OT One Million Dollars

[parco]

I was having a discussion with someone the other day and I thought I'd throw it out here and see what people had to say. If you suddenly had a million dollars, what would you do? Invest? Spend like mad? Travel?

[TEMPLE]

If I had a million dollars, I'd by a monkey. Haven't you always wanted a monkey?

[Louis]

Given where I am now in my life & career (a lot closer to retirement than I am to the start) this:

https://personal.vanguard.com/us/funds/snapshot?FundId=1498&FundIntExt=INT

[Idris Icabod]

Vegas to become a billionaire.

[Louis]

Vegas to become a billionaire.

To be sure you get to enjoy at least some of it, I suggest that you spend a few grand on hookers and blow before you head over to the blackjack tables.

[Dead Man]

Smart and responsible Dead would simply invest in his company. Build a bigger headquarters with a legit shop, buy new trucks, buy some TV commercial spots, etc. Every dollar invested is two, four + I get back

Real life Dead would blow it on booze, bikes and women, and probably be real life dead in a year or two.

And that's why God will never let me win the lottery.

[eddief]

just to blow a few thou:

http://corbin.com/slingshot/

[Louis]

just to blow a few thou:

http://corbin.com/slingshot/

Eddie, that has one wheel too many. I think you meant to post this:

(Yamaha XSR900)

https://ultimatemotorcycling.com/wp-content/uploads/2016/05/2016-yamaha-xsr900-first-test-review-cornering.jpg

[ANAO]

Buy as many points as I can in a diversified real estate portfolio.

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[Elefantino]

Call Dave Kirk and tell him money is no object.

[Wolfman]

A totally tricked-out sprinter van and a new garage. Save/invest the rest.

[54ny77]

order an extra topping or two on tomorrow night's pizza night. that'll leave me with about $999,995 afterwards.

[SoCalSteve]

I'd buy a condo in the building I now live in ( I lease ) with a view of the ocean and the sun setting over the Santa Monica mountain range ( west facing ).

http://www.condopedia.com/wiki/Azzurra

http://www.toplacondos.com/Azzurra

I love living here!

And yes, 1 bedrooms with a view start at $750k and go up to well over a mil.

[Louis]

And yes, 1 bedrooms with a view start at $750k and go up to well over a mil.

That's a lot of $$$ for a situation where you have to keep your bikes out on the deck... ;)

[Dead Man]

Even with the near-crisis housing inflation in Portland, out here $750k would bu you a 4000sqft house on 30 acres of scenic property right smack in the middle of some of the best road riding in the NW quadrant of the state. And less than an hour commute on country roads to downtown Portland.

Cannot ****ing believe what some you mofos are paying for housing elsewhere in these unite states.

[Cicli]

https://m.youtube.com/watch?v=4lmW2tZP2kU

[bikerider888]

Invest of course. Any new funds that come in are to be invested, regardless of the amount. Then spend the income if I really wanted to.

[oldpotatoe]

If I had a million dollars, I'd by a monkey. Haven't you always wanted a monkey?

I'd buy my wife a green dress, but not really a green dress. and

http://www.controller.com/listings/aircraft/for-sale/1434655/1987-aero-l-39c-albatros

you would need the rest of the $ just to fly it..:D

[witcombusa]

A millon dollars just ain't what it used to be. :eek: The dollar devaluation is amazingly sad to say the least.

Compared to say 1980, you'd be at around 340,000 FRN.

[paredown]

I must be of that age--I'm thinking RETIREMENT.

Also, pay off some stuff, get some home repairs done that are too complexicated for me to do on my own and have been put off. Maybe hire some help for a couple of other projects that I'm facing that are a lot of work for one guy.

I would probably buy a decent newer car for my lovely wife--in part so I would no longer dread working on her Volvo.

[oldpotatoe]

A millon dollars just ain't what it used to be. :eek: The dollar devaluation is amazingly sad to say the least.

Compared to say 1980, you'd be at around 340,000 FRN.

please...don't....

[mcteague]

I'd buy my wife a green dress, but not really a green dress. and

http://www.controller.com/listings/aircraft/for-sale/1434655/1987-aero-l-39c-albatros

you would need the rest of the $ just to fly it..:D

Ah, nice Bare Naked Ladies (https://www.youtube.com/watch?v=B4L3ls_6UYg) reference!

Tim

[carpediemracing]

I'd put aside some for fun and invest the rest.

"Some" means $100k or so.

"Fun" means stuff like maybe some minor car stuff, house stuff, etc. For me having a 3 season porch is "fun", or building a room above our garage for bike stuff.

[oldpotatoe]

Ah, nice Bare Naked Ladies (https://www.youtube.com/watch?v=B4L3ls_6UYg) reference!

Tim

temple above too..:D

[soulspinner]

Call Dave Kirk and tell him money is no object.

Great start. Get a Llewellen too................

[Tickdoc]

I'd move to SFO and build my dream house! (Oh, wait, that's just the lot)
http://photos.zillowstatic.com/p_h/ISy7sevecxzc8c1000000000.jpg

[stephenmarklay]

I would worry less about paying for my kids college.

[paulh]

temple above too..:D

I'd get some of the Dijon ketchup too.

[parco]

Interesting responses so far. I guess a certain amount of sarcasm is to be expected. This is a sincere question.

[saab2000]

I'd buy a house and a new car (a Honda of some flavor) and save/invest the rest.

It would sure be easier to live on my current income if I didn't have housing expenses.

[fa63]

I would pay off the loan balance on our house ($150k), buy a nice used camper van ($50k maybe?), and buy a kick ass bike of course :D Then I would invest the rest, rent out the house, and take the rent + investment earnings and hit the road for a while.


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[Llewellyn]

Seeing as we don't have a mortgage any more and we don't want for anything, I'd donate most of it to a couple of charities that I care deeply about. Boring but true.

[Hilltopperny]

I'd pay off the house, truck, car, student loan debt and buy a nice new Llewellyn. I'd then stash some for kids education or start up business and buy some income properties to generate more revenue. Maybe take a nice vacation:beer:

[1centaur]

I'd hire lawyers to get the rest back :D

[saab2000]

I'd hire lawyers to get the rest back :D

Ha! I immediately thought something similar?

A joke in my industry....

What's the fastest way to become a millionaire? Start out as a billionaire and start an airline.

