7 ms·

> When I first hit $100K income, I would take a peek at my W2 for a few days admiring the six digits, but then it wore off. When I hit $200K, $300K, $400K, and

> When I first hit $100K income, I would take a peek at my W2 for a few days admiring the six digits, but then it wore off. When I hit $200K, $300K, $400K, and $500K, it was the same thing. I would be delusional to think that earning $1M, or $10M would suddenly make it different. >What is out there that I could do that would make me excited waking up every day for the next 45 years that could also earn me enough money to cover my expenses? At $500k, with UK tax rates (probably higher than US), you'd have $275k net. If you remove generous expenses, you have $200k a year in savings. Five years working would get you $1M. With $1M, you would probably never have to work again (~$40k in safe withdrawal per year). Then you'd have the ability to pick any job, irrespective of pay. Go help charities, help with research, spend all your time on open source projects, whatever you want.

SlowRobotAhead 8y ago
Lots of people used to taking home 275k aren't going to transition well to 40k which depending on where you live could feel like you are only slightly above poverty level.
- shados 8y ago
  yeah, going up is obviously fine, but it quickly becomes your new normal. Going back down is...painful. Even for simple things. I grew up without A/C in an apartment with leaky windows that would get way too cold at night. Never bothered me. I was used to sweating a lot in summer and using a lot of blankets or standing by the oven while we were making dinner in winter. Today? The moment the temperature is a little off I WANT TO DIE. I can't get any work (or anything really) done, and I'm likely to get sick. Im a wuss now. Central air/heat (or heated floors if we're gonna get fancy) or I'm sad. My young self from 30 years ago would laugh his ass off at how useless my current self is. Wealth can spoil you really quickly.
cpursley 8y ago
I get that everyone's priorities are different, but I'm always amazed that ultra high income earners don't do this (this being live well below means, invest the rest in index funds then go work on passion projects, hobbies, focus on family). Lifestyle inflation and projecting status is a pricey hedonistic treadmill that is ultimately unrewarding.
- taurath 8y ago
  People get addicted to the power that resources bring. Buying things because you like them, eating whatever you want whenever you want (and not having to travel for it), the ability to follow whims and flu around the world. The problem there is you’re just responding to whims, and everything will start to feel the same.
- fierro 8y ago
  lifestyle creep is real
- beefalo 8y ago
  Most people that make a lot of money probably like their jobs. It is probably quite difficult to get really good at something you don't actually like doing.
Someone1234 8y ago
> you'd have $275k net. If you remove generous expenses, you have $200k a year in savings. In Seattle Washington? You'd have an extremely hard time making ends meet on $75K, it certainly isn't "generous." For example median home value in Seattle is $725K.
- DVassallo 8y ago
  My expenses are about $150K a year. Fixed costs per month: * $5K mortgage * $1.2K health insurance * $300 life and disability insurance * $800 utilities * $2K home services: nanny, sitter, cleaner * $800 school / preschool and kids activities * $2K groceries, essentials, etc I have a family, two small kids (4 and 2), and live a comfortable life in Seattle. I could obviously adjust my standard of living, move somewhere cheaper, etc, but I didn't want my family to have to change anything from this experiment I'm doing with my life.
  - Jotra7 8y ago
    $2K home services: nanny, sitter, cleaner. Spends more per month on luxuries than most people make in the US, cries. Get a grip, dude.
  - deleted 8y ago
    [deleted]
  - hinkley 8y ago
    I live a comfortable life in Seattle and my mortgage is $3k a month including taxes, in a house that’s too big for us to keep clean. I think “comfortable” might be understating things. If I moved into my neighborhood now it might be closer to $5k (without a bigger down payment) but I wouldn’t recommend it.
    - DVassallo 8y ago
      $5K includes property taxes, HOA, and home insurance. The total was $4K originally when I bought a $850K townhouse in 2015. But I refinanced recently to get some cash out and that got it to $5K.
max_ 8y ago
Is your "$40K" number from the so callled 4% rule?
blaisio 8y ago
$1m is not enough for most people in the US to never work again, unless they are quite frugal. It's barely enough to retire with.
- cpursley 8y ago
  What bubble/ivory tower part of the country are you in? $1m is enough. Especially with a paid-off mortgage. Most people get by for way, way less than that.
  - taurath 8y ago
    If at any point in ones life you’ve made over $300k, I doubt $40k a year would feel like anything other than relative poverty - not that that’s a terrible thing. It’s plenty of money except if you’re used to vacations to Europe in 4 star hotels, nice gym and golf memberships, cars, etc.
    - EpicEng 8y ago
      >If at any point in ones life you’ve made over $300k, I doubt $40k a year would feel like anything other than relative poverty Neither here nor there. The GP was responding to "$1M is not enough for most people to retire on."
  - cakebrewery 8y ago
    Not with inflation
  - pureagave 8y ago
    In the bay area and almost everywhere on the west coast you are looking at over $1k/month in property taxes for that house with a "paid-off mortgage." In most states you never really "own" your home. You only own it while you pay tax every six months until you are dead.
    - sadris 8y ago
      Why would you retire in a high cost of living area?
sytelus 8y ago
A good balance between risk and returns is often considered to be 10% annualized. Annual comfort living expense for family of 4 is at least $120K net in most urban areas. Adding taxes, your gross would be around $150K. So $1.5M in investment is often considered good in theory for achieving financial independence. The big issue however is that returns are averaged over long duration and so on some years you can end with as little as 2-3% or even negative. So you need to have 25-50% cushion to ride out bad turns in economy where you will be eating up principal itself. This is also important for any unforeseen circumstances such a medical issues that might rack up huge out of pocket (especially in US). Or children leaving for college needing to pay as much as $50K in tuitions. You also need at least 6 months of buffer ($50K) in case some bad event triggers losing your investment, for example, someone trying to to sue you. Given all these more practical investment asset size is $3M for financial independence.
- monktastic1 8y ago
  Wait, are you saying that 10% is a safe withdrawal rate? There's been a ton of research on this, and most analyses come up with 3-4%.

