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Comment by Dayshine | Hacker News Reader

> When I first hit $100K income, I would take a peek at my W2 for a few days admiring the six digits, but then it wore off. When I hit $200K, $300K, $400K, and $500K, it was the same thing. I would be delusional to think that earning $1M, or $10M would suddenly make it different.

>What is out there that I could do that would make me excited waking up every day for the next 45 years that could also earn me enough money to cover my expenses?

At $500k, with UK tax rates (probably higher than US), you'd have $275k net. If you remove generous expenses, you have $200k a year in savings. Five years working would get you $1M.

With $1M, you would probably never have to work again (~$40k in safe withdrawal per year).

Then you'd have the ability to pick any job, irrespective of pay. Go help charities, help with research, spend all your time on open source projects, whatever you want.

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$1m is not enough for most people in the US to never work again, unless they are quite frugal. It's barely enough to retire with.

What bubble/ivory tower part of the country are you in? $1m is enough. Especially with a paid-off mortgage. Most people get by for way, way less than that.

If at any point in ones life you’ve made over $300k, I doubt $40k a year would feel like anything other than relative poverty - not that that’s a terrible thing. It’s plenty of money except if you’re used to vacations to Europe in 4 star hotels, nice gym and golf memberships, cars, etc.

>If at any point in ones life you’ve made over $300k, I doubt $40k a year would feel like anything other than relative poverty

Neither here nor there. The GP was responding to "$1M is not enough for most people to retire on."

Not with inflation

In the bay area and almost everywhere on the west coast you are looking at over $1k/month in property taxes for that house with a "paid-off mortgage." In most states you never really "own" your home. You only own it while you pay tax every six months until you are dead.

Why would you retire in a high cost of living area?

Because you like living there

The vast majority of people don't get to make those sort of decisions. It's a matter of "where can I live?", not "where do I _want_ to live?"

So, the ivory tower remark seems appropriate.

There's more to the US (and the world) than the West Coast.

Yes there’s also New York, Chicago, London, Paris... ;)

I think the commenter's point is yes you could cash out and move to nowheresville with a cheap house, but there's no point in playing that hypothetical game because it doesn't end (live in the ghetto! Your house is valued at $10k, aren't those low low property taxes sweet??)

They making the probably-fair assumption that these hypothetical people want to live at least close to where they're rooted their lives.

>$1m is not enough for most people in the US to never work again, unless they are quite frugal.

i.e. "$1m is not enough for most people in the US to never work again assuming they want to live to the standard that I have become accustomed to."

Which very likely does not apply to "most people". We do pretty well for ourselves and it's easy to forget that "most people" live paycheck to paycheck on far less.

Florida is popular retirement destination in US and comfort living cost there for 2 people is about $50K annual without taxes. Part of the high cost is that most people in our generation won’t have paid off their mortgage and monthly $1500 expense is expected just for that. Add on the top property taxes, high cost of medical, high cost of smart devices, phone plans, eating out even once a week - etc. If you have kids who are still dependent then you can easily add another significant chunk.

+1 for Florida. You can buy a 3 bedroom home on a barrier island within walking/biking distance to a pristine beach for $500k. Even less for a nice condo.

$1m + paid off mortgage are probably enough for most of the country. You'll still need to be frugal, depending on your age.

Median household income is $60k in the US. So, $40k for 1 person is probably enough.

What is the average household income in the US?

The 40th percentile income in the US is $43.3k [0], with 126 million households [1], that comes out to about 50 million households that make less than $44k.

To put my feelings bluntly, get out of your bubble.

[0] https://statisticalatlas.com/United-States/Household-Income [1] https://www.google.com/search?q=us+number+of+households

Just my insurance is $20K/year (health, life, disability, home, auto, umbrella). Then $10K/year in property taxes. Then $30K/year in mortgage interest. That's already $60K/year and doesn't include food, utilities, schools, etc.

> you'd have $275k net. If you remove generous expenses, you have $200k a year in savings.

In Seattle Washington? You'd have an extremely hard time making ends meet on $75K, it certainly isn't "generous." For example median home value in Seattle is $725K.

My expenses are about $150K a year.

Fixed costs per month:

* $5K mortgage

* $1.2K health insurance

* $300 life and disability insurance

* $800 utilities

* $2K home services: nanny, sitter, cleaner

* $800 school / preschool and kids activities

* $2K groceries, essentials, etc

I have a family, two small kids (4 and 2), and live a comfortable life in Seattle. I could obviously adjust my standard of living, move somewhere cheaper, etc, but I didn't want my family to have to change anything from this experiment I'm doing with my life.

I live a comfortable life in Seattle and my mortgage is $3k a month including taxes, in a house that’s too big for us to keep clean. I think “comfortable” might be understating things.

If I moved into my neighborhood now it might be closer to $5k (without a bigger down payment) but I wouldn’t recommend it.

$5K includes property taxes, HOA, and home insurance. The total was $4K originally when I bought a $850K townhouse in 2015. But I refinanced recently to get some cash out and that got it to $5K.

