[Can you retire on] $5mm

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skime
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[Can you retire on] $5mm

Post by skime » Sat Dec 23, 2017 10:05 am

I've read some articles on both the ease and difficulty of retiring on $5mm portfolio. I'm just curious what this group thinks of either the ease or difficulty doing it.

Could you do it? Why or why not?

Gill
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Re: $5mm

Post by Gill » Sat Dec 23, 2017 10:07 am

Yes, I would say it's a bit easier than retiring on a $4 million portfolio and much easier than on a $3 million portfolio.
Gill

Nova1967
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Re: $5mm

Post by Nova1967 » Sat Dec 23, 2017 10:09 am

Not sure about the difficulty of retiring with $5 million, all I can say is let me try.
Last edited by Nova1967 on Sat Dec 23, 2017 10:10 am, edited 1 time in total.

Explorer
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Re: $5mm

Post by Explorer » Sat Dec 23, 2017 10:09 am

The problem with money is we never seem to have enough :mrgreen: :moneybag :moneybag :moneybag :confused

2Birds1Stone
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Re: $5mm

Post by 2Birds1Stone » Sat Dec 23, 2017 10:10 am

My household spending is roughly $45k/yr, so $5MM is WAY too much money for us. I would rather enjoy my freedom a decade or two earlier.

betablocker
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Re: $5mm

Post by betablocker » Sat Dec 23, 2017 10:11 am

It’s all about your length of time to death, standard of living, and expected rate of return. Because of lower expected returns some experts are recommending the we reduce the safe withdrawal rate to 2.5-3%. There’s also lots of writing out there on using dynamic withdrawal rates ie changing how much you take out based on market performance.

MikeG62
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Re: $5mm

Post by MikeG62 » Sat Dec 23, 2017 10:20 am

skime wrote:
Sat Dec 23, 2017 10:05 am
I've read some articles on both the ease and difficulty of retiring on $5mm portfolio. I'm just curious what this group thinks of either the ease or difficulty doing it.

Could you do it? Why or why not?
It depends on your estimated annual spend level. For example, someone who expected to spend $100,000 per year in retirement is set with $5M. On the other hand, if you wanted to spend $250,000 a year, you may have problems.

Also, you need to keep taxes in mind. $5M pulled from a taxable portfolio yields a much larger available spend than $5M pulled from a tax deferred portfolio - and a good reason why just max’ing your 401K is not likely to be enough. You need savings outside your tax deferred vehicles.

Also, as someone else rightly said, future asset returns will have a lot to say about how well this works out.
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livesoft
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Re: $5mm

Post by livesoft » Sat Dec 23, 2017 10:36 am

What is this thread really about?
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flyingaway
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Re: $5mm

Post by flyingaway » Sat Dec 23, 2017 10:39 am

I don't have $5MM yet. If I had, it would be difficult for me to walk away. More money, more power.

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Alexa9
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Re: $5mm

Post by Alexa9 » Sat Dec 23, 2017 10:41 am

Obviously depends on your spending and lifestyle. Use a safe withdrawal rate to get an idea of budgeting. Personally I need at least 20MM for my lavish lifestyle.

GoldenFinch
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Re: $5mm

Post by GoldenFinch » Sat Dec 23, 2017 10:46 am

I could retire on social security alone because I grew up almost like Mister Money Mustache lives (depression era parents). 3m vs. 5M would make little difference because we don’t spend much.

Happy Holidays! :sharebeer
Last edited by GoldenFinch on Sat Dec 23, 2017 10:54 am, edited 1 time in total.

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wander
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Re: $5mm

Post by wander » Sat Dec 23, 2017 10:48 am

I will answer your question when I get there.

The Wizard
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Re: $5mm

Post by The Wizard » Sat Dec 23, 2017 10:52 am

livesoft wrote:
Sat Dec 23, 2017 10:36 am
What is this thread really about?
Retirement is really more about combined income streams than just portfolio size.
It's also about your Desired Retirement Income, which of course would be greater than your expenses to some degree.

As a single person, I would probably annuitize sufficient funds to achieve around $100,000 of ordinary income this year, which would cover all my routine expenses and then some.
The remainder of my $5M portfolio ($3M plus, depending on age) I would invest with at least 50% stock funds and use some of the proceeds to fund irregular discretionary expenses...
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HomerJ
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Re: $5mm

Post by HomerJ » Sat Dec 23, 2017 11:23 am

skime wrote:
Sat Dec 23, 2017 10:05 am
I've read some articles on both the ease and difficulty of retiring on $5mm portfolio. I'm just curious what this group thinks of either the ease or difficulty doing it.

Could you do it? Why or why not?
Let's be super conservative, and say 3% withdrawals, increase each year for inflation. That should last indefinitely, so it doesn't matter how old you are.

If you are closer to normal retirement age you could pull 4%.

3% gives $150,000 a year. That's enough income to put someone in the top 10% of income earners in the U.S.

Now, honestly ask yourself, is it a ridiculous question to ask if someone CAN retire with a portfolio of $5 million?

Some 1% people may not wish to, since that would be a downgrade, but it's still a pretty silly position to take that it's difficult to retire with $5 million.