SlowRobotAhead 8y ago

Lots of people used to taking home 275k aren't going to transition well to 40k which depending on where you live could feel like you are only slightly above poverty level.

shados 8y ago
yeah, going up is obviously fine, but it quickly becomes your new normal. Going back down is...painful. Even for simple things. I grew up without A/C in an apartment with leaky windows that would get way too cold at night. Never bothered me. I was used to sweating a lot in summer and using a lot of blankets or standing by the oven while we were making dinner in winter. Today? The moment the temperature is a little off I WANT TO DIE. I can't get any work (or anything really) done, and I'm likely to get sick. Im a wuss now. Central air/heat (or heated floors if we're gonna get fancy) or I'm sad. My young self from 30 years ago would laugh his ass off at how useless my current self is. Wealth can spoil you really quickly.

cpursley 8y ago

I get that everyone's priorities are different, but I'm always amazed that ultra high income earners don't do this (this being live well below means, invest the rest in index funds then go work on passion projects, hobbies, focus on family). Lifestyle inflation and projecting status is a pricey hedonistic treadmill that is ultimately unrewarding.

taurath 8y ago
People get addicted to the power that resources bring. Buying things because you like them, eating whatever you want whenever you want (and not having to travel for it), the ability to follow whims and flu around the world. The problem there is you’re just responding to whims, and everything will start to feel the same.
fierro 8y ago
lifestyle creep is real
beefalo 8y ago
Most people that make a lot of money probably like their jobs. It is probably quite difficult to get really good at something you don't actually like doing.

Someone1234 8y ago

> you'd have $275k net. If you remove generous expenses, you have $200k a year in savings. In Seattle Washington? You'd have an extremely hard time making ends meet on $75K, it certainly isn't "generous." For example median home value in Seattle is $725K.

DVassallo 8y ago
My expenses are about $150K a year. Fixed costs per month: * $5K mortgage * $1.2K health insurance * $300 life and disability insurance * $800 utilities * $2K home services: nanny, sitter, cleaner * $800 school / preschool and kids activities * $2K groceries, essentials, etc I have a family, two small kids (4 and 2), and live a comfortable life in Seattle. I could obviously adjust my standard of living, move somewhere cheaper, etc, but I didn't want my family to have to change anything from this experiment I'm doing with my life.
- Jotra7 8y ago
  $2K home services: nanny, sitter, cleaner. Spends more per month on luxuries than most people make in the US, cries. Get a grip, dude.
- deleted 8y ago
  [deleted]
- hinkley 8y ago
  I live a comfortable life in Seattle and my mortgage is $3k a month including taxes, in a house that’s too big for us to keep clean. I think “comfortable” might be understating things. If I moved into my neighborhood now it might be closer to $5k (without a bigger down payment) but I wouldn’t recommend it.
  - DVassallo 8y ago
    $5K includes property taxes, HOA, and home insurance. The total was $4K originally when I bought a $850K townhouse in 2015. But I refinanced recently to get some cash out and that got it to $5K.

max_ 8y ago

Is your "$40K" number from the so callled 4% rule?

blaisio 8y ago

$1m is not enough for most people in the US to never work again, unless they are quite frugal. It's barely enough to retire with.

cpursley 8y ago
What bubble/ivory tower part of the country are you in? $1m is enough. Especially with a paid-off mortgage. Most people get by for way, way less than that.
- taurath 8y ago
  If at any point in ones life you’ve made over $300k, I doubt $40k a year would feel like anything other than relative poverty - not that that’s a terrible thing. It’s plenty of money except if you’re used to vacations to Europe in 4 star hotels, nice gym and golf memberships, cars, etc.
  - EpicEng 8y ago
    >If at any point in ones life you’ve made over $300k, I doubt $40k a year would feel like anything other than relative poverty Neither here nor there. The GP was responding to "$1M is not enough for most people to retire on."
- cakebrewery 8y ago
  Not with inflation
- pureagave 8y ago
  In the bay area and almost everywhere on the west coast you are looking at over $1k/month in property taxes for that house with a "paid-off mortgage." In most states you never really "own" your home. You only own it while you pay tax every six months until you are dead.
  - sadris 8y ago
    Why would you retire in a high cost of living area?

sytelus 8y ago

A good balance between risk and returns is often considered to be 10% annualized. Annual comfort living expense for family of 4 is at least $120K net in most urban areas. Adding taxes, your gross would be around $150K. So $1.5M in investment is often considered good in theory for achieving financial independence. The big issue however is that returns are averaged over long duration and so on some years you can end with as little as 2-3% or even negative. So you need to have 25-50% cushion to ride out bad turns in economy where you will be eating up principal itself. This is also important for any unforeseen circumstances such a medical issues that might rack up huge out of pocket (especially in US). Or children leaving for college needing to pay as much as $50K in tuitions. You also need at least 6 months of buffer ($50K) in case some bad event triggers losing your investment, for example, someone trying to to sue you. Given all these more practical investment asset size is $3M for financial independence.

monktastic1 8y ago
Wait, are you saying that 10% is a safe withdrawal rate? There's been a ton of research on this, and most analyses come up with 3-4%.