Curious to know the ideal net worth for retirement? As someone retired in 2012 at age 34 with $3 million, let me tell you.
I was talking to a tennis friend of mine who said his sister checked out once she cleared 10 million dollars. She was 37 when she decided to quit her job and go on an Eat, Pray, Love journey to Southeast Asia. She had made a bulk of her fortune as an early investor in an internet consumer company.
My friend and I then got to talking about other people we knew who checked out in their 30s and 40s. They too, had cleared over 10 million dollars in net worth or investable assets. They had all been early employees at successful startups. Or they had risen up the ranks at a big tech company while holding a lot of shares.
Even a 30-year-old softball buddy of mine who worked at Uber said he’s shooting to have a $10 million net worth before he retires.
As a personal finance blogger, I subsequently got to thinking: Is 10 million dollars the ideal net worth amount for retirement? Is 10 million actually the new one million due to inflation? It seems to me that a net worth of $10 million or greater is ideal before leaving work behind.
$10 Million Is A Top One Percent Net Worth
10 million dollars is a lot of millions. If you have a 10 million dollar net worth or higher, you have a top one percent net worth in America. Therefore, if you can’t retire off 10 million dollars comfortably, you’ve got some serious problems!
The sad part about wondering whether 10 million dollars is enough to retire comfortably is that plenty of people who make a lot of money still go broke. Just look at so many ex-NFL players who end up with very little soon after their careers are over. The reason why they end up broke is due to a lack of financial education.
Good financial education will compound on itself. It will pay dividends for years to come. One of the main reasons why I’ve consistently been publishing on Financial Samurai since 2009 is to help people reach financial freedom sooner. We’ve only got one life to live and schools aren’t willing to impart any personal finance wisdom.
For fun, because this is what personal finance enthusiasts do, let’s discuss whether 10 million dollars is the ideal net worth for retirement. Of course, we can always retire with less. Most have. But where’s the fun in that?
Retiring With 10 Million Dollars: The Ideal Net Worth
Intuitively, we know that retiring on 10 million dollars should be no problem. But let’s look at the numbers.
The composition of the 10 million dollars is important. After all, you might have a 10 million dollar net worth, but six million of that may be tied up in your mega-mansion!
Ideally, you want your entire 10 million dollars to be invested in income-producing assets. Therefore, let’s take a look at how much 10 million dollars can produce in this low interest rate environment.
Back in 2007, when the 10-year bond yield was at 5%, 10 million dollars could have generated $500,000 a year in risk-free passive income.
Living off $500,000 a year will provide for a very fine life. Of course, some households might still feel like they are scraping by. But not you!
You can live in a big fancy house, pay private school tuition, eat whatever you want, fly first class, and even fly private on occasion. You can also eat all the toro sashimi and Kobe beef you want. Yum!
Unfortunately, 10 million dollars today generates a lot less. Since the 10-year bond yield is around 1.6%, it can only generate ~$160,000 a year in risk-free income. Not bad, but exactly living the high life.
Although a decline in interest rates has helped support the U.S. economy by making borrowing costs cheaper, it has hurt the average retiree’s ability to generate retirement income.
Therefore, even with 10 million dollars in investable assets, you’ve still got to pay careful attention to how your capital is allocated.
Loading ...More Risk Required To Produce More Income And Wealth
$160,000 a year is a healthy amount of risk-free retirement income, especially if you don’t have any debt. However, if there’s more than one of you to support and if you have surprise costs, such as a big medical bill, perhaps it might not be enough.
What’s the solution? Take more risk with your 10 million dollars by trying to earn a higher return. I don’t recommend reaching too far for yield. Reaching for 3% – 4% yields or returns is the most I’d go for. Remember, with 10 million dollars, you’ve already won the game! Further, with stock market valuations so high, returns could come down in the future.
Just imagine being all-in on dividend stocks before the March 2020 sell-off. You would be pooping bricks if your portfolio declined by $3.2 million in just one month! As a result, most multi-millionaires are highly diversified.
Sure, things are fantastic now. However, when you are retired, you should have no desire to create unnecessary heart attacks. Your goal is to live as long and as healthy a life as possible.
Here are some investment ideas that have the potential to generate higher yields with a reasonable amount of risk.
- A REIT ETF like VNQ, which has a yield of ~2.7%
- Investing in individual REITs like O, which has a yield of ~4.5%
- Private eREITs, which have historically returned high single-digit yields, even during stock market sell-offs
- Investing in individual dividend-paying stocks like AT&T with a forward yield of ~7%
- Investing in a dividend ETF like VYM with a ~3% yield
- Buying rental property
- Lending out hard money (not a fan)
- Buying an annuity (not a fan either)
By taking more risk, your 10 million dollars could conceivably generate $300,000 – $400,000 in retirement income. If so, you should be able to live well for the rest of your life.
The one thing I must caution is having a retirement withdrawal rate much higher than 3X the risk-free rate of return. As we’ve seen during previous periods where low interest rates stayed low for an extended period of time, asset bubbles can form and then burst.
Therefore, don’t just assume your risk assets will always go up. They may, over a long enough period of time. But in the long run, you might also be dead.
Further, I’m assuming all of us with 10 million dollars would like to leave some money to charities and people we care about. Every person I know with $10 million wants to create a perpetual giving machine after they are gone.
Ways To Make Your 10 Million Dollars Go Farther
If you don’t want to take on more risk, the next best way to make your ten million dollars go farther is to lower your cost of living. Since you’re no longer tied down to a job, you could relocate to the heartland of America to save on living costs.
Ten million dollars in New York City may be like having 30 million dollars in Des Moines. If you can bear the weather and the more homogeneous environment, off you go to Iowa! Besides, the weather in New York City isn’t much better. But if you’re coming from San Diego, LA, or SF, then moving to the MidWest may be more difficult.
See the minimum net worth levels required to feel wealthy in various cities. The biggest surprise is how high of a net worth is required to feel wealthy in low-cost cities such as Dallas, Houston, and Chicago. The other surprise is how much more financially satisfied residents are in expensive San Francisco.
Just the other day, I was playing tennis in 64 degree sunny weather while supposedly another Nor’easter was happening. It’s during the winter months where California and Hawaii really outperform.
Once you’ve made your retirement fortune, it makes sense to geoarbitrage if you want to feel even richer. Some retirees have relocated to different countries like Mexico or Malaysia to save on living costs. Then again, if you have 10 million dollars, you probably don’t have to go anywhere to save.
I strongly believe investing in 18-hour cities through a platform like CrowdStreet, which specializes in 18-hour cities, is a smart way to boost income and wealth. If you can generate 8% – 10% returns with $10 million, we’re talking $800,000 – $1 million a year. Of course, there are no guarantees the greater you go on the risk curve.
More Ways To Stretch Your Money
Another way to get your 10 million dollars to last longer is to not touch it for longer. Instead of retiring before you’re 60, wait until your 60s or later. This way, you allow your 10 million dollars to compound for longer and potentially grow even bigger.
The earliest you can receive Social Security is age 62. If you’ve been able to amass 10 million dollars in net worth or investable assets, you likely paid the maximum FICA tax for at least a decade.
Therefore, you should be able to also receive the maximum Social Security benefit a month of $2,324 if you collect at age 62 or $3,895 if you elect at age 70 for 2021.
Of course, if you retire with a pension on top of your 10 million dollars, then you should be set for life. If you have a pension, please count your lucky stars. Its value has gone way up with a decline in interest rates.
Earn Side Income In Retirement
By now, we should all agree that 10 million dollars is enough to retire well. However, I still suggest generating additional side income in retirement to ensure your capital will last for another generation. Earning side income also brings about a sense of purpose.
When I “retired” in 2012, I experienced some negatives of early retirement nobody talked about. Thanks to Financial Samurai, I’ve found something fun to keep me busy, especially during this damn pandemic. This site has helped with my mental health and happiness.
This site generates a decent amount of supplement retirement income. However, only one source of online income is passive: my severance negotiation book, which gets updated every couple of years. Writing articles, responding to business development inquires, and doing interviews takes time.
If you don’t want to make supplemental income online, you can always do some freelance consulting, gig economy work, tutoring, or coaching. The opportunities are endless to make extra income.
Retiring Early With 10 Million Dollars With A Family
Now that we know 10 million dollars can generate between $160,000 – $400,000 a year without the help from Social Security, let’s go through a budget. I’ve decided to compromise and say 10 million dollars can generate $250,000 a year in relatively low-risk retirement income.
This $250,000 budget is for a household of four with two young children living in big city like Los Angeles. Both parents have decided to retire early in their 40s to take care of their children until they never come back.
The couple made their money working at six-figure jobs for 20+ years. During their careers, they averaged a 40% after-tax saving rate. They invested the majority of it in various investments that produce income.
Budget Thoughts With $10 Million Of Investments
As you can see from the budget, $250,000 a year can go pretty quickly when you have two kids and a mortgage. Good thing their mortgage is only $500,000 on a $2,500,000 house.
If the couple paid off their mortgage, they would save $24,492 a year in cash flow. Having this extra breathing room would be nice because there’s not that much extra to cut.
