Retirement with $8M in investments

[marktop]

I'm 53yr old, have ~$8M in various mutual funds, stocks, ETFs, bond funds. House is almost paid off with no plans to move. 3 kids to put through college. Living in the SF bay area in a house valued at about $4M, and all this does not make us feel wealthy with a net worth over $14M (including a rental house). We live a simple lifestyle with no expensive vacations or large expenses.

I have never used an investment advisor and wish I had followed the advice of the first investment book I read (DCA into S&P 500 fund). After 2 decades of trying to beat the S&P 500 and not being able to, all recent investments have been going into VTI and VOO.

In order to retire, should I move all investments (some at Fidelity and Etrade in funds) to VTI and VOO. Any suggestions? Also, at what net worth do people feel wealthy? This is a subjective question, but in Silicon Valley its just crazy with the wealth some people have generated.

[livesoft]

Welcome to the forum.

Folks feel very wealthy with $3 million. See, for instance, this thread: viewtopic.php?f=2&t=150595

For best responses, you should follow the requested format for portfolio advice:
"How to Get the Best Advice on My Portfolio at Bogleheads.org"

[rob]

Not sure what to say about not feeling wealthy with a nw of 14M..... You have more than any dozen regular people.

Work out expenses and see if you can cover with a 4% withdrawal. As to the specific funds - not a clue but your better off getting a plan rather than trying to pick funds.

[dbr]

It seems unlikely you want all your assets in stocks on retirement. Then again you may be wealthy enough and have little enough concern with the consequences that 100% stocks is fine. It might help to know what you have altogether. I would echo the suggestion by Livesoft.

The brutal truth is that at $14M you are not wealthy and can no longer do anything about it. Well, I am jerking you around a little, but the point is how you feel is up to you and your question has no answer. I know people who have no assets and still feel wealthy because they at least can manage a lifestyle that most of the world would envy and have many other things more important than what money buys.

I don't mean this as a negative comment, but if I had your wealth I would probably be working hard on finding useful places to give away about 90% of it, well half of it, no wait, I am not giving up one penny of what I have.

Just another comment, at that level of wealth I suspect wealth is not real but merely a marker in a competitive game. You can decide if you are still a player in that game or not.

[MNGopher]

I suggest moving to a state like South Dakota. You'll be more than fine.

[itstoomuch]

OP,
You live in Low "Milage" area and driving a vehicle that is carrying a lot of responsibility mass.
YMoneyMV

[Grt2bOutdoors]

What are your annual spending requirements in retirement? Include taxes in the annual spending number.
When you've won the game, stop playing. Why do you feel compelled to place all of your retirement assets at risk? Who are you competing against? Why?

Not wealthy? You are in the top 3% of America in terms of wealth and you don't feel wealthy? Turn off the television and stop paying attention to the neighbors.

[sambb]

Take all your money (if in taxable) and put it into all into vanguard tax managed balanced fund. Then read this forum for one year - two years. Dont move or take any drastic life changing actions, just see how it goes. You will be fine. Dont worry about others who may have differing opinions on wealth. It is a personal thing. Take the plan as listed herein, and learn learn learn. You will be totally ok.

[edge]

Um, he is in the top 0.5%.

What are your annual spending requirements in retirement? Include taxes in the annual spending number.
When you've won the game, stop playing. Why do you feel compelled to place all of your retirement assets at risk? Who are you competing against? Why?

Not wealthy? You are in the top 3% of America in terms of wealth and you don't feel wealthy? Turn off the television and stop paying attention to the neighbors.

[btenny]

Can you say YIPPIE and dance. You are wealthy by almost every standard. You have won the game. You live in a great area and own a great house. Take some of your investments and pay off the house completely. I would see about dramatically lowering your asset allocation to maybe 20-30% or less in stocks. Buy a lot of BND or a mix of bond funds with most of the rest. Set aside a good amount in cash in 2 or more banks in CDs. Set aside some for your kids college. Set aside some to buy some long term care insurance. Set aside some in cash as spending money for the next 2-3 years in case the market crashes. Then retire or go on a long vacation.

Do you want to buy other things or just retire? What are your plans?

Good Luck.

[LarryAllen]

I would get some investment real estate to mix it up. I would hate to be that dependent on the stock market each day. I would rather know rent checks are coming in. Move $2mil to Memphis, Kansas City, Indy or other cash flow city and you would be getting $25k a month in rents with B neighborhoods. Easy!

[hirlaw]

I would get some investment real estate to mix it up. I would hate to be that dependent on the stock market each day. I would rather know rent checks are coming in. Move $2mil to Memphis, Kansas City, Indy or other cash flow city and you would be getting $25k a month in rents with B neighborhoods. Easy!

