Race from $2M to $4M...and Beyond!

[G-dog]

I just read through the active topic about living on 25k or less.

What do you $2M-$4M'ers think about this? We definitely don't live on $25k per year. On the other hand, I think we are very low spenders by the standards of people in our income group. For many years, we lived on my salary and saved almost all of my wife's salary. We have lived in the same house for over 25 years and still have modest cars that we keep for a minimum of ten years. We really don't buy a lot of stuff in general and we don't travel a lot either. We don't have any expensive hobbies either.

Our expenses are higher than many (except probably the Bay Area crowd), mainly because of where we choose to live - right across the Hudson river from Manhattan. But we like it here and have no plans of moving and we can afford it.

My annual spend has been about $25K/year since I retired in 2015.  But my $ are separate from Spouse’s, and there are a few household bills I don’t cover (internet, water/sewer/ garbage, streaming services, cell phone, property tax).  I cover gas, electric, insurance (house, cars, personal liability).  We both cover costs for our own car, medical, and each buy groceries, but I buy more in this category as chief cook and bottle washer.

So, together we both spend more than $25K.  Spouse buys more stuff than I do (hence our money is separate….).  I still have plenty of unnecessary spends in my budget, so could cut back if needed. I doubt Spouse will ever cut back.

[EscapeVelocity2020]

I have lived on 25k/yr in my 20's, when I was single and just starting out.  As a family of four, we live on less than 25k/yr per person, not counting income and property taxes, but that's probably not that impressive.  We also don't have a mortgage, car loans, or significant dental or medical expenses, which can be budget killers for people that are unfortunate through no fault of their own... 

Houston is a relatively LCOL area, we can order in and eat out regularly and have maids clean very inexpensively.  So I'm not entirely sure how answering this one question can even be informative without a whole lot of explanation and, with all the shenanigans bloggers play about 'core living expenses' and not counting imputed costs (like having a paid off house and cars), the discussion has ceased to really interest me.  I try to spend mindfully and teach my children not to be wasteful, but eventually our assets are going to need to go somewhere...

[billsfan1_2000]

Hello, y'all.....

As I've mentioned before here previously (I am a loyal reader but only occasional poster) I am hanging it up as of March 1 2023, after one more bonus round and restricted share payout at mega bank.

I will be 58 at the time hence need to bridge to age 65 where Medicare, SS and defined benefit pension kick in.  Health instance will be major concern.....looking like mostly cost will be between $1,000 - $1,200 per month.  Total annual spending is in the $70k per year range.

Sooo...on the date I retire I will have $2.1M in investable cash to put to work to fund expenses <can't touch the $2M in 401k/IRA, yet>. 

$2.1M times 5% produces passive income of over $100k which is MORE than adequate......

Sooo...apart from my googling "best income fund for retirement"....do any of you have suggestions for what to look at and places to park cash that will produce this almighty yield? 

Any thoughts whatsoever most welcome!!!!!

[Car Jack]

I have a spread sheet with "expected expenses" that has things like medical at $12k, property tax at $8800 and groceries at $10,400, which I feel are all reasonable.  $25k a year?  Maybe for a single person living in an apartment or something.  For DW and me with some remaining expenses for our 2 20 something year old kids, we're at $67k expected.  We do have plenty to pay for that, so that's not a problem.

[LoanShark]

Hello, y'all.....

As I've mentioned before here previously (I am a loyal reader but only occasional poster) I am hanging it up as of March 1 2023, after one more bonus round and restricted share payout at mega bank.

I will be 58 at the time hence need to bridge to age 65 where Medicare, SS and defined benefit pension kick in.  Health instance will be major concern.....looking like mostly cost will be between $1,000 - $1,200 per month.  Total annual spending is in the $70k per year range.

Sooo...on the date I retire I will have $2.1M in investable cash to put to work to fund expenses <can't touch the $2M in 401k/IRA, yet>. 

$2.1M times 5% produces passive income of over $100k which is MORE than adequate......

Sooo...apart from my googling "best income fund for retirement"....do any of you have suggestions for what to look at and places to park cash that will produce this almighty yield? 

Any thoughts whatsoever most welcome!!!!!

Congrats on being just over a year out! So you're saying that you'll have $2.1MM of actual cash at that point, excluding your retirement accounts? I would definitely get that invested...especially in a year where inflation is >5% like it is, year to date.

With regard to dividends, plenty of funds / ETF's that are designed to max dividends, i.e. SCHB through Schwab which pays 2.8%. You could also look at BDC's that pay pretty high dividend yields.

The safe withdrawal rate concept isn't really based on dividends though, it's more of a function of the average annual return of the stock market indices minus inflation.

[secondcor521]

Hello, y'all.....

As I've mentioned before here previously (I am a loyal reader but only occasional poster) I am hanging it up as of March 1 2023, after one more bonus round and restricted share payout at mega bank.

I will be 58 at the time hence need to bridge to age 65 where Medicare, SS and defined benefit pension kick in.  Health instance will be major concern.....looking like mostly cost will be between $1,000 - $1,200 per month.  Total annual spending is in the $70k per year range.

Sooo...on the date I retire I will have $2.1M in investable cash to put to work to fund expenses <can't touch the $2M in 401k/IRA, yet>. 

$2.1M times 5% produces passive income of over $100k which is MORE than adequate......

Sooo...apart from my googling "best income fund for retirement"....do any of you have suggestions for what to look at and places to park cash that will produce this almighty yield? 

Any thoughts whatsoever most welcome!!!!!

On health care, the two most common choices are COBRA and ACA.  With the subsidies (assuming an AGI of $70K), depending on your family size, it'll probably be less expensive than you expect.  But if you like very high quality health insurance, you may not like what are typically small provider networks of the ACA.

