Curious to know the ideal net worth for retirement? As someone semi-retired in 2012 at age 34 with $3 million, let me tell you. $10 million sounds like the ideal amount of money to retire with. With $10 million in investable assets, you can easily generate between $300,000 – $500,000 of low-risk investment income. I know because my net worth is now in the eighties figures, partially thanks to a prolonged bull market.
I was talking to a tennis friend of mine who said his sister checked out once she cleared 10 million dollars. She was 37 when she decided to quit her job and go on an Eat, Pray, Love journey to Southeast Asia. She had made a bulk of her fortune as an early investor in an internet consumer company.
My friend and I then got to talking about other people we knew who checked out in their 30s and 40s. They too, had cleared over 10 million dollars in net worth or investable assets. They had all been early employees at successful startups. Or they had risen up the ranks at a big tech company while holding a lot of shares.
Even a 30-year-old softball buddy of mine who worked at Uber said he's shooting to have a $10 million net worth before he retires.
As a personal finance blogger and author of Millionaire Milestones, I subsequently got to thinking: Is 10 million dollars the ideal net worth amount for retirement? Is 10 million actually the new one million due to inflation? Nah, that is too extreme and $3 million is more appropriate. However, it sure seems like more people are shooting to retire with $10 million.
Invest In Real Estate To Build More Wealth
In addition to investing in stocks for retirement, also invest in real estate. Real estate provides the powerful one-two punch of principal appreciation and rental income growth over time. Fundrise manages over $3 billion in private real estate investments, mainly in the Sunbelt region where valuations are lower and yields tend to be higher. With the Fed embarking on a multi-year interest rate cut cycle, there should be increased demand in real estate in the coming years. I've personally invested over $300,000 with Fundrise so far.
$10 Million Is A Top One Percent Net Worth
10 million dollars is a lot of millions. If you have a 10 million dollar net worth or higher, you have a top one percent net worth in America. Therefore, if you can't retire off 10 million dollars comfortably, you've got some serious problems!
The sad part about wondering whether 10 million dollars is enough to retire comfortably is that plenty of people who make a lot of money still go broke. Just look at so many ex-NFL players who end up with very little soon after their careers are over. The reason why they end up broke is due to a lack of financial education.
Good financial education will compound on itself. It will pay dividends for years to come. One of the main reasons why I've consistently been publishing on Financial Samurai since 2009 is to help people reach financial freedom sooner. We've only got one life to live and schools aren’t willing to impart any personal finance wisdom.
For fun, because this is what personal finance enthusiasts do, let's discuss whether 10 million dollars is the ideal net worth for retirement. Of course, we can always retire with less. Most have. But where's the fun in that?
Retiring With 10 Million Dollars: The Ideal Net Worth
Intuitively, we know that retiring on 10 million dollars should be no problem. But let's look at the numbers.
The composition of the 10 million dollars is important. After all, you might have a 10 million dollar net worth, but six million of that may be tied up in your mega-mansion! This is why people it's a mistake to just think all you need to do is have a net worth equal to 25X your annual expenses to retire early. It's not that simple.
Ideally, you want your entire 10 million dollars to be invested in 100% income-producing assets. Therefore, let's take a look at how much 10 million dollars can produce in this low interest rate environment.
How Much Income $10 Mill In Investments Can Generate In Retirement
Back in 2007, when the 10-year bond yield was at 5%, 10 million dollars could have generated $500,000 a year in risk-free passive income.
Living off $500,000 a year will provide for a very fine life. Of course, some households might still feel like they are scraping by. But not you!
You can live in a big fancy house, pay private school tuition, eat whatever you want, fly first class, and even fly private on occasion. You can also eat all the toro sashimi and Kobe beef you want. Yum!
Unfortunately, 10 million dollars today generates a lot less. At one point, during the pandemic, the 10-year bond yield was only at 0.6%. In other words, your $10 million could have only generated a measly $60,000 risk-free!
Thankfully, today, the 10-year bond yield is back to ~4.2%, meaning your $10 million invested can generate $420,000 a year in risk-free income. Not bad, but no longer a top 1% income, which now starts at over $650,000.
Therefore, even with 10 million dollars in investable assets, you've still got to pay careful attention to how your capital is allocated.
Loading ...More Risk Required To Produce More Income And Wealth
$400,000 a year is a healthy amount of risk-free retirement income, especially if you don't have any debt. However, if there's more than one of you to support and if you have surprise costs, such as a big medical bill, perhaps it might not be enough.
What's the solution? Take more risk with your 10 million dollars by trying to earn a higher return. I don't recommend reaching too far for yield. Reaching for 5%-7% yields or returns is the most I'd go for. Remember, with 10 million dollars, you've already won the game! You don't want to risk losing it.
Further, with stock market valuations so high, returns could come down in the future. Stock market crashes happen all the time. Once you've got over $10 million, your goal is to protect it at all costs.
Just imagine being all-in on dividend stocks before the March 2020 sell-off. You would be pooping bricks if your portfolio declined by $3.2 million in just one month! As a result, most multi-millionaires are highly diversified.
Sure, things are fantastic now. However, when you are retired, you should have no desire to create unnecessary heart attacks. Your goal is to live as long and as healthy a life as possible.
Here are some investment ideas that have the potential to generate higher yields with a reasonable amount of risk.
- A REIT ETF like VNQ, which has a yield of ~2.7%
- Investing in individual REITs like O, which has a yield of ~4.5%
- Private real estate funds, which have historically returned high single-digit yields, even during stock market sell-offs
- Investing in individual dividend-paying stocks like AT&T with a forward yield of ~7%
- Investing in a dividend ETF like VYM with a ~3% yield
- Buying rental property
- Lending out hard money (not a fan)
- Buying an annuity (not a fan either)
By taking more risk, your 10 million dollars could conceivably generate $500,000 – $700,000 in retirement income. If so, you should be able to live well for the rest of your life.