$300K a year off of a $2 million investment?
You mean $25k/month gross, not net, right?

[JW-Retired]

marktop,
You say you have a net worth of $14M. I've always viewed Bogleheads as a pretty wealthy bunch. We had a net worth survey here in 2015. See
viewtopic.php?f=2&t=154364&start=100

If you scroll down a little, you can see in the results plot there are only 4 forum members out of 757 answering the survey who had a net worth more than your $14M.

Please allow yourself to feel wealthy.

And welcome to the forum.
JW

[LarryAllen]

I would get some investment real estate to mix it up. I would hate to be that dependent on the stock market each day. I would rather know rent checks are coming in. Move $2mil to Memphis, Kansas City, Indy or other cash flow city and you would be getting $25k a month in rents with B neighborhoods. Easy!

$300K a year off of a $2 million investment?
You mean $25k/month gross, not net, right?

Yes, gross. To get net that high would need to go to C neighborhoods with more risks.

[David Jay]

What are your annual spending requirements in retirement? Include taxes in the annual spending number.

This is the issue. What are your expenses. What will your expenses be once the mortgage is paid off?

At your age, if you have an accessible portfolio (don't include the house because it is not liquid - you need a place to live) with 30 times living expenses you can retire. One might want to subtract out (3) college educations before making the calculation.

[RAchip]

It depends on you.

I have a NW of over 30mm (9mm real estate and 21mm stocks/bonds/cash) and no debt. I'm 51 years old and I would like to retire but I am not yet confident in doing it. On the one hand, life can be short so I would prefer to do exactly what I want each day. On the other hand a possible 40 years of retirement is a long time and ANYTHING can happen. And I have more kids than you do so that is a big factor. I have taken control of my situation and fired all advisors and handle all aspects of my finances myself. I made it all myself and decided that I am going to be in direct control of what happens for better or worse.

I am not actually a committed boglehead. I am not convinced that putting all my money in an index funds is what I want to do. I have a large stock portfolio that I "manage" myself (large blue chip dividend stocks that I buy and never sell). I certainly would not be buying bonds at this point although I have a hold a multi-million dollar municipal bond portfolio purchased when rates were lower.

Retiring is a difficult and complicated decision for me. You have decide if you have enough. For what its worth, I have more and I'm not sure its enough.

[inbox788]

I'm 53yr old, have ~$8M in various mutual funds, stocks, ETFs, bond funds. House is almost paid off with no plans to move. 3 kids to put through college. Living in the SF bay area in a house valued at about $4M, and all this does not make us feel wealthy with a net worth over $14M (including a rental house). We live a simple lifestyle with no expensive vacations or large expenses.

You're not going to get a lot of sympathy with those kinds of stats, but I've seen the struggles of some people with rich people problems. Begin with what is your current annual budget and spending to help us understand your lifestyle and what your expected lifestyle costs will be in retirement. If you were to retire today and used 2-3% SWR, you have and annual budget of around $280-420k/year. In SF and NYC, that's barely middle class. Move to middle america and you're making 5-10X average family incomes and you will start to feel quite rich.

For now, I can see that you've got some significant expenses, and might seem like you're going paycheck to paycheck, especially if the kids are going to private school. How old are the kids? With tuition $20k/kid, that's $60k/year. Your property tax could be as high as $50k/year on your home, not to mention any expensive hobbies you might have (cars, boats, vacation homes, etc.) And federal and state income tax is quite high (over 50% marginal? 40% overall?). Mortgage is a killer, but since it's being paid off soon, that should be quite a relief in your ongoing budget. FWIW, a 15 year mortgage on $4M is about $30k/month or $360k/year! But since you're almost paid off, I assume you bought it a while back and you've made a pretty penny on it. It only gets worse when the kids go off to college and you're facing $50-60k/year and if they're close in age, you might have some years where you have 2-3 in college.

Yeah, some of those super wealthy folks in silicon valley pretty much can have everything they want. You have reached a point where you can have pretty much anything you want, just not everything. Choose wisely.

And if you really want to BH your portfolio, you're going to have to detail out the current investments. Anyway, I hope to someday approach a fraction of some of these numbers being thrown about.

[cheapskate]

Silicon Valley is a crazy place. This NYT article is (http://www.nytimes.com/2007/08/05/techn ... 5rich.html) 9 years old, but still very relevant.

