Monday, December 28, 2009

What does $1 Million Actually Mean Today?

Becoming a millionaire used to mean you were on top of the world. Nowadays, it means you are climbing up the ladder. While a million dollars is completely out of reach for many people, it's just a step along the way for many others. Why? Because it doesn't go as far as it used to.

The term millionaire has been synonymous with being rich ever since we became a country. The person most often credited to be the first American millionaire, Elias Hasket Derby, made his fortune as a privateer during the American revolution. Back then a millionaire did really mean rich.

Also, we all love round numbers. We love to see 1999 become 2000, and our odometer roll over to 100,000 miles. So it's only natural we would fixate on $1,000,000. It's a milestone with a lot of zeros. It's even got an additional comma. Now that's rich -- having two commas in your net worth! But what does that get you? Not as much as you would think.

Housing

Housing is where most people hold their largest chunk of wealth and with real estate falling considerably in many areas, some might think that the lifestyle a million dollars would provide would be luxurious. But that depends on where you live.

There are plenty of nice places to live that don't cost very much, but according to the California Association of Realtors, the median house price in Palo Alto, Los Altos, Manhattan Beach and Cupertino is over $1 million. The median price for the entire San Francisco Bay Area tops $500,000 and Orange County is right behind at just under that. And those are just averages, not even something special. While other areas of the country aren't nearly this expensive, being a millionaire in some areas just means you paid off the mortgage.

Retirement

Another aspect of becoming a millionaire is not working. If you had a $1 million right now, could you retire and would your money last? This is a simple calculation. If you want to try to live off the interest and you invest the money in tax exempt municipal bonds that pay 4 percent, then you would have $40,000 a year to live on.

But that doesn't account for inflation going forward. If $1 million today doesn't feel like much, imagine what it will feel like in 30 years. At 3 percent inflation compounding for the next 30 years, $1 million dollars will have the purchasing power of $412,000 today and your $40,000 income will feel like $16,500. So retiring when you have $1 million may sound nice, but it's likely that it won't be what many people have in mind when they think of retiring a millionaire.

Instead of living on the interest, you could tap into the principal as well. Those are slightly more difficult calculations. For example, if you were 50 years old right now and wanted to plan for your money to last until you were 95, then you need money for 45 years in retirement. If you stick with the 4 percent return, then you could withdraw about $48,000 a year. Again this doesn't account for inflation going forward. Each year if prices rise, your standard of living would fall. In this example, you have 45 years of prices going up at 3 percent. So that last year will feel like $12,600 does today.

Combining Retirement and Real Estate

If we factor in a house, this gets even worse. If we take the price for a house out of the $1 million, even in a reasonable area and not San Francisco, it's going to be a big piece of your net worth and cut into your funds for retirement. For example, if you bought a nice $250,000 home, you would only have $750,000 left to live on. At 4 percent that would be $30,000 a year or $2,500 a month. That's before inflation takes a bit every year.

These retirement calculations show that even if your house is paid off, that living off a million dollars isn't what it's cracked up to be. And if your house isn't paid off, it's probably not even close to what you want to do.

Bottom Line

So the bad news is that even if you fall into a million dollars, you probably aren't set for life, especially if you are young. But the good news is, you'll still be a millionaire, and that's better than the alternative.

23 comments:

Anonymous said...

Bookmarked this. Thanksgiving owing to you against sharing. Definitely benefit my time.

Anonymous said...

I just found the website who reviews about
many
home business ideas

If you want to know more here it is
home based business reviews

Anonymous said...

I wish not agree on it. I over warm-hearted post. Expressly the title-deed attracted me to study the intact story.

namie said...

你怎麼能經過一片海,而忘記它的藍?.........................

Anonymous said...

This is a celebrated article as they all are. I tease been wondering about this an eye to some culture now. Its vast to receive this info. You are reasonable and balanced.

Anonymous said...

Nice post and this enter helped me alot in my college assignement. Thanks you on your information.

Anonymous said...

Good day, sun shines!
There have been times of troubles when I felt unhappy missing knowledge about opportunities of getting high yields on investments. I was a dump and downright pessimistic person.
I have never thought that there weren't any need in big starting capital.
Nowadays, I'm happy and lucky , I started take up real money.
It's all about how to choose a proper partner who utilizes your funds in a right way - that is incorporate it in real business, and shares the income with me.

You may get interested, if there are such firms? I have to answer the truth, YES, there are. Please be informed of one of them:
http://theinvestblog.com [url=http://theinvestblog.com]Online Investment Blog[/url]

free consumer debt counseling service said...

One million dollars do not mean as much as 20 years ago.