The one thing I must caution is having a retirement withdrawal rate much higher than 2X the risk-free rate of return. As we've seen during previous periods where low interest rates stayed low for an extended period of time, asset bubbles can form and then burst.
Therefore, don't just assume your risk assets will always go up. They may, over a long enough period of time. But in the long run, you might also be dead.
Further, I'm assuming all of us with 10 million dollars would like to leave some money to charities and people we care about. Every person I know with $10 million wants to create a perpetual giving machine after they are gone. Having generational wealth also reduces your anxiety for your children’s future as well.
Ways To Make Your 10 Million Dollars Go Farther
If you don't want to take on more risk, the next best way to make your ten million dollars go farther is to lower your cost of living. Since you're no longer tied down to a job, you could relocate to the heartland of America to save on living costs.
Ten million dollars in New York City may be like having 30 million dollars in Des Moines. If you can bear the weather and the more homogeneous environment, off you go to Iowa! Besides, the weather in New York City isn't much better. But if you're coming from San Diego, LA, or SF, then moving to the MidWest may be more difficult.
See the minimum net worth levels required to feel wealthy in various cities. The biggest surprise is how high of a net worth is required to feel wealthy in low-cost cities such as Dallas, Houston, and Chicago. The other surprise is how much more financially satisfied residents are in expensive San Francisco.
Just the other day, I was playing tennis in 64 degree sunny weather while supposedly another Nor'easter was happening. It's during the winter months where California and Hawaii really outperform.
Once you've made your retirement fortune, it makes sense to geoarbitrage if you want to feel even richer. Some retirees have relocated to different countries like Mexico or Malaysia to save on living costs. Then again, if you have 10 million dollars, you probably don't have to go anywhere to save.
I strongly believe investing in 18-hour cities through a platform like CrowdStreet, which specializes in 18-hour cities, is a smart way to boost income and wealth. If you can generate 8% – 10% returns with $10 million, we're talking $800,000 – $1 million a year. Of course, there are no guarantees the greater you go on the risk curve. Therefore, building a diversified private real estate portfolio and carefully vetting each sponsor and deal are important.
More Ways To Stretch Your Money
Another way to get your 10 million dollars to last longer is to not touch it for longer. Instead of retiring before you're 60, wait until your 60s or later. This way, you allow your 10 million dollars to compound for longer and potentially grow even bigger.
The earliest you can receive Social Security is age 62. If you've been able to amass 10 million dollars in net worth or investable assets, you likely paid the maximum FICA tax for at least a decade.
Therefore, you should be able to also receive the maximum Social Security benefit a month of $2,324 if you collect at age 62 or $3,895 if you elect at age 70.
Of course, if you retire with a pension on top of your 10 million dollars, then you should be set for life. If you have a pension, please count your lucky stars. Its value has gone way up with a decline in interest rates.
Earn Side Income In Retirement
By now, we should all agree that 10 million dollars is enough to retire well. However, I still suggest generating additional side income in retirement to ensure your capital will last for another generation. Earning side income also brings about a sense of purpose.
When I “retired” in 2012, I experienced some negatives of early retirement nobody talked about. Thanks to Financial Samurai, I've found something fun to keep me busy, especially during this damn pandemic. This site has helped with my mental health and happiness.
This site generates a decent amount of supplement retirement income. However, only one source of online income is passive: my severance negotiation book, which gets updated every couple of years. Writing articles, responding to business development inquires, and doing interviews takes time. At least I limit this time to 15 hours a week. I enjoy writing, which is why I continue to publish three times a week on Financial Samurai since July 2009.
If you don't want to make supplemental income online, you can always do some freelance consulting, gig economy work, tutoring, or coaching. The opportunities are endless to make extra income. Just beware that going back to work after retiring for years can be really tough. First, you'll have a difficult time finding decent-paying employment. Second, if you find employment, you may have an even more difficult time staying employed!
I decided to return to part-time consulting in November 2023 in anticipation of filling a void once my four-year-old daughter goes to school full-time. However, I could only last four months because I had a micromanager and didn't enjoy all the meetings.
At least the experience made me better appreciate all the freedom that I had as an early retiree.
Retiring Early With 10 Million Dollars With A Family
Now that we know 10 million dollars can generate between $300,000 – $500,000 a year risk-free without the help from Social Security, let's go through a budget. Let’s stay conservative and say 10 million dollars can generate $250,000 a year in relatively low-risk retirement income.
This $250,000 budget is for a household of four with two young children living in big city like Los Angeles. Both parents have decided to retire early in their 40s to take care of their children until they never come back.
The couple made their money working at six-figure jobs for 20+ years. During their careers, they averaged a 40% after-tax saving rate. They invested the majority of it in various investments that produce income.
Budget Thoughts With $10 Million Of Investments
As you can see from the budget, $250,000 a year can go pretty quickly when you have two kids and a mortgage. Good thing their mortgage is only $500,000 on a $2,500,000 house.
If the couple paid off their mortgage, they would save $24,492 a year in cash flow. Having this extra breathing room would be nice because there's not that much extra to cut.
If the couple decides to send their two kids to private grade school, their costs will increase by $30,000 – $110,000 a year for 13 years. And when you have a net worth of 10 million or 10 million dollars in investable assets, you will likely want to send your kids to private school.
Once their kids are done with college, they will free up another $30,000 in cash flow by not having to contribute to two 529 plans. If saved properly, the two 529 plans should be able to pay for most of their children's college expenses.
Lest you think this $10 million / $250,000 budget is not based on reality, I've spoken to a handful of couples who have similar amounts of wealth and budgets.
In fact, my friend's sister who checked out at 37 with 10 million dollars has budgeted to spend $175,000 a year. She's focused on capital preservation after hitting it big. Here are some thoughts on what to do with $10 million if you so happen to have a nice windfall.
Retirement Will Be Different Than You Imagine
One of the great things about retirement is that you no longer need to save for retirement. Therefore, psychologically, your retirement income will go farther than you think.
