this post was submitted on 26 Nov 2023
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Got a source for the claim that a boomer stock sell off is driving factor? I would have just made greed the motivator.
Spending money is good for the economy. Retiring is good for the economy, that means someone else gets that higher pay job slot. Retirees should be living off of dividends, 401ks and IRAs, not volatile stock sell offs.
If you're only going to live another 10 or 20 years but you have $1M stashed... do you take the $1M now and buy a fancy house? Or do you keep that $1M going for the... checks math ... few tens of thousands of dollars it'll earn in yearly dividends? Meanwhile your daughter needs a new hair-do, your son is living in your basement again, and your wife... well she's your wife. And she wants that new car that you promised you'd get her when you retire.
I guess it's back to the grind instead.
First: Don't take financial advice from randos on the internet. Second: What you said is not a person who is financially ready to retire. It's a number, not an age, as they say. You should not be retiring with $1M solely in stocks. That's bad planning (and too low of a number these days). You need multiple millions spread out over stocks, bonds, your residence, and retirement accounts like 401Ks and IRAs. A million dollars is a number we need to have a conversation about in this country, because everyone wants to hate on millionaires. Want to know what a million dollars is? $430k house that you bought when it was $250k. ~$270k in retirement savings, each, for 2 people. 2 paid off 10 year old cars. How rich does that sound? They're technically millionaires with their assets. Not so rich when you put it like that.
No, you don't buy a fancy house when you are retiring, that's when you downsize so you don't have a huge tax/utilities overhead, a big yard to take care of, and a huge house to maintain that you may have a hard time getting around in as you age. Your daughter is an adult, she needs to get her shit together. Son needs to pay a share of all utilities and whatever other expenses he's costing if he's not disabled. Wife needs to be on board with the finances or everyone in this scenario is a dumbass.
If you have a straight million dollars invested and earning 5% you'll make $50k a year to cover all your bills. $50K someplace really cheap to live (which probably won't be desirable or near qualty services like hospitals as you age) will get you by with no frills. 5% is conservative, a lot of optimists choose higher numbers or historic averages, but this is when you hae no job and are getting old, you need to be very conservative with estimates. $1.5M in straight interest bearing accounts at 5% gets you $75k, a much more reasonable number with a paid off house in a decent area. Got house payments still? Might want to grab that WalMart greeter job to keep that expense at bay. $2.0M will let you live a nice lifestyle, fly to visit the grandkids once in a while, have a small bass boat or whatever to go fish in you spare time, and live in a pretty nice place.
These are my numbers. There are boing to be plenty of people with different opinions and targets, but I thing $2.0M+ is a safer number that will still cover you even if the market rolls back on you for a while.
Tell the girl to pay for her own haircut, get her a salon gift card for her birthday. Tell the son to get a job at Starbucks.
Just a conversation, man :)
I didn't even know someone could borrow against securities. Sounds like I need to have a discussion with my finance guy...
... speaking of finance guys, I should find one.
Sure, let's talk about that.
People who hate on millionaires are making arguments a million hours too late (for many of the reasons you stated). The rage these days is to hate on billionaires.