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Old 06-04-2021, 10:06 AM
 
Location: Knoxville, TN
10,884 posts, read 5,598,620 times
Reputation: 21377

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Some lottery winners blow through their money quickly not realizing the practical value of a million dollars or even 5 million.

Some friends were once discussing what constitutes "a lot of money". The consensus was that 5 million dollars was a lot of money. None of us felt a million dollars was a lot of money.

A million dollars is a huge shot in the arm, and anybody would be fortunate to have a million dollars fall in their lap. It would jump start any normal person's lifestyle. It would be instant money security, reduce money stress, and fund all kinds of small dreams like buying a beautiful home or vacation home, or upgrading to a waterfront home, or travel or boating, but it is not "a lot of money".
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Old 06-04-2021, 03:04 PM
mlb
 
Location: North Monterey County
4,971 posts, read 4,428,231 times
Reputation: 7903
When I hear all this talk about 6 figure incomes - not only here in California but across the country - I am boggled.

I worked in government for the last 30 years of my career. My end salary was $60K. I worked up from the high $20’s at my last employer - yes, with promotions along the way.

I DID save almost a million dollars - in our portfolio- because I knew I was going to need it in retirement. It’s a lot of money to me. Lucky for us - we also inherited money - but lived our lives as if we weren’t going to. We’ve been able to live on the pension and social security alone not touching savings nor the portfolio. Everything else is a buffer against what life will present to us as we age.

I wonder what all those folks with 6 figure incomes will think is “not enough”. If they are spending all of their 6 figure income - are they saving for the future? Time will tell.
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Old 06-04-2021, 03:25 PM
 
Location: western NY
6,242 posts, read 3,003,275 times
Reputation: 9875
Quote:
Originally Posted by mlb View Post
When I hear all this talk about 6 figure incomes - not only here in California but across the country - I am boggled.

I worked in government for the last 30 years of my career. My end salary was $60K. I worked up from the high $20’s at my last employer - yes, with promotions along the way.

I DID save almost a million dollars - in our portfolio- because I knew I was going to need it in retirement. It’s a lot of money to me. Lucky for us - we also inherited money - but lived our lives as if we weren’t going to. We’ve been able to live on the pension and social security alone not touching savings nor the portfolio. Everything else is a buffer against what life will present to us as we age.

I wonder what all those folks with 6 figure incomes will think is “not enough”. If they are spending all of their 6 figure income - are they saving for the future? Time will tell.
EXCELLENT post!!

Sounds like your path in life paralleled mine, except I was in the private sector.....and I was able to retire from full-time work at the age of 56, however I worked part-time, for 5 years after that, until SS kicked in.
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Old 06-04-2021, 07:30 PM
mlb
 
Location: North Monterey County
4,971 posts, read 4,428,231 times
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Millenials are going to need to save 50% of their income to retire. But they’re not.

https://www.cnbc.com/2019/10/23/mill...ire-at-65.html

I forced myself to save 25-30% of my paycheck the last 18 years of my career...because my spouse was under employed with no benefits.

50%? Wow. That seems extreme.
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Old 06-04-2021, 08:37 PM
 
Location: Gaston County, N.C.
425 posts, read 413,081 times
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Quote:
Originally Posted by Igor Blevin View Post
Some friends were once discussing what constitutes "a lot of money". The consensus was that 5 million dollars was a lot of money. None of us felt a million dollars was a lot of money.
I remember about a decade ago, philosophizing about the number at which point money doesn't really mean anything to me anymore. I figured it was around $15 million, because even in conservative investments it would leave plenty of income to travel the world, buy a new car yearly, waste money on things, eat in restaurants all the time.

Maybe today I'd say $20 million. But the difference between 20 and 40 million isn't meaningful on a personal consumptive level. Instead you're entering a different world of poker players, how to use that money for political, social, environmental, purposes... maybe grants to causes and foundations you support.
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Old 06-05-2021, 12:56 AM
 
Location: Las Vegas & San Diego
6,906 posts, read 3,309,672 times
Reputation: 8618
Quote:
Originally Posted by k374 View Post
unfortunately not... if you started out 20 years ago investing $1,000 a month, which is a substantial sum for most people, especially 20 years ago that was quite a hefty amount, and you invested in Fidelity Target Date 2040 consistently ALL through 2 DECADES... you would still not be anywhere close to $1M (you would be at $665K now).

https://tinyurl.com/dwpskyww

And, that is through the biggest, most epic bull markets in history. God forbid the market drops 50% like everyone is saying it will and does not recover for another 13 years like it did in 2000-2013, then your million dollar dream will be on hold for a VERY VERY long time!!!

People say yeah, $1M isn't much, but to actually accumulate that is exceptionally difficult, it isn't easy.
Target funds are not the best investments - If invest in more traditional 70% SPY and 30% FBNDX gets to $765K. If adjust contribution amount for inflation, get $946K - not that far off.
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Old 06-05-2021, 02:36 AM
 
105,907 posts, read 107,860,524 times
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Over the accumulation stage I would never use anything but 100% equities right up to maybe ten years before retirement
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Old 06-05-2021, 03:06 AM
 
Location: Las Vegas & San Diego
6,906 posts, read 3,309,672 times
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Quote:
Originally Posted by mathjak107 View Post
Over the accumulation stage I would never use anything but 100% equities right up to maybe ten years before retirement
Same here but many invest closer to the conventional model of 70/30 - if the 20 years at $1000/mo was invested only in the S&P (SPY) the total would be $953K and if increased the amount contributed with inflation the total would be $1.18M - meet the goal. Big difference from the Target fund results.
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Old 06-05-2021, 03:10 AM
 
105,907 posts, read 107,860,524 times
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As I say ,there is zero financial sense for long term investors to mitigate temporary drops using bonds and permanently hurting long term returns …

If mentally one can’t handle the volatility then a money manger would make far more sense .

Generally those with low pucker factor just have lower trigger points to poor investor behavior so even balanced portfolios don’t work for them as they bail anyway or try to time things.

Morningstar investor returns which track money flow show the same bad behavior when volatility picks up in balanced funds as equity funds
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Old 06-05-2021, 05:06 AM
 
Location: Pennsylvania
31,342 posts, read 14,108,713 times
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Quote:
Originally Posted by oregonwoodsmoke View Post
Locally there is an ad running for a casino. It shows people telling what they would buy if they won the million dollar jackpot.


I've got to say, the general population has no idea what a million dollars is (or maybe it is just the gambling public?). Sorry, folks, a million dollars will not buy you your own private jet let alone afford to fly it anywhere, your own gigantic yacht, or your own huge private beach in a place with fantastic weather.


There are a lot of places in America where, after taxes, your million dollar jackpot won't even buy you a middle class 3 bedroom house.


Not that I'd turn down a free million dollars, but it just isn't all that much spending power any more.
Depends on where you live and your lifestyle. Give me a million dollars and I'll live just fine for the rest of my life. On the other hand a million dollars in NYC or Boston or California might not last long.
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