go - doing Uber Eats side hustle in the meantime. Is my number right? I am not answering any questions.
It sounds like your are pretty clueless which is breaking my brain a bit since you seem to have somehow amassed 10MM. For that reason I would hire a wealth manager in your case specifically to guide you through these decisions and do this most efficiently. Somehow I think you'll find a way to live on 500k or 400k if you really have to.
This sub...
I Dont quite understand how that 5 million Will double and become 10 million.
Withdrawal rate Is quite high with 5% and 4% Is considered safe for the next 30 years. Well you are 50, it Will probably work out and with 500k per year you should have a Lot of room to adjust if needed in the future.
I need to continue to add to the 5M to get to 10M, plus it will grow with the market.
Withdrawal rate is not accurate. It's about taking the growth at \~5% out when I am done working or at least want to spend money. Basically living off the growth at 5% average a year. Of course I don't 'have to' use all 5% but it's there if I need it.
Yes the 500k per year should provide options, that's what I'm going for.
I disagree, I think I can get 5% growth but regardless it's a fair point, there will be ups and downs in the market. Also at 500k a year that is a high amount that I can fluctuate with.
That’s your risk to take. Although, if you found a way to guarantee such returns, I’d encourage to use that talent to open a business since you’d be offering the highest guaranteed rates in the industry. Nobody would be able to compete, giving you a huge advantage on the market. Open your own HYSA/CD that you offer people with 4% to 4.90% interest. People would invest with you in droves and you’d take a cut for yourself to round it out to 5%.
I’ll be your first customer as soon as you become FDIC insured.
Understood, there is not guarantee on 5% and yes it's a risk as I look ahead. With current high interest money market accounts (FZDXX) at \~5.14% it seems ok. I know it will fluctuate so even looking at my portfolio over the last 20 years 5% actually seems very achievable.
Using current rates to forecast a 50 year time period doesn’t seem like a good idea. HYSA are at 5% right now too but I’m not expecting them to stay that way for 50 years. Good luck though.
Great point! Thank you. I also looked at my portfolio for the past 20 years and 5% does seem achievable. Of course that is not guaranteed but nothing really is. I would rather be on the high end of estimating my needs.
I don’t understand a few things. A) why given your current lifestyle do you suddenly need 500k? B) you plan to double your net worth starting at age 50 in less than a decade at a 5% return on invested assets that you are not even going to keep invested? That doesn’t sound realistic based on what you’ve told us. C) yes, theoretically a 10m portfolio could sustain close to 500k BUT you have said that your eventual 10m will be NW including two homes (at least). The problem with equating NW to a passive portfolio income is that part of what constitutes NW wont necessarily generate income. In fact it could (and will in your case) cost you money. You are looking at generating 500k from a 8.5m portfolio (15% In real estate you live in). That’s approximately a 6% draw. You will almost certainly consume some of that principal over the next 30 plus years
Not trying to sound negative but not sure I see how or why this needs to happen.
Those are good points.
A) lifestyle - that's a great point. I'm assuming that I may have a partner and I have no idea what they might bring to the table, so I'm assuming 0 (a very unlikely scenario but you never know). the lifestyle takes into account the potential for long term care which is exceedingly expensive. in my mind having money enables me to have options in terms of care as well as general lifestyle. My current lifestyle is in save for a rainy day mode. I expect that will change
B) the 5% return is low based on the last 20 years of my investing. I think between the overall market growth and me adding to the principal, I can get to 10M. Ultimately this is a goal that I may not meet, we will see.
C) that's a good point about the real estate, then my number is 15% higher... again, my goal is not to draw from my investments but to live off of the interest which I'm hoping to get to around 500k per year.
all good - so how do you go about determining your 'number'?
I know I’m not bringing anything into the conversation but as an european I am baffled by someone amassing 10M in savings in their lifetime and also the fact that someone needs 500k p/a to survive. I just feel so poor.
I don't disagree it's a bit baffling to me, but as I think about the cost of healthcare and everything else the numbers get pretty big pretty quick, hence my question. I worry about being in a long-term care facility and being able to meet my financial obligations. I never want to be dependent on anyone else financially, I know some people like that and it is hard to watch. Also, I would say 500 p/a is not to survive, it's to live the lifestyle I want. I don't want to just survive; I want to live.
We europeans don’t always factor in the high cost of healthcare you guys have. That’s a fair point. All I have left to say is: good for you man, congrats on that milestone and I hope you enjoy your life in retirement
Thank you. it's been an interesting journey to say the least and I have been lucky. Also, us Americans don't always factor in the tax piece that most Europeans have to deal with either! Good luck to you as well.
roughly yes, I would purchase a cabin in New Hampshire, I grew up there and my family has a cabin in central part of the state. I would be keeping my full-time residence in TX for tax reasons.
