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Is that the magic number needed to retire and walk away from it all?
10 MILLION DOLLARS
- Thread starter DrCommonSense
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Would work for me.
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If you are young, the magic number would be 25 to 28 times your annual expenses, based on models that indicate a high probability that a 3.5 to 4 percent withdrawal rate can be sustained indefinitely.
If you are older, you need less. See Retirement Calculator - Monte Carlo Simulation RetirementSimulation.com
If you are older, you need less. See Retirement Calculator - Monte Carlo Simulation RetirementSimulation.com
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10 Mil?!? Who's gonna make that much....? Gonna take 25-30 years, no kids, no debt, crazy busy (fraudulently aggressive), abnormally high investment returns, and probably some luck. I'd be done, but sounds unrealistic...
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Looks easy. Asc in office. 3 np who rx whatever. 20 procedures every day with sedation. 10 mil per year.
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2-3 million.
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A Tale of 4 Physicians: The Impact of Lifestyle - Physician on FIRE
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Sent from my iPhone using SDN mobile
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all depends on your expenses. expenses include taxation in your home state. for me 10 million is enough.
figure 1.5 - 2 million for a house leaves you 8 million. 8 million yielding 5 % gives you 400K a year without ever touching principal. . take home pay is
234,917 . your social security income will take care of property tax.
$400000 Federal Tax Calculator 2017/2018 | 2017 Tax Refund Calculator
most people do take money out of principal if they have no pension.
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I think that's too much, for me anyways, although the more you can save, the better, obviously. I'm not planning on needing that much. But I do plan on having my house paid off by age 55, kids already put through college once retired, no more 529 plans to fund, no more house payments, no more student loans payments, not having to keep dumping money into the 401K once retired (obvious, but does reduce expenses compared to working years).
That being said, there are too many variables you need to determine, for any of us to answer this for you. What age you want to retire?
How much money you're going to need in retirement? What will your expenses be in retirement? What will your lifestyle be, then?
They all change the equation, and total dollars needed, in the end. But it's different for everyone.
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i never said the income is from equities. you assumed that? 5% is too low for equity income. the 5% is from bonds. bond coupon income is not taxed as a capital gain. if you wish to make it equities you are assuming more risk which is OK but figure you would average higher, say 6.5% return or so.
What You Need To Know About Capital Gains And Taxes
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Why not keep most in stocks with higher dividend rates?
Whats the benefits of bonds if you have a significant financial cushion? Even with a 40% market drop, you could still ride it out with dividends if you dont sell the principal.
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Incomes in the future could be lower with corporate America taking a slice of the pie through ownership of medical practices, so predictions about the future are difficult. Municipal bonds could tank or become insolvent under the tax bill currently being debated since their tax free status will be revoked. How much do you really need? It depends on your expectations. As you approach 60, if your house(s) are paid off, then the major expenditures are property taxes (that are not decreasing) and insurances. Most people, including doctors, will downsize from their 9700 sf houses on a lake to something more practical as they approach retirement. Clearly 10 million net worth is far more than most doctors will ever save in a lifetime unless they are extremely frugal (most are not) or exceptional in their investing (most are not). The 401k/pension plans are the best way to save tax deferred monies since they can be automatically deducted. Paying off the house as early as possible by doubling or tripling the amount paid each month increases net worth by 0.5-1 million in the long run compared to paying what is due on the loan. Me? I will be perfectly happy on far less net worth than 10 million 
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what was written in the original post is //Is that the magic number needed to retire and walk away from it all?//
i figured walking it away from it all meant disconnecting from everything. if you are not walking away from it all and plan to
actively manage your investments (or pay someone to do it) then you would probably want to be in stocks. Right now (11/2017) there is a lot of equity euphoria going on. market is breaking records. you hear "this time it is different" regarding p/e ratios. everyone wants to be in stocks. you do not know it, but you are part of that euphoria. if the market dropped 40% you would be part of the dysphoria. most people have a variety of investments so that they do not jump out of the 10th floor of buildings when one part of their portfolio collapses.
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check out the Japan stock market chart before you decide to ride out a market drop.
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Japan is a cautionary tale and a black swan event. It's best to be diversified with a portfolio including both US and international stocks, and for most, some stake in bonds and real estate.
To answer the OP's question, I once had the $10 Million Dream, but I realized there wasn't much I would do with that amount of money that we couldn't do with 1/4 to 1/3 of that sum (in today's dollars).
Instead of committing to working full time for another 15+ years to achieve the 8-figure total, I've decided to cut back to part-time and start enjoying life with my family more while I'm still reasonably young (just turned 42). I've got all I need to retire at any point now, but I'm not necessarily in a big hurry. We live in a low cost of living area with good public schools and affordable housing. $3 Million would be plenty to live well with $100,000 a year allowance on a conservative 3.33% withdrawal rate.
$10 Million should allow you to live really well just about anywhere, but if you aren't insistent on living in NYC, SF, LA, etc... you can be quite happy with much, much less.
Cheers!
-PoF
To answer the OP's question, I once had the $10 Million Dream, but I realized there wasn't much I would do with that amount of money that we couldn't do with 1/4 to 1/3 of that sum (in today's dollars).
