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CYAI: Disney Cruise for the family!

Home Personal Finance and Budgeting CYAI: Disney Cruise for the family!

  • q-school q-school 
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    Status: Physician
    Posts: 2640
    Joined: 05/07/2017

    5 million right now after tax would change 99 percent of Americans lives, including mine.
    Yes it can be blown but any reasonable person could retire at almost any age with five million after tax.
    Especially true if you have some savings already or are over age of fifty.

    I appreciate vagabond chiming in. I think we all agree that ther is some threshold of wealth where someone becomes trust fund kid, but even they don’t inherit bulk of wealth till later in life usually as far as I know. Their initial may be enough that they don’t have to have traditional jobs, but I’m not sure I agree how different it is than people who know they have five million coming to them.

    I see the things I worry about have evolved over time. My kids are starting from a very different place. I presume their kids will start from an even more financially advanced place. At some point, if kids are smart, work hard, financially responsible, doesn’t it follow that one generation would be considered as trust fund kid?

    I don’t really have negative connotation when I say that. More of a factual distinction. Like when we talk about definition of rich. I can say flp or startrek or myself is rich. We may tell children they are not rich. We may not feel rich. 99 percent of people in the world not on this board say we are rich.

    But if you inherit five million after tax are you by definition rich?

    #230095 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 979
    Joined: 11/21/2017

    5 million right now after tax would change 99 percent of Americans lives, including mine.
    Yes it can be blown but any reasonable person could retire at almost any age with five million after tax.
    Especially true if you have some savings already or are over age of fifty.

    I appreciate vagabond chiming in. I think we all agree that ther is some threshold of wealth where someone becomes trust fund kid, but even they don’t inherit bulk of wealth till later in life usually as far as I know. Their initial may be enough that they don’t have to have traditional jobs, but I’m not sure I agree how different it is than people who know they have five million coming to them.

    I see the things I worry about have evolved over time. My kids are starting from a very different place. I presume their kids will start from an even more financially advanced place. At some point, if kids are smart, work hard, financially responsible, doesn’t it follow that one generation would be considered as trust fund kid?

    I don’t really have negative connotation when I say that. More of a factual distinction. Like when we talk about definition of rich. I can say flp or startrek or myself is rich. We may tell children they are not rich. We may not feel rich. 99 percent of people in the world not on this board say we are rich.

    But if you inherit five million after tax are you by definition rich?

    Click to expand…

    Rich and wealthy are very subjective terms.

    To me being rich implies having more than average wealth currently, ie. over 1M in investable assets (assets other than the primary residence).

    Being wealthy to me implies not having to worry about money, which means that you are not at significant risk of losing your assets or rich status. Your income would need to be self sustaining. In that context, very few of us are wealthy as we are all depleting our capital if we stop working. With current dividend yields below 2%, you would need investable assets in the order of 10M to sustain a 200k/year spend without depleting capital.

    So I think being FI is somewhere inbetween. It is enough to sustain the spending to age 95 (hopefully) but it is depleting the capital base.

    I’d like to think the kids will be well set up, but maybe that’s just a FI fairy tale.

    There’s a lot to think about and much of it comes down to your subjective assessment of fear of the future and negative outcomes. Are you an optimist or a pessimist. It sounds like you’re an optimist and there’s a lot of good in that. I’m a pessimist. That fear has always driven me to keep accumulating. Is that fear irrational, probably not. Is it optimal, probably not.

    #230521 Reply
    Liked by q-school
    Avatar Panscan 
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    Status: Resident
    Posts: 1135
    Joined: 03/18/2017

    Why is the goal to leave millions as you pass? I know once you start depleting capital it starts a vicious cycle but to me the concept of 100% of capital preservation seems foolish and too passive. And in reality I bet if you looked at it, most people probably still have their wealth grow over retirement.

    I think people are too timid with their plans. Obviously you don’t want to run out of money but if you are so conservative your wealth grows in multitudes during your retirement id call that losing too and means you could have retired or worked less earlier. Thats less fatal of an error but it’s still an error.

