Another 25 years?

[BLADEMDA]

My advice is don’t get discouraged . Investing regularly With compounding interest works wonders on a portfolio. It’s like a snowball at the top of a hill rolling down. Over time that little snowball will become quite large. The minimum you should be investing is $60-$80k per year. Use all the pretax accounts available to you including an HSA. 2 decades of investing $80k per year should really add up.

25-30 years of investing at $80k per year should get you to over $6 million dollars.

---

Members don't see this ad.

 

[deleted126335]

“Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”​

― Charles Dickens, David Copperfield

 

[BLADEMDA]

Here's how much investing an extra $1,000 per month will net you for retirement — starting in your 20s, 30s and beyond

Saving $1,000 per month until you retire can make you a millionaire if you begin saving early. Here's a breakdown of how much money you can expect.

www.cnbc.com

A 20-year-old would end up investing $564,000 over their career, and the total would grow to more than $1.6 million by the time he or she retires. Starting younger lets you take advantage of the power of compound interest. That means you get returns on the money you invest, and even better, returns on your returns.

 

[BLADEMDA]

64 percent of millennials believe they will become wealthy in their lifetime

 

[BLADEMDA]

This is how I plan to fund my retirement; it's really quite simple and no fancy schemes are needed for me to do it.

 

[BLADEMDA]

This graph is for Nimbus and Vector 2. The huge run up in stocks has caused the wealth gap to widen a great deal. I suspect that Biden and AOC will make sure taxes are raised significantly in 2022.

 

[BLADEMDA]

Let's get back on track here. Hypothetically, Southpaw wants to retire at age 50. What is a good estimate for his nest egg number if he wants to stop working entirely? Traditionally, the number of 25 X required income was the answer. So, if Southpaw wants $200K in income he would need $200K x 25.

But, because Southpaw is retiring early and things are less certain the earlier you retire Southpaw needs 33 X $200K or $6.6 million. The reason is the initial withdrawal rate, IWR, of 4% could be too high to last his lifetime. Again, the earlier you retire the lower the IWR or the more money you need saved up.


The 25x Rule of retirement savings is a reasonable approach for those retiring at a traditional age. For extreme early retirement, however, a 33x Rule may be more appropriate. Further, market valuations and a retiree’s specific asset allocation can have significant effects on a safe IWR.

How the 25x Rule Can Help You Save for Retirement

The 25x Rule helps you estimate the total amount of money you need to save for retirement. Planning for retirement involves countless considerations, from deciding when to take Social Security to paying for healthcare and managing retirement accounts. This useful rule of thumb can give you a high-le

www.forbes.com

In markets with high P/E ratios the safe IWR is lower than for those who retired during markets with low P/E ratios. This brings us back to what is a safe IWR for early retirement? In this stock market I would argue 2.5% is the right IWR for someone retiring at age 50 vs a 3.0-3.5% IWR for someone retiring at age 65.

Thus, Southpaw actually needs even more than 33 X his required income to retire at age 50 if we use a IWR of 2.5%. The numbers show that Southpaw needs closer to $9 million US dollars to retire at age 50 if he wants $200K in annual income after taxes/healthcare.

Remember, Southpaw can fix this issue by going 0.5 FTE at age 50 rather than retiring completely; this lowers his nest egg requirement dramatically and hedges the risk that the market crashes during his early retirement years.

BOTTOM LINE: The earlier you retire before age 65 the bigger the nest egg and the lower the IWR to safe guard against worst case scenarios.

 

[BLADEMDA]

 

[BLADEMDA]

Remember, if Southpaw wants $200K of annual income you need to double the savings amount listed below:

 

[nimbus]

This graph is for Nimbus and Vector 2. The huge run up in stocks has caused the wealth gap to widen a great deal. I suspect that Biden and AOC will make sure taxes are raised significantly in 2022.

View attachment 341789

That’s why we should raise capital gains taxes and redistributed some of that money. Why should billionaires who “make money with money” pay less tax than working people?

