Author Topic: Can't live on 4 million!  (Read 6549 times)

Ottawa

  • Handlebar Stache
  • *****
  • Posts: 1027
Can't live on 4 million!
« on: January 29, 2014, 06:53:19 AM »

BPA

  • Handlebar Stache
  • *****
  • Posts: 1203
Re: Can't live on 4 million!
« Reply #1 on: January 29, 2014, 07:06:41 AM »
Downsizing to a million dollar house?  Poor babies.

smalllife

  • Pencil Stache
  • ****
  • Posts: 980
Re: Can't live on 4 million!
« Reply #2 on: January 29, 2014, 07:08:30 AM »
I feel like wealth is wasted on those who don't appreciate the opportunities they have. 

Ottawa

  • Handlebar Stache
  • *****
  • Posts: 1027
Re: Can't live on 4 million!
« Reply #3 on: January 29, 2014, 07:09:09 AM »
Yah...I love this quote:
Quote
From present monthly expenditures of $4,274 on wine, restaurants, clothing and grooming, travel and their golf club, they could eliminate $3,540. They would still have a $200 per month wine allowance, $320 for restaurants, $350 for clothing and grooming, and $670 for travel./

Paulie

  • Guest
Re: Can't live on 4 million!
« Reply #4 on: January 29, 2014, 07:15:00 AM »
Haha, I like the first sentence: 'Alex and Caitlin are in a very tough spot.'

After just saying in the intro they have about 4 million...

LalsConstant

  • Bristles
  • ***
  • Posts: 439
Re: Can't live on 4 million!
« Reply #5 on: January 29, 2014, 08:03:15 AM »
Wow.  They could easily blow through a hundred grand a year give away fifty grand a year give or take a bit and never deplete their resources provided they moved into a less expensive house.

First world problems.

If I had 4 million today I would not be at work tomorrow!

minimalist

  • Stubble
  • **
  • Posts: 140
  • Age: 35
  • Location: Washington, DC
Re: Can't live on 4 million!
« Reply #6 on: January 29, 2014, 09:20:41 AM »
The point of the article was that even with a $4 million net worth, retirees need to control spending.

foobar

  • Pencil Stache
  • ****
  • Posts: 731
Re: Can't live on 4 million!
« Reply #7 on: January 29, 2014, 09:39:49 AM »
The article doesn't say you can't live on 4 million. It says you can't like a 285k lifestyle on 4 million. That isn't very controversial. You should focus on the fact this guy save up 4 million bucks and appears willing to make the changes needed now that his life situation has changed.

Anyone else think that the numbers that financial planner is putting out are a bit low? Obviously I have no clue what the guys tax basis is in that 4 million and so on but I would expect a number  well over 100k not the 65k this guy is talking about. For example using firecalc (yeah I know us versus ca),2.5 million (pay taxes on selling the house and investments  and  500k for a new house) taking out 100k/yr has a 95% survival rate for 30 years. In the bad cases (i.e. immediate market drop), you could cut your spending to like 90k and up the number to more like 100%. And after 20 years you start getting that 50k pension payouts which makes the financial situation rosier.

My take away is that annuities suck but I would like to know if I missing something

This couple can't get by on 4 million in assets.  WOW
 
http://business.financialpost.com/2014/01/29/even-with-a-net-worth-of-4-million-retirement-at-50-is-a-struggle/

BPA

  • Handlebar Stache
  • *****
  • Posts: 1203
Re: Can't live on 4 million!
« Reply #8 on: January 29, 2014, 04:08:35 PM »
The article doesn't say you can't live on 4 million. It says you can't like a 285k lifestyle on 4 million. That isn't very controversial. You should focus on the fact this guy save up 4 million bucks and appears willing to make the changes needed now that his life situation has changed.

Anyone else think that the numbers that financial planner is putting out are a bit low? Obviously I have no clue what the guys tax basis is in that 4 million and so on but I would expect a number  well over 100k not the 65k this guy is talking about. For example using firecalc (yeah I know us versus ca),2.5 million (pay taxes on selling the house and investments  and  500k for a new house) taking out 100k/yr has a 95% survival rate for 30 years. In the bad cases (i.e. immediate market drop), you could cut your spending to like 90k and up the number to more like 100%. And after 20 years you start getting that 50k pension payouts which makes the financial situation rosier.

My take away is that annuities suck but I would like to know if I missing something

This couple can't get by on 4 million in assets.  WOW
 
http://business.financialpost.com/2014/01/29/even-with-a-net-worth-of-4-million-retirement-at-50-is-a-struggle/

How many "mustachians" would squander that yearly salary like they have?  Other than Joet, none.

That to me seems to be the point of posting it here.

TreeTired

  • Bristles
  • ***
  • Posts: 451
  • Age: 136
  • Location: North Carolina
  • I think we can make it
Re: Can't live on 4 million!
« Reply #9 on: January 29, 2014, 06:38:54 PM »
Here is the crux of the problem,  and it could be true using almost any amount.   Yes, it is pathetic.

Quote
They have developed a style of living that they cannot support on an income appreciably less than the $285,000 he used to earn. 


If you own a 120 ft yacht with a fulltime crew of 20 you probably couldn't "make it"  with $10mm in assets. 

