I retired at 52 with a $3M net worth – here's what my spending looks like
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I'm really failing to see the point of this article. It's not like there's any particular insights in it. His net worth and retirement status is completely irrelevant to his spending habits.
It would've been a slightly more interesting article if it was a yearly breakdown, but a weekly breakdown doesn't tell us anything. The majority of that week's expenses was a hotel stay, which I'm sure is not a weekly expense.
Dividends from index funds might be 2%? The S&P overall generates about 2% dividends. Capital gains may double that, but are not reliable as the market goes through its cycles.
Interest from cash is likely 1% at best.
From the spending analysis, he's spending ~$6,000/month, or, $72,000/year. With a $3,000,000 net worth, his minimum cash return is 2.4%.
Assuming he's keeping up with inflation, which I'd say is really important given that he's likely got another 30+ years of retirement to fund, he should budget another 2%, and target 4.4%.
I've been stymied, like many investors seeking fixed income, by this protracted low interest rate period. Municipal bond yields are poor, all cash and govm't bonds have very poor yields. I tried peer lending, but was let down by the service company. So I had to get creative.
Over the last 3 years, I built a dividend portfolio that currently yields 6%. All the stocks in the portfolio have a history of at least 10 years of increasing dividends, and I expect that the 6% will increase by about 0.2% annually as they raise their dividends.
With all that said, it seems like he could get a better cash yield with a different mix of investments.
If he is living on that and not using up his principal it sounds good
I say shame-retired because I still feel ashamed to say this out loud. Certainly to members of the opposite sex.
I live in a crazy-expensive city. So sometimes panic sinks in and I feel i am heading to a life of poverty. Especially thinking about my peers with 6-figure-$US equivalent salaries.
Am i crazy or a realist ?!
(To be clear, i have a CS degree, lots of experience, and can go back to tech but only as a developer drone...)
This "retiree" has monthly income of $8K+.
There are other tricks you can do
(1) You can use your standard deduction to slowly convert your pre-tax retirement accounts into after-tax accounts without paying any tax (i.e. 24k/year). Then after five years you can withdraw the principle from the after-tax accounts. This can be done at any age.
(2) In years where you do not use your 0% tax bracket you can use the remainder for capital gain harvesting. You can sell some of your investments and buy them back again. If the gain does not push you over 77.4/k you pay zero tax but raise your cost basis to lower your gain when you ultimately sell the investment. And wash sale rules do not apply to selling with a gain.