 

[nimbus]

Let's get back on track here. Hypothetically, Southpaw wants to retire at age 50. What is a good estimate for his nest egg number if he wants to stop working entirely? Traditionally, the number of 25 X required income was the answer. So, if Southpaw wants $200K in income he would need $200K x 25.

But, because Southpaw is retiring early and things are less certain the earlier you retire Southpaw needs 33 X $200K or $6.6 million. The reason is the initial withdrawal rate, IWR, of 4% could be too high to last his lifetime. Again, the earlier you retire the lower the IWR or the more money you need saved up.


The 25x Rule of retirement savings is a reasonable approach for those retiring at a traditional age. For extreme early retirement, however, a 33x Rule may be more appropriate. Further, market valuations and a retiree’s specific asset allocation can have significant effects on a safe IWR.

How the 25x Rule Can Help You Save for Retirement

The 25x Rule helps you estimate the total amount of money you need to save for retirement. Planning for retirement involves countless considerations, from deciding when to take Social Security to paying for healthcare and managing retirement accounts. This useful rule of thumb can give you a high-le

www.forbes.com

In markets with high P/E ratios the safe IWR is lower than for those who retired during markets with low P/E ratios. This brings us back to what is a safe IWR for early retirement? In this stock market I would argue 2.5% is the right IWR for someone retiring at age 50 vs a 3.0-3.5% IWR for someone retiring at age 65.

Thus, Southpaw actually needs even more than 33 X his required income to retire at age 50 if we use a IWR of 2.5%. The numbers show that Southpaw needs closer to $9 million US dollars to retire at age 50 if he wants $200K in annual income after taxes/healthcare.

Remember, Southpaw can fix this issue by going 0.5 FTE at age 50 rather than retiring completely; this lowers his nest egg requirement dramatically and hedges the risk that the market crashes during his early retirement years.

BOTTOM LINE: The earlier you retire before age 65 the bigger the nest egg and the lower the IWR to safe guard against worst case scenarios.

I think 2.5 and even 3% withdrawal rate is too low. Fidelity will sell you an annuity that pays just under 4%.

Edit: my math was off. It’s about $45k/year for a $1mil annuity so it’s over 4%.

 

[Southpaw]

I can’t help but think if people need to plan for a retirement that gives them the same income they have now that they’ve done life wrong. But to each their own.

I don’t plan to carry a mortgage in retirement. My kids will hopefully be out of the house. I won’t be saving for their college (I’m hoping some will be left over for them to give the grandkids a start). Lack of a mortgage and kid expenses will greatly reduce my financial needs.

like WCI says, a physician can have anything they want they just can’t have everything.

I’ll happily work part time past 50. But I’ll be doing my own cases in some easy peasy outpatient center hopefully.

 

[okayplayer]

Who needs 300k/yr post tax in today’s dollars to be comfortable in retirement?!? I echo Southpaw’s statement about no kids on the payroll and all of the multitude of costs that come with that, no housing costs, no disability insurance, no life insurance, no cme/ABA recert stuff, etc etc etc

 

[chocomorsel]

Millions of dollars to retire? Needing 300k per yr to just live? Y'all feeding caviar to yere dog or wha?

I hear you. Hence my response above. I can easily survive on 80k a year. Like I said, I live cheaply.
I help support my elderly parents now but they won’t be around forever. And if I ever adopt a kid, unlike plenty people on this board I won’t be all about “give them all the finer things I never got to have as a child” and indulge them. No sir.
But I come from a third world country and my lens is totally different.

 

[Neopolymath]

I hear you. Hence my response above. I can easily survive on 80k a year. Like I said, I live cheaply.
I help support my elderly parents now but they won’t be around forever. And if I ever adopt a kid, unlike plenty people on this board I won’t be all about “give them all the finer things I never got to have as a child” and indulge them. No sir.
But I come from a third world country and my lens is totally different.

I have read this site probably 3-4 years less time than you so maybe I'm wrong, but I feel like I see more people on here not wanting to give their kids anything than people spoiling their kids. Hell, there are many people on here making $300,000-800,000 a year talking about not paying for their kid's state college education for god's sake.

