1.1 Million-- What does that mean?

[Bluesky1]

Hello,

I'm hoping that some of you can help me put my current financial situation into perspective. All told, I have about 1.1 million in personal assets, with only my mortgage as debt. To me, this sounds like a lot of money, but I also realize its obviously not anywhere near enough to live off of for the rest of my life, so I'm trying to understand what this amount does mean and what kind of life I can have with it.

Here are some facts:

- 30 years old
- Annual income of about $50,000 per year. Work a low paying public service job that has great benefits and flexibility, and supplement with a lucrative second job. Currently in grad school and in mid-2018 will be entering a field where I will be making about $65,000 per year starting. My cap on earning will probably be about $100,000, but that would be down the line when I have years of experience.
- Currently put away 25% of my income for retirement, and also have a state public employees plan that I am now vested in.
- Own my own home. Put down a little over 20% and am 4 years into a 30-year fixed. Value of home (based on comps) has around increased $160,000 since I purchased.
- Personal outlook is to focus on saving and experiences. Frugal with material items and day-to-day purchases.
- I cover all of my monthly bills and expenses with earned money and don't access my family money unless for a large purchase that I see has some future value, ie new hardwood floors for my home and my books for grad school.
- About $500,000 of my assets are in a trust I will be able to access at age 33. I plan to only use that money for valuable things such as upgrading from a townhouse to a single family home in 2-3 years, any time needed to stay home with future children, etc.
- Although it sounds horrible to say, I will at some point inherit around $5 million, though I hope that day is decades away

I hope those snippets provide some information about my situation and the kind of spender and investor I am. I am mostly looking for perspective on my situation: is that a lot of money, or in the grand scheme of things is it really not that much? Is it enough money that I could someday purchase a second home? Can I afford a $20,000 dream honeymoon primarily from my pocket? Will I be able to afford a completely unnecessary but desired expensive car? All of those are hypotheticals to help me understand, basically, what my life could look like based on the family money I have been given and my approach to dealing with money I've earned.

Thank you in advance for any help!

[Fishindude77]

You're in great shape at 30 years old, congrats. It's time to start thinking about your wants and needs and how much $$ you need to live on, as well as when you want to retire. Invested pretty safely, I'm sure you could plan on getting about 5% or $55,000 per year out of that $1.1 mil without ever getting into the principal.

[Milly]

It sounds like you have a lot of assets for a 30 year old. Despite an average income, you are able to save a large percentage. You are future focused and I have little worry for your future.

You are frugal and prudent with your money, but are worried that if you start tapping into your savings/assets you will ruin your habits or deplete your reserves. Am I capturing this correctly?

Here's my two cents:
Don't depend on inheritance coming just in case your benefactor gets drunk in a casino or dementia and a cunning person convinces them to write you out of the will. Crazy things happen. It will be a very happy $5M surprise (although not a happy cause) and if you play it right, you might be able to live off the interest and anything else you make is for comforts and fun.

You have two money sources income and savings (cash flow and hour glass money). If you can be frugal and patient live on your income, you don't slowly deplete you assets.

On the other hand, I plan on having about $1.5-2M (in today's money before inflation) to retire. If you work all your career and only have to add another half a million or so before you retire, it wouldn't take long before you don't have to save 25%. I'd take that dream honeymoon or other once in a lifetime experiences.

A useful easy to look at it is to figure out those numbers. How much do you want to have for retirement? What is your current rate of saving? When you want to make a purchase do the math to see how many months it would take to replenish, or rather how long it adds before you aren't too worried about putting away that 25% (not necessarily that you should ever stop).

Bottom line: don't get into the habit of chipping away at your savings, but make intentional choices knowing the difference it actually makes.

[snafu]

Does your 25% retirement savings include the deduction for state pension plan participation? What is the plan for vested sum when you transition to your next career option? Will you likely have an opportunity to join an employer's retirement program with some level of employer contribution?

What have you chosen as allocation of non state pension retirement savings? Are you are earning 5% - 7% or higher annually? What are the costs? What is the current allocation, earnings and expenses on $ 500,000. trust? How many income streams feel comfortable? At 30 y/o, do you anticipate continuing to work until age 55, 60 or? Retirement needs a plan or it can be uncomfortably boring.

Understand that retirement savings continue to compound, increasing in value over the long term until it becomes a monthly 'draw,' to meet expenses which is often lower since home is likely to be mortgage free, transportation costs reduce, work related expenses like wardrobe, group gifts, lunch/coffee, parking drop.

If taking a dream vacation is important, you will create a savings stream to facilitate. One rule of thumb is to keep 'needs' at 50% of earned income, 20% savings, 30% for 'wants.'

[Captain Save]

Hello,

I'm hoping that some of you can help me put my current financial situation into perspective. All told, I have about 1.1 million in personal assets, with only my mortgage as debt. To me, this sounds like a lot of money, but I also realize its obviously not anywhere near enough to live off of for the rest of my life, so I'm trying to understand what this amount does mean and what kind of life I can have with it.

Here are some facts:

- 30 years old
- Annual income of about $50,000 per year. Work a low paying public service job that has great benefits and flexibility, and supplement with a lucrative second job. Currently in grad school and in mid-2018 will be entering a field where I will be making about $65,000 per year starting. My cap on earning will probably be about $100,000, but that would be down the line when I have years of experience.
- Currently put away 25% of my income for retirement, and also have a state public employees plan that I am now vested in.
- Own my own home. Put down a little over 20% and am 4 years into a 30-year fixed. Value of home (based on comps) has around increased $160,000 since I purchased.
- Personal outlook is to focus on saving and experiences. Frugal with material items and day-to-day purchases.
- I cover all of my monthly bills and expenses with earned money and don't access my family money unless for a large purchase that I see has some future value, ie new hardwood floors for my home and my books for grad school.
- About $500,000 of my assets are in a trust I will be able to access at age 33. I plan to only use that money for valuable things such as upgrading from a townhouse to a single family home in 2-3 years, any time needed to stay home with future children, etc.
- Although it sounds horrible to say, I will at some point inherit around $5 million, though I hope that day is decades away

I hope those snippets provide some information about my situation and the kind of spender and investor I am. I am mostly looking for perspective on my situation: is that a lot of money, or in the grand scheme of things is it really not that much? Is it enough money that I could someday purchase a second home? Can I afford a $20,000 dream honeymoon primarily from my pocket? Will I be able to afford a completely unnecessary but desired expensive car? All of those are hypotheticals to help me understand, basically, what my life could look like based on the family money I have been given and my approach to dealing with money I've earned.

Thank you in advance for any help!

I think you're doing very good mainly because you are on top of your financial situation.. you have a plan... If I were you .. i would focus on making sure I enjoy what I do for a living? Will that job be fulfilling?

why are you embarassed that you're inheriting 5mil. just be grateful that you have that security blanket. and it sounds like you won't let it go to waste.

[clatoden99]

Ideally you would want the money to work for you and earn you some decent returns. This is more of a question for an investment expert. I like real estate. Not only does it earn you money but the value goes up every year. Having said that, depending where you live, we may be close to another real estate bubble as prices have gone up dramatically after the last RE bubble. Its always better to buy at the bottom and not at the top. Unfortunately, no one ever knows when we have reached either place. You should be conservative with the money but honestly, you can probably live off it for the rest of your life even if you never make 1% of interest on it assuming your dont blow it all on toys.