House (worth $1.7m) is fully paid off Property tax is $1k/month. $3m are ALL in SP500. SP500 returns 7% of *annualized* growth. Planning to withdraw 7% on good SP500 years 4% on bad years to slow down capital diminishing. TC will be: ~$200k on good years ~$120k on bad years CGT will be ~10% (long-term, married). Will do casual consulting/freelancing and deposit it all in kids college funds (2 kids). Wife supportive, colleagues say I need 2x the money but I don’t think so. What do you people think?
Do your kids need a college fund?
Why not muni bonds so it’s all tax free income?
Limited appreciation.
10% at 10% tax vs 4% at 0% tax
4% SWR was meant for 30 years with 60/40 portfolio. 1. Too long a retirement timeframe 2. Too much risk for retired person with 100% stock portfolio 3. No international exposure if US doesn't do well
Real estate is 37% still. And I know that 100% stock sounds dumb according to SWR but do we still think the bond & stock market are 2 different things to the US government? If I can’t trust sp500, I can’t trust the bond market either. Good point on international exposure, what do you recommend?
Stock market and bond market have very different characteristics. It's not about trust but controlling volatility. Volatility doesn't matter when building wealth but matters when drawing down. VXUS for international exposure
Sounds like you've got it all figured out. Why ask the poors? 🤣
Gotta flex on em
Honestly I’m horrified it feels like a 1-way road type of a decision
I did that under 38, but you'll eventually realize how boring life gets in retirement If you go through with full retirement, have the following: - home gym (1000 sq ft) - class A apartment building 25-100 units - hire a good property management company - $5 MM -$10MM in umbrella insurance - LLC Parent, LLC Holding, 2x PO Boxes - Business Account x2 (Parent & Maintenance) - Business Credit x2 - Intuit Small Biz (Accounting) - Google Biz Email - Billing Software (Tenant Online Billing) - Tailored Operating Agreement for LLC x2 - Stay active af Congrats
Current TC or gtfo
he is getting tfo
How did you pay the house? Stocks?
ABC - always be closing. 😉
My recommendation would be to adjust for two considerations which are 1) You don't know a bad year until after the bad year (or a good year until after) so planning annual spend is not possible. - How to adjust? Pick one number e.g. 150k to withdraw/convert to cash annually. At the end of the year, you can pay yourself a 50k bonus if performance is tracking ahead, else no bonus 2) The delta between 200k and 100k is too much! Can you imagine how stressful and depressing your life would be if you had to abruptly cut your expenses in half AND you don't even know which year? 3) 7% is too aggressive especially if planning for the next 50-60 years. I'd suggest 5% max. Why? Sequence of returns, inflation, past performance not being indicative of future performance etcetera etcetera 4) Last one, promise. Plan to give your kids the bulk of their inheritance at 30 and see how that impacts your projections. You're in good shape though OP. Congratulations and good luck
No inheritance for kids. I’m spending all the money I made. They gotta earn their own like I did.
With a paid house, 3million more than enough provided 200k is enough for lifestyle (which should be as you don’t have mortgage). P.S if you live like a 200k household that also needs to save, you’ll be doing great tbh. Like if you didn’t have the 3 million but made 200k w2 income, what would you do?
For now. In 10 years, 1K property tax likely to be 3K/month. Healthcare expenses will only go up then too. If you have HOA fees, watch out for getting scammed in future on those. (My old neighbors HOA fees went from 80/month to 800/month in 10 years). Cost of living will also go up at the same time. So 120K today will be like 80K in future, and when you need more $$ for Healthcare, kids, Property taxes.
I mean with lesser job tensions, lesser health problems. Can get HSA and max out from the 200k. If they live like how a family earning 200k lives (paid off house, remember) they should be fine. Do 401k, savings and HSA from the 200k.