George
best rated tasc approved debt consolidation company

Anonymous said...

[u][b]Xrumer[/b][/u]

[b]Xrumer SEO Professionals

As Xrumer experts, we have been using [url=http://www.xrumer-seo.com]Xrumer[/url] for a sustained fix conditions and remember how to harness the massive power of Xrumer and turn it into a Spondulix machine.

We also provender the cheapest prices on the market. Numberless competitors devise cost 2x or even 3x and a lot of the continuously 5x what we responsibility you. But we maintain in providing enormous accommodation at a debilitated affordable rate. The whole something of purchasing Xrumer blasts is because it is a cheaper substitute to buying Xrumer. So we focusing to keep that thought in recollection and provide you with the cheapest censure possible.

Not just do we cause the unexcelled prices but our turnaround heyday for the treatment of your Xrumer posting is wonderful fast. We will take your posting done in the forefront you know it.

We also outfit you with a ample log of well-heeled posts on manifold forums. So that you can get the idea seeking yourself the power of Xrumer and how we hold harnessed it to emoluments your site.[/b]


[b]Search Engine Optimization

Using Xrumer you can trust to distinguish thousands upon thousands of backlinks over the extent of your site. Tons of the forums that your Install you settle upon be posted on oblige great PageRank. Having your association on these sites can categorically serve found up some cover dignity back links and uncommonly aid your Alexa Rating and Google PageRank rating through the roof.

This is making your site more and more popular. And with this inflate in regard as superbly as PageRank you can think to lead your milieu really superiority high in those Search Locomotive Results.
Traffic

The amount of see trade that can be obtained before harnessing the power of Xrumer is enormous. You are publishing your situation to tens of thousands of forums. With our higher packages you may regular be publishing your site to HUNDREDS of THOUSANDS of forums. Imagine 1 post on a stylish forum last will and testament usually cotton on to a leave 1000 or so views, with communicate 100 of those people visiting your site. At once devise tens of thousands of posts on fashionable forums all getting 1000 views each. Your freight ordain go through the roof.

These are all targeted visitors that are interested or curious nearly your site. Deem how divers sales or leads you can fulfil with this considerable loads of targeted visitors. You are in fact stumbling upon a goldmine ready to be picked and profited from.

Remember, Above is Money.
[/b]

GET YOUR TWOPENNY BLAST TODAY:


http://www.xrumer-seo.com

Anonymous said...

Hello!
You may probably be very interested to know how one can manage to receive high yields on investments.
There is no initial capital needed.
You may begin to get income with a sum that usually goes
on daily food, that's 20-100 dollars.
I have been participating in one company's work for several years,
and I'm ready to let you know my secrets at my blog.

Please visit blog and send me private message to get the info.

P.S. I make 1000-2000 per daily now.

http://theinvestblog.com [url=http://theinvestblog.com]Online Investment Blog[/url]

Anonymous said...

Amiable dispatch and this mail helped me alot in my college assignement. Say thank you you for your information.

Anonymous said...

My friend and I were recently discussing about technology, and how integrated it has become to our daily lives. Reading this post makes me think back to that debate we had, and just how inseparable from electronics we have all become.


I don't mean this in a bad way, of course! Societal concerns aside... I just hope that as the price of memory decreases, the possibility of uploading our memories onto a digital medium becomes a true reality. It's a fantasy that I daydream about every once in a while.


(Posted on Nintendo DS running [url=http://kwstar88.livejournal.com/491.html]R4i[/url] DS OperaV2)

逛街 said...

wonderful ..................................................

Anonymous said...

Go over Our Dastardly Prices at www.Pharmashack.com, The Main [b][url=http://www.pharmashack.com]Online Dispensary [/url][/b] To [url=http://www.pharmashack.com]Buy Viagra[/url] Online ! You Can also Underline to Mammoth Deals When You [url=http://www.pharmashack.com/en/item/cialis.html]Buy Cialis[/url] and When You You [url=http://www.pharmashack.com/en/item/levitra.html]Buy Levitra[/url] Online. We Also Classify a Bountiful Generic [url=http://www.pharmashack.com/en/item/phentermine.html]Phentermine[/url] On account of Your Intake ! We Hawk Hallmark [url=http://www.pharmashack.com/en/item/viagra.html]Viagra[/url] and Also [url=http://www.pharmashack.com/en/item/generic_viagra.html]Generic Viagra[/url] !

Anonymous said...

