From Forbes.com
I got a call from a newly "rich" executive. Having worked 60-hour weeks for years and now ready to retire at 55, he sold his business for $4 million. He was ready to live out his dream life and live off that tidy nest egg. The problem is, to do so--on $4 million--he must cut his standard of living.
It's the plight of the "mMillionaire" -- the middle-class Millionaire.
Mansions and yachts are out. The mMillionaires who want to retire before age 65 or 72, find they must live in three- and four-bedroom homes and drive mid-priced four-door sedans and mini-vans.
They are your neighbors--millionaires who live middle-class lifestyles even though they may have millions in liquid assets.
These mMillionaires have between $2
million and $10 million of investable assets, beyond their homes. Many have sold businesses or inherited money, yet few believe they can retire and continue living the high life.
The key question facing the mMillionaire is, "Can I continue to live the way I am living for the rest of my life?" The answer for most of these millionaires is "no."
Just a generation ago, a person with $2 million or more in liquid assets would have had enough for a secure retirement. But not today. Combine longer life expectancies and the rising costs of health care, food, transportation and property, and you have financial challenges ahead for the mMillionaire.
When Social Security was passed 72 years ago, life expectancy was less than 70. Now it's well above that and may continue to rise with advances in medical treatment. As a result, the mMillionaires in this high net worth class are finding they must scale back their lifestyles or delay retirement. That's something most of them, who are high-earners today, can't imagine.
For many of the executives and mMillionaires that I speak with everyday, this comes as a shock. Often their biggest obstacle is changing their own attitudes about what their wealth can afford them. Some are reluctant to embrace projections about their nest eggs' staying power. They believe that lower expenses in retirement will offset inflation and lost income.
Even with no mortgage or tuition payments, many mMillionaires underestimate the effects of inflation, especially on the cost of health care services for the aging.
We find that people don't always want to confront bad news. There's no question that more people are accumulating wealth at an unprecedented rate. They're living the good life, banking on retiring when they want to and continuing that quality through retirement. What they haven't counted on is that retirement can be a 40-year experience and that conditions can change drastically. In fact, in about 30 years, people will need more than $2 million to equal the purchasing power of $1 million today.
Many mMillionaires who are used to running businesses or managing others often want very specific answers on how to manage their middle-class millionaire status. Unfortunately, there's no formula for long-term financial security. Everyone's needs vary.
But, there are certain principles that can guide the mMillionaire's actions. If you are an mMillionaire, congratulations, but there are still a number of things you should keep in mind--ranging from managing your tax liabilities, to taking a really critical look at your investment portfolio (are you too heavily in tech stocks or consumer durables?), and of course guarding your estate, the nest egg you will leave behind.
Carrie Coghill Kuntz is a certified financial planner in Pittsburgh. She is a registered representative of Commonwealth Financial Network, a member of the Financial Industry Regulatory Authority and the Securities Investor Protector Corporation.
Copyrighted, Forbes.com. All rights reserved.
Do you suppose this was written to be taken seriously? Or just having a little fun?
Replies
77
Darlene is my middle name, not my nickname
Actually, I think it is probably true. I sure would like to have that dilema though. ;-)
Beach Comber
You know, it's our own darn fault. I talked to my father-in-law about a book the other day. He is a 80 yr. old retired orthopedic surgeon. He said he called all the libraries to see if any of them had it. He only owns one home but vacations to nice places (Greenbriar, French Lich, Castles in Europe, etc.) He has no debt and drives newer model Buicks. He doesn't have a yacht but can afford anything he wants, He just doesn't have Ipod( "$400, forget it."), Sirius audio ("radio is free"), 4 movie channels or netflix ("we have the library"), etc. As my 22 year old son has figured out, "Just cuz you can, doesn't mean you should."
I am amazed at the people who get a personal trainer ($40-45 a session), private school bills, fancy cars, pay $50 for wine and $14 for cheese and then complain that they can't give money to charity.
We need to run our personal lives like our businesses -have margin. Have money and time left over. Don't over-commit your time or money so that you have time for the unexpected things that come up. But hopefully when things do come up, you have enough 'dry powder' to last through the tough times (and not blame Bush, the economy, developers or your bad luck.)
