How Are Lottery Winners Able To Quit Their Jobs?

[Ted Bear]

With $1 Million net to you u can earn $50,000 a year, before taxes. That will probably be close to $40,000 after taxes. Going to be hard to scrape by on that in most places, but it can be done. Needs versus wants.

[lottamoxie]

If I won $1M right now, even after tax of $600K, I'd "retire" in a NY minute because with my savings added in I'd then have plenty. I'd run (probably screaming) from corporate America and the veal fattening pens...errr...cublicles. Would I never work again? I wouldn't say no for sure, but I'd never have to and that's the definition of financial freedom.

[brocco]

Motivation? If I got a huge lump sum, I would be taking some time to myself. It doesn't matter how much money (to an extent). The career world would always be there waiting for me.

[mysticaltyger]

Originally Posted by bukli

people who have no clue what 5% average annual inflation means to your lump sum win, or have a clue what a decent investment MUST pay to be worth putting your money into (ie, 12% per year or just hold gold, it's much safer) or where to find such investments. i've lived all my life on a clear 20k per year. Anyone can do so (in style, actually) in quite a few very nice countries, like Chile, Uruguay, Portugal.

--The current inflation rate, while understated by the government, is not 5%.

--Most people, especially when they have the time, can find ways to save money they couldn't when they were working. They have more time as well as more energy/mental bandwidth to do so.

--The 4% rule is at least 90% reliable for a 30 year retirement. And the amount you'd need for a 60 year retirement would require taking out only a bit less (say 3.5 or 3.75%).

--You really don't need to earn 12% per year to keep the money growing. A few percentage points above the inflation rate is good enough. Even at 5% inflation, 8% returns should be plenty.

--Since 1926, stocks have returned about 10% per year. A mix of stock and bonds in the neighborhood of 7% to 8%. That covers the super high inflation years of the 1970s and early 1980s as well as the Great Depression years, when stocks lost 90% of their value from 1929-1933 (although we also had deflation during that time, so the real value drop wasn't quite as bad).

--It's not that hard to invest in a Vanguard S&P 500 Index fund plus a bond index fund....or just put it all in Vanguard Balanced Index (60% stocks & 40% bonds--all in one fund). This stuff is easier to do than ever before.

--Gold is generally a horrible investment. It appreciates at about 4% a year, much less than stocks, which average 10%. And yet gold is extremely volatile--much more volatile than stocks. A small amount of gold in a portfolio is fine, maybe 4% for diversification, but more than that is a bad idea, IMO.

--I agree with you on the last part about being able to retire fairly well on 20k a year in some of the nicer 3rd world, lower end 1st world countries. Some people can retire well on 20k a year in the U.S., most notably Jacob from Early Retirement Extreme.