If the couple decides to send their two kids to private grade school, their costs will increase by $30,000 – $110,000 a year for 13 years. And when you have a net worth of 10 million or 10 million dollars in investable assets, you will likely want to send your kids to private school.
Once their kids are done with college, they will free up another $30,000 in cash flow by not having to contribute to two 529 plans. If saved properly, the two 529 plans should be able to pay for most of their children’s college expenses.
Lest you think this $10 million / $250,000 budget is not based on reality, I’ve spoken to a handful of couples who have similar amounts of wealth and budgets.
In fact, my friend’s sister who checked out at 37 with 10 million dollars has budgeted to spend $175,000 a year. She’s focused on capital preservation after hitting it big. Here are some thoughts on what to do with $10 million if you so happen to have a nice windfall.
Retirement Will Be Different Than You Imagine
One of the great things about retirement is that you no longer need to save for retirement. Therefore, psychologically, your retirement income will go farther than you think.
For example, I saved 50% – 75% of my after tax-income from 1999 – 2012. Then I left the workplace for good in 2012. Once I left work behind, the income drop didn’t feel so bad. I was only spending less than half of my income for 13 years anyway.
Everything was going great in retirement from 2012 – 2017. My wife joined me in retirement in 2015 when she negotiated a severance as well. We travelled the world for 10 weeks a year. Then we decided to start a family.
We decided to buy a larger house, a safer car, and save for our children’s education. If our kids decide to go to college in 2036+, surely college tuition will be at least 100% higher.
As a result, the passive income that I thought was enough wasn’t. Therefore, I had to figure out ways to make more.
Don’t expect your lifestyle and your expenses to stay static once you retire. You might have kids late like we did. Or, god forbid, you might get into an accident or have an expensive recurring health issue.
$10 Million Should Be Enough To Retire Happy And Free
If you’ve been able to accumulate $10 million, congratulations! You should be able to retire with little-to-no financial concerns. Go ahead and enjoy life to the maximum today. You’re ahead of 99% of the American population.
If you’re still on your journey to financial independence, trying to accumulate a $10 million net worth or $10 million in investable assets is a worthwhile goal. Just know that even with so much money, you probably should continue to invest due to inflation.
With a top 1% net worth, I highly recommend you track your finances like a hawk with the free financial tool by Personal Capital. I’ve been using it since 2012 and have seen my net worth skyrocket during this time.
Think about yourself as a mama bird sitting on a golden egg. The last thing you want is some vulture swiping away your baby. The more money you have, the more you have to lose. Therefore, diligently tracking your net worth, especially if you have 10 million dollars or more, is important.
Spend Your Wealth With Joy!
One last thing. Retiring with $10 million is still under the estate tax exemption limit of $12.92 million per person in 2023. Therefore, you can feel comfort knowing your heirs don’t have to pay an onerous 40% death tax on capital you already paid taxes on. Further, you have plenty to donate more freely to charities you really care about.
I realize reaching a $10 million net worth or having $10 million in investable assets may sound like an unsurmountable goal. However, with so many investors making great fortunes from this bull market, maybe it’s much more feasible than we think.
Now wasn’t this retirement exercise fun? Good luck building your fortune! And if you just can’t get your head around accumulating $10 million, then shoot for $5 million. It’s amazing how much easier a challenge gets once you make a very big stretch goal.
Loading ...Build Wealth Through Real Estate
Every person I know with a $10 million net worth or more is heavily invested in real estate. Real estate is my favorite way to achieving financial freedom. It is a tangible asset that is less volatile, provides utility, and generates income. High inflation also acts as a tailwind for rent and property prices.
Take a look at my two favorite real estate crowdfunding platforms. They are free to sign up and explore.
Fundrise: A way for all investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the most appropriate way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. They also have higher growth due to job growth and demographic trends. For those with a lot of capital, you can build your own select fund with CrowdStreet.
I’ve personally invested $810,000 in 18 commercial real estate projects across the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$300,000. Real estate is the ultimate inflation hedge, and will help you reach the ideal net worth.
Track Your Wealth Wisely
The rich stay on top of their finances like a hawk. Therefore, do the same by signing up with Personal Capital. PC is a free online tool I’ve used since 2012 to help build wealth. Reaching the ideal net worth figure for retirement of $10 million requires diligent tracking.
Before Personal Capital, I had to log into eight different systems to track 35 different accounts. Now I can just log into Personal Capital to see how my stock accounts are doing. I can easily track my net worth and spending as well.
Personal Capital’s 401(k) Fee Analyzer tool is saving me over $1,700 a year in fees. Finally, there is a fantastic Retirement Planning Calculator to help you manage your financial future as well.
Related posts on becoming a millionaire and retirement:
How To Become A Millionaire By 30 – My financial journey in my 20s.
How To Become A Millionaire By 20 – If you want to instill in your children a strong work ethic and make them financially independent sooner.
Your Wealth Is Mostly Due To Luck: Be Grateful! – You know it’s true.
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After spending 30 years working in finance, writing about finance, and studying finance, I’m certain you will love Buy This, Not That. Whether it’s wanting to retire early or decide on a big decisions, my book will help you make more optimal choices. Thanks for your purchase!
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Always enjoy you posts & especially the ensuing comments.
Retired young in ’98 with a nice little mortgaged to the hilt real estate portfolio & foolishly just kept buying, rehabbing, flipping &/or holding.
We have been debt free for many years & free & clear on a conservative $7-$9mil of mixed use properties & 1st position notes. Our Passive/K-1 income nets > $228k/yr & we still enjoy rehabbing the odd property.
Other self directed investments taken purely for tax deferral are up there as well, but the dreaded RMD will soon kick in as will taking Soc Security.
My wife has our kids heavily invested in Real Estate to the point where it literally covers the operating costs of their own homes that we built or rehabbed. In fact REI & W-2 income qualified our single 26 yr old daughter for a $650k home in Scottsdale AZ. Her passive income alone now covers >50% of the operating costs for that home.
Most of you guys are just nuts. Sorry to say it but you just are. 10 or 20mil isn’t enough for some people? Come on. I’m 38 and I retired on a net worth of 6mill when I was 31. I have 2mill cash in my house I live in. 1 million in a couple rentals. Have 700k cash in the bank and rest in stocks that produce around 100k a year after tax in dividends. Based on all the calculation Ive done I can live a great life and never run out of money ever. In fact, I have too much money. If you think you need 10mill especially over the age of 50 you need to take a hard look at your spending habits.
I don’t think many people are saying they need $10 million to retire. I think people are agreeing that $10 million to retire or more is an ideal net worth number.
Do you have my wife and kids? Where do you live? And they’re pretty important factors when trying to figure out and target net worth.
Shane, I’m with you. I live in California and bought my house 25 years ago. it is now worth $3.7M but I only pay $12K in property taxes because California limits the increase in property taxes and I paid off the mortgage. I also have $4.2M in liquid investments mostly in diversified ETFs. I am still working but generated $54K in dividend and interest in my taxable accounts and another 20K in tax free accounts in the past year. This does not include the $600K in increase in portfolio value from January of 2021 to today with what most investors would consider a relatively conservative portfolio of stock and bond ETFs. I also saved $600K because of a big payout from my job which was unusual as I normally don’t earn quite so much. Regardless, rather than spend the windfall, I am saving it. If you think about it in spending terms, if I spend $100K like Shane does a year, that is 6 years of retirement spending without touching the rest of the portfolio. If you want to be picky and include inflation, then it is still at least 5 years.
That said, the advice on this site would have had me in 100% risk free bonds at 1.6% vs the $600K my portfolio increased off of a base of about $3million (for those following along I had a $3M starting point plus 600K savings plus 600K portfolio increase gets to $4.2M). Instead, living conservatively, no mortgage, no car payments, no child care assistance (which is a ridiculous expense the FS includes in his budget for two people not working), etc.
Yes, I am taking more risk. But over a 10 year period, I am not really taking that much risk. So if I were to retire, I could easily live off of the $4.2M with a very, very nice lifestyle.
Plus, the advice on this site doesn’t really deal with normal retirement post kids in college where there is no more saving for college education and people have paid off their mortgages. Plus, the FS budget for two retired people includes $19K for childcare assistance. Why do you need childcare assistance if both parents are retired! I mean, isn’t that part of the point of retiring early? You get to spend more time with your kids when it counts? OMG!
Anyway, I live on much less and take much nicer vacations than the FS does. His priorities and mine are not at all aligned. For example, you can build a home gym with a Peloton and Bowflex weights for about $3K and then only pay $40 a month for the Peloton subscription as opposed to the $500/mth FS spends and never have to deal with the sweaty “bros” at the gym who spend 20 minutes hogging one machine. I just have to share with my wife.
Bottom line is you are are right. The people on this site, FS included, can use to ratchet down their spending habits. Kids or no kids.
“ That said, the advice on this site would have had me in 100% risk free bonds at 1.6% vs the $600K my portfolio increased off of a base of about $3million (for those following along I had a $3M starting point plus 600K savings plus 600K portfolio increase gets to $4.2M). ”
Can you point out where I say this about your allocation? I wonder if there is a misunderstanding somewhere I need to correct.
