Author Topic: $1 Million Isn't That Much....  (Read 7023 times)

ltt

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$1 Million Isn't That Much....
« on: January 28, 2017, 06:44:20 AM »
.............sigh.

Having lunch with a group of friends yesterday.  Some of the conversations we have sometimes center around college and debt.  This person doesn't believe one needs a college education unless it's a more specialized area.  I tend to agree on this matter.  But when it was mentioned that having a college degree and making $1 million more over the course of a career versus having a high school degee/community college really isn't that much............well, I had no words.  I did mention about investing that money....didn't get very far. 

Indexer

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Re: $1 Million Isn't That Much....
« Reply #1 on: January 28, 2017, 07:25:05 AM »
Based on average pay figures from CNN.

HS: $35,000yr for 40 years = 1.4 million.

BS: $60,000yr for 40 years = 2.4 million.

Yes, it is only one million more. If it was 10 million VS 9 million that would be a small increase. 2.4 VS 1.4 million as a percentage it is a 71% increase. That is a huge increase in pay.

http://money.cnn.com/infographic/economy/college-degree-earnings/


EDIT: I used 40 years of work because we are talking about the average person. I know for this crowd 10-15 years would be more appropriate. ;)
« Last Edit: January 28, 2017, 07:27:47 AM by Indexer »

DailyGrindFree

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Re: $1 Million Isn't That Much....
« Reply #2 on: January 28, 2017, 07:40:33 AM »
Based on average pay figures from CNN.

HS: $35,000yr for 40 years = 1.4 million.

BS: $60,000yr for 40 years = 2.4 million.

Yes, it is only one million more. If it was 10 million VS 9 million that would be a small increase. 2.4 VS 1.4 million as a percentage it is a 71% increase. That is a huge increase in pay.

http://money.cnn.com/infographic/economy/college-degree-earnings/


EDIT: I used 40 years of work because we are talking about the average person. I know for this crowd 10-15 years would be more appropriate. ;)

You are absolutely right. 71% increase can't defined as "isn't that much". What about the investment of the difference over 40 years.
Any number increase is relative to person's situation and how much she/he is making.

JR

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Re: $1 Million Isn't That Much....
« Reply #3 on: January 28, 2017, 09:31:45 AM »
I often hear/read the phrase $1 million just isn't much money anymore. Using a 3% SWR, $1 million could produce more income than the median individual income (~$26k) in the wealthiest nation to ever exist. Sure sounds like a lot of money to me.

oldtoyota

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Re: $1 Million Isn't That Much....
« Reply #4 on: January 28, 2017, 09:42:11 AM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.


TheAnonOne

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Re: $1 Million Isn't That Much....
« Reply #5 on: January 28, 2017, 11:00:00 AM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.

Well, if they can adequately explain why the 4% rule is age-ist, they might have ya!

Most people couldn't tell you a damn thing about investing, beyond that, those that know the market does "7%" a year have no comprehension of what that actually means.

People just generally quote some garbage with no true understanding of what it means, to you, or to them. It's basically just some ignorance.

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THOUGH, to play devils advocate, retiring on the 4% rule is much easier in your 30s, when, if things go, or start to go south, you can make more money to correct it. When you're 70, while you COULD the will is usually not there anymore.

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Re: $1 Million Isn't That Much....
« Reply #6 on: January 28, 2017, 11:52:25 AM »
Based on average pay figures from CNN.

HS: $35,000yr for 40 years = 1.4 million.

BS: $60,000yr for 40 years = 2.4 million.

Yes, it is only one million more. If it was 10 million VS 9 million that would be a small increase. 2.4 VS 1.4 million as a percentage it is a 71% increase. That is a huge increase in pay.

http://money.cnn.com/infographic/economy/college-degree-earnings/


EDIT: I used 40 years of work because we are talking about the average person. I know for this crowd 10-15 years would be more appropriate. ;)

You are absolutely right. 71% increase can't defined as "isn't that much". What about the investment of the difference over 40 years.
Any number increase is relative to person's situation and how much she/he is making.

Depending on the individual's living situation, there are breaks and tax incentives at the $35k-ish range that are not available at the $60k-ish range. That can really even out the difference in standard of living.
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Classical_Liberal

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Re: $1 Million Isn't That Much....
« Reply #7 on: January 28, 2017, 01:25:22 PM »
Based on average pay figures from CNN.

HS: $35,000yr for 40 years = 1.4 million.

BS: $60,000yr for 40 years = 2.4 million.

