|Posted: May 19, 2014, 10:12 pm - IP Logged|
Well i don't have a million dollars am I'm living just fine. And so are billions of other people around the world. I hear what you are saying but why cant he or anyone else live with a million given to them? The problem is that we all just want to BUY stuff. Buy, Buy, Buy. Well if one's approach to a satisfactory quality of life revolves around what he or she can 'buy', then no amount of money will ever be enough. He or anyone else with his new found financial blessing should be able to do just fine, all that's required is a bit of discipline.
"Well i don't have a million dollars am I'm living just fine."
Have you quit your job and started living on your savings yet?
His problem isn't just buying stuff. It's how long he'll need an income, and inflation. He's 48, so his life expectancy is probably at least another 30 years, and perhaps 40 or more. Even if he could safely earn 10% and live on the 100k income from a million bucks today, inflation of 3% would mean he'd need an income of 142k when he's 60 to have the same spending power. At 70 he'd need almost 192k. Given a more realistic return on his investment, he could scrape by on a very modest income and not be broke until his mid-60's or so.
His net from the "$20 million" jackpot should be about $6 million. That's enough for a very low risk investment to provide a fairly comfortable income that will increase by 3% per year and last until he's 82. A slightly higher rate of return could give him more income or last past 82 in case he forgets to die on time, but it also increases the chance that he'll lose principal. Either way, it only works if he lives a comfortable lifestyle instead of an extravagant one.
"all that's required is a bit of discipline."
There's the problem. Does it sound like he's got the necessary discipline and a realistic grasp of how much money it takes to live a given lifestyle if he thinks he can live on a million bucks? If he runs out and buys a house that costs a million bucks and an expensive car right off the bat that's probably a good sign he needs a wake up call. At least an expensive house on Long Island is probably a good investment. He can sell it later, but in the meantime it's a major expense that reduces the standard of living that the rest of his income can pay for.