I am not saying I don't get caught up in the same stuff. I just know, as Pogo said, " I looked for the enemy and found out it was me." I know a bunch of us are hurting, but let's not complain or find othe sorrowful situations. let's use it as an opportunity to reevaluate priorities and figure out our purpose.
I am amazed at the people who get a personal trainer ($40-45 a session), private school bills, fancy cars, pay $50 for wine and $14 for cheese and then complain that they can't give money to charity.
We need to run our personal lives like our businesses -have margin. Have money and time left over. Don't over-commit your time or money so that you have time for the unexpected things that come up. But hopefully when things do come up, you have enough 'dry powder' to last through the tough times (and not blame Bush, the economy, developers or your bad luck.)
I am not saying I don't get caught up in the same stuff. I just know, as Pogo said, " I looked for the enemy and found out it was me." I know a bunch of us are hurting, but let's not complain or find othe sorrowful situations. let's use it as an opportunity to reevaluate priorities and figure out our purpose.
Beach Fanatic
Nicely said, trying2. 
SoWal Insider
I am not saying I don't get caught up in the same stuff. I just know, as Pogo said, " I looked for the enemy and found out it was me." I know a bunch of us are hurting, but let's not complain or find othe sorrowful situations. let's use it as an opportunity to reevaluate priorities and figure out our purpose.
For example: The Duncans....
“Expensive, high interest rate mortgage loans continued to grab a larger share of the market last year, and thousands of homeowners like Paul and Elizabeth Duncan are feeling the squeeze.”
“The Toms River (NJ) couple are finding it increasingly hard to make the $3,200 monthly payments on their $327,000 mortgage, which they refinanced last year at a 9 percent interest rate. They are not sure how they are going to make this month’s installment.”
“‘We have more going out than coming in,’ Elizabeth Duncan said.”
“The couple married in 1999, but with two children each from previous marriages, they soon found that their two-bedroom mobile home was much too small. They bought the three-bedroom colonial in 2004 with $28,000 down and a $211,000 mortgage, land records show. The Duncans earn $80,000 a year.”
“They said they so enjoyed owning the house that they took out a $50,000 home equity loan to build a 450-square-foot family room extension. They also racked up another $46,420 on five credit cards as they landscaped their front yard, and purchased new televisions, a $5,500 dining room set and a $5,000 pool table.”
“With bills piling high, a telemarketer called one day and offered a mortgage refinancing to Elizabeth. The woman told her they could refinance all their debt and pay $400 a month less than they were before.”
“The credit card and home equity payoffs, along with mortgage company fees, came to $327,000, at a 9 percent per year interest rate. But there was a catch.”
“Until they received a notice for late taxes, the Duncans said they failed to realize that the loan, unlike most mortgage loans, did not include payments for property taxes. Buried one-inch deep in the paperwork was an ‘Escrow Waiver’ form, mixed in with several other required disclosures.”
“Now the Duncans have set up the escrow account to pay taxes and homeowners insurance, but their mortgage payments are now $200 a month higher than their total debt payments were before they refinanced.”
“The couple say they are angry about the lender not including the $200-a-month escrow payments in the loan, but the Duncans say they realize they have spent themselves into their current crisis.”
“‘We shouldn’t have gone so crazy when we moved in here,’ Elizabeth Duncan said. ‘We went overboard, way overboard.’” “She said she hopes others will learn from their experiences. ‘Maybe someone else won’t make the same mistake,’ she said.”
“Soon, the Duncans say, they may be forced to sell their new dining room furniture, or take out a cash advance on a credit card in order to make payments and buy some time.”
Edited
Beach Fanatic
?They said they so enjoyed owning the house that they took out a $50,000 home equity loan to build a 450-square-foot family room extension. They also racked up another $46,420 on five credit cards as they landscaped their front yard, and purchased new televisions, a $5,500 dining room set and a $5,000 pool table.?