Yes, it is only one million more. If it was 10 million VS 9 million that would be a small increase. 2.4 VS 1.4 million as a percentage it is a 71% increase. That is a huge increase in pay.

http://money.cnn.com/infographic/economy/college-degree-earnings/


EDIT: I used 40 years of work because we are talking about the average person. I know for this crowd 10-15 years would be more appropriate. ;)

You are absolutely right. 71% increase can't defined as "isn't that much". What about the investment of the difference over 40 years.
Any number increase is relative to person's situation and how much she/he is making.

Depending on the individual's living situation, there are breaks and tax incentives at the $35k-ish range that are not available at the $60k-ish range. That can really even out the difference in standard of living.

Not to mention that the "average" person finances the degree at 5 percent interest over 10 or more years of repayment, the gap continues to close.  Most of the "generals"/Liberal Arts portion of a Bachelor's education are available for free or near free if one chooses to partake.  It's very occupation dependant. 

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Re: $1 Million Isn't That Much....
« Reply #8 on: January 28, 2017, 01:26:28 PM »
I think 1 mil is plenty if you diversify some investments and live moderately. I think the temptation is always to spend spend spend, life is about more than material possessions.

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Re: $1 Million Isn't That Much....
« Reply #9 on: January 28, 2017, 01:30:36 PM »
$1 mil is a lot.... and it isn't. 

I've had several friends say "If I only had a million dollars I'd retire and ..."  And the truth is, they COULDN'T.  Or, to be more clear: they couldn't retire on $1 mil given their current spending. 

I find most people have not a clue:
* how much they spend
* how much that means they'd need
* how much less they could get by on and still be pretty damn happy
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Re: $1 Million Isn't That Much....
« Reply #10 on: January 28, 2017, 02:15:44 PM »
I often hear/read the phrase $1 million just isn't much money anymore. Using a 3% SWR, $1 million could produce more income than the median individual income (~$26k) in the wealthiest nation to ever exist. Sure sounds like a lot of money to me.

Damn skippy!   

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Re: $1 Million Isn't That Much....
« Reply #11 on: January 28, 2017, 02:18:11 PM »
$1 mil is a lot.... and it isn't. 

I've had several friends say "If I only had a million dollars I'd retire and ..."  And the truth is, they COULDN'T.  Or, to be more clear: they couldn't retire on $1 mil given their current spending. 

I find most people have not a clue:
* how much they spend
* how much that means they'd need
* how much less they could get by on and still be pretty damn happy

The irony is that a person whose spending habits make them unable to retire on the SWR of $1M is perfectly capable of stashing that $1M, unless they're in serious debt. They generally have income to cover that consumption.

If they were willing to live on what they could have from that nest egg-- call it $1M since that's the figure being floated around-- and save the rest of their income while working like a lion-stalked wildebeest, they would most likely accumulate that million in just a few years at an ordinary professional income level.
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Metric Mouse

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Re: $1 Million Isn't That Much....
« Reply #12 on: January 28, 2017, 05:33:58 PM »
$1 mil is a lot.... and it isn't. 

I've had several friends say "If I only had a million dollars I'd retire and ..."  And the truth is, they COULDN'T.  Or, to be more clear: they couldn't retire on $1 mil given their current spending. 

I don't think there's anything wrong with that. But what if the conversation went to point out that that $1 million, left invested over ten years, would double in inflation adjusted terms. So while they might not be able to retire now, they could be just ten years from retirement, very easily, with no extra effort from them.

At that point it would be easy to point out some of the small changes that could be made to bring that 10 year time frame much closer to zero years.
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Re: $1 Million Isn't That Much....
« Reply #13 on: February 06, 2017, 03:21:29 PM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.

 A couple years ago, while discussing money with my out of college daughter, I pointed out, a million dollars is a lot of money but, it still will only generate about $40,000 a year, where a good job will get you $60k to $100K.

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Re: $1 Million Isn't That Much....
« Reply #14 on: February 06, 2017, 07:16:02 PM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.

 A couple years ago, while discussing money with my out of college daughter, I pointed out, a million dollars is a lot of money but, it still will only generate about $40,000 a year, where a good job will get you $60k to $100K.
I think I'd take the only $40k a year to do whatever I wanted, rather than $60K for a job. Just me though.
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Re: $1 Million Isn't That Much....
« Reply #15 on: February 06, 2017, 07:48:21 PM »
I often hear/read the phrase $1 million just isn't much money anymore. Using a 3% SWR, $1 million could produce more income than the median individual income (~$26k) in the wealthiest nation to ever exist. Sure sounds like a lot of money to me.

