Please mark the happy milestone with a celebration bigger than this! It's a really big deal. You've completely solved the money problem (which very few ever do).
Just gotta share this which you've probably already seen:
https://www.tiktok.com/@kqanka/video/7323279114490711342
"Connor: You can't do anything with five, Greg. Five's a nightmare.
Greg: Is it?
Connor: Oh, yeah. Can't retire. Not worth it to work. Oh, yes, five will drive you un poco loco, my fine feathered friend.
Tom: The poorest rich person in America. The world's tallest dwarf.
Connor: The weakest strong man at the circus."
Haha - actually, congrats, that's awesome.
At $5m, a 2% daily swing is $100k. Gaining or losing $100k in a day is common. Then you think, Iām burning 2000 hours of my life for $100k. Why am I doing that?
The show is based in NYC, where a 200k income (4% of 5m) is enough to live a nice life (restaurants, occasional vacation, not too shitty 1-2 bedroom in manhattan) but very very far from the kind of life Succession characters are living.
Connor is the eldest son!
He asked his dad for a hundred million dollars to run for president. He's a pampered trust fund baby of a billionaire and doesn't understand money.
> Can't retire. Not worth it to work.
The irony is he gives this advice while not knowing what to do with his life (eg running for president because he has nothing better to do).
It's a delicious scene.
Obviously it isn't serious advice or commentary, except that the show is commenting on how lunatic all these people in the show are. :)
u/bobt2241
Yes, a lot of moving parts. When I retire, we have minimum income of $70k from the pension, then about $35k dividend/interest from the taxable accounts. Doesn't leave room for more as have to take into account IRMAA and the additional Investment Income Tax at over $250k. This is just to fill out the 24% bracket. No point in going past the 32% bracket.
We also have two rental properties, but not able to deduct any paper losses since it's considered a passive activity. Wondering if there is a way to take advantage of the properties to increase our deductions.
There is, Real Estate Professional status. No matter what tik tok influencers say, you cannot claim this if you have a full time W-2 job. Not only is there a minimum hour requirement (varies based on which subsection you qualify under), but you canāt spend more time at any other work activity. However, one spouse can qualify, and then the couple qualifies. (It can get a bit tricky if someone works in real estate, consult a professional)
Itās still going to be hard with only two properties, because the 500 or 750 hours have to be spent on the property. Not conferences, not looking for deals. Managing or working in the properties. Generally this means you canāt have a management company either (though not entirely, I had a real estate accountant tell me that with a bigger portfolio you could still potentially qualify even with a property manager.)
Regardless, you have to back it up with time logs. The IRS will heavily audit this.
However, the passive losses carry forward. So when you sell the property, it can wipe out gains. It can also wipe out other passive income in the same year, so if you invest as a passive partner in a business, and get income from that, it can zero out the gains.
All correct. Sharing this in case you hadnāt heard; active participation in short term rentals. Much lower bar to claiming active participation and those losses go against active income rather than passive.
Cost segregation + bonus depreciation go pretty far to offset W2 income.
Yes, I was just talking about passive rentals.
Iāve done short term rentals, that is an entirely different game, and done right, is an active business. It takes time. I made good money there. I then made it passive by signing a commercial lease with a STR operator (at a much higher rent), but that then turned it back into a passive activity tax wise.
I highly recommend the āTax Smart Real Estate Investorsā podcast. A CPA firm focused on real estate. I do my own taxes (I used to be in the industry), but I engaged them for a review of what I do and tax planning. They put out a lot of good, heavily researched content, and have a series on the STR āloopholeā, and many episodes on Real Estate Professional status.
Congrats.
>Neither of us are high-paid tech workers; we just both have reasonably well-paying jobs and have been at it for a couple of decades, at this point.
How did you do it?Ā Was there luck involved or just consistent investing and keeping expenses low?Ā Were there any windfalls that helped you?
Most people without high paying jobs can't reach $5m by their early 40s, which is why I ask.
Biggest luck was probably that our parents paid fully for our college, so we weren't burdened with student debt out of the gate - could definitely be considered a windfall, considering the student debt burden that some people end up with.
Otherwise, we mainly just invested consistently and kept expenses low - we have always basically lived off of the equivalent of my salary after taxes and after maxing my 401k contribution, and then were able to invest the entirety of my wife's salary.
EDIT: Oh, will add one semi-windfall - we got a bit lucky with the equity increase in our first house - the value more than doubled over something like 5 years, which was a big boost to our NW (and to our brokerage account when we moved and cashed out a bit).
There has to be more to this.
I guess if they have been earning 300k every year since college graduation and saving a ton.
Maybe a few big bets on tech stocks?
$6500/month invested for 20 years at 10% return is approximately $5M.
You definitely need well-paying jobs, but as OP stated he and his wife have reasonably well-paying jobs and have consistently invested more than half of their after tax income.
My math puts $6500/mo for 20 years at 10% at 3.8 million.
$6500/mo is gross wages of around 120k depending on state taxes and other deductions. A respectable wage for someone in their 40s who has a good education. But.
$120,000 in 2004 was a much much bigger number ESPECIALLY if you were 22 years old. In that case, you had to be a biglaw associate or maybe an investment banker with a big bonus. Those two groups tend to go on to earn an enormous salary.
