How To Live On a $2mil Windfall

[Honest Abe]

Nice entry in the Betterment blog, basically an intro to FI and a link to MMM and ERE at the end.

https://www.betterment.com/blog/2013/12/13/live-2-million-windfall/

[tpozywio]

Cool, good read.   I think I'll take door number 1!

[arebelspy]

Awesome to see MMM, ERE, and especially JLCollinsNH get a shout out/link at the end!

[Self-employed-swami]

Neato.

[LRS]

Happy to see some of the early retirement luminaries namedropped, but let's spare a moment to talk about this clown-ass "wealth advisor" who says that $2MM "would not allow most people to quit their jobs." WHAT?!? Assuming 4% annual withdrawals, that size fortune would spit off $80,000 a year - about 1.5x the median household income in the United States. I'd be interested to hear how this guy concludes that "most people" wouldn't be able to live on that amount, when in fact the majority of people in this country are doing so. How much of an idiot does this guy look like next to Jacob?

[lentilman]

Happy to see some of the early retirement luminaries namedropped, but let's spare a moment to talk about this clown-ass "wealth advisor" who says that $2MM "would not allow most people to quit their jobs."

This might actually be true.  There is a big difference between earning/saving 2MM and having it dropped in your lap.  The people who earned it have an understanding of how to use money.  "Most" people spend what they have and would increase baseline spending in response to the "gift".

A fair number of lottery winners end up losing it all.  It's probably prudent to counsel them to keep working.

[Honest Abe]

Wealth managers aren't there to teach people how to get rich, they are there to teach rich people how to not become poor. A non-mustachian (most people) would not be able to draw down 4% of 2mil for 50+ years and would run out.

[LRS]

I see where you guys are coming from and I agree that many and perhaps most people would find some way to piss away even a $2MM windfall. But this entire little exercise of "come up with the best plan for this money" seems a little pointless if we're not even allowed to assume that we're capable of implementing the plan.

To the extent that the "wealth advisor" in the article really did mean to say "most people just squander it anyway so it's pointless for me even to try, so I'm telling them not to quit their day jobs," I suppose I would sigh and grudgingly admit his wisdom. But that doesn't seem to be in the spirit of the thought experiment. Maybe I'm misreading, but I interpreted him to mean something closer to "$80,000 a year isn't enough to live," which is idiotic and richly deserving of ridicule and an honored place in AMWOSAC (Anti-Mustachian Wall Of Shame And Comedy).

[FiveSigmas]

Nice! In addition to the references at the end, there's also an in-article link to CFireSim. I'm glad it's getting some broader exposure.

[Honest Abe]

Nice! In addition to the references at the end, there's also an in-article link to CFireSim. I'm glad it's getting some broader exposure.

Not surprising they already know of CFireSim. The Betterment social team definitely lurks on this and other FI message boards, as you'll see employees (even the CEO at times!) come out and comment when their service is discussed.

[arebelspy]

Nice! In addition to the references at the end, there's also an in-article link to CFireSim. I'm glad it's getting some broader exposure.

Not surprising they already know of CFireSim. The Betterment social team definitely lurks on this and other FI message boards, as you'll see employees (even the CEO at times!) come out and comment when their service is discussed.

Good for them; good way to find out how they can make a better product.  As long as they aren't shilling, that's a great way to interact with influencers.

[Albert]

Happy to see some of the early retirement luminaries namedropped, but let's spare a moment to talk about this clown-ass "wealth advisor" who says that $2MM "would not allow most people to quit their jobs." WHAT?!? Assuming 4% annual withdrawals, that size fortune would spit off $80,000 a year - about 1.5x the median household income in the United States. I'd be interested to hear how this guy concludes that "most people" wouldn't be able to live on that amount, when in fact the majority of people in this country are doing so. How much of an idiot does this guy look like next to Jacob?

That's only true if you invest those 2 millions wisely otherwise withdrawing 80k/year would leave you with zero in just 25 years and I'm not even considering inflation.

[plainjane]

Happy to see some of the early retirement luminaries namedropped, but let's spare a moment to talk about this clown-ass "wealth advisor" who says that $2MM "would not allow most people to quit their jobs." WHAT?!?

Well I expect he's looking for space to cover his management fees too.