Not to mention that you're expenses in earning this much would be less than if you worked a real job as you wouldn't need to drive, or buy clothes for it, or many other things that add up.

I think I'd take the only $40k a year to do whatever I wanted, rather than $60K for a job. Just me though.

Me too, not to mention that working for $60k would yield somewhere around $48k after taxes while $40k would run to about $34k. $14k difference can be partially offset by things like needing a commute and my life would be noticably less stressful. Plus $34k is more than enough to for me to live off of.


I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.
Well, if they can adequately explain why the 4% rule is age-ist, they might have ya!

Yeah my family still says the same to me though my attitude hasn't changed in the years since I discovered MMM. I come from an Indian background, which has a patronizing attitude towards younger members of the family. I don't let it concern me.

Last year when my sister and her husband came to visit she claimed I would need at least $2.5M. A cousin who works on Wall Street said I should get $5M (though he was overall supportive of the idea of retiring early)). My sister's husband who is a business professor didn't believe in the 4% rule. Also my sister kinda wigged out and said the idea of me retiring by the age of 37 would be "unfair," but I didn't remember until later that was her age so that could explain that reaction.

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Re: $1 Million Isn't That Much....
« Reply #16 on: February 07, 2017, 06:13:24 AM »
Yeah my family still says the same to me though my attitude hasn't changed in the years since I discovered MMM. I come from an Indian background, which has a patronizing attitude towards younger members of the family. I don't let it concern me.

Last year when my sister and her husband came to visit she claimed I would need at least $2.5M. A cousin who works on Wall Street said I should get $5M (though he was overall supportive of the idea of retiring early)). My sister's husband who is a business professor didn't believe in the 4% rule. Also my sister kinda wigged out and said the idea of me retiring by the age of 37 would be "unfair," but I didn't remember until later that was her age so that could explain that reaction.
I know the patronizing sentiment.

I have a really nice fun job, wife likes hers too. That's the reason we're looking at retiring at 55 when our kids go to college. We've decided we'll slow travel and work out (we're already travelling internationally annually and working out).

I told my dad on Saturday night after dinner about our plans. He was very happy. He said at least I listed to my (late) Grandpa and I have the same attitude as he did. FWIW, my dad was laid off a few years back and drove my mum and my grandma crazy, luckily his old employer called him back. He has a relaxing desk job, and he's from the mindset where if you don't work, what else do you do?

Most people who've said we can't retire by 55 either can't retire by 65 due to their spending habits (my millionaire doctor uncle and his friends) or they don't have the balls to simplify their lifestyle as their wives are the boss of them (I love rubbing that in their faces). I have to constantly tell them that my family would never consult them since as health professionals they don't even take care of their personal health. Or they are plain fucking jealous that an accountant and engineer can do it on their oh-so-low salaries (as if we don't know the compounding power of lazy investing). Or they think my kids will go without 'nice' things in life like a new car and a huge sweet 16 party, private schools and out of state universities.

Bless their hearts.
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talltexan

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Re: $1 Million Isn't That Much....
« Reply #17 on: February 07, 2017, 08:29:19 AM »
I'm on the side of getting a college education.

However, it's not fair to compare those earnings without noting that skipping college means you can start earning big money four years earlier. College costs a lot of money and time right out of the gate. I could see how finding the right job at age 19 could put you on a better track to retire by 30 if you can achieve the high savings rate out of that $35 K.

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Re: $1 Million Isn't That Much....
« Reply #18 on: February 07, 2017, 08:42:26 AM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.

 A couple years ago, while discussing money with my out of college daughter, I pointed out, a million dollars is a lot of money but, it still will only generate about $40,000 a year, where a good job will get you $60k to $100K.
A good job plus a million will generate $100-140K...why not have both ;)

The thing about having a million, once you get it in hand you can decide. Those without the million can only complain about how its not enough to retire, which is pointless since its not a choice you can make until you get the money. Its called armchair quarterbacking, its easy to criticize when you have no skin in the game. Wait till you reach that million, if you decide its not enough within 10 years you'll have 2 million through compound savings. Is 2 million enough? No, how about 4 million after 20 years? 8 million in 30? The numbers get crazy after a couple decades, if I hit 1 million by age 45 I will have 4 million at 65 without saving another dime...

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Re: $1 Million Isn't That Much....
« Reply #19 on: February 07, 2017, 09:32:07 AM »
Yeah my family still says the same to me though my attitude hasn't changed in the years since I discovered MMM. I come from an Indian background, which has a patronizing attitude towards younger members of the family. I don't let it concern me.