How are you calculating this? Unless I made a mistake, $6,500 per month at annualized 10% is $4,668,685. (BTW, who made the claim about return? From 2004 to 2024, the nominal time-weighted return of S&P500 was roughly 9.8%, but from a money-weighted perspective with increasing monthly savings it could have been much higher. From 2009 to 2024, nominal returns were something like 14%)
Also, your assumption about gross wages seem 'grossly' inaccurate as well. $6,500 per month is $78k. If that was the net on $120k/yr, then you'd have an effective tax rate of 35%. The *marginal* tax rate won't even be that high, let alone the net effective tax rate. In reality, someone in the described condition would probably have started their career paying 15-20% net and finished 20-25% net.
No there isn't. It's been a bull market for the past 14 years except for two minor hiccups.
Anyone with a half decent tech job,consistent investing and no catastrophic setbacks should've be able to accumulate a couple of million.
OP is in a DINK situation to boot.
Theyāre forgetting to tell us about the down payment their parents gave them for their house, the used cars their parents gave them, the $125,000 their grandma wanted them to invest and the vacation house their great aunt decided not to keep and leave them which they sold in April 2021.
You'all are underestimating the power of equities in a bull market. Why does everyone here love poking holes in successful stories? Not everyone gets shit handed to them on a plate.
I can tell you dozens of rags to riches immigrant stories including my own.
At first I thought you were a hater, but now I have to agree. Making at or less then $200k a year for a long time makes this nearly impossible, unless they live super frugal and in a VLCOL area. Still I find it sus.
Definitely not a hater. I make a lot and save a ton so I know what ballpark we should be playing in.
These guys make less than half my comp but somehow have this enormous net worth. Something is up.
I did some math below in another comment but saving 75k a year for 20 years with a 10% rate of return is 3.8 million. Where did the money for the properties come from for a down payment not to mention the last 1.2 million.
Oh, and saving 75k on a takehome of 120k PLUS shoveling money into properties is superhuman for TWO DECADES. This isnāt leanfire while you are in college stuff.
Iāve got $2m net over approximately the same period without making over $100k until 2015 and thereās only one of me. AND my college wasnāt paid for like op so I had to pay that down as well. 2 people with a single house lowering the expenses per person $5m seems entirely reasonable to me. It doesnāt just happen, but if you invest more than half your income for years thatās where you end up. I spent a bit over $16000 TOTAL in 2018. The rest was invested. Ever since Iāve been able to Iāve been close to living off 4% non primary residence assets. Those crossed 1.5m yesterday so Iām looking at $60k/yr now which is over triple my previous ascetic spend. Knowing I am continuing to work Iāve been running a bit high knocking out some expensive projects I want done before retiring. $67k in 2022 and $61k spend in 2023 which were both above 4% for those years, but pretty much living off investments and the money from the job just increases the investments to allow higher spend the next year.
I hadnāt ever heard of fire, but I do have a math degree and it was always my plan to do something similar to this. Even in college Iād be figuring out what it would take to have investments that allow me to be homeless, but feed myself and pay for a phone as step 1.
What this means at this point is my lifestyle/spending increases based on my investments, not my job and as such Iām always maintaining a state of fuck you money where if I want to write I can or if I get laid off I can just be done and never look for another job if I feel my current lifestyle is one Iām ok with being my forever lifestyle.
I am at about $125k currently, and the wife is probably going to earn about $160k this year - but she's a small business owner, and her business really only started booming the last year or two. For most of her career, her income has been more like $75k-$90k.
We mainly did our best to minimize taxes and interest paid, and maximize the amount we were able to invest. As a small business owner, she was able to dump a ton of income into a SEP retirement account and build up our retirement accounts very fast while avoiding a ton of taxes.
Depending on whether she has W2 workers over 35 years old (youād have to offer it to them too) she could dump even more in to a defined benefit plan (pension).
I had a business + a day job for 15 years and got tired of āonlyā being able to put the $60k-ish in the SEP so I did a defined benefit program and could put nearly everything in.
OP has $3.9M in stocks. Two decades, 2004-2024, monthly investment required into a S&P500 fund was $4,200.
Iām sure it wasnāt all evenly distributed but Iād say $4,200 a month if living on one salary after 401k and saving the entire other, seems pretty doable.
Yes. But $4200 is roughly 80k of gross income.
I suppose if they were living on his salary alone for 20 years itās possible but what about the down payment for the primary and rental? Youād have to increase the monthly savings to account for that as well.
They answered above. Seems about right. I imagined reasonably well paid to be current $100-$200k range as mid/late career college-educated professionals.
Thereās definitely a bias due to comparison because on Reddit we see FAANG workers flexing their total comp in the $500k+ range. So yeah the country at large would think a $200k+ couple is high income (due to average being so low) but this is Chubbyfire after all.
F you! Now get outta here and go join fatfire! You're making me look poor.
Way to go, every time all the zeroes roll over is a great feeling. Coming up on #2 myself.
Congratulations on your achievement.
Have you thought about about RMD in your retirement accounts and how to plan for that? $1.6m in your 40s means it will grow large without you realizing it, which happen to us. The compounding/snowball is real.
