You should subtract capital gains. Unless you know of a way to put $84k/year into a roth account.
If you invest in S&P 500 index fund you don't need to sell until after retirement.
I agree.
But a material chunk of the $14M belongs to the government (not available for the individual to spend).
If someone takes out a $2M loan at the age of 58, and retires at 59 (before any of it is paid back), do you think that should be money considered in a retirement calculation?
The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…
Do people in countries with universal healthcare not have this problem? What are the types of products and services that are so significant? Surely we aren’t talking about things like Netflix and utilities?
Depends on what is covered under universal health care.
In Canada, doctors and hospitals are covered. But if you need a lot of drugs, you might need to keep working. You also need to budget for dental and vision, as those are also tied to employment agreements.
The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…
To avoid repeating myself, I'll link a reply to a sibling comment:
The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…
> The greatest expense for me in retirement is now health insurance Obamacare changes that. If you don't have much income you get ACA federal tax credits.
ACA plans in my state expose you to over $20,000 in annual risk, for a family plan. That's assuming you don't end up with a huge "out of network" bill by accident (and their networks are terrible, so that's very possible). I think the "gold" plan is a little better (though a much worse deal if you're having to pay the full premium, overall) but I'm not sure how much income-based help you get for the top-tier (and still quite bad, compared to group plans at employers around here) plan.
The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…
The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…
> The greatest expense for me in retirement is now health insurance Obamacare changes that. If you don't have much income you get ACA federal tax credits.
Unless you go to great efforts to shelter, the couple of million in assets will provide an income that exceeds anything considered "not much income". His stated desire to spend the income is going to greatly complicate sheltering efforts.
If you've ever talked to anyone that has done FIRE or just retired a few years early, it's always health insurance. The current US system of healthcare via your employer is a huge blocker to any kind of alternative lifestyle. Have to wait until 65 (or like 68 by the time most of us can retire)
This is not a problem any more - with the ACA, you can get excellent health insurance plans nowadays.
The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…
This is the reality of the situation; until you're eligible for (edit) medicare, health is a significant expense. When paired with the "hedonistic treadmill" of spending, early retirement takes a lot more investment than many suspect. Even at a safe withdrawal rate of 4%, $2M is "only" $80k a year. You're not driving around in Ferrari's and eating caviar on that (parodying a rich lifestyle here). Of course there are…
Will $80k a year be enough for any lifestyle? That's the question I struggle with. It's more than enough in today's dollars. But I have no idea what will happen with inflation and costs between now and retirement day. Maybe by the time I retire, $80k/yr will be poverty level. Maybe health insurance premiums alone will cost $80k/yr. Who knows! What will the value of the dollar be and to what extent will healthcare costs have grown? It makes it impossible to set a target. All those "save for retirement" online tools start with that nonsensical question: "How much income will you need in retirement?" How the F should I know? I can't predict the future.
EDIT: Yes, SOME tools will account for inflation by asking you what you think inflation might be between now and retirement day. (Who knows?) Most don't account for costs that will rise much faster than inflation, like housing and health care.
The greatest expense for me in retirement is now health insurance so it makes sense for me to instead work for insurance coverage and put my wealth towards an inheritance for my children. I used to naively believe once I paid off my mortgage, had a substantial retirement account and savings - a couple million dollars - I'd no longer work. It's also very difficult to get off of the treadmill of spending a lot of money…
> It's also very difficult to get off of the treadmill of spending a lot of money on products and services - requires a massive life change I haven't been ready to perform.
You should just factor this into your living costs. As long as you aim for the right fraction of your earnings to go into savings rather than an absolute amount, you'll be fine.
> Retirement forces you to stop thinking that it is your job that holds you back. For most people the depressing truth is that they aren't that organized, disciplined, or motivated. Maybe, but I don’t know anyone who’s less happy being retired. They might not be living their retirement fantasy, but the pressure and stress of having to work is gone.
I tend to believe the statement -- I don't know about the "happiness" aspect per se but regarding doing all those things you told yourself you'd do, yeah for sure. During COVID lockdown I saw hundreds of instances of a meme something along the lines of: "I used to think I just didn't have the time for all the things I wanted to accomplish; lockdown proved that isn't true!" Not exactly scientific, but I can relate to…
I read some interesting advice somewhere that said: "Sit still until you're compelled to move."
I think the idea is that a lot of our wants / desires are urges that come and go, but our dreams and needs are deeper than that and we have to let those urges pass before we can find out what our true desires are.