Infatuation casinos? ruminate on this untested [url=http://www.realcazinoz.com]casino[/url] advisor and be paid up online casino games like slots, blackjack, roulette, baccarat and more at www.realcazinoz.com .
you can also examine our warn [url=http://freecasinogames2010.webs.com]casino[/url] coerce at http://freecasinogames2010.webs.com and rout floor with by law tangled dough !
another voguish [url=http://www.ttittancasino.com]casino spiele[/url] convenient is www.ttittancasino.com , in prize german gamblers, walk off a flummox with in unrestrained online casino bonus.

Anonymous said...

Opulently I assent to but I dream the post should prepare more info then it has.

Anonymous said...

Nice brief and this enter helped me alot in my college assignement. Thank you on your information.

Lillie said...

I like to ask the younger students that I teach financial literacy to "What would you do if you had a million dollars?" Most of them come up with the idea of buying a house, a car, giving some to Mom and other family members not realizing that a million dollars doesn't go far today. It's always interesting to hear the answers, but after reading your comments, I will certainly have to increase the millions during my next session.

Anonymous said...

Generic Viagra is a prescription drug that takes care of the physical dilemma of erectile dysfunction in men. Sildenafil citrate is the major component of generic viagra pills that dilates the arteries in the penis and allows filling of blood in small spaces of penis that hardens and gets erect.Generic Viagra works by helping the blood vessels in your penis to relax, allowing the flow of blood into your penis. The result of this is improved erectile function. Generic Propecia is a medication used for the treatment of prostate cancer and pattern baldness in men. It is the main ingredient in two drugs – Proscar for prostate cancer and Propecia for pattern baldness. Generic Viagra has been clinically shown to improve erectile function even in men who had diabetes or prostate surgery. The pill contains this component that helps increase blood flow to the penis and may help men with ED get and keep an erection satisfactory for sexual activity.Generic Cialis is slightly different from the other erectile drugs available in the market as it may work up to 36 hrs after dosing. Generic Levitra orks along with sexual stimulation to help achieve an erection when taken 30 to 60 minutes before sexual activity.

Anonymous said...


xanax, [url=http://kc.hri.tu.ac.th/index.php?title=The-Truth-About-Xanax-Side-Effects]xanax[/url],

http://kc.hri.tu.ac.th/index.php?title=The-Truth-About-Xanax-Side-Effects

xanax, [url=http://reconcilecommunity.org/wiki/index.php?title=Prescription-Pill-Slang-Every-Parent-Should-Know]xanax[/url],

http://reconcilecommunity.org/wiki/index.php?title=Prescription-Pill-Slang-Every-Parent-Should-Know

xanax, [url=http://lri.robsonhall.ca/wiki/index.php?title=Prescription-Pill-Slang-Every-Parent-Should-Know]xanax[/url],

http://lri.robsonhall.ca/wiki/index.php?title=Prescription-Pill-Slang-Every-Parent-Should-Know

xanax, [url=http://algoritm2.ru/wiki/index.php?title=Wondering-How-Does-Xanax-Work?]xanax[/url],

http://algoritm2.ru/wiki/index.php?title=Wondering-How-Does-Xanax-Work?

xanax, [url=http://fhcwiki.com/wiki/index.php?title=Prescription-Pill-Slang-Every-Parent-Should-Know]xanax[/url],

http://fhcwiki.com/wiki/index.php?title=Prescription-Pill-Slang-Every-Parent-Should-Know

Anonymous said...


buy cialis online [url=http://www.buycialis.name] Cialis Online [/url]http://www.buycialis.name
cialis[url=http://www.cialisbuyonline.us] Buy Cialis [/url]http://www.cialisbuyonline.us
Cialis[url=http://www.nonprescriptioncialis.com]Cialis[/url]http://www.nonprescriptioncialis.com

Anonymous said...


Codeine[url=http://www.codeine-usa.com]Codeine[/url]http://www.codeine-usa.com
Discount Viagra [url=http://www.viagradiscount.us] viagra[/url]http://www.viagradiscount.us
Valium [url=http://www.diazepamdeals.com] Valium Online[/url]http://www.diazepamdeals.com
Xanax Online[url=http://www.onlinexanaxusa.com] Xanax Online[/url]http://www.onlinexanaxusa.com

Anonymous said...

<----- Opening Spinn
viagra, viagra, http://ccdb-portal.crbs.ucsd.edu/web/richardsmith/safeguards-before-you-purchase-viagra-online

viagra, viagra,

http://ets.tlt.psu.edu/learningdesign/user/1171

viagra, viagra,

https://moodle.umn.edu/blog/index.php?postid=13082

viagra, viagra,

https://students.washington.edu/elsafund/wp/wordpress/groups/safeguards-before-you-purchase-viagra-online/

viagra, viagra,

http://pocketknowledge.tc.columbia.edu/home.php/browse/90641

viagra, viagra,