There is a serious reality distortion field in Silicon Valley. It is often useful to take a step back and compute 2 numbers - (1) how much do you need per year to live off (it sounds like in your situation, with home(s) paid off, $200K would be a very comfortable number). (2) With your 10M (ex-primary residence) portfolio, 200K is a 2% withdrawal rate, very very safe and doable. Even if you are 100% equities (globally allocated), you should be able to hit a 3+% dividend. That gives you room to survive a 35%ish dividend cut in the aggregate (according to William Bernstein, the worst shave for dividends was in the great depression - 50%).
You don't have to worry about funding 529 plans for your 3 kids and such.

[franklinsimms]

If you were to retire today and used 2-3% SWR, you have and annual budget of around $280-420k/year. In SF and NYC, that's barely middle class.

I don't want to get too far off topic, but those figures seemed curious (even for high cost of living cities) so I took a look at the statistics.

In 2013, 84% of San Francisco households earned less than $200k/year.

In that same year, 92% of households in the five boroughs earned less than $200k/year. If you narrow it down to only Manhattan, that number goes down to 82%.

I don't doubt a high earning family could feel anything but rich in an expensive city. But expenses aside, $280k-420k/year is not middle class any way you look at it.

[Pajamas]

The way you feel is appropriate from your perspective. When you have to pay taxes on a house worth $4 million, $8 million doesn't seem very wealthy.

Since you don't take a lot of expensive vacations, maybe take a few weeks to go on one of those volunteer vacations to some country like Haiti and help build a school or clinic or put in some wells for clean drinking water. That would give you a different perspective on feeling wealthy.

[White Coat Investor]

I'm 53yr old, have ~$8M in various mutual funds, stocks, ETFs, bond funds. House is almost paid off with no plans to move. 3 kids to put through college. Living in the SF bay area in a house valued at about $4M, and all this does not make us feel wealthy with a net worth over $14M (including a rental house). We live a simple lifestyle with no expensive vacations or large expenses.

What would make you feel wealthy if you have a NW of $14M and reportedly an inexpensive lifestyle?

I'll tell you-- a lifestyle that is actually inexpensive. The majority of the people on this forum, and almost all regular Americans, would feel very wealthy if they just sold your house and lived on the proceeds for the rest of their lives.

Your lifestyle isn't inexpensive. You have a $4M house. Say that out loud. Still sound like an inexpensive lifestyle? I mean, just the P&I mortgage payment on a 4%, 30 year, $4 Million mortgage is $231K a year- more than the average physician's gross income.

I'm amazed how many very wealthy people don't feel wealthy. I consider myself very wealthy and my NW is less than the value of your house.

Here are some things you can do to FEEL more wealthy:

1) Give more money away
2) Meet more people with an average income or less and observe how they live
3) Travel internationally
4) Spend time volunteering to serve others

Notice that "Accumulate more wealth" isn't on that list. Even if you doubled your NW, you probably still wouldn't feel any wealthier than you do now. I know the Bay Area is a nutty place with regards to incomes and home values, but this is more than that.

[White Coat Investor]

I have a NW of over 30mm (9mm real estate and 21mm stocks/bonds/cash) and no debt. I'm 51 years old and I would like to retire but I am not yet confident in doing it.... I'm not sure its enough.

More money isn't going to make you feel more financially secure. I would suggest two books:

1) How to think about money- Jonathan Clements
2) Enough- Jack Bogle

Seriously. $30 Million is enough, no matter where you live.

[SpaceCowboy]

You don't need to feel wealthy, you just have to believe that you can live an acceptable lifestyle in the location of your choice with the wealth that you have.
I retired at 53 in a HCOL area and basically decided that having time with family and free time was more important than accumulating more wealth. In the Bay area, there are certainly lots of people with enormous wealth, and if you compare yourself to them you won't feel wealthy. However, you have all the money you need to take care of yourself and your family. Mentally set aside $1mm for your 3 kids education, and you still have plenty of wealth leftover.
Here's a saying that I read on Bogleheads that helped me come to grips with the situation and it fits yours too:
"You have enough wealth to buy anything that you want, you just don't have enough to buy everything that you want."

[inbox788]

If you were to retire today and used 2-3% SWR, you have and annual budget of around $280-420k/year. In SF and NYC, that's barely middle class.

I don't want to get too far off topic, but those figures seemed curious (even for high cost of living cities) so I took a look at the statistics.

In 2013, 84% of San Francisco households earned less than $200k/year.

In that same year, 92% of households in the five boroughs earned less than $200k/year. If you narrow it down to only Manhattan, that number goes down to 82%.

I don't doubt a high earning family could feel anything but rich in an expensive city. But expenses aside, $280k-420k/year is not middle class any way you look at it.