Here is a related post on my recommended proper asset allocation by age.
Not sure how you know what my vacation spending amounts are. But I’m glad you are taking nice vacations. You can’t take it with you.
A $7.9+ net worth is great. If you feel it’s enough, then that’s all that matters. Personally, I decided to accumulate more based on our spending habits. Our passive investment income is about $340,000 a year now, which is a comfortable amount for us but couldn’t be generated reliable with your liquid net worth.
That’s the beauty of personal finance. Financial targets and spending amounts are personal.
I just topped 10 million with the recent surge of my NVDA stock. Pretty good for a guy without even a high school education. My median cost for the shares was $13.62 and yesterday they closed at $650.48. I’m 65 and never planned to make this much money, but the habits I developed just made it work. 25 years ago I stopped selling real estate (I bought my first house at 20 for 15K) to buy more and just used equity to finance new purchases. It made no sense to sell, when the prices mostly just kept mushrooming. I bought a 4 new properties at fire sale prices from 2009 to 2011. So now have 7 properties worth 6 million and 200K in rents coming in yearly. My stocks are worth 4.5 million and just keep climbing. It’s very true the first million is the hardest, but the next millions are much easier if you’re smart and know how to properly leverage. I still have one 500K mortgage on my primary residence, just for the deduction. My thought is most everyone has to work, you might as well make it pay well if you can!
One thing about …. RISK. You have to take it to make bank ! My real estate values were slashed in 2008 and my NVDA dropped by 1/2 in 2019. I did not panic or sell and just waited for the recovery. Risk is the price you have to pay for profit. Just be sure to manage it as well as you can ( NO over leveraging !) and try and do it while you are young to develop a tolerance.
Congrats! And at 65, please don’t forget to spend a lot of it. Enjoy the YOLO Economy to the max!
You are so right, I don’t ever plan on running out of money now, but I will for sure run out of time !
Thought provoking article as usual, Sam. It seems like everyone has their own number in mind. I always thought $10M would be my number, but it appears for some people that’s not enough. I guess that is human nature though, isn’t it? When you actually reach a number, you look for a bigger number. Single digit millionaires aspire to be decamillionaires, centamillionaires aspire to be billionaires. Fascinating indeed to read actual wealthy people’s thought processes on the comments here. What struck me was the individual who had hit $10M, but still didn’t feel secure or like it was enough. I read somewhere that for the uber-rich, there’s always that fear that they will lose all their wealth somehow. Personally, I’m 46 and about to hit $3M net worth, but don’t feel exceptionally wealthy and that’s ok with me. After this pandemic, you realize that health, family, and friends (things money can’t really buy) are what’s most important. I’ll just go on watching YouTube videos of yachts, private jets, and supercars, and admiring them from afar.
Everybody wants what they can’t have. That is the biggest secret to understanding how life works ! For one thing, once you have it, you are no longer “wanting” it.
Based on the survey, more than 28% of the readers have more than $10m, maybe $10m is an achievable goal? Not knowing the participants’ age, it is hard to tell what age group has achieved this level of wealth.
10 million is not enough for me. It used to be a goal and the thought was that this would be plenty. Well…it probably is. I’ve done the numbers – penciled out expenses; including extraordinary events. We aren’t big spenders (only recently flying first class – despite a million dollar income) and will most likely accumulate money as the years go by. We are 63 and a couple years from planned retirement. We are well above 10mil but I don’t know that I would be comfortable at 10 million. Homes are paid off, have not carried a credit card or car loan in 30yrs. The challenge is truly being secure in what you have. We are working on that. We both grew up with nothing and it’s hard to let go of that insecurity.
I’m in your same boat just in our late 40’s. Because we have about $2M/year (and climbing thanks to inflation and expansion) in expected expenditures (as business/real estate owners), $10M+ NW just doesn’t feel like that much of a security blanket. It doesn’t help to know we still have to sustain ourselves (and teenage children) for years to come either.
I think a lot of average earners should try to understand this rather than wondering why $10M isn’t automatically more than enough. I guess if we sell our business and real estate we wouldn’t have to worry about our expenses. But we would be giving up a 7 figure income by doing that. I still feel trapped and a bit apprehensive about whatever age we decide to retire. Of course there is the lingering concern about the possibility (and probably inevitability) of another Great DEPRESSION with an 80+% loss. Odd to feel this way but it’s my natural emotional inclination. Another lingering concern is that the family may never want to cut back on the level of spending we are currently used too – spouse has no interest in giving up that 7500 sq ft home even once we’re empty nesters, among other big expenditures – high end vacations, etc. Makes me wonder how I’ll transition from earning and amassing savings to retiring and drawing down those savings, even if it’s just a portion of the nest egg, with those concerns lingering regardless of what a financial advisor might say to reassure.
Hard to feel like you won the game with our age and expense circumstances. I wonder how many other decamillionaires are in similar predicament and also feel this way.
I guess we make two.
I am 61 yrs old and have a net worth of about 14million. I am well off, but do not feel like i am rich. I live a modest life, and am thankful for what I have. Many of the people here sound like a bunch of pompous assholes whining that with 10 million or more they are at poverty level. For god’s sake, with that much money you are in the top 1% of Americans. Stop complaining.
Lynn,
Im 37 years old with 10M investable with a wife and 3 kids. We have no debt, but i truly believe the 20M mark is the golden number to achieve financial freedom.
Like some other readers, I feel discouraged at the notion that I will need $10mm in order to retire really comfortably.
Here’s my situation as a 48-year-old married gay man with no children:
* Net worth of $2mm
* $740,000 in cash
* $750,000 at Vanguard Brokerage (80% Stock Funds / 20% Bond Funds)
* $416,000 in SEP-IRA at Vanguard (80% Stock Funds / 20% Bond Fonds)
* Manhattan Apt worth $800,000; $600,000 left on mortgage at 3.125% on 30-yr mortgage
* Annual salary of $240,000 as a sole proprietor of a health care practice
* Spouse makes $180,000 a year and provides us with health insurance
I’m wondering if I should get braver with my cash position at this point in time and throw more of it into the Vanguard funds? Or should I pay down some of my mortgage?
Without children, retirement is so much easier. 5 million is probably closer to the ideal net worth amount for retirement with our children.
Check out this budget of a household with children and $5 million net worth.
https://www.financialsamurai.com/why-5-million-dollars-is-barely-enough-to-retire-early-with-a-family/
We’re talking “ideal” here. We can all still live great retirement lives in less than ideal numbers.
I know this post is motivating for some, but it also feels a bit of a downer.
I am 35, single income, with a 2.5m net worth in 3 homes + retirement, and reading the comments and this post makes me feel way behind compared to the 30 year olds with 5m in net worth.
Comparison is the thief of joy isn’t it?
You seem to be doing great to me! I was at about $3 million at your age when I decided to leave the finance industry for good and do my own thing with this site.
Here’s my journey if curious: https://www.financialsamurai.com/the-first-million-might-be-the-easiest-how-to-become-a-millionaire-by-30/
Hi Sam
Great article. Would love to hear your thoughts about inheritance expectations and retirement. Using the $10 million figure — let’s say you and your spouse expect to inherit a portfolio of real property currently valued around that figure. National life expectancy tables suggest the bequest at or around retirement age. Assume both working professionals in big east coast City with combined w2 & passive income of about 500k. Is living somewhat beyond your means now instead of deferring gratification (not maxing 401k, buying boat .etc) irresponsible considering the future prospects?
What an amazing problem! As W2 employees, maxing 401ks+ backdoor Roth IRAs should only be about 50k, a 10% savings rate with your incomes. What if you just did this tax-advantaged part? That would definitely still let you buy a boat and not leave you entirely in the lurch should you be cut out of the will.
I’m 46, and my net worth is approximately 9m, and I am retired. My expenses, including a 1 year old and baby mother is around 90k, not including income tax. Honestly, I dont even think it’s that high.
One thing people need to watch out for, especially when calculating their net worth, is their what their real LIQUIDATED net worth is. Especially in our very liquid real estate and investment environment, your net worth is NET of taxes and fees, not just assets less debt.
For instance, I own 50% interest in a warehouse in austin, and my portion is probably worth 2.5m or so. But, really, my basis is 1.3 after depreciation, and if I sold I will incur cap gains and a 6% fee. So, really, it’s only worth 2m give or take. I can say my net worth is 9.5, but its 9. I can say my investments are 3m, but they’re 2.8. Etc etc…
A lot of people have sizable investment accounts…you have to calculate your worth AFTER capital gains. If you have an expensive home, same thing! Reduce your home value by 6%, and if you made a ton on it, reduce it more.
Many, many people look at their bank accounts and forget that there is the govt hand that reduces their net worth.
I found this article quite interesting, as well as the comments. As someone who is 31, and admittedly off to a good start, my natural guess would have been that $10M is the # to shoot for at say, 55.