Last year when my sister and her husband came to visit she claimed I would need at least $2.5M. A cousin who works on Wall Street said I should get $5M (though he was overall supportive of the idea of retiring early)). My sister's husband who is a business professor didn't believe in the 4% rule. Also my sister kinda wigged out and said the idea of me retiring by the age of 37 would be "unfair," but I didn't remember until later that was her age so that could explain that reaction.
I know the patronizing sentiment.

I have a really nice fun job, wife likes hers too. That's the reason we're looking at retiring at 55 when our kids go to college. We've decided we'll slow travel and work out (we're already travelling internationally annually and working out).

I told my dad on Saturday night after dinner about our plans. He was very happy. He said at least I listed to my (late) Grandpa and I have the same attitude as he did. FWIW, my dad was laid off a few years back and drove my mum and my grandma crazy, luckily his old employer called him back. He has a relaxing desk job, and he's from the mindset where if you don't work, what else do you do?

Most people who've said we can't retire by 55 either can't retire by 65 due to their spending habits (my millionaire doctor uncle and his friends) or they don't have the balls to simplify their lifestyle as their wives are the boss of them (I love rubbing that in their faces). I have to constantly tell them that my family would never consult them since as health professionals they don't even take care of their personal health. Or they are plain fucking jealous that an accountant and engineer can do it on their oh-so-low salaries (as if we don't know the compounding power of lazy investing). Or they think my kids will go without 'nice' things in life like a new car and a huge sweet 16 party, private schools and out of state universities.

Bless their hearts.

That's great that you enjoy your job. With me, I don't know if I'll continue working once FIRE, but I just loving the idea of having that choice. My dad is the same way, he's 65 and still working but it largely is because he doesn't know what else he would do with his time.

Yeah, I definitely have a lot of family members that earn significantly more than I do but I suspect aren't doing a great job of saving it. AFAIK my siblings and their spouses are saving money, but as they both live in very HCOL areas and have kids and a hefty mortgage....I don't think retiring early is something they have considered.

talltexan

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Re: $1 Million Isn't That Much....
« Reply #20 on: February 13, 2017, 10:05:41 AM »
I'm an only child, but my wife is pretty close with her brother. She vascillates between claiming he's a tiger at saving/investing (he's five years younger than we are), and claiming he's working with wayyy less than we are. I take the life cycle approach, claiming he will significantly out-earn us over the life cycle, in order to try to pressure my wife to scale back.

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Re: $1 Million Isn't That Much....
« Reply #21 on: February 16, 2017, 04:01:39 PM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.

 A couple years ago, while discussing money with my out of college daughter, I pointed out, a million dollars is a lot of money but, it still will only generate about $40,000 a year, where a good job will get you $60k to $100K.
I think I'd take the only $40k a year to do whatever I wanted, rather than $60K for a job. Just me though.

Me, too. $40K a year is enough for me. I tracked our spending and know that it's possible for us.

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Re: $1 Million Isn't That Much....
« Reply #22 on: February 16, 2017, 04:03:59 PM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.

 A couple years ago, while discussing money with my out of college daughter, I pointed out, a million dollars is a lot of money but, it still will only generate about $40,000 a year, where a good job will get you $60k to $100K.
A good job plus a million will generate $100-140K...why not have both ;)

The thing about having a million, once you get it in hand you can decide. Those without the million can only complain about how its not enough to retire, which is pointless since its not a choice you can make until you get the money. Its called armchair quarterbacking, its easy to criticize when you have no skin in the game. Wait till you reach that million, if you decide its not enough within 10 years you'll have 2 million through compound savings. Is 2 million enough? No, how about 4 million after 20 years? 8 million in 30? The numbers get crazy after a couple decades, if I hit 1 million by age 45 I will have 4 million at 65 without saving another dime...

Wouldn't you have to avoid spending the principal on the $1M at age 45 for you to have $4M at age 65? Maybe that is implied in your statement.

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Re: $1 Million Isn't That Much....
« Reply #23 on: February 17, 2017, 12:47:21 AM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.

