I'm with OP - $3.7M seems like a lot, but it really isn't enough to retire on. I assume he'll need to pay taxes on that, a 20% long-term capital gains tax. Brings it down to about $3M. Being generous and giving him 3.5% return (real return) a year in fixed income, that's only $105,000 a year in income, which he'll need to pay taxes on as well. He'll net out around $85k a year.
$85k a year is surely enough to live off without working?
I'm in the UK, if I could earn a guaranteed £40k a year without working I'd be set for life and would have a pretty great life! That's would give me close to twice the national average salary.
£80k a year would put you into the tiny percent of top earners.
Don’t forget in America he needs to spend $12k a year on health care. And that’s like a minimum, last time I checked Obamacare, those kind of plans had $8-10k max out of pocket too.
So even with health insurance deducted, that still works out, with current exchange rates, at £63k, which is quite a high income - 95th percentile in the UK income distribution after tax.
I dont know how to tell you this, but 99% of the world population (and I am pretty sure at least 85-90% of Americans) WONT retire with anything even close to $3.7 MM.
He’s NOT 85% of Americans, he’s a tech entrepreneur who is capable of building and selling businesses with 7 figure exits. Personally I wouldn’t want to retire on only $85k if I had that kind of potential. At that income you still need to budget for food and travel - I’d prefer a life where I can eat out when I want, hop a plane with my wife and go somewhere whenever I want. Retirement is about freedom!
That was more a rhetorical question. The real issue is you can’t predict how long you’ll live so it’s not correct to say “draw it all down evenly over X years”
That's not necessarily what retirement means, and it's not what he indicated in the story.
> I don’t have any specific plans for what I’ll be doing next, other than not doing any kind of software for a while. I’m itching to create more tangible things, especially art and music, so I’ll likely put a lot of effort in to exploring those things more.
Nothing in there says the art/music can't make any money, nor does he rule out software again in the future. As he notes, "I absolutely love starting things..."
Retirement frequently means something different for a 30-something CEO who just exited ("I don't have to work") versus a 70-something year old ("I'm done working").
$85k budget a year without touching the $3m principal. I'd say he'd have a great chance of never needing to work again if he wishes, especially if he already has some retirement savings and/or assets such as housing.