Even though you can't touch the $2M yet, many people still include it in their FIRE stash in terms of calculating the 4% (or 5% if you're aggressive) number.  So many people would think you could take 4% * ($2.1M + $2M) = $205K per year.  The only thing here is to make sure you can handle the pre-59.5 age period.  Obviously if you have $2.1M in accessible assets and only 1.5 years to age 59.5 (when you can access 401k and IRA without penalty), you're fine here.

Many people no longer set up their portfolio for income the way you're describing.  What I do is invest in low-cost, total-market index funds, take whatever dividends they throw off (about 1% to 2%) and spend those, then sell shares as needed a few times a year.  I don't know exactly, but since I retired early six years ago - which has been a pretty lucky time so far, but historically still in the middle somewhere - my portfolio has grown about 10% a year.

So the suggestion would be to look at total return, not just dividend or yield.  (In your case, if you only take $100K a year, then you're really at about a 2% withdrawal rate, so you're really close to living on dividends anyway.)

Further, depending on how you're accounting for taxes (i.e., whether you're including them in that $70K or not), it turns out that a FIREd life can be lived at the same quality level on a lot less money.  That's because taxes are quite progressive  in that $70K to $200K income range, and - here's the important part - when you FIRE, you will end up paying taxes on what you spend ($70K), not what you earn ($200K or whatever).

[Exflyboy]

Even better.... @billsfan1_2000 if you spend after  (edit: after tax) investments your Federal tax bill will be $zero.. assuming you are married (i.e within the 12% tax bracket and living on long term cap gains and qualified dividends).

Secondly remember your MAGI is only the GAIN on the capital that you draw out of your LT after tax investments.

So you look at the tax lots and spend the the shares where you have made the least gain. You might find that $70k is nearer $35k of MAGI.

Now with a $35k MAGI if you are OK with a Bronze healthcare plan then you can use a HSA and reduce your MAGI by a further $9,200.

Look at that.. My god you are POOR and your Healthcare will be virtually free.

I am paying $2:30/month for my HC next year using this method.

[lhamo]

Another option would be to do a reverse equity glidepath and keep a big chunk in cash or similar low volatility assets and at least partially live off of that while you gradually increase the amount you have in equities.  Many will point out that it is not financially "optimal" in that you are not necessarily maximizing your earnings on the entire stash, but if you have any level of anxiety about running out of money in FIRE it can provide a smoother bridge to get past those worries.  And let you manage income for things like ACA subsidies and Roth conversions.  And if the market DOES drop dramatically sometime in the next few years you can deploy significant chunks of cash strategically, if you have the guts to do so.

Also since you are beyond age 55 you should be able to tap your 401k at any time via the rule of 55 -- check with your plan administrator to see if there are restrictions on when and how, though (my sister found that they only allowed lump sum distributions prior to 59.5)

[Exflyboy]

Also since you are beyond age 55 you should be able to tap your 401k at any time via the rule of 55 -- check with your plan administrator to see if there are restrictions on when and how, though (my sister found that they only allowed lump sum distributions prior to 59.5)

I'm glad you pointed that out @lhamo Many people throw the age 55 rule about like its a given, when in fact a lot of employers are quite restrictive in how you can withdraw the money. I have 3 401k plans and every one of them required a withdrawal of the entire balance in a single year.. The tax consequences of which would have been brutal in my case.

Now I am in the "great beyond" of 59.5+ its no longer a factor... Not sure how I feel about that.

[billsfan1_2000]

Edit:  Hanging it up as of March 1 2022!!!!  Not 2023....sorry about that!!!

And - THANKS SO MUCH for the thoughtful posts!!!!

:) 

[G-dog]

Edit:  Hanging it up as of March 1 2022!!!!  Not 2023....sorry about that!!!

And - THANKS SO MUCH for the thoughtful posts!!!!

:)

Congratulations! The end is in sight.  I take it your employer doesn’t have any retiree medical benefits for which you might qualify? I was lucky that my ex-employer let you take retiree medical at 55 years old. 

[SwordGuy]

I'm glad you pointed that out @lhamo Many people throw the age 55 rule about like its a given, when in fact a lot of employers are quite restrictive in how you can withdraw the money. I have 3 401k plans and every one of them required a withdrawal of the entire balance in a single year.. The tax consequences of which would have been brutal in my case.

Couldn't you roll it all over into an IRA, and then take out just what you want to be taxed?

[secondcor521]

I'm glad you pointed that out @lhamo Many people throw the age 55 rule about like its a given, when in fact a lot of employers are quite restrictive in how you can withdraw the money. I have 3 401k plans and every one of them required a withdrawal of the entire balance in a single year.. The tax consequences of which would have been brutal in my case.

Couldn't you roll it all over into an IRA, and then take out just what you want to be taxed?

Yes, you can roll it over.  But then the magic age becomes 59.5 instead of the-calendar-year-in-which-you-turn-55 for penalty-free withdrawals.  That 4.5 year difference can be important in some people's cases.

The ability to do partial withdrawals can of course help tax-wise.

[arcturus]

Even better.... @billsfan1_2000 if you spend after  (edit: after tax) investments your Federal tax bill will be $zero.. assuming you are married (i.e within the 12% tax bracket and living on long term cap gains and qualified dividends).

Secondly remember your MAGI is only the GAIN on the capital that you draw out of your LT after tax investments.

So you look at the tax lots and spend the the shares where you have made the least gain. You might find that $70k is nearer $35k of MAGI.

Now with a $35k MAGI if you are OK with a Bronze healthcare plan then you can use a HSA and reduce your MAGI by a further $9,200.

