Comments on: If I retire with a million dollars how well can I live?

By: FreeUrChains

FreeUrChains — Mon, 12 Mar 2012 21:18:15 +0000

Another Reason to Retire Very Very Early: To all of those that died suddenly and unexpectantly and never got to get away from those jobs they hated to do for $/hr.

By: Dreamer

Dreamer — Mon, 14 Feb 2011 20:16:07 +0000

Yep thanks Jacob, thats pretty much along the lines of what I thought. The problem as I see it with only taking 3% as a withdrawl rate is that you either have to have a larger nest egg, or invest more aggresively or and/or do some work. I stay out of the stock market cos Im risk adverse, this means my returns are less, finding some part time work is easier said than done these days IMHO. Perhaps I will have to get into dividend income from shares to earn a bigger income.

By: Jacob

Jacob — Mon, 14 Feb 2011 20:08:25 +0000

@Dreamer – I don’t think 4% is safe in the very long run. The 4% studies was for a typical 30 year retirement, not a 70 year retirement. I think 3% is much safer. The safest of all would be to “keep one hand on the steering wheel” and be able to either adjust expenses or earn just a little bit of money rather than blindly withdraw the same inflation adjusted amount year after year expecting total returns to eventually make up for it because some simulation said it worked in the past.

By: krantcents

krantcents — Mon, 14 Feb 2011 20:07:13 +0000

You can “live” on whatever you want! My thought of retirement is to enjoy life. I expect my needs and wants will be equal to what I have now. Therefore, I know I will need to have enough set aside for retirement for minimum 25 (presuming retiring at 70 yrs old)years.

By: Dreamer

Dreamer — Mon, 14 Feb 2011 20:00:46 +0000

Is the 4% withdrawl rate advisable to extreme early retirement? I read somewhere that it is not.
What is your take on this Jacob?

By: deegee

deegee — Mon, 14 Feb 2011 14:21:45 +0000

The cost and availability of HI varies a lot depending on the state (New York, USA) you live in. Even using ehealthinsurance.com the best I could do was to find a plan which in 2009 cost me $470 a month, which is now nearly $700 a month, for just one person.

That being said, I retired 2 years ago at age 45 with less than $1M, about 1/3 of it in an IRA I do not touch. Now, my taxable and IRA accounts are worth just over $1M while my expenses are about $22k a year, so I am still living just fine off the taxable account only which generate about $32k in dividends. The IRA, SS, and my frozen pension are my “reinforcements” which await me when I hit my 60s 13 years from now.

By: LifeAndMyFinances

LifeAndMyFinances — Mon, 14 Feb 2011 11:48:47 +0000

It’s pretty sad to say that $1,000,000 might not be enough for us to live on, but I really think we would need more, especially since my wife and I are only in our mid-20s. If the stock market went down at all, we would be in a world of trouble.

By: IDI

IDI — Mon, 14 Feb 2011 10:51:57 +0000

Why would I want to stay in the US when I retire? I will just move to a low-cost country and live like a king.

By: Goals Update and Weekly Round-Up #8 « Life And My FinancesLife And My Finances

Mon, 14 Feb 2011 09:55:51 +0000

[...] If I Retire With a Million Dollars, How Well Can I Live?- by EarlyRetirementExtreme [...]

By: Jacob

Jacob — Tue, 26 Aug 2008 01:22:36 +0000

@multifinance – if you use 30 years, market returns and historic inflations, the solution to the annuity equation is about 4%. The reason I don’t use an annuity calculation is because unless you specifically buy one, the parameters entering the calculation are too uncertain to trust the calculation.

By: Multifinance

Multifinance — Mon, 25 Aug 2008 23:07:48 +0000

The rule of thumb retiring 4% per annum is nonsense.
1.use a reasonable life time expectancy.
2.assume you do not leave anything for your
heirs.
3.ask yourself first what your annual spending
needs would be.
4.calculate your annual annuity.
5.the outcome should tell you wether or not you
could satisfy your retirement needs.

Example:
You have one million dollars.
Assume you are 65 years of age.
Assume you will live another 30 years
Assume your conservative annual return will be 3,25% only.
Your annual annuity which you can pay to yourself is $ 52.681,72
Of course the value of this annuity decreases because of inflation.
However as you get older and older, your needs will likely decrease as well (except for medical.)

By: Millionaire Mommy Next Door

Millionaire Mommy Next Door — Wed, 14 May 2008 15:18:12 +0000

Great analysis, Jacob. Whether a million dollars is enough or not is completely up to the individual and their lifestyle choices.

I am really impressed that you live off of $6,600 to $13,500 a year! We spend this much on health insurance alone! Please tell us, how do you do it? I’d love to see your itemized list of annual expenses!

By: Jacob

Jacob — Sat, 02 Feb 2008 19:33:02 +0000

@calamityjamie – thanks for suggestions. I think my preference is towards something movable but semi-permanent like the tumbleweed houses. Alternatively, I could just park an RV permanently somewhere. I think my “mobile” occupation would be either as a blogger (if this blog ever gets to make any money) or an investor.

By: CalamityJaimie

CalamityJaimie — Fri, 01 Feb 2008 21:24:22 +0000

You mention RVing. Full-time RVing can be much less expensive than living in a stick house, particularly if you can purchase your RV outright. You have a lot of control over expenses. For example, you can boondock (without hookups) for free on many public lands. Some RVers join a membership park system or half-price camping club to reduce their camping costs.

Another option is to work or volunteer on the road. Some positions are fun and pretty laid back and you often get a free or reduced-cost RV site. Also, since you are in one place for a while, it reduces your fuel costs. And you get to know an area in depth.

You might want to take a look at my book, Support Your RV Lifestyle! An Insider’s Guide to Working on the Road. My writing partner, Alice Zyetz has also written an eBook, Taking the Mystery out of Retiring to an RV, to start exploring this lifestyle.

It’s a great lifestyle with so many benefits. It’s not for everyone, but it might be for you! Jaimie Hall-Bruzenak

By: Jacob

Jacob — Wed, 23 Jan 2008 03:49:49 +0000

Nope, I have not detailed my budget yet. One of the reasons is that I think budgets are very individual – especially the rent part, so I’m not sure my budget would be so helpful to other people. Another reason is that since I don’t track my budget, it would require some work I basically take my net income and subtract the transfers to my investment accounts leaving those numbers above. Basically DW takes care of the tactical aspects of expenses. I’m the one doing the taxes and the investments, so all I know is how much DW spent out of our total budget.

By: Frugal Bachelor

Frugal Bachelor — Wed, 23 Jan 2008 00:51:08 +0000

Another thing is that you can take that million dollars anywhere. In many countries $40K a year would put you well into upper middle-class, and you could live like a king.

Have you written about your annual expenses for less than $13,500? It’d be very interesting to see – sorry if you posted it and I missed it.