[SoCalSteve]

That's a lot of $$$ for a situation where you have to keep your bikes out on the deck... ;)

The bikes don't mind, they love the view of the Marina and the ocean. Their favorite is the spectacular sunsets we get pretty much every evening ( mine too )....:beer:

[SoCalSteve]

Even with the near-crisis housing inflation in Portland, out here $750k would bu you a 4000sqft house on 30 acres of scenic property right smack in the middle of some of the best road riding in the NW quadrant of the state. And less than an hour commute on country roads to downtown Portland.

Cannot ****ing believe what some you mofos are paying for housing elsewhere in these unite states.

To me, living in the middle of nowhere is not my idea of living.

To each their own, my man. To each their own. Name calling is not nice...:)

[bicycletricycle]

To easy to waste without any long term gain, I would invest it and collect whatever annual dividend I could get from it.

[saab2000]

The answer is clear, isn't it?:rolleyes:


https://www.youtube.com/watch?v=UTK57dJc_pU

[fuzzalow]

To me, living in the middle of nowhere is not my idea of living.
There's nuthin' wrong with living in the middle of nowhere if that is what you want. That circumstance becomes less than great if living in nowhere is what you don't particularly want but living in nowhere is where you live because that's all you can get.

The fallacy is bragging what real estate & housing can be had for $ spent in one place over another place - no kidding it's cheaper! 'cos nobody wants to live there! BTW, in this instance, those idealized commute times to downtown are sheer fantasy and the real world commute times are likely longer or much more variable. If the location & surrounding infrastructure was that good the proximity to downtown would have been already priced in to the RE values. Sometimes the invisible hand of capitalism actually works.

Zip code is king.

To each their own, my man. To each their own. Name calling is not nice...:)

In fairness, "mofo" was likely intended as a frat/bro term of bonding/solidarity.

[MattTuck]

I guess we are talking 1M in after tax dollars?

Put $400K into savings/diversified portfolio

Spend $25 on frivolous things (probably a new bike or two, some goodies, etc.)

With about $450-550K, have a basic, high efficiency house built that includes a carriage house on the property with loft apartment, with the expectation that it could be used for rental income, parents, air BNB type stuff, etc. Depending on where this was done, it could cost more or less than this.

With any remaining funds, I'd likely buy a condo unit somewhere warm in the winter that could be used for rental income, and go down there for a month every year.


I think the general philosophy here is to set yourself up for living a life with a low monthly nut, and providing some opportunity to generate some income from what you've paid for. If you can do it right, you could probably get rental income to pay for property taxes and heating/electric. If you can do that, and own the house outright, you're in a very good situation.

[buldogge]

At this particular moment...I would probably purchase a house in the central corridor (CWE to Clayton for those that know St. Louis). We have been contemplating a move...but even here in St. Louis, houses in the area(s) we like/want, are still 600-700k.

Invest the rest in Vanguard TR2035, I suppose.

-Mark in St. Louis

[jds108]

Having recently retired via rental real estate, at least $900k of that would be put towards loan payoffs or investments. The specific route would end up being determined by tax consequences and loan rates vs investment return rates.

I'd spend $10k or so on my Promaster van - just drop it off at a conversion shop to have it go from an empty cargo van to a camper van: solar panels, batteries, air cond, heat, fridge, awning, windows, cabinets, and something like a murphy bed.

And a trip to one of those fancy beach spots where the cabins are built out over the water.

And the final luxury - pay somebody to mow all of the rentals!

[AngryScientist]

id make something like this happen and invest the rest. i'm too young to consider retirement, and $1M is really not near enough to consider stopping work, so i'd buy something fun and make the time to use it as much as possible:)

https://adventureamericas.files.wordpress.com/2012/05/dsc02651l.jpg

[Aaron O]

If I had a million dollars, I'd by a monkey. Haven't you always wanted a monkey?

https://www.youtube.com/watch?v=1_zmeKpcDe0monkey+annie's+boobs

[numbskull]

I spent a lot of money on booze, birds and fast cars. The rest I just squandered.
George Best

[john903]

I would start the community bike shop I have all ways wanted to do, focusing on kids program's and get them outside. With that much money it is one less thing I would have to worry about and I could focus on kids program instead.

Actually I am really excited to make this happen and things are actually starting to fall into place. Our locale Boys and Girls club is on board with this and has started a bike program here were I will be volunteering starting in November. We plan on teaching the kids how to fix their own bikes and have a earn a bike program. Other long term goals is to make a mobile bike shop to serve the community and low income areas. Seattle has Bike Works and a mobile bike shop and this is what I am using to modeling of.

You got me thinking now if anyone has any suggestions on how to raise money to start a community bike shop I am all ears.
Have a great day.

[shovelhd]

I'd retire. Like immediately. I'd buy a slit camera and become an official and timer full time.

[verticaldoug]

You can put 3 kids through college, and almost a 4th although you are a little short.

(I'm not joking)

[54ny77]

Not all of us work at Morrison Foerster at $1500/hr.

:p


Cannot ****ing believe what some you mofos are paying for housing elsewhere in these unite states.

[sg8357]

I could almost pay my back taxes.

or

It would be enough money so I could afford
to work in a bike shop and not starve.

[Peter P.]

To easy to waste without any long term gain, I would invest it and collect whatever annual dividend I could get from it.

We think alike, sir.

In fact, I'd only spend 90%, if any of the dividend so that the capital could grow.

Soon I'd be so rich I'd own the world, BWAH HA HA HA! (Twirls his Snidely Whiplash moustache.)

[managerx]

SUPER boring...invest...compound...repeat.

[kittytrail]

http://www.controller.com/listings/aircraft/for-sale/1434655/1987-aero-l-39c-albatros

you would need the rest of the $ just to fly it..:D


but can you put a bike in there? :D

http://bit.ly/2eBkoox


USD1m? for me? oh... thanks! could be a useful supertoolbox for doing more interesting stuff more quickly and frequently. :)

[JAGI410]

Camper Van ($50k)
LS swap my Miata ($15k)
Pay off house ($165k)
Santa Cruz Tallboy ($8k)
Tools ($2k)
Take 3 month leave of absence
Invest the rest

[unterhausen]

I'm pretty sure I'm not going to make $1mil in the rest of my career, so that means I could retire, right? My wife probably will make more than that if she keeps working, so she couldn't retire. I would make dinner and clean the house most days.

[EDS]

I would pay off my mortgage and take two months off work next summer. Load the wife and kids in the car and road trip. Invest the rest.

[estilley]

Pre-pay my grad school I'm in right now.

Pay cash for a house in NE Pdx. Rent out the rooms to my friends to pay the note.

Subaru Outback.

Get that Ti Stinner.

Leaves me about $550k to invest.