I was being hyperbolic with those figures, and meant to imply it may be difficult to eek out a basic middle class existence on that budget, not that it would be in the bottom of the middle class the way it came out. In any case, if you lived on Manhattan in a 2000 sq. ft. home paying mortgage, drove 2 cars and had to pay for parking, sent 3 kids to private school, you might be living paycheck to paycheck and having trouble saving up for retirement. You or I might not notice how much equity we're building up in our home, and someone who owns a home 10X as much might not either, but writing those extra zeroes on the tax bill does hurt just as much if not more. As long as you have that albatross of a mortgage around your neck, it's hard to feel rich. Once OP doesn't have to pay mortgage, I'm sure it will be a huge relief and might start feeling rich then.
Just like most American's don't feel rich compared to the rest of the world (middle class Americans own refrigerators, washing machines, cars, iPhones, etc.), the average rich don't feel rich when they see the uber rich jetting around in their private planes, partying on their yachts, being driven around by their personal limousines, or attended to by their personal butlers. Even with OPs wealth, those kind of luxuries seem a little out of reach. He might be able to indulge once in a while in the equivalent of timeshares for jets:
http://www.forbes.com/sites/forbestrave ... 032df71ab7
http://www.jets.com/charter/

[Call_Me_Op]

Not sure why you feel the need to "keep up with the Jones'" in Silicon Valley. Clearly, you have way more than enough to live any reasonable lifestyle.

[Quark]

I have a NW of over 30mm (9mm real estate and 21mm stocks/bonds/cash) and no debt. I'm 51 years old and I would like to retire but I am not yet confident in doing it.... I'm not sure its enough.

More money isn't going to make you feel more financially secure. I would suggest two books:

1) How to think about money- Jonathan Clements
2) Enough- Jack Bogle

Seriously. $30 Million is enough, no matter where you live.

It depends on your expenses. For example, it's not enough to own and operate a jet.

[Quark]

If you were to retire today and used 2-3% SWR, you have and annual budget of around $280-420k/year. In SF and NYC, that's barely middle class.

I don't want to get too far off topic, but those figures seemed curious (even for high cost of living cities) so I took a look at the statistics.

In 2013, 84% of San Francisco households earned less than $200k/year.

In that same year, 92% of households in the five boroughs earned less than $200k/year. If you narrow it down to only Manhattan, that number goes down to 82%.

I don't doubt a high earning family could feel anything but rich in an expensive city. But expenses aside, $280k-420k/year is not middle class any way you look at it.

I was being hyperbolic with those figures, and meant to imply it may be difficult to eek out a basic middle class existence on that budget, not that it would be in the bottom of the middle class the way it came out. In any case, if you lived on Manhattan in a 2000 sq. ft. home paying mortgage, drove 2 cars and had to pay for parking, sent 3 kids to private school, you might be living paycheck to paycheck and having trouble saving up for retirement. ...

Owning a 2000 sq ft home in Manhattan is way above middle class.

For the first quarter 2016, the average Manhattan apartment sale was about $2 million for about 1,200 sq ft. The median sales price was about half of that. http://ny.curbed.com/2016/4/1/11345882/ ... -apartment

[Riprap]

Leaving whether or not you're wealthy aside, you're correct to carefully consider your moves in the context of the lifestyle you want to live.

If you blow your investment portfolio by spending beyond your means, divorce, lawsuit etc., you'll likely never recover. Preventing catastrophic mistakes is your mission if you choose to retire. Getting a job at Home Depot for supplemental income isn't likely going to do much for you if things go badly. IMO, for now you should treat your investment portfolio as a perpetual income machine with an ability to keep up inflation. The machine has a limit though and you have to figure out what that limit is and whether it's sufficient to sustain your lifestyle. This really is no different than the small business person facing an irregular revenue stream. Just as a business doesn't get a daily appraisal on it's fixed assets, you shouldn't get a daily appraisal of your portfolio. You have to think in terms of cash flow.

So what's the number? If you're heavy in equities don't spend more than the dividend until your children are no longer your responsibility. If you had $7.5M in SP500, then I think you could spend $150K plus whatever you're netting from the rental. Start researching FAFSA, and you'll find that you probably don't want to fill the forms out at your net worth and can count on zero financial assistance. Merit based scholarships may be an option though as many don't require FAFSA forms to be filled out.

If you have a lot of taxable investments, carefully consider where you place them. I would be in mainstream Vanguard mutual funds that would more than likely be in their current form for decades to come. Unforeseen capital gains is a catastrophic event you should plan to avoid.

