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not that i'm endorsing the site in any way, but using the firecalc app for 2million, withdrawing 60k/y for 60 years...

FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 83 possible 60 year periods in the available data, starting with a portfolio of $2,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 83 cycles. The lowest and highest portfolio balance throughout your retirement was $2,000,000 to $58,126,914, with an average of $20,266,626. (Note: values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 60 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.


how would you evaluate the risk?

The cane was from a car wreck? I always assumed it was necessary due to his excessive swag and the unavoidable pimp limp that goes along with being such a great talent.

Well, in my opinion though, today’s economic environment of low bond yields and high cyclically adjusted price-to-earnings ratios for stocks is somewhat unprecedented, but the traditional 4.0% safe withdrawal rate should remain an appropriate baseline, unless the forecast is that the fundamental engine of economic growth is damaged far worse than during the Great Depression.

That site is awesome! Thanks.

As has already been stated, the problem with the OP is lack of specificity in "set for life" but it also includes some restrictions (no kids, etc.) but not others. So people should post whatever set for life means to them, and then how much they think it would cost.

Obviously, there is no reason that the money is all we'll ever have since there's been a ton of talk of how to invest it, so there should also be no restriction as to whether you want to keep working.

Set for life to me : Being able to do everything I would ever want to do and having the question of whether or not I could afford it be non-existant.
It also means that I don't HAVE to work anymore if I don't want to, but it turns out that a lot of what I'd do in my free time would be things that make money, so my set for life amount is lower.


I wouldn't go nuts with spending because a lot of the higher end **** doesn't interest me. I used to do a lot of catering for very high end clientele, billionaires and sultans and such, and I always kept thinking how on earth could they spend $50 mil on this estate in the Hollywood Hills, etc. I wouldn't do that if I had all the money in the world.

What I would spend money on:
Traveling all over the world
Eating out at really good restaurants, probably a couple times a week
Get a decent house here in L.A.
Have a couple kids
Normal expenses, etc.
Purchase condo somewhere else too, like Aspen or Hawaii.

And then, the ways that I'd spend my time would continue to make me money. I'd get involved in real estate. I'd continue playing poker, which has been a consistent money maker for me for about 8 years. I'd write and produce films doe myself and my friends to star in. I'm currently doing that now, as well but would do larger projects and take bigger risks financially if I had the scratch. But I wouldn't be trying to make billion dollar films. And then I'd also invest to get a whatever% yearly return on my money, although I'm not a finance guy at all and there's already plenty of disagreement ITT about a realistic percentage, risk of ruin, rate of inflation, etc. so that's hard to quantify.

I might do some other projects as well, depending on how much free time I'd have. I'd pick up some hobbies that aren't really much money at all, like cooking classes, or learn the guitar, or get in ridiculous shape.

So... Idunno, 4 million?

A couple of thoughts for the morning...

If anyone is offering you an investment that they promise will make you 10% without any risk, run away as fast as you can, that's getting into Madoff territory. (If it's too good to be true...)

Double Down, we have almost exactly the same idea of "set for life". The only disagreement that I would have is that you could live well forever on what is left of 4 million after you buy a nice house in LA and a condo in Aspen. (Of course, if you work, all the numbers change. My goal was to never have to think about money again and I certainly don't want to have to work at seventy years old. I have friends in this position and it looks pretty scary after they've lived an upper middle class retirement for the past ten to fifteen years. They were company executives who are now having to apply to be Walmart greeters.)

Damn, that is scary.

But yeah, the reason why my number is lower is because I'll be doing things to bring in more income.

Nobody is going to guarantee you 10%. That's an invitation to a lawsuit down the road. But if you think nobody can return 10% then you are sadly underinformed and have bought into the "common man" BS about mutual funds and index funds.

http://www.zerohedge.com/sites/defau...orst%20HFs.jpg

Over how long a period?