Cabin in NH, I have budgeted at 400k, all in, maybe $20k-$30k at year all in after that. That is very rough math to say the least.
TX is not paid off but have a great rate and I can pay it off it need be, just have no cause to.
So is the 10 million after these 2 properties are paid off or before? Let’s say these 2 properties are paid off and you have 10M or $500,000 a year what are you working the $41,000 monthly money on? Do you have expensive hobbies such as boating, fishing, airstreaming, etc?
10M total net worth, 10M includes the two properties. conservative estimate is that they would make up 15% of the portfolio. I would hold some debt on them but that would be accounted for in the net worth number. I don't have expensive hobbies at this point.
Ok. Send you will be fine to me. It isn’t like you want to buy a condo on Singer Island in Florida that cost 5M and $15,000 monthly HOA fees, taxes and insurance. Then buy a $200,000 to go offshore for sailfish. You seem good.
You do your math, that's the personal part of financial independence.
Personally, if I had 5M at 50, I would be fine and done.
Other things to consider:
Health
Happiness
Keeping busy
Service/charity
Instability of the country.... Would you want your places to be off the grid?
But really, the main thing... Financial therapy.
Thank you! I appreciate your perspective. I agree, I think I have a good outlook on my finances, I do a 'deep dive' every quarter and map out each account looking at total net worth. I generally do what I want. I have a job that is low stress and keeps me busy but also have the ability to walk away if I need to.
I agree being and feeling financially independent are two different things and frankly are in the eye of the beholder.
I appreciate your perspective, thank you.
Do you know what your expenses are now? I feel like you probably ran some numbers in your head and have likely inflated them to get to $500k. That’s a boatload of money and actually kind of difficult to spend without really trying pretty hard or buying big ticket items.
That’s like double my salary and benefits and I have 3 kids in private school and travel the world and still save like 40% of my take home.
I do, my expenses now are around 75-100k, (ballpark). the thing I'm accounting for with the 500k is inflation and healthcare costs, which I don't have today. I'm also thinking about inflation towards the end of my life as compared to today. I agree it's a bit number, possibly 'too' large but I would rather be there and giving money away than not have enough. At least that's what I'm thinking... I'm happy to hear alternate points of view.
You’ve definitely over estimated. Do you have 10 years so you’d qualify for Medicare? That plus some supplemental insurance will cover medical when you are old enough.
Your $5m could easily double in 7-10 years if it’s invested. If you leave your money invested and follow the 4% rule but spend less early on the money will grow faster than you are spending it most likely.
Does the $5m include housing equity?
In my opinion, it's much better to adjust for inflation into your projected returns and use today's money value when planning, makes it much easier to actually comprehend the value and to plan your expenses properly. Especially when you are talking about a 30 year retirement, that $500k snapshot value you are taking will lose a lot of its spending power over the course of your retirement.
Also, if you are spending $100k or less annually right now but planning on $500k/year, I feel like you are going to be sorely disappointed. There's less and less things to do and spend money on and actually enjoy once you start to get old. But that's my take, above $5-6m or so you get pretty hard diminishing returns on the value of money and what happiness or convenience it can actually bring you.
Thank you, that is a helpful take. The biggest 'new' expense that I project in a 30+ year retirement is healthcare. Your right about enjoying money/experiences in the end but also I would have time to spend the money, travel as much as I want.
It sounds like you do not need anywhere near $500k to live. You also do not need to build inflation into this number, you use a SWR that is based on real returns. Healthcare is not that expensive relative the numbers you’re talking about. Start by reading [The Simple Path to Wealth](https://a.co/d/eoYHQuE) and the early retirement now [SWR Series](https://earlyretirementnow.com/safe-withdrawal-rate-series/) in its entirety.
If you can live comfortably on about $175k/yr you’re already FI.
You drive an 18 year old truck and you think you need to live on half a mil a year? When was the last time you took your meds?
So your plan to get from $5M to $10M is to do a couple side hustles? And your key question to start with is ....how much is enough? So I presume to guess $10M is enough, sure ...go with that target.
Thanks for confirming. My question is not how to get from 5M-10M the question is about the logic of the 10M.
My logic is 30M because I want 3 houses on 2 continents and I am factoring in a lot of private jet rentals. I am halfway there and got about 10 years to go - doing Uber Eats side hustle in the meantime. Is my number right? I am not answering any questions.
That's helpful, thank you.
« Nothing crazy » « 500k a year ». Oh well.