Look at that.. My god you are POOR and your Healthcare will be virtually free.

I am paying $2:30/month for my HC next year using this method.

Thank you @Exflyboy  - I found this post quite helpful.  I've done some estimated tax calculators to estimate taxes during those "bridge years" to help with my planning, and I came to realize exactly what you just said....so it is helpful to have some real-world valuation of a "online estimator" that you question whether its working or not.   And your point on health insurance is also very very helpful for people like me who are not yet ready to pull the trigger, but planning for it. 

Thanks for imparting some real-world wisdom for us wannabes!

[SwordGuy]

I'm glad you pointed that out @lhamo Many people throw the age 55 rule about like its a given, when in fact a lot of employers are quite restrictive in how you can withdraw the money. I have 3 401k plans and every one of them required a withdrawal of the entire balance in a single year.. The tax consequences of which would have been brutal in my case.

Couldn't you roll it all over into an IRA, and then take out just what you want to be taxed?

Yes, you can roll it over.  But then the magic age becomes 59.5 instead of the-calendar-year-in-which-you-turn-55 for penalty-free withdrawals.  That 4.5 year difference can be important in some people's cases.

The ability to do partial withdrawals can of course help tax-wise.

https://www.schwab.com/ira/understand-iras/withdrawals/59-and-under might be useful, it lists a number of penalty-free ways to pull funds out of an IRA before 59.5.

[Exflyboy]

You're welcome @arcturus Yeah I remember going through this and until you actually get there its hard to understand how HC can be even remotely affordable with the wonderful (thank god its not Socialism!) system we have!

Now of course with a Bronze plan its great until something goes wrong then you're on the hook for $8500 (even more if they get away with not covering one of your bills).. This happened to me when I broke my wrist.

But... at least you won't go bankrupt and if nothing bad happens (which hasn't for us in the 6 out of 7 years we have been on the ACA) then the premium payment can be negligible.

No Federal taxes and almost free HC.. Being rich is wonderful..:)

[Bateaux]

Happy Thanksgiving everyone.  I hope your holidays are filled with joy and love.

[ysette9]

My husband is pulling the plug at the end of this year and I ordered up some tasty Obamacare for us starting in January 2022.

I put together a spreadsheet where I estimated what our income would be from dividends and distributions from our taxable account and then added in various Roth conversion amounts. I then priced out ACA plans at different MAGI amounts to get a feel for what it would cost.

In your case I would look up the cost basis of any taxable investments you plan on living off of first. Like others have said above, it is the gains, not the total spending that matters for MAGI calculations. Our plan is to live off of our taxable bonds initially so our gains are essentially zero, meaning we can use up all of that space for Roth conversions instead.

[Fomerly known as something]

Happy Thanksgiving everyone.  I hope your holidays are filled with joy and love.

Well the Lions lost so it’s a normal thanksgiving

[2sk22]

In your case I would look up the cost basis of any taxable investments you plan on living off of first. Like others have said above, it is the gains, not the total spending that matters for MAGI calculations. Our plan is to live off of our taxable bonds initially so our gains are essentially zero, meaning we can use up all of that space for Roth conversions instead.

This is exactly what I was doing yesterday! We have a lot of money in taxable accounts and I was looking at our Fidelity account to see if the cost basis was recorded correctly for our index fund investments. I was not surprised to find that they don't have the cost basis for really old trades. We have been doing buy-and-hold for almost thirty years and thankfully I have been a bit of a packrat, I have somehow kept almost all of the trade statements since the mid 1990s :-)

[2sk22]

Incidentally, when I looked, I noticed that there was one value recoded for "cost basis per share" from mid 1990s until 2010 and another value from 2010 until today. Apparently brokerages are under no obligation to accurately keep track of cost basis per share for individual lots so it's really up to you to have accurate numbers.

From 2001 until 2018, I used a specialized brokerage called ShareBuilder (much missed) that allowed me to buy buy a fixed dollar amount of any shares I wanted on a weekly basis. For many years, we bought $100 worth of the Dow Jones Spider ETF (symbol DIA). I had all of those shares transferred to Fidelity when they shut down ShareBuilder. Somehow the cost basis of those shares got transferred properly.

I bought my first $100 of DIA on ShareBuilder on October 10 2001 - soon after the markets reopened after 9/11. My way of asserting that we would eventually recover....

[arcturus]

My husband is pulling the plug at the end of this year and I ordered up some tasty Obamacare for us starting in January 2022.

I put together a spreadsheet where I estimated what our income would be from dividends and distributions from our taxable account and then added in various Roth conversion amounts. I then priced out ACA plans at different MAGI amounts to get a feel for what it would cost.

In your case I would look up the cost basis of any taxable investments you plan on living off of first. Like others have said above, it is the gains, not the total spending that matters for MAGI calculations. Our plan is to live off of our taxable bonds initially so our gains are essentially zero, meaning we can use up all of that space for Roth conversions instead.

Thanks @ysette9.   Still a few years out for me, but when I look at one of my taxable accounts (which has about 2/3 of my total taxable investments), across all investments, I have about 34% of the total in unrealized capital gains.  Assuming 10% annual growth (seems a bit high at present), in about 4 years I'd be at about 100%, meaning that for every $2 I withdraw, I would have $1 in capital gains.  Of course, I would try to manage this by looking at individual lots, etc., but for a broad planning assumption, it is probably useful.  (???) 

Even assuming this, its not a bad scenario.  Assuming $80K per year in withdrawals, it still means only $40K is taxable and at the long term capital gains rate.  When I go to kff.org and use that planning assumption, it suggests I could get silver plan coverage for about $228 per month.  Not bad.  Oh, and per an earlier note, I could use HSA dollars to pay for those premiums tax free.  Curious as to whether anyone else has used this estimator and whether its accurate. 