 

[deleted126335]

Best money I have spent is on my kid's education. When the grandkids come I will happily fund their 529s.

 

[nimbus]

Best money I have spent is on my kid's education. When the grandkids come I will happily fund their 529s.

Same. We only have one child who has graduated from a state university but we still have money left over in her 529. That money can continue to grow, either to pay for grad school or to go to the next generation.

 

[thinkorswim]

Who needs 300k/yr post tax in today’s dollars to be comfortable in retirement?!? I echo Southpaw’s statement about no kids on the payroll and all of the multitude of costs that come with that, no housing costs, no disability insurance, no life insurance, no cme/ABA recert stuff, etc etc etc

Yes, exactly this. @BLADEMDA is the delusional one thinking we all need $10 million to retire comfortably.

Mortgage, student loans and child expenses currently make up over 60% of my after-tax income. And we’re still able to live a pretty darn good lifestyle with the rest.

 

[nimbus]

I have read this site probably 3-4 years less time than you so maybe I'm wrong, but I feel like I see more people on here not wanting to give their kids anything than people spoiling their kids. Hell, there are many people on here making $300,000-800,000 a year talking about not paying for their kids state college education for god's sake.

Yeah some people are ridiculously miserly. Or they’d rather buy a boat.

 

[cchoukal]

I’m 46, have 1 yr-old twins, and a mortgage til I’m 75 (and that’s assuming we stay in this house forever). I’m making the assumption that I’ll have to maintain my working level of income throughout most of my retirement. That sounds like about 7 -8million. I live in a high COL area, and make a little over MGMA mean. Of course, I have a pension and, supposedly, a lifetime health insurance benefit, which shifts things some. But mostly I’m banking on some rich uncle dying and leaving me an estate. Is that a good retirement plan?

 

[BLADEMDA]

I think 2.5 and even 3% withdrawal rate is too low. Fidelity will sell you an annuity that pays just under 4%.

View attachment 341792

Edit: my math was off. It’s about $45k/year for a $1mil annuity so it’s over 4%.

You do realize that with a 3 percent withdrawal rate instead of annuity the odds are very high you will be leaving your kids a lot of money. The annuity is structured in such a way that the principal goes to the insurance company. If you take the 3.5 percent at age 65 your principal could easily triple by the time you expire leaving your kids a very nice inheritance.

 

[BLADEMDA]

Yes, exactly this. @BLADEMDA is the delusional one thinking we all need $10 million to retire comfortably.

Mortgage, student loans and child expenses currently make up over 60% of my after-tax income. And we’re still able to live a pretty darn good lifestyle with the rest.

You need to re-read my posts. I never state what you need but rather what it takes to safely achieve your own personal desired income upon retirement. For those needing only $80k at age 60 the number is a lot lower than peoplle like me who need $200k at age 60.

 

[DirtDocMD]

The current “word” from the locums agencies, is that it’ll take at least $300 an hour to get a replacement Doc (and that’s BEFORE travel/lodging/car). Also, the group won’t be able to capture much of the billing, unless credentialing is done at least 90 days out, so even MORE expensive. (Hence, think they’ll have plenty of work for me. If not, oh well—-plenty elsewhere).

Anyway, I could get by on 10-15 weeks a year of that EASY, and not touch ANY of the nest egg (unless I was looking at a MAJOR toy)...

Lot less to worry about when you’ve got the house paid off, a spouse who’s not a profligate spender, your “dream” purchase out of the way (ranch), and other stuff already funded.

The big “drains” at this point are healthcare ($25k a year), and property taxes ($13-$15k a year, would be MUCH higher if we had a “stupid” house).

Once you get those “necessities” of healthcare, taxes, and utilities, out of the way (say $50k a year), the rest is just “fun money”. Most of us can manage a decent amount of “fun” on $5-$7k per month. Not hard to do on that 10-15 weeks of work per year, and “maybe” taking $50-$75k a year out of the nest egg/nest egg earnings per year.

Think for most folks, $5 million is still a good number, and perfectly “do-able”, if willing to keep expenses under control, and CONSIDER working a week a month, by late 40’s/ age 50.

