How did you get to this point? I have $2M+ net worth, and while I live somewhere rent controlled, $2M isn't that much in the Bay Area. I'm still scared to lose my job.
What is your $2m generating? For instance, if you invested in high quality dividend stocks, you can get 3% and it should generally grow about what GDP does (which should also include inflation effects). So that's $60k/year, or after 15% dividend tax + let's say 5% California state tax, for a net of $48k. If you're in somewhere rent-controlled, seems like even with a family you're not going to on the streets starving.
Alternatively, if you have $2m in stocks that are growing, you could consider the growth amount as potential income, because you could always sell it. Generally the growth is better than 3%, but down times will also hurt worse since you might have to sell at a low.
Or you could purchase a residence with $1m, and buy dividends with the rest. Taxes on the residence will be about $10k, with dividend income of $24k, leaving $14k for food, etc.
You won't independently wealthy in any of these scenarios (not in the Bay Area, anyway), but in these scenarios you don't actually need much from a job, maybe $40k with a family. So you should be able to save several years worth of that on a Bay Area salary, which leaves you with quite a long runway.
And if things get really bad, you can move to the middle of nowhere, buy a house for $300k and actually be independently wealthy.
Which will decline as the Fed cuts rates. Longer duration locks in risk free yields longer. Your portfolio goals and allocation will of course drive your strategy.
The 5% HYSA minus the FED-targeted rate of 2% is back to 3%. But high quality dividend companies generally raise their dividend each year, plus you get the increase in stock value. So you only get 3% in income, but your total return is much better.
Two dead parents worth of houses. Mortgage paid off and a side job. It would have been that without the houses but there is an ex wife involved. Avoid those.
My net worth is less than yours. I could live on your interest fine and just retire.
> With a $2m+ net worth you could move to 90% of the country, retire and live off of the interest.
Not really for most scenarios.
For someone who is single and has no kids and plans to stay that way forever and is happy to live a very simple lifestyle, perhaps. Anyone else, no.
You'd still need to buy a house even if you move to a real cheap area, so you don't have 2M in cash. Then, how are you paying for health care? Kids education?
$500k buys a very nice house in many part of the country.
Health insurance can be purchased from healthcare.gov in largely the same way home insurance works.
$1.5M would get you $60k/year without ever touching your principal.
That being said, waiting even a few years drastically changes the math into your favor. 5 years of a job, plus interest on your retirement fund could easily double it.
To support a sibling post, depends very much on age and circumstances. 50, healthy, no wife or kids and no plan to have them? Might be fine retiring at $2m. 30 with a family? Ehhhh…
Likely-time-remaining is a huge factor in figuring out how much it’ll take to retire at a given level of risk (of running out of money too early).
It's $80k/year at a 4% withdrawal rate. If you were 30 with a family it might be cutting it close (depends on things like student loans, cost of health insurance, car payments, cost of mortgage, etc). Bumping it up to $2.5m would probably make things a lot more comfortable, but the point remains that OP has no reason to worry.
That's a mindset problem. If you have $2M net worth, if $1M is in cash in a HYSA paying 5% APY you're making $3.5k/month on that alone. I don't know what your costs are; rent, healthcare, partner, kids, other dependents; if you caught long covid and became disabled and couldn't work another full day in your life, you'd still be making $3.5k a month. I don't wish that disability on anyone, but what helps the mental switch on what to do is to pull a years worth of living expenses out of savings into a cash account, and then just go do that for a year. Don't think about the rest of the pile, just sit with that year's worth of just living and doing no work.
It's not net worth. It's how long you can abide. If you have $2M net worth and $1.99 is tied up in a way you can't spend on bills, that don't mean nothin'. If things got bad, I guess you could move. You could probably buy a house now in fly-over country and just retire, living on interest from conservative investments.
If you're scared about your financial situation with over a $2M net worth either you are prone to paranoia or you're living well above your means.
