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Even if OP spends 1M on college fees ( I forgot how expensive it is in the US ), I would imagine that they'll still be very comfortable for a long time. Plus,

by arbol 8y ago

Even if OP spends 1M on college fees ( I forgot how expensive it is in the US ), I would imagine that they'll still be very comfortable for a long time. Plus, you need to factor in their future earnings. When people speak of retirement, they really mean just doing something else they're interested in. The likelihood of these activities generating income, at some stage, is substantial. Also why would anyone need to spend 300k in a year? If you own your house, there's not much to spend other than utilities, food and a couple of holidays... Or am I missing something?

leetcrew 8y ago
no one needs to spend $300k in a year, but unless you are some kind of ascetic monk, you are susceptible to lifestyle creep. the reason i bring up college expenses (which are about $70k/year at top US schools) is that parents tend to do whatever they can to give their kids the best possible chance in life. even if someone is not purchasing luxuries for themselves, it's not hard to spend tons of money on children. about $600k needs to be set aside if he wants to guarantee that his children can attend any college they can get accepted to. in the meantime, there are plenty of expensive things he can do to improve their chances of admission. maybe this means buying a house in a better school district or paying for private school (possibly >$40k per year per child). maybe it's private SAT prep to boost test score. extracurriculars are also very important for admissions (and are enriching in their own right), and the most impressive ones aren't cheap either. there's always something you can spend more money on to improve life outcomes for your kids. you can't just say "I have a lot of money, I'm going to spend modestly, and everything will be alright," and have it be so.
jartelt 8y ago
Your holidays can become progressively longer and more extravagant. The cost of this can add up quickly. Maybe you previously just went to Florida for a week for vacation. Now you decide to take the family to Italy for 3 weeks in the summer and to New Zealand in the winter.... There can also be an urge to buy that vacation home in Tahoe or Jackson that you always dreamed of. Maybe you used to rent a house in Tahoe for a weekend every winter before windfall. Now you buy a place and have a mortgage for a cabin that you use a handful of times a year. Before you know it, you can have a lot more expenses creep up.
toast0 8y ago
Add up a few even ifs of $1M each, and the comfort level drops considerably. $8M should be enough to live comfortably, but it requires a bit of planning and a reasonable definition of comfort. It doesn't take a lot of reading to get towards get a nice umbrella policy, talk to an estate lawyer, and then put most of the money in a diversified bond fund and a diversified stock fund', and plan to pull out a small % per year as your annual budget; allow for large expenses occasionally, but be aware of the impact on your future annual budget. Maybe set aside a specific amount money (in consultation with your significant other) for unwise investments, if you want to learn first hand why they're not recommended.

by arbol 8y ago

leetcrew 8y ago

no one needs to spend $300k in a year, but unless you are some kind of ascetic monk, you are susceptible to lifestyle creep. the reason i bring up college expenses (which are about $70k/year at top US schools) is that parents tend to do whatever they can to give their kids the best possible chance in life. even if someone is not purchasing luxuries for themselves, it's not hard to spend tons of money on children. about $600k needs to be set aside if he wants to guarantee that his children can attend any college they can get accepted to. in the meantime, there are plenty of expensive things he can do to improve their chances of admission. maybe this means buying a house in a better school district or paying for private school (possibly >$40k per year per child). maybe it's private SAT prep to boost test score. extracurriculars are also very important for admissions (and are enriching in their own right), and the most impressive ones aren't cheap either. there's always something you can spend more money on to improve life outcomes for your kids. you can't just say "I have a lot of money, I'm going to spend modestly, and everything will be alright," and have it be so.

jartelt 8y ago

Your holidays can become progressively longer and more extravagant. The cost of this can add up quickly. Maybe you previously just went to Florida for a week for vacation. Now you decide to take the family to Italy for 3 weeks in the summer and to New Zealand in the winter.... There can also be an urge to buy that vacation home in Tahoe or Jackson that you always dreamed of. Maybe you used to rent a house in Tahoe for a weekend every winter before windfall. Now you buy a place and have a mortgage for a cabin that you use a handful of times a year. Before you know it, you can have a lot more expenses creep up.

toast0 8y ago

Add up a few even ifs of $1M each, and the comfort level drops considerably. $8M should be enough to live comfortably, but it requires a bit of planning and a reasonable definition of comfort. It doesn't take a lot of reading to get towards get a nice umbrella policy, talk to an estate lawyer, and then put most of the money in a diversified bond fund and a diversified stock fund', and plan to pull out a small % per year as your annual budget; allow for large expenses occasionally, but be aware of the impact on your future annual budget. Maybe set aside a specific amount money (in consultation with your significant other) for unwise investments, if you want to learn first hand why they're not recommended.