I am a Multi-Millionaire but I am Afraid of Retirement
Is a million bucks enough to retire on anymore?
Trigger warning! This is a whiny, first-world, rich white people’s problems article. Skip it if it is only going to piss you off.
If you’ve been reading my Medium articles, you know that I am a reasonably well off privileged white fuck. But did you know that I am a multi-millionaire? I am! About two million now, my net worth.
I am a self-made millionaire. I was born into a middle-class working household. My dad was an electronics technician in the aerospace industry and my mom was a stay-at-home housewife. (At my father’s insistence, I later learned. When us four kids were grown and moved out, she got a job using her ancient office skills.) We lived in one of those small suburban ticky-tack houses in the San Fernando Valley in Southern California.
How I Became a Millionaire
I became a millionaire through education, consistent work ethic, thrift, and not having kids. And, or course, the huge boost of my white privilege. But it was never mainly about the money for me. I was just drifting through life, taking what seemed like the easiest and most interesting path. I was quite surprised when I first noticed I had become a bona fide millionaire, not so very long ago.
Sadly, education, consistent work ethic, thrift, and not having kids is no longer a guaranteed path to becoming a millionaire. I’m sorry, young people, for fucking it all up for you.
I got an engineering degree from U. C. Berkeley in the 1970’s, when it was still quite inexpensive for in-state students. I worked in high tech my whole career. So pretty good salary, and a few bucks from bonuses and stock options (and bonus stock options) here and there. 401K retirement plans. Absolutely no pensions!
I never had any kids, so there is my biggest savings. Both my and Misha’s parents have passed and we never had to contribute to their upkeep, which can also be a huge drain on people’s wealth. We’ve had no other extraordinary expenses either, such as paying for a niece’s rehab or a nephew’s kidney transplant. (None of my nieces or nephews have been in rehab or had kidney transplants, as far as I know. I really don’t know them very much at all.) I never had to pay alimony, though I did lump-sum buy my way out of a marriage.
I never had a desire to live extravagantly. I never owned:
- A second home, neither for vacationing nor investment
- A jet ski
- A Winnebago
- A boat
- A pilot’s license
- Expensive hobby tools/materials
- A set of golf clubs, nor a country club membership
I vacationed, but also not extravagantly. A few trips to Hawaii. A couple of cruises. Drive up to Lake Tahoe for skiing when I was young. One “Grand Tour” of Europe — a few weeks travelling by train through Germany, France, and England — when I was in my twenties. Not too long ago, Misha and I flew to New York for a long weekend and catch a Broadway musical (Wicked), ticking off an item from my very short bucket list.
The one extravagance I recall was that I put in a hot tub at one house I owned for a time. Big whoop. Oh, and changing my sex: I figure that racked up about $40,000 in bills (mostly on electrolysis and therapists). But I would class that as a medical necessity.
My only vices were not expensive ones. I drank heavily but managed to avoid any DUIs or other costly damage. I dabbled in recreational drugs but rarely paid for them myself. (Booze and drugs worked very well for me, until they didn’t. As we say. I’m twenty years sober now, thank you very much.)
I was able to save a lot. I had some pretty decent investment guys over the years, so I did okay.
One of my millions is the current value of my investment accounts (including those 401K retirement accounts).
House-Rich
The other of my millions is being house-rich. My first house was a nice, brand-new condo in Los Gatos that I bought together with another Intel engineer at the end of the 1970s. Interest rates were insane due to inflation — the famous “stagflation” actually. I recall having a 17% mortgage. That’s right, not 1.7%, but 17%. I lived there for only a few years so the interest rate didn’t matter much.
After my delightful Los Gatos sojourn, I moved into an older single-family home in the southeast part of Silicon Valley (off Blossom Hill Road, near the big IBM campus), with a much better interest rate on my mortgage. I lived there for quite a while. Then I upgraded to a brand-new, fairly large home in northern San Jose (near the intersection of freeways 880 and 101).
In 2008, I was diagnosed with throat cancer. Fortunately, my employer-provided health insurance covered the lion’s share of the half-million dollars in medical bills.
Cancer was, for me, as for many cancer survivors, a life-changing experience. I decided it was time to move somewhere very nice instead of waiting for retirement before leaving the miserable suburbs (crowds, traffic, a dearth of nature and beauty). I sold the house in San Jose for about three-quarters of a million dollars and bought the beautiful little home I live in now, in the awesome redwood forests of Felton (in the hills between San Jose and Santa Cruz beach) for about a half million. (A goodly chunk of my investment money came out of that profitable sale.)
