Oh I agree. I like to watch The Money Guy show and they are quick to point out that when The Millionaire Next Door came out in 1996, that $1M from then is now like $2M now. A million just isn’t what it used to be…. what’s really scary is, what will a million be worth when I retire 20 years from now???? sheesh if that doesn’t keep one up at night, I don’t know what will.With inflation, a million bucks just is not what it used to be...
My one personal feelings are that if one wants to leave a legacy and be ABSOLUTLEY SURE one will not run out of money, and keep pace with inflation, one can withdraw 3% of one's portfolio each year (see sequence of return risk)...
If you do not care about leaving a legacy, but do not want to outlive your money, one can take 5%...
One million dollars then generates between $30,000 and $50,000 per year... not bad especially when combined with SS (if it still exists), but not the retirement life of luxury most people look forward to...
Do not get me wrong, a million dollars is a LOT of money, and more than most people will ever have, but it is not the magical number it used to be in the 80's and 90's... if one can have other income streams like rental real estate, that helps as well, but who really wants to be a landlord in their golden years?
The Paradox Of $1 Million
How much is $1 million? It's a lot of money — more than the vast majority of people will ever accumulate. It's also not enough to make you rich. This paradox is a useful tool for educating younger generations about wealth.www.forbes.com
Rule of 72. If the Fed could magically keep inflation at 2% (ha!) then every 36 years our money would be worth half as much. 3% it’s down to every 24 years. Toss in the last few years and…
Still, the advice is the same as ever: stack it high and stack it deep. Only thing I think that is changing is that people are moving from recommending a 10% retirement savings rate to something closer to 20%.
Edit: forgot about the 3% bit. Only saw that recently, waiting to see how that new advice shakes out with time. One could always go Dave Ramsey and insist 8% is perfectly fine… yeah, not going there.