4 ms·

How many is 'a lot'?

• tempsy 7y ago
  I don’t know but I think a lot of people (no dependents) could live off $1M in invested savings for the rest of their life. 5-10 years in a managerial class role nets many that much.
  • yibg 7y ago
    I see these types of comments here quit a bit, and I'm guessing they're mostly from folks with no kids or ever having kids. Certainly there is an argument to be made for working less and living with less, but for most people $1M invested doesn't check out. If you're relying solely on returns from that investment, then conservatively you can only safely withdraw 3-4%, which works out to 30-40k a year. That's close to full time on minimum wage in some states. While that's enough to survive, not sure if that'd be a fulfilling life for most, even while single. What happens if you have a family later? EDIT: Also not sure how many can actually save that much in 5-10 years. That's 100k - 200k of savings after tax. Even with compound interest, that's pretty tough for most I would think.
    • tempsy 7y ago
      There are REITs that generate 12% dividends you can easily buy, which would be $120K before tax. 3-4% is extremely conservative and you could certainly withdraw more. It’s also less about “never making another dime working” and more that you don’t need a traditional 9-5. You can and should figure out other sources of income.
      • yibg 7y ago
        There are investments that return 10+%, but that doesn't mean that's how much you should take out every year. The 3-4% (usually 4% for retirement savings) is to buffer for years where you get negative returns. I've never seen anyone recommend withdrawing 12% a year with plans to have the nestegg last a long time.
        • tempsy 7y ago
          I was suggesting 6% not 12%. You can live off $60K as a single person even in higher cost cities pretty easily. Taxes aren’t actually that high even in CA at that level.