My husband and I:
– non investment income $325k
– retirement savings $625 (60% Roth)
– Investments (stocks, ETFs, mutual funds $450k)
– Cash (yes, it needs to be invested, procrastination $140k)
– Annual expenses all in ($70k)
– own $425k house (outstanding principal $300k)
– no other liabilities, live in Philadelphia
Feel like the $10M is attainable as long as no major disruptions. Constantly debate whether a real estate investment other than the primary residence is a good idea. Also, wonder when life insurance comes in.
With low interest I’d definitely leverage your cash and buy some houses
10mil my a$$. Im 40, if i had $200k, id be able to quit my job and live the next 30-40yrs EASILY. $200K dividend by 40 years is a healthy $5K a year to live off.
Not sure what you mean, seems like you have a lot to learn and are on the right site to start.
Some people have finer tastes in life. Why $5K an year, I’ve seen millions of people live for < $100 /yr in some third world countries. Glad you are content with your 5K an year but dont expect everyone else to be content living a life like yours. BTW that 5k after 40 years in today's money be like having <2000$. That's the magic of inflation.
Sorry Vinay, but you need to work on your math skills and get a reality check. Unless you live in a van down by the river….then I’d say you’re all good…
I’m currently 50, with a wife and 2 kids living in the Seattle area. My wife and I both work in tech and currently have about 10.5M net worth, 7M in in the stock market and 3.5M in real estate with zero mortgages. My primary house is worth 2.5M and my second house is 1M which I rent out. So that is about 8M in investments that makes money for me as its invested and generates a return. However, my 2.5M primary house does not make me any money beyond appreciation as I live it. My goal is to reach about 10M in investible assets outside of primary residence. Depending on how the stock market does, I think it will take anywhere between 2 to 5 years. My networth at that point should be around 13-15M.
Hi! Thanks for sharing. Would you be willing to share how much annually you are able to generate with your current investments in both the market and real estate? Are you primarily in mutual funds in the stock market?
Currently, I’m not retired yet so I don’t really optimize for income generation and instead focus on appreciation. Checking personal capital, last year my total investments including primary and rental house appreciated about 16.4%. My rental property generates about 4% cash, but take into account property tax and insurance and repairs, its more like around 3%. I mainly invest in big ETFs like VOO, SPY, VWO, etc…nothing really outrageously risky. Annually, my wife and I pull in around 800K and we save about 360k per year after taxes.
How can you possibly save 360k a year? Taxes must consume 300k. You have 2 kids. You have 2 houses. Something doesn’t compute here…
Ummm. 800k-300k-360k is 140k/yr. His rental has positive cash flow. Financial Samurai is definitely on the spendier end of financial blogs (one of its real competitive edges), but many people live very well with two kids on $140k/yr spending money
I will be receiving 10M in Three years at the age of 40 but wont be able to use the $ until age 55, how much will the account be worth at that time? Also, what is a realistic Rate of Return to expect? I have Three children ages 4,3 and 1. Will i have enough to retire at age 55? I forgot to mention that i can use the account for medical and education before age 55.
Not sure if you will have enough without you sharing your expenses. What is your net worth now?
I have zero debt. My net worth right now is 1M
Looks like there are 3% of the readers have accumulated net worth between $10M to $20M+.
If you are in this category, would you like to share your story to inspire the rest of us to achieve the financial freedom?
I started a Saas business 6 years ago. We cost disrupted a major category and now have about 100K shops using our software. My company is worth about 30 million USD and I own 95% of it.
We’re just getting started, competitors of mine are valued at 9 and 10 figures.
Yeah the secret to becoming a billionaire is hiring the right people (Which is very very challenging and requires a lot of luck especially in this day and age) and taking risk and watching your financial expenses so you can break even in a downturn and having a good product for the consumer.
I’m 59 want to retire at 62. I want to spend $360k per year. What’s minimum amount I need in savings ?
I had a conversation with my brother this past weekend where he mentioned that $10M was discussed among some of his close friends as being the ideal retirement amount. My brother and his friends were tight in their 20’s while living in San Diego. My brother ended up moving to Orlando while his friends stayed in San Diego and started buying small companies, improving operations and balance sheets and selling for profit.
They did so well that they all had net worths in the millions after a few years and eventually had to talk about how long they wanted to continue with their business. As partners, they made a pact to retire once they all reached a certain net worth. That amount was $10M.
They retired 7 years ago in their early 30’s. One of those friends recently invited my brother to spend a week in Vegas with all expenses paid plus $5,000 gambling money. The friend spends his spare time trading options and nonchalantly mentioned losing $20,000 on one trade. Seems that $10M net worth is plenty for retirement and then some.
Wow! How generous to provide $5000 in gambling money! It certainly seems like $10 million or more is the ideal net worth to retire early then.
$5k can disappear in Vegas real quick over 5 days. Minimum nighttime tables are $25/hand and the seating is full, if you’re at craps you’re gonna have hundreds out there within a few rolls.
Would we not also agree 5 days is too long? 1 night is not enough, 2 is good, 3+ is too many. It’s good to be young… :)
Clearly, in any reasonable lifestyle cost scenario, and any reasonable scenario of investing down the fairway, $10 million will be more than enough to live forever on. Even using 3% as a “perpetual” withdrawal rate…and taking 35% away for taxes…that leaves one $195,000 of spending money a year. Probably 4X the average household income in the US. If someone is uncomfortable with 3%, they could go 2% and still have $130,000 to blow every year. Of course…the crazy edge cases won’t, like the guy who spends like Michael Jackson and “invests” his $10M in rare art. I’m at a number that has a very healthy excess from what I actually need to live to 120…and I’m only FINALLY retiring in a month or so (at 55), when I could have probably done so three years ago or so and been fine…so I’m in no position to judge anyone who says $10M is the right number, despite it being “too much” for anyone normal. :)
$10 million does no work for me. I am 57 and I have a net worth of around $16 million in California but around $11 million is tied up in real estate: principal residence, vacation home, 4 unit apartment building. While all are paid for, the property taxes alone are nearly $80 annually. No chance I can retire without at least $10 million in liquid assets (non-real estate).
Keep hustling Tanner! Perhaps at $20 million you will feel comfortable to retire. Not too far away.
I’ll offer a different perspective from CA. I’m nearly 50 with a smaller net worth than yours. Half of it is tied up in RE including my primary residence. My property taxes are higher than yours likely because I acquired my properties more recently. Everything I own has a big mortgage. My primary residence is < 10% of my net worth with everything else being investment properties.
Unless some catastrophe befalls me, a $10M net worth is more than enough for my family of 4 with 2 young kids even though I have many more years of educational expenses to incur. With the expectation that my net worth will continue to grow, I'm already thinking about how I'm going to donate the money because my spending isn't keeping up with the increases in my net worth. I certainly wouldn't want it all to go to my kids should I pass away with a large estate; they need to have some incentive to create their own success.
Your ROI on your Investments must be pretty bad if the 6 mil plus 4 unit cannot generate enough income to cover real estate tax plus your annual expenses. Of course, if your annual expenses are through the roof, that’s a different matter.
Just my observation, but vacation homes are *terrible* investments. Say it’s a 1m vacation home you owned for 14 years. That actually cost you 4m (loss of compounding) + upkeep (taxes etc). This may be worth it, but I think about the opportunity cost everytime i (try to) make a large purchase.
I always enjoy your newsletters that lead me to these articles. Your newsletters are worthy of publication on this site.
$250K is very reasonable for a family of 4 in a high cost of living area. The details may differ, but gross income is correct. For example, my house is worth $2M and I have a $1M mortgage which takes out a big bite. Also jumbo mortgages have higher interest rates. Some people spend on private schools while others lease luxury cars or both. Also, I stopped contributing to my kids’ 529s when they were 9. I think I have enough but would love to see you write an article on that.
While I have no problem with a $10M or any stretch goal, I’ve always been of the opinion that one can get a higher return than your “safe” benchmarks. If you’ve made it to early retirement, you should be a fairly good investor and you weren’t playing it safe your entire life. You took some reasonable risks.
I think a diversified portfolio can easily return 5%/year, so a $5M in investable assets would suffice. There certainly would be more volatility, but I’m assuming we are all flexible and creative people to have gotten this far. Personally, I’ve been batting double digit returns since retirement (2013). Even if we had a few bad years in the future, I’d still be far above 5% annual returns.
Money Ronin I think you are right on 5% being a very conservative target. I am a very conservative investor and the return on my portfolio is 8%. This return even held during the pandemic so I am confident that its a strong and diversified portfolio.
I’m interested in hearing about what choices you made to get double digits returns.
I agree that an 8% return is reasonable but I would be cautious using the pandemic as a bear market benchmark; just look at the S&P 500 for 2000 to 2010. I think in terms of decades for long-term investing. Over decades, I can beat Sam’s “safe” returns, but there certainly will be some bad years. I can ride out future bad years because I’ve had some extraordinary good years.
As for my double digit returns, they were enhanced by my investments in real estate, specifically 6 to 12 unit C class apartments in a high demand/low supply area using ~70% leverage. I’ve been helped by rising rents over the last few years. If the asset value increases by 5%, my return is over 15% because of the leverage. On top of that I get a little cash flow and principal paydown of the mortgage which may add another 2 to 3% return.
