You Know What Really Grinds My Gears? Now with 3x more gears...

[Shazam]

Originally Posted by Jason14h

Using the 4% rule that's $160,000 year

If you make $160,000 a year living in the region of Alberta, Canada, you will be taxed $53,196. That means that your net pay will be $106,804 per year, or $8,900 per month. Your average tax rate is 33.3% and your marginal tax rate is 42.0%.

You aren't retiring in Luxury off $105,000 a year. You certainly can retire, and/or take time off work, work part time, and be very comfortable.

But if you don't hate your job you actually can keep working and start living a real life of luxury with an extra $100K a year in income plus your working salary.

The money will not be taxed as employment income. It will be eligible dividends and cap gains. You're looking at something like a 10% tax.

[Jason14h]

Originally Posted by Shazam

The money will not be taxed as employment income. It will be eligible dividends and cap gains. You're looking at something like a 10% tax.

Sorry you are right about Capital Gains/Dividends vs Income - Stupid me

Approx 15% on $160K so you are looking at $145,000 year

Still not retiring in luxury on that is the point - It's isn't hard to see why someone whos under 50 would keep working if they don't hate their job.

[CroFlames]

Originally Posted by Jason14h

Using the 4% rule that's $160,000 year

If you make $160,000 a year living in the region of Alberta, Canada, you will be taxed $53,196. That means that your net pay will be $106,804 per year, or $8,900 per month. Your average tax rate is 33.3% and your marginal tax rate is 42.0%.

You aren't retiring in Luxury off $105,000 a year. You certainly can retire, and/or take time off work, work part time, and be very comfortable.

But if you don't hate your job you actually can keep working and start living a real life of luxury with an extra $100K a year in income plus your working salary.

True, but at the same time you aren't making car payments, mortgage payments, loan payments etc.

You are spending that $105,000 annual net income on insurance, property tax, and utilities and the rest is for having fun. Pretty comfy lifestyle borderline luxury.

[SutterBrother]

Originally Posted by CroFlames

True, but at the same time you aren't making car payments, mortgage payments, loan payments etc.

You are spending that $105,000 annual net income on insurance, property tax, and utilities and the rest is for having fun. Pretty comfy lifestyle borderline luxury.

I'd spend $100k on blow and hookers, and then just waste the rest.

[Jason14h]

Originally Posted by CroFlames

True, but at the same time you aren't making car payments, mortgage payments, loan payments etc.

You are spending that $105,000 annual net income on insurance, property tax, and utilities and the rest is for having fun. Pretty comfy lifestyle borderline luxury.

Sorry why arent you paying for those things?

The $160,000K 4% rule is based on not spending ANY of the $4million and living off its returns + inflation adjustment

If you buy a car, house, etc outright, you subtract that from the $4million and the yearly return is lower

[Locke]

Originally Posted by SutterBrother

I'd spend $100k on blow and hookers, and then just waste the rest.

Way to live George!

[CroFlames]

Originally Posted by Jason14h

Sorry why arent you paying for those things?

The $160,000K 4% rule is based on not spending ANY of the $4million and living off its returns + inflation adjustment

If you buy a car, house, etc outright, you subtract that from the $4million and the yearly return is lower

The assumption is that your net worth before you won the $4MM is not zero. So you pay off the home and car(s) and live off the winnings.

I think most people on this board have at least starting chipping away at their mortgages.

I feel like this should be in random thought thread.

[Shazam]

Welp, I guess I should retire.

* eyes away jpg *

[Table 5]

Originally Posted by Jason14h

If you buy a car, house, etc outright, you subtract that from the $4million and the yearly return is lower

Indeed. Never mind the fact that everyone thinks that they would just leave the capital alone and "live off the interest"...but I feel like that's much harder to do in reality. Most people would burn through quite a bit (if eventually not all) of all that capital by splurging on material goods, travel, gifts for family, "investing" in their cousin's business etc.

