The Plight of the poor mMillionaire....
Commentary: Worth $4 Million -- and Unable to Retire
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by Carrie Coghill Kuntz
Thursday, October 11, 2007
YahoooooooooooI got a call from a newly "rich" executive. Having worked 60-hour weeks for years and now ready to retire at 55, he sold his business for $4 million. He was ready to live out his dream life and live off that tidy nest egg. The problem is, to do so--on $4 million--he must cut his standard of living.
It's the plight of the "mMillionaire" -- the middle-class Millionaire.
Mansions and yachts are out. The mMillionaires who want to retire before age 65 or 72, find they must live in three- and four-bedroom homes and drive mid-priced four-door sedans and mini-vans.
They are your neighbors--millionaires who live middle-class lifestyles even though they may have millions in liquid assets.
These mMillionaires have between $2 million and $10 million of investable assets, beyond their homes. Many have sold businesses or inherited money, yet few believe they can retire and continue living the high life.
The key question facing the mMillionaire is, "Can I continue to live the way I am living for the rest of my life?" The answer for most of these millionaires is "no."
Just a generation ago, a person with $2 million or more in liquid assets would have had enough for a secure retirement. But not today. Combine longer life expectancies and the rising costs of health care, food, transportation and property, and you have financial challenges ahead for the mMillionaire.
When Social Security was passed 72 years ago, life expectancy was less than 70. Now it's well above that and may continue to rise with advances in medical treatment. As a result, the mMillionaires in this high net worth class are finding they must scale back their lifestyles or delay retirement. That's something most of them, who are high-earners today, can't imagine.
For many of the executives and mMillionaires that I speak with everyday, this comes as a shock. Often their biggest obstacle is changing their own at udes about what their wealth can afford them. Some are reluctant to embrace projections about their nest eggs' staying power. They believe that lower expenses in retirement will offset inflation and lost income.
Even with no mortgage or tuition payments, many mMillionaires underestimate the effects of inflation, especially on the cost of health care services for the aging.
We find that people don't always want to confront bad news. There's no question that more people are ac ulating wealth at an unprecedented rate. They're living the good life, banking on retiring when they want to and continuing that quality through retirement. What they haven't counted on is that retirement can be a 40-year experience and that conditions can change drastically. In fact, in about 30 years, people will need more than $2 million to equal the purchasing power of $1 million today.
Many mMillionaires who are used to running businesses or managing others often want very specific answers on how to manage their middle-class millionaire status. Unfortunately, there's no formula for long-term financial security. Everyone's needs vary.
But, there are certain principles that can guide the mMillionaire's actions. If you are an mMillionaire, congratulations, but there are still a number of things you should keep in mind--ranging from managing your tax liabilities, to taking a really critical look at your investment portfolio (are you too heavily in tech stocks or consumer durables?), and of course guarding your estate, the nest egg you will leave behind.
....I know there is one mMillionaire who posts here semi-regularly......lives in a $110k home in San Antonio....drives a Hyundai....
That's misleading.
$4 million buys one of a GUARANTEED annuity.
Dude will do just fine; Yachts and trips around the world constantly? NO, but he wasn't doing that before, was he?
He can continue the life, in the style he's lead it (unless he's mortgaged to his eyeballs), he just can't go Donald Trump ape- .
What do munis yield these days?"Can I continue to live the way I am living for the rest of my life?" The answer for most of these millionaires is "no."
Anyways, aren't we supposed to not care about the heartless and evil upper crust?
"Mansions and yachts are out"
sniff! please stop, I can't stand the heart-break any more!
$4M returning 5%/year is $200K, in the top 2%.
Some Wal-mart emloyees works 10 years to gross that much.
I'll take half of the $200,000 and not complain once. Amazing how spoiled people get
We are slaves to money.
That is a good point. I will have to crunch the numbers to see what kind of return the guy could expect.
This also brings up another bit that most don't realize:
People living in a 500,000 dollar home don't always have a larger net worth, and often have a much more negative net worth, than someone living in a 200,000 dollar home.
I plan on living like a pauper for most of my life, and MAYBE going on a travel binge when I hit my fifties after the kids are done with school and out of the house.
Wonder if he would give me the four mil. Ill bet you I would
live very well. Better yet I will swap him my retirement for
his. And I live very well now.
I love how people such as Dan are making fun of the guy in the first article.
Dude has been working his ass off his whole life and would like to enjoy a certain standard of living through retirement. But, since Dan is busy on Spurstalk, he deserves that money and anyone complaining can go to .
If you can't retire on $4 million dollars in your mid 50s, you need to re-assess your values.
the real victims: middle-aged rich guys
Don't get me wrong, the guy is obviously living a little too high a standard of living to not be able to retire with 4 mil in your fifties. But still, when did we start mocking people that have worked their asses off for 30 years like Dan is doing?
I agree.
I think the guy's problem from the OP is that he wanted to exhorbitant a lifestyle.
You could literally live forever at the same level of living on four million if you earned a modest return of 6% at an annual inflation rate of 3%.
That equates to $10,000 per month income, before taxes. Take out taxes and that is still $6,600 per month at least.
I you can't live comfortably with one or two people on $120,000 per year before taxes, you are a shallow, materialistic, -twit.
Boo ing hoo to this guy.
4m? go to some lame country with ty exchange rate, and live like king
I recommend Venezuela. Personal property rights are rock solid there.
buy a nice boat and sail around the world
Somebody said "Argentina"?
With my USD millions I will retire in fascist Argentina pretty soon.
And elpimpo will still be writting one line zingers.
Props
Who is the idiot who pays you for writting?
Smeagol its funny because even if I knew you as well as I knew elpimpo, away from spurstalk, he'd still own you in every conceivable aspect.
Senor El Elpimpo es el hombre te' hombres....
El es 'El Hombre'......
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