I've mentioned in other threads that this phenomenon has been fully explored in the literature, most notably in "Bonfire of the Vanities" where poor Master of the Universe Sherman McCoy couldn't make ends meet on a mere $765,000 per year.
« Last Edit: January 29, 2014, 06:41:25 PM by NC_MJ »

chucklesmcgee

  • Pencil Stache
  • ****
  • Posts: 613
Re: Can't live on 4 million!
« Reply #10 on: January 29, 2014, 09:14:19 PM »
Yah...I love this quote:
Quote
From present monthly expenditures of $4,274 on wine, restaurants, clothing and grooming, travel and their golf club, they could eliminate $3,540. They would still have a $200 per month wine allowance, $320 for restaurants, $350 for clothing and grooming, and $670 for travel./

Only $200/month? What if they want more than one bottle?

Ottawa

  • Handlebar Stache
  • *****
  • Posts: 1027
Re: Can't live on 4 million!
« Reply #11 on: January 30, 2014, 06:05:11 AM »
Here is the crux of the problem,  and it could be true using almost any amount.   Yes, it is pathetic.
If you own a 120 ft yacht with a fulltime crew of 20 you probably couldn't "make it"  with $10mm in assets. 

I've mentioned in other threads that this phenomenon has been fully explored in the literature, most notably in "Bonfire of the Vanities" where poor Master of the Universe Sherman McCoy couldn't make ends meet on a mere $765,000 per year.

Yes, it is a classic example of not realizing that you are a HEDONIC ADAPTATION sucka!

yahui168

  • 5 O'Clock Shadow
  • *
  • Posts: 92
  • Age: 44
  • Location: CA
Re: Can't live on 4 million!
« Reply #12 on: January 30, 2014, 01:19:35 PM »
I feel like the author is trolling. They write these articles so their readers can justify buying a $50k SUV on credit. Everyone can pat themselves on the back.

Ottawa

  • Handlebar Stache
  • *****
  • Posts: 1027
Re: Can't live on 4 million!
« Reply #13 on: January 30, 2014, 01:23:24 PM »
I feel like the author is trolling. They write these articles so their readers can justify buying a $50k SUV on credit. Everyone can pat themselves on the back.

It is my understanding that alot of news media gets financial support by...the banks!  I don't know if anyone can confirm this, but it would make alot of sense.   It is not in the bank's interest (pun intended?) to see stories that people are Mustachian...I think they make more money reeling in debt charges on money owed and (over contributed) retirement accounts plush with big fat MER charges from mutual funds and the like...

Cheddar Stacker

  • Magnum Stache
  • ******
  • Posts: 3718
  • Age: 42
  • Location: USA
Re: Can't live on 4 million!
« Reply #14 on: February 03, 2014, 10:05:11 PM »
My take away is that annuities suck but I would like to know if I missing something


You're correct, annuities SUCK. They're no different than any other insruance product, a tax on people who are bad at math. It's a security blanket that makes you feel all warm and fuzzy. All so you can look the other way while the insurance company is slowly taking your hard earned cash.

mlipps

  • Handlebar Stache
  • *****
  • Posts: 1175
Re: Can't live on 4 million!
« Reply #15 on: February 05, 2014, 09:22:46 AM »
How about this thread on Bogleheads today? Can't decide if it's a legitimate question or just a humble brag. http://www.bogleheads.org/forum/viewtopic.php?f=2&t=132319&newpost=1949482

Cheddar Stacker

  • Magnum Stache
  • ******
  • Posts: 3718
  • Age: 42
  • Location: USA
Re: Can't live on 4 million!
« Reply #16 on: February 05, 2014, 09:42:39 AM »
How about this thread on Bogleheads today? Can't decide if it's a legitimate question or just a humble brag. http://www.bogleheads.org/forum/viewtopic.php?f=2&t=132319&newpost=1949482

It looks to me like a lot of humble brag mixed with one legitimate question - will my marital dynamics change if I retire and my wife works another 10 years? I think this is a good question that needs to be discussed with his wife, but other than that it seems like a major brag. I think he is grossly underestimating his safe withdrawal rate. They could take out 5%/year or more which would give them over $500K/year, plus the trust distribution. I have no idea what he would be worried about, financially speaking.

foobar

  • Pencil Stache
  • ****
  • Posts: 731
Re: Can't live on 4 million!
« Reply #17 on: February 05, 2014, 09:55:40 AM »
I could definitely see problems if it was she had to work and he stayed home. If it is she chooses to work, it is a different issue. Is there a log of bragging? Sure. But it is also a legit question. How do things change when you retire. There is actually a pretty decent uptake in the divorce rate after retirement. Both parties were fine until they through in another 50+ hours of being with each other:).

I have to assume the guy know he can take more out and is just being conservative. Too some extent the guy has already retired. He didn't build his 10 million portfolio off his 100k/yr job and his wife working part time.  At some point he downsized to do something he wanted to do and now he wants to stop.

Now if the guy was saying his expenses where 600k/yr and he doesn't think he will ever be able to retire, I would put him in the clueless group

How about this thread on Bogleheads today? Can't decide if it's a legitimate question or just a humble brag. http://www.bogleheads.org/forum/viewtopic.php?f=2&t=132319&newpost=1949482

It looks to me like a lot of humble brag mixed with one legitimate question - will my marital dynamics change if I retire and my wife works another 10 years? I think this is a good question that needs to be discussed with his wife, but other than that it seems like a major brag. I think he is grossly underestimating his safe withdrawal rate. They could take out 5%/year or more which would give them over $500K/year, plus the trust distribution. I have no idea what he would be worried about, financially speaking.