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What does "Retirement" mean to you?

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Mr. Bill:

--- Quote from: David in MN on February 05, 2020, 09:55:38 AM ---A bit oversimplified but if you can net a 3% dividend of $2 million you end up with $60k per year and with almost no expenses that's not bad.

--- End quote ---

It's a great target to aim for.  I think, for a lot of people, $2 million is about 200 years of savings.  But you're right about not touching the principal -- you'll use up the $2 million in your last few years of life on long-term care and medical expenses.

Sorry to be dismal about it. :(

IMHO, that is a normal goal of many people.
The problems I see with it are that it needs to be invested to get even a 3% return. A big market recession like 2008 could greatly reduce your income overnight and a crash could wipe it out completely.
There's also the concern of the government deciding they can "Handle you money better then you can", grab it away from you, and decide how much you should get every month.
They've already tossed this idea around, but figured it would piss off too many voters.
The people have a huge amount of money in investment portfolios and they want it. With a lot of the younger generations either unable or unwilling to invest their money, it's just a matter of time before they won't fear the voting public when the older savers/investors are a minority.

David in MN:
Well I'm not the first generation to do this and there's a date in the future where I say the final goodbye to my parents and inherit somewhere north of $5 mil. I don't know what the in-laws will leave behind but they're in the hunt too. When I say I will be fat and happy on $2 mil the real number will be closer to $10.

It's an odd stress. Better to have the money than not but I am going to feel the pain of inheriting the liquid value of the farm without having the farm. It's a very hard topic to wonder what you really want out of this life and look to your child and realize for 6 generations we grew the war chest and now it's in your hands.

There's a lot of emotion that comes out when I think of this. I still only allow myself 1 pair of jeans and a $20 Costco jacket. I'm not sad or deprived but I grew up poor while sitting on a massive inheritance. I don't know different.

Something to consider.
Unless Trump changed the Inheritance tax that Obama put in place, you would stand to lose a majority of that inheritance in taxes.
As I understand it, Obama reduced the exempt amount of inheritance down to $1,000,000. While you still had to claim that $1 mill on your income and pay a hefty percentage, any amount over that is taxed at 60%. And that is the government assessed total of cash, property, possessions, and investment value.
So for a $10 mill inheritance, $1 mill would be taxed around 35% to 40% or more unless it was sheltered and the remaining $9 mill would be taxed at 60%. A quick estimate would be having to pay close to $7 mill in taxes for a $10 mill inheritance leaving you about $3 mill. Still a tidy sum, but way less than $10 mill assuming you received the whole thing.

You may already be aware of this and have a plan in place. If not, I wouldn't wait until it comes through to talk to an attorney or CPA.
If Trump changed it, it's still something to consider.


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