    #230678 Reply
    Liked by q-school
    Avatar Panscan 
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    Joined: 03/18/2017

    By most people I meant people on this site, following 4% rule and etc, not the general public

    #230679 Reply
    Avatar Tim 
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    Status: Accountant
    Posts: 3286
    Joined: 09/18/2018
    Thats less fatal of an error but it’s still an error.

    Click to expand…

    Hmmm, plan for 64 or 94? Dang that 30 years is a long time. It’s the timing issue. I would think about 84 most are like WTF, can’t change anything much now.

    Unless I really really have to. I think most don’t have a goal of a huge legacy, but an additional 30 years? Should it be 20? How bout 15? I sure would be a lot more relaxed having too much than too little.

    #230710 Reply
    Avatar Panscan 
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    Joined: 03/18/2017

    Im with ya, I just don’t see point in planning on dying with 10 million

    #230788 Reply
    Avatar AR 
    Participant
    Status: Physician
    Posts: 873
    Joined: 03/10/2016
    Splash Refinancing Bonus

    Im with ya, I just don’t see point in planning on dying with 10 million

    Click to expand…

    Well when you get to your 90s,  10 million ain’t going to be worth much.

    #230804 Reply
    Liked by jfoxcpacfp
    q-school q-school 
    Participant
    Status: Physician
    Posts: 2640
    Joined: 05/07/2017

    Im with ya, I just don’t see point in planning on dying with 10 million

    Click to expand…

    as the years pass, you will value different things in life.  it may or may not be important to leave behind a legacy.

    most here will leave legacies-not because they necessarily value it, but because of what was mentioned earlier-  good savings habits and uncertaintly about costs, particularly end of life care and not knowning when you will pass.  if you save hard for 15 years, it will be hard to spend.  even if you know KNOW KNOW that you will not run out of money, the things you buy without waiting for it to be on sale anymore will likely not change the growth of your retirement accounts.  the only real way i think is to give away chunks or spend really really differently.   New mercedes every 2 years.  Only stay in five star hotels.  Order every appetizer and have one bite of each.  even that might not be enough.  but it’s hard to not want to get value out of your $.  so eventually, it keeps growing.  i agree with you, no point in planning on dying with 10 mil for most of us.   however, if we are very likely going to die with 10 mil because of intelligence, planning, luck, etc etc, should we make plans for that?

    #230915 Reply
    Avatar Tim 
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    Status: Accountant
    Posts: 3286
    Joined: 09/18/2018

    @panscan,
    The real problem is the math with such a long lead time.
    Significantly below average returns (90%)
    Below average (75%)
    Average (50%)
    Without any contributions or sequence risk or major events, the only controllable is spending and hopefully the size of the pot when you cease “earned income”.
    The fear of failure (real consequences) completely ignores Above average and Significantly Above Average returns. I personally would prefer handing out $100 bills for acts of kindness on a street corner as a hobby than the alternative. No good answer but the goal certainly is not to live in poverty. The math is the problem. It’s all over the place for a 30 year time frame.

    #230922 Reply
    Liked by StarTrekDoc
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 2124
    Joined: 01/15/2017

    @panscan,
    The real problem is the math with such a long lead time.
    Significantly below average returns (90%)
    Below average (75%)
    Average (50%)
    Without any contributions or sequence risk or major events, the only controllable is spending and hopefully the size of the pot when you cease “earned income”.
    The fear of failure (real consequences) completely ignores Above average and Significantly Above Average returns. I personally would prefer handing out $100 bills for acts of kindness on a street corner as a hobby than the alternative. No good answer but the goal certainly is not to live in poverty. The math is the problem. It’s all over the place for a 30 year time frame.

    Click to expand…

    This.   SORR is a real concern for anyone with a 30+ year retirement.  For physicians — I would bet most of us are looking at 100k+ year, if not 150-200k post retirement yearly needs.  If you want plan to succeed all 250+ scenarios Monte Carlo, the rule of averages is that your children and grandchildren will have quite a sizable inheritance.    With that knowledge, the impact on our kids and grandkids decision making probably will be significant.

    If I knew I had $1M coming, my FIRE plans would absolutely be impacted.  Certainly my current day savings and spending will be absolutely altered.

    #231298 Reply
    Liked by Tim, q-school

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