For example, I saved 50% – 75% of my after tax-income from 1999 – 2012. Then I left the workplace for good in 2012. Once I left work behind, the income drop didn't feel so bad. I was only spending less than half of my income for 13 years anyway.
Everything was going great in retirement from 2012 – 2017. My wife joined me in retirement in 2015 when she negotiated a severance as well. We travelled the world for 10 weeks a year. Then we decided to start a family.
We decided to buy a larger house, a safer car, and save for our children's education. If our kids decide to go to college in 2036+, surely college tuition will be at least 100% higher.
As a result, the passive income that I thought was enough wasn't. Therefore, I had to figure out ways to make more. In fact, going back to work is definitely in the cards now that our kids are in school full-time and college costs continue to grow aggressively!
Don't expect your lifestyle and your expenses to stay static once you retire. You might have kids late like we did. Or, god forbid, you might get into an accident or have an expensive recurring health issue.
$10 Million Should Be Enough To Retire Happy And Free
If you've been able to accumulate $10 million, congratulations! You should be able to retire with little-to-no financial concerns. Go ahead and enjoy life to the maximum today. You're ahead of 98.5% of the American population. It’s not 99% because a top 1% net worth is now over $13 million as of 2024.
If you're still on your journey to financial independence, trying to accumulate a $10 million net worth or $10 million in investable assets is a worthwhile goal. Just know that even with so much money, you probably should continue to invest due to inflation.
And if you get to the magical $10 million net worth mark, here are profiles of households who have over a $20 million net worth. You'll get to see how they did it and whether they are happier. Hint: they aren't.
With a top 1% net worth, I highly recommend you track your finances like a hawk with the free financial tool by Empower. I've been using it since 2012 and have seen my net worth skyrocket during this time. Link up your financial accounts and do a deep-dive review.
Think about yourself as a mama bird sitting on a golden egg. The last thing you want is some vulture swiping away your baby. The more money you have, the more you have to lose. Therefore, diligently tracking your net worth, especially if you have 10 million dollars or more, is important.
Spend Your Wealth With Joy!
One last thing. Retiring with $10 million is still under the estate tax exemption limit of $13.99 million per person in 2025. Therefore, you can feel comfort knowing your heirs don't have to pay an onerous 40% death tax on capital you already paid taxes on. Further, you have plenty to donate more freely to charities you really care about.
I realize reaching a $10 million net worth or having $10 million in investable assets may sound like an unsurmountable goal. However, with so many investors making great fortunes from this bull market, maybe it's much more feasible than we think.
Now wasn't this retirement exercise fun? Good luck building your fortune! And if you just can't get your head around accumulating $10 million, then shoot for $5 million. It's amazing how much easier a challenge gets once you make a very big stretch goal.
Loading ...Build Wealth Through Real Estate
Every person I know with a $10 million net worth or more is heavily invested in real estate. Real estate is my favorite way to achieving financial freedom. It is a tangible asset that is less volatile, provides utility, and generates income. High inflation also acts as a tailwind for rent and property prices.
Take a look at my two favorite real estate crowdfunding platforms. They are free to sign up and explore.
Fundrise: A way for all investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and manages about $3 billion for over 350,000 investors. For most people, investing in a diversified real estate fund is the most appropriate way to go. With only a $10 investment minimum, it's easy to dollar-cost average into Fundrise as I have done since 2016.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. They also have higher growth due to job growth and demographic trends. For those with a lot of capital, you can build your own select fund with CrowdStreet.
I've personally invested $954,000 in 18 commercial real estate projects across the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$300,000. Real estate is the ultimate inflation hedge, and will help you reach the ideal net worth.
Both platforms are sponsors and Financial Samurai is currently an investor in Fundrise to the tune of ~$300,000.
Invest In Private Growth Companies
In addition, consider investing in private growth companies through a fund. Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment.
One of the most interesting funds I'm allocating new capital toward is the Fundrise venture capital product. It invests in:
- Artificial Intelligence & Machine Learning
- Modern Data Infrastructure
- Development Operations (DevOps)
- Financial Technology (FinTech)
- Real Estate & Property Technology (PropTech)
Roughly 65% of the product is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!
The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. In addition, you can see what Fundrise is holding before deciding to invest and how much. Traditional venture capital funds require capital commitment first and then hope the general partners will find great investments.
I've personally invested $155,000 in the Fundrise venture product to gain more exposure to private growth companies. It's the easiest way to do so.
Order My New Book: Millionaire Milestones
If you’re ready to build more wealth than 90% of the population, grab a copy of my new book, Millionaire Milestones: Simple Steps to Seven Figures. With over 30 years of experience working in, studying, and writing about finance, I’ve distilled everything I know into this practical guide to help you achieve financial success.
Here’s the truth: life gets better when you have money. Financial security gives you the freedom to live on your terms and the peace of mind that your children and loved ones are taken care of.
Millionaire Milestones is your roadmap to building the wealth you need to live the life you’ve always dreamed of. Order your copy today and take the first step toward the financial future you deserve!
Related posts on becoming a millionaire and retirement:
How To Become A Millionaire By 30 – My financial journey in my 20s.
How To Become A Millionaire By 20 – If you want to instill in your children a strong work ethic and make them financially independent sooner.
Your Wealth Is Mostly Due To Luck: Be Grateful! – You know it's true.
For more nuanced personal finance tips and advice, join 70,000+ others and subscribe to my free weekly newsletter. I've been helping people achieve financial freedom since 2009.
I’ve made it! I’ve been working for some time to be able to post to this thread. Last week I joined the $10M net worth club. Sam, I wanted to thank you and the community you have created. At times, you’ve reaffirmed my thoughts, challenged my beliefs, exposed me to new financial concepts and revealed a glaring blind spot. Your writing style makes every concept accessible to people like myself without a formal financial background. I am very grateful for this community of like minded individuals looking to better their family’s financial situation. The site is largely absent of the vitriol typically found on sites. Again, thank-you and the best to you and your family in 2024!
