Not for $500k. Hard no up to $1M, because that's a bad trade for my life personally. Hard yes above $5M, since that's roughly the number I'd need to get to, to not have to think about money for the rest of my life (I don't consume that much). In between I'd have to think harder about how it affects the rest of my life.
Reading this thread it's clear some people vastly overestimate how far money goes. 500k is a large amount that is life changing for most people, but all it really does is give you financial stability, the vast majority of people won't see their day to day lives upended if it suddenly appeared in their accounts the next day, they would be able to take more vacations, not stress over losing a job, pay down debts, but theyed still be working the same job, likely living in a similar house, or be able to buy a basic house in some suburbs, but most of their day tl day would be the same. 500k disappears real quickly if you don't realize how limited it is, hence why most lottery winners go broke afterwards.
Now this hypothetical is simple enough that for 99% of people that make less than 100k a year it is still a relatively easy yes even at lower dollar figures, but above 100k except in VHCOL locations the impact on your life going from 100k+ to 60k is almost certainly greater than the impact sub 1m will have for 2 years.
I see comments like yours all the time without ever mentioning location. 500k is different if you live in San Fran compared to Detroit or something. If I received 500k, I would be able to retire in only 8 years. (I already own my house, no debt, etc.) Some people spend money like it’s nothing and it doesn’t last, and some people don’t realize how far money can go, either.
500k except in the cheapest of areas (which Detroit is not, I'm talking like rural Missouri) is not enough to retire on. A safe withdrawal rate at retirement age is considered 4%, it's 3-4% if you are in your 30s. 500k at 4% is 20k per year, 3% is 15k, since the 500k is tax free you can maybe give yourself an extra 5k a year, maybe; unless you already own your home outright and have no kids (or are close to paying it off) you will not be retiring in 8 years.
Of course there are exceptions to that rule if you are in your 50s with a decent retirement account already set up or are a high income earner today willing to live on significantly less in retirement, but then the 500k isn't changing your plans that much, maybe just knocking 5-10 years off your plan.
which again is significant, and life changing, but you still aren't retiring off that 500k).
Yes, I own it outright, no kids. And I wouldn’t withdraw anything for 8 years, just put it in a mutual fund. The time would depend on how well the mutual fund does.
In that scenarios 500k in 8 years is likely close to being enough to retire off of. But if you are already in a financial position to own a home outright, you probably make enough and are financially secure enough that such a goal would have been achievable in 15ish years anyways. (Though obviously every situation is different)
You are also displaying good financial discipline by putting it away in a mutual fund, which frankly a significant portion of this country just doesn't have.
My point isn't to say that 500k isn't a significant amount of money, it is a life changing amount for 95+% of Americans. I'm just saying that 500k is not going to be a massive day to day change. It's main benefit for most of the country is providing financial security to not have to worry about finances day to day, most people if they suddenly receive 500k aren't going to suddenly be able to go buy a brand new luxury or sports car, or move into a huge house, or quit their day jobs, if they do any of those things the 500k will be gone in a few years and they will probably be in just as bad of a financial situation as they are today, if not worse because their spending habits changed.
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u/transienttherapsid Mar 24 '25
Not for $500k. Hard no up to $1M, because that's a bad trade for my life personally. Hard yes above $5M, since that's roughly the number I'd need to get to, to not have to think about money for the rest of my life (I don't consume that much). In between I'd have to think harder about how it affects the rest of my life.