Just for fun, what would you do with a million dollars

[conchaway]

By the time you accumulate 1 million, you are so decrepit that you have to spend it on doctors.

[Tomoonifly]

Buy $1 mil worth of 2 or 3 Master Limited Partnerships (MLP) such as Energy Transfer (ET) which typically pay distributions of around 9%, and 80% of the distribution is not taxable until you receive the initial investment back. So $90,000 per year income with only $18,000 being taxable.

[Mike Banks]

These days a million dollars will only buy a minor politician

But it will be counted as a tax deduction in Australia--
.

[newhaul]

Originally Posted by Tomoonifly

Buy $1 mil worth of 2 or 3 Master Limited Partnerships (MLP) such as Energy Transfer (ET) which typically pay distributions of around 9%, and 80% of the distribution is not taxable until you receive the initial investment back. So $90,000 per year income with only $18,000 being taxable.

Et no thanks only paying .61 per share annually
I prefer stuff like B5Z at 1.01 a share annually
Or FEN 1.20

[joelhemington]

Originally Posted by Chotu

1. I wouldn’t count on my pension being solvent or paying out as agreed.

2. Set up some small passive or close to passive income streams.

3. Up to $500k on the boat and income stream and just factor in that it’ll deprecate

4. Live low, frugally, don’t touch the capital you left behind. Live off income streams.

5. Sell the boat when you’re physically unable to use it anymore.

7. Use proceeds of sale to buy a tiny cabin.

This is my life plan basically. Ha ha

"7. Use proceeds of sale to buy a tiny cabin" - this is of course assuming you ever finish that boat

[OneTwoSail]

Great comments, and questions all, here are some clearly hypothetical answers to the questions. Note quite a few people saying go and spend it all now, or get a $500k boat! When you've spent your entire working life saving 50% of your earnings it's very difficult to spend big. In fact it's very difficult for me to make a plan that actually has me running out of cash, so ideally looking for a safe drawdown.

@Valhalla 360:
Too many unknowns:
- Is the savings in retirement accounts? No, it's all in regular investment accounts, no penalties for withdrawing.
- How much is the Pension? Maybe $2k in 20 years time
- Is the Pension solvent? Yes
- How much is Social Security? None
- What type of cruising do you want to do? Cruising the med, Greece looks like a great place to start and then wherever we feel like next
- What else do you want to do? This has been the goal for the last 10 years. At some point my wife would want to go back to land with a small house in a low cost of living country with a garden and some pets.
- What type of lifestyle do you expect? I'm naturally frugal but prefer to spend on a few high quality things/adventures than a bunch of smaller lesser ones. We definitely prefer anchorages to marinas wherever possible. Prefer to mostly cook in than eat out, and our favourite activities are just exploring new places on foot or by bicycle. The only difference would be trading paying rent for paying for a boat. Sadly I took my wife on a lagoon 380 charter, so that's set the bar to what she wants!

@ol1970:
1) you are approximately 58 years old and will live exactly 20 more years then croak a happy man watching the sunset somewhere over the pacific. -42
2) you are a US citizen and will receive a modest SS payment that you claim early at 62 years old -Nope not a US citizen, no social security coming my way ever, just a work pension, $2k/month from 62
3) you are single and no kids or other considerations -1 kid lives with his mom and stepdad, finishing high school but if he can school remote (which looks very possible, even just for periods) he will join, at least part time.
4) you are very handy and can fix stuff. -Yes, I'm known to be pretty handy when combined with google and youtube, sadly also very good at breaking things sometimes.
5) you are healthy and fit -Yes, my familty history on one side is full of huge obesity, heart disease and diabetes, so once I got a wake up call at 30 where the weight starting piling on and since then I changed my lifestyle completely and lived as healthy as possible. No smoking, no drinking, eating healthily, 11 years of visible abs, and I have to keep it that way otherwise the blood pressure quickly starts climbing from normal.

@Adelie:
I'd love to be able to go now on a $30k boat, but my wife won't do a monohull, and very likely not an old/less comfortable multi either. What's the running cost of a lagoon 380 again...

[Chotu]

Patrick:

A $500K boat is a depreciating asset, not “spending”. You’re spending the depreciation and upkeep costs. Not losing 50% of your $1mil.

I’m as cheap as they come. But always looking 10 years down the road at the big picture.

In the big picture, you’re spending $100k or $200k on a super nice $500k boat. And you’ll have spent that only at the end when you’re done with it, after depreciation. The nice boat is just a negative rate savings account, essentially.

[OneTwoSail]

Thanks Chotu, that makes far more sense! Yes the plan is to buy a boat from someone else who has "paid" most of the depreciation already

[ol1970]

Patrickza, I think you are very wise to not spend $500k on a boat unless you only want to go cruising for a few years. It will take roughly $30k a year to properly maintain and run a boat like that, not including any costs to live. But we can’t take it to the graveyard so if your plan is to deplete your assets in 20 years go for it, but $2k a month pension at 62 considering inflation will have you living in abject poverty with a lot of life ahead of you.