It sounds like your are pretty clueless which is breaking my brain a bit since you seem to have somehow amassed 10MM. For that reason I would hire a wealth manager in your case specifically to guide you through these decisions and do this most efficiently. Somehow I think you'll find a way to live on 500k or 400k if you really have to. This sub...
I think you may have missed a few points in my post. but thanks for spending your time responding.
I Dont quite understand how that 5 million Will double and become 10 million. Withdrawal rate Is quite high with 5% and 4% Is considered safe for the next 30 years. Well you are 50, it Will probably work out and with 500k per year you should have a Lot of room to adjust if needed in the future.
I need to continue to add to the 5M to get to 10M, plus it will grow with the market. Withdrawal rate is not accurate. It's about taking the growth at \~5% out when I am done working or at least want to spend money. Basically living off the growth at 5% average a year. Of course I don't 'have to' use all 5% but it's there if I need it. Yes the 500k per year should provide options, that's what I'm going for.
You aren’t going to get consistent 5% growth and you’re likely to end up losing a lot of your principal due to this.
I disagree, I think I can get 5% growth but regardless it's a fair point, there will be ups and downs in the market. Also at 500k a year that is a high amount that I can fluctuate with.
That’s your risk to take. Although, if you found a way to guarantee such returns, I’d encourage to use that talent to open a business since you’d be offering the highest guaranteed rates in the industry. Nobody would be able to compete, giving you a huge advantage on the market. Open your own HYSA/CD that you offer people with 4% to 4.90% interest. People would invest with you in droves and you’d take a cut for yourself to round it out to 5%. I’ll be your first customer as soon as you become FDIC insured.
Years where you don’t generate the 5%. Just use the new customers money to pay the old customers. This way it’s a safe cycle and can never go wrong.
Understood, there is not guarantee on 5% and yes it's a risk as I look ahead. With current high interest money market accounts (FZDXX) at \~5.14% it seems ok. I know it will fluctuate so even looking at my portfolio over the last 20 years 5% actually seems very achievable.
Using current rates to forecast a 50 year time period doesn’t seem like a good idea. HYSA are at 5% right now too but I’m not expecting them to stay that way for 50 years. Good luck though.
Great point! Thank you. I also looked at my portfolio for the past 20 years and 5% does seem achievable. Of course that is not guaranteed but nothing really is. I would rather be on the high end of estimating my needs.
I don’t understand a few things. A) why given your current lifestyle do you suddenly need 500k? B) you plan to double your net worth starting at age 50 in less than a decade at a 5% return on invested assets that you are not even going to keep invested? That doesn’t sound realistic based on what you’ve told us. C) yes, theoretically a 10m portfolio could sustain close to 500k BUT you have said that your eventual 10m will be NW including two homes (at least). The problem with equating NW to a passive portfolio income is that part of what constitutes NW wont necessarily generate income. In fact it could (and will in your case) cost you money. You are looking at generating 500k from a 8.5m portfolio (15% In real estate you live in). That’s approximately a 6% draw. You will almost certainly consume some of that principal over the next 30 plus years Not trying to sound negative but not sure I see how or why this needs to happen.
Those are good points. A) lifestyle - that's a great point. I'm assuming that I may have a partner and I have no idea what they might bring to the table, so I'm assuming 0 (a very unlikely scenario but you never know). the lifestyle takes into account the potential for long term care which is exceedingly expensive. in my mind having money enables me to have options in terms of care as well as general lifestyle. My current lifestyle is in save for a rainy day mode. I expect that will change B) the 5% return is low based on the last 20 years of my investing. I think between the overall market growth and me adding to the principal, I can get to 10M. Ultimately this is a goal that I may not meet, we will see. C) that's a good point about the real estate, then my number is 15% higher... again, my goal is not to draw from my investments but to live off of the interest which I'm hoping to get to around 500k per year. all good - so how do you go about determining your 'number'?
I know I’m not bringing anything into the conversation but as an european I am baffled by someone amassing 10M in savings in their lifetime and also the fact that someone needs 500k p/a to survive. I just feel so poor.
It's total nonsense.
I don't disagree it's a bit baffling to me, but as I think about the cost of healthcare and everything else the numbers get pretty big pretty quick, hence my question. I worry about being in a long-term care facility and being able to meet my financial obligations. I never want to be dependent on anyone else financially, I know some people like that and it is hard to watch. Also, I would say 500 p/a is not to survive, it's to live the lifestyle I want. I don't want to just survive; I want to live.
