If you have lets say, $250k in the bank.
50k in a rainy day (emergency) account. Own your own home ($400k). Have a retirement acct. $250-400k and zero debt. Or some variation scenario. Generate enough basic income to meet your everyday normal expenditures. You are a millionaire and are doing quite well. It takes a lifetime of work to get to this point for most that can get there. It is not an easy feat. Even today.

The key to success is living with in your means. If you just blow $ and feel like going hog wild that won't hold up. But otherwise you should be just fine and secure. Just monitor goings on's around you and adjust accordingly.

It is still a significant accomplishment and kudos to those who achieve. Fwiw.

I would say this is pretty accurate. I'm not far off and I'm still stuck in the "starter" house I bought in 2013. Can't upgrade in house because it requires double what my current house is worth. We are debt free except the mortgage. Living comfortably but no where close wealthy. I thought being a millionaire would be it but now I'm trying to plan for 3-4 million by 65.

quote:

Originally posted by chellim1:

The key is staying ahead of inflation, even in retirement.
That means having your money in several "buckets": (1.) a short term bucket for the next 6 months spending which is liquid and not subject to market fluctuation, (2.) a medium term bucket for the next 3-5 years using laddered bonds or income equivalent (possibly annuities, although there are some good, some not so good with many variables here) which keeps steady with inflation, and (3.) a long term bucket for beyond 5 years using a diversified equity strategy.

I adopt this bucket system and am pretty close to your allocations

First 3 months: Cash in banks and high yield savings

Rest of the Year: 6-month treasury etf

Next Year and Year after that: Ladder Bond ETF that mature in December the year before.

Year 3 - 10: Capital preservation mix of broad equity ETFs and higher fixed income, low volatility ETFs designed to mitigate a 20-30% downturn in the next 3 to 6 month horizon. Currently 40% equity / 60% fixed income

Year 11 - 20: Growth-Oriented Sector equity ETFs with Fixed Income. Currently 70% equity / 30% Fixed income.

While the 70/30 mix is aggressive for a retiree, I base my acceptance of that risk in that I have a surplus in both long term buckets and the stock market can more than recover over 10 years. And I also rebalance between the two buckets every year.

quote:

Originally posted by Rey HRH:

While the 70/30 mix is aggressive for a retiree

It's all about how your numbers work for you. If you can ride through 3 to 5 years of bear market living off your cash-like balance, the more equities the better the probability of long term gains.

I started out with a 30/70 equity/bond mix with the plan to spend down the bond (and money market) while the equities grew. Statistically this greatly reduces sequence of return risk, and my presumption has been since Biden took office that we were going to see a serious bear market. (I still believe it is coming eventually, and will be terrible due to the national debt and budget.)

But then I stepped into gold and silver, 10% each, which brought me to 50/50 cash/equities. Now our silver is 40% of the portfolio and gold still at 10% after selling quite a bit. I let the winners ride and it has made us very comfortable.

My diversification is all messed up but when we hit a few numbers I'll rebalance to 10% each silver and gold, 30% equities, 50% bonds/money market.

The equities are across large and small cap, growth and value, plus some dividend funds and a smattering of tech.

quote:

Originally posted by Rey HRH:.

So a million today is the same as having $125,000 in the 70s...

Yes, but back then most everybody hoped to be a thousandaire.

quote:

Originally posted by Graniteguy:
I know people that retired in the mid-50's with $2M net worth and are doing just fine.

Of course.

Let's say for ease of math that $500k of that is their home equity, cars, and other illiquid net worth.

That still potentially leaves them $1.5M available to invest and live off.

Even with an ultra safe investment strategy and the traditional conservative 4% annual withdrawal rate, that is still $60k income per year.

$60k a year is around the median annual earnings for an American worker ($62k), and higher than the median annual earnings for workers in many Low Cost of Living states (high 40s to low 50s).

They're not going to be living the high life, but in a LCOL area with a paid-off home, that $60k can go a long way...

And depending on their investment strategy and risk appetite, they could even be pulling 5-6% each year, which would put them at $75k-$90k, comfortably above the median worker.

Plus, if they have access to a pension, which often isn't included as part of net worth calculations, then they'd be in an even better spot and well ahead of the curve.

Logically I know we're financially secure, but I don't feel wealthy. I guess when I was young, dumb, and broke I thought being wealthy meant being able to indulge without thought or concern. While I'm not worried about keeping the lights on or surprise repair bills, I still weigh wants vs needs and expect value for my money, just as I did several zeros ago. Even inside the top 10% we can relate a lot more to the bottom 90% than the top 1%.

quote:

Originally posted by Sclass:
Logically I know we're financially secure, but I don't feel wealthy. I guess when I was young, dumb, and broke I thought being wealthy meant being able to indulge without thought or concern. While I'm not worried about keeping the lights on or surprise repair bills, I still weigh wants vs needs and expect value for my money, just as I did several zeros ago. Even inside the top 10% we can relate a lot more to the bottom 90% than the top 1%.

I could not have said it any better! This is exactly how I feel.

As I get older and more mortal, I am aware of my "wealth" and am trying to actually spend more improving my places to add to their value and my own pleasure of them. As I mentioned in another recent thread, I'm likely to die with no heirs, so I'm betwixt and between where my assets will go.

quote:

Originally posted by 6guns:

quote:

Originally posted by Sclass:
Logically I know we're financially secure, but I don't feel wealthy. I guess when I was young, dumb, and broke I thought being wealthy meant being able to indulge without thought or concern. While I'm not worried about keeping the lights on or surprise repair bills, I still weigh wants vs needs and expect value for my money, just as I did several zeros ago. Even inside the top 10% we can relate a lot more to the bottom 90% than the top 1%.

I could not have said it any better! This is exactly how I feel.

As I get older and more mortal, I am aware of my "wealth" and am trying to actually spend more improving my places to add to their value and my own pleasure of them. As I mentioned in another recent thread, I'm likely to die with no heirs, so I'm betwixt and between where my assets will go.

We're in the same boat with no heirs. We've been volunteering to help rescue dogs for several years now and it's become passion of ours. The rescue is part of our estate plan now but in the future I'm thinking of exploring setting it up as a revenue stream instead of a lump sum check.

^^^ Admirable! That gives me some ideas. Thank you.

The problem is inflation.

Inflation averages 3.5% a year +/-.

When I was starting out my career, a million dollars was a LOT of money.

That million in today's dollars is $6,500,000. Now today that is still a lot of money.

Having a million in savings, using the 4% rule, that gives you 40,000 per year to drain down and not run out of money.

Not exactly the life style of the rich and famous.

While still working and near retirement, I was very happy with my financials and did feel very secure. Reading the Journal and seeing my next door neighbor sold his business for 17 billion readjusted how wealthy I felt.

quote:

Originally posted by sig2392:
The problem is inflation.
Inflation averages 3.5% a year +/-.
When I was starting out my career, a million dollars was a LOT of money.
That million in today's dollars is $6,500,000. Now today that is still a lot of money.
Having a million in savings, using the 4% rule, that gives you 40,000 per year to drain down and not run out of money.
Not exactly the life style of the rich and famous.

Yes. Exactly!
Which is why you have to earn more than 4% in retirement.

You have to earn more than 4% in retirement if you plan on being buried with all your principal savings. (or plan on passing most of it on to your children)

If you have $2M+ at 62, and earn nothing on that money, you could withdraw 60K+ a year until you were 95. (assuming no social security)