> And for a properly demoralising angle, that level of wealth is still a far cry from being fully financially independent.
Really? I feel like if you had 900k in cash, and no debts, you could easily live freely. Maybe not the ultimate lifestyle, but pretty comfortably, even in the US. That's around 50k a year in investments. Even with a partner and maybe even a kid or two, you could get by and have the time to build up your own independent income sources, unless I'm wildly overestimated how much the average person wants to spend to live decently.
> feel like if you had 900k in cash, and no debts, you could easily live freely. Maybe not the ultimate lifestyle, but pretty comfortably, even in the US. That's around 50k a year in investments.
It's still cutting it very close. 900k in cash will go by faster than expected due to inflation. A single person in a rural or low COL area for under $2k/month between rent/food/utilities. This isn't really leaving much room for hobbies/enjoyment. I would say that's a bit above subsistence level. Rounding up, that might be $30k/year in basic living, which, in theory would last 30 years. Inflation's going to eat in to that - I can't say how much for sure, but I have a hard time seeing most people make $900k in cash last more than 10-15 years. There will be too many temptations to spend chunks, and there will be legitimate emergencies (thinking primarily of unexpected health stuff).
"50k year in investments" - that 900k would have to be invested moderately aggressively to ensure 50k/year coming off while maintaining most of the principal.
What may be more interesting is seeing what other people might view as "low bar" COL numbers. My mental model for much of the low COL areas of the US would be around $2k/month for a single person to live without being at 'rock bottom', basing mostly on what I see around me as lowish rent, food and utility numbers. I've no doubt some people stretch that number lower, and two people sharing a space would cut the number lower as well. I'd think 2 adults could get by on $3k at 'above subsistence levels' in many areas for a long time. Rounding up a tag, that might put you closer to $40k/year, but you'd still not make that $900k last a long time, between inflation and emergencies.
Since my comment triggered a real discussion, I wanted to share some of my thoughts on the subject. For what it's worth, my own views are probably on the fringe side.
To start with, when I say "financially fully independent", I'm not talking about a fixed amount. Instead I'm eyeing a figure that allows you to live comfortably (but not lavishly) with a family, in the place of your choosing, and not have to ever touch the principal. Even in the face of a devastating decade-long recession.
Let's work backwards from that. In case of a massive global downturn, looking down the barrel of a universal lost decade, it is still possible to invest your money so that you can get a reliable 1.8% above inflation from dividends alone. That's pre-tax. Assume capital gains are taxed at 35%, and we're talking about ~1.2% annual real return on investment.
If you expect your family's annual, comfortable living expenses (with assorted housing maintenance costs factored in) to be about 110k net, then you'll need 110/0.012 = 9.16M to invest. Let's round that up to 9.2M.
In case you want to retire to a relatively lavish lifestyle, so you can get a large estate and enough liquid cash to pay for helping staff even under the most drastic but still realistic scenarios, we're talking about post-tax net income of >200k a year, and a principal of at least 17M.
And as a comparison point, if you take the term 'millionaire' from when it became popular and try to adjust for inflation you get a threshold of around 30M. Which seems about right for "permanent lavish lifestyle, times two".
Oh true, I forgot to account inflation, and also healthcare. While I don't think you could retire at 30 with it, 900k would give you a comfy runway to build your own income sources (like an online business or something), while living freely for many years. I guess that's what I meant by financial freedom, not necessarily not having any other income forever. And building online income streams isn't for everyone of course, but it's probably a desire of many here.
On the other hand, 900k will let you comfortably retire and live like a king if you move to a lower cost of living country.
If you're interested, you can look into "Financial Independence / Retire Early" discussion forums and read about people's plans for retiring and living off their investments. Most that I've seen that retire in USA are aiming for much more than $1m and still live rather frugally, though it depends on their plan, how much longer they plan on living, if they are planning on giving anything away as inheritance, and where they plan on living.