[secondcor521]

Oh, and per an earlier note, I could use HSA dollars to pay for those premiums tax free.

Probably not.  Using HSA distributions to pay ACA premiums is typically not allowed (except for some corner cases).

Cite:  IRS Pub 969, Insurance premiums:  https://www.irs.gov/publications/p969#en_US_2020_publink1000204086

[ysette9]

My husband is pulling the plug at the end of this year and I ordered up some tasty Obamacare for us starting in January 2022.

I put together a spreadsheet where I estimated what our income would be from dividends and distributions from our taxable account and then added in various Roth conversion amounts. I then priced out ACA plans at different MAGI amounts to get a feel for what it would cost.

In your case I would look up the cost basis of any taxable investments you plan on living off of first. Like others have said above, it is the gains, not the total spending that matters for MAGI calculations. Our plan is to live off of our taxable bonds initially so our gains are essentially zero, meaning we can use up all of that space for Roth conversions instead.

Thanks @ysette9.   Still a few years out for me, but when I look at one of my taxable accounts (which has about 2/3 of my total taxable investments), across all investments, I have about 34% of the total in unrealized capital gains.  Assuming 10% annual growth (seems a bit high at present), in about 4 years I'd be at about 100%, meaning that for every $2 I withdraw, I would have $1 in capital gains.  Of course, I would try to manage this by looking at individual lots, etc., but for a broad planning assumption, it is probably useful.  (???) 

Even assuming this, its not a bad scenario.  Assuming $80K per year in withdrawals, it still means only $40K is taxable and at the long term capital gains rate.  When I go to kff.org and use that planning assumption, it suggests I could get silver plan coverage for about $228 per month.  Not bad.  Oh, and per an earlier note, I could use HSA dollars to pay for those premiums tax free.  Curious as to whether anyone else has used this estimator and whether its accurate.

From everything I have read it is the most widely cited estimator for cost and seems to be accurate. For my own purposes it was slightly off from the WA exchange website but we are talking about $40 kind of differences.

[arcturus]

Oh, and per an earlier note, I could use HSA dollars to pay for those premiums tax free.

Probably not.  Using HSA distributions to pay ACA premiums is typically not allowed (except for some corner cases).

Cite:  IRS Pub 969, Insurance premiums:  https://www.irs.gov/publications/p969#en_US_2020_publink1000204086

Oh, ok interesting.....thanks for that correction @secondcor521

[soccerluvof4]

Big hit yesterday so put a little extra cash I had to work. Kinda hard to complain when markets are so high and even though fire'd gives as I said and opportunity to do a little buying. I am just surprise and perhaps it was just a reason to do some selling that it was as much as I was even though in the big picture it was small. These variants though imo are going to keep popping up and its the new world we live in.

[2Birds1Stone]

Gosh, the market hasn't been this low since........*gasp*...........October 28th.

[Dicey]

Gosh, the market hasn't been this low since........*gasp*...........October 28th.

Hahaha, I love that you get it.

[goodmoneygoodlife]

There's a guy by the name of SIR_JACK_ALOT formerly on WallStreetBets (banned now) that did a cannonball run, racing from like 40K to 10 million.

I think he multiplied his money quite a bit within 21 months and gave up finally when he reached 8 million.

He did this gambling run on his 401K account so he didn't have to pay taxes lol.

[Dicey]

There's a guy by the name of SIR_JACK_ALOT formerly on WallStreetBets (banned now) that did a cannonball run, racing from like 40K to 10 million.

I think he multiplied his money quite a bit within 21 months and gave up finally when he reached 8 million.

He did this gambling run on his 401K account so he didn't have to pay taxes lol.

Yet. Still, net of taxes, that's a lot to play with. I wonder if he'll pick up his chips or keep gambling.

[SwordGuy]

There's a guy by the name of SIR_JACK_ALOT formerly on WallStreetBets (banned now) that did a cannonball run, racing from like 40K to 10 million.

With a handle like that, I have to ask "How do we know this person really did this and isn't living in their parent's basement jacking off a lot about fooling folks on WallStreetBets?"

[Fomerly known as something]

Gosh, the market hasn't been this low since........*gasp*...........October 28th.

Hahaha, I love that you get it.

I have some ideas of where I can do some tax loss harvesting, BUT the market needs to tank a ton more before it’d be worth the effort.

[BeanCounter]

So most of our money is with Fidelity. And of course since we are circling the "beyond" number in this thread on just investment assets we qualify for Fidelity's private client group which includes free advisory services. I've been using the same guy for several years now and I like him very much and he truly gets my love of index funds. Anyway, I met with him recently with a few tax questions. Which was helpful. I also asked some other questions on some funds and asset allocation and while he answered them he also said "it doesn't really matter". So I asked him to clarify. And he said to me "you've hit the point at which none of it really matters, nothing you do, or don't do to your portfolio, or what the market does or doesn't do will have any real, material, long term effect on your portfolio. Your only concern should be tax and draw down strategies."
This was really shocking to me. I've been thinking on it for awhile. I've done lots of CFIRESIM modeling, and I guess he's right. Do any of you feel this way? Seems like an odd question to ask on a finance forum but is there a point at which your nest egg is so big that no change in asset allocation or large market drop can really make a difference? Or that the choice between drawing 3% or 4% even matter anymore?
It has changed the way I look at market drops.

[ixtap]

Intellectually, I know this is true, but I was still sad when Megacorp opened a bit down when I had a market order to sell RSUs. Did the math and the difference was < $2k, and we get the tax deduction for a capital loss. Not a material difference at all, and we confirmed with each other this is why we have rules (set up the sell order as soon as you realize it is available...) rather than guessing.