I like a 2-3% “withdrawal” rate, over “4%”, if planning EARLY retirement.

Huge house, expensive hobbies/habits (expensive, not reasonable), divorce and/or “big spender” spouses, and unchecked INFLATION—-can all jeopardize...

 

[BLADEMDA]

Some of my posts discuss the number it takes to be rich not just adequate income upon retirement. I was hoping you all would understand the difference between savings requirements for each.

 

[BLADEMDA]

The current “word” from the locums agencies, is that it’ll take at least $300 an hour to get a replacement Doc (and that’s BEFORE travel/lodging/car). Also, the group won’t be able to capture much of the billing, unless credentialing is done at least 90 days out, so even MORE expensive. (Hence, think they’ll have plenty of work for me. If not, oh well—-plenty elsewhere).

Anyway, I could get by on 10-15 weeks a year of that EASY, and not touch ANY of the nest egg (unless I was looking at a MAJOR toy)...

Lot less to worry about when you’ve got the house paid off, a spouse who’s not a profligate spender, your “dream” purchase out of the way (ranch), and other stuff already funded.

The big “drains” at this point are healthcare ($25k a year), and property taxes ($13-$15k a year, would be MUCH higher if we had a “stupid” house).

Once you get those “necessities” of healthcare, taxes, and utilities, out of the way (say $50k a year), the rest is just “fun money”. Most of us can manage a decent amount of “fun” on $5-$7k per month. Not hard to do on that 10-15 weeks of work per year, and “maybe” taking $50-$75k a year out of the nest egg/nest egg earnings per year.

Think for most folks, $5 million is still a good number, and perfectly “do-able”, if willing to keep expenses under control, and CONSIDER working a week a month, by late 40’s/ age 50.

I like a 2-3% “withdrawal” rate, over “4%”, if planning EARLY retirement.

Huge house, expensive hobbies/habits (expensive, not reasonable), divorce and/or “big spender” spouses, and unchecked INFLATION—-can all jeopard

The key is still being in the work place at age 50 and not out of the game entirely. It’s much easier to step it up again if needed as long as you are still actively working some. Once you stop all work getting privileges after 2 years may be difficult.

The safe plan is to scale back and not fully retire until that nest egg is truly big enough for you.

 

[BLADEMDA]

I have read this site probably 3-4 years less time than you so maybe I'm wrong, but I feel like I see more people on here not wanting to give their kids anything than people spoiling their kids. Hell, there are many people on here making $300,000-800,000 a year talking about not paying for their kid's state college education for god's sake.

I think 2.5 and even 3% withdrawal rate is too low. Fidelity will sell you an annuity that pays just under 4%.

View attachment 341792

Edit: my math was off. It’s about $45k/year for a $1mil annuity so it’s over 4%.

Annuities favor the insurance companies. Your better approach is to take a reasonable withdrawal rate and invest the rest.

The Stunning Problem With The 4% Retirement Income Rule In One Chart

Many investors rely on the "4% retirement rule", but it has a serious problem. If you are nearing retirement, you need to understand "sequence of investment returns" because it can mean the difference between a retirement with plenty of income and one where you run out of money.

www.forbes.com

 

[BLADEMDA]

Data are for illustration only. All results are hypothetical and based on simulations using historical data, since 1926. Assumes a 25-year retirement period. See footnote 3 for important details.

 

[doctalaughs]

Obviously no one “needs” 10M to retire.

However, 300k/yr in retirement income (what that would safely generate) is not “outrageous.” You aren’t going to be flying on private jets, buying a new bmw every year or living at the ritz on that type of money.

However, you’ll need that level of money if you want the option to do things like:
- treat your kids and their families to a nice vacation once in a while (taking 10-12 people on a week trip is pricey)
- have the option to help with grandkids education, if needed.
- support medical expenses god forbid a family member gets seriously ill
- pay for graduate school for my kids if they want to pursue it.

Those are all things that I would like to have the OPTION do easily without worrying it will alter my retirement.