[boatman61]

Get a custom Tiki 38 built by a good builder then go sailing.. Stuff Wall St..

[hpeer]

To be serious for just a second, two recommendations.

CF’s parent Social Knowledge (?) has a form for early retirement questions.

https://www.early-retirement.org/

Back when I was planning I used the below calculator. It takes a bit to get used to the format, and then you need to fool with it a good amount to see all its capabilities. It can do quite a bit, it is very good. To simulate passive income I entered it as a negative number where the mortgage payment would normally go, our house being paid off this worked.

https://www.firecalc.com/

It has been some years since I looked around and there may be better calculators now.

SS is under appreciated. In very round numbers I get close to $3k/month. That is the equivalent of $1 million with a 3% fixed return. Not too shabby. If it stays around.

We are fortunate to have enough passive income to be comfortable, not enough to be frivolous. We could afford to blow $1 million. I might spend as much as $300k on a newer boat and reserve the rest for maintenance in my decrepitude. Then again I might just reserve the whole thing for maintenance on and upgrades to the current boat.

We just went through an informal process of looking at various houses for when we “retire” from sailing. We discovered 2 things:

1-After living in a big city core for 35 years we have become hicks, or maybe always were. We have just realized our inner hickdom. No manicured lawns for us.

2-We really like living on a boat and dirt dwellings are a big compromise. We may eventually want something easier to navigate with decrepit legs. But we want it mobile and floating.

[Group9]

I guess we would just throw it into the stock fund account with the rest of it.

We pretty much already own everything we really want.

[boatman61]

Originally Posted by boatman61

Get a custom Tiki 38 built by a good builder then go sailing.. Stuff Wall St..

Oh.. forgot to mention.. I'd also buy a Brough SS100..

[valhalla360]

Originally Posted by patrickza

@Valhalla 360:
Too many unknowns:
- Is the savings in retirement accounts? No, it's all in regular investment accounts, no penalties for withdrawing.
- How much is the Pension? Maybe $2k in 20 years time
- Is the Pension solvent? Yes
- How much is Social Security? None
- What type of cruising do you want to do? Cruising the med, Greece looks like a great place to start and then wherever we feel like next
- What else do you want to do? This has been the goal for the last 10 years. At some point my wife would want to go back to land with a small house in a low cost of living country with a garden and some pets.
- What type of lifestyle do you expect? I'm naturally frugal but prefer to spend on a few high quality things/adventures than a bunch of smaller lesser ones. We definitely prefer anchorages to marinas wherever possible. Prefer to mostly cook in than eat out, and our favourite activities are just exploring new places on foot or by bicycle. The only difference would be trading paying rent for paying for a boat. Sadly I took my wife on a lagoon 380 charter, so that's set the bar to what she wants!

- I wouldn't have it 100% in non-retirement accounts. Some yes, all no. Taking advantage of the tax benefits is too big of an issue.
- Where is this 100% solvent pension? The good ones are only 80-90% funded, so I would expect to discount it significantly for risk. Babyboomers are starting to tap pensions in large numbers, this will push non-solvent pensions into collapse or reduce payouts.
- What country are you from? Most have some form of social security (it might go by a different name). Also what is the health insurance situation in said country? In the US, the average is $1400/month per person, so a couple should be looking at somewhere around $2800 or if even moderately successful in your career, it could easily be north of $3500/month (and in 20yr, it will be higher with inflation adjustments). Health insurance negates some of that but if you are living off of savings, Obamacare subsidizes the vast majority of the insurance (not saying it's right just stating the facts).
- I'm taking it by Greece, you mean coastal cruising. In 1st world countries that will be more expensive (though not outrageous). Do you have EU residency where you can stay there long term?
- Assume the boat will be worth a fraction of the purchase price (boats are depreciating assets), so you need to set aside enough for the move back to land counting on little or nothing from the boat sale (again babyboomers aging out my kill the resale value).
- What's your current monthly budget? I would expect to spend a similar amount while cruising. Your idea of anchor out and live frugally doesn't seem to align with your wife wants for a comfy catamaran.

No pension but SS equates to about the same thing only larger and inflation adjusted. Otherwise, we aren't too far from what you describe.

I would cap the boat at $100k to be ready to sail (preferably a bit less). We have some other things going on for the next couple years but we've had our eye out for another Gemini catamaran probably to purchase around 2023.

$1million isn't that much and in 20yr, a $2k pension is going to be equivalent to maybe $1200 after inflation.

One interesting thing is it doesn't take long once you hit $1million before you are at $1.5m or even $2.0m. If we had $1m in Jan 2018, we would have $1.5m today based on returns. No guarantees we would repeat that in 3 years but towards the end, compounding results in small time frames substantially increasing account balances...just a question of when is enough enough.

[boatman61]

Some folks base their choices on "What if I live to 100"..
Other on "What if I don't"..