This family has $10 million and generating 250K on 2.5 percent growth. After that family is paying 18 percent tax. Why aren’t they paying off $500K mortgage at 2.75 percent.
I believe they have budgeted 250k. They have likely made more from investments. Also it is a hypothetical.
Who are you getting to sit for you for $15 hr? Generally I don’t see this budget working for you in NYC, altho’ I guess you save on landscaping what you pick up on the cost of parking. It would be very hard with kids unless you commit to public which right now is in total chaos.
If I recall correctly, $5M was the number maybe a year or so ago. Did you adjust it based on the crazy stock market performance? When the bubble bursts, will it go down to $5M or lower?
About the returns from the $10M, why not put aside 2-3 years of living expenses, and allocate the rest to 75% SPY, and 25% bond? Take a look at firecalc.com/. It provides simulations based on real market data and tells you how your assets will perform.
-Frank
Sam, this is a thought-provoking article. I think it is important to have stretch goals but the word “attainable” comes to mind. We don’t have a particular number but $10MM seems like way more than we would ever need. I guess it all goes back to your lifestyle and decisions down the road. We currently live in Colorado but do not foresee staying here in retirement. Geo-arbitrage is something we want to capitalize on for capital preservation. That said, I agree with you that you can’t just set your portfolio in a set-it and forget-it mode. We don’t have a $10MM portfolio but we keep an eye on it because we feel it is just the right thing to do. For us, every $ matters today and tomorrow. As far as options in today’s low-interest environment, we still max out tax-deferred accounts (401k, IRAs) but are pumping cash into real estate (through cheap leverage) and also pumping money into our brokerage accounts. The market seems to be overpriced and we might experience a correction down the road. For us, that would mean a buying opportunity knowing the market (long-term) goes up. This is a great article, not totally relatable but it is nice to hear perspectives and wonder about the possibilities :)
Personally, I no longer use the US Treasury note as safe withdraw rate since the US government debt is getting so massive (and covid and related is making it much worse) it is no longer risk free. I still think using a 3-4% withdraw rate is a “safe” rate when you used a balance, diversified investment portfolio that should include real estate, large, mid and small cap stocks, international stocks, corporate bonds (both investment grade and close to it), and some government bonds. Between dividends/bond payments from these investments, should still be 2.5-3.5% yield range (higher if more RE rental property investment in SE or Midwest) plus appreciation – and actually have less risk than just US government bonds.
The example family from LA – why on earth would you be saving $30k/year for your kids education when you yourself are strapped for cash and not saving for retirement yourself? Money for your kids college should always come after you are fully funding your retirement expenses. Plus, college has probably never had less value than it does today while simultaneously the highest costs in real terms its ever been. Financial Samurai alone is a PHD in personal finance and its just one site out of thousands on it that are completely free. Any topic you want has an unlimited amount of free knowledge on the internet – you just have to actually do the research.
These comments put a lot into perspective. You have an individual living on $30k annually and another with an annual expense of $30k for a horse.
Amazed at the monthly frugality on clothing expense, Sam! I guess nice clothing is one of my vices.
With interest rates bottomed out, a rental property monthly income will be one of my goals for secure retirement cash flow.
Somehow I considered $5M the threshold for retirement in the future, although inflation to me here in CA seems far higher than CPI documents.
$5M is more than enough for me for retirement, but I have no intention of living in the super high cost of living cities in the US (SF, NYC, Chicago, Seattle, etc). You can buy a super nice large new house in the SE for less than $500k and have annual property tax between $2-6k. Cap rates for rentals are more like 6-9% too vs the 2-3% in the high cost cities, so much higher investment return opportunities as well.
$5M is more than enough to retire even in most high cost of living cities. Perhaps exceptions are SF and Manhattan (but not all NYC). Chicago has some incredible deals on Gold Coast mansions 4000 sq ft for only $1.5M. When thinking of LA, everybody thinks about Santa Monica or Beverly Hills, but Long Beach is far cheaper with equal access to the beach.
I think where most people go wrong in planning is they believe retirement is synonymous with no mortgage. That may be fine if you live somewhere with a $500K house (house = 10% of $5M net worth), but if your house costs more, you really should have a mortgage given the super low mortgage rates you can lock in for 30 years.
Currently I have a $1M mortgage at 3.0% which I plan to never pay off (I refinance every few years). It makes no sense to have a large chunk of my net worth in my primary residence. I’d rather have the capital working for me. This is what I do (semi-retired), and I give the same advice to my retired mother-in-law. Her pension and small rental property cover her expenses. Why not take some of that home equity and grow her wealth for future generations or a charity? I’m a big believer in long-term planning which includes investing beyond one’s life span.
I personally like having no mortgage as I sleep peacefully at night. I also don’t like a car payment. Of course, some may choose to invest their money and likely earn more than the 3% but there are fluctuations. Personal choice according to your investment philosophy and objectives.
This website is really hilarious sometimes, I still can’t resist.
I definitely have learned a lot in other articles here but holy smokes this article is out of touch with the vast majority of not just Americans, but people on this planet.
For me I hope to stick things out another year or couple depending on how things open up with the pandemic, then baristaFIRE my way through life for as long as I feel like it (age 39 now). I have way too much travel and living to do. And it doesn’t take anywhere near $10million to do this. Highlights: spent a decade doing music full-time, travelled to ~60 countries including living out of the US for 2 1-year stints (once backpacking, once working on a cruise ship) and some longer-term medical volunteering, walked 8000 miles across the US and Nepal on long distance hikes. $12k a year will do me just fine, $20k a year makes me feel like a queen.
What’s hilarious is you thinking anybody can live comfortably off $15-$20K/year. What’s hilarious is you thinking that you want to compare yourself to the average American who is not doing well healthwise and financially.
What’s also funny is you think you can actually help other people and give to charity living off 15,000 to $20,000 a year. I like this article said, there are people who live for themselves, and there are people who also live to help others.
Feel free to be selfish your entire life. But I can promise you you won’t feel fulfilled as the person who is constantly helping other people.
When you are old and alone, you will have wished you had started a family or help more people who now want to help you.
“What’s hilarious is you thinking anybody can live comfortably off $15-$20K/year.”
I guess me and most of my friends are hilarious then? Millions of Americans- some who are struggling, but some doing just fine spending that amount? And billions of people on this planet?
Also, I’d rather do for charity than give to charity. Each his own- if you feel better sending a check than being involved in the work itself, fine. My main work is in healthcare- I treated 11 low income patients today. I’m involved in community building. I’ve taught music in inner city schools.
I’m writing just to challenge this idea you need $10 million which is very out of touch with where most Americans or people in general are at- you can be very fulfilled and not need anywhere near that much to live on. I imagine a lot of people read an article like this and feel isolated and hopeless. We both know the grey area is somewhere between living on $20k/yr, and $250k a year (which is a way conservative income off of $10mil in investments btw- 4% rule says 400k is reasonable to expect).
Your comments about my personal life are unwarranted, but whatever, as I’m not getting married to you when the pandemic is over. My partner loves me just fine. I also don’t rely on having children to help me. I ride on my karma and my community building (and yeah, that does include my family- blood related or not).
Life purpose, friends & family is true wealth. What someone “needs” to feel comfortable financially is infinitely personal. I respect people who take care of their own financial needs (because many do not) and those that provide for others. At different times in one’s life this dynamic may change. I appreciate Sam’s $10 million goal and protocol for getting there.
I guess the point of this newsletter is to achieve financial freedom. So philosophical differences from the intent of this site, or disrespecting someone’s journey or belief system is counterproductive. Finances are deeply personal and everyone has their position. I’m glad Sam’s site encouraged readers to considering why they work, save and invest.
I’m with Dizzy! Thank you, Dizzy.
I am 69-year-old single parent with 25-yr-old disabled adult child (obviously had only child late!).
I had most of my life “adventures” prior to initial parenting age 45. Travelled the world, etc.
Never had professional career, but feel that I have done my best to provide for both of myself and adult disabled child.
Some U.S. Citizens seem oblivious to truly living within their means.
I have manipulated the “system” to best support my disabled child and I. But that does not require $10M in assets!
I have followed this blog for many years while preparing for “retirement.” But have always felt out of sync with the predominant attitude.
So many “affluent” U.S. citizens live in a world that seems like a fairyland.
Sorry, but many months of pandemic isolation while trying to pursue medical care for the disabled within dysfunctional U.S. health care system has led me to this dismal view.
Dizzy
Keep up the good work!
People who live in poverty need your kind of constant and personal interaction through volunteerism more than they need some one time grandiose Monetary donation!
Pride and dignity in being considered a true and equal member of society is overall what the poor need not false pity and loathing for their existence!
God Bless you for your outlook on life and willingness to challenge those who imagine they are the intellectual elite!
Thank you for offering health services to the poorest in our community!
Best Regards
Chris
Bruce Lee suggested once that if everybody just helped the person on their right, no one will be left behind.
