3 ms·

I think this over-estimates the amount required to live a luxurious life in perpetuity. Consider the case of someone wishing to live a luxury lifestyle in the

by lumost 3y ago

I think this over-estimates the amount required to live a luxurious life in perpetuity. Consider the case of someone wishing to live a luxury lifestyle in the trendy lower east side neighborhood of manhattan. We'll use a 1300 sqft 3 bedroom condo as a baseline. https://www.redfin.com/NY/New-York/455-FDR-Dr-10002/unit-B303-304/home/188122793 https://www.redfin.com/NY/New-York/455-FDR-Dr-10002/unit-B30... This condo will cost 8k/month with a 20% downpayment at todays interest rates, leaving our hypothetical million dollar a year salary person with 52k/month post-tax. Assuming they live a rather luxurious lifestyle of ~16k per month, they will still have a savings rate of 60%. Leading to a retirement in 12 years with a portfolio of 7.8 MM. If the person makes 10x this value or 10MM per year... Then they can retire in 1 year. At 100 MM, they can retire in ~2 months. You can play with the numbers a bit, our hypothetical 1MM/year individual would be living in the "average" 3-bedroom apartment for the Lower East Side. Perhaps the 10MM/year individual would choose the most expensive unit which is only ~4x more expensive, and increase their spending to 90000 per month - equivalent to a new model X per month. They still retire in 3.8 years. https://www.redfin.com/NY/New-York/105-Norfolk-St-10002/unit-15/home/186103493 https://www.redfin.com/NY/New-York/105-Norfolk-St-10002/unit...

ewzimm 3y ago
Further, this assumes that a person's primary financial goals are based on personal consumption, when a person might much more highly value their ability to contribute to their community and finance projects that improve the quality of life of those around them, or maybe they have a particular goal for society in general that they want to pursue, like funding a research project. Many wealthy people don't focus on personal consumption at all, even living frugally, but care about the wider impact of their money.
jjcm 3y ago
If anyone wants an extremely simplified "when can I retire given x expenses and y income" calculator, I threw together one here: https://html.non.io/simple-retirement-calculator/ https://html.non.io/simple-retirement-calculator/ Screenshot with op's scenario: https://image.non.io/7865a80e-d1e7-4437-b983-9101ed023024.webp https://image.non.io/7865a80e-d1e7-4437-b983-9101ed023024.we... (assumes a 4% safe withdrawal rate, I suspect op is using 3%).
- cassianoleal 3y ago
  Thanks! It looks like I can safely retire in `null` years! I'll put the champagne on ice.
  - pstrateman 3y ago
    It looks to be inflation adjusted, so null means never since your safe withdrawal rate will always be less than expenses.
    - cassianoleal 3y ago
      Yep, I got that - hence the "thanks!" :|
- codpiece 3y ago
  Thanks for this, it's simple and extremely helpful.
- eurleif 3y ago
  See also: https://www.firecalc.com/ https://www.firecalc.com/
  - jjcm 3y ago
    This one is immensely more powerful and should be used if you want anything more than a "neat, that's a nice ballpark to have" estimate like what you'd get from mine.
- lostmsu 3y ago
  > 1,830 monthly HOA fee
  - jjcm 3y ago
    Good catch - missed that!
bko 3y ago
A 1300 sqft apt isn't exactly lux with a family of 4. Plus public schools aren't great in most of the city and private will cost you 50k per kid, post tax. Then you have to ask what you're doing during the summer. Camp will cost you easily another 20-50k per kid. And your naive math of tax leaves out a lot city and state tax. There are a lot of expenses. The fire stuff you read about people retiring after a few million is often heavily biased towards young single people where you can move to Thailand and live well but falls apart with a family. People don't retire and live in the city after making a million a year for a few years. Maybe they're all stupid, but chances are they aren't and you're severely understimating how much things cost and how much you're taxed. If you're making a million a year you'll want nice things for your family, that includes space for your kids to enjoy their childhood, vacations together, good food, transportation, and other things, otherwise what the hell is the point of working hard?
- cvhashim04 3y ago
  Found the millionaire ;) Agreed, nowhere near close to those numbers but kids, school, vacations, life, things just add up quickly.
- lumost 3y ago
  In Manhattan, it's pretty lux :) If you expand your radius to Brooklyn and the other burrows you can get a modern renovated brownstone with 4k sqft for similar pricing and a 20 minute commute to wherever you need to go in Manhattan. Adding in 100k per year doesn't change the math too much Our hypothetical individual would retire in 13 years. However it's worth highlighting that the costs for this hypothetical individual will fall by ~30% following the kids graduation from college. Now, in theory - there is nothing which stops one from scaling housing costs arbitrarily high. If Musk desired, he could buy the New Yorker hotel and turn it into his house.
- nasmorn 3y ago
  Camp cost 20-50k per kid. Is that lobster camp? What are kids doing in a 50k camp? I am regular European and 50k is like an annual salary. Kids go to camps though but they are more like 700 a week. Let’s call it a grand. For 50k you can get a helicopter pilot license not a summer camp
cyanydeez 3y ago
what really needs to be said is that conspicuous consumption is expensive and generating a "Elon" affect where you simply can't do anything dumb for an infinite number of reasons is the trajectory of conspicuous consumption.