The net worth component of your home is almost meaningless unless you plan to drastically downsize.

Some will comment that this is way too conservative. Perhaps it is. You can't afford to make a mistake once you retire with 3 kids to worry about.

[snackdog]

I recall years ago the magic number to feel wealthy (as in no longer requiring an income) in the Silicon Valley was $40MM. The reasoning went that 1/2 would eventually fall into the hands of the tax man, $10MM was required for real estate, and the remaining $10MM was 40 years of incidental expenses. At 3% SWR, that's just $300,000 per year to feed the family, keep them clothed, educated, clean and safe. I guess by now the number has inflated to quite a lot more.

[HomerJ]

I'm 53yr old, have ~$8M in various mutual funds, stocks, ETFs, bond funds. House is almost paid off with no plans to move. 3 kids to put through college. Living in the SF bay area in a house valued at about $4M, and all this does not make us feel wealthy with a net worth over $14M (including a rental house). We live a simple lifestyle with no expensive vacations or large expenses.

I have never used an investment advisor and wish I had followed the advice of the first investment book I read (DCA into S&P 500 fund). After 2 decades of trying to beat the S&P 500 and not being able to, all recent investments have been going into VTI and VOO.

In order to retire, should I move all investments (some at Fidelity and Etrade in funds) to VTI and VOO. Any suggestions? Also, at what net worth do people feel wealthy? This is a subjective question, but in Silicon Valley its just crazy with the wealth some people have generated.

How much do you spend? If you spend around $200k a year, you will never run out of money. If you spend $500k a year, you will need to work longer (or move).

You say you live a simple lifestyle. You need to quantify the numbers. If you don't know, you need to start tracking your monthly expenses. It doesn't have to be to the penny, but you should be able to figure out how much you need a month to the nearest thousand.

[HomerJ]

I'm 53yr old, have ~$8M in various mutual funds, stocks, ETFs, bond funds. House is almost paid off with no plans to move. 3 kids to put through college. Living in the SF bay area in a house valued at about $4M, and all this does not make us feel wealthy with a net worth over $14M (including a rental house). We live a simple lifestyle with no expensive vacations or large expenses.

What would make you feel wealthy if you have a NW of $14M and reportedly an inexpensive lifestyle?

I'll tell you-- a lifestyle that is actually inexpensive. The majority of the people on this forum, and almost all regular Americans, would feel very wealthy if they just sold your house and lived on the proceeds for the rest of their lives.

Your lifestyle isn't inexpensive. You have a $4M house. Say that out loud. Still sound like an inexpensive lifestyle? I mean, just the P&I mortgage payment on a 4%, 30 year, $4 Million mortgage is $231K a year- more than the average physician's gross income.

I'm amazed how many very wealthy people don't feel wealthy. I consider myself very wealthy and my NW is less than the value of your house.

Here are some things you can do to FEEL more wealthy:

1) Give more money away
2) Meet more people with an average income or less and observe how they live
3) Travel internationally
4) Spend time volunteering to serve others

Notice that "Accumulate more wealth" isn't on that list. Even if you doubled your NW, you probably still wouldn't feel any wealthier than you do now. I know the Bay Area is a nutty place with regards to incomes and home values, but this is more than that.

Great post. OP... just browse some real estate listings in other parts of country and see what you can get for a million or two. I'm betting you can find a BETTER house for 30% of the cost. And your taxes, insurance, etc. will probably also drop 50% or more.

You can easily live on $200,000 - $250,000 for the rest of your life. With a paid-off house, that's a ton of money for someone with "simple" tastes.

[HomerJ]

It depends on you.

I have a NW of over 30mm (9mm real estate and 21mm stocks/bonds/cash) and no debt. I'm 51 years old and I would like to retire but I am not yet confident in doing it. On the one hand, life can be short so I would prefer to do exactly what I want each day. On the other hand a possible 40 years of retirement is a long time and ANYTHING can happen. And I have more kids than you do so that is a big factor. I have taken control of my situation and fired all advisors and handle all aspects of my finances myself. I made it all myself and decided that I am going to be in direct control of what happens for better or worse.

I am not actually a committed boglehead. I am not convinced that putting all my money in an index funds is what I want to do. I have a large stock portfolio that I "manage" myself (large blue chip dividend stocks that I buy and never sell). I certainly would not be buying bonds at this point although I have a hold a multi-million dollar municipal bond portfolio purchased when rates were lower.

Retiring is a difficult and complicated decision for me. You have decide if you have enough. For what its worth, I have more and I'm not sure its enough.

