Stories of Financial Windfalls
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My thinking is that it's probably a good idea not to change your lifestyle unless the windfall is, let's say, at least 2 if not 3 orders of magnitude more money than you'd normally earn in a year.
Probably not in terms of spending the money on stuff like cars or houses, but a common theme amongst people who have "smaller" windfalls (say $50K-500K) is a radical change in opportunity that no longer having to scratch out a day to day existence offers.
In my own case, I sold some technology for around $100K when I was otherwise close to broke and it radically changed what opportunities I had by giving me a runway and ultimately hugely allowed me to change my lifestyle for the better.
But if you are anywhere close to the peak of your earnings than two orders of magnitude (i.e. 100x) represents easily more than you can expect to earn in the entire rest of your career. One order of magnitude (10x) is likely to represent at least 1/4.
Why wouldn't that kind of optionality change your decisions?
That's pretty awesome, but it is not necessarily FU money.
But in the end that's neither here nor there. I'm happy to use your 28% of normal income for the rest of your life. Why wouldn't that change your lifestyle--whether that means working fewer hours, buying more things, planning to retire earlier, being more charitable, whatever it is I don't see why it wouldn't have any impact.
It definitely has an impact, but if you use it to retire earlier, it would shave about 10 years off of your projected retirement time. so the impact it has will be some years down the road.
In my case, I had a fairly similar thing happen---about ten years of income earned over two years---because my non-day-job income is highly variable. I was able to endow the next 20 years of my charitable giving, support several elections that I wanted to contribute to, and plan to retire about 10 years earlier. Lovely impact, but it didn't substantially change my day-to-day life. The only thing I did that I probably would not have otherwise done was to buy a new car instead of trying to have my old one repaired one more time.)
Assume a safe withdrawal rate of 4% [0]. With a windfall of 100x your anuall salary, this is sufficient to quit working and still quadruple your annual income.
[0] Historically, this is enough to maintain your inflation adjusted principle.
...as I eye my bicycle which is also missing a chain guard from the Schwinn factory but if I cared about getting a "windfall" all that much I'd have sued the girl who bought that bike as a replacement to the one she destroyed when she hit me with her car.
My mother recently passed away. I was just thinking I should find some stories about what others have done for inspiration.
These are anything but inspirational. They’re just dumb.