As someone trying to do something similar in 5 years (not nearly in the same situation), I'm having a hard time imagining why you would refinance and take money out (and not the opposite, refinance and pay things down or pay off your mortgage completely).

A lot of the things in your post resonated with me, but seeing this in the comments really got me curious about your math.

Good luck with your endeavor!

I didn't need the cash out, but it adds a bit of a safety margin. Liquid cash gives you optionality. For example, if things don't work out as I hope, I could use that cash to try to buy another small business, or something like that. It would have been harder (or impossible) to refinance without a steady paycheck, so I planned for that while I still had the job.

My mortgage interest rate is 4% and I've put the cash I've withdrawn in short term US treasures at 2.5%, so that cash is only costing me 1.5%.

Another reason I did a refinance was that when I bought my house I had only been in the US for 2.5 years and my credit score wasn't great (in the 600s IIRC). I could only get an 5/1 ARM loan that was about to start becoming variable at a higher interest rate.

Wow how much nanny-ing are you getting for $2k a year?

Those are monthly costs

>In Seattle Washington? You'd have an extremely hard time making ends meet on $75K, it certainly isn't "generous."

Renting an 1800 sq ft 3 bedroom house is $40K/year. That leaves $35K. Per month that's almost $3000.

If you are having an "extremely hard time" paying for everything else with $3000, you may want to reevaluate your lifestyle.

I'm not saying it's a fantastic lifestyle, but it's not a poor lifestyle. You'll still be able to afford a lifestyle better than most of the country.

I agree with you but grocery and other essentials bills itself comes out to be $2000 per month for family of 4. If you don’t care about organic food shopping, specific brands for quality and relying heavily on Wallart then it is possible to lower this at $1000. The eating out lunch at work itself is usually $300. Phone + cable + internet bills in family would add another $300 even when you haven’t upgraded in 4 years and so minimum TV subscription. The cost of gas and 2 car maintenance + insurance easily adds up to $500/mo. Replacing car, even mid end, adds another $500/mo for next 5 years. Computers, house maintenance (essential servicing) etc will add another $300/mo spread out. We haven’t yet got to various other utilities, schooling, dentist, optometrist etc.

I suppose bare minimum essential is probably $1000/mo but if you set needle to little above middle class but way below “rich” (which is not same as median) then $3000’for “everything else” is not sufficient.

You'd have an extremely hard time making ends meet on $75K

That isn’t much less than the median income in Seattle.

It's generally a bad idea to buy a house, so I don't really see how the median home value is relevant.

>It's generally a bad idea to buy a house

Why's that?

I live in Seattle, none of my friends work in tech, none of them make anywhere near 75k, try cutting that number in half. They aren't living in condos in cap hill with the other high earning tech folks but believe it or not they aren't struggling to eat at night either and live comfortable fulfilling lives.

I get that everyone's priorities are different, but I'm always amazed that ultra high income earners don't do this (this being live well below means, invest the rest in index funds then go work on passion projects, hobbies, focus on family). Lifestyle inflation and projecting status is a pricey hedonistic treadmill that is ultimately unrewarding.

People get addicted to the power that resources bring. Buying things because you like them, eating whatever you want whenever you want (and not having to travel for it), the ability to follow whims and flu around the world.

The problem there is you’re just responding to whims, and everything will start to feel the same.

lifestyle creep is real

Most people that make a lot of money probably like their jobs. It is probably quite difficult to get really good at something you don't actually like doing.

Lots of people used to taking home 275k aren't going to transition well to 40k which depending on where you live could feel like you are only slightly above poverty level.

yeah, going up is obviously fine, but it quickly becomes your new normal. Going back down is...painful.

Even for simple things. I grew up without A/C in an apartment with leaky windows that would get way too cold at night. Never bothered me. I was used to sweating a lot in summer and using a lot of blankets or standing by the oven while we were making dinner in winter.

Today? The moment the temperature is a little off I WANT TO DIE. I can't get any work (or anything really) done, and I'm likely to get sick. Im a wuss now. Central air/heat (or heated floors if we're gonna get fancy) or I'm sad. My young self from 30 years ago would laugh his ass off at how useless my current self is. Wealth can spoil you really quickly.

A good balance between risk and returns is often considered to be 10% annualized. Annual comfort living expense for family of 4 is at least $120K net in most urban areas. Adding taxes, your gross would be around $150K. So $1.5M in investment is often considered good in theory for achieving financial independence.

The big issue however is that returns are averaged over long duration and so on some years you can end with as little as 2-3% or even negative. So you need to have 25-50% cushion to ride out bad turns in economy where you will be eating up principal itself. This is also important for any unforeseen circumstances such a medical issues that might rack up huge out of pocket (especially in US). Or children leaving for college needing to pay as much as $50K in tuitions. You also need at least 6 months of buffer ($50K) in case some bad event triggers losing your investment, for example, someone trying to to sue you. Given all these more practical investment asset size is $3M for financial independence.

Wait, are you saying that 10% is a safe withdrawal rate? There's been a ton of research on this, and most analyses come up with 3-4%.

Is your "$40K" number from the so callled 4% rule?

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