I'm constantly surprised how many well-off people try to pass themselves off as "one of the poors". My family and friends do okay with a net worth way below that, in the Bay Area. I've worked minimum wage jobs here in the bay, and had co-workers actually struggling to make it to the next paycheck. It really gets on my nerves when someone in software chimes in with "we're all struggling"—No, we are not all struggling on the same level. Guess how much the person making your fast food or working at your local grocery store is making... And think about how they still live in the same city as you.
"$2M isn't that much". Man, I can't imagine what it takes to come to that conclusion.
> If you're scared about your financial situation with over a $2M net worth either you are prone to paranoia or you're living well above your means.
As someone who was layed off and went without a job for 13 months (tech bubble), I am _always_ scared about my financial situation. Sure, if I lose my job, I have the resources to hold out while I find another, but
- It _will_ impact my lifestyle, because I'll need to be more careful about what money I spend
- It _will_ make my family unhappy, for the same reasons
- I've been in the position where it's "do we eat or pay rent next month?", and it sucks. I likely won't get back there, but the fear of getting there persists.
Look, I get it, $2M is a lot of money. But there's a fair number of people that can get to that amount (especially living in an area where a 2br dwelling is easily $1M of that), still be saving _more_ money, and still fear the idea of being out of work for months. Especially if it's a single earner household. And especially if there's children.
Then you are living above your means. Having $2M in assets puts you in the top 5% in the USA, let alone with world. If you can't figure out a way to pay for food with this much money tied up in assets, you should spend some of your savings on a financial advisor.
There are literal minimum wage workers getting by in the bay. I really can't understand this obsession with not wanting to admit that you are well-off.
> There are literal minimum wage workers getting by in the bay.
And there are people that don't have a job and live off the land. Each type of person has different expectations and commitments.
- The person making $80k/year is well off compared to the person making nothing because they can't hold down a job; but they're still reasonable to be worried about losing their job, being unable to pay for their apartment, and being out on the street.
- The person making $150k/year is well off compared to the $80k person, but can have the exact same fears. Maybe they're worried about losing their house because they won't be able to pay their mortgage.
It can be very hard to pay your bills after being out of work for a year, even taking minimum jobs to help make ends meet; because people make commitments based on their earnings. And even _reasonable_ commitments can be rough if you're out of work long enough.
> I really can't understand this obsession with not wanting to admit that you are well-off.
The poster with $2M in net worth never denied they were well off. You're the one that seems to be denying that it's possible to be well off and _also_ be worried about the impact of losing your job. Your stance is... mind boggling to me.
If you're making enough to sustain a $2M net worth, either you are skilled enough to be able to find another job quickly (highly experienced individuals are always in demand) and you are just not confident enough to realize your worth—or, you are not skilled enough to get another job quickly and are being paid above your worth.
In any case, I would suggest saving up an emergency fund to the point that you are not scared of losing your job. I understand making that people must make commitments (car payments, mortgages, student loans, etc.) and that the risk of not paying them off is always there. But I would hope that a millionaire of all people has enough collateral for a loan if necessary, and that they would have good enough credit to be approved.
If you have your finances in order, you should not be scared of losing your job. Having actual fear from the thought means that maybe your assets aren't working for you (they are all deprecating assets or the cost of their upkeep is higher than the return). The one thing that can and should terrify you is illness or injury that makes you unable to work.
> If you're making enough to sustain a $2M net worth, either you are skilled enough to be able to find another job quickly (highly experienced individuals are always in demand) and you are just not confident enough to realize your worth—or, you are not skilled enough to get another job quickly and are being paid above your worth.
As someone who was out of work for ~13 months during the dotcom bust; this is absolutely false. Sometimes, things work out such that getting a new job is more complicated than just having a good skill set. And honestly, the idea that "if you can't find a another job quickly, you're clearly not very good at your job" is flat out insulting.
> I would suggest saving up an emergency fund to the point that you are not scared of losing your job.