"No one ever went broke underestimating the intelligence of the American people. People can easily be persuaded to accept the most inferior ideas or useless products"
(attributed to H. L. Mencken)
(Except possibly the investor/investors who bought the tranches from the bundled loans: THEY might go bankrupt)
"You can take the trailer trash out of the mobile home, but you can't take the
"mobile home" out of the trailer trash"
(attributed to me)
By the way, that $80,000.00/ year is higher than the combined gross
income of my wife and I.
"No one ever went broke underestimating the intelligence of the American people. People can easily be persuaded to accept the most inferior ideas or useless products"
(attributed to H. L. Mencken)
(Except possibly the investor/investors who bought the tranches from the bundled loans: THEY might go bankrupt)
"You can take the trailer trash out of the mobile home, but you can't take the
"mobile home" out of the trailer trash"
(attributed to me)
By the way, that $80,000.00/ year is higher than the combined gross
income of my wife and I.
margarita brocolia
trying2makeabuc - 
Good post. You have a wise FIL.
.
Good post. You have a wise FIL.
.
Beach Fanatic
The Duncan's are obviously not very bright, to put it mildly.
They probably received an escrow waiver form in their initial disclosures in addition to the one signed at closing. The initial disclosure most likely would have been in a package of 15-20 pages, easily identifiable.
If you escrow, you receive either your tax bill or a copy and it normally has to be forwarded to the lender for payment. If you waive escrows, the bill comes directly to you. So the Duncan's somehow missed their tax bill once, twice, who knows, until the late notice came.
Sure, let's blame the mortgage company when we were the ones who ran up almost 100k in consumer debt.
They probably received an escrow waiver form in their initial disclosures in addition to the one signed at closing. The initial disclosure most likely would have been in a package of 15-20 pages, easily identifiable.
If you escrow, you receive either your tax bill or a copy and it normally has to be forwarded to the lender for payment. If you waive escrows, the bill comes directly to you. So the Duncan's somehow missed their tax bill once, twice, who knows, until the late notice came.
Sure, let's blame the mortgage company when we were the ones who ran up almost 100k in consumer debt.
Edited
Beach Fanatic
"..The Duncan's are obviously not very bright, to put it mildly..."
Yet SOMEONE thinks their services are worth $80,000.00/ year
Go figure.
Yet SOMEONE thinks their services are worth $80,000.00/ year
Go figure.
SoWal Expert
Their "justification" for their addition (to a mobile home no less) was lack of space, yet they then had room for a pool table in their cramped abode :funn:.
If you can't write a non-bouncing check for it and it's not necessary for your survival, YOU DON'T NEED IT!
I'd be in a "credit crunch" too, if I was buying TVs, pool tables, furniture I couldn't afford!
If you can't write a non-bouncing check for it and it's not necessary for your survival, YOU DON'T NEED IT!
I'd be in a "credit crunch" too, if I was buying TVs, pool tables, furniture I couldn't afford!
Beach Fanatic
Oh, this sounds like a good idea:
http://online.wsj.com/public/article/SB119162722016150793.html
"...Despite potential tax and investment consequences, more individuals have been borrowing from their 401(k) plans or taking hardship withdrawals in recent months, some retirement-plan providers say.
Not all plans have seen jumps, and more-comprehensive statistics won't be available until next year. But a number of plan providers that follow month-to-month patterns, including T. Rowe Price Group Inc., Hewitt Associates and Hartford Financial Services Group Inc., have seen a small but noticeable uptick..."
http://online.wsj.com/public/article/SB119162722016150793.html
"...Despite potential tax and investment consequences, more individuals have been borrowing from their 401(k) plans or taking hardship withdrawals in recent months, some retirement-plan providers say.
Not all plans have seen jumps, and more-comprehensive statistics won't be available until next year. But a number of plan providers that follow month-to-month patterns, including T. Rowe Price Group Inc., Hewitt Associates and Hartford Financial Services Group Inc., have seen a small but noticeable uptick..."
SoWal Expert
What happens when they don't pay that 401k money back w/ interest? :roll:
SoWal Insider
Their "justification" for their addition (to a mobile home no less) was lack of space, yet they then had room for a pool table in their cramped abode :funn:.
If you can't write a non-bouncing check for it and it's not necessary for your survival, YOU DON'T NEED IT!
