Because I want to retire wealthy like my parents and live in an affluent suburb with the good school districts and lake effect weather, I would need around $20M after tax winnings. I’m only looking at a modest 5% return on investment. I do intend to live the leisurely lifestyle.
I’m pretty sure most people think they need more money then they do…I don’t just mean because of not being frugal, but also they forget expenses associated with working, and having to pay people to do stuff we don’t have time or energy for because work uses up so much time and energy.
I think self and Kevbabe could live OK and happy off investment income from $1M in principal. We could live really well with $3-5M socked away.
If I were not working for a living, I could live somewhere with low cost of living, inexpensive housing, and low property taxes. Mexico would do, but even middle US could work… Many of these places don’t have much in the way of paying jobs…not a problem for rich Kevbo. Or I could buy a distressed property that I’d have time to fix up. I’d have time to do most of the work myself.
Since I don’t need a job, I’d be free to choose a great house deal, without regard to a wicked commute, or likelyhood of being snowed in for a week each winter, etc. And I’d have no deadline (e.g. have to find a place before I start new job next week) so I could wait for a good deal.
And I could hit that principal and pay cash for a place. So the place will end up costing me only 30% or so of what I’d lay out by the time a mortgage would be payed off.
Next thing is that working for a living actually COSTS a fair bit of money. Just getting there costs money. I currently have to keep, insure, maintain, license, repair, and fuel at least one fairly reliable car. Most don’t have time to do the work themselves. With 60 hours (counting commuting) freed up each week, I can reduce vehicle expenses to near zero. A scooter isn’t fast, but hey, I now have time to get there. My office is pretty casual, but I still spend probably $500/yr. on work wardrobe.
If I didn’t have to work, I could buy the fantastic produce at the farmer’s market, time to cook cheap meals, and time to shop for good deals on other stuff at flea markets and garage sales. I’d have time to fix stuff that broke, and stuff I got for free because it was broke. He’ll I’d have time to actually grow my own damn food, or suppliment anyway.
Entertainment: Fixing stuff is fun for me, but Fly fishing is also cheap fun. I’d have time for it. Ditto with hunting. These are both currently pretty expensive, because I have to factor in using my limited, and thus highly prized, vaction time.
I live pretty frugally now…but I can see a lot of places where I currently trade money for time.
I really like Kevbo’s ideas, which were things that weren’t necessarily expensive, but time consuming. I find it very clever to enjoy things by virtue of having time to do them, not just being able to afford it.
I think if I landed several million dollars I would probably go back to school (since money is a big roadblock for me right now) and try for a Master’s degree. Then I would probably try my luck working as a freelance writer, or maybe teach piano lessons out of my home; fun jobs where I am my own boss and decide my own hours, and have a supplementary income to ensure my lifestyle.
As for housing, I would probably buy/build a modest home somewhere where I could have my own well, and build solar panels on the roof. The idea being that I could be as financially self-sufficient as possible (so even if the money runs dry for whatever reason my living expenses would still be as low as possible).
I’d love to see someone being asked what they will do with the ONE MILLION DOLLARS!! (Dr Evil pinky to mouth) they won, and say “put a down payment on a fixer upper in Silicon Valley”.
I already own, so I could cut my mortgage expense (unless I find that I can earn more on my money than I’m paying in interest, in which case it pays to keep the mortgage).
My employee takes care of most of my medical insurance expense, plus provides group rates for life and long-term care. Those are a straight increase in personal expenses.
I save $20.00/week in MTA commute cost. However, I’ll be driving much more, thus no savings and maybe an increased expense due to gas. Perhaps the additional use shortens the life of my (fully-owned) car, or increases the chance for mechanical failure.
I pay to get my shirts done at the laundry. $5.00/week savings, plus an additional $20/month in other dry cleaning costs. The house cleaner stays; now that we will be spending more time at home, we might have to increase to 2 days per week.
I often travel for work, thus most of my meals are comped. Staying at home actually increases my grocery bill, plus increases gas and electricity consumption.
Right now, I spend approximately 12-14 hours/day on work-related tasks. I now have 5 days a week to fill; entertainment expenses, even if frugal, increase. I, too, like to fish. My fishing trips are not especially cheap, but they are infrequent. In no way is increasing my time spent fishing saving me money. I do have to toss out the idea of buying a ‘fixer-upper’, as I neither like to do home repairs / improvements, nor do I have even a smidgen of skill at it (a lack on my part that vexes Ms. D_Odds).
I also plan for inflation. While overall inflation, as measured by CPI, has been low, college and health care costs have risen sharply (and lets not even talk about the price of gas). If living off of investment income, you have to plan to roll additional funds back into income-generating investments in order to cover increasing costs.
We could not earn, reliably, income on a $1 million net jackpot to equal our current income. We would be hard pressed to do so on $2 million. Could we live more cheaply than we do? Yes. Do I want to give up the creature comforts I’ve earned. Not especially. I lived very cheaply when I was in the Air Force. I lived very cheaply just starting out. I earned, the old fashioned way, my nice vacations and 35000 channels of horrible TV and so on. I’m not ready to give them up, and I can safely say the same for Ms. D_Odds. We could retire early, and in more luxury than currently planned with $1-3 million, but no way could we just walk away upon receipt of that sum.