[Locke]

Originally Posted by Table 5

Indeed. Never mind the fact that everyone thinks that they would just leave the capital alone and "live off the interest"...but I feel like that's much harder to do in reality. Most people would burn through quite a bit (if eventually not all) of all that capital by splurging on material goods, travel, gifts for family, "investing" in their cousins business etc.

I'd invest it and then bail on Canada. You'd never see me again. Just completely gone.

[Table 5]

Originally Posted by Locke

I'd invest it and then bail on Canada. You'd never see me again. Just completely gone.

You don't come across to me like a guy who can keep quiet for too long, ha.

But I hear you. Not that $4M is f-you money, but I agree that this is probably not the country to live in if you're rich.

[Sliver]

Originally Posted by CroFlames

True, but at the same time you aren't making car payments, mortgage payments, loan payments etc.

You are spending that $105,000 annual net income on insurance, property tax, and utilities and the rest is for having fun. Pretty comfy lifestyle borderline luxury.

That's not luxury at all if you have a family, though.

I have kids 18 and 17. Older one is in university. Younger one going to university next year. That ####'s expensive. I'll be supporting them for another five years minimum, plus I want to be able to help them get a leg up at the beginning of their lives (e.g. down payment help). I'm not going to let them flounder and take on a bunch of debt when they're at the bottom of their careers while I'm hanging out at the top of mine. That'd be the epitome of selfish IMO.

Also, sure, my wife is sitting pretty with a 2022 vehicle right now, but obviously that'll be replaced three or four times over the next three to four decades of our lives. Plus my vehicle. More big spends.

Four million is a ton of money, but - in spite of what Scotiabank's marketing team wants us to believe - most people are not richer than they think; they're poorer.

That's a retireable amount, but only if your age, expenses and familial obligations (self imposed or otherwise) allow it. It's absolutely not bordering on luxury and - in fact - is a bit risky if you quit your job. Just wait until the stock market takes a 20% haircut. Now you're not pulling out what you expected and if you've been out of work for a bit it's likely your skills are obsolete.

Plus I think most people do an atrocious job of budgeting. I mean, I have a line item for household maintenance I value at 3.5% of my home's worth divided by 12. It's a completely normal amount that you can expect to have to pay to keep your home at standard of "well maintained". I don't think most people do that in their budget (or they low-ball it), but that's over $2k and less than $3k/month in my case.

Vehicle maintenance line item? Tires, oil changes, windshields and then other mechanical issues? Those are actual costs you will face forever.

I think four million is enough for coasting. The FIRE guys (financially independent retire early) are big on coasting. Get a job that pays your current bills and keeps your greasy paws off your investments, but is one that lacks the high pressure of a "real" career. Only issue with that is if you're going to work, anyway, it may not be the worst to just grind out a few more years at your high-paying job. Those "easy" jobs are typically not that easy and you end up with stress still, but making #### money.

[Locke]

Originally Posted by Table 5

You don't come across to me like a guy who can keep quiet for too long, ha.

But I hear you. Not that $4M is f-you money, but I agree that this is probably not the country to live in if you're rich.

You know me. So I'm going to take that as a compliment. For now...

But yeah, ultimately Canada is becoming too expensive to live in unless you're hustling or generationally wealthy.

[CroFlames]

Originally Posted by Sliver

That's not luxury at all if you have a family, though.

I have kids 18 and 17. Older one is in university. Younger one going to university next year. That ####'s expensive. I'll be supporting them for another five years minimum, plus I want to be able to help them get a leg up at the beginning of their lives (e.g. down payment help). I'm not going to let them flounder and take on a bunch of debt when they're at the bottom of their careers while I'm hanging out at the top of mine. That'd be the epitome of selfish IMO.

Also, sure, my wife is sitting pretty with a 2022 vehicle right now, but obviously that'll be replaced three or four times over the next three to four decades of our lives. Plus my vehicle. More big spends.

Four million is a ton of money, but - in spite of what Scotiabank's marketing team wants us to believe - most people are not richer than they think; they're poorer.

That's a retireable amount, but only if your age, expenses and familial obligations (self imposed or otherwise) allow it. It's absolutely not bordering on luxury and - in fact - is a bit risky if you quit your job. Just wait until the stock market takes a 20% haircut. Now you're not pulling out what you expected and if you've been out of work for a bit it's likely your skills are obsolete.