And adjusting AA when we do our snapshot next week will probably not affect much of anything. In this case, we are less sad about the market going down: maybe we won't have to rebalance....

[lhamo]

So most of our money is with Fidelity. And of course since we are circling the "beyond" number in this thread on just investment assets we qualify for Fidelity's private client group which includes free advisory services. I've been using the same guy for several years now and I like him very much and he truly gets my love of index funds. Anyway, I met with him recently with a few tax questions. Which was helpful. I also asked some other questions on some funds and asset allocation and while he answered them he also said "it doesn't really matter". So I asked him to clarify. And he said to me "you've hit the point at which none of it really matters, nothing you do, or don't do to your portfolio, or what the market does or doesn't do will have any real, material, long term effect on your portfolio. Your only concern should be tax and draw down strategies."
This was really shocking to me. I've been thinking on it for awhile. I've done lots of CFIRESIM modeling, and I guess he's right. Do any of you feel this way? Seems like an odd question to ask on a finance forum but is there a point at which your nest egg is so big that no change in asset allocation or large market drop can really make a difference? Or that the choice between drawing 3% or 4% even matter anymore?
It has changed the way I look at market drops.

I am kind of at this point, but won't truly cross it until I sell current house and downsize to (hopefully) my last house.  I have plenty of assets at this point and enough cash to live off of until I can more easily tap traditional retirement assets penalty free (could do that now with a 72t withdrawal but not ready to commit to that).  But I won't feel truly unburdened by financial decisions until I have that housing piece locked in.  I mean, I know I would be fine -- if need be I can buy a condo for a reasonable price.  But I have specific things I would prefer in a house and the market here is so crazy that I can't really say with certainty what that is going to look like in 2-3 years.  Thankfully current house should continue to appreciate, but it might not appreciate at the same rate that the kind of property I am looking for will.

[pecunia]

So most of our money is with Fidelity. And of course since we are circling the "beyond" number in this thread on just investment assets we qualify for Fidelity's private client group which includes free advisory services. I've been using the same guy for several years now and I like him very much and he truly gets my love of index funds. Anyway, I met with him recently with a few tax questions. Which was helpful. I also asked some other questions on some funds and asset allocation and while he answered them he also said "it doesn't really matter". So I asked him to clarify. And he said to me "you've hit the point at which none of it really matters, nothing you do, or don't do to your portfolio, or what the market does or doesn't do will have any real, material, long term effect on your portfolio. Your only concern should be tax and draw down strategies."
This was really shocking to me. I've been thinking on it for awhile. I've done lots of CFIRESIM modeling, and I guess he's right. Do any of you feel this way? Seems like an odd question to ask on a finance forum but is there a point at which your nest egg is so big that no change in asset allocation or large market drop can really make a difference? Or that the choice between drawing 3% or 4% even matter anymore?
It has changed the way I look at market drops.

I have retirement money with Fidelity.  I've been retired for a year and a half now and haven't had to touch it yet.  The Fidelity guy told me about the same thing.  The numbers seem to bear this out. 

The Fidelity guy told me about two guys he meets with who he helps plan their retirement.  One guy has far less than a million and drives a Mercedes Benz.  The other guy has 5 million and drives a beat up old pickup truck.  I guess he was trying to tell me of the values of frugality.  He said the first guy is going to have problems.

I think you are set as long as you don't pi** it all away.

[Dicey]

In related insanity, I ran the numbers on all of our properties a few weeks, maybe a month ago. Just for fun, I ran 'em again today. The combined and averaged estimates are up $134k! In a freaking month! DH and his brother have also decided to try to close out MIL's estate by the end of the year. There will most likely be payouts with two commas. WTF? I never knew a huge infusion of cash would feel so stressful.

[Exflyboy]

In related insanity, I ran the numbers on all of our properties a few weeks, maybe a month ago. Just for fun, I ran 'em again today. The combined and averaged estimates are up $134k! In a freaking month! DH and his brother have also decided to try to close out MIL's estate by the end of the year. There will most likely be payouts with two commas. WTF? I never knew a huge infusion of cash would feel so stressful.

People just have no idea what the rich have to go through.. Just awful..;)

[Exflyboy]

So most of our money is with Fidelity. And of course since we are circling the "beyond" number in this thread on just investment assets we qualify for Fidelity's private client group which includes free advisory services. I've been using the same guy for several years now and I like him very much and he truly gets my love of index funds. Anyway, I met with him recently with a few tax questions. Which was helpful. I also asked some other questions on some funds and asset allocation and while he answered them he also said "it doesn't really matter". So I asked him to clarify. And he said to me "you've hit the point at which none of it really matters, nothing you do, or don't do to your portfolio, or what the market does or doesn't do will have any real, material, long term effect on your portfolio. Your only concern should be tax and draw down strategies."
This was really shocking to me. I've been thinking on it for awhile. I've done lots of CFIRESIM modeling, and I guess he's right. Do any of you feel this way? Seems like an odd question to ask on a finance forum but is there a point at which your nest egg is so big that no change in asset allocation or large market drop can really make a difference? Or that the choice between drawing 3% or 4% even matter anymore?
It has changed the way I look at market drops.

We are not quite at "Beyond" territory on liquid investments but our pensions and rent alone would give us an income of 1.5X annual spend, so it really doesn't matter to us what the market does.

Now KNOWING and BELIEVING are two very different things and I still wrestle with large purchases because they are "nice" and I "want" them. Even though intellectually it doesn't matter one bit whether I bought a nice new SUV or not I.e don't buy it and maybe I die with an extra $400k... Nice, but if our NW is close to $12M on my deathbed then I missed out on the pleasure of driving a nice new SUV for no reason at all.