Instead of committing to working full time for another 15+ years to achieve the 8-figure total, I've decided to cut back to part-time and start enjoying life with my family more while I'm still reasonably young (just turned 42). I've got all I need to retire at any point now, but I'm not necessarily in a big hurry. We live in a low cost of living area with good public schools and affordable housing. $3 Million would be plenty to live well with $100,000 a year allowance on a conservative 3.33% withdrawal rate.
$10 Million should allow you to live really well just about anywhere, but if you aren't insistent on living in NYC, SF, LA, etc... you can be quite happy with much, much less.
Cheers!
-PoF
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Being retired what scares me is severe inflation. If it costs 10K to buy a loaf of bread 10 million is not going to get you very far.
Seems unlikely, but some inflation hedges are not a bad idea either.
Seems unlikely, but some inflation hedges are not a bad idea either.
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That is a scary picture.
Going forward due to extreme P/E inflations of the current market coupled with artificially low interest rates, I would suspect a far lower return in almost any asset class than was seen over the last 30 years.
Stocks will return maybe 4% annually over the next 10-15 years, bonds return even worse, real estate is very inflated, etc.
The 10 million number is so high because I am assuming poor investment returns going forward for America.
So which market in the world is relatively stable to invest in now, considering both Nikkei and DJIA are inflated?
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S&P 500 and USD, as usual. It's just a question of ratio depending on your retirement plans.
Incomes in the future could be lower with corporate America taking a slice of the pie through ownership of medical practices, so predictions about the future are difficult. Municipal bonds could tank or become insolvent under the tax bill currently being debated since their tax free status will be revoked. How much do you really need? It depends on your expectations. As you approach 60, if your house(s) are paid off, then the major expenditures are property taxes (that are not decreasing) and insurances. Most people, including doctors, will downsize from their 9700 sf houses on a lake to something more practical as they approach retirement. Clearly 10 million net worth is far more than most doctors will ever save in a lifetime unless they are extremely frugal (most are not) or exceptional in their investing (most are not). The 401k/pension plans are the best way to save tax deferred monies since they can be automatically deducted. Paying off the house as early as possible by doubling or tripling the amount paid each month increases net worth by 0.5-1 million in the long run compared to paying what is due on the loan. Me? I will be perfectly happy on far less net worth than 10 million
Because you educated your children.
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LETTER TO THE EDITOR
Tulip Equity Market Mania
Is there anybody out there? Is there anyone at home?
Watching this incredible equity market run as a private investor with 30 years of traditional fixed income credit experience and a senior risk manager who has worked on solutions to well-known market downturns generates a fair degree of speculation as to how equity markets have reached these levels when looking at fundamentals in the US and abroad.
As we know, elections have been won with simple and clean rationales like it’s the “economy stupid”. And maybe we need to go no further than its demand for “yield stupid” to explain the length, pace and trajectory of this run. But at some point, there will have to be at least a poise. New York City medallions at one time seemed a no-brainer given the competitive set and demand fundamentals which resulted in them being pushed to dizzying heights. Enter Uber and valuations suffered greatly. Medallion owners and their financers all had their day(s) of reckoning. Anyone who has been in the credit approval process knows the tales of Tulip Mania in 1637 and always looking for disconnects in fundamentals relative to valuations. In this case, it was tulip bulbs reportedly going for 10x average annual earning of a skilled craftsman at that time. In hindsight who would possibly do such a thing?
In today’s world with traditional fixed income alternatives not offering returns anywhere near where savers need them to be (and in some cases savers paying the government issuers to hold their money), 20% annual returns in equities are very attractive if not inexcusable not to be participating in – at least that is how the story seems to be told. It appears that those who feel they have missed out are jumping in on the possible tail of bull market crushing one of the best waves investors have ever had the chance to ride. Even some asset management CEOs have spoken of investors having too much cash on the sidelines. Until rates move and central banks’ balance sheets are no longer depressing yields it is hard to see immediate pressure on these valuations despite wide acknowledgment of them being “rich” .
Maybe we have truly reached a new paradigm. With the large gains many have achieved, maybe there will be less susceptibility to a run since some early believers/adapters are now sitting on 50+% accretion and can easily withstand the downward “shocks” of 20 or 30% experienced historically. Maybe limited volatility reflected in the VIX and other indices have been way ahead on gauging this new reality.
I still find it hard to believe. The propensity for new and disruptive technology seems far more powerful today than ever before. The increased output of wind turbines, the penetration of wind and solar in the US alone provide useful reference points. The seemingly unbelievable power of Amazon to succeed and disrupt on such a large scale all serve as useful reminders to how sensitive industries are to the innovations we hear of but are difficult to appreciate early on. How will the companies that so many have piled into passively or directly own, embrace, or defend against Blockchain, AI, Bitcoin and other rapidly developing alternatives?
I was concerned there was a bubble forming long ago and would agree today that was premature, but the Dow potentially reaching 5 one thousand point gains in a year would argue the component companies have the threats of today and tomorrow thoroughly in check. I do believe this market remains highly sensitive to a good fit for purpose alternative “relieving” the pressures that have been built up by well-intentioned short-term policies playing a much longer role than intended or anticipated.
Maybe the tulip valuations would have held if bulbs could have been “preserved” for ten years or so. That seems to be a relevant question as to what has pushed and held the valuations we see today.
John Olert, former Chief Risk Officer and Chief Credit Officer, Fitch Group
Source: @valuewalk; Read full article