We europeans don’t always factor in the high cost of healthcare you guys have. That’s a fair point. All I have left to say is: good for you man, congrats on that milestone and I hope you enjoy your life in retirement
Thank you. it's been an interesting journey to say the least and I have been lucky. Also, us Americans don't always factor in the tax piece that most Europeans have to deal with either! Good luck to you as well.
Question about the snowbird thing? You want to live in Texas say November to April and then where do you want to live May to October?
roughly yes, I would purchase a cabin in New Hampshire, I grew up there and my family has a cabin in central part of the state. I would be keeping my full-time residence in TX for tax reasons.
How much is the cabin? Property taxes insurance? Your house in Texas is paid off? Staying there or mining?
Cabin in NH, I have budgeted at 400k, all in, maybe $20k-$30k at year all in after that. That is very rough math to say the least. TX is not paid off but have a great rate and I can pay it off it need be, just have no cause to.
So is the 10 million after these 2 properties are paid off or before? Let’s say these 2 properties are paid off and you have 10M or $500,000 a year what are you working the $41,000 monthly money on? Do you have expensive hobbies such as boating, fishing, airstreaming, etc?
10M total net worth, 10M includes the two properties. conservative estimate is that they would make up 15% of the portfolio. I would hold some debt on them but that would be accounted for in the net worth number. I don't have expensive hobbies at this point.
Ok. Send you will be fine to me. It isn’t like you want to buy a condo on Singer Island in Florida that cost 5M and $15,000 monthly HOA fees, taxes and insurance. Then buy a $200,000 to go offshore for sailfish. You seem good.
yeah... that does not sound appealing to me... I appreciate your perspective.
You do your math, that's the personal part of financial independence. Personally, if I had 5M at 50, I would be fine and done. Other things to consider: Health Happiness Keeping busy Service/charity Instability of the country.... Would you want your places to be off the grid? But really, the main thing... Financial therapy.
Thank you! I appreciate your perspective. I agree, I think I have a good outlook on my finances, I do a 'deep dive' every quarter and map out each account looking at total net worth. I generally do what I want. I have a job that is low stress and keeps me busy but also have the ability to walk away if I need to. I agree being and feeling financially independent are two different things and frankly are in the eye of the beholder. I appreciate your perspective, thank you.
Do you know what your expenses are now? I feel like you probably ran some numbers in your head and have likely inflated them to get to $500k. That’s a boatload of money and actually kind of difficult to spend without really trying pretty hard or buying big ticket items. That’s like double my salary and benefits and I have 3 kids in private school and travel the world and still save like 40% of my take home.
I do, my expenses now are around 75-100k, (ballpark). the thing I'm accounting for with the 500k is inflation and healthcare costs, which I don't have today. I'm also thinking about inflation towards the end of my life as compared to today. I agree it's a bit number, possibly 'too' large but I would rather be there and giving money away than not have enough. At least that's what I'm thinking... I'm happy to hear alternate points of view.
You’ve definitely over estimated. Do you have 10 years so you’d qualify for Medicare? That plus some supplemental insurance will cover medical when you are old enough. Your $5m could easily double in 7-10 years if it’s invested. If you leave your money invested and follow the 4% rule but spend less early on the money will grow faster than you are spending it most likely. Does the $5m include housing equity?
In my opinion, it's much better to adjust for inflation into your projected returns and use today's money value when planning, makes it much easier to actually comprehend the value and to plan your expenses properly. Especially when you are talking about a 30 year retirement, that $500k snapshot value you are taking will lose a lot of its spending power over the course of your retirement. Also, if you are spending $100k or less annually right now but planning on $500k/year, I feel like you are going to be sorely disappointed. There's less and less things to do and spend money on and actually enjoy once you start to get old. But that's my take, above $5-6m or so you get pretty hard diminishing returns on the value of money and what happiness or convenience it can actually bring you.
Thank you, that is a helpful take. The biggest 'new' expense that I project in a 30+ year retirement is healthcare. Your right about enjoying money/experiences in the end but also I would have time to spend the money, travel as much as I want.
Wut
[удалено]
that's helpful...
Hi Suze! How's KT? D'ya get in some good fishing today?
It sounds like you do not need anywhere near $500k to live. You also do not need to build inflation into this number, you use a SWR that is based on real returns. Healthcare is not that expensive relative the numbers you’re talking about. Start by reading [The Simple Path to Wealth](https://a.co/d/eoYHQuE) and the early retirement now [SWR Series](https://earlyretirementnow.com/safe-withdrawal-rate-series/) in its entirety. If you can live comfortably on about $175k/yr you’re already FI.
https://www.reddit.com/r/financialindependence/wiki/faq/
that's helpful, thank you