 A couple years ago, while discussing money with my out of college daughter, I pointed out, a million dollars is a lot of money but, it still will only generate about $40,000 a year, where a good job will get you $60k to $100K.
A good job plus a million will generate $100-140K...why not have both ;)

The thing about having a million, once you get it in hand you can decide. Those without the million can only complain about how its not enough to retire, which is pointless since its not a choice you can make until you get the money. Its called armchair quarterbacking, its easy to criticize when you have no skin in the game. Wait till you reach that million, if you decide its not enough within 10 years you'll have 2 million through compound savings. Is 2 million enough? No, how about 4 million after 20 years? 8 million in 30? The numbers get crazy after a couple decades, if I hit 1 million by age 45 I will have 4 million at 65 without saving another dime...

Wouldn't you have to avoid spending the principal on the $1M at age 45 for you to have $4M at age 65? Maybe that is implied in your statement.
I think that was the point. with 1 million one can keep working and spending every dime they make, and still be pretty well off in twenty years. There is no downside to having $1million as early as possible, whether it is 'enough' or not.
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Re: $1 Million Isn't That Much....
« Reply #24 on: February 17, 2017, 07:20:56 AM »
$1 million might not grow to $4 million in twenty years. A 5.5% real return would only get you to $3 million.

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Re: $1 Million Isn't That Much....
« Reply #25 on: February 17, 2017, 10:30:36 AM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.

 A couple years ago, while discussing money with my out of college daughter, I pointed out, a million dollars is a lot of money but, it still will only generate about $40,000 a year, where a good job will get you $60k to $100K.
A good job plus a million will generate $100-140K...why not have both ;)

 I do have both (plus), my daughter, no, she's back in school.
Although I semi-retired in Jan, semi because we run a small business and my wife is working 7 days a week.
 I only work to give her a day off, about once a week. She could retire, but she is not interested, also, she told my daughter she would pay her way through dental school. The business income should cover our expenses plus the dental school costs, but it could get tight. I don't want to touch our retirement funds, for 5 years.

Quote
The thing about having a million, once you get it in hand you can decide. Those without the million can only complain about how its not enough to retire, which is pointless since its not a choice you can make until you get the money. Its called armchair quarterbacking, its easy to criticize when you have no skin in the game. Wait till you reach that million, if you decide its not enough within 10 years you'll have 2 million through compound savings. Is 2 million enough? No, how about 4 million after 20 years? 8 million in 30? The numbers get crazy after a couple decades, if I hit 1 million by age 45 I will have 4 million at 65 without saving another dime...
   I decided $1M is not enough, but the last 5 or 6 years of market growth fixed that. I don't think I would like living on $25k (MMM) or even $40k, although I don't think we spend a lot more than $40k certainly less than $50k.
 I'm an oddity here as I'm older at 61 yrs old and will collect SS in 5 years. So barring any major life problems or market meltdowns, l expect life to be great.

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Re: $1 Million Isn't That Much....
« Reply #26 on: February 17, 2017, 09:10:19 PM »
I was told this a few months ago and then told I am "young" as in "too young" to understand $1M is not 'enough" to retire.

 A couple years ago, while discussing money with my out of college daughter, I pointed out, a million dollars is a lot of money but, it still will only generate about $40,000 a year, where a good job will get you $60k to $100K.
A good job plus a million will generate $100-140K...why not have both ;)

The thing about having a million, once you get it in hand you can decide. Those without the million can only complain about how its not enough to retire, which is pointless since its not a choice you can make until you get the money. Its called armchair quarterbacking, its easy to criticize when you have no skin in the game. Wait till you reach that million, if you decide its not enough within 10 years you'll have 2 million through compound savings. Is 2 million enough? No, how about 4 million after 20 years? 8 million in 30? The numbers get crazy after a couple decades, if I hit 1 million by age 45 I will have 4 million at 65 without saving another dime...

I admit, in my more fanciful moments I wonder what it'd be like to use the stash to upgrade your lifestyle, if only for a year or two.  A part of me is weirdly curious what a first class flight would be like, not that I'd ever do it.

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Re: $1 Million Isn't That Much....
« Reply #27 on: February 17, 2017, 11:48:55 PM »
I'm on the side of getting a college education.

However, it's not fair to compare those earnings without noting that skipping college means you can start earning big money four years earlier. College costs a lot of money and time right out of the gate. I could see how finding the right job at age 19 could put you on a better track to retire by 30 if you can achieve the high savings rate out of that $35 K.