You can take responsibility for yourself and reach your goals.
It is good to help someone get on their feet, but to support them is to hurt them. Get a dream and work persistently towards it.
The best help you can get is at the end of your own arm.
I think that’s great and if you have no kids you probably can keep it very lean especially if you spend part of the year in countries where your dollar goes far. But your model is really no less surprising or extreme than SF. The vast majorities of people won’t retire w $10M, nor can they live successfully on $20k particularly as they age. I see a lot of elderly in my city who are clearly struggling financially and not a ton of support out there for them.
You’ve given me a good idea for my household of 4 trying to live off the Federal Poverty Level (~$25,500). Might try it for a month and see what type of lifestyle it will provide. Will be fun! Glad you are enjoying your life off $12,000 – $20,000 a year.
Sam
Good morning
Following Post is in good jest!
I just find it humorous when people talk about poverty as if there is a way to prevent it or that they can give more money to eliminate it. It’s more about certain personalities having power over others who are disadvantaged even amongst the equally poor than their income level that places them in that group.
If you want your children to experience poverty you first have to dispel the notion that poverty is solely related to an annual income of less than $25,500.
Poverty exist for the bottom 5% of Americans because they are the ones who are targeted by and suffer from the established evil (Machiavellians Narcissists , Sociopaths and if truly unfortunate Psychopaths) members of our society that have no regard or consciousness for their behavior.
I would suggest surviving for a year versus a month with a family of 4 (My single mother had 6 kids) it shouldn’t be too difficult.
Your children should attend a public school where they are the new poorest members. The Inner city schools are especially scary but really any public school will do (The wealthiest school I attended had the worst environment as supposed do-gooders are actually the most evil amongst us.)
I found when it comes to those who work in the public sectors it did not matter what school you went to. It simply mattered whether there were any other members of the society that cared if you existed or not.
There is a small percentage of people in all occupations like the following: law enforcement, teachers, principals, counselors, private business owners and anyone else who has to deal with the other 95% (That’s us) of society for whom are cared for by someone else who might retaliate against them for their evil actions.
The bottom 5% are the only ones who can be openly abused and assaulted without regard for consequences. (Think George Floyd, but remove race from the discussion.) (And yes before an idiot has a chance to respond to the race issue, I (A white guy) have personally been physically manhandled/assaulted twice by white police officers for no violent actions on my part.)
This is what poverty means and there is little that race has to do with it!
You should strive to ensure that you live in the worst housing conditions you can afford and that you do not have reliable transportation to get a true meaning of being financially stressed on a daily basis.
You do not have to factor much in for food: churches help, free lunch with a good dose of humiliation from school staff and fellow students, food stamps along with government subsidized supplements like 5lb cheese blocks (No wine with that for those of you keeping score.) will do wonders for your kids self esteem.
Make sure you do not have access to a washer and dryer so you can budget in your 1/2 mile walk with quarters to the local laundry mat.
Also factor in at least once a quarter some overpriced maintenance requirement by a contractor that you can’t afford so you can decide on gas for the car or gas for the heat in the trailer. But don’t fret much if your stove is electric your children can ferry boiling water to each other to mix in pitchers to take baths and being from Kentucky sleeping with your sisters to survive the ice box your in doesn’t sound so disgusting.
Since you are a family of 4 I would suggest you negotiate all conversations! No one respects women especially single mothers and the wolves are always licking their chops at the prospects to include the children girls and boys.
Words of wisdom save the money (you don’t have anyway) on toys and once a week to every ten days you can surprise your kids with a package of 99 cent generic cookies to share. (I am now 50 and the most excitement I get out of life is to buy a package of Oreo’s or Chips Ahoy’s and I smile for my mother every time.)
Many of my friends were as poor as we were but they had other members of society (church community, sports and other activities clubs) looking out for them and therefore they could not be targeted by the evil people without potential discovery and retaliation.
I personally find it patronizing and a little scary when I hear the people here talk about giving to the poor.
My experience was that the givers were all “crazies” of some type or another hiding themselves from the respected part of society all the while using their generosity to hide their evil ambitions and intentions. (Jerry Sandusky comes to mind!) and his buddy good ole Joe!
Personally I seldom give to anyone, it was degrading to be looked down upon as if I were a lesser human being! Something the giver never even realizes while they are patronizing their intended victims for their imagined deserved worship from others! (For the score keeper nuanced language.)
There is one thing poor/poverty stricken people know better than anyone reading this site!
They will survive until tomorrow morning.
Seriously for everyone, life is brutal and we will all eventually decease to exist. Read the information people post and stop taking pot shots at each other. I can assure everyone positive experiences are better than negative ones and we all have Battle Scars even the Rich Girl who simply broke a nail to attain hers!
Sam do not let your children experience poverty! Let them experience stealth compassion for others without glorified acknowledgement for themselves!
Regards
Chris
OK, will do! Can you tell me about your experience with poverty? That’s a consistent hope from the comments section, for readers to share their personal experiences so we can all learn.
I plan on writing the post. Thanks.
Sam
My families survival is ongoing, I personally made it out at least for now!
Poverty induced trauma (Can be like PTSD on Steroids).
One of my earliest memories (Age 6) is watching my dad give a lesson on life while he chopped three puppies in half. Our dog had 11 puppies and only 8 tits, it was simple country math!
Parents divorced when I was 7 that Trauma event was particularly nasty! Better left for another day it ended with all of us in state home for two years and the Hollywood movies you watch are pretty close to how you are are treated and regarded. (Age 9-11)
At 8 I got the privilege of helping to save my oldest brother aged 11 at the time from hanging himself by tying his shirt sleeve to a door knob and then over the top of the door. He was quite purple before we could get him off the door.
That was a precursor to hanging himself four years later while in jail at the age of 15 seems the shirt works fine when jailers forget to do their rounds at night.
Some of offenses for being put in jail the four months before his death were for being late to school and being out after curfew!
Yes the school officials, judges and police were all supporters for him to spend time in jail instead of class. I would like to see how many parents on your reading list would even believe what I am writing? I know better than to have children, if you think you can protect them you are a fool! Do not worry, If you are wealthy and lazy parent your kids can get similar experiences at boarding schools!
Even if you survive a month on $2,135.00, being a solid family unit you could never experience the daily trauma inflicted upon a poverty stricken mother from all parts of society to include all of the children and their society influenced behaviors.
Poverty is not being poor it is about being the target of everything evil all at once and on an hourly basis!
Thank God for the strength of good mothers!
All men are evil, good men work hard everyday to not be!
PS
Cease to exist versus decease, no need to let the other team collect a point for intelligence bashing for those keeping score.
Also the Clark download has gotten in my way a few times and canceled my post before submission.
I never learned to type so it can take a while for me to put together a good post and redoing them means you lose some of my wit!
By the way for anyone who thinks they are struggling and can not see their financial future getting where it needs to be. I will hit approximately 8-9 million counting government holdings for my pensions, military retirement and all other asset classes.
Only in America is Poverty not an excuse all other cultures are designed to destroy individual achievements and to ensure the elites children do not have to contend with the more qualified poor!
Regards
Chris
Sam
Curiously enough I would like to know how serious you and other readers are about understanding poverty versus being financially disadvantaged!
I think I could possibly write a short post each week for approximately 25-50 weeks if people are really interested in the nuanced differences.
What are your thoughts!
I can already see most of your readers are a little stunned by my candid posting about being a do gooder. (Thinking about how to get out of the new light shining on them.)
Normally at least one evil doer will imagine themselves more intelligent and cunning than myself and attempt to show everyone else that they are by trying to make illogical discussion sound logical and truthful.
“A Real Marine” initially had that thought for a second at least.”
And yes I know I said we need to stop taking pot shots at each other but this guy really did jump into a cockfight with nerf balls.
Regards
Chris
To all
This might actually might be the quote of the century, so make sure you quote me properly and do not hijack it for yourself!
“Jump into a cockfight with Nerf Balls.”
Christopher Horn
First Sergeant USMC Retired
Sure, I’d love to have a comprehensive guest post on your story on poverty, it’s affects on society, and what you think we should all do about it.
Sam,
Copy,
Thank you for the opportunity to share the ugly truth of our “So called society” (I forget wat country song that stems from but it is not intentional to omit a proper quotation for it).
1st Story (Not the first in timeframe for what will come but the one that proves “All men are evil, a good man works hard everyday to not be!” (Christopher Horn at least I am not aware of this being quoted before but who knows!).
So Poverty versus Poor:
When I was (7) maybe (8) the youngest of six children of a single 27 year old mother. (That’s right she had six children before her 21st Birthday.), I was playing with several other kids from the neighborhood in the backyard of the largest house in our cul de sac. The Kids that lived there were approximately (7) and (5) (Honestly not positive but sincerely approximated.).
They had an old refrigerator door in the back yard that we were pretending was the wrestling ring mat! (Maybe you remember “Jerry the King Lawler” and “Bill Dundee).
So as we were wrestling I accidentally hurt the (5) year old somehow although not really sure how (Quite honestly he was a true sissy!). But anyway he ran inside his house crying and we had to stop wrestling and go home.