Plus I think most people do an atrocious job of budgeting. I mean, I have a line item for household maintenance I value at 3.5% of my home's worth divided by 12. It's a completely normal amount that you can expect to have to pay to keep your home at standard of "well maintained". I don't think most people do that in their budget (or they low-ball it), but that's over $2k and less than $3k/month in my case.

Vehicle maintenance line item? Tires, oil changes, windshields and then other mechanical issues? Those are actual costs you will face forever.

I think four million is enough for coasting. The FIRE guys (financially independent retire early) are big on coasting. Get a job that pays your current bills and keeps your greasy paws off your investments, but is one that lacks the high pressure of a "real" career. Only issue with that is if you're going to work, anyway, it may not be the worst to just grind out a few more years at your high-paying job. Those "easy" jobs are typically not that easy and you end up with stress still, but making #### money.

Well said. I'm financially disciplined for the most part and do personal budgeting.

But if I ran into $4MM I'm likely buying a new truck for me and a luxury SUV for the missus. Probably some luxury vacations too.

Did you just talk me into working even after winning $4MM? lol.

[Shazam]

Jesus Christ.

$4MM is more than enough to retire on.

It's when that's the issue.

But if you got $4MM right now and you wanted to retire in 10 years...

@ 6% annum for 10 years = 1.79 factor = $7163390.

[Sliver]

Originally Posted by Locke

You know me. So I'm going to take that as a compliment. For now...

But yeah, ultimately Canada is becoming too expensive to live in unless you're hustling or generationally wealthy.

Agree.

That's another reason why I don't want to take my foot off the gas. Make hay while the sun is shining. You can do well right now, but it's getting harder and I think there are fewer opportunities for those coming up after us. The low-hanging fruit is not very abundant. Because of my pessimism for the future, I want to build up some insulation for my family going forward. I'm not going to be one of those guys kicking back on an early retirement while my kids live an anxious and stressed-out life trying to get traction to buy a fricken townhouse. I'm in it with them.

Once they get settled in life I'll re-evaluate my own retirement.

Or maybe my business will randomly go tits up and I'll get a job washing Locke's helicopter for $12/hour and a pat on the head. Anything can happen in this crazy world.

[Shazam]

Originally Posted by CroFlames

Well said. I'm financially disciplined for the most part and do personal budgeting.

But if I ran into $4MM I'm likely buying a new truck for me and a luxury SUV for the missus. Probably some luxury vacations too.

Did you just talk me into working even after winning $4MM? lol.

Just buy ####ing XDIV and you'll be fine.

[Sliver]

Originally Posted by Shazam

Jesus Christ.

$4MM is more than enough to retire on.

It's when that's the issue.

But if you got $4MM right now and you wanted to retire in 10 years...

@ 6% annum for 10 years = 1.79 factor = $7163390.

lol, yeah that's not the conversation anybody is having.

$2 million is plenty on a long enough timeline.

The conversation we're having that is obvious to everyone except you is: would you retire tomorrow if you won $4 million? Literally everyone knows it'll grow if you keep working and let it build for a decade, so that adds nothing to the conversation.

You're basically saying it's not enough to retire and you'd have to keep working haha.

[Locke]

$4M would be great! I could engage in a respectable drug habit, get some really nice Scotch and maybe even take up smoking?

See...this is the problem with retirement savings...you never know how long you're going to live so people scrimp and save and try to be conservative because they mistakenly believe that the only aspect they can control is the financial element.

When in truth...if you subsist exclusively on Oreos, cigarettes, scotch and crossing the road drunk and blindfolded you can really bring that age number down to accommodate your available funds!

Now thats how you play 5D Chess!

Everyone always just wants more money, nobody ever thinks to bring the living age down. Thats the ticket!

[Fuzz]

Let's say you have 40 years left in life. That's $8333 a month with zero growth. If you have investment growth match inflation, could you live a happy life off of that amount now? I sure could. I'd retire immediately.