[rmorris50]

For a couple of years I’ve been focused on analyzing how best to access all our money in the most tax efficient way. I think it’s best actually if we start 72ts soon and quit corporate USA and work some sort of coast job, if any. However, i haven’t pushed it hard yet with the financial advisor. He uses extremely conservative assumptions and still insists we need to work another 7 years (age 55) and grow our assets to 5m (he assumes 6.5 gross return and 3 percent inflation and really pads expenses). I constantly tell him if we can’t 3.1 million work now… then he talks about leaving legacy for family and charities. Or he tries to scare us with a scary LTC scenario. I’m like I get it, you want to make fees off our money as long as possible, but I don’t want to be buried in a gold coffin.

My mom has given me perspective. She lives off social security of $1300 a month and supplements it with a small inheritance now worth 20k. She has to pay $715 a month in rent but she gets help from us kids, as buy her necessities here and there. It’s definitely the simple life, she just sits in her apartment most days but she manages.

So if somehow my spouse and I piss away 3.1 million I assume we can somehow make social security work. Let’s hope that’s a very extreme scenario for us at this point. Honestly the only thing I can really think of that would cause this is some sort of health catastrophe.


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[pecunia]

In related insanity, I ran the numbers on all of our properties a few weeks, maybe a month ago. Just for fun, I ran 'em again today. The combined and averaged estimates are up $134k! In a freaking month! DH and his brother have also decided to try to close out MIL's estate by the end of the year. There will most likely be payouts with two commas. WTF? I never knew a huge infusion of cash would feel so stressful.

People just have no idea what the rich have to go through.. Just awful..;)

Some quips are worth repeating.  I loved it.

[secondcor521]

This was really shocking to me. I've been thinking on it for awhile. I've done lots of CFIRESIM modeling, and I guess he's right. Do any of you feel this way? Seems like an odd question to ask on a finance forum but is there a point at which your nest egg is so big that no change in asset allocation or large market drop can really make a difference? Or that the choice between drawing 3% or 4% even matter anymore?
It has changed the way I look at market drops.

Yes.  My net WR is about 75 basis points.  Which means for every basis point that the S&P500 goes up, the increase covers my lifestyle for about 5 days.  Of course many days, especially over the last year or so, the S&P500 frequently goes up by dozens and dozens of basis points, which covers me for months and months.  And of course, if the S&P goes up by more than a basis point every 5 days, which it usually does, then the excess is just accumulating.

I have an elderly relative who is in a similar spot.  He has enough money and a short enough life expectancy that he can have an AA anywhere between 100% stocks, 100% bonds, and 100% cash, and 100% probably anything else and it just doesn't matter - he'll be fine.

He and I both watch market drops, but it becomes increasingly distant / academic / disconnected.  What does it matter, if it doesn't change the cat food I buy or how often I go to McDonald's?  It just becomes numbers on a screen somewhere.  Or it can sometimes feel like a burden / obligation / responsibility rather than a "Whee!  Freedom!" sort of thing.

If you are at this point, the other thing that does start to loom as a personal finance consideration is estate and legacy planning.  Doing things well in this arena can help those who are left behind; doing things poorly can cause issues.  There are more and more of these types of threads over at early-retirement.org, and I expect to see more and more of them pop up here as the MMM population gets older and people get into the "Beyond!" realm of things and they become aware of this aspect of money.

ETA:  To clarify, I buy cat food for the cat.  I eat human food.

[BeanCounter]

So most of our money is with Fidelity. And of course since we are circling the "beyond" number in this thread on just investment assets we qualify for Fidelity's private client group which includes free advisory services. I've been using the same guy for several years now and I like him very much and he truly gets my love of index funds. Anyway, I met with him recently with a few tax questions. Which was helpful. I also asked some other questions on some funds and asset allocation and while he answered them he also said "it doesn't really matter". So I asked him to clarify. And he said to me "you've hit the point at which none of it really matters, nothing you do, or don't do to your portfolio, or what the market does or doesn't do will have any real, material, long term effect on your portfolio. Your only concern should be tax and draw down strategies."
This was really shocking to me. I've been thinking on it for awhile. I've done lots of CFIRESIM modeling, and I guess he's right. Do any of you feel this way? Seems like an odd question to ask on a finance forum but is there a point at which your nest egg is so big that no change in asset allocation or large market drop can really make a difference? Or that the choice between drawing 3% or 4% even matter anymore?
It has changed the way I look at market drops.

Now KNOWING and BELIEVING are two very different things and I still wrestle with large purchases because they are "nice" and I "want" them. Even though intellectually it doesn't matter one bit whether I bought a nice new SUV or not I.e don't buy it and maybe I die with an extra $400k... Nice, but if our NW is close to $12M on my deathbed then I missed out on the pleasure of driving a nice new SUV for no reason at all.

Me too.
We still have young kids so that does change things a little. DH hasn't quit his job yet because we are tied to a school schedule anyway and it provides good insurance so might as well (but I keep telling him that when he starts hating getting out of bed and going to work, we need to reevaluate). I'm driving a 9 year old Honda and while I'd like to replace it, we'll have another driver in a couple years and he might as well learn on my car. So the practical stands in the way of luxury at this point. But I still analyze every. single. purchase. And I don't think of us as wealthy. (That was never the intention. We were just careful and wanted to have the freedom not to work, or at least not to worry about layoffs, and now here we are.)
I'm learning. This Fidelity conversation was eye opening for sure.