Depends how old you are. Both my wife and I are retired. We don’t need more than $100K to live well. Our SS income amounts to about $70K. Given that we only need $1-1.5m to create cash flow to do fine. $10 million is a nice goal worth pursuing but whether we reach it or not within the next couple of years is completely irrelevant. So it all depends old you are and what lifestyle you need to support.
True. $70K a year in pre-tax Social Security income is great! Did you know there are over 30 states that don’t tax Social Security benefits? Might be strategic to move there if you are looking for a change.
We both retired past SS full retirement age (66) and worked while collecting Social Security so it grew not only because of COLA but also because of contributions. Even in retirement we may fall again in the the 35% bracket due to large investment income (our RMD could add additional $120K), which is a curse because we don’t need it but have to pay taxes on it. Because of high Medicare and prescription surcharges we lose more than $13K upfront. We have moved our primary to Florida already so we won’t pay state taxes on SS and other income. That should save us about 10-15K in state taxes.
liked most of sam’s ideas. think his living expense chart is to low. in reality most families have at least one child needing extra help. there are many items becoming much more expensive. in texas my home insurance on 750000 house is 6500 as an example.
52 here, net worth (today lol) $11.2 million including house no mortgage. About half NW in cash T-bills averaging about 4.3% and overseas banks (my wife is non-American) averaging 8.1% this year (although I’m taking currency risk). Other NW half in big cap stocks/IRA/HSA/529s. Married with 4 kids ages 3-9. Passive interest and dividend cash income will be about $350k this year but expect that to go down 30% next year.
We hit it big selling our small business 2 years ago. Haven’t been working since. Been quite frugal buying a home (bought far under what we could have, mixed feelings about that lol), new Hondas bought with cash no luxury cars. Decided to put all 4 kids thru private which will be a material commitment, $40-70k/yr depending.
Haven’t been working, but starting to itch to do something productive again for fun and profit. Can’t even imagine getting a job again where a boss-man tells me what to do — unthinkable lol. Gotta get started putting some capital into income-producing real estate.
I can’t shake the anxiety that $11 million won’t be enough to last us and give an inheritance for our children. Really gotta get more passive income going. Wouldn’t mind starting another business, but not sure up to the commitment with 4 young children.
Congrats! Well, the estate tax threshold this year is $12.92 million per person. So given you are almost there, maybe do some consulting to help me you feel more secure.
Generational wealth does help in reducing anxiety.
Congrats on breaching 10 million!! it is a massive milestone.
However, given you have a family of 6 with 4 young kids, i feel even 10 million is not enough to give you a completely worry free life.
To raise a family of 6 comfortably in America takes easily $500,000 a year.
With 10 million dollars, you would most certainly want to send your kids to private school. That’s easily $120,000. Extracurricular activities, summer programs/camps. That’s another $40,000.
So education for four would eat up 160,000 a year (after tax).
Living expenses for 6 people is easily $10,000 a month (food, clothing, fuel, entertainment), or 120,000 a year.
Insurance for 6 that’s about 20,000 a year.
So we are already at $300,000 in after tax expenses. (or 500,000)
This doesn’t even include family trips, and one time expenses that come up constantly.
And provided that you don’t want to dip into your nest egg, you still need to save for the future, education expenses will only go up. a 4 year college is now $80,000 per year. By the time your kids go to college, it will be in the 140,000 a year range. And those kids will need to get married.
It sounds to me that to sustain a $10 million dollar lifestyle in retirement, you will need about 20-30 million.
Once you retire, you don’t need to save a retirement anymore. Also, by the time you reach traditional retirement age, these kid expenses, go away down as they become independent adults.
How many kids do you have and how much do you spend on them per year?
i was responding to the original poster. He said he is 52, with 4 kids, aged (3-9). Education expenses are very much a thing for people who opt to retire early.
In my opinion, when a person is retired, they should continue to try to grow the nest egg in the event that they don’t die on schedule. What if they live to 90? What if they live to 100? What if they live to 115? What if they are a freaking medical miracle, and live to 130?
You plan for the “worst” case
OP here. Our expenses nowhere near that high. We’re not in a major metro. Excluding buying two cars, our TTM expenses under $250k/year. That includes absolutely everything — kids’ private, food, overseas travel, property taxes, clothing, home furnishings. 4 kids’ private running about $50k/year which isn’t bad. We live well, but not extravagantly.
NW >$13m now thanks to the market. 4% annual withdrawl assumption yields $520k/year to live on. We’re under half that so I think we’re good.
Have a modest passive income from interest and dividends too.
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Hello,
10 millions it’s good, but don’t forget than for the moment it’s a chance to United States, that there isn’t of “Wealth Tax” on your Patrimony, I saw recently maybe a day the UHNWI will pay this.
It’s really different in Europe : France, Spain,…, Swiss, the “high patrimonies” pay the “Wealth Tax” who added at the “Incomes Tax” (idem concerning the succesions “inheritances”), it’s the double or triple penality.
By example, in France for only 1,35 million dollars of patrimony, you must payed this “Wealth tax”.
Hope than this tax don’t arrive never in your country.
The first $12.06 million of your net worth / estate is tax free upon death PER PERSON. The threshold might go up or down over time. But it’s pretty darn high!
I hear you on France though. But at least you guys have affordable healthcare and some happier!
Thanks SAM for your reply.
You’re right, no country or governance is perfect, they all have their flaws.
I’m not against pay this tax and wish the sharing of wealth, but really since 10 years now, many wealth people have left the France and his arrogance, I plan to do it myself.
Who knows maybe to join Monaco, the United States or others…
Thanl you still for your interesting article.
My investor clients want to achieve more than $10m, keep buying real estate investment properties and create unlimited happiness!!
Haha, will do. But the property taxes, and the maintenance headaches I think will eventually get them. I’m more focused on a simple life now.