 

[BLADEMDA]

 

[doctalaughs]

The safe plan is to scale back and not fully retire until that nest egg is truly big enough for you.

This.

I also think everyone should “overshoot” their number by 30%.

If the market tanks 1-2 years after you “retire” you gotta be ok with 30% less than what you were planning on. Going back to work after retiring is difficult (both mentally and logistically in medicine).

A lot of people here say 2M is plenty. How does 1.4 sound to live on for 30+ years? I’m fairly sure most physicians are used to spending more than 55k/yr — especially when they have nothing to do but leisure. Not to mention inflation.

 

[Neopolymath]

This.

I also think everyone should “overshoot” their number by 30%.

If the market tanks 1-2 years after you “retire” you gotta be ok with 30% less than what you were planning on. Going back to work after retiring is difficult (both mentally and logistically in medicine).

A lot of people here say 2M is plenty. How does 1.4 sound to live on for 30+ years? I’m fairly sure most physicians are used to spending more than 55k/yr — especially when they have nothing to do but leisure. Not to mention inflation.

This is why retiring from work completely is a bad idea IMO. Better to cut back early but work longer. We have a unique opportunity in medicine to do that in most specialties. This doesn't even get into the debate about the health of people who keep working in some capacity versus those that sit on their couch saving money at 50. I've seen it too many times to be comfortable doing that myself.

 

[nimbus]

Annuities favor the insurance companies. Your better approach is to take a reasonable withdrawal rate and invest the rest.

The Stunning Problem With The 4% Retirement Income Rule In One Chart

Many investors rely on the "4% retirement rule", but it has a serious problem. If you are nearing retirement, you need to understand "sequence of investment returns" because it can mean the difference between a retirement with plenty of income and one where you run out of money.

www.forbes.com

I agree. Fidelity and I and everybody else knows we can do better than 4%. I just use that as an example to show that you can get 4% guaranteed until you die if you want to. Fidelity is not dumb, they know there is a very high likelihood that they can pay you 4% and still make money.

 

[chessknt]

Yeah some people are ridiculously miserly. Or they’d rather buy a boat.

Alternatively seeing fully funded education by mommy and daddy sets a tone of entitlement and could reduce the value of the experience. It isn’t child abuse to expect them to have skin in the game as fully functioning adults.

Should parents also buy them cars and houses and European vacations just because they can afford it easily?

I think there is a middle ground and it is a personal decision but isn’t like funded college education is this morally obvious choice it is made out to be by people of means.

 

[okayplayer]

Blade, curious the source on this. Would like to read more.

 

[BLADEMDA]

I agree. Fidelity and I and everybody else knows we can do better than 4%. I just use that as an example to show that you can get 4% guaranteed until you die if you want to. Fidelity is not dumb, they know there is a very high likelihood that they can pay you 4% and still make money.

Nimbus,

I looked at the annuities and the rate of return is dependent on how long you keep the money invested with the insurance company prior to taking withdrawals. For example, if I deposit $1 million into an annuity today and start taking withdrawals a year from now the rate of return is around 1.90%.

Compare that with the better annuity product from Fidelity where you are likely to earn 6-7% pretty easily if you invest conservatively. I think Fidelity offers the best annuity product in their VIP series with an expense ratio of 0.10% plus the fund fees. There are no RMDs and the available mutual funds are excellent. The biggest "plus" is the fact there are no RMDs.

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/FPRA_Brochure.pdf

 

[BLADEMDA]

Blade, curious the source on this. Would like to read more.

Fidelity's website.