5 million net would be the point I could totally stop working. I could probably earn $100k investing fairly conservatively, after taxes. That would be living a modest, middle-class existence in this area.
I could quit for one million, post taxes. No mortgage, no kids, no wanderlust and hate to drive. If I moved, I’d make a bundle on my current home, and could easily build a brand new one, where taxes, insurance, etc. are much lower. My present investments generate my take home pay. I already have nursing home insurance. BUTTTTTTTTTTTTTTTTTTTTTTTT I’d still like the burden of dealing with winning a mega-jackpot, just to prove I could rise to the occasion.
$100,000 would be enough, if I worked regularly. $225,000 at least, to consider stop working. $500,000 to actually stop working.
I think I could quit if I had $3 million, after taxes. Housing in South Florida is getting ridiculously expensive, but I’m only here for my job. If I didn’t have to worry about working I’d move back to west central Florida in a heartbeat. I could pay off the mortage on my parents’ new house, build a house of my own and plant a little flower garden. As long as I have a big grassy lawn, a nice shade tree and a pile of good books, I’ll be happy.
Your location is listed in coordinates that I can’t read. Is it Afghanistan by any chance?
If anyone has a spare $30,000 or so, I’d love to have it so I could quit my job and work full-time on finding a good job.
Hey, that reminds me. Lotto Pool Guy is from Belize. He probably could live very, very well with a million American dollars if he went back home.
I figure about 2.5 million after taxes, invested conservatively, would pay off the house and roughly replace my current income (which actually means I can plow the current amount of mortgage payments into increasing the principal as a hedge against inflation).
I could probably get by fine with 300k as long as I lived in the midwest and got to invest most of it.
I’d actually want to continue to work. Just until coming to work at my little convenience store in a $1500 designer suit gets old. I would need $100 million so that I could pull that one off with little guilt.
I figure 1.3 would do me for retirement.
1 million to invest and 300,000 for a house. Once you buy a house outright living exspenses go way down. If you own your house that leaves insurance (car, house and health), utilites (gas, electric, cable, phone), car payment (maybe) taxes and food.
I figure that 35,000 after taxes (being conservative on estimating the investment income, 7% rate of return with 50% tax) would be fine. My bills would run about 5280 a year (gas, electric, cable, phone. That’s what they cost now) Not sure about insurance or food but I eat pretty cheap. That would leave a lot more disposable income than I have now. Plus throw in the miracle of compound interest and I’d be pretty well set.
The sad thing is my luck really sucks. I ain’t ever gonna win a million.
Slee
$8,000,000 is my figure. I’d actually work two more years until I’m eligible for a 25 year retirement (which I don’t currently plan on taking). But I figure I’d have $1,000,000 to spend now on a good house, car, etc. Then I’d invest the other $7,000,000 and the interest, combined with my pension, would keep me comfortable.
Probably somewhere around 1.5 to 2 million would be more than enough for anything I’d reasonably want to do. Prudent investments could increase the capital appreciably by the time I need to pay for kids’ educations and still have enough to live on when I’m old enough to really retire. In the meantime, I could continue to live my semi-student lifestyle. After paying off the damnable student loans hanging over my head, I’d probably buy a few toys, but I don’t really covet things that much. Probably an outgrowth of taking close to 8 years to graduate, between working at shitty jobs to get money saved for school.
I also remember doing a thread like this sometime in the past.
I came to the conclusion that we’d need to win over $15 million to not have to work again.
I didn’t do the math for a lump sum payment, as I’d probably not handle that amount too well. But I believe the standing figure is that you get $50,000 for each million of the jackpot. That comes out to $750,000 per year before taxes.
Figure that taxes will take about half (I’m rounding for ease, 40 percent is harder to figure out), so that leaves us with $375,000 per year. Of that amount, half would be put away into a savings account for the time after the payments were up. (I know that some could go into a tax defered type of investment, so that would lower our taxes, I’m talking broad outlines here, not exact dollars) So that leaves us about $187,000. Now I personally can’t win the lottery and retire, and let my mom keep working, so figure for her yearly salary expenses, about $45,000. Same thing with my mother-in-law, add another $35,000 for her. That leaves us with $100,000 left. A little less than we make right now. While it’s true that taxes have already been taken out of that amount, if we’re not working, we have to be doing something. So I’m sure our leisure and entertainment expenses would be more. Not to mention travel, since I love to travel, I imagine we’d spend most of our time doing that.
Now some of the yearly bills could be lowered, if we paid off all the mortgages and such like the first year, but that would leave less to really live on, so then we’d have to keep working to meet other expenses. So…like I said…$15 million minimum. I don’t even play if it’s less than that.
Now Wesley, you are a college student so I assume you are pretty young. I assume you haven’t taken any finance classes yet or it is just not your forte. That is not even within one order of magnitude for a realistic answer.