Also there are other options besides high school and 4 years at college. Trades can make plenty... Sometimes I make $800 in a day. At the moment I have a regular gig that I do each month inspecting empty stores for a management company and make around $900 for about 5 hours work.

scottish

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Re: $1 Million Isn't That Much....
« Reply #28 on: February 18, 2017, 08:27:18 AM »
First class flight isn't worth it.  :-)

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Re: $1 Million Isn't That Much....
« Reply #29 on: February 18, 2017, 11:22:40 AM »
First class flight isn't worth it.  :-)

Indeed.  I've been bumped up before without paying.  Better food.  Free drinks.  More leg room.  Figure out what that is worth to you before hand, then check the price of coach vs first.  Personally, I don't think I could ever justify it.   You and they both arrive at the destination at the same time.  They might get off the plane 3 minutes before you, but you're both sitting there waiting at the same baggage claim.

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Re: $1 Million Isn't That Much....
« Reply #30 on: February 18, 2017, 11:38:07 AM »
I had to go out to Vancouver last month.   I paid Air Canada an extra $50 to sit in an exit row (about 9" extra leg room).

That was worth it.

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Re: $1 Million Isn't That Much....
« Reply #31 on: February 18, 2017, 03:34:02 PM »
$1 million might not grow to $4 million in twenty years. A 5.5% real return would only get you to $3 million.
Good point. And no way is 3 million enough, either! We had all better keep working. :)
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scottish

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Re: $1 Million Isn't That Much....
« Reply #32 on: February 18, 2017, 06:02:00 PM »
But if you managed a 10% return, $1M would grow to almost $7M in 20 years.   So we should stop working sooner.

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Re: $1 Million Isn't That Much....
« Reply #33 on: February 18, 2017, 06:52:44 PM »
First class flight isn't worth it.  :-)

Indeed.  I've been bumped up before without paying.  Better food.  Free drinks.  More leg room.  Figure out what that is worth to you before hand, then check the price of coach vs first.  Personally, I don't think I could ever justify it.   You and they both arrive at the destination at the same time.  They might get off the plane 3 minutes before you, but you're both sitting there waiting at the same baggage claim.

I've flown business class trans-pacific (when I wasn't the one picking up the tab). For international flights, there is a bigger difference (a seat you can lay mostly flat to sleep in being the biggest perk, but enough room to use my laptop to work on slides without elbowing my neighbors was also a significant perk). Of course the price differential is also higher for business/flight class tickets when flying internationally. I could maybe see myself paying out of pocket for it at some point under some some extreme set of circumstances... but I certainly haven't felt the need to yet.
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Re: $1 Million Isn't That Much....
« Reply #34 on: February 19, 2017, 04:52:18 AM »
First class flight isn't worth it.  :-)

I knew it!

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Re: $1 Million Isn't That Much....
« Reply #35 on: February 19, 2017, 05:35:21 AM »
I heard 5MM isn't what it used to be the other day at work. 200k per year. Isn't what it used to be haha
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Re: $1 Million Isn't That Much....
« Reply #36 on: February 19, 2017, 06:52:17 AM »
I heard 5MM isn't what it used to be the other day at work. 200k per year. Isn't what it used to be haha

$5MM isn't what it used to be.  You'd have to have $40MM in today's dollars to have the same relative wealth as $5MM in 1960. 
But that's beside the point, as anyone in their right mind could retire with much less than $5MM today. 

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Re: $1 Million Isn't That Much....
« Reply #37 on: February 19, 2017, 07:15:58 AM »
Oh, desk_jockey, I've been on a low information diet sonce November, 2016, to keep my head from exploding,  but sometimes things slip through. That quote is a total trainwreck. It would be hilarious if it wasn't true.
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Re: $1 Million Isn't That Much....
« Reply #38 on: February 19, 2017, 07:22:44 AM »
Based on average pay figures from CNN.

HS: $35,000yr for 40 years = 1.4 million.

BS: $60,000yr for 40 years = 2.4 million.

Yes, it is only one million more. If it was 10 million VS 9 million that would be a small increase. 2.4 VS 1.4 million as a percentage it is a 71% increase. That is a huge increase in pay.

http://money.cnn.com/infographic/economy/college-degree-earnings/


EDIT: I used 40 years of work because we are talking about the average person. I know for this crowd 10-15 years would be more appropriate. ;)

I take issue with using data like this to promote college attendance.  Because this study is based on an insane amount of selection bias, it is no help in figuring out how much more an individual will earn if he chooses to attend and graduate from college. 
In general, the kind of people who go to college would probably out earn the kind of people who don't go to college, even if they had the same credentials.  I believe much of the additional earnings aren't due to the diploma, but come about because of expectations, motivations, family background, etc.   I actually think colleges often inhibit the financial health of students, but that is a topic for another post.