How Can I Make My Retirement Savings Last? | Fidelity Institutional

Withdraw only 4% to 5% from savings yearly, with adjustments for inflation.

institutional.fidelity.com

Another important factor in determining the right asset mix for you: the degree of confidence you need that your money will last your lifetime. As the chart below illustrates, in about half of the hypothetical scenarios we tested, a growth portfolio (70% stocks, 25% bonds, and 5% cash) would have allowed you to withdraw more than 7% each year over 25 years of retirement—over 25% more than a conservative portfolio (20% stocks, 50% bonds, and 30% cash) with a sustainable withdrawal rate of 5.7%.3

If you want a much higher degree of confidence, the analysis suggests that increasing equity exposure doesn't raise the sustainable withdrawal rate, and in fact becomes counterproductive. At a 90% confidence level, the sustainable withdrawal rate for the conservative portfolio is 4.8%, versus 4.5% for the growth portfolio. For a 99% confidence, the analysis suggests you could withdraw 4.1% from the conservative portfolio, versus only 3% from the growth portfolio.3

 

[BLADEMDA]

Fidelity's website.

How Can I Make My Retirement Savings Last? | Fidelity Institutional

Withdraw only 4% to 5% from savings yearly, with adjustments for inflation.

institutional.fidelity.com

Another important factor in determining the right asset mix for you: the degree of confidence you need that your money will last your lifetime. As the chart below illustrates, in about half of the hypothetical scenarios we tested, a growth portfolio (70% stocks, 25% bonds, and 5% cash) would have allowed you to withdraw more than 7% each year over 25 years of retirement—over 25% more than a conservative portfolio (20% stocks, 50% bonds, and 30% cash) with a sustainable withdrawal rate of 5.7%.3

If you want a much higher degree of confidence, the analysis suggests that increasing equity exposure doesn't raise the sustainable withdrawal rate, and in fact becomes counterproductive. At a 90% confidence level, the sustainable withdrawal rate for the conservative portfolio is 4.8%, versus 4.5% for the growth portfolio. For a 99% confidence, the analysis suggests you could withdraw 4.1% from the conservative portfolio, versus only 3% from the growth portfolio.3

This is why I repeatedly state use 3% for you withdrawal rate once you reach age 60+. Before age 60 use 2.5% IWR for a 99% confidence.

Bottom line: 3% withdrawal rate past the age of 60 should be close to a 99% success rate for not running out of money. In fact, in most scenarios you end up with 2-3 X your initial investment if you live past age 85 and your stock percentage is at least 50-60%.

I want to pass on money to my kids so I will use 3%; for those that don't care about passing on any money your IWR can be higher.

Retiring soon? Why the popular 4% withdrawal rule may be a bad idea

It's a particularly risky time to retire, due to market conditions, according to experts. Those who do may want to reconsider using the so-called 4% rule.

www.cnbc.com

 

[BLADEMDA]

Financial planner Michael Kitces has researched the 4% rule extensively. Analyzing data going back to the 1800s, Kitces demonstrates that a 4% withdrawal rate with Bengen’s 60% stocks and 40% bonds allocation would never have resulted in a nest egg running out of money in less than 30 years – not even in the worst 30-year periods.

He doesn’t stop there. In most historical scenarios, retirees would actually have more money in their accounts after 30 years, not less. Even with a 4.5% withdrawal rate, Kitces shows that in 96% of the 30-year periods since 1926, retirees would have larger nest eggs after 30 years than when they first retired.

Therein lies one of the problems with retirement planning. Retirees have to plan for the worst-case scenario, even though it will mean spending far less than they may need to live.

The Never-Ending Nest Egg​

In Pfau’s numbers, a 3% withdrawal rate left nest eggs intact over every single 40-year period going back to 1926 for portfolios based on 50/50 or 75/25 splits in stocks and bonds. But what if you want to retire extremely young and plan on living for another 45, 50, or even 60 years?

It turns out that if a portfolio can survive the first 10 to 15 years with minimal losses, it’s likely to continue growing forever. Kitces demonstrates that a 3.5% rate effectively forms a safe withdrawal rate “floor.” If a retiree can withdraw no more than 3.5% each year for the first 15 years, they overcome the initial sequence risk, and their portfolio keeps growing indefinitely. A withdrawal rate of around 3.5% is safe for the first 40 to 45 years, and portfolios that can last that long are almost certain to reach “escape velocity” and continue growing.

Why did the portfolio last forever at a 3.5% withdrawal rate but run out after 40 years at a 4% withdrawal rate? Because the less money you take out, the more is left in the portfolio to capitalize on market upswings, even after the downswings.