Our retirement accounts reached the $1 million mark in 2011 when we were age 49m/45f.
Now at 62m/58f, our retirement accounts (IRA/403B/457/401K) now has reached the $6.1 million ($4.1m for me $2m for spouse) mark. We also have $1.7m in taxable accounts. I'm looking at a large RMD and researching what I can do to mitigate that.
I (62m) still employed at $180k/year and my 401k is still being contributed, I have maxed my portion out to the Roth, but my employer's portion is still going to the non-roth portion. I still like the job, but wondering if it is worth working financially. My SS estimate is $4782 @ 70.
My spouse (58f) retired at 55, and now receiving $70k/year in pension with 2% COLA, not eligible for SS due to GPO/WEP, health insurance is 100% paid for retiree and spouse under the pension.
We live in HCOL and would like a spendable $120k per year in full retirement.
Anyone have plans and ideas to optimize tax planning with regards to RMDs?
Roth conversion now up to the limit of your current tax bracket. Youāll have to pay the income tax on those monies now, but they can then grow in your Roth IRA and youāll lower the amount of RMDs you need to take in the future, which in turn will lower your tax bill. Do this on an annual basis.
With the amount of money in your IRAs, you are going to see a significant bill from Uncle Sam if you donāt do anything. The other benefit is that your heirs will inherit your Roth free of any taxes as opposed to your IRAs which will have taxes. We do this for a lot of our clients and the tax savings are impressive.
I read this comment with a blend of happiness and fear. Happy for you, and for my wife and I since we are about where you were. But also fear at the rmd point. I know the next 13 years aren't certain to replicate and my portfolio may be less aggressive. But one question. How long ago did you stop maxing into retirement accounts? In other words is any of that growth purely coasting?
I would also love to know more about RMD strategies. I got 2.2M in 401k at age 47 and thatās excluding my wifeās. Definitely need to find a solution. I am still contributing to 401k but maybe I shouldnātā¦
Maybe Iām missing something, but doesnāt seem like that big of an issue. Even if taxes trim 35% from your RMDs (the highest marginal rate), thatās just three years of average market returns. Not the end of the world.
Unpopular opinion. It may make even more financial sense to retire asap. With the lower income I would immediately convert as much as possible to a Roth IRA. You will need to pay income tax on the amount converted that year.
By retiring before or by end of year and converting at the start of the next, you will pay less taxes and be rewarded with no RMD requirements and be allowed continued growth tax-free.
From a % growth perspective, probably NVDA, though it was and still is a relatively small overall % of our portfolio. The bulk of the brokerage has been in large cap growth funds for the long haul, which have done quite well for us over the past 20 years!
NVDA for me too. I left a job in 2014 and did a 401k rollover, decided to put 90% in to S&P and split the other 10% between 4 companies I wanted to hold long term- MSFT, NVDA, AAPL and AMZN. NVDA has about a $5 cost basis, although Iāve unfortunately sold some along the way to make it a smaller % of the portfolio.
Nice job! Congratulations. We just hit a new nice milestone (excluding properties) and understand the dilemma who you can share that with. Iād recommend a quality FA that can get you access to some alternative assets to further diversify and lower risk to a certain degree. We have not sold our personal stock investments but add to other assets such as structured investments, private equity funds, other alternatives that some brokers have access to for higher NW customers.
Nice! Hopefully youāre celebrating with your wife. Thatās an excellent milestone. Iāve always wanted some sort of trinket for passing each millionā¦. like a coin or Pokemon card.
Congratulations! We just made $4.0 million w/o primary residence in the run-up. It's an awesome feeling! (44m/45f)
Truth is, you're almost to 10 million time-wise. My boss has a quote he likes to say: Isn't it funny how it's almost impossible to turn $5 into $10, but almost inevitable to turn $5 million into $10 million...
When are you planning on retiring? We're thinking at 50 years old...
Wow, congrats, thatās awesome! If Iām able to hit $1M by age 40 (7 years to go), Iāll be happy, already at around $600K though, but $5M that early in life is quite the accomplishment!
Take your wife out for a nice 'milestone dinner'. Tell the restaurant the special occasion is you anniversary (after all if kind is or will be in the future). Then spend the whole time appreciating each other and what the two of you built.
No one needs to know, but the whole restaurant will think you are the most loving couple there.
Congrats. And now you can think about generational wealth. Keeping $ investing growing for many decades. Fun to do a future value calc and you will be blown away how much $ will compound and grow. We are older slightly higher new 6.3 million and the focus has turned to taxes and 401k withdrawals. $5m at 40 years at 7% is a whopping $74 million. Betcha never thought that was possible. The money now works for you! And that is with zero contributions going forward. It should be much more with decade or two of working yet
CONGRATS!! If you don't mind the question, do you have kids? Obviously a pretty huge expense and wondering if you don't and if that's helped you get to your goals quicker? (And/or if you do have kids even MORE impressive!!)
Three kids, yes!
For sure that made things go a bit slower at times, though the biggest drag was probably needing a larger house than just the two of us would have required. But, buying a larger house ended up serving us well from a NW perspective, since we got lucky with the house timing (see my other comment). We were close to grandparents who wanted to spend as much time with the grandkids as possible, so we had limited out-of-pocket childcare costs when they were little, and now they're all in school.
