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How I got wealthy without working too hard

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Re: How I got wealthy without working too hard

#271

Post by ac29 »

handrous wrote: post #228
influx wrote: post #223

Earlier quoted context omitted.

Obamacare subsidies are based on income. You are likely getting subsidies at this level of income. Will it exist for the next 40 years, who knows?

A couple years of serious illness for you or anyone you're responsible for (spouse, children) will still ruin your retirement plans, if you try to retire early on $40,000/yr in income. A "Silver" exchange plan, even if the premium were $0/m, would still expose you to so much financial risk ("max out-of-pocket") that you'd be rolling some not-very-friendly dice, trying to retire early.

What is the max out of pocket number that you are seeing that is so financially ruinous?

My out of pocket maximum is something like $7000/year. That would be painful on $40k/year, but we're talking about someone with a $1M nest egg, so unless you hit the maximum every single year, its not impossible to cover. Spending $47k/year for a couple years instead of $40k isnt going to financially ruin someone with $1M.

Re: How I got wealthy without working too hard

#272

Post by lkbm »

PaulDavisThe1st wrote: post #255
marktangotango wrote: post #110

Earlier quoted context omitted.

I once shared this outlook, but when one considers their own ideas about the lifestyle "wealthy" entails, and run some numbers, specifically determine the annual spend for that lifestyle, one will quickly realize the truth. A million can be blown in a year, or SWR'd (safe withdrawal rate) at $40k a year indefinitely. Can you retire on $40k a year? Would you want that level of income and lifestyle? Of course this depe…

$40k/yr on $1M is a 4% rate of return. Where are you seeing a guaranteed rate of 4% at this time?

It's not guaranteed, but based on historical average returns for the stock market we frequently assume ~7% growth - ~3% inflation = 4% as the amount you can take out each year indefinitely while your inflation-adjusted principle stays constant.

Looking around, a lot of places[0][1][2] are using 10% growth - 3% inflation, so I guess the 4% is the more conservative estimate.

[0] https://www.nerdwallet.com/article/investing/average-stock-m... [1] https://www.sofi.com/learn/content/average-stock-market-retu... [2] https://www.fool.com/investing/how-to-invest/stocks/average-...

Re: How I got wealthy without working too hard

#273

Post by [deleted] »

handrous wrote: post #195
marktangotango wrote: post #110

Earlier quoted context omitted.

I once shared this outlook, but when one considers their own ideas about the lifestyle "wealthy" entails, and run some numbers, specifically determine the annual spend for that lifestyle, one will quickly realize the truth. A million can be blown in a year, or SWR'd (safe withdrawal rate) at $40k a year indefinitely. Can you retire on $40k a year? Would you want that level of income and lifestyle? Of course this depe…

> Can you retire on $40k a year? Maybe in Europe. No, in the US. Not even close. Even with a paid-off house. Certainly not before "retirement age". Health care is the reason.

[deleted]

Re: How I got wealthy without working too hard

#274

Post by PaulDavisThe1st »

lkbm wrote: post #272
PaulDavisThe1st wrote: post #255

Earlier quoted context omitted.

$40k/yr on $1M is a 4% rate of return. Where are you seeing a guaranteed rate of 4% at this time?

It's not guaranteed, but based on historical average returns for the stock market we frequently assume ~7% growth - ~3% inflation = 4% as the amount you can take out each year indefinitely while your inflation-adjusted principle stays constant. Looking around, a lot of places[0][1][2] are using 10% growth - 3% inflation, so I guess the 4% is the more conservative estimate. [0] https://www.nerdwallet.com/article/inves…

If you're planning to live on your investments' income generation, and nothing else, putting them all (and arguably any) in the stock market could be catastrophic.

One minor downturn for that last just a few months, and you have zero income.

IMO, "US$1M nest egg, live on proceeds" requires guaranteed income, and more or less excludes speculative investment.

I appreciate that others opinions on this may vary.

Re: How I got wealthy without working too hard

#275

Post by robocat »

jacobmischka wrote: post #84
marktangotango wrote: post #78

Earlier quoted context omitted.

> would easily bring you 1M total investments. I think this is the disconnect with GP, $1M isn't what anyone can really call "wealthy" nowadays. Yes, it's a lot of money, but does not allow one to live what most people consider to be a rich lifestyle.

I absolutely can and will call $1M wealthy. Anyone who thinks it isn't is absolutely living in a bubble.

$1M is certainly not wealthy in a first world country.

For example it it is not enough to retire when older and live a moderate lifestyle in New Zealand.

Firstly, you need to own an average home in the city you live in. Don’t move away from your friends. Don’t live in a dangerous suburb. I live in Christchurch where I was born, median house price: $693,000 (Wellington and Auckland are a lot more expensive).

Secondly, you need residual income from investments. New Zealand pays superannuation to everyone that reaches retirement age*, but it is not enough to keep your home warm or go to a café every day.

The figure I aim for is NZD2M. $1M buys a median home in a desirable suburb (7 suburbs in Christchurch have a median price over 1M), and $1M is left to invest. I am middle aged: the amount you need to aim for goes up drastically if: you are younger, you live in an expensive city, you live in an expensive country.

NZD2M gets a comfortable retirement at present. It definitely doesn’t get a “wealthy” retirement (no holiday homes, no wealthy holidays, no flash yacht).