Safe Withdrawal Rates for Retirement - Does the 4% Rule Still Apply?

www.moneycrashers.com

 

[chocomorsel]

I have read this site probably 3-4 years less time than you so maybe I'm wrong, but I feel like I see more people on here not wanting to give their kids anything than people spoiling their kids. Hell, there are many people on here making $300,000-800,000 a year talking about not paying for their kid's state college education for god's sake.

Really? Because I see the opposite. Maybe we are paying attention to different. And people always defending the “I never had this growing up so I am gonna make sure my kid does.”
There’s one dude on here who talks about how he plans on spending a million dollars per kid in college. Like it ain’t no damn thing.

 

[chocomorsel]

Alternatively seeing fully funded education by mommy and daddy sets a tone of entitlement and could reduce the value of the experience. It isn’t child abuse to expect them to have skin in the game as fully functioning adults.

Should parents also buy them cars and houses and European vacations just because they can afford it easily?

I think there is a middle ground and it is a personal decision but isn’t like funded college education is this morally obvious choice it is made out to be by people of means.

Yup. In this forum it’s considered child abuse. Lol

 

[BLADEMDA]

Alternatively seeing fully funded education by mommy and daddy sets a tone of entitlement and could reduce the value of the experience. It isn’t child abuse to expect them to have skin in the game as fully functioning adults.

Should parents also buy them cars and houses and European vacations just because they can afford it easily?

I think there is a middle ground and it is a personal decision but isn’t like funded college education is this morally obvious choice it is made out to be by people of means.

Part of my goals during retirement is to leave some money for my kids. I would like to leave each of them 2 million upon my death. Now, this may sound like a lot today but who knows what it will actually buy in 2-3 decades when I'm gone. But, this is my goal not yours.

So, I am using a lower withdrawal rate like 3% which increases the chance/odds my strategy will be successful in both funding my retirement and leaving the kids some decent money. This assumes Biden/AOC/Sanders allows me to leave my kids that much money as the proposals from the far left want to heavily tax inheritance money.

Biden’s ‘Double Death Tax’ | National Review

The White House is proposing what would amount to a second estate tax. The one we already have is bad enough.

www.nationalreview.com

 

[BLADEMDA]

Wealthy may face up to 61% tax rate on inherited wealth under Biden plan

As part of his American Families Plan, Biden is proposing to nearly double the top tax rate on capital gains and eliminate the "step-up in basis."

www.cnbc.com

 

[deleted126335]

Yup. In this forum it’s considered child abuse. Lol

Just different values.

 

[doctalaughs]

Really? Because I see the opposite. Maybe we are paying attention to different. And people always defending the “I never had this growing up so I am gonna make sure my kid does.”
There’s one dude on here who talks about how he plans on spending a million dollars per kid in college. Like it ain’t no damn thing.

I’m sorry but there is a huge amount of data that rich kids do better than poor kids on every measure of achievement. That’s not purely due to values imparted— and it’s also not because the parents are buying them fancy cars. The (sad) truth is that parents willing to pay for:

1) extra tutoring, lessons, camps etc
2) experiences that “rich” kids have (travel, clubs, sports/camps) allow them to network and relate to others with means, which opens doors later
3) start out with minimal (or zero) debt, or a headstart in a down payment or inheritance

Those kids on average will end up ahead and more likely to be upper class with high career achievement. Obviously this isn’t always true— but statistically it’s a fact.

 

[chocomorsel]

Just different values.

For sure

 

[chocomorsel]

I’m sorry but there is a huge amount of data that rich kids do better than poor kids on every measure of achievement. That’s not purely due to values imparted— and it’s also not because the parents are buying them fancy cars. The (sad) truth is that parents willing to pay for:

1) extra tutoring, lessons, camps etc
2) experiences that “rich” kids have (travel, clubs, sports/camps) allow them to network and relate to others with means, which opens doors later
3) start out with minimal (or zero) debt, or a headstart in a down payment or inheritance

Those kids on average will end up ahead and more likely to be upper class with high career achievement. Obviously this isn’t always true— but statistically it’s a fact.