by lumost 3y ago

ewzimm 3y ago

Further, this assumes that a person's primary financial goals are based on personal consumption, when a person might much more highly value their ability to contribute to their community and finance projects that improve the quality of life of those around them, or maybe they have a particular goal for society in general that they want to pursue, like funding a research project. Many wealthy people don't focus on personal consumption at all, even living frugally, but care about the wider impact of their money.

jjcm 3y ago

If anyone wants an extremely simplified "when can I retire given x expenses and y income" calculator, I threw together one here: https://html.non.io/simple-retirement-calculator/ https://html.non.io/simple-retirement-calculator/ Screenshot with op's scenario: https://image.non.io/7865a80e-d1e7-4437-b983-9101ed023024.webp https://image.non.io/7865a80e-d1e7-4437-b983-9101ed023024.we... (assumes a 4% safe withdrawal rate, I suspect op is using 3%).

cassianoleal 3y ago
Thanks! It looks like I can safely retire in `null` years! I'll put the champagne on ice.
- pstrateman 3y ago
  It looks to be inflation adjusted, so null means never since your safe withdrawal rate will always be less than expenses.
  - cassianoleal 3y ago
    Yep, I got that - hence the "thanks!" :|
codpiece 3y ago
Thanks for this, it's simple and extremely helpful.
eurleif 3y ago
See also: https://www.firecalc.com/ https://www.firecalc.com/
- jjcm 3y ago
  This one is immensely more powerful and should be used if you want anything more than a "neat, that's a nice ballpark to have" estimate like what you'd get from mine.
lostmsu 3y ago
> 1,830 monthly HOA fee
- jjcm 3y ago
  Good catch - missed that!

bko 3y ago

A 1300 sqft apt isn't exactly lux with a family of 4. Plus public schools aren't great in most of the city and private will cost you 50k per kid, post tax. Then you have to ask what you're doing during the summer. Camp will cost you easily another 20-50k per kid. And your naive math of tax leaves out a lot city and state tax. There are a lot of expenses. The fire stuff you read about people retiring after a few million is often heavily biased towards young single people where you can move to Thailand and live well but falls apart with a family. People don't retire and live in the city after making a million a year for a few years. Maybe they're all stupid, but chances are they aren't and you're severely understimating how much things cost and how much you're taxed. If you're making a million a year you'll want nice things for your family, that includes space for your kids to enjoy their childhood, vacations together, good food, transportation, and other things, otherwise what the hell is the point of working hard?

cvhashim04 3y ago
Found the millionaire ;) Agreed, nowhere near close to those numbers but kids, school, vacations, life, things just add up quickly.
lumost 3y ago
In Manhattan, it's pretty lux :) If you expand your radius to Brooklyn and the other burrows you can get a modern renovated brownstone with 4k sqft for similar pricing and a 20 minute commute to wherever you need to go in Manhattan. Adding in 100k per year doesn't change the math too much Our hypothetical individual would retire in 13 years. However it's worth highlighting that the costs for this hypothetical individual will fall by ~30% following the kids graduation from college. Now, in theory - there is nothing which stops one from scaling housing costs arbitrarily high. If Musk desired, he could buy the New Yorker hotel and turn it into his house.
nasmorn 3y ago
Camp cost 20-50k per kid. Is that lobster camp? What are kids doing in a 50k camp? I am regular European and 50k is like an annual salary. Kids go to camps though but they are more like 700 a week. Let’s call it a grand. For 50k you can get a helicopter pilot license not a summer camp

cyanydeez 3y ago

what really needs to be said is that conspicuous consumption is expensive and generating a "Elon" affect where you simply can't do anything dumb for an infinite number of reasons is the trajectory of conspicuous consumption.