Random Walker
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Re: $5mm

Post by Random Walker » Sat Dec 23, 2017 1:13 pm

Just a plug here for Monte Carlo Simulation. It’s a very powerful tool. Results can be very enlightening. One can see the effects of different asset allocations and different spending levels. For me, I found that I could meet goals with a much less aggressive AA than I would have generated on my own.

Dave

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Sandtrap
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Re: $5mm

Post by Sandtrap » Sat Dec 23, 2017 2:32 pm

The title of the post looks like 5 millimeters. :shock:
Can you retire on 5 millimeters?

ONward.
5 million in assets is relative to one's annual expenses, age at retirement, alternative income streams (SS, pension, R/E income, etc, etc). One with $5 million in a HCOL with $250k in annual expenses thinking about "early" retiring at age 40 may be in for a tough road.
Alternatively, one with one/fourth of that retiring to an ULTRA LCOL area in Southeast Asia may be doing just fine.

This is where BobK's "Funded Ratio" comes into play because it's adaptable to each scenario vs the 25x and so forth."Bobcat2" Funded Ratio Thread
https://www.bogleheads.org/forum/viewt ... 0&t=219878

Keys to a Successful Retirement by “Bobcat2”
viewtopic.php?f=2&t=199570&p=3053900&hi ... s#p3053900

j :D

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steve roy
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Re: $5mm

Post by steve roy » Sat Dec 23, 2017 2:41 pm

Sorry, $5 million to retire on just wouldn't work for me. I'd have to give up the yacht and some of the household staff, and that would be intolerable.

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randomizer
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Re: $5mm

Post by randomizer » Sat Dec 23, 2017 2:42 pm

Yes.Easy.
75:25 — HODL the course!

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BL
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Re: $5mm

Post by BL » Sat Dec 23, 2017 2:46 pm

Surely you're joking, Mr. Skime!

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Pajamas
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Re: $5mm

Post by Pajamas » Sat Dec 23, 2017 2:49 pm

I stopped working with a lot less than that without any problems. If anything, $5 million would create problems with taxes and estate planning as well as with a need to spend or give away more money. Good problems to have, but problems nonetheless.

22twain
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Re: $5mm

Post by 22twain » Sat Dec 23, 2017 3:07 pm

Gill wrote:
Sat Dec 23, 2017 10:07 am
Yes, I would say it's a bit easier than retiring on a $4 million portfolio and much easier than on a $3 million portfolio.
And a helluva lot easier than on a $1 million portfolio. :twisted:
My investing princiPLEs do not include absolutely preserving princiPAL.

skime
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Re: $5mm

Post by skime » Sat Dec 23, 2017 3:11 pm

BL wrote:
Sat Dec 23, 2017 2:46 pm
Surely you're joking, Mr. Skime!
I was just getting opinions on articles I have read. I've seen articles that show people that can and can't retire with $5 million.

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Will do good
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Re: $5mm

Post by Will do good » Sat Dec 23, 2017 3:23 pm

skime wrote:
Sat Dec 23, 2017 3:11 pm
BL wrote:
Sat Dec 23, 2017 2:46 pm
Surely you're joking, Mr. Skime!
I was just getting opinions on articles I have read. I've seen articles that show people that can and can't retire with $5 million.
I have read articles from billionaires and for them $5 million is not enough.

However I have read lot more articles from people with less than $50k in their life savings and $5 million is more than enough. What does this have to do with anything? It's all have to do with individuals. It's no different at BH.

skime
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Re: $5mm

Post by skime » Sat Dec 23, 2017 3:59 pm

Will do good wrote:
Sat Dec 23, 2017 3:23 pm
skime wrote:
Sat Dec 23, 2017 3:11 pm
BL wrote:
Sat Dec 23, 2017 2:46 pm
Surely you're joking, Mr. Skime!
I was just getting opinions on articles I have read. I've seen articles that show people that can and can't retire with $5 million.
I have read articles from billionaires and for them $5 million is not enough.

However I have read lot more articles from people with less than $50k in their life savings and $5 million is more than enough. What does this have to do with anything? It's all have to do with individuals. It's no different at BH.
It's just a question. Nothing more - nothing less. My question was could you do it? Why or why not?

The Wizard
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Re: $5mm

Post by The Wizard » Sat Dec 23, 2017 4:53 pm

steve roy wrote:
Sat Dec 23, 2017 2:41 pm
Sorry, $5 million to retire on just wouldn't work for me. I'd have to give up the yacht and some of the household staff, and that would be intolerable.
This is true.
Do you have ANY IDEA how much it costs to run a 400-foot yacht on a continuing basis?
https://en.m.wikipedia.org/wiki/Octopus_(yacht)
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LadyGeek
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Re: $5mm

Post by LadyGeek » Sat Dec 23, 2017 4:55 pm

This thread has run its course and is locked (not actionable, hypothetical). Questions must apply directly to you, a family member, or a friend. A general "can you do it?" question cannot have a clear answer unless you are asking about your own situation. Additional details are needed.

Otherwise, the discussion is non-productive and usually devolves into contentious disagreements. It's the reason for the policy as stated here: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
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