* retirement age is currently 65, but is likely to be increased because that is unaffordable for the country as it currently is economically.

Re: How I got wealthy without working too hard

#276

Post by [deleted] »

handrous wrote: post #195
marktangotango wrote: post #110

Earlier quoted context omitted.

I once shared this outlook, but when one considers their own ideas about the lifestyle "wealthy" entails, and run some numbers, specifically determine the annual spend for that lifestyle, one will quickly realize the truth. A million can be blown in a year, or SWR'd (safe withdrawal rate) at $40k a year indefinitely. Can you retire on $40k a year? Would you want that level of income and lifestyle? Of course this depe…

> Can you retire on $40k a year? Maybe in Europe. No, in the US. Not even close. Even with a paid-off house. Certainly not before "retirement age". Health care is the reason.

[deleted]

Re: How I got wealthy without working too hard

#277

Post by handrous »

ac29 wrote: post #271
handrous wrote: post #228

Earlier quoted context omitted.

A couple years of serious illness for you or anyone you're responsible for (spouse, children) will still ruin your retirement plans, if you try to retire early on $40,000/yr in income. A "Silver" exchange plan, even if the premium were $0/m, would still expose you to so much financial risk ("max out-of-pocket") that you'd be rolling some not-very-friendly dice, trying to retire early.

What is the max out of pocket number that you are seeing that is so financially ruinous? My out of pocket maximum is something like $7000/year. That would be painful on $40k/year, but we're talking about someone with a $1M nest egg, so unless you hit the maximum every single year, its not impossible to cover. Spending $47k/year for a couple years instead of $40k isnt going to financially ruin someone with $1M.

My assumption is that a couple (say) would be running with pretty thin margins, even assuming no mortgage interest or rent and modest living, on $40,000 a year and a fairly low CoL area, so losing another $7k (that's per person, right, not the max-out-of-pocket for the whole plan? Or maybe your exchange plans are way better than ours) would be be very painful, at best. A forever-alone hermit living in a rural trailer park might be another story—there are definitely some circumstances I can imagine in which it might be kinda OK to try to retire before Social Security and Medicare kick in on $1m savings, but not ones that involve anything like a normal life.

And sure, you may not be missing payments thanks to the $1m in the bank, but if you start eating that principle too early (=before you're 60ish years old, at a minimum) you might find yourself needing to get a job after being out of the work force for (say) 10 years and while possibly dealing with serious, chronic health problems. I'm not sure how disability works when you haven't worked for a few years due to retiring, and have six-plus figures in the bank still, but my guess would be "it doesn't", until you are, in fact, ruined.

Re: How I got wealthy without working too hard

#278

Post by DeathArrow »

Chris2048 wrote: post #55
PragmaticPulp wrote: post #14

> Take a $ 500-1000 / day, full-remote job > Take 2 months for holidays in-between contracts > Do this for 7 years while investing most of your salary in a diversified portfolio. Working $1000/day contracts for 5 days per week, 10 months per year is equivalent to $217K of contractor income per year. But contractor income is not comparable to normal career income because you have to handle additional taxes and health…

> Take a $ 500-1000 / day, full-remote job How common is this as contractor pay outside the US? I'd find it hard to hit the lower end of that (i.e. 440 eur per day) in fully-remote jobs, despite the pandemic making remote jobs more common. For context, I'm a Python dev, in finance. I used to do Java, which I note still seems to offer higher salaries, but I wouldn't be tempted to return. Maybe the AWS route could work…

>For context, I'm a Python dev, in finance. I used to do Java, which I note still seems to offer higher salaries, but I wouldn't be tempted to return. Maybe the AWS route could work?

According to SO surveys Python programmers are better payed than Java programmers: https://insights.stackoverflow.com/survey/2021#work-salary

Re: How I got wealthy without working too hard

#279

Post by [deleted] »

PaulDavisThe1st wrote: post #257
lkbm wrote: post #237

Earlier quoted context omitted.

TL;DR: $40k/year in exchange for working full time = not wealthy. $40k/year without having to work = wealthy. I consider $40k/year pretty good, and definitely enough for me to live comfortably on here in Austin TX (Source: I've lived here for 13 years now, and I'm only just now getting close to spending+taxes [retirement+charity excluded] exceeding $40k as I've started spending more liberally.) I've got friends here…

I agree with everything you wrote here except this: > However, having enough money in savings that you get $40k/year without having to work is something else entirely. A 65-year-old with that nest egg is borderline-wealthy. A 40-year-old with that level of savings is solidly wealthy. Why the difference? The 65 year old is going to be able to actually draw down some of the nest egg much sooner than the 40 year old. Th…

[deleted]

Re: How I got wealthy without working too hard

#280

Post by xboxnolifes »

tonystubblebine wrote: post #167

Do people here like working? That's a thing that often seems missing from these wealth optimization conversations. I love working. I don't love working all day. But I got into programming because I love programming and then I found that I also love what I can build through programming and what people do with the things I build. I spent a lot of my career leveling up my situation so that it was more of doing those thi…

I enjoy programming. I do not enjoy working. I do not need a scheduled, 8 hours a day, 5 days a week time block where I am mostly doing things I do not like in order to get what I enjoy out of programming. I am absolutely optimizing for getting out of the cycle.
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