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Re: $1 Million Isn't That Much....
« Reply #39 on: February 19, 2017, 09:03:44 AM »
Based on average pay figures from CNN.

HS: $35,000yr for 40 years = 1.4 million.

BS: $60,000yr for 40 years = 2.4 million.

Yes, it is only one million more. If it was 10 million VS 9 million that would be a small increase. 2.4 VS 1.4 million as a percentage it is a 71% increase. That is a huge increase in pay.

http://money.cnn.com/infographic/economy/college-degree-earnings/


EDIT: I used 40 years of work because we are talking about the average person. I know for this crowd 10-15 years would be more appropriate. ;)

I take issue with using data like this to promote college attendance.  Because this study is based on an insane amount of selection bias, it is no help in figuring out how much more an individual will earn if he chooses to attend and graduate from college. 
In general, the kind of people who go to college would probably out earn the kind of people who don't go to college, even if they had the same credentials.  I believe much of the additional earnings aren't due to the diploma, but come about because of expectations, motivations, family background, etc.   I actually think colleges often inhibit the financial health of students, but that is a topic for another post.
Indeed. Studies like this lump people for whom college isn't an option due to, say, extreme mental developmental delays in with people who enter the skilled trades, kick butt, take names, and end up owning a plumbing company, a car dealership or a construction company.
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maizeman

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Re: $1 Million Isn't That Much....
« Reply #40 on: February 19, 2017, 09:24:52 AM »
Controlled studies in humans are hard. For estimating the actual value of an ivy league degree, folks look at students who got admitted to one or more ivy league schools but still decided to go to another school. And even though there are still plenty of confounding factors, they find that the wage gap is much smaller than if you just compare the gap in average wages between an ivy league graduate and the grads of other universities.

It's much harder to do this with college generally since lots of people who attend end up dropping out before they get a degree, so even if you compared people who applied to college, got admitted, but didn't attend, you still wouldn't know if they'd have completed the degree or not and the fair comparison would be to the wages of the combination of college grads and college drop outs.

I'd argue that the wage premium of college grads is a combination of three main factors:
A selection effect: colleges admit people who are already likely to make more money (based on their existing intelligence, drive, soft-skills, etc)
A signaling effect: finishing a college degree shows potential employers that you know how to show up and get work done on time without your parents looking over your shoulder like they did in HS.
A training effect: you actually learn some skills in college that are valuable to employers.

The problem is sorting out the relative impact of those three factors.
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Re: $1 Million Isn't That Much....
« Reply #41 on: February 19, 2017, 10:33:58 AM »
Yeah my family still says the same to me though my attitude hasn't changed in the years since I discovered MMM. I come from an Indian background, which has a patronizing attitude towards younger members of the family. I don't let it concern me.

Last year when my sister and her husband came to visit she claimed I would need at least $2.5M. A cousin who works on Wall Street said I should get $5M (though he was overall supportive of the idea of retiring early)). My sister's husband who is a business professor didn't believe in the 4% rule. Also my sister kinda wigged out and said the idea of me retiring by the age of 37 would be "unfair," but I didn't remember until later that was her age so that could explain that reaction.
I know the patronizing sentiment.

I have a really nice fun job, wife likes hers too. That's the reason we're looking at retiring at 55 when our kids go to college. We've decided we'll slow travel and work out (we're already travelling internationally annually and working out).

I told my dad on Saturday night after dinner about our plans. He was very happy. He said at least I listed to my (late) Grandpa and I have the same attitude as he did. FWIW, my dad was laid off a few years back and drove my mum and my grandma crazy, luckily his old employer called him back. He has a relaxing desk job, and he's from the mindset where if you don't work, what else do you do?

Most people who've said we can't retire by 55 either can't retire by 65 due to their spending habits (my millionaire doctor uncle and his friends) or they don't have the balls to simplify their lifestyle as their wives are the boss of them (I love rubbing that in their faces). I have to constantly tell them that my family would never consult them since as health professionals they don't even take care of their personal health. Or they are plain fucking jealous that an accountant and engineer can do it on their oh-so-low salaries (as if we don't know the compounding power of lazy investing). Or they think my kids will go without 'nice' things in life like a new car and a huge sweet 16 party, private schools and out of state universities.

Bless their hearts.

Wait what?  Rubbing their faces in their balls??  hahaha  -- love this post!



