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The $1,000,000 retiree scenario may sound wishful or farfetched but it really isn't. It will take that much or not more to live a middle-class lifestyle now and in the not to distant future. This doesn't even factor in inflation or future buying power.
Living in California, I often laugh to myself when I think of $1,000,000 as being a lot of money, but actually it isn't.
Younger workers need to start saving and investing now. What's more important than yield or rate of growth is time.
The $1,000,000 retiree scenario may sound wishful or farfetched but it really isn't. It will take that much or not more to live a middle-class lifestyle now and in the not to distant future. This doesn't even factor in inflation or future buying power.
Living in California, I often laugh to myself when I think of $1,000,000 as being a lot of money, but actually it isn't.
Younger workers need to start saving and investing now. What's more important than yield or rate of growth is time.
If I had that kind of principal, I would no longer have to take big risk. All I need to do is buy two houses each $500k. Let both houses (don't rent them out, it's big headache) appreciate for about 5% for 10 years and cash them out at the end of the 10th year. Put the proceed in a total bond index fund like Vanguard that earns about 4.5% per year. If I withdraw just $30k/year, I would still have plenty left for my descendents.
my opinion under no circumstances would i ever plunk 1 million bucks in to anything other than a diversified mix of things unless i had a few million and the rest diversified me. betting the ranch on one economic outcome is not a wise thing to do. while i love wellesely it should only be a part of a well constructed portfolio,if rates rise it will lose the luster it had for the last 32 years while we had a bond bull market..
i would not bet heavy on anything to interest rate sensitive since rates are poised to go up ,it is only a question of when.
I think Wellesley is reasonably diversified. Not perfectly so, I'll grant you, but good enough. It held up better than expected during 2013's interest rate hiccup. I do agree, though, that 2 years' worth of cash is prudent and I didn't mention that in my post. Of course, that takes away from yield, but you still need to have at least some.
The $1,000,000 retiree scenario may sound wishful or farfetched but it really isn't. It will take that much or not more to live a middle-class lifestyle now and in the not too distant future. This doesn't even factor in inflation or future buying power.
Living in California, I often laugh to myself when I think of $1,000,000 as being a lot of money, but actually it isn't.
Younger workers need to start saving and investing now. What's more important than yield or rate of growth is time.
$1M is still more than most people have, even in CA. However, I do agree it provides only a middle class lifestyle in retirement. Depending on where one lives, if one's mortgage is paid off, what age one retires, how much the SS and/or pension check is, and one's medical costs, it can range from a decent, but mundane, retirement, to an upper middle class lifestyle.
I guess if I had $1 million, I would first get the house in order such as savings, finish paying off debt, have some type of emergency fund. Then when that is all said and done, look into investing further.
If I had that kind of principal, I would no longer have to take big risk. All I need to do is buy two houses each $500k. Let both houses (don't rent them out, it's big headache) appreciate for about 5% for 10 years and cash them out at the end of the 10th year. Put the proceed in a total bond index fund like Vanguard that earns about 4.5% per year. If I withdraw just $30k/year, I would still have plenty left for my descendents.
So you're going to dig into your own pocket for property taxes, maintenance, repairs, insurance?
Seems like a big waste to me. You can get the same growth in mutual funds without those big expenses.
Or at least the second of the houses is a waste - the first one may not be if you live in it instead of paying rent.
At my age I would get a big bucket and fill it with 1,000 $1,000 bills. I would then take out no more than one per week for the next 20 years. By the time the bucket was empty I would most likely be dead.
Given what I have read about corporate stock buybacks I would avoid a $16,000 equities market like the plague.
You're forgetting INFLATION.
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