So what are your expenses? The math is pretty easy. Why is it a difficult and complicated decision? You have like $400,000 coming in each year from dividends, and I assume another couple of hundred thousand of dollars coming in from rents.

Are your needs not met with $500,000 coming in each year passively from your investments?

[mojorisin]

I have a NW of over 30mm (9mm real estate and 21mm stocks/bonds/cash) and no debt. I'm 51 years old and I would like to retire but I am not yet confident in doing it.... I'm not sure its enough.

More money isn't going to make you feel more financially secure. I would suggest two books:

1) How to think about money- Jonathan Clements
2) Enough- Jack Bogle

Seriously. $30 Million is enough, no matter where you live.

Great suggestion on these books. Started reading them this a.m. Puts things into perspective!

[Dottie57]

In order to retire, should I move all investments (some at Fidelity and Etrade in funds) to VTI and VOO. Any suggestions? Also, at what net worth do people feel wealthy? This is a subjective question, but in Silicon Valley its just crazy with the wealth some people have generated.

Right now I feel wealthy in that when I retire I should be able to pay my bills withoutt scrimping. (1.1 m in portfolio). If medicare and social security are not trashed, I will have more spending money in retirement than I have now. Less taxes, less savings.

As others have said , how you feel about $8m in retirement is up to you.

[warner25]

This gives me a new perspective on my recent thread ( viewtopic.php?f=2&t=204336&newpost=3137091 ), with this kind of feeling like satire. I guess this is where I could end up someday if I don't adjust my own thought patterns. But the value of your house alone is more than I might earn in my entire career, and I'm still pretty sure that I could retire comfortably before age 50 in most of the United States.

I see a lot of 3BR homes/apartments that rent for about $4,000/month inside of San Francisco. Between that and another $4,000/month for food, utilities, insurance, entertainment, etc. my family would live very well in that city by spending less than $100k/year. That is 0.7% of your net worth. As others have said, if that doesn't make you feel wealthy then something else is wrong.

[HomerJ]

Silicon Valley is a crazy place. This NYT article is (http://www.nytimes.com/2007/08/05/techn ... 5rich.html) 9 years old, but still very relevant.

Interesting article. I found this perspective eye-opening.

Umberto Milletti has fantasized about downsizing his life to ease the financial pressures he feels despite a net worth around $5 million. In 2000, when his stake in DigitalThink, the online learning company he co-founded in 1996, was worth around $50 million, he bought his family of four a five-bedroom house in Hillsborough, an upscale suburb south of San Francisco. After his net worth fell 90 percent, though, he found the house more of an albatross than a dream.

“We could move,” Mr. Milletti said. “But if you do that, then you’re admitting defeat. No one wants to go backwards.”

So he works 60 to 70 hours a week at InsideView, an online sales intelligence company he co-founded in 2005, in part to prove that his first success was not a fluke — but also to meet his monthly nut, which includes payments on a seven-figure mortgage.

I see moving to a NICER house with a BETTER view for 50% of the cost, and no longer working 60-70 hours a week as a step forward, not backwards.

[inbox788]

Owning a 2000 sq ft home in Manhattan is way above middle class.

For the first quarter 2016, the average Manhattan apartment sale was about $2 million for about 1,200 sq ft. The median sales price was about half of that. http://ny.curbed.com/2016/4/1/11345882/ ... -apartment

Yes! Compared to Manhattanites, but NOT when compared to rest of US.

http://money.cnn.com/2014/06/04/real_es ... home-size/

That's why OP feels poorer than he is. And why I joke he's barely middle class.

[sperry8]

To those of you suggesting the OP move to some backwoods place... stop. Most people who live in Silicon Valley do so for a reason. I lived there. They are quite unlikely to just pick up and move to a "cheap" area as it doesn't align with their values.

The OP doesn't state what his expenses are or what they will be. So we really can't say if he has "enough". That said, If he wants to he does. It's all about living within your means, whatever those may be. With $14mm ($10mm in cash), assuming the house is paid the OP can live off $400,000 a year pre-tax without working. If he works, then he can spend more. Of course still have to put the kids through college and he doesn't state what his mortgage is (and also seems to state he rents too ). So first we need to know OPs spending obligations and such.

Clearly OP could move to Des Moines and be wealthy. But he likely won't want to. He wants to be "wealthy" where he is. To help him we need to know his spend, today and for the future.

[LarryAllen]

Seriously. $30 Million is enough, no matter where you live.

