6 ms·

Unless they made 7 million or more (after taxes), they will need a job again. The life expectancy of a 35 year old is 50 more years. That is effectively forever

Unless they made 7 million or more (after taxes), they will need a job again. The life expectancy of a 35 year old is 50 more years. That is effectively forever when managing money. Single digit millions will not sustain an upper middle class life style forever, even in Texas. When they need a job again, they are better to look where their network and friends are. So stay close to them.

dmortin 7y ago
> The life expectancy of a 35 year old is 50 more years. That is effectively forever when managing money. Can't they just do a lazy portfolio and put 60 percent into stock indexes, for example? Even if there will be a donwturn in the next years the stock market should recover in 10 years or so and produce good yields again.
CuriouslyC 7y ago
Even 2 million at a very safe 2% is still 40k/year without touching the principle. That's livable if your house and vehicle are paid for and you have very simple tastes. Realistically you could easily do a lot better through a mix of leveraged rental property and stocks.
- asdfasgasdgasdg 7y ago
  Just for a little context, that 40k would be tax free, since the first 40k of cap gains are untaxed. So you'd actually be netting out more than the median American. So, move anywhere where median Americans live, buy a reasonably sized house, and you'll be cruising. I have family that recently bought a huge house bordering on mansion sized in Salt Lake City for under 500k. So if you have $2.5M in the bank and you buy that kind of house with cash, you have a very livable nest egg that should allow you to cruise through the rest of your life not just in acceptable conditions, but in abundance.
  - SilasX 7y ago
    >Just for a little context, that 40k would be tax free, since the first 40k of cap gains are untaxed. Wait, what? How do you figure? First, the $40k referred to is interest on the $2 million, not capital gains. Second, all interest over a trivial amount is taxed as ordinary income. (If it comes from a mutual fund with stock ownership, it could have qualified dividends taxed at a lower rate, but it's still taxed.) Anyway, I agree it can get you a comfortable life, but you're definitely paying taxes on it.
    - asdfasgasdgasdg 7y ago
      Generally you'd source some of your "income" from capital gains, and some from dividends. You wouldn't use interest at all. The first 24k of dividends would fall under the standard deduction, assuming you're married. Assuming your "income" is coming half from cap gains and half from dividends, that yields a 0% tax rate (20k dividends @0% and 20k cap gains @0%). And this is of course assuming nothing comes from retirement accounts. In that case, the situation is even more advantageous.
      - sys_64738 7y ago
        The 2019 Standard Deduction for married filing jointly is $24.4k.
        asdfasgasdgasdg 7y ago
        I'm aware ("the first 24k of dividends would fall under the standard deduction" -- from my post). I think you're trying to correct something in my comment, but since I already mentioned the fact you posted, I think you must have misunderstood something, or I must have been unclear. Could you make it more obvious what your objection is?
        sys_64738 7y ago
        I'm not objecting to anything. Simply mentioning that the std deduction is 400$ more for 2019. Peace.
esoterica 7y ago
Are you forgetting investment returns? You don’t need 7 million to sustain an upper middle class lifestyle for perpetuity.
jaggederest 7y ago
$7m is $210k annually, do you really think people need that much to retire in Texas? I know many that pull it off with closer to 1.5m in assets with zero principal depletion
deleted 7y ago
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orasis 7y ago
LOL. $3M in index funds in any place that doesn't have a bonkers cost of living provides a very comfortable life.
pjdemers 7y ago
... you can live on this if you and your spouse both have perfect health until the very very end. There is a 50% chance one of you will develop a serious health problem that is expensive but not fatal. You will need $3 million to deal with that.
- asdfasgasdgasdg 7y ago
  I mean maybe if you don't carry any health insurance and choose not to take advantage of the ACA's guaranteed issuance provisions. Otherwise, it would be quite an uncommon disease that costs $3M to treat.
refurb 7y ago
You don't need anything close to $7M. If you had $2.5M, you could buy a house outright in Texas and still have more than $2M left. Assume a 4% withdrawal rate, that's $60K+ for living expenses after taxes, not including housing costs (because you own outright). I live a very middle class life in SF right now and don't spend anywhere near $60K for my non-housing costs.

dmortin 7y ago

> The life expectancy of a 35 year old is 50 more years. That is effectively forever when managing money. Can't they just do a lazy portfolio and put 60 percent into stock indexes, for example? Even if there will be a donwturn in the next years the stock market should recover in 10 years or so and produce good yields again.