EDIT: there is no house note!


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[Grumbs]

Even with the near-crisis housing inflation in Portland, out here $750k would bu you a 4000sqft house on 30 acres of scenic property right smack in the middle of some of the best road riding in the NW quadrant of the state. And less than an hour commute on country roads to downtown Portland.

Cannot ****ing believe what some you mofos are paying for housing elsewhere in these unite states.

Are you talking about an hour commute on country roads in a car, or on a bike?
And would you mind sharing what towns you have in mind here specifically?
I won't blow your spot up, I promise! You can send a PM

[regularguy412]

just to blow a few thou:

http://corbin.com/slingshot/

Strangely, there are no less than TWO of these zipping around in my little town. Whodathunk!?

Mike in AR:beer

[Dead Man]

Are you talking about an hour commute on country roads in a car, or on a bike?
And would you mind sharing what towns you have in mind here specifically?
I won't blow your spot up, I promise! You can send a PM

You're not a Californian are you?

[Grumbs]

You're not a Californian are you?

Lol nope. I grew up in Mass, but I already live here. I just haven't explored thoroughly enough outside the city and what you described sounds like potentially useful information for my future. Not the $750k part, but everything else. Reminds me sort of what Concord MA is to Boston.

[ripvanrando]

I'd get a big detached barn garage for motorized and non-motorized vehicles. The interior would be finished and my trophies would be hung on the walls. Upstairs would be a training studio aka clubhouse. I could easily do it now but I don't like spending money like that.

[saab2000]

I'd get a big detached barn garage for motorized and non-motorized vehicles. The interior would be finished and my trophies would be hung on the walls. Upstairs would be a training studio aka clubhouse. I could easily do it now but I don't like spending money like that.

With a place like this, who needs a house anymore? :beer:

I think I might buy a secluded place in the hills of western Wisconsin with a million bucks. A million buys a lot of land out there and it's a cycling paradise (8 months of the year...)

Get up, have breakfast, mosey on around the property, go for a ride where I see 4 cars the whole time, get back, make dinner and a giant bonfire out in the clearing in the woods a few hundred feet from the house, sip on some wine. Sleep.

Repeat. I could do that for a million in Wisconsin.

[benb]

Ironic thread. We just did our #s this weekend, and we actually have this much in savings (more actually) now. Not sure exactly when it happened, probably in the last year or so. I'll be 40 in 2017 and our son turns 4 next month.

Living in the Boston area it doesn't feel like much money. We've got a mortgage and child care (day care) and college to save for. :crap: We both work, we were running the #s as we want to figure out if my wife can find a way to cut back hours, take a position outside of Boston that makes less, or start her own company. It didn't look pretty. Theoretically we can do it but the savings for college and retirement would vaporize and we'd probably feel really stressed out.

I assume most of these dreams assume you're a) older b) have more of your life expenses past you c) have good retirement savings already.

I feel like if we won a $1 million lottery ticket (after taxes) tomorrow it probably still wouldn't change much. It'd just go in the bank. Maybe pay off the house. Maybe we'd get custom bikes or something as that is relatively low cost for a splurge compared to buying a fancy car or something.

We bought our condo (duplex) 6 years ago, prices have gone bonkers in our town again since then. It's expensive as hell here.

[jh_on_the_cape]

I have had this discussion over drinks with friends before, some of whom have more $ and some with less $.

$1 is like $10 is like $100 to different people (on up to $1M).

Another exercise is to say what would you do with an extra $1, $10, $100 and so on by factors of 10. Clearly 1, 10, 100 would not change things for most people (but would for some!). At what level would you actually change your life, not your portfolio? How much would it take for you to move/change your job, etc.?

On the flip side, I was chatting with an ex-boss and he flipped the question jokingly: How little can I pay you before you leave?

This came up because a few years back I inherited an amount of money from a relative with whom I had had little contact and had few other heirs. It was just the amount I owed in student debt so I paid off the loans and felt good about it because the relative had been devoted to education and would have approved.
But what if the amount had been 10x or 100x or 1000x as much?

How much would it take you to really make a change to your life NOW? And why is that amount different than for others?
Our tipsy results:
1. Some people are just really happy at their job and in their position financially and don't long for something else. Are you?
2. Some people "require" or accustomed to more $ for their lifestyle. Why?
3. It depends on what your time is worth to other in $. Opportunity cost. But what is your time worth to you? 2 people with similar paying jobs and financial situations have different reactions to windfalls.
4. Some people think about others more than themselves, either family or through charity.

What would I do with $1M? Whatever my wife decides! A little saving for college, but I think we would take a 1 year leave of absence and travel around the world with the kids homeschooling them. We did something similar last year and would like to do it again!

[benb]

I think $10 million would change things drastically for us, maybe $5 million. $1 million just doesn't go that far unless you could move to a really cheap area and live very frugally.

$5 million would be enough to pay the house off, definitely pay for college, and possibly tip us over into having enough for retirement, maybe not right away, but enough to get off the rat race.

$10 million I'm pretty sure we could pay everything off, quit our jobs, switch our investments to a conservative strategy, and maintain our current standard of living off of investment returns.

Short of those 2 scenarios there is no way I'm ever buying a Porsche or an airplane or a big yacht. Looking at the #s we could definitely easily afford a Porsche if we changed our priorities away from saving and retirement but what a big waste of money.

Who knows what the medical insurance rates are going to be in 20 years, that's a biggie.

[stephenmarklay]

My first thought is kids/college.

However, would likely use what I needed and use it as a travel fund. I wish I could travel more and let me kids see the world. That would be very cool.

[parco]

I think $10 million would change things drastically for us, maybe $5 million. $1 million just doesn't go that far unless you could move to a really cheap area and live very frugally.

$5 million would be enough to pay the house off, definitely pay for college, and possibly tip us over into having enough for retirement, maybe not right away, but enough to get off the rat race.

$10 million I'm pretty sure we could pay everything off, quit our jobs, switch our investments to a conservative strategy, and maintain our current standard of living off of investment returns.

Short of those 2 scenarios there is no way I'm ever buying a Porsche or an airplane or a big yacht. Looking at the #s we could definitely easily afford a Porsche if we changed our priorities away from saving and retirement but what a big waste of money.