I’m 51 years old and my annual income from my job is about 150K. My net worth varies quite a bit because almost all of my money is in the market. A few lucky buys into some tech stocks over a decade ago, as well as the Fed’s irresponsible money printing, has done me well. Last November, NW was 17.5M, but after the recent market fall, it’s now a little over 13.5M.
I’ve been frugal, saving, and investing since my teenage years and these habits have done me well, but I also feel like it turned into a mini penny-pinching scrooge. It is like a hard-to-break habit. Lots of financial books and sites are good at describing how to make/save/invest money and how to generate money from your assets. But there’s not a lot of info on how to do responsible/conscious spending or break out of the frugal mindset to enjoy what I’ve created.
It is hard to break the habit. I’ve written about this subject in my new book, Buy This, Not That.
Here are some other posts:
No point making money if you don’t spend it
The best decumulation age so you don’t die with too much
Interesting post – 10 million ouch. I will be 69 this year. unfortunately had to retire early because of a disability. Wife will retire next year – she will be 67. I do collect 24k in social security – wife will collect 44 k she will wait until age 70 but our assets (not including home) is 4.3 million all invested in stocks bonds and cash 40/50/10. Our expenses are about 100k a year.
So we will need to draw 80k a year until wife reaches age 70 (3 years )
Now to make the money last – glad the withdrawal rate is up
Hi folks, actively debating something and would love your POV. Just sold a company to FAANG, will be vesting over next two years. At current stock prices (big if), in two years, NW would be 5M in NYC or 5.7M in Miami. I’d be 31 then.
I’m debating whether to move to Miami or NYC. If taxes were no object I’d do NYC. However, taxes are obviously an object and I’m not to keen to work at FAANG for another 2 years after.
How should I think about this?
It sure is nice not to pay so much in taxes. If you enjoy Miami, I’d go on the adventure!
Hello,
Love this website. I am very grateful for what I have so there is no complaint whatsoever here. I simply want to get an opinion of my situation. I just turned 50; my wife and I have no kids. We roughy have a $6.5mm stock portfolio and a $10mm property portfolio (including my own residence of $3.7mm). Our mortgages all together are about $5mm.
I have a job that pays me $1.2mm and I like my team and the day to day work. But it’s a large company and I hate the politics and direction it is going. I can stay for a few more years and retire. Or I can quit now and find something that may pay less but I have more enjoyment, adventurous and freedom.
Our lifestyle is comfortable with a few luxury items once in a while. We certainly don’t need to fly private or have Gucci or Hermes everywhere. All the rental incomes roughly cover mortgages expenses and real estates taxes, so I can’t imagine I need to spend $300k pretax or $200k after tax a year.
So if you were me, 1) stay in this comfortable job or 2) retire from the corporate life and do something fun.
Many thanks,
Daniel C
At 50, time is getting much more valuable. Life is too short to not enjoy what you do. I say find joy and spend more of your wealth!
Many thanks, Sam! I will keep you posted.
Daniel… myself 54, similar financial position ans spending as you have. I jumped the ship 2 years ago, launched a small start up with and idea I had… work maybe 50% on it. Other than that…enjoy live more… I go skiing when there is fresh snow and sun etc,,
Also recently lost my mother but I was able to spend a lot of time with her during her last month… invaluable.
So my advise…leave the “comfortable” job behind… I haven not regretted a day “out of the office” yet.
Best
U
Awesome…. i am pulling the trigger after one year posting on this. :)
Daniel
Sounds good! Let us know how you feel after.
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You can check out my podcast on Apple as well.
Thanks, good luck, and enjoy your wealth!
Be done with the stress and frustration of your current job. Freedom of time is real wealth. You are a productive hard working individual. Once you have some time to rest and recover you will be revitalized. Rediscover who you are; eat well, sleep well, exercise and learn. You will open a new chapter and, it may be the best most rewarding of your life. Andrew Carnegie believed that a man’s most powerful, productive decade was 50-60 years of age. You are 50, go for it!!
Thanks for the reminder about age 50!
I’m planning on re-retiring or at least taking things way easier this year. I’m turning 45 and need a break.
Maybe I’ll do a 5-year break and come back at 50!
Let’s enjoy the YOLO economy while it lasts.
NEED ADVICE
Background:
I am a 39 year old, white male, married no kids, living in New York city. I have been in finance for 16 years working on an equities trading desk at an investment bank. I am thinking of quitting my job to try something new (either in Tech or Crypto)
Between 2013-2019 I averaged $1 million per year in W2 income (pre-tax). I saved the vast majority. I purchased 3 properties + invested in a handful of startups and maxed out my 401k since 2006. I have a net worth of ~$10M after debt. Asset base is mostly real estate with low interest rate debt + multiple 401ks and private equity exposure. Our burn rate is about $180k per year (i feel like we live a very comfortable lifestyle)
i have two side hustles: 1 real estate and 2 crypto. We have 3 homes (2 rentals + 1 primary). The two rentals generate about $400k in gross rental annually and $200-$250k after expenses.. I have been a crypto hobbiest since 2016. Have made decent money in the space (About $1M-$1.5M) but want to focus on it more.
PROBLEM
I have HATED my job for the past 6 years but stuck with it because it was paying so well. That recently changed.
The last two years my W2 salary has dropped from $1M to $600k largely due to automation. After tax and including inflation, my W2 is down over 50% compared to 2017. However, the hours worked havent changed. I still work 60-70 hours per week doing something i hate and Im getting paid less than half what i used to make.
Furthermore, my W2 as a percentage of net worth has dropped considerably. (after tax W2 / NI = 3-4%). Back in the day when i was just starting out, a $400k bonus (after tax) was life changing. At this stage in my life, that bonus of $200k makes less of an impact. Plus I am missing the boat in tech + crypto as that is just my side hustle.
The last 3 years, my assets grew and real estate hustles have generated more than my full time job. The rental income along is 70-80% of my W2 income after adjusting for taxes.