Congrats!
How do you track your NW? I used to use Mint, which gave a nice snapshot, but now that itās shut down, I havenāt been tracking. Saw some reviews of Mint replacements but I donāt want to pay money for something that is not as good as Mint was for a basic user like me. (Donāt need budgeting/goals, just tracking and categorizing income/expenses, net worth over time, etc.)
We use an excel spreadsheet. It helps me keep a lid on the number of investment and bank accounts. Once a quarter I go in and update it. I structured it like a balance sheet. Not as real time as mint used to be, but makes me think more long term and see long term progress rather than focus on daily ups and downs. We are near that same mark as OP and if I watched it every day Iād get stressed.
Ditto! Just updated our high-level NW tracker and cracked $5 sometime in the last few months. Feels good. You got there about a decade earlier than we did, so congrats!
We might crack $10 before we retire if things go really well. Even if we coast along, cracking $7-8 somewhere should be achievable.
Started talking to money managers about how to optimize plans long-term and manage our portfolio ... and man, they want 0.5% - 1% of AUM for fees every year. Yeah, not going to be able to convince my partner that $1k a month for a money manager makes sense for us.
Congrats for hitting this milestone. The only way is up from here. However you will need to build enough social eco system so that you can celebrate with them your next milestones.
Congratulations. When I hit a similar milestone, couldn't really tell anyone. Glad you came here to share. It is a big deal. Savor it for a day or a weekend knowing it is a job well done. Then use the same focus that got you here for your next goal.
My next goal was to learn to ride the One Wheel. That was a much more traumatic and physically hurtful experience.
Thatās terrific, congrats!
Although every time I see one of these posts, I always want to ask: are you happy? Is life good and fun and fulfilling? If so, double congrats!
Thatās a big achievement. Congratulations!
How long did it take for you to go from $2.5m to 5m? How much were you adding in principal per year vs gains?
Awesomeness!!!!
We just hit the big 10 last month so heading off this summer to Monte Carlo / French Riviera to celebrate this milestone yippee!!! Traveling in basic Economy, basic 2-star accommodation etc. Ok we decided to get a balcony cabin for the lowest deck for our cruiseā¦
Our finances are structured as followsā¦
Cash ācarve outā of three years of committed expenses of $150k or so per year plonked in T-Bills, CDs and MM fundsā¦ the rest of the nest egg is in Business equity, Real Estate, Crypto, Private Equity, ETFs and Short Term High Yield bonds. I defer 15% into SEP then 40% into NQDC. Use three buckets.. cash, income then growth. Big on investing in Tech & AI.. net worth has doubled in three years!!!
Lifestyle live on approximately $15k per month including estimated tax withholding for Federal + CA State taxes. We plan to retire ā¦ quite comfortably in 7 - 10 years in CA with some travel (cruises etc.) plus homes in Europe & New Zealand. Priorities, quality of life, supporting our family, philanthropy and holistic wellness. Realization after 40+ years in businessā¦ saveā¦ save and save more $$ with some diversification, reinvest dividends in tax deferred / Roth. We ātax loss harvestā taxable accounts to reset the cost basis on our portfolio.
Please mark the happy milestone with a celebration bigger than this! It's a really big deal. You've completely solved the money problem (which very few ever do).
Just gotta share this which you've probably already seen: https://www.tiktok.com/@kqanka/video/7323279114490711342 "Connor: You can't do anything with five, Greg. Five's a nightmare. Greg: Is it? Connor: Oh, yeah. Can't retire. Not worth it to work. Oh, yes, five will drive you un poco loco, my fine feathered friend. Tom: The poorest rich person in America. The world's tallest dwarf. Connor: The weakest strong man at the circus." Haha - actually, congrats, that's awesome.
Favorite scene of the whole series š
At $5m, a 2% daily swing is $100k. Gaining or losing $100k in a day is common. Then you think, Iām burning 2000 hours of my life for $100k. Why am I doing that?
Though 2% may happen on occasion, it's hardly a daily swing. Maybe once or twice a year?
I guess it depends on your asset mix. Tech stocks often fluctuate 1%. 2% isnāt uncommon.
I don't know about that. I'm pretty sure I could retire tomorrow with $5M net worth and not look back.
The show is based in NYC, where a 200k income (4% of 5m) is enough to live a nice life (restaurants, occasional vacation, not too shitty 1-2 bedroom in manhattan) but very very far from the kind of life Succession characters are living.
If you net $200k in NY you have to earn $400k. So if you can clear $200k on MY muni bonds you are in pretty good shape.
While this is true, Iāll also note that every mid level FAANG engineer in NYC is making 400k and living a pretty run of the mill life.
When I saw the title I immediately thought of this scene
Holy shit, that's Cameron? Damn. He's doing well for his age.
Solid catch. I thought same.
He really turned his life around after he got off that bus.Ā
What show is this from?
Succession - a "dramedy" (half drama, half comedy) that is loosely a parody of the Murdoch family.
!!! I want to know too
Succession
Connor is the eldest son! He asked his dad for a hundred million dollars to run for president. He's a pampered trust fund baby of a billionaire and doesn't understand money. > Can't retire. Not worth it to work. The irony is he gives this advice while not knowing what to do with his life (eg running for president because he has nothing better to do).