> And honestly, the idea that "if you can't find a another job quickly, you're clearly not very good at your job" is flat out insulting.
To be clear, I was only referring to leadership or management roles (given the context of a millionaire in this industry). At that point in your career I would expect one to have many career connections and/or enough sheer charisma and experience that makes landing a job doable if not a breeze.
It's not meant to be particularly insulting, just realistic.
> As someone who was out of work for ~13 months during the dotcom bust; this is absolutely false.
I didn't consider exceptional events such as the dotcom bust, or the 2008 financial crisis or the Coronavirus pandemic and subsequent inflation. If we include those, I do agree that if makes sense to fear losing your job.
I do concede that we've had multiple "once-in-a-lifetime" industry upsets in a very short while and with that context it could make sense to panic. But in normal circumstances, I still think fearing job loss as a millionaire comes from somewhere more emotional/instinctual than rational.
You intentionally moved to that area, and it even sounds like you own real estate there.
Yes, it will impact your lifestyle, and you may have to be more careful about what money you spend, depending on how you're currently spending it. So what? 99% of people on earth live like that, and most do just fine.
The fact that having to live a non >$2M net worth lifestyle would make your family unhappy sounds concerning.
1. The discussion of what I've gone through, where I am in my life, and how the idea of losing my job (again) is concerning to me... is totally separate from the discussion of someone having $2M in net worth and living in an expensive area. Neither of those are true about me.
2. The vast majority of people, if they suddenly had to live with $0 income for a while, would be concerned, regardless of how much they make now.
3. The vast majority of people, if they suddenly had to live with 1/2 their normal income, would be concerned, regardless of how much they make. People make life decisions based on their income, and having that thrown up in the air generally causes people worry and stress.
> The fact that having to live a non >$2M net worth lifestyle would make your family unhappy sounds concerning.
The phrase "$2M net worth lifestyle" does not mean anything.
A 2M net worth could be a 1.5M house (which in the bay area is a simple nondescript house) and 500K in a 401k (which you can't touch until you're 60, so it's off limits). That's it. Neither of these can be used to pay any monthly bills.
So this person with a 2M net worth (locked in assetts) is still 100% dependent on that monthly paycheck to cover all expenses.
It makes especially... interesting reading to those of us from the global South. To make $2 mil at my current salary, I will have to work for about 100-150 years, saving every penny and spending nothing, and I make decent money by our standards. There's even no relatively safe way to make some smart investments (which I imagine is how most of this money was acquired) because of incessant economical crises and non-existence of startup culture.
Man, some people here are completely out of touch with the average Eathlican. I'll have to show this discussion to my friends.
With that kind of money you could just... you know, move pretty much anywhere on the planet and live comfortably for many years, until a good opportunity comes up. Depending on the place, it might last you the entire lifetime (see my salary above).
> I'm constantly surprised how many well-off people try to pass themselves off as "one of the poors".
The amount of people I've seen on here saying "It's just not an option to quit Google/Meta no matter how awful they are, I have a mortgage to pay!" even when the tech job market was still red-hot is quite incredible.
For a software engineer, or really most professionals, $2M really is not _that_ much in terms of retirement.
It’s absolutely enough to live a frugal retirement on, but not some sort of massive nest egg. You can safely withdrawal about $80k/year from that without it diminishing.
Don’t get me wrong, that’s the average income in the USA, but most deep career professionals would be taking a step down in terms of purchasing power. No real source of income means you can’t really finance anything. Major purchases are essentially pulled straight from that nest egg.
Try having a chronic health condition. My ability to continue walking will at some point depend on paying doctors to replace part of my skeleton; that doesn't come cheap in America.
Of course I'm a random person on the internet and you haven't asked for my advice.
Just saying -- kids pick up languages real fast, friendship treaties and tax benefits are abundant and with 2M you can shop around for a better lifestyle if you really want to not have that stress and fear, unless you are determined to become filthy rich, I ofc don't know you.