I have two options
1) Stay in a job i hate making $250-300k after tax in an industry that is a melting ice cube and eventually get laid off in 2-3 years
2) Take a 40-50% pay cut to roll the dice and enter the crypto space full time. Might not make money the first 1-3 years but long-term believer.
My wife supports me leaving my W2 but demands i have something lined up before pulling the trigger. However, that is extremely difficult working 70 hours a week + multiple side hustles.
What do you guys think is should do!??!
Thanks in advance!
I AM A HUGE FAN of this website and the COMMUNITY around it. Wishing everyone a happy and healthy new year!
With a $10M net worth at 39, I would for sure roll the dice! Life is too short to hate what you do with that level of net worth.
If you negotiate a severance, like I did, it makes taking a leap of a faith so much easier.
Thanks Sam! i already downloaded your book and read it. great advice. however, i think its going to be harder for me. The good news is, i would be leaving less money on the table if i leave bc defferred comp has gone down a lot.
Thanks for the reply!
We’ve got a very similar path, except I love my job in trading. I can see myself staying for years, especially if I continue to make a few million a year. I quit when I was 33, thinking I’d get deeper into real estate and crypto, but realized I really missed working on something that I can actually add a lot of value and command respect. I returned after a 1 year break, admitting that it taught me a lot about how I’m not looking forward to retirement and being past my prime. However, I’d leave the second I ever say I hate the job.
You have one life. Do not spend it doing something that you, in the presence of a community that you respect, say boldly that you “HATE”. Frankly, your wife is completely wrong here. It’s impossible to focus on the next step when you’re spending 70hr with your head underwater doing something you can’t stand. It’s different if you needed the money, but come on, your withdrawal rate is sub 2%, you’re clearly capable having had success in your career/RE/crypto, and, perhaps above all, you do not have kids.
Good luck!
You have many choices and you are still young. While I am 56, we have a net worth (investable assets) of over 10.2 million. Still working at a job I don’t mind toooo much. I keep on doing it so my assists can grow. They should grow about a million more in 3.5 years. Sure you are making less then you did, but are still making great money. I am very conservative now, sold all my rentals and company. If I get a return over 3 percent it works for me. Good luck
What are the ways your friends are creating perpetual giving machines to improve their families?
I really love the content on your site! Thank you.
One thing I don’t get – it seems that you’re leaving inflation (3%) out of the target yield calculation. For instance – yes, with $10M and 1.5% risk-free yield, you do get 150K a year, but after 20 years you’d need to spend $263K per year to maintain the same life style. You’d in fact need a 4.5% yield investment to balance out.
Obviously, you know all of that – so what am I missing??
If you had 10m in investable assets, you would just borrow 400K per year against that portfolio at approx 3%. Loans are not taxable, so you avoid income or cap gain tax and you let your portfolio continue to compound at 5%+
There are other benefits as well, step up for estate etc.
So when do you repay the $400K loan? Do you repay it each year? Then take out another $400K loan? Or do you not repay the loan each year and just let the loan balance grow? If you repay it each year, won’t you have to cash out of investments thus causing a possible taxable transaction?
Hey Ramon, I’m currently doing almost exactly that. Home value ~$2.4M paid off, just took a $400k 30 yr mortgage at 2.99%. Wanted an easy monthly repay of ~$1,600 mo as I’m repaying with income (not gains) but wanted the mortgage benefits and some additional investable capital/dry powder.
Not a retirement strategy yet but would repeat in retirement depending on rates for a tax free lump sum. You’re correct though that the repay will create a taxable event but it should be from long term gains or lower income tax levels. The interest rate is the key here.
One thought is that as your “risk free” rate drops, the need to analyze expenses increases. At a 1.5% risk free rate, If you can cut 15k from the budget that is 1 million less needed. With less income needed there is also less tax impact, so it can snowball for you.
These expenses don’t even need to impact your quality of life, refinancing, energy efficiency, solar, are all things that can reduce or eliminate after tax expenses.
What do you think on the Fundrise IPO? Worths doing? What’s your opinion?
Bro I am 35 with all negative, unpaid cars, unpaid student loan, unpaid house. And some people complaining about only having few million at my age.
I am getting rattled here reading all these articles. My husband and I have around 1 Million in all Vanguard funds and we are 72 years Old. We have to draw our first RMD this year. We have about 90K left in our mortgage. He is still working as a teacher and has only 12 years of service for retirement pension. I have 27 years of service as a teacher and will have pension. No Social security for both of us. You think we can survive with pension and our Retirement funds in Vanguard?
How big is your pension? Folks with pensions your age generally have generous ones. How are you guys not eligible for SS?
Most folks under 40 won’t ever get a pension or a pension large enough to cover general living expenses.
See: How To Calculate The Value Of Your Pension
You’re a financial samurai and you don’t know that many teachers cannot qualify for both a pension and SS?
I did not know that. Perhaps because I’m not a full-time teacher but a part-time seasonal high school tennis coach.
But I know several people who have pensions and who can also collect Social Security, including my own parents.
Here’s a relevant article as well: https://www.aarp.org/retirement/social-security/questions-answers/pensions-and-social-security.html
In your case, without SS and Pension, it will be difficult to have a decent life from the interest only IRA. You may have to draw down from the Principal to meet your expenses.
Easy to retire, assuming you are the “normal” educator, you also probably have a tax deferred employer program. If you teach in states like CT you not only don’t get SS but you can’t even qualify for 50% of the other spouse, although that won’t apply to you because you both teach… however YOU MAY HAVE YEARS OF ss CONTRIBUTION WHEN YOU WERE NOT A TEACHER AND THAT YOU CAN COLECT ALTHOUGH IT WILL PROBABLY GENERATE A REDUCTION IN PENSION.
A million may not be what it used to be, but it is still a million, with proper financial planning it can be done and you can enjoy a very nice retirement.
Listening to people here, you would think you have to be in the top 1% to be able to retire well, that is not at all true.