I remember a doctor client 10+ years ago who had a little over $15m. They lived a pretty reasonable life considering their income. That is they lived well below their income but still a very nice life in terms of travel, taking care of their family, etc.... However, the non-doctor spouse felt unsure if they had enough. They knew how expensive long term care could be in addition to their customary lifestyle. They probably didn't think they would ever be destitute but a couple of malpractice claims that exceed policy limits, or other crazy happening, could put a dent into things. Not to suggest $30m, or even $15m, isn't "enough" because all logical people would agree it's a significant amount of money. However, it's not as simple as some suggest.

[LarryAllen]

I see moving to a NICER house with a BETTER view for 50% of the cost, and no longer working 60-70 hours a week as a step forward, not backwards.

I tend to agree with you here but remember there are many facets that make a place enjoyable to different people. Political, religious, social, weather, etc.... It costs money to live in an expensive part of California but many people choose to make that sacrifice. Almost every year when the Rose Bowl game, on New Year's day, is on TV and it's 75 and sunny in LA is a good reminder.

[HomerJ]

Seriously. $30 Million is enough, no matter where you live.

I remember a doctor client 10+ years ago who had a little over $15m. They lived a pretty reasonable life considering their income. That is they lived well below their income but still a very nice life in terms of travel, taking care of their family, etc.... However, the non-doctor spouse felt unsure if they had enough. They knew how expensive long term care could be in addition to their customary lifestyle. They probably didn't think they would ever be destitute but a couple of malpractice claims that exceed policy limits, or other crazy happening, could put a dent into things. Not to suggest $30m, or even $15m, isn't "enough" because all logical people would agree it's a significant amount of money. However, it's not as simple as some suggest.

I'm pretty sure long-term care isn't expensive enough to bankrupt someone with $15 million.

And if the doctor quit work, than the possibility of malpractice lawsuits also go away.

I am constantly amazed how people who are smart enough to accumulate millions and millions of dollars can't seem to do simple math.

[HomerJ]

I see moving to a NICER house with a BETTER view for 50% of the cost, and no longer working 60-70 hours a week as a step forward, not backwards.

I tend to agree with you here but remember there are many facets that make a place enjoyable to different people. Political, religious, social, weather, etc.... It costs money to live in an expensive part of California but many people choose to make that sacrifice. Almost every year when the Rose Bowl game, on New Year's day, is on TV and it's 75 and sunny in LA is a good reminder.

You can stay in California for the weather, but you no longer need to live in the best school districts or near work.

And if one looks around, there are some very beautiful places to live that are much cheaper. No one is saying to move to Kansas City (where I live). I wouldn't live here if I had $10 million. I live here because my job is here. Just like the OP lives in Silicon Valley because his job is there. But once you retire, you can live anywhere. And there are some amazing much cheaper (but far nicer) lake-view, and mountain-view, and ocean-view homes all over the country (and the world if you're really adventurous).

You could own 2-3 of them even. Or have one main house, and rent for 2-3 months at a time in different places to explore the world.

People do stay in areas for family and friends, but there are more options once you no longer have a job.

[LarryAllen]

Seriously. $30 Million is enough, no matter where you live.

I remember a doctor client 10+ years ago who had a little over $15m. They lived a pretty reasonable life considering their income. That is they lived well below their income but still a very nice life in terms of travel, taking care of their family, etc.... However, the non-doctor spouse felt unsure if they had enough. They knew how expensive long term care could be in addition to their customary lifestyle. They probably didn't think they would ever be destitute but a couple of malpractice claims that exceed policy limits, or other crazy happening, could put a dent into things. Not to suggest $30m, or even $15m, isn't "enough" because all logical people would agree it's a significant amount of money. However, it's not as simple as some suggest.

I'm pretty sure long-term care isn't expensive enough to bankrupt someone with $15 million.

And if the doctor quit work, than the possibility of malpractice lawsuits also go away.

I am constantly amazed how people who are smart enough to accumulate millions and millions of dollars can't seem to do simple math.

Ok, what if you have a job like an estate planning attorney that has malpractice liability for life? Then what you say?

[Riprap]

At 53, with relatively high market valuations and three kids to send to college (and help with grad school perhaps?), I think it's a big mistake to tap into principal right now in oreder to spend 4% of your investments.

However, it's not as simple as some suggest.

This^

My guess is you're soul searching and know your spend rate is too high for your investment base.

[Cruise]

And if the doctor quit work, than the possibility of malpractice lawsuits also go away.

Actually, the possibility remains until the last former patient turns 21 + [whatever additional years defined by state statute.] But, that is what insurance "tails" cover.

[LarryAllen]

And if the doctor quit work, than the possibility of malpractice lawsuits also go away.