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Re: $1 Million Isn't That Much....
« Reply #42 on: February 19, 2017, 10:37:18 AM »
I heard 5MM isn't what it used to be the other day at work. 200k per year. Isn't what it used to be haha

$5MM isn't what it used to be.  You'd have to have $40MM in today's dollars to have the same relative wealth as $5MM in 1960. 
But that's beside the point, as anyone in their right mind could retire with much less than $5MM today.

Not it a person was into frequent vacations to resort areas, big trucks, ski-boats, constant shopping, etc. I think this is why some people think a $1M isn't enough. They don't want to slow their consumption. In fact I suspect they think they'd have more time to shop and spend so they would need more money than they make now.

Thinks the joys of freedom to do as you like, hiking, a bike ride, joy of washing the car or weeding the garden aren't good enough. Got to have a high profile flashy retirement...

I had a great time yesterday just being at home taking care of a few things and reading a book. Got a great night's sleep too. My cost? Close to what my utilities cost me b/c I didn't spend anything else.

"....I told my dad on Saturday night after dinner about our plans. He was very happy. He said at least I listed to my (late) Grandpa and I have the same attitude as he did. FWIW, my dad was laid off a few years back and drove my mum and my grandma crazy, luckily his old employer called him back. He has a relaxing desk job, and he's from the mindset where if you don't work, what else do you do?"

These people blow my mind. And then I look around at the people I know who spend much of their retirement watching TV.
« Last Edit: February 19, 2017, 10:42:28 AM by Tasty Pinecones »

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Re: $1 Million Isn't That Much....
« Reply #43 on: February 19, 2017, 11:51:14 AM »
I heard 5MM isn't what it used to be the other day at work. 200k per year. Isn't what it used to be haha

$5MM isn't what it used to be.  You'd have to have $40MM in today's dollars to have the same relative wealth as $5MM in 1960. 
But that's beside the point, as anyone in their right mind could retire with much less than $5MM today.
should start a "What would you do with  $40 million?" Thread. :)
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maizeman

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Re: $1 Million Isn't That Much....
« Reply #44 on: February 19, 2017, 11:57:21 AM »
I heard 5MM isn't what it used to be the other day at work. 200k per year. Isn't what it used to be haha

$5MM isn't what it used to be.  You'd have to have $40MM in today's dollars to have the same relative wealth as $5MM in 1960. 
But that's beside the point, as anyone in their right mind could retire with much less than $5MM today.
should start a "What would you do with  $40 million?" Thread. :)

Isn't it obvious? Leave it invested for twenty years so it could grow to $160M in real dollars. I don't know how people think they can enjoy retirement these days with anything less than a nine-figure net worth.
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talltexan

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Re: $1 Million Isn't That Much....
« Reply #45 on: February 20, 2017, 07:29:50 AM »
At some level of wealth, there is no need to maximize returns. Investing $40 million should be about buying a company, having some fun, owning prestige.

It's the people who are trying to turn $0.3 million into $1.4 million who really need to focus on maximizing returns.

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Re: $1 Million Isn't That Much....
« Reply #46 on: February 20, 2017, 08:43:47 AM »
At some level of wealth, there is no need to maximize returns. Investing $40 million should be about buying a company, having some fun, owning prestige.

It's the people who are trying to turn $0.3 million into $1.4 million who really need to focus on maximizing returns.

this seems dumb.  you should always be maximizing no matter what level you are at.  I'm reading a book on negotiating right now.  The author makes a point that if you can negotiate 2k lower price it doesnt matter if the contract is 10MM or 100k, its still a 2k bottom line cost savings for your company.  Same logic applies to money at all levels IMO. 
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talltexan

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Re: $1 Million Isn't That Much....
« Reply #47 on: February 20, 2017, 08:46:08 AM »
I would argue that--rather than maximizing money--you're now operating a hobby. Because you can afford to do so without affecting your desired lifestyle. Mustachians should cringe at the idea, but our goal is not to evangelize the ultra-rich.


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boarder42

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Re: $1 Million Isn't That Much....
« Reply #48 on: February 20, 2017, 09:18:30 AM »
I would argue that--rather than maximizing money--you're now operating a hobby. Because you can afford to do so without affecting your desired lifestyle. Mustachians should cringe at the idea, but our goal is not to evangelize the ultra-rich.


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so your arguement is pure just semantics of what you want to call it.  we can call it a donkey fart then.  but its still maximizing money.
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talltexan

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Re: $1 Million Isn't That Much....
« Reply #49 on: February 20, 2017, 11:28:43 AM »
I would argue that life is divided into a set of activities in which you optimize, and a set that you just do enough to get by in (i.e., the proverbial donkey-farting).