[Fomerly known as something]

As someone who just got a chewy shipment, cat food is too expensive for humans, thank goodness he’s only 11 pounds.

On my NW, like Exflyboy, I’ll have a pension.  Which will cover all my needs, so my NW is really just for fluff.  I was running my let’s “break” my plan the other day.  I will truly will have to work at it to die with “nothing”.

[soccerluvof4]

There's a guy by the name of SIR_JACK_ALOT formerly on WallStreetBets (banned now) that did a cannonball run, racing from like 40K to 10 million.

With a handle like that, I have to ask "How do we know this person really did this and isn't living in their parent's basement jacking off a lot about fooling folks on WallStreetBets?"

This! for sure. I spend time on Reddit and there is so much BS especially on the likes of Wallstreetbets where you have people saying whatever just to jack up a stock when you know they dont own a share.  U rah rah!

[2sk22]

So most of our money is with Fidelity. And of course since we are circling the "beyond" number in this thread on just investment assets we qualify for Fidelity's private client group which includes free advisory services. I've been using the same guy for several years now and I like him very much and he truly gets my love of index funds. Anyway, I met with him recently with a few tax questions. Which was helpful. I also asked some other questions on some funds and asset allocation and while he answered them he also said "it doesn't really matter". So I asked him to clarify. And he said to me "you've hit the point at which none of it really matters, nothing you do, or don't do to your portfolio, or what the market does or doesn't do will have any real, material, long term effect on your portfolio. Your only concern should be tax and draw down strategies."
This was really shocking to me. I've been thinking on it for awhile. I've done lots of CFIRESIM modeling, and I guess he's right. Do any of you feel this way? Seems like an odd question to ask on a finance forum but is there a point at which your nest egg is so big that no change in asset allocation or large market drop can really make a difference? Or that the choice between drawing 3% or 4% even matter anymore?
It has changed the way I look at market drops.

Now KNOWING and BELIEVING are two very different things and I still wrestle with large purchases because they are "nice" and I "want" them. Even though intellectually it doesn't matter one bit whether I bought a nice new SUV or not I.e don't buy it and maybe I die with an extra $400k... Nice, but if our NW is close to $12M on my deathbed then I missed out on the pleasure of driving a nice new SUV for no reason at all.

Me too.
We still have young kids so that does change things a little. DH hasn't quit his job yet because we are tied to a school schedule anyway and it provides good insurance so might as well (but I keep telling him that when he starts hating getting out of bed and going to work, we need to reevaluate). I'm driving a 9 year old Honda and while I'd like to replace it, we'll have another driver in a couple years and he might as well learn on my car. So the practical stands in the way of luxury at this point. But I still analyze every. single. purchase. And I don't think of us as wealthy. (That was never the intention. We were just careful and wanted to have the freedom not to work, or at least not to worry about layoffs, and now here we are.)
I'm learning. This Fidelity conversation was eye opening for sure.

We never intended to accumulate as much as we did either. Our attitude towards spending has not changed a lot over the years. I bought a new car earlier this year, a Honda CR-V. Even with the encouragement of my wife to spend as much as I wanted, I just could not see the point in spending any more money on a luxury make. This car has pretty much all the luxury I could think of.

[EscapeVelocity2020]

So most of our money is with Fidelity. And of course since we are circling the "beyond" number in this thread on just investment assets we qualify for Fidelity's private client group which includes free advisory services. I've been using the same guy for several years now and I like him very much and he truly gets my love of index funds. Anyway, I met with him recently with a few tax questions. Which was helpful. I also asked some other questions on some funds and asset allocation and while he answered them he also said "it doesn't really matter". So I asked him to clarify. And he said to me "you've hit the point at which none of it really matters, nothing you do, or don't do to your portfolio, or what the market does or doesn't do will have any real, material, long term effect on your portfolio. Your only concern should be tax and draw down strategies."
This was really shocking to me. I've been thinking on it for awhile. I've done lots of CFIRESIM modeling, and I guess he's right. Do any of you feel this way? Seems like an odd question to ask on a finance forum but is there a point at which your nest egg is so big that no change in asset allocation or large market drop can really make a difference? Or that the choice between drawing 3% or 4% even matter anymore?
It has changed the way I look at market drops.

Now KNOWING and BELIEVING are two very different things and I still wrestle with large purchases because they are "nice" and I "want" them. Even though intellectually it doesn't matter one bit whether I bought a nice new SUV or not I.e don't buy it and maybe I die with an extra $400k... Nice, but if our NW is close to $12M on my deathbed then I missed out on the pleasure of driving a nice new SUV for no reason at all.

Me too.
We still have young kids so that does change things a little. DH hasn't quit his job yet because we are tied to a school schedule anyway and it provides good insurance so might as well (but I keep telling him that when he starts hating getting out of bed and going to work, we need to reevaluate). I'm driving a 9 year old Honda and while I'd like to replace it, we'll have another driver in a couple years and he might as well learn on my car. So the practical stands in the way of luxury at this point. But I still analyze every. single. purchase. And I don't think of us as wealthy. (That was never the intention. We were just careful and wanted to have the freedom not to work, or at least not to worry about layoffs, and now here we are.)
I'm learning. This Fidelity conversation was eye opening for sure.

I suppose I'm an outlier in this group.  I look at swings in the market as an indicator toward how unimportant saving $100 here and there is.  Things that I can control, like major purchases, taxes (to some extent), etc. are where I focus most of my financial mental energy, so asset allocation is still on my radar.  Not that I optimize in terms of capturing all of the gains of this latest leg of the bull market, going conservative with $400k in my 401k from 100% equities probably 'cost me' $40k (opportunity cost), but I like the idea of being able to cut back on risk a bit more while the Fed starts tapering.  We've won the game by all reasonable measures, so I play a little more defense these days.  Nothing says that there won't be another 50% decline in my lifetime, which is one of the few significant financial events that would get us back to having to pay closer attention to budgeting. 