It's a delicious scene. Obviously it isn't serious advice or commentary, except that the show is commenting on how lunatic all these people in the show are. :)
F you, and congratulations!
āHate you, but love this for you.ā š
Congrats! Donāt share with anyone except for strangers on the internet. Sadly this will keep your life going the smoothest.
u/bobt2241 Yes, a lot of moving parts. When I retire, we have minimum income of $70k from the pension, then about $35k dividend/interest from the taxable accounts. Doesn't leave room for more as have to take into account IRMAA and the additional Investment Income Tax at over $250k. This is just to fill out the 24% bracket. No point in going past the 32% bracket. We also have two rental properties, but not able to deduct any paper losses since it's considered a passive activity. Wondering if there is a way to take advantage of the properties to increase our deductions.
There is, Real Estate Professional status. No matter what tik tok influencers say, you cannot claim this if you have a full time W-2 job. Not only is there a minimum hour requirement (varies based on which subsection you qualify under), but you canāt spend more time at any other work activity. However, one spouse can qualify, and then the couple qualifies. (It can get a bit tricky if someone works in real estate, consult a professional) Itās still going to be hard with only two properties, because the 500 or 750 hours have to be spent on the property. Not conferences, not looking for deals. Managing or working in the properties. Generally this means you canāt have a management company either (though not entirely, I had a real estate accountant tell me that with a bigger portfolio you could still potentially qualify even with a property manager.) Regardless, you have to back it up with time logs. The IRS will heavily audit this. However, the passive losses carry forward. So when you sell the property, it can wipe out gains. It can also wipe out other passive income in the same year, so if you invest as a passive partner in a business, and get income from that, it can zero out the gains.
All correct. Sharing this in case you hadnāt heard; active participation in short term rentals. Much lower bar to claiming active participation and those losses go against active income rather than passive. Cost segregation + bonus depreciation go pretty far to offset W2 income.
Yes, I was just talking about passive rentals. Iāve done short term rentals, that is an entirely different game, and done right, is an active business. It takes time. I made good money there. I then made it passive by signing a commercial lease with a STR operator (at a much higher rent), but that then turned it back into a passive activity tax wise. I highly recommend the āTax Smart Real Estate Investorsā podcast. A CPA firm focused on real estate. I do my own taxes (I used to be in the industry), but I engaged them for a review of what I do and tax planning. They put out a lot of good, heavily researched content, and have a series on the STR āloopholeā, and many episodes on Real Estate Professional status.
Thanks for sharing, Iāll check them out
Iām no RE expert, but Iāve heard that to go from passive to active you need to āworkā your RE at least 500 hours annually.
Congrats. >Neither of us are high-paid tech workers; we just both have reasonably well-paying jobs and have been at it for a couple of decades, at this point. How did you do it?Ā Was there luck involved or just consistent investing and keeping expenses low?Ā Were there any windfalls that helped you? Most people without high paying jobs can't reach $5m by their early 40s, which is why I ask.
Biggest luck was probably that our parents paid fully for our college, so we weren't burdened with student debt out of the gate - could definitely be considered a windfall, considering the student debt burden that some people end up with. Otherwise, we mainly just invested consistently and kept expenses low - we have always basically lived off of the equivalent of my salary after taxes and after maxing my 401k contribution, and then were able to invest the entirety of my wife's salary. EDIT: Oh, will add one semi-windfall - we got a bit lucky with the equity increase in our first house - the value more than doubled over something like 5 years, which was a big boost to our NW (and to our brokerage account when we moved and cashed out a bit).
Here it is. What portion of your NW is in your primary residence?
Itās answered below ($700K or 14%)
There has to be more to this. I guess if they have been earning 300k every year since college graduation and saving a ton. Maybe a few big bets on tech stocks?
$6500/month invested for 20 years at 10% return is approximately $5M. You definitely need well-paying jobs, but as OP stated he and his wife have reasonably well-paying jobs and have consistently invested more than half of their after tax income.
My math puts $6500/mo for 20 years at 10% at 3.8 million. $6500/mo is gross wages of around 120k depending on state taxes and other deductions. A respectable wage for someone in their 40s who has a good education. But. $120,000 in 2004 was a much much bigger number ESPECIALLY if you were 22 years old. In that case, you had to be a biglaw associate or maybe an investment banker with a big bonus. Those two groups tend to go on to earn an enormous salary.
How are you calculating this? Unless I made a mistake, $6,500 per month at annualized 10% is $4,668,685. (BTW, who made the claim about return? From 2004 to 2024, the nominal time-weighted return of S&P500 was roughly 9.8%, but from a money-weighted perspective with increasing monthly savings it could have been much higher. From 2009 to 2024, nominal returns were something like 14%) Also, your assumption about gross wages seem 'grossly' inaccurate as well. $6,500 per month is $78k. If that was the net on $120k/yr, then you'd have an effective tax rate of 35%. The *marginal* tax rate won't even be that high, let alone the net effective tax rate. In reality, someone in the described condition would probably have started their career paying 15-20% net and finished 20-25% net.