Oh yeah. It’s you. The million dollar per kid dad.
Please carry on.
I don’t have kids so....
And if I am ever rich I don’t want my rich kids to just network work just rich people. Nah. I network with all kinds of regular people, rich people, and lower income people.
To be honest, hanging around a bunch of rich people sounds painful.
The richer do have means of getting richer with their networks though, something other people tend to lack.

When I become rich, I plan on creating jobs for poor people. Not other rich people.
But like I said, I come from a poor third world country.

 

[deleted126335]

…..
But like I said, I come from a poor third world country.

I suspect that many of the poor and average and above average but not quite rich in your country of origin sacrifice significantly so their kids can get a better education.

For many of us on this board it means no vacation home or boat or less on cars and other luxuries. Not much of a sacrifice. For me it did mean relocating to an area that I wouldn’t of have chosen to live plus some of the above.

 

[coffeebythelake]

Oh yeah. It’s you. The million dollar per kid dad.
Please carry on.
I don’t have kids so....
And if I am ever rich I don’t want my rich kids to just network work just rich people. Nah. I network with all kinds of regular people, rich people, and lower income people.
To be honest, hanging around a bunch of rich people sounds painful.
The richer do have means of getting richer with their networks though, something other people tend to lack.

When I become rich, I plan on creating jobs for poor people. Not other rich people.
But like I said, I come from a poor third world country.

We are doctors. We are basically very well educated blue collar workers. What we call "rich" while it is well beyond thr average American is not the type of rich that bankers think of. Unless you are doing some boutique or concierge medicine we hang out with people on all socioeconomic classes and backgrounds.

Personally I believe in contributing to my children's education and futures the same way my parents did for me. I think a lot of immigrant families understand the hardships involved as a 1st generation immigrant and work hard to give their kids a better (not spoiled) life

 

[pgg]

Now I don't want anyone to misconstrue my posts above about FIRE. My point is that for those of us wanting to maintain our lifestyle at around $300K per year (yes, I can live on less) the minimum number is $11.7 Million. If you factor in inflation and devaluation of the US Dollar that number could be as high as 17.7 Million.

I have to disagree.

If your math hinges on high inflation/devaluation of the dollar then sure, you can conjure any stratospheric number and justify it by mentioning Weimar Germany or Zimbabwe.

I do have to wonder though, what kind of luxury buying opportunities a retiree will be indulging in, if society has collapsed in a hyperinflation event. Catastrophic devaluation of currency isn't something that can be hedged by saving 50% more of that currency.

Anyway, let's not get carried away - 4% SWR is probably OK even for the FIRE cohort - a group that, by definition, is OK with frugal living and is absolutely capable of ratcheting back spending in a down market. Your hypothetical retiree doesn't HAVE to spend that $300K like a robot.

Nor does he HAVE to retire to 0-time. Maybe the better answer for us is to recognize that our ongoing earning ability is an asset all by itself, and one worth preserving to hedge our investments early in retirement. One can retire early, but maintain a license and do a few weeks of locums per year. Is a year with 44 weeks of vacation really that much different than full retirement? I can make $50K with 2-3 weeks of work-like-a-dog locums coverage. Given that 6 or 8 weeks yields an easy $100K of income, fretting over bumping an $11M nest egg to $17M seems like a very hard answer to an easy problem.

 

[pgg]

Best money I have spent is on my kid's education. When the grandkids come I will happily fund their 529s.

Agreed. With 2 kids done with school now and the 3rd entering her junior year of college, I can't think of a better way to give them an advantage over peers and open up more opportunities (eg freedom to take lower paying jobs that are better fits, more school, higher risk / greater reward paths) than starting life debt free with a degree.

I still fund their Roths too. At some point my wife and I are going to die and they'll inherit everything anyway. Annual Roth-sized gifts compounding tax free for decades and avoiding any future middle-class estate taxes is the best of all intergenerational wealth transfer. It's a good way to teach them how to invest, too.