Sure it seems that way now, but what happens when a volcano appears under their house and it floods with lava? Or they go to war with the elves?
Remember: Build a man a fire and you keep him warm for one night; light a man on fire and you keep him warm for the rest of his life.
I hope so, but it is amazing how quickly one can burn through money by making foolish choices. Or just being unlucky. I can’t be the only one who remembers esr being worth tens of millions on paper, then losing basically all of it.
IIRC the stock price fell quite a bit before he could sell.
...which was entire reason for Steam release in the first place
One paramedic prices having a heart attack at about $400k pre-insurance† (or no insurance). Check those limits on your plan...
† Healthline has an article with another example from 2012 priced at $500k
The ACA does prohibit these limits for certain "essential health benefits", but there's a lot of wiggle room that insurance providers will take advantage of.
In actual health insurance, there is no longer a coverage cap. So you don't need a backup insurance plan past 5M or somethign anymore.
They deserve it absolutely but $2M each does not put them in a position of "fuck you" [1].
A 4 or even 3 percent withdrawal rate is more likely to be sustainable. Those are also rates I see suggested more commonly on retirement planning sites.
So, yes, $2m should probably be modeled at about $80K income per year before taxes without touching principal but without building savings.
(May be somewhat higher with higher interest rates/inflation.)
My understanding is that annuities provide in general a worse return than the so called 4% rule on average.
There's a whole active debate around exactly what numbers are sufficiently safe over what time horizons and what portfolio mixes. For a fun long read, see ERN's series on safe withdrawal rates https://earlyretirementnow.com/safe-withdrawal-rate-series/
I bet I'll see 5% within next 2 months. Obviously interest rate changes drastically over time.
The only real challenge is a portfolio mix and withdrawal strategy that minimizes the damage from withdrawing during downturns. That's where the 4% rule becomes relevant.
5% interest hasn’t been avail from a bank in a couple of decades, and the fact that we’re close to it again doesn’t mean it will stay that way…
You just can’t get a guaranteed risk-free return of that range indefinitely, which is why a lot of people shoot for 3-4% when they don’t have more capital to invest in riskier but higher return investments.
Edit: this also touches on a grievance I have with progressive taxation and annualized retirement savings. These guys might have been in a Lowe tax bracket for many years and be back in a low tax bracket depending on how sales go over the years. The one time they hit it home they are in the top tax bracket and can only max out tax advantages from retirement contributions for that one year. They'd be in a much better position in this regard of their income was spread out. The entire system is build assuming people earn pretty much the same year to year. Same for other self-funded founders with exits.
I do get a kick out of the idea that these guys basically revolve a lot of their life around developing DF. I wonder how much of their lifestyle could be legitimately expensed from a corporate account without any IRS hassle.
No kidding. I spent most of my 20s and part of my 30s working for companies without a 401k (several small startups or video game studios). I'd love to put in more than the max now to make up for it, but have to make do with just buying stocks without the tax advantage.
I think that if you're considered 'behind' for your current salary and age, especially significantly so (I bet a bunch of people here, even those 10 years younger than me, probably have 5-10x more in their 401k than I do), there really shouldn't be much of a cap on what you can put into your 401k.
Like the cap should just be a max total you can have in there based on your age, not a cap per year.
[1] https://newsletter.gamediscover.co/p/steam-the-state-of-long...
Asking for a married friend…
* Standard-deduction next year is $27,700 married ($13,850 single)
* Long-term-capital-gains is 0% on first $89,250 ($44,625 single)
Thus if you have the tooling to perfectly control your income, e.g. you take $27,700 in treasury bill payments and then sell off enough stock (or take qualified dividends from your corporation's bank account) in the total of $89,250, you'd end up with:
* Ordinary Income: $27,700 - standard deduction of $27,700 = $0 taxable income
* Long-Term-Capital-Gains of $89,250 = 0% ltcg tax bracket
= $116,950 ($58,427 single) of federally tax-free income
Then if you're in a no-income-tax state (such as WA, like the Adams brothers), you don't owe any taxes at all.
[1] https://www.kitces.com/blog/long-term-capital-gains-bump-zon...
Unless there’s another way you hand in mind?
That is exactly what "fuck you" money means. It's not about having so much money you couldn't possibly want for anything. People will always want. It's about having enough that you're not beholden to anyone for your basic needs.
https://www.youtube.com/watch?v=rJjKP8vYjpQ&ab_channel=Youtu...
I always thought it meant something like "enough money to tell literally anybody to go fuck themselves without fear of the economic consequences". But I did a little googling and apparently "fuck you money" is one of those things that doesn't really have a clear-cut definition. Which is weird.
In theory there is some specific dollar that you earn which puts you over the line into "fuck you" money. If you're a dollar away from financial independence, are you worried about saying "fuck you" to your boss? Hell no! Which must mean that you're already safely in "fuck you" territory.
So that the magical greenback--the one with the serial number ending in "FU"--must come way earlier. Maybe it's the buck that puts your bank account into five figures for the first time. Or the one that tops off your 6-month emergency fund. Hell, if the dollar that puts you in the dos commas club doesn't send a surge of "fuck you" power running through your veins... you might just not be the "fuck you" type.
First, you can't predict what will happen with the economy vis-a-vis your investments and cost-of-living. Sure there are rules of thumb, but depending your age and the current situation, assumptions like "I can perpetually do a 4% drawdown" may or may not be reliable.
Second, the ability to say FU to everyone is not a black and white decision. Perhaps you value earning more to live a higher lifestyle in the short-term, with some optionality to say FU if things go sideways. Other people might have been burnt and would rather live a life of poverty than be forced to capitulate to The Man one more time. In the immortal words of Lawrence from Office Space: "you don't need a million dollars to do nothing". Most people probably fall somewhere in between.
And last but not least, declaring financial independence raises new existential questions which people may not be ready to answer. Having a job gives a baseline social connection and sense of communal utility. To actually declare financial independence poses a risk of alienation, which may have no upside once the immediate threat of short-term dependence on one's employer is removed.
It is about significantly improving your economic baseline, your p90 negative outcome. You can be making a million dollars a year and still be needy as hell. You need to keep your job, need to your investments stay up, need interest rates to stay down. If you're leveraged, there's a decent chance you'll go broke on a long enough timeline. And you'll always be partly aware of it. Your baseline is getting a job you hate so you don't go homeless.
If you have 2 million in the bank and don't leverage too hard, your baseline is being the average American while working 0 hours a week. You can do that until you figure out whatever is next, instead of sending out resumes.
"So, what the hell DO you do if you are unlucky enough to win the lottery?" https://old.reddit.com/r/AskReddit/comments/24vo34/whats_the...
It's got some dark news, but real advice that seems legit.
If you're going the Reddit route, at least link to /r/fatfire or /r/personalfinance
A competent business owner coming into a windfall this size is in a pretty good spot compared to your average rando off /r/askreddit~~
EDIT: Please disregard this comment, just left it here as a monument to my own jerkness
I saw "AskReddit", quickly skimmed and saw something along the lines of "Every lottery winner gets murdered by family", and jumped to the conclusion that this was your typical /r/AntiWork-esque "Mediocrity is good" viral post.
I think all the advice he posted about setting up trusts, buying index funds and treasuries, etc would fit in great here, on /r/fatfire, MMM or anywhere else.