CuriouslyC 7y ago

Even 2 million at a very safe 2% is still 40k/year without touching the principle. That's livable if your house and vehicle are paid for and you have very simple tastes. Realistically you could easily do a lot better through a mix of leveraged rental property and stocks.

asdfasgasdgasdg 7y ago
Just for a little context, that 40k would be tax free, since the first 40k of cap gains are untaxed. So you'd actually be netting out more than the median American. So, move anywhere where median Americans live, buy a reasonably sized house, and you'll be cruising. I have family that recently bought a huge house bordering on mansion sized in Salt Lake City for under 500k. So if you have $2.5M in the bank and you buy that kind of house with cash, you have a very livable nest egg that should allow you to cruise through the rest of your life not just in acceptable conditions, but in abundance.
- SilasX 7y ago
  >Just for a little context, that 40k would be tax free, since the first 40k of cap gains are untaxed. Wait, what? How do you figure? First, the $40k referred to is interest on the $2 million, not capital gains. Second, all interest over a trivial amount is taxed as ordinary income. (If it comes from a mutual fund with stock ownership, it could have qualified dividends taxed at a lower rate, but it's still taxed.) Anyway, I agree it can get you a comfortable life, but you're definitely paying taxes on it.
  - asdfasgasdgasdg 7y ago
    Generally you'd source some of your "income" from capital gains, and some from dividends. You wouldn't use interest at all. The first 24k of dividends would fall under the standard deduction, assuming you're married. Assuming your "income" is coming half from cap gains and half from dividends, that yields a 0% tax rate (20k dividends @0% and 20k cap gains @0%). And this is of course assuming nothing comes from retirement accounts. In that case, the situation is even more advantageous.
    - sys_64738 7y ago
      The 2019 Standard Deduction for married filing jointly is $24.4k.
      - asdfasgasdgasdg 7y ago
        I'm aware ("the first 24k of dividends would fall under the standard deduction" -- from my post). I think you're trying to correct something in my comment, but since I already mentioned the fact you posted, I think you must have misunderstood something, or I must have been unclear. Could you make it more obvious what your objection is?
        sys_64738 7y ago
        I'm not objecting to anything. Simply mentioning that the std deduction is 400$ more for 2019. Peace.

esoterica 7y ago

Are you forgetting investment returns? You don’t need 7 million to sustain an upper middle class lifestyle for perpetuity.

jaggederest 7y ago

$7m is $210k annually, do you really think people need that much to retire in Texas? I know many that pull it off with closer to 1.5m in assets with zero principal depletion

deleted 7y ago

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orasis 7y ago

LOL. $3M in index funds in any place that doesn't have a bonkers cost of living provides a very comfortable life.

pjdemers 7y ago

... you can live on this if you and your spouse both have perfect health until the very very end. There is a 50% chance one of you will develop a serious health problem that is expensive but not fatal. You will need $3 million to deal with that.

asdfasgasdgasdg 7y ago
I mean maybe if you don't carry any health insurance and choose not to take advantage of the ACA's guaranteed issuance provisions. Otherwise, it would be quite an uncommon disease that costs $3M to treat.

refurb 7y ago

You don't need anything close to $7M. If you had $2.5M, you could buy a house outright in Texas and still have more than $2M left. Assume a 4% withdrawal rate, that's $60K+ for living expenses after taxes, not including housing costs (because you own outright). I live a very middle class life in SF right now and don't spend anywhere near $60K for my non-housing costs.