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BlueVeins · 22-25
I'm grateful that I wasn't born rich. I'd like to be moderately wealthy today, so I would not have to worry about my whole life crashing down if I lose my job and can't find another one. I think I would like three million dollars at most, at least for my own benefit, so that I would never really feel any pressure to work again. I don't want a fancy car or house or anything like that.
Heartlander · 80-89, M
@BlueVeins 3 mil would easily generate $150K+ safely in taxable annnual income. Enough for a comfortable, worry free life in most places. Without “earned” income, however, there would be no Medicare or social security benefits to greet you on getting old. So pick a fun job to work at for a few years to meet the Medicare requirements at least.
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Heartlander · 80-89, M
@BlueVeins I’m still seeing ads for 5%+ on CD type savings, but even 3% and 90K would work for me.
BlueVeins · 22-25
@Heartlander Couple things --
CD saving rates change wildly over time. Rates are high right now, but they'll go down as the Fed cuts the Prime Interest Rate.
If you use up all the interest from your savings account, the actual value of your account will decline due to inflation.
If you actually wanted to use a CD account with 5% interest, you could only safely withdraw around 2% without causing problems for the time being. But obviously, that's painfully low, so most people invest in higher return assets like stocks. Stocks return ~10% a year. Reserve 3% for interest, 3% for volatility, and 1% for dollar cost averaging, and you've got 3% left.
CD saving rates change wildly over time. Rates are high right now, but they'll go down as the Fed cuts the Prime Interest Rate.
If you use up all the interest from your savings account, the actual value of your account will decline due to inflation.
If you actually wanted to use a CD account with 5% interest, you could only safely withdraw around 2% without causing problems for the time being. But obviously, that's painfully low, so most people invest in higher return assets like stocks. Stocks return ~10% a year. Reserve 3% for interest, 3% for volatility, and 1% for dollar cost averaging, and you've got 3% left.
Heartlander · 80-89, M
@BlueVeins
Yes. Also paying down or paying off a house mortgage is the equivalent of a high interest CD, and at least for now, appreciating home values will overwhelm whatever the inflation rate. Car mortgages also, but be careful of early payoff penalties that go along with many car loans. That inflation is probably what keeps us old people holding on to our no mortgage homes. We are on the benefit side of that inflation rather than the bad side. And with no mortgage payment social security alone is enough to live very comfortably, and the IRAs only have to be tapped to meet the RMD requirement.
Yes. Also paying down or paying off a house mortgage is the equivalent of a high interest CD, and at least for now, appreciating home values will overwhelm whatever the inflation rate. Car mortgages also, but be careful of early payoff penalties that go along with many car loans. That inflation is probably what keeps us old people holding on to our no mortgage homes. We are on the benefit side of that inflation rather than the bad side. And with no mortgage payment social security alone is enough to live very comfortably, and the IRAs only have to be tapped to meet the RMD requirement.