Actually, the possibility remains until the last former patient turns 21 + [whatever additional years defined by state statute.] But, that is what insurance "tails" cover.

True.

However, you can not always get tail coverage and claims can exceed tail.

[Artsdoctor]

I'm 53yr old, have ~$8M in various mutual funds, stocks, ETFs, bond funds. House is almost paid off with no plans to move. 3 kids to put through college. Living in the SF bay area in a house valued at about $4M, and all this does not make us feel wealthy with a net worth over $14M (including a rental house). We live a simple lifestyle with no expensive vacations or large expenses.

I have never used an investment advisor and wish I had followed the advice of the first investment book I read (DCA into S&P 500 fund). After 2 decades of trying to beat the S&P 500 and not being able to, all recent investments have been going into VTI and VOO.

In order to retire, should I move all investments (some at Fidelity and Etrade in funds) to VTI and VOO. Any suggestions? Also, at what net worth do people feel wealthy? This is a subjective question, but in Silicon Valley its just crazy with the wealth some people have generated.

At some point, and it's usually in your early to mid 50's, it occurs to you that it's not just about what you have, but what you spend.

Before you do anything, take a look at your annual expenses, and the more detail, the better. Once you take a look at expenses, break it down into what you feel are relatively necessary expenses, and what you feel are more luxurious expenses. This exercise will take some time, and trying to define "necessary," you'll find, is a very subjective term.

Once you define expenses, you'll be in a better position to figure out how you'd like to proceed. Do not start selling appreciated assets without doing a tax analysis.

You are wealthy by nearly any standard, but I'd recommend sitting down with your spouse and talking about why you don't feel that way. It's not just about the money.

[afan]

OP, my suggestion:
Unless you have health or some other problems that would force you to retire now, there is no financial logic to quitting now.

I would work at least until my last child finished all education. That should permit covering all expenses, including education, from current income, and letting your assets grow. Here of course I assume that you continue to have the same high income that generated your networth. If you have a relatively small income and got your wealth by, say, selling a business, then there would be even more reason to keep working. You want to protect your assets from consumption now and save them for later.

At 53 you may be only halfway through your life. It is easy to keep earning money now, it will be very difficult to retire at 53, discover at 83 that you need more money, and then go out an get any kind of well paying job.

Should you put all your assets in stocks? probably not.

Whether you should sell investments now and move them into low cost stock funds depends on what the investments are and whether you would pay capital gains tax on the sales. If you would have taxable gains you might wait for clarity about whether there will be reductions in taxes in 2017. Right now, no one knows. If the investments you are considering selling are in tax advantaged accounts, then just see how they compare to the low cost Vanguard funds.

[randomguy]

I'm 53yr old, have ~$8M in various mutual funds, stocks, ETFs, bond funds. House is almost paid off with no plans to move. 3 kids to put through college. Living in the SF bay area in a house valued at about $4M, and all this does not make us feel wealthy with a net worth over $14M (including a rental house). We live a simple lifestyle with no expensive vacations or large expenses.

I have never used an investment advisor and wish I had followed the advice of the first investment book I read (DCA into S&P 500 fund). After 2 decades of trying to beat the S&P 500 and not being able to, all recent investments have been going into VTI and VOO.

In order to retire, should I move all investments (some at Fidelity and Etrade in funds) to VTI and VOO. Any suggestions? Also, at what net worth do people feel wealthy? This is a subjective question, but in Silicon Valley its just crazy with the wealth some people have generated.

How much do you spend? If you spend around $200k a year, you will never run out of money. If you spend $500k a year, you will need to work longer (or move).

You say you live a simple lifestyle. You need to quantify the numbers. If you don't know, you need to start tracking your monthly expenses. It doesn't have to be to the penny, but you should be able to figure out how much you need a month to the nearest thousand.

OP doesn't live a simple life in any normal sense of the word. He owns a 4 million dollar house. Even in SF and Silicon Valley that is well beyond a simple life or a modest home. There is a real simple reason why the OP doesn't feel wealthy despite being wealthy. He has 14 million but a neighbor has 20 million and another has 30 million and he hangs out with some guy who IPOed his company for 100 million. By comparing your self to the .1% instead of the 99%, you will pretty much always feel poor.

Here is an article from a while back that pretty much sums it up: http://www.nytimes.com/2007/08/05/techn ... d=all&_r=0

[Gropes & Ray]

I don't want to get all Disney Princess on this conversation, but I genuinely feel wealthy and my net worth is probably $100k. But I have acquired a wife, a son, a dog, a small house and a reliable car. I never worry about money. Maybe don't look at your bank account and then count up your assets.