Who knows what the medical insurance rates are going to be in 20 years, that's a biggie.
This is closer to the reason for my post. Another thing that folks are assuming is that this 1 million is just dropped in their lap and they still have whatever money they had before that. I probably should have been more clear. So here it is:
What if all the money you had was 1 million dollars. The reason I ask is that a friend is nearing retirement age and as they have checked into all of their assets they have a little over 1 million dollars. As we talked they were really surprised that 1 million dollars in todays money is not really that much. My friend is thinking that they will have to keep working because they don't really have enough to live comfortably and not work. This sounds so crazy to me. That a person could have a million dollars but not feel that it is enough. But as JH has stated it's all relative.

[paredown]

I think the 'toggle effect'--ie what amount of money would change how you live is also a good place to start if you want change in your life.

I remember hearing a therapist talking about how he worked with people who were unhappy with where they were in life, and who claimed it was the lack of money that prevented change. He'd do a version of 'What if you had $xxx'--and what he found pretty consistently was that it was not lack of means that kept most people from changing their lives, but fear of change, fear of the unknown, fear of risk etc. Sometimes just basic fear about taking a chance on life.

There are a couple of books I like--one is 'The Art of Possibility'; a second is 'The Happiness Project'.

We all get into our grooves and see life unfolding in the future as it has in the past, and tell ourselves stories about why we can't do XX --even though we witness others making changes in their lives and tell ourselves stories about how it is easier for them.

News flash--change is hard--for everyone.

Money may be an enabler, but it is seldom enough for real change; conversely, I think for a lot of folks the notion that winning a million would not make them change their life that much means that they have found their groove and are more or less content with their lives.

For me now--I would be happy to continue pretty much exactly as I live--volunteering for Habitat, finishing the house, gigging a little in the construction industry if I won the $1mil, because I'm pretty content (though worried about retirement),

[redir]

Depends on lifestyle and location. Make those adjustments and your friend will be fine.

[54ny77]

Because it's not, assuming you don't want to touch the principal.

Let's say you go the most conservative investment route possible and get, say, 3% after-tax yield on fixed income investments, which ain't bad. Not great, but not bad. That's $30k/yr. Or even say it's 4%. Same question.

If you have other debts, you're not eating out, let along buying a new custom bike.

If you're entirely debt free, the question is, can you live on $30k/yr? That's almost impossible. Things like childhood expenses, rent (or property taxes if you own), insurances, utilities, medical/healthcare costs, food, car (gas), some travel, some discretionary spending, and on & on....oh and yeah, bike stuff. :D

The reason I ask is that a friend is nearing retirement age and as they have checked into all of their assets they have a little over 1 million dollars. As we talked they were really surprised that 1 million dollars in todays money is not really that much. My friend is thinking that they will have to keep working because they don't really have enough to live comfortably and not work. This sounds so crazy to me. That a person could have a million dollars but not feel that it is enough. But as JH has stated it's all relative.

[Hilltopperny]

I live very modestly and a million dollars can be stretched quite far in my household! I am only 35 and will be 36 in about a week or so. My wife and I bought a cape style home with two acres and a pond in the foothills of the Adirondack mountains for 50k, she drives an impreza and I just financed a tacoma, taxes are around 2k a year and the only other large scale payment is her student loans. With 1 million dollars in the area we chose to live in we can live well for the rest of our lives with the proper investments. It's funny how far money can be stretched is relative to where you choose to live and what your priorities are. :beer:

[benb]

Right.. you probably can't live on $40k/yr. You're going to get something from Social Security perhaps.

If you're in your 60s right now I think you can assume you're going to get something from SS.

For those of us my age (like I said I turn 40 in less than a year) we have been told since our early 20s that our retirement plans should not count on SS being solvent.

I think the first serious retirement advice I really got was around 2004 when I would have been 26, at that time I think I was clearing about $50k/yr after taxes, and the financial plan was assuming:

- I wasn't going to get married
- Wasn't going to have kids
- Wanted to have a similar quality of live as if I had $50k of 2004 $$ per year to live off of

They were saying I'd need $5 million in savings at retirement for that.

My parents and my in laws are in their mid-late 60s. Both my dad and FIL were career engineers who moved into management. My FIL never worked for a company with less than 50k employees his whole career AFAIK, my Dad worked at a series of startups. My FIL has a retirement package that leaves him on the group insurance for the company he was at when he retired. My parents don't have anything like that. They are both paying big $$ for health insurance but in the case of my parents without being able to be on a company's health plan in retirement the health insurance fees become a very huge differentiator in their retirement outlook.

I'm an engineer too, I've worked for large companies and small companies, but by the time I started there are essentially no companies in my industry that ever let retirees stay on the group medical insurance. Health care is the big elephant in the room.

[estilley]

This is closer to the reason for my post. Another thing that folks are assuming is that this 1 million is just dropped in their lap and they still have whatever money they had before that. I probably should have been more clear. So here it is:
What if all the money you had was 1 million dollars.


My answer stays exactly the same as the money I have now is basically negligible when you add $1 million to it.

The life of a 25 year old in grad school...



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[jh_on_the_cape]

I am super careful not to let me lifestyle change too much from the days when I had less $. I think that is the key. The real big additional expenses are from having kids.

My answer stays exactly the same as the money I have now is basically negligible when you add $1 million to it.

The life of a 25 year old in grad school...



Sent from my iPhone using Tapatalk

[estilley]

I am super careful not to let me lifestyle change too much from the days when I had less $. I think that is the key. The real big additional expenses are from having kids.



Exactly. I've actually enjoyed the lifestyle downgrade from when I was working a higher paying job before I went back to school. Learn to live with what you have and make it count. Anything extra saved a rainy day.


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[eippo1]

For me it was pay off my school loans and other assorted debts, and then help with a needed renovation to our house. As others have said $$ doesn't go very far in metro Boston.

[fuzzalow]

So here it is:
What if all the money you had was 1 million dollars. The reason I ask is that a friend is nearing retirement age and as they have checked into all of their assets they have a little over 1 million dollars.

It depends. Lifestyle. living expenses, location as the 3 main variables for starters.

I've posted on this before: assuming the entire $1M all as working capital earning 4% annual return spending at the median US income of ~$52K year ($4,333/month) will have this money last for 441 months (36.75 years). Scale up or down from this hypothetical amount and see where it lands and whether it can work. If this money is being drawn down from an IRA account it will be even less net-to-the-retiree because IRA withdrawals are taxed as regular income.

[MattTuck]

It depends. Lifestyle. living expenses, location as the 3 main variables for starters.

I've posted on this before: assuming the entire $1M all as working capital earning 4% annual return spending at the median US income of ~$52K year ($4,333/month) will have this money last for 441 months (36.75 years). Scale up or down from this hypothetical amount and see where it lands and whether it can work. If this money is being drawn down from an IRA account it will be even less net-to-the-retiree because IRA withdrawals are taxed as regular income.