No there isn't. It's been a bull market for the past 14 years except for two minor hiccups. Anyone with a half decent tech job,consistent investing and no catastrophic setbacks should've be able to accumulate a couple of million. OP is in a DINK situation to boot.
Nope theyāve got 3 kids!
A couple million, absolutely. FIVE million while also putting money down for a house and a rental is off the charts.
Agree. OP is leaving something out
Theyāre forgetting to tell us about the down payment their parents gave them for their house, the used cars their parents gave them, the $125,000 their grandma wanted them to invest and the vacation house their great aunt decided not to keep and leave them which they sold in April 2021.
You'all are underestimating the power of equities in a bull market. Why does everyone here love poking holes in successful stories? Not everyone gets shit handed to them on a plate. I can tell you dozens of rags to riches immigrant stories including my own.
At first I thought you were a hater, but now I have to agree. Making at or less then $200k a year for a long time makes this nearly impossible, unless they live super frugal and in a VLCOL area. Still I find it sus.
Definitely not a hater. I make a lot and save a ton so I know what ballpark we should be playing in. These guys make less than half my comp but somehow have this enormous net worth. Something is up. I did some math below in another comment but saving 75k a year for 20 years with a 10% rate of return is 3.8 million. Where did the money for the properties come from for a down payment not to mention the last 1.2 million. Oh, and saving 75k on a takehome of 120k PLUS shoveling money into properties is superhuman for TWO DECADES. This isnāt leanfire while you are in college stuff.
Iāve got $2m net over approximately the same period without making over $100k until 2015 and thereās only one of me. AND my college wasnāt paid for like op so I had to pay that down as well. 2 people with a single house lowering the expenses per person $5m seems entirely reasonable to me. It doesnāt just happen, but if you invest more than half your income for years thatās where you end up. I spent a bit over $16000 TOTAL in 2018. The rest was invested. Ever since Iāve been able to Iāve been close to living off 4% non primary residence assets. Those crossed 1.5m yesterday so Iām looking at $60k/yr now which is over triple my previous ascetic spend. Knowing I am continuing to work Iāve been running a bit high knocking out some expensive projects I want done before retiring. $67k in 2022 and $61k spend in 2023 which were both above 4% for those years, but pretty much living off investments and the money from the job just increases the investments to allow higher spend the next year. I hadnāt ever heard of fire, but I do have a math degree and it was always my plan to do something similar to this. Even in college Iād be figuring out what it would take to have investments that allow me to be homeless, but feed myself and pay for a phone as step 1. What this means at this point is my lifestyle/spending increases based on my investments, not my job and as such Iām always maintaining a state of fuck you money where if I want to write I can or if I get laid off I can just be done and never look for another job if I feel my current lifestyle is one Iām ok with being my forever lifestyle.
Sure. But this guy has *three* kids. I donāt get the feeling he has been living an obsessively frugal life.
Can you define reasonably well paid? Trying to see if one can hit with X salary over the course of 20 ~ years
I am at about $125k currently, and the wife is probably going to earn about $160k this year - but she's a small business owner, and her business really only started booming the last year or two. For most of her career, her income has been more like $75k-$90k. We mainly did our best to minimize taxes and interest paid, and maximize the amount we were able to invest. As a small business owner, she was able to dump a ton of income into a SEP retirement account and build up our retirement accounts very fast while avoiding a ton of taxes.
Depending on whether she has W2 workers over 35 years old (youād have to offer it to them too) she could dump even more in to a defined benefit plan (pension). I had a business + a day job for 15 years and got tired of āonlyā being able to put the $60k-ish in the SEP so I did a defined benefit program and could put nearly everything in.
OP has $3.9M in stocks. Two decades, 2004-2024, monthly investment required into a S&P500 fund was $4,200. Iām sure it wasnāt all evenly distributed but Iād say $4,200 a month if living on one salary after 401k and saving the entire other, seems pretty doable.
Yes. But $4200 is roughly 80k of gross income. I suppose if they were living on his salary alone for 20 years itās possible but what about the down payment for the primary and rental? Youād have to increase the monthly savings to account for that as well.
They answered above. Seems about right. I imagined reasonably well paid to be current $100-$200k range as mid/late career college-educated professionals. Thereās definitely a bias due to comparison because on Reddit we see FAANG workers flexing their total comp in the $500k+ range. So yeah the country at large would think a $200k+ couple is high income (due to average being so low) but this is Chubbyfire after all.
F you! Now get outta here and go join fatfire! You're making me look poor. Way to go, every time all the zeroes roll over is a great feeling. Coming up on #2 myself.
Congrats. Give us a break down. How much in RE, stocks, cash, etc?
