Million dollar arm. Ten cent head.

[jon-nyc]

Therein lies the problem. Most guys with 12MM are thinking about the multimillion dollar purchase they can make. I see 12MM net worth and think “you can spend $480k a year in perpetuity, which is a nice life.”

[Axtremus]

@jon-nyc said in Million dollar arm. Ten cent head.:

I see 12MM net worth and think “you can spend $480k a year in perpetuity, which is a nice life.”

Just curious … what’s the fixed formula or model you use to go from “$X net worth” to “can afford to spend $Y a year in perpetuity”?

[jon-nyc]

The number used at Bogleheads is 4% and it checks out historically and in Montecarlo models.

Some financial companies say 3%, because they take 1% a year.

[George K]

I'm doing a bit more than 4% because of age (RMD). Right now, I'm at 1/24.6 withdrawals from my IRA.

[George K]

@jon-nyc said in Million dollar arm. Ten cent head.:

I see 12MM net worth and think “you can spend $480k a year in perpetuity, which is a nice life.”

My attitude as well.

[Jolly]

Look at what happens to lottery winners. Most are broke in five or six years.

[Axtremus]

@Jolly said in Million dollar arm. Ten cent head.:

Look at what happens to lottery winners. Most are broke in five or six years.

Still, I think most of us won't mind winning the lottery every now and then.

[Jolly]

We ain't average bears.

[jon-nyc]

@Jolly said in Million dollar arm. Ten cent head.:

Look at what happens to lottery winners. Most are broke in five or six years.

And NBA stars. But they’re just winners of a different kind of lottery.

[LuFins Dad]

Meh, Russell is something of the aberration in the NFL.

One of the good things the NFL does is make all rookies attend financial management seminars given by retired players going over the dangers, the pitfalls, and the opportunities. Most of the rookies take the lessons to heart. Some don’t.