So when it came to replacing cars, we upgraded my 2007 Mini Cooper and bought newer so that all of our cars have backup cameras.  Not that we bought outrageous vehicles (a Honda Fit ~$18k new in 2015, Toyota Corolla ~27k new, etc.), but the safety features and reliability had enough value to justify.  I plan to give the Corolla to my son when he leaves for college.  We've also put more money in to upgrading our home since we plan to be there 5 - 10 more years at least... 

TL;DR - my attitude toward spending has changed more than my attitude toward having asset allocation fit my risk tolerance.

[SwordGuy]

Our net worth has been climbing pretty steadily since retirement, even with a number of large expenses, some involuntary and others voluntary luxuries.

Short of a catastrophic, lingering illness requiring expensive medicine or lodging, we'll have plenty.   Our focus is on helping others to prosper and living a good life  -- because we really can't control the medical stuff like alzheimers or dementia.

[BeanCounter]

TL;DR - my attitude toward spending has changed more than my attitude toward having asset allocation fit my risk tolerance.

Well, my asset allocation is still 80% equities, 15% bonds and 5% cash. Almost exclusively in index funds. My advisors remarks were more that we've already decided what our risk level is (I like having 5% in cash) and we've already decided we're not trying to beat the market (index funds) so there isn't really anything left to do but enjoy the ride.
I'm struggling with more of the shift to spending and not over thinking it all the time. And actively trying NOT to save more. So what goes in for my husbands 401a and 403B should offset what my RMDs are on my inherited accounts etc. After years of saving a lot, this is a drastic change in mindset.

[soccerluvof4]

So most of our money is with Fidelity. And of course since we are circling the "beyond" number in this thread on just investment assets we qualify for Fidelity's private client group which includes free advisory services. I've been using the same guy for several years now and I like him very much and he truly gets my love of index funds. Anyway, I met with him recently with a few tax questions. Which was helpful. I also asked some other questions on some funds and asset allocation and while he answered them he also said "it doesn't really matter". So I asked him to clarify. And he said to me "you've hit the point at which none of it really matters, nothing you do, or don't do to your portfolio, or what the market does or doesn't do will have any real, material, long term effect on your portfolio. Your only concern should be tax and draw down strategies."
This was really shocking to me. I've been thinking on it for awhile. I've done lots of CFIRESIM modeling, and I guess he's right. Do any of you feel this way? Seems like an odd question to ask on a finance forum but is there a point at which your nest egg is so big that no change in asset allocation or large market drop can really make a difference? Or that the choice between drawing 3% or 4% even matter anymore?
It has changed the way I look at market drops.

Now KNOWING and BELIEVING are two very different things and I still wrestle with large purchases because they are "nice" and I "want" them. Even though intellectually it doesn't matter one bit whether I bought a nice new SUV or not I.e don't buy it and maybe I die with an extra $400k... Nice, but if our NW is close to $12M on my deathbed then I missed out on the pleasure of driving a nice new SUV for no reason at all.

Me too.
We still have young kids so that does change things a little. DH hasn't quit his job yet because we are tied to a school schedule anyway and it provides good insurance so might as well (but I keep telling him that when he starts hating getting out of bed and going to work, we need to reevaluate). I'm driving a 9 year old Honda and while I'd like to replace it, we'll have another driver in a couple years and he might as well learn on my car. So the practical stands in the way of luxury at this point. But I still analyze every. single. purchase. And I don't think of us as wealthy. (That was never the intention. We were just careful and wanted to have the freedom not to work, or at least not to worry about layoffs, and now here we are.)
I'm learning. This Fidelity conversation was eye opening for sure.

I suppose I'm an outlier in this group.  I look at swings in the market as an indicator toward how unimportant saving $100 here and there is.  Things that I can control, like major purchases, taxes (to some extent), etc. are where I focus most of my financial mental energy, so asset allocation is still on my radar.  Not that I optimize in terms of capturing all of the gains of this latest leg of the bull market, going conservative with $400k in my 401k from 100% equities probably 'cost me' $40k (opportunity cost), but I like the idea of being able to cut back on risk a bit more while the Fed starts tapering.  We've won the game by all reasonable measures, so I play a little more defense these days.  Nothing says that there won't be another 50% decline in my lifetime, which is one of the few significant financial events that would get us back to having to pay closer attention to budgeting. 

So when it came to replacing cars, we upgraded my 2007 Mini Cooper and bought newer so that all of our cars have backup cameras.  Not that we bought outrageous vehicles (a Honda Fit ~$18k new in 2015, Toyota Corolla ~27k new, etc.), but the safety features and reliability had enough value to justify.  I plan to give the Corolla to my son when he leaves for college.  We've also put more money in to upgrading our home since we plan to be there 5 - 10 more years at least... 

TL;DR - my attitude toward spending has changed more than my attitude toward having asset allocation fit my risk tolerance.

I dont think your an outlier , perhaps its because based on what your saying is a lot how I perceive things. Most here as you say have won the game and while there will be hurdles along the way I as well spend more time defending it wiping me out than trying to get that extra percentage point in gains per sae. I think to for me I am at a very expensive time with buying a house 2 years ago I seemingly will be remodeling forever and will have my 3rd in college and still another to go. So I keep things well enough so if we have a huge correction I dont need to say remodel a room or buy a new car but as long as I am a certain percentage above my minimum NW amount then I continue to move forward knocking things off my list and which frankly will pay me off in the long run.