No harm no foul!
A few days later my oldest sister got what now as adults we can realize was a strange request from the older brother of the two boys.
You see my sister had started smoking and these kids older brother aged 14-16 (estimated age) also smoked cigarettes.
So they were on the phone and arranging the delivery of a cigarette to my sister, but it was only to be given if I specifically came down to get the cigarette, Not any of my other older four siblings could retrieve it.
So I went to their house as my sister had been instructed to have me do by their older brother.
When I got to the house to retrieve the cigarette it became apparent that it was a setup between the older brother and his (I believe Step Father!).
So the older son blocked my path to return home while the father sent the two younger boys out of the house with angered instructions to beat me up.
As I was being beaten by the two boys he kept yelling stuff about my families status versus his and how he wouldn’t stand for it.
So I am there of course “crying” not so much from the beating as much as from the confusion of what has just occurred.
The two boys are crying because they are confused from why their father is having them beat me and the older boy seems genuinely disgusted for his part in setting me up and preventing from escaping.
It of course took me 20 years to reflect on this incident before deciphering the meaning of it and the realization of true evil.
Please try to imagine a 35-40 year old man sitting in his home for 3-5 days conspiring a plan to hurt a 7/8 year old kid!
Then orchestrating the plan to carry it out and then prodding his children to commit the assault.
Now tell me if anyone reading this would imagine that any of their neighbors would commit this kind of act on their children simply knowing that they are to weak to retaliate.
Single Mothers have no ability to guard their children against his kind of Socio/Psychopathic behavior!
I find it hard to accept that anyone here would believe that their 7 year old child should be prepared or even capable to defend themselves against this kind of evil from the adult neighbors living on their own street.
This is the reality between Poverty versus Poor!
Stay tuned for next weeks example!
Chris
Next Week I will discuss “Shitty Paint”!
Regards
Chris
To all,
I am not sure how this weekly post will pan out!
It seems it will be difficult to keep a running conversation for those of you who are intrigued/interested in the plight of poverty stricken America!
Although I can only assume that most of you will not respond with questions or opinions, it would be helpful for me to at least receive a response of acknowledgement that the post is being read.
These short stories are quite personal and if no one is even reading them or interested they should be discontinued!
Let me know if you believe they have ay value in solving America’s poverty problem?
The upcoming “Shitty Paint” story is actually pretty upsetting!
Regards
Chris
Sam
Here is a thought, I am not sure how to make the adjustment for your sites.
Currently each topic is separated by itself!
I would recommend that all reciprocal conversations be combined regardless of your monthly posting.
Your viewers who are willing to engage in debatable/combative conversations are currently forced to have to revisit previous months articles of conversations to interact with you and your readers. I have to revert to past articles to continue heated debate versus moving to the future with each additional topic you discuss.
If I am going to have a weekly topic of discussion about the reality of poverty in America it should be open to your current conversations and not tied to a topic from a month to a year ago. Your readers that are willing to engage each other in heated debate need an ongoing ability to antagonize eaach other for debate.
I would suggest you discuss platform options for your readers responses to continue with each additional article you introduce!
Just a thought!
Regards
Chris
Sam
Good Afternoon
After three short post on Poverty Versus Poor, I have not seen any inquisitive responses from yourself or any of your readers.
I fully understand and expected that they would not want to subject themselves to someone like myself (Virtuous Masochist are the most ferocious personality trait of all 23+ Currently identified personalities and it is still in debate as to whether it can be classified by itself.)
Those who fall into the considered normal 16 personalities discussed in the Briggs Meyers evaluation have no idea of what goes through the minds of the the 7/8 other Sadist/Masochist personalities.
If you fall into the normal 16 you are simply just a witness to the battlefield that is waged daily in your presence for which you are just a pawn used by the sadist (The Dark Triad) to obtain their individual objectives.
Masochist intervene and endure the evil that will be extolled upon them, on a daily basis so that the 16 other personalities may survive their one off encounters with the Sadist!
I personally hate the pain induced by combating the Sadistic personalities within in our societies but am compelled, capable and willing to go to war with all of them at every opportunity to ensure a just outcome for the unsuspecting target of their evil ambition and desires. Most people are blissfully unaware or incapable of defending themselves against these cunning and disgusting personalities.
A lifetime of constant interaction with these demons of society allows one to develop a unique skill at defeating them on a regular basis.
Investors by nature are people who want to purchase items for lower priced value and move the item to a more popular demanded location for personal profit!
I do not think that they are as interested as you suggested in actually solving any of our countries problems especially the plight of the poor/poverty stricken.
I will engage with another article and if there are questions or comments regarding the issue I will continue on.
If the crowd is silent I will take my Q and leave the forum.
It is personally rewarding to reflect on how societies leaders continue to destroy the pride and dignity of their fellow citizens and discuss the possibility of reversing that trend!
Regards
Chris
Not everyone can escape poverty, because it’s on them to do so themselves and they just don’t have the drive it takes or even will try. But the truth is there are multiple paths in the USA for ANYONE to make financial progress. In most of the world there is no path at all and that’s why crossing our border is such a goal, for much of the entire planet.
I would really be interested in finding out more regarding the 23+ Currently identified personalities?
Bruce Lee suggested once that if everybody just helped the person on their right, no one will be left behind.
You can take responsibility for yourself and reach your goals.
It is good to help someone get on their feet, but to support them is to hurt them. Get a dream and work persistently towards it.
The best help you can get is at the end of your own arm.
I’m with Dizzy. I have one of the better salary jobs in the United States as an airline captain and thinking about ten million for retirement is just silly and completely unrealistic. Perhaps I’m no longer the audience for this blog.
Honestly, you may not be, and that’s Ok. I’m a dreamer and always have been. I’m also surrounded by similar people who often fail, but often end up doing pretty big things.
When dreaming is free, I say why not. You just never know.
Financial Samurai, I love that you’ve challenged us to dream. I was happy with a $6 Million target and now you’ve made me think… why limit myself?
At the end of the day though my family is perfectly happy living on a budget of $120,000 in the great state of Texas. Our home is fully paid for. We made a decision to downsize to one vehicle because we’re both working from home due to pandemic. Can we buy more? Sure we can. But financial freedom makes us both extremely happy – I invest for the challenge.
It tickles me pink because I am an admin and I know I have a net worth higher than most of my co-workers and neighbors. I choose to work to stay connected to society and it gives structure to my day and sets a good example for my son. It also allows me to be very generous.
My spouse and I are both 45 and started the investing journey when we were 23. You are an inspiration to us Financial Samurai!
Awesome. Just don’t let me let you feel unhappy for not achieving your $6 million target! That’s the last thing I want, and it seems some readers take it this way with words to describe my post like, “dreams crushed, impossible, etc.”
I just have a funny way of thinking I guess… I never see big goals as a bummer b/c I see people achieve big goals all the time. It’s motivating! Positive sum game!
Great job investing for 22 years so far and enjoying the journey!
It’s easy to travel cheap when you are young, I did then too. But now I’m 65 not so nice. That lay flat bed in business class for 12 hours to Asia is worth every penny. You will find this out also, soon enough.
Sam
Good Morning
Great provoking article!
$10,000,000.00
I find this to be the appropriate number to shoot for, for your Above Average Readers.
The other 99% of those who have not found your site yet should shoot for a goal of between $2-$5 million if they want to sustain a future average lifestyle.
Miami Boy, thank you for your contribution to the discussion it is the best example of understanding the reality of achieving wealth and the impact inflation has on your having achieved a supposed magical number.
Tony, Veterans are not special Americans, military service was our choice and honorable members of the service do not demand or request appreciation from anyone for that service. (Semper Fidelis!)
To all,
The post here are great and quite educational for me, I have enjoyed all of the input!
No one should be discouraged by this discussion, the goal of these conversations is to provide a forum where we all can benefit from each other’s perspectives and experiences.
Regards
Chris
Chris,
Tony did not demand a thing for himself. But I guess we should expect that from a Marine (not always known for their intelligence) He did not ask for anything. I’m pretty sure that guy is totally self made and has earned it all. He said “just some advice”. When did they allow snowflakes in the Marines? Hell, even Sam agreed with him.
Kevin
Read my post under VA Nurse it was intended for you.
You might actually be right about my intelligence level as somehow I posted my response in the wrong forum.
I still give my response a point over yours for its content!
What military branch does your intelligence come from?
Semper Fidelis!
Chris
Chris,
Thank you for your post. I was simply responding to his post. Isn’t that what you yourself mentioned “that no one should be discouraged by this discussion” that is what I was doing. Riddle me this? How can you complain when family is worth 10 million w/paid of real estate worth 5 million and can spend 80K the a year for private school? What major inflation has happened in the last 10 years other than probably real estate? Recently lumber has because of the Wild fires and pandemic. If I was a Little hard on. Junior (Miami Boy) I apologize to him. But please explain how they should be “recently feeling tight”
Maybe their spending habits on that kind of net worthwhile?
Tony
Tony
Good Afternoon
Thank you for the response and further discussion.