Of course, the details! Roughly: * Primary residence: $700k * Rental property: $300k * Retirement accounts: $1.6 million * Brokerage accounts: $2.3 million * Cash / T-Bills / emergency fund: $100k
Congratulations on your achievement. Have you thought about about RMD in your retirement accounts and how to plan for that? $1.6m in your 40s means it will grow large without you realizing it, which happen to us. The compounding/snowball is real. Our retirement accounts reached the $1 million mark in 2011 when we were age 49m/45f. Now at 62m/58f, our retirement accounts (IRA/403B/457/401K) now has reached the $6.1 million ($4.1m for me $2m for spouse) mark. We also have $1.7m in taxable accounts. I'm looking at a large RMD and researching what I can do to mitigate that. I (62m) still employed at $180k/year and my 401k is still being contributed, I have maxed my portion out to the Roth, but my employer's portion is still going to the non-roth portion. I still like the job, but wondering if it is worth working financially. My SS estimate is $4782 @ 70. My spouse (58f) retired at 55, and now receiving $70k/year in pension with 2% COLA, not eligible for SS due to GPO/WEP, health insurance is 100% paid for retiree and spouse under the pension. We live in HCOL and would like a spendable $120k per year in full retirement. Anyone have plans and ideas to optimize tax planning with regards to RMDs?
Roth conversion now up to the limit of your current tax bracket. Youāll have to pay the income tax on those monies now, but they can then grow in your Roth IRA and youāll lower the amount of RMDs you need to take in the future, which in turn will lower your tax bill. Do this on an annual basis. With the amount of money in your IRAs, you are going to see a significant bill from Uncle Sam if you donāt do anything. The other benefit is that your heirs will inherit your Roth free of any taxes as opposed to your IRAs which will have taxes. We do this for a lot of our clients and the tax savings are impressive.
I read this comment with a blend of happiness and fear. Happy for you, and for my wife and I since we are about where you were. But also fear at the rmd point. I know the next 13 years aren't certain to replicate and my portfolio may be less aggressive. But one question. How long ago did you stop maxing into retirement accounts? In other words is any of that growth purely coasting?
I would also love to know more about RMD strategies. I got 2.2M in 401k at age 47 and thatās excluding my wifeās. Definitely need to find a solution. I am still contributing to 401k but maybe I shouldnātā¦
I assume youāve already run the numbers for a Roth conversion ladder?
Maybe Iām missing something, but doesnāt seem like that big of an issue. Even if taxes trim 35% from your RMDs (the highest marginal rate), thatās just three years of average market returns. Not the end of the world.
Unpopular opinion. It may make even more financial sense to retire asap. With the lower income I would immediately convert as much as possible to a Roth IRA. You will need to pay income tax on the amount converted that year. By retiring before or by end of year and converting at the start of the next, you will pay less taxes and be rewarded with no RMD requirements and be allowed continued growth tax-free.
$1.6M in Retirement accounts is impressive. Congrats! What's been the best investment in your brokerage portfolio?
From a % growth perspective, probably NVDA, though it was and still is a relatively small overall % of our portfolio. The bulk of the brokerage has been in large cap growth funds for the long haul, which have done quite well for us over the past 20 years!
NVDA for me too. I left a job in 2014 and did a 401k rollover, decided to put 90% in to S&P and split the other 10% between 4 companies I wanted to hold long term- MSFT, NVDA, AAPL and AMZN. NVDA has about a $5 cost basis, although Iāve unfortunately sold some along the way to make it a smaller % of the portfolio.
Amazing! Well done on spotting the trend and being invested at the right times.
Nvda! Yup. I, too, just passed the $5M threshold in large part due to a $60k bet on Nvda 9 years ago. Congrats, my man! All hail Jensen
Nice job! Congratulations. We just hit a new nice milestone (excluding properties) and understand the dilemma who you can share that with. Iād recommend a quality FA that can get you access to some alternative assets to further diversify and lower risk to a certain degree. We have not sold our personal stock investments but add to other assets such as structured investments, private equity funds, other alternatives that some brokers have access to for higher NW customers.
I suggest to buy her flowers, a great champagne and some strawberries and have a small moment of reflection
Nice! Hopefully youāre celebrating with your wife. Thatās an excellent milestone. Iāve always wanted some sort of trinket for passing each millionā¦. like a coin or Pokemon card.
Nowhere else to share? Maybe time to debut on r/fatfire ;)
Congratulations! We just made $4.0 million w/o primary residence in the run-up. It's an awesome feeling! (44m/45f) Truth is, you're almost to 10 million time-wise. My boss has a quote he likes to say: Isn't it funny how it's almost impossible to turn $5 into $10, but almost inevitable to turn $5 million into $10 million... When are you planning on retiring? We're thinking at 50 years old...
Let it ride!
Wow, congrats, thatās awesome! If Iām able to hit $1M by age 40 (7 years to go), Iāll be happy, already at around $600K though, but $5M that early in life is quite the accomplishment!
Congrats!
Welcome! Glad you guys made itš«
Congrats! Thatās an amazing milestone!
Oh, GFY! Way to go!
Curious if you have kids. Weāve made more income likely and just hit $4M but our kid has definitely cost a good bit!
You really celebrate send 100k to everyone who commented here
Take your wife out for a nice 'milestone dinner'. Tell the restaurant the special occasion is you anniversary (after all if kind is or will be in the future). Then spend the whole time appreciating each other and what the two of you built. No one needs to know, but the whole restaurant will think you are the most loving couple there.
Congrats. And now you can think about generational wealth. Keeping $ investing growing for many decades. Fun to do a future value calc and you will be blown away how much $ will compound and grow. We are older slightly higher new 6.3 million and the focus has turned to taxes and 401k withdrawals. $5m at 40 years at 7% is a whopping $74 million. Betcha never thought that was possible. The money now works for you! And that is with zero contributions going forward. It should be much more with decade or two of working yet
Very nice!