I'm more than well aware that many funds can beat 10% in a single year. I'm not quite sure what you mean by "common man", I've certainly beat the market, sometimes by more than a thousand percent in a single year in the past. I stated "promise" (they can't) 10% (meaning over years) without risk (which you ignored) and then you call me uninformed.

What was your friend's return in 2008? Even the hedge funds suffered, because of calls on the shorts. I've been a fairly astute investor for more than thirty years, although the vast majority of that was in real estate which has since been sold. (I own other assets, but I've never owned mutual or index funds.)

Since you are (happily I assume) "informed", why are you still dreaming of the good life? Why aren't you living it? I'm not sure why you would misquote me to then call me uninformed, but I've done pretty well over the years.

He said without any risk.

What exactly do you think this proves?

The results are more positive than I expect though the low of exactly what we started with has me skeptical.

In any case, it does not invalidate what I said which was " if your average growth was 3%, that doesn't mean you can withdraw 3% per year and still have your principle at the end". I am assuming you are putting it in to FireCalc the default setting of 75% stock 25% bond with .18% ER which over most 60 year periods in US history will yield a bit over 7% per year.

many funds have beaten 10% over 10 or 15 year or even 20 year periods only to subsequently blow up and lose 75% of their value in a single year and forced to close.

While I don't focus on this specific side of the market, I assume you mean 10% average. I think that I would be skeptical of a company, whatever they invested in, that never had a down year in twenty years. I'm not saying it could never happen, but I'm not sure how it would work.

Whatever sector they chose to be in would have some type of cyclical nature and if they diversified into several disparate sectors (to lower their variance), they would then lose some of their returns. I will study this a bit more...

It's mostly just a function of the vast number and variety of hedge funds out there. By sheer chance, some will be successful for long stretches of time and the people who run or invest in them will swear that it's a sure thing. Until it isn't. And then they have a tendency to fail spectacularly in ways that a well-diversified slow-but-steady portfolio just won't. Of course the ones that fail won't show up in the brochures advertising that manager's great overperforming funds next year, but he'll have others. There's a strong, strong, survivorship bias involved anytime you hear about some hedge fund manager beating the market for any significant length of time. Anyone who says they can get 10% return in their sleep is either uniformed about the risks involved or trying to sell you something, or both.

You're such a "common man".

you have to allow yourself to dip into it, but you're structuring the payments in a way so that the balance isn't supposed to be depleting.

For me, set for life means having an amount such that devoting any meaningful time or effort solely toward making money is no longer worth it to me. I don't need a super-yacht or a private jet, but I would want a big house not in hickville, a beach house, the ability to drive whatever cars I want to within reason, and the ability to always get the better/more expensive stuff in terms of food/travel/entertainment. With 50k or 100k or 200k a year, I'd still feel compelled to devote a significant amount of effort toward making more money.

Surprised no one likes this, giving a simple but decent molecular explanation for habituation and how it causes you to eventually perceive new found wealth without the same intensity as a function of time (habituation)

The concept of habituation and how your brain adjust to stimuli is fascinating as it also is the exact reason people experience drug withdrawal and dependence. There is an implication that the middle road is the best(I love Buddhism) But literally once you start disrupting your brain chemistry, it struggles to maintain an equilibrium through gene expression. So stick to the Middle Path and weed if you choose to do any of it.

Seems like a lot of people here would be doing it wrong if they were given a large sum of money.

If you put the money in property you don't lose your principal and house prices adjust with inflation so you don't get stung their either like you would with a regular investment. Your rental income is your "salary".

Also if you are living somewhere expensive in America wouldn't it make more sense to go somewhere you could have a better quality of life with your money? Once you take out having to stay somewhere because of work you really open your options.

You could probably take 1 mill, buy property somewhere cheap but with good rental returns and move to Thailand and live like a king.

Lol @ working if you had 5 mil. Just retire and live off of the interest. Even if you took zero risk you'd make 250k a year.

5% with zero risk. Tell me more.

are you set for life if you feel the need to work still?

You also forgot about inflation.