I can not explain why it can be as challenging for a wealthy family to cope with unfortunate events and circumstances as it is for those in poverty.
What I can say is that it is the reality!
An acquaintance of mine, had the unfortunate experience of having her parents commit suicide due to a loss of established wealth and status.
We should be mindful of the frailties of the mind when someone else seems to be irrationally affected by what we perceive as normal life’s ups and downs.
Congratulations on your business success I love it when an individual can take on the world and come out on top.
Keep it up!
Regards
Chris
Chris,
Sorry to hear of your friends loss of parents. Very tragic. In my view Miami Boy was complaining over stuff that was nothing for the type of wealth his family have or precedes to have I should say. Paid off house worth 2 million/other paid off real estate worth 5 million/500K liquid. Business that generates 1 million and cash flows 250K. Paid off land as well? If hurting with those numbers maybe time to liquidate some stuff and not complain. Surely people who can generate those numbers have a plan A, B, C and D backup modes. You know “Pull the Ripcord scenario”. In my observation he is entitled and has no concept of struggles in life that so many are feeling now w/low income or Little sources to assist. Because I plan ahead for all actions, I have been able to help all tenants that need it. I am waiving all rents as long as they prove unemployment (no back rents due). Donate to food banks etc, etc.. paid for a few new roofs for people, have went to local electric company paid off 10K of outstanding charges (In the undercover Stealth Wealth mode). When I donate I don’t seek or want attention. 10 million net worth he says they have is nothing to complain about when so many millions with far far less is just wrong in my observation.
Tony
Tony
Good morning
I just did not see his comment as complaining.
It seems to me he was just providing a real life picture of what can happen even if you have money.
Regards
Chris
Chris,
Look at the end of Miami Boys post where he said “It’s been quite tough for my parents lately.” If that not complaining I don’t know what is? I’m sure so many people would gladly trade places w/his family. Or am I wrong?
The point of the post was that inflation is real issue. My parents business has done roughly 250k a year for roughly 15-20 years. 250k a year was worth a lot more 15-20 years ago than 400k is today. My parents had much less in terms of net worth 15-20 years. They felt more comfortable at the time than they do now. See below for inflation by various consumer goods and services.
ritholtz.com/2016/08/inflation-look-right-places/
We are extremely blessed and privileged. 10 million is a lot of money. But I do feel that the money needs to continue to grow at a reasonable rate above CPI in order to provide the same standard of living in the future.
Another thing – 400k in a corporate job is much different than as a self employed business owner. My parents have to pay health insurance (2k a month for our family of five because of specific health conditions) and they don’t have a 401k plan with matching or pension plan as many corporate jobs provide.
It’s great you’ve been working through these aspects of your parents’ finances…I wasn’t nearly as aware or interested at your age, but of course there wasn’t the internet at the time. You’ll be ahead of the curve for your own financial journey.
Education, medical and housing have absolutely gone through the roof, and every generation coming up has it worse than the previous in terms of cost.
I disagree with the corporate job vs self-employed business owner comment. The benefit of corporate jobs is stability of income (assuming company/management is stable). But a huge benefit of self-employment is flexibility with deductions (home office, meals and entertainment, transportation) etc. Typically, everyone’s net income is far below a comparable W-2 Gross income. You can deduct health insurance (2K is cheap for a family of 5 btw) and a solo 401K allows you to max out contributions at $58K vs. $19.5K; (plus the ease of doing backdoor Roths).
At least your family has hedged inflation through real estate. The cash flow is the issue; a 3% cap rate on fully paid real estate is quite low, even for a HCOL area and Miami is not NYC or SFO. They’re benefiting from the appreciation but not the cash, so things “feel” tight.
James
Seriously, that sounds like a complaint to you?
It sounds like a son taking his parents concerns to heart, to me.
Tony
Good Morning
I should clarify, this person was an acquaintance of mine!
The word friend is not something I use lightly.
My wife and 8 men are all I have ever called friend and I have only communicated possibly twice a year with 3 of them over the past 10 years and have not spoken with the other 5 in the last 10-20 years(Not even sure if they are alive.).
“All Men are evil, a good man works hard everyday to not be!”
I do appreciate your sincerity of conversation.
Regards
Chris
Chris,
Sorry but tony did not seek or ask for anything for his service in his posts. He never said veterans are special. So are you saying those great Americans who have served and all who gave the ultimate sacrifice are not special? Wow, guess we can call you Commie Chris! Unbelievable. I think you must be one of the wannabees who never had the balls to join or tried and washed out because of bone spurs. How many participation trophy’s do you have in your room?
A real Marine
Real Marines wouldn’t suggest that other Marines did not earn the title!
Closet Communist typically use projection to hide in plain sight!
Hope your friends and family aren’t invited to this discussion!
For the record and other readers:
I am a retired First Sergeant and my highest position held was as the Acting SgtMaj of an Artillery Battalion (700+Marines).
First Sergeant of a Division level Headquarters Company (1200+ Marines).
First Sergeant of a Regional Headquarters in Central Europe for 16 countries.
I served in theater during two wars in1991 and 2005.
I have since served a year in Kabul, Afghanistan 2016-2017 and in Erbil, Iraq 2019-2020 (And yes the Iranian missile attack was quite close).
I have been regrettably responsible for assigning deployment missions to two Marines who were posthumously awarded the Bronze Star for Valor!
I still stand behind my statement, we are not special Americans we are simply Americans who have sacrificed more than others by our own choosing to do so. If others want to honor us we should be gracious about it but in no way should we shame others for not serving.
Semper Fidelis!
Chris
Curious why a fixed index annuity might not be a decent ‘safe harbor’ for a small portion (10 – 20%) of this money over the next ten years with interest rates where they are currently at.
It works. What is the annuity rate?
There are no right and wrong solutions, given everyone is in a different situation. I would say there are optimal and suboptimal solutions though.
Looks like the annuity rate averages 4 – 5% per year when I look at the 10 year averages.
This post starts with a fundamental misconception that before retirement you are growing assets and after retirement you are drawing down assets; hence the 4% rule. I think of “retirement” as retiring from W2 or 1099 income; that is, trading time for money at a set rate.
After you “retire” you should continue to grow your assets. Assets should primarily be invested in passive entities that grow in value and/or income. Examples are stocks, real estate, or (family) businesses (not bonds or gold). Our apartments are growing in value and income monthly.
Asset management for growth should be done with your heirs. As Sam suggests passing money and wisdom (managing money, growing assets, enjoying life, glorifying God) to your heirs is a key motivator to most people. Don’t just give money. Give your knowledge, experience, and teaching to your heirs.
Good points. You will enjoy my next post: Two Retirement Philosophies Will Determine Your Safe Withdrawal Rate.
I totally agree. I semi-retired in 2013 with “just enough”. My goal was to supplement my passive income with a side hustle. If I could get a 5% ROI, draw down 2%, I’m still 3% ahead. The part-time side hustle would help keep my nest egg invested.
As it turns out, my net worth has grown faster since I retired than before. A big part of it is real estate. Although I’m not expecting double digit returns forever, I do plan to invest aggressively indefinitely. At this point, I’m investing like my time horizon is forever because I am doing multi-generational planning. I’m comfortable with an aggressive strategy because:
1. I can earn side income if things go that bad.
2. If I’m too lazy to work, I’ll still die with a positive but small net worth. Sorry, kids.
3. If I’m right, I will have created intergenerational wealth.
4. In either case, my knowledge and experience is worth more to my kids than an inheritance.
5. I will likely get a modest inheritance in a few years which I do not include in my net worth at the moment
I plan to retire at 60. That’s when I can get my pension of about 40k/year plus medical. I hope to have 3 million or more. I am 42 with a net worth of 1.5 million currently. Would love to retire now, but I would need about 6 million to feel comfortable and withdraw 2% a year. The biggest stressor to early retirement for me would be medical coverage. Even if you could obtain a subsidy, there’s no guarantee that it won’t be changed to some kind of means test in the future.
It’s great you are getting a $40K/year pension! That’s like having $1,600,000 at a 2.5% rate of return.
Let’s hope health care coverage gets more affordable some how. We pay $2,250/month for a family of 4.
Kevin
Interesting tirade!
Obviously you are unable to decipher nuanced language!
I would love to entertain everyone here by taking your bait.
However, a ten page assessment of a personality disorder that screams for attention would take more of my time than you are worthy of.
Tony being self made is admirable!
Miami boy simply used personal experience showing all of us that wealth in retirement can be subjective based on actual future needs and desires.
His parents appear to be squeezed based off of their previously established lifestyle due to significant increases in cost for the the things that are important to them after retirement.
Stating legitimate facts and concerns in this forum is not “whining” it is educational!
Regards
Chris
VA nurse
This post was not intended for your post.
Regards
Chris
VA nurse
Awesome!
I am also hoping to retire at 60 with a similar plan as yours but you are far ahead of where I was at 42! (Unless I count the government holdings for military retirement in my personal net worth portfolio.)
Best of luck and thank you for your service taking care of our military members and their families!
Regards
Chris