Where are you getting 4%? I'd like some of that sweet high yield action ;)

[fuzzalow]

Where are you getting 4%? I'd like some of that sweet high yield action ;)

C'mon Matt, you work with this kinda thing in academia, right? Not using a fixed-income rate but an equity rate of return. SPX returns are pegged at around 10% on a historical basis. To be conservative I plugged-in 4%.

There are always returns to be found.

[Grumbs]

Ironic thread. We just did our #s this weekend, and we actually have this much in savings (more actually) now. Not sure exactly when it happened, probably in the last year or so. I'll be 40 in 2017 and our son turns 4 next month.

Living in the Boston area it doesn't feel like much money. We've got a mortgage and child care (day care) and college to save for. :crap: We both work, we were running the #s as we want to figure out if my wife can find a way to cut back hours, take a position outside of Boston that makes less, or start her own company. It didn't look pretty. Theoretically we can do it but the savings for college and retirement would vaporize and we'd probably feel really stressed out.

I assume most of these dreams assume you're a) older b) have more of your life expenses past you c) have good retirement savings already.

I feel like if we won a $1 million lottery ticket (after taxes) tomorrow it probably still wouldn't change much. It'd just go in the bank. Maybe pay off the house. Maybe we'd get custom bikes or something as that is relatively low cost for a splurge compared to buying a fancy car or something.

We bought our condo (duplex) 6 years ago, prices have gone bonkers in our town again since then. It's expensive as hell here.

Have you considered moving farther out? I don't know about the portability of your job, but if I lived in Massachusetts I would be thinking about the Pioneer Valley.

[shovelhd]

Have you considered moving farther out? I don't know about the portability of your job, but if I lived in Massachusetts I would be thinking about the Pioneer Valley.

Why?

[humboldt]

I would pay off all my debt: house, credit cards, etc. That would use up about $400k. I'd invest about $400k and spend about $100k on a Toyota Tundra all setup for extended camping trips.

[likebikes]

i'm in my 20s and I could live for the rest of my life off that $1mil. though i'd eventually get bored and probably end up with a boring regular job.

[Mr. Pink]

I'd buy some future political influence by contributing a hundred thou to a certain politician's charitable foundation. Then I'd just travel a lot.

Oh, and it looks like I'd finally be able to afford a few tickets to the World Series and Hamilton on Broadway.

[Mr. Pink]

i'm in my 20s and I could live for the rest of my life off that $1mil.


I'm a little more cavalier because I'm old enough to collect Social Security, which, btw, I am. You, young man, should be much more careful. I suppose you could survive on a million without working, but, it's going to be tough. Maybe, maybe, you could be assured of 5% a year returns (good luck with near negative interest rates), so that's 50 grand a year. Not bad, compared to a middle class existence, but, woe on you if the market's crash again, or inflation takes off. Still not the lap of luxury, for sure. Used aluminum bikes vs new carbon.
I'd buy a solid apartment building in a healthy economic town or two, screen tenants ruthlessly, and that might work out. If you want to be a landlord.

[MattTuck]

C'mon Matt, you work with this kinda thing in academia, right? Not using a fixed-income rate but an equity rate of return. SPX returns are pegged at around 10% on a historical basis. To be conservative I plugged-in 4%.

There are always returns to be found.

My comment was of course a bit tongue in cheek. However, there is some real reason (maybe small) to question whether 4% is realistic in today's world.

1. The S&P 500 since 2000, has had an annual return just a little over 4% per year (with dividend reinvestment).

2. Interest rates are extremely low right now, which has pulled a lot of price appreciation from the future. One interpretation is that we're in for a period of lower price appreciation in the future.

3. By several measures, many asset classes are at cyclically high values (whether it be P/E ratios for stocks, price to median income for houses, or bond yields), and a significant pull back could significantly impair one's ability to average 4% going forward. As example, say you start with 100, and you drop 20% out of the gate. (80), then you make 10% each of the next three years. (88, 96.8, 106.5). so at end of year 3, you have 106.5, with an average of around 2% return per year.

4. While agree that there is always yield somewhere, it is usually not without risk. This is what led to the Subprime Mortgage Backed Securities catastrophe. Companies needed yield, and they said, "hey, we can loan money out at 8% to these sub-prime borrowers! Good deal."

5. We are in a truly uncharted area when it comes to central banks and monetary policy. Anyone that pretends to know how this will all play out is either fooling themselves or trying to fool you. It is the greatest* financial experiment in the history of man-kind, and so I'm somewhat skeptical of the idea that returns going forward are going to resemble the past.


*biggest, not best.

[Llewellyn]

Yields on many solid shares in the Australian market are around 4 - 5% although it would be naive to suggest that will always be the case, because there are certainly some challenges ahead.

[Louis]

In a related matter, I’ve been at the company I work for long enough that when I leave I’ll have a bit of a pension. Lately they’ve been trying to get folks to take a lump-sum instead of the monthly pension (which is a lifetime benefit, once you start to take it). One of the rumors making the rounds is that sometime in the near future they will force everyone to take a lump-sum instead of payments over time.

I’ve been comparing what they would offer me if I were to go for the lump-sum today (they tell you what that would be for you on a web site with all your other salary and retirement) but it’s tough to know what “risk free rate” to use in the NPV calculation, so I’m having a hard time deciding if the lump-sum offered is a good or a bad deal. Obviously, the lower rate I assume the higher the NPV, and the worse the lump-sum offer will appear to be in comparison.

Random question: Is assuming a given risk-free rate (and lifetime) and calculating the NPV of the pension’s future stream of payments the only way to judge the lump-sum offer? Or am I missing something?

TIA

[SoCalSteve]

In a related matter, I’ve been at the company I work for long enough that when I leave I’ll have a bit of a pension. Lately they’ve been trying to get folks to take a lump-sum instead of the monthly pension (which is a lifetime benefit, once you start to take it). One of the rumors making the rounds is that sometime in the near future they will force everyone to take a lump-sum instead of payments over time.

I’ve been comparing what they would offer me if I were to go for the lump-sum today (they tell you what that would be for you on a web site with all your other salary and retirement) but it’s tough to know what “risk free rate” to use in the NPV calculation, so I’m having a hard time deciding if the lump-sum offered is a good or a bad deal. Obviously, the lower rate I assume the higher the NPV, and the worse the lump-sum offer will appear to be in comparison.

Random question: Is assuming a given risk-free rate (and lifetime) and calculating the NPV of the pension’s future stream of payments the only way to judge the lump-sum offer? Or am I missing something?