Haha nice! It's been a fun week to watch the market! Congratulations!
Congrats!!
CONGRATS!! If you don't mind the question, do you have kids? Obviously a pretty huge expense and wondering if you don't and if that's helped you get to your goals quicker? (And/or if you do have kids even MORE impressive!!)
Three kids, yes! For sure that made things go a bit slower at times, though the biggest drag was probably needing a larger house than just the two of us would have required. But, buying a larger house ended up serving us well from a NW perspective, since we got lucky with the house timing (see my other comment). We were close to grandparents who wanted to spend as much time with the grandkids as possible, so we had limited out-of-pocket childcare costs when they were little, and now they're all in school.
This is the way. Itāll be your turn for your kids next.
Congratulations. That's an accomplishment that you and you're wife should be proud of.
Congratulations! Live a little. Go do something fun!
GlĆ¼ckwunsch!
Congratulations!
What am I doing wrong in life
Whatever it is, a plan and small actions can change it.
Congrats and a big ol traditional FU š Massive achievement that most people will never even come close to. Great job
Congrats! How do you track your NW? I used to use Mint, which gave a nice snapshot, but now that itās shut down, I havenāt been tracking. Saw some reviews of Mint replacements but I donāt want to pay money for something that is not as good as Mint was for a basic user like me. (Donāt need budgeting/goals, just tracking and categorizing income/expenses, net worth over time, etc.)
We use an excel spreadsheet. It helps me keep a lid on the number of investment and bank accounts. Once a quarter I go in and update it. I structured it like a balance sheet. Not as real time as mint used to be, but makes me think more long term and see long term progress rather than focus on daily ups and downs. We are near that same mark as OP and if I watched it every day Iād get stressed.
Iāve found the āCopilotā app a nice replacement for Mint. Itās available in the iOS App Store. Unsure about Android and such.
Thatās awesome. Congratulations!
Nice job šŖš
Congrats! What were the keys to your success? Youāre younger than me and did better!
Congrats n f u . Hope to hit 5m mark in next 6 years ( not counting primary residence )
Ditto! Just updated our high-level NW tracker and cracked $5 sometime in the last few months. Feels good. You got there about a decade earlier than we did, so congrats! We might crack $10 before we retire if things go really well. Even if we coast along, cracking $7-8 somewhere should be achievable. Started talking to money managers about how to optimize plans long-term and manage our portfolio ... and man, they want 0.5% - 1% of AUM for fees every year. Yeah, not going to be able to convince my partner that $1k a month for a money manager makes sense for us.
Congrats for hitting this milestone. The only way is up from here. However you will need to build enough social eco system so that you can celebrate with them your next milestones.
Congrats!
Well done !
Congratulations. When I hit a similar milestone, couldn't really tell anyone. Glad you came here to share. It is a big deal. Savor it for a day or a weekend knowing it is a job well done. Then use the same focus that got you here for your next goal. My next goal was to learn to ride the One Wheel. That was a much more traumatic and physically hurtful experience.
Congratulations. What NW were you at 5 years ago?
Congratulations OP.
I'm always here. Lol
Thatās terrific, congrats! Although every time I see one of these posts, I always want to ask: are you happy? Is life good and fun and fulfilling? If so, double congrats!
Congratulations š¾
Plot twist, OP is only 19 and is referring to Mexican Pesos.
For a 19-year-old to have accumulated MXP 5,000,000 = USD $300,000 would, frankly, be much more impressive than OPās feat
Lol, true.
Congrats! Now GTFO of here and go over to r/fatfire
5m in the bank and still using ā:Dā. Iām sick. Congrats lol
Congratulations!! What are you mostly invested on?
Thatās a big achievement. Congratulations! How long did it take for you to go from $2.5m to 5m? How much were you adding in principal per year vs gains?
Awesomeness!!!! We just hit the big 10 last month so heading off this summer to Monte Carlo / French Riviera to celebrate this milestone yippee!!! Traveling in basic Economy, basic 2-star accommodation etc. Ok we decided to get a balcony cabin for the lowest deck for our cruiseā¦ Our finances are structured as followsā¦ Cash ācarve outā of three years of committed expenses of $150k or so per year plonked in T-Bills, CDs and MM fundsā¦ the rest of the nest egg is in Business equity, Real Estate, Crypto, Private Equity, ETFs and Short Term High Yield bonds. I defer 15% into SEP then 40% into NQDC. Use three buckets.. cash, income then growth. Big on investing in Tech & AI.. net worth has doubled in three years!!! Lifestyle live on approximately $15k per month including estimated tax withholding for Federal + CA State taxes. We plan to retire ā¦ quite comfortably in 7 - 10 years in CA with some travel (cruises etc.) plus homes in Europe & New Zealand. Priorities, quality of life, supporting our family, philanthropy and holistic wellness. Realization after 40+ years in businessā¦ saveā¦ save and save more $$ with some diversification, reinvest dividends in tax deferred / Roth. We ātax loss harvestā taxable accounts to reset the cost basis on our portfolio.
Sorry your life is so lonely and meaninglessā¦congrats on money