Cheers
My brother a teacher in the alum rock school district retired and cannot collect social security and a friend who was a teacher in Southern California also cannot collect social security
Always enjoy you posts & especially the ensuing comments.
Retired young in ’98 with a nice little mortgaged to the hilt real estate portfolio & foolishly just kept buying, rehabbing, flipping &/or holding.
We have been debt free for many years & free & clear on a conservative $7-$9mil of mixed use properties & 1st position notes. Our Passive/K-1 income nets > $228k/yr & we still enjoy rehabbing the odd property.
Other self directed investments taken purely for tax deferral are up there as well, but the dreaded RMD will soon kick in as will taking Soc Security.
My wife has our kids heavily invested in Real Estate to the point where it literally covers the operating costs of their own homes that we built or rehabbed. In fact REI & W-2 income qualified our single 26 yr old daughter for a $650k home in Scottsdale AZ. Her passive income alone now covers >50% of the operating costs for that home.
Most of you guys are just nuts. Sorry to say it but you just are. 10 or 20mil isn’t enough for some people? Come on. I’m 38 and I retired on a net worth of 6mill when I was 31. I have 2mill cash in my house I live in. 1 million in a couple rentals. Have 700k cash in the bank and rest in stocks that produce around 100k a year after tax in dividends. Based on all the calculation Ive done I can live a great life and never run out of money ever. In fact, I have too much money. If you think you need 10mill especially over the age of 50 you need to take a hard look at your spending habits.
I don’t think many people are saying they need $10 million to retire. I think people are agreeing that $10 million to retire or more is an ideal net worth number.
Do you have my wife and kids? Where do you live? And they’re pretty important factors when trying to figure out and target net worth.
Shane, I’m with you. I live in California and bought my house 25 years ago. it is now worth $3.7M but I only pay $12K in property taxes because California limits the increase in property taxes and I paid off the mortgage. I also have $4.2M in liquid investments mostly in diversified ETFs. I am still working but generated $54K in dividend and interest in my taxable accounts and another 20K in tax free accounts in the past year. This does not include the $600K in increase in portfolio value from January of 2021 to today with what most investors would consider a relatively conservative portfolio of stock and bond ETFs. I also saved $600K because of a big payout from my job which was unusual as I normally don’t earn quite so much. Regardless, rather than spend the windfall, I am saving it. If you think about it in spending terms, if I spend $100K like Shane does a year, that is 6 years of retirement spending without touching the rest of the portfolio. If you want to be picky and include inflation, then it is still at least 5 years.
That said, the advice on this site would have had me in 100% risk free bonds at 1.6% vs the $600K my portfolio increased off of a base of about $3million (for those following along I had a $3M starting point plus 600K savings plus 600K portfolio increase gets to $4.2M). Instead, living conservatively, no mortgage, no car payments, no child care assistance (which is a ridiculous expense the FS includes in his budget for two people not working), etc.
Yes, I am taking more risk. But over a 10 year period, I am not really taking that much risk. So if I were to retire, I could easily live off of the $4.2M with a very, very nice lifestyle.
Plus, the advice on this site doesn’t really deal with normal retirement post kids in college where there is no more saving for college education and people have paid off their mortgages. Plus, the FS budget for two retired people includes $19K for childcare assistance. Why do you need childcare assistance if both parents are retired! I mean, isn’t that part of the point of retiring early? You get to spend more time with your kids when it counts? OMG!
Anyway, I live on much less and take much nicer vacations than the FS does. His priorities and mine are not at all aligned. For example, you can build a home gym with a Peloton and Bowflex weights for about $3K and then only pay $40 a month for the Peloton subscription as opposed to the $500/mth FS spends and never have to deal with the sweaty “bros” at the gym who spend 20 minutes hogging one machine. I just have to share with my wife.
Bottom line is you are are right. The people on this site, FS included, can use to ratchet down their spending habits. Kids or no kids.
“ That said, the advice on this site would have had me in 100% risk free bonds at 1.6% vs the $600K my portfolio increased off of a base of about $3million (for those following along I had a $3M starting point plus 600K savings plus 600K portfolio increase gets to $4.2M). ”
Can you point out where I say this about your allocation? I wonder if there is a misunderstanding somewhere I need to correct.
Here is a related post on my recommended proper asset allocation by age.
Not sure how you know what my vacation spending amounts are. But I’m glad you are taking nice vacations. You can’t take it with you.
A $7.9+ net worth is great. If you feel it’s enough, then that’s all that matters. Personally, I decided to accumulate more based on our spending habits. Our passive investment income is about $340,000 a year now, which is a comfortable amount for us but couldn’t be generated reliable with your liquid net worth.
That’s the beauty of personal finance. Financial targets and spending amounts are personal.
I just topped 10 million with the recent surge of my NVDA stock. Pretty good for a guy without even a high school education. My median cost for the shares was $13.62 and yesterday they closed at $650.48. I’m 65 and never planned to make this much money, but the habits I developed just made it work. 25 years ago I stopped selling real estate (I bought my first house at 20 for 15K) to buy more and just used equity to finance new purchases. It made no sense to sell, when the prices mostly just kept mushrooming. I bought a 4 new properties at fire sale prices from 2009 to 2011. So now have 7 properties worth 6 million and 200K in rents coming in yearly. My stocks are worth 4.5 million and just keep climbing. It’s very true the first million is the hardest, but the next millions are much easier if you’re smart and know how to properly leverage. I still have one 500K mortgage on my primary residence, just for the deduction. My thought is most everyone has to work, you might as well make it pay well if you can!
One thing about …. RISK. You have to take it to make bank ! My real estate values were slashed in 2008 and my NVDA dropped by 1/2 in 2019. I did not panic or sell and just waited for the recovery. Risk is the price you have to pay for profit. Just be sure to manage it as well as you can ( NO over leveraging !) and try and do it while you are young to develop a tolerance.
Congrats! And at 65, please don’t forget to spend a lot of it. Enjoy the YOLO Economy to the max!
You are so right, I don’t ever plan on running out of money now, but I will for sure run out of time !