TIA

Maybe I am missing something here...but, how long are you going to live for? And, if you do decide to die, does your spouse continue getting the monthly payments?

Lump sum versus you living til 90, hmmmm....:confused:

[Louis]

Maybe I am missing something here...but, how long are you going to live for? And, if you do decide to die, does your spouse continue getting the monthly payments?

Lump sum versus you living til 90, hmmmm....:confused:

I assumed I'd live for 30 more years after starting the pension, but the out years don't have that much of a huge impact since they're discounted quite a bit. (unless the assumed rate is super-low)

(They have multiple options that change the lump-sum offer a bit - 10 year certain pay-out, etc. I'm single, so the spouse issue doesn't affect me.)

[Idris Icabod]

In a related matter, I’ve been at the company I work for long enough that when I leave I’ll have a bit of a pension. Lately they’ve been trying to get folks to take a lump-sum instead of the monthly pension (which is a lifetime benefit, once you start to take it). One of the rumors making the rounds is that sometime in the near future they will force everyone to take a lump-sum instead of payments over time.

I’ve been comparing what they would offer me if I were to go for the lump-sum today (they tell you what that would be for you on a web site with all your other salary and retirement) but it’s tough to know what “risk free rate” to use in the NPV calculation, so I’m having a hard time deciding if the lump-sum offered is a good or a bad deal. Obviously, the lower rate I assume the higher the NPV, and the worse the lump-sum offer will appear to be in comparison.

Random question: Is assuming a given risk-free rate (and lifetime) and calculating the NPV of the pension’s future stream of payments the only way to judge the lump-sum offer? Or am I missing something?

TIA

Do you work for the same company as me?? I got the lump sum offer about a month ago and have until the 18th to accept or defer. I've crunched the numbers lots of times and it's really confusing. Most of my colleagues are older than me and waiting out the pension but I've got 22 years until I can get the unreduced amount. The confusion is even worse when you factor in the joint and survivor calculations. I'm thinking about taking the entire lump sum, going to Vegas and spending it all on hookers and blow as you suggested earlier in the thread, it's probably the least biased opinion I've had on the matter!

[Louis]

but I've got 22 years until I can get the unreduced amount.

This is probably the key factor for you - lots can (and will) happen over 22 years.

[MattTuck]

Louis,

There is a technically and mathematically correct way to calculate what you're asking. and I think you've got that right.

But I wouldn't look at it like that. If you get a lump sum payment today, the cash is yours. If the pension fund becomes insolvent in the future, it is not your problem and your benefits are not at risk. Whatever risks to your benefits in the form of inflation, cost of living adjustments, problems with the actual fund, etc. are no longer issues to you. There is real value in this. In 10 years, this will be very apparent, after so many of today's under-funded pension funds become unable to pay their obligations.

Short version: A bird in the hand is worth two in the bush. Don't count your eggs before they hatch.

[fogrider]

health insurance is the big ? also, we're talking after taxes right? any windfall would mean paying the man...the first thing would be to talk an estate planner/accountant. sure take a chunk for fun, but investing wisely will keep the money flowing.

I think $10 million would change things drastically for us, maybe $5 million. $1 million just doesn't go that far unless you could move to a really cheap area and live very frugally.

$5 million would be enough to pay the house off, definitely pay for college, and possibly tip us over into having enough for retirement, maybe not right away, but enough to get off the rat race.

$10 million I'm pretty sure we could pay everything off, quit our jobs, switch our investments to a conservative strategy, and maintain our current standard of living off of investment returns.

Short of those 2 scenarios there is no way I'm ever buying a Porsche or an airplane or a big yacht. Looking at the #s we could definitely easily afford a Porsche if we changed our priorities away from saving and retirement but what a big waste of money.

Who knows what the medical insurance rates are going to be in 20 years, that's a biggie.

[Louis]

But I wouldn't look at it like that. If you get a lump sum payment today, the cash is yours. If the pension fund becomes insolvent in the future, it is not your problem and your benefits are not at risk.

Good points. Unfortunately, there's no simple way to quantify that additional risk. We'll see what they do. It the short term it may be moot, but eventually when I retire I will have to decide.

(Also, I'm not sure how the lump sum (if any) would be taxed compared to monthly payments of time - that could have a significant impact on things.)

[SoCalSteve]

Good points. Unfortunately, there's no simple way to quantify that additional risk. We'll see what they do. It the short term it may be moot, but eventually when I retire I will have to decide.

(Also, I'm not sure how the lump sum (if any) would be taxed compared to monthly payments of time - that could have a significant impact on things.)

Retirement $$$ is considered income, so yes it will be taxed. You may be able defer the % of that if you put the lump sum in something like an IRA and then take small chunks at a time.

I'd consult with a CPA before you do anything!

[gavingould]

hmm.
living in a high-housing cost metropolis doesn't get ya super far on a mil.
luckily no credit card debt, no student loans for wife or myself.
probably get some home improvements under way - 2 bath remodels, kitchen, maybe get set up with geothermal HVAC and some solar if feasible. likely we need the whole house electrical upgraded too, so we might as well gut the place proper all at once and insulate, fresh drywall to replace the old plaster and lath.
if we do all that, probably won't be a lot left. maybe enough to pay off the remaining mortgage of our other property. anything left, 401k it.

maybe i'd drop 10k or so on camera stuff. have plenty of bike stuff already.

[Mr. Pink]

My comment was of course a bit tongue in cheek. However, there is some real reason (maybe small) to question whether 4% is realistic in today's world.

1. The S&P 500 since 2000, has had an annual return just a little over 4% per year (with dividend reinvestment).

2. Interest rates are extremely low right now, which has pulled a lot of price appreciation from the future. One interpretation is that we're in for a period of lower price appreciation in the future.

3. By several measures, many asset classes are at cyclically high values (whether it be P/E ratios for stocks, price to median income for houses, or bond yields), and a significant pull back could significantly impair one's ability to average 4% going forward. As example, say you start with 100, and you drop 20% out of the gate. (80), then you make 10% each of the next three years. (88, 96.8, 106.5). so at end of year 3, you have 106.5, with an average of around 2% return per year.

4. While agree that there is always yield somewhere, it is usually not without risk. This is what led to the Subprime Mortgage Backed Securities catastrophe. Companies needed yield, and they said, "hey, we can loan money out at 8% to these sub-prime borrowers! Good deal."