Zillow tells me my lovely Felton home is now worth about a million dollars. My mortgage is paid off so the house is my second million, if Zillow can be trusted.
Financing My Retirement
I am on the verge of retirement, and I worry about whether I have saved enough. I would be sitting pretty if it were just me, but I am also supporting Misha, for reasons. Is it in fact possible for two people to retire comfortably today on a net worth of two million bucks? Including a paid off house?
I’m sure a lot of you are scoffing now, and wishing you had a million smackeroos in the bank. Yeah, I’m awfully fortunate. I’m not losing sleep with worry about retirement. But I am concerned.
Let me lay one more financial fact on you before I get into my concerns. When I retire at age 70 in a couple of years, the Social Security Administration will begin sending me monthly checks of $4,746. If Misha doesn’t touch her Social Security until she reaches 70 (in 15 years), another check of about $1,000 should be coming in.
Shit fire! Just the Social Security alone should be enough to live on, shouldn’t it?
Well. All of my expenses go through my checking account. For the last few years, I’ve been totalling up my previous year’s expenses at tax time, working from a dump of my banking records. Even with our modest lifestyle and no mortgage or car payments, we’ve been spending about $7,000 a month, excluding income taxes.
Big ticket items are:
- Misha’s health insurance, currently $1,058/month, until she goes on Medicare in 10 years (yeah, you try buying private health insurance when you are over 50)
- Property taxes
- Business taxes (I am employed as a private contractor)
- Electricity and propane (no city gas in the hills where I live)
- Food
I will also need to pull income (and not capital, I hope) from my investments. Good. That’s what I’ve been saving for.
Note that Social Security is taxable income. Investment income is taxable as well, though some may be taxable at the lower capital gains rate. 401K retirement account withdrawals may be taxable. That means that I need an income of about $8,000 to $9,000 a month when I add in income taxes. So $4,746 a month, or, later, when Misha’s Social Security kicks in, $5,746 a month, doesn’t cut it.
I understand a good rule of thumb is that investments can pull about 4% per annum on average, without touching the capital. That’s $40,000 on a million bucks, or $3,333 per month. That puts me up to $8,000 a month, and later $9,000 a month, which puts me at exactly break-even.
Hooray! I made it! No worries, huh?
What Could Go Wrong
But no margin for error, either. What could go wrong?
Inflation can kill me. Social Security is indexed to inflation, but I understand it doesn’t completely keep up. And we’re already seeing inflation, right? Globally! It seems likely to be only getting worse from here on out, given climate change and resource depletion.
A stock market crash could, and probably will at some point, devalue my investments.
I’m sure there will be expensive home maintenance projects like a new roof or replacing the septic tank from time to time. Maybe need a new car, too.
My house will burn down. Given that the world is on fire due to climate change, it is only a matter of time before my lovely house and the surrounding redwood forest go up in smoke. I have insurance (at least for now — insurance companies are already starting to pull out of California and Florida due to climate change risk) so I’ll be okay. Nevertheless, I’m certain it will wind up hitting my pocket-book pretty good.
But I am house-rich. My backup plan is to cash in the house and move somewhere with a lower cost of living. But where? Everywhere is expensive these days. And how house-rich will I be after it burns down?
I guess the wise thing to do is to sell the house now, before it burns down, and move somewhere cheaper. But climate change risk is growing everywhere. I could be jumping out of the frying pan into the fire. Or, in this case, jumping out of the fire and into the frying pan. Whatever. It’s a real crap shoot, isn’t it?
Besides, civilization is collapsing. It may well be that 10, 20, 30 years from now, it won’t matter how much money anyone has in the bank because money won’t be worth anything anymore. So I might as well ride it out here and see how far the trip takes me.
If I don’t live more than ten or twenty more years, I’ll be fine. Except for being dead. But I’m kind of looking forward to that.
Maybe my wisest investment at this point would be in a Sarco pod.
Final point: If an f/n bitch with a million bucks in the bank is worried about financing her retirement, what does that say about the state of our economy?
For those of you who do not have a million dollars in the bank and a well-paying job, how do you do it? Isn’t life just kicking your ass? I don’t mean this in a gloating way. I’m sorry that the world has to be this way.
— Lannie Rose, August 2023
preferred pronouns: she/her/hers
This article was not written by an AI (but isn’t that just what a clever AI would say?)