Thought provoking article as usual, Sam. It seems like everyone has their own number in mind. I always thought $10M would be my number, but it appears for some people that’s not enough. I guess that is human nature though, isn’t it? When you actually reach a number, you look for a bigger number. Single digit millionaires aspire to be decamillionaires, centamillionaires aspire to be billionaires. Fascinating indeed to read actual wealthy people’s thought processes on the comments here. What struck me was the individual who had hit $10M, but still didn’t feel secure or like it was enough. I read somewhere that for the uber-rich, there’s always that fear that they will lose all their wealth somehow. Personally, I’m 46 and about to hit $3M net worth, but don’t feel exceptionally wealthy and that’s ok with me. After this pandemic, you realize that health, family, and friends (things money can’t really buy) are what’s most important. I’ll just go on watching YouTube videos of yachts, private jets, and supercars, and admiring them from afar.
Everybody wants what they can’t have. That is the biggest secret to understanding how life works ! For one thing, once you have it, you are no longer “wanting” it.
Based on the survey, more than 28% of the readers have more than $10m, maybe $10m is an achievable goal? Not knowing the participants’ age, it is hard to tell what age group has achieved this level of wealth.
10 million is not enough for me. It used to be a goal and the thought was that this would be plenty. Well…it probably is. I’ve done the numbers – penciled out expenses; including extraordinary events. We aren’t big spenders (only recently flying first class – despite a million dollar income) and will most likely accumulate money as the years go by. We are 63 and a couple years from planned retirement. We are well above 10mil but I don’t know that I would be comfortable at 10 million. Homes are paid off, have not carried a credit card or car loan in 30yrs. The challenge is truly being secure in what you have. We are working on that. We both grew up with nothing and it’s hard to let go of that insecurity.
I’m in your same boat just in our late 40’s. Because we have about $2M/year (and climbing thanks to inflation and expansion) in expected expenditures (as business/real estate owners), $10M+ NW just doesn’t feel like that much of a security blanket. It doesn’t help to know we still have to sustain ourselves (and teenage children) for years to come either.
I think a lot of average earners should try to understand this rather than wondering why $10M isn’t automatically more than enough. I guess if we sell our business and real estate we wouldn’t have to worry about our expenses. But we would be giving up a 7 figure income by doing that. I still feel trapped and a bit apprehensive about whatever age we decide to retire. Of course there is the lingering concern about the possibility (and probably inevitability) of another Great DEPRESSION with an 80+% loss. Odd to feel this way but it’s my natural emotional inclination. Another lingering concern is that the family may never want to cut back on the level of spending we are currently used too – spouse has no interest in giving up that 7500 sq ft home even once we’re empty nesters, among other big expenditures – high end vacations, etc. Makes me wonder how I’ll transition from earning and amassing savings to retiring and drawing down those savings, even if it’s just a portion of the nest egg, with those concerns lingering regardless of what a financial advisor might say to reassure.
Hard to feel like you won the game with our age and expense circumstances. I wonder how many other decamillionaires are in similar predicament and also feel this way.
I guess we make two.
I am 61 yrs old and have a net worth of about 14million. I am well off, but do not feel like i am rich. I live a modest life, and am thankful for what I have. Many of the people here sound like a bunch of pompous assholes whining that with 10 million or more they are at poverty level. For god’s sake, with that much money you are in the top 1% of Americans. Stop complaining.
Lynn,
Im 37 years old with 10M investable with a wife and 3 kids. We have no debt, but i truly believe the 20M mark is the golden number to achieve financial freedom.
Like some other readers, I feel discouraged at the notion that I will need $10mm in order to retire really comfortably.
Here’s my situation as a 48-year-old married gay man with no children:
* Net worth of $2mm
* $740,000 in cash
* $750,000 at Vanguard Brokerage (80% Stock Funds / 20% Bond Funds)
* $416,000 in SEP-IRA at Vanguard (80% Stock Funds / 20% Bond Fonds)
* Manhattan Apt worth $800,000; $600,000 left on mortgage at 3.125% on 30-yr mortgage
* Annual salary of $240,000 as a sole proprietor of a health care practice
* Spouse makes $180,000 a year and provides us with health insurance
I’m wondering if I should get braver with my cash position at this point in time and throw more of it into the Vanguard funds? Or should I pay down some of my mortgage?
Without children, retirement is so much easier. 5 million is probably closer to the ideal net worth amount for retirement with our children.
Check out this budget of a household with children and $5 million net worth.
https://www.financialsamurai.com/why-5-million-dollars-is-barely-enough-to-retire-early-with-a-family/
We’re talking “ideal” here. We can all still live great retirement lives in less than ideal numbers.
I know this post is motivating for some, but it also feels a bit of a downer.
I am 35, single income, with a 2.5m net worth in 3 homes + retirement, and reading the comments and this post makes me feel way behind compared to the 30 year olds with 5m in net worth.
Comparison is the thief of joy isn’t it?
You seem to be doing great to me! I was at about $3 million at your age when I decided to leave the finance industry for good and do my own thing with this site.
Here’s my journey if curious: https://www.financialsamurai.com/the-first-million-might-be-the-easiest-how-to-become-a-millionaire-by-30/
Hi Sam
Great article. Would love to hear your thoughts about inheritance expectations and retirement. Using the $10 million figure — let’s say you and your spouse expect to inherit a portfolio of real property currently valued around that figure. National life expectancy tables suggest the bequest at or around retirement age. Assume both working professionals in big east coast City with combined w2 & passive income of about 500k. Is living somewhat beyond your means now instead of deferring gratification (not maxing 401k, buying boat .etc) irresponsible considering the future prospects?
What an amazing problem! As W2 employees, maxing 401ks+ backdoor Roth IRAs should only be about 50k, a 10% savings rate with your incomes. What if you just did this tax-advantaged part? That would definitely still let you buy a boat and not leave you entirely in the lurch should you be cut out of the will.