5. We are in a truly uncharted area when it comes to central banks and monetary policy. Anyone that pretends to know how this will all play out is either fooling themselves or trying to fool you. It is the greatest* financial experiment in the history of man-kind, and so I'm somewhat skeptical of the idea that returns going forward are going to resemble the past.


*biggest, not best.

These are wise words. I'll add one factor that worries me a lot, to quote Mr. Trump - China. When that party ends over there, when that huge, huge (youge!) pile of debt forces a reckoning, and slows down the fastest growing economy in the world to near nothing, and maybe sends it into a Japan like recession, then the whole world will probably be dragged down into a long depression. Some say it's inevitable, especially with their one child policy creating a very old population very soon. Old people don't spend money, and are a drag on any economy. The west is also going to experience very large elder populations going through the end game at the same time.
The bright side to that coin is that inflation should stay very low for a long time, and the calculations I've done in some models always tell me that inflation is the worst enemy to a retirees savings and income.

[Mr. Pink]

In a related matter, I’ve been at the company I work for long enough that when I leave I’ll have a bit of a pension. Lately they’ve been trying to get folks to take a lump-sum instead of the monthly pension (which is a lifetime benefit, once you start to take it). One of the rumors making the rounds is that sometime in the near future they will force everyone to take a lump-sum instead of payments over time.

I’ve been comparing what they would offer me if I were to go for the lump-sum today (they tell you what that would be for you on a web site with all your other salary and retirement) but it’s tough to know what “risk free rate” to use in the NPV calculation, so I’m having a hard time deciding if the lump-sum offered is a good or a bad deal. Obviously, the lower rate I assume the higher the NPV, and the worse the lump-sum offer will appear to be in comparison.

Random question: Is assuming a given risk-free rate (and lifetime) and calculating the NPV of the pension’s future stream of payments the only way to judge the lump-sum offer? Or am I missing something?

TIA


Ha. I was staring at the choice of a lump sum or fixed payments about ten years ago from my old company. It was a very substantial amount. I had about three years to mull it over, and conferred with a lot of people, but, I was of the attitude that I was smarter than the people who managed that pension fund, and I could do better on my own. After all, I was doing fairly well in the market with my other money. Now, you have to remember the time. We're talking 2004-2007, about. Does that ring any bells? Good times, good times, the champagne was flowing on Wall Street, everybody was getting rich on their house, Serottas were nearly 20,000 bucks, if you tried hard enough. Gimme two! Well, after being assured that my pension payment would be backed up very well by the federal government through the PBGC, I decided not to do the lump sum and take the payments for the rest of my life. That was late 2007. Guess what happened in 2008 and beyond after Lehman went under? Yeah, I would have immediately lost 30% of that money in the markets. Oh, sure, it would have come back, and maybe more, but, no thanks. The peace of mind from the regular check is worth it. Consider it an annuity, a nice, safe, regular source of income. If you have COLA, you are truly blessed, and would be a total fool to take the lump.
Remember, when you stop working, nobody is going to hire you over a certain age these days. If you lose your money, you are really screwed. There are no second chances after a certain age. Ducks in a row and all that.

[brownhound]

Divide into quarters...

$250k: my kid's education fund. Inviolate.

$250k: pay-off my house and some improvements.

$250k: invest/retirement.

$250k: play (travel, new vehicle, etc) - that's the fun part.

The "life-changing" aspect would depend on how the invest/retirement and house things go. If they crash, keep working. If they don't, then I could consider options like retire early or career change or whatever.

The $1m lets me breathe easier and perhaps leverage big changes.

$10mm let's me quit. $100mm let's me become a philanthropist and really give benefits.

[fuzzalow]

I wanted to respond to your post for the reasons not because I take exception to your playful dig at my use of a SWAG number like 4% but because you responded with a litany of facts but little in the way of actions in addressing the OP's inquiry. And it is this emphasis on factual minutia which I see as a distraction from addressing the real issue as to getting a handle on what $1M in retirement money means in real terms.

None of this is personal, matters of finance almost never are.

My comment was of course a bit tongue in cheek. However, there is some real reason (maybe small) to question whether 4% is realistic in today's world.

1. The S&P 500 since 2000, has had an annual return just a little over 4% per year (with dividend reinvestment).

2. Interest rates are extremely low right now, which has pulled a lot of price appreciation from the future. One interpretation is that we're in for a period of lower price appreciation in the future.

3. By several measures, many asset classes are at cyclically high values (whether it be P/E ratios for stocks, price to median income for houses, or bond yields), and a significant pull back could significantly impair one's ability to average 4% going forward. As example, say you start with 100, and you drop 20% out of the gate. (80), then you make 10% each of the next three years. (88, 96.8, 106.5). so at end of year 3, you have 106.5, with an average of around 2% return per year.

4. While agree that there is always yield somewhere, it is usually not without risk. This is what led to the Subprime Mortgage Backed Securities catastrophe. Companies needed yield, and they said, "hey, we can loan money out at 8% to these sub-prime borrowers! Good deal."

5. We are in a truly uncharted area when it comes to central banks and monetary policy. Anyone that pretends to know how this will all play out is either fooling themselves or trying to fool you. It is the greatest* financial experiment in the history of man-kind, and so I'm somewhat skeptical of the idea that returns going forward are going to resemble the past.


*biggest, not best.

All the above all well and good as far as facts, all of which can be gotten from reading the WSJ or other serious newspaper. All that and the over riding point you make as far as I can comprehend, is that forecasting is both inaccurate and uncertain and that there are risks & unknowns. OK. Great. Now what? Doesn't invalidate the concept of working capital I talked about in my post, does it?

Someone commented that what you posted was seen as wisdom, I disagree as all your points are merely statement of facts. A Bloomberg terminal will bring you all the facts, statistics, news and information available in the world but all that data is worthless unless you know how to put it to use. Wisdom, to my definition and in this case, is the formation of a view of the financial landscape and formulating a means of coping and addressing that view going forwards - replete with the risks and upsides to be had within that particular conceptualization.

Yeah, I know this is just loose talk on a bike forum but because you have given me the impression you work in academia related to finance, therefore I hold you to a higher standard. In fairness, academics don't have to act, they can just talk and there is nothing wrong with academic debate either. But if you and I are talkin', then I'm gonna address you as a peer. Harry Truman said he wanted advice from a one-handed economist because he found the vacillations of an academic frustrating to a president as a decision maker - too bad Harry, that's why you were president! But in the real of retirement planning, every prospective retiree is a decision maker!

I'm not putting you on the spot to say that you should lay out a plan for this guy for free on the internet. And only the infirm would act on such advice. I am saying that anybody can voice opinions until the cows come home and that may be dandy but it doesn't move the ball downfield one bit and that guys who know a little more might present a little more substance to help a guy out without violating ethics or confidentialities.

Retirement money is serious business: You don't have the choice to fish or cut bait. The only choice is to fish or to fish! If there is only one thing I can ask any reader of this thread to do for yourselves is to plan, act and treat this matter with the utmost importance:

Don't get bogged down in the minutia
facts are not wisdom
do not succumb to paralysis by analysis
take action to plan and move forwards but under no circumstances do not do nothing.
How to plan is an entirely separate and comprehensive topic.Caveat emptor. CAVEAT EMPTOR. CAVEAT EMPTOR

All this is written with the best of intentions and is not presented as criticism but as a different view and approach on the topic. That's all for me on this one, see you at the next stop.

[Louis]

Let the pissing contest begin...

[ripvanrando]

Au or Ag

[Mr. Pink]

Jeez. Somebody is not going to make it to 90 stressing so much.

[MattTuck]

Let the pissing contest begin...

nah. fuzz is right. I wasn't purporting to give out wisdom, or investment advice, and if you are seeking advice, please go see an advisor.

There are a lot of risks (facts), and it is possible that all of those are priced 100% into the market. My comments were just meant as a word of caution about assuming returns going forward.

Buying at the top of the market (not saying we are at the top, but we could be) is just a really bad time to invest and then live off the earnings.

As demonstrated in the following table that shows 1,000,000 invested in S&P500 index on January 1, 2000. With withdrawals of 60,000 each year.

[Louis]

Buying at the top of the market (not saying we are at the top, but we could be) is just a really bad time to invest and then live off the earnings.

Nearly impossible to time the market, so about all you can do is decide how much you want in stocks (given your age and personal risk tolerance) and gradually (over as much time as you like) put the $ into you chosen vehicle (say, Vanguard Index 500).

[SoCalSteve]

Nearly impossible to time the market, so about all you can do is decide how much you want in stocks (given your age and personal risk tolerance) and gradually (over as much time as you like) put the $ into you chosen vehicle (say, Vanguard Index 500).

I'm surprised " fixed income " investing hasn't come up. Double tax free bond funds paying around 5%...$50k tax free a year on your $1 mil investment. Not a bad way to supplement your pension and social security.

Thoughts?

[MattTuck]

Nearly impossible to time the market, so about all you can do is decide how much you want in stocks (given your age and personal risk tolerance) and gradually (over as much time as you like) put the $ into you chosen vehicle (say, Vanguard Index 500).

Yes, same analysis, but only adding 200,000 per year for 5 years, also starting in 2000.

[Louis]

I'm surprised " fixed income " investing hasn't come up. Double tax free bond funds paying around 5%...$50k tax free a year on your $1 mil investment. Not a bad way to supplement your pension and social security.

Thoughts?

Folks see +20% annual returns and get greedy.

They forget about the risk of the -20% years.

Also, many of the folks posting here might be on the young side, so they have a longer time horizon and can take higher risk.

[SoCalSteve]

Folks see +20% annual returns and get greedy.

They forget about the risk of the -20% years.

Also, many of the folks posting here might be on the young side, so they have a longer time horizon and can take higher risk.

I guess I'm just old and conservative...:crap:

[Louis]

Yes, same analysis, but only adding 200,000 per year for 5 years, also starting in 2000.

I'm facing this issue (on a much smaller scale) for some money in my HSA. I started doing it a few years ago and now need to shift from cash to investments of some sort. I'll probably just transfer about half of it into VIIIX (S&P 500 index at Vanguard), wait a while, then decide what to do with the rest of it.

[Hindmost]

I thought that a million dollars would be a blessing. Now I have a headache.

[Dead Man]

I thought that a million dollars would be a blessing. Now I have a headache.

I'd be happy to dispose of it for you

[SoCalSteve]

I thought that a million dollars would be a blessing. Now I have a headache.

http://www.therichest.com/rich-list/poorest-list/10-lottery-winners-who-went-broke/

[likebikes]

I'll probably just transfer about half of it into VIIIX (S&P 500 index at Vanguard)

VIIIX has a minimum investment of $200,000,000.00.

[Louis]

VIIIX has a minimum investment of $200,000,000.00.

It's being done through my HSA at work and is one of the options we have - I'm not doing it as an individual. ( bummer about that ;) )

[Mr. Pink]

http://www.therichest.com/rich-list/poorest-list/10-lottery-winners-who-went-broke/


Even more striking is pro athletes always screwing up, and, after all the history, and education programs to help prevent it, still happens.


http://www.si.com/vault/2009/03/23/105789480/how-and-why-athletes-go-broke

[Louis]

Matt's spreadsheet example got me thinking about S&P returns so I tracked down a list of annual returns from 1928 to 2015. (this includes dividends)

It's close to, but not quite a normal distribution, with more of a tail on the negative side. I don't know how significant that is - there seemed to be some info out there that said that daily or weekly returns were less skewed.

In case you're interested:

[Mr. Pink]

Past performance does not guarantee future returns.

Seriously, there is a school of thought that the recent past, basically, the industrial revolution and the great 20th century growth period, was an anomaly in the history of economics. We may never see so much productivity growth in the next century or so. The rise of the robots and AI is a cause of that. Facebook, Uber, and a lot of these heavily capitalized corporations do not employ a lot of people, and their missions seem to be developing products that will put millions out of work.

[jlwdm]

A million dollars was a significant number many years ago and unfortunately since the number does not change with inflation it is not that significant any more. It does sound like a lot though.

It is easy to see why so many people end up in bankruptcy after winning a million dollar lottery. If you take the lump sum option you only get about $670,000 and then you have to pay income taxes. The lottery withholds 25% for taxes but the taxes are more than this.

There is not enough left to do all of the things $1m lottery winners seem to do: quit work, buy a house, pay off your parents' house and buy new cars - these are just the basics. Then there is travel, partying and fending off every friend and relative you have.

Antoine Walker went bankrupt after earning more than $100m in the NBA. That takes a little more work.

Jeff

[93legendti]

I was having a discussion with someone the other day and I thought I'd throw it out here and see what people had to say. If you suddenly had a million dollars, what would you do? Invest? Spend like mad? Travel?

A net million? Buy more rental houses, flip a few more houses (I find houses for around $30,000 in this area), buy a new ski boat, sponsor more BBQ's for soldiers, take an extra vacation every year and put ~ $6-750,000 in a liquid fund.