I'd be in a "credit crunch" too, if I was buying TVs, pool tables, furniture I couldn't afford!
The addition was to their new colonial-style home, not the mobile home. (Apparently the home had GCT and SS already in place. :roll
.
Beach Fanatic
What happens when they don't pay that 401k money back w/ interest? :roll:
They can not retire and instead work right up until the day they
die, continuing to bolster the Social Security trust fund and ensuring
that I will have Social Security to collect.
See?
A silver lining to every gray cloud
Beach Fanatic
Like I said before, live like you make 50% of what you do. Then these things won't happen.
SoWal Expert
50% is currently beyond my reach, but a great savings tool is to have a fixed percentage of your paycheck automatically sent to a savings account.
You don't have to think about saving it and don't think to spend it because it is never part of your checking account balance. Adds up fast, depending on your salary and the percentage, you can have saved a couple grand by the end of the year - plus interest!
You don't have to think about saving it and don't think to spend it because it is never part of your checking account balance. Adds up fast, depending on your salary and the percentage, you can have saved a couple grand by the end of the year - plus interest!
SoWal Insider
50% is currently beyond my reach, but a great savings tool is to have a fixed percentage of your paycheck automatically sent to a savings account.
You don't have to think about saving it and don't think to spend it because it is never part of your checking account balance. Adds up fast, depending on your salary and the percentage, you can have saved a couple grand by the end of the year - plus interest!
:scratch: Saving money....that's an interesting new concept.
.
Beach Comber
Have no fear, Duncans! Hillary will soon ensure that we passive taxpayers make you whole because of the scurrilous ways you have been taken advantage of by the greed of the financial system!
(enjoy that pool table)
(enjoy that pool table)
SoWal Insider
Have no fear, Duncans! Hillary will soon ensure that we passive taxpayers make you whole because of the scurrilous ways you have been taken advantage of by the greed of the financial system!
(enjoy that pool table)
I think the "Bush Gang" is trying to beat her to it:
Paulson Urges Action on Housing Crisis
Tuesday October 16, 11:50 am ET
By Martin Crutsinger, AP Economics Writer
Paulson: Aggressive Action Needed for Housing Crisis, Which Is 'Significant Risk' to Economy
WASHINGTON (AP) -- Treasury Secretary Henry Paulson called Tuesday for an aggressive response to deal with an unfolding housing crisis that he said presents a significant risk to the economy.
In the administration's most detailed reaction to the steepest housing slump in 16 years, Paulson said that government and the financial industry should provide immediate help for homeowners trying to refinance current mortgages before they reset at much higher rates.
In his most somber assessment of the crisis to date, Paulson said that the housing correction is "not ending as quickly" as it had appeared it would and that "it now looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet."
Paulson spoke a day after officials from the nation's three biggest banks announced the creation of a fund with up to $100 billion in resources to buy troubled assets such as mortgage-backed securities.
--------------------------
:roll: This economy is sooo screwed.
Beach Fanatic
I know what kind of "aggresive response" we'll get out of Bush.
Just like the katrina Response.
"You're doing a heck of a job, Brownie"
W
Which is just as well.
Just like the katrina Response.
"You're doing a heck of a job, Brownie"
W
Which is just as well.
Beach Fanatic
50% is currently beyond my reach, but a great savings tool is to have a fixed percentage of your paycheck automatically sent to a savings account.
You don't have to think about saving it and don't think to spend it because it is never part of your checking account balance. Adds up fast, depending on your salary and the percentage, you can have saved a couple grand by the end of the year - plus interest!
Scooter, I wasn't suggesting that you save the 50% (although that is a grayt idea). It is more of a philisophical approach to life. What happens to most people, men especially, is that we want to have the biggest and best of everything. we see our neighbors get a new car and we want a bigger new car, and on and on it goes.
I applaud your automatic savings plan. It works. A person should take one night a week and spend it loking at his/her investments, how they are performing, etc. Make informed decisions, read about the investment arena that you are in. Social Security is not going to be around much longer and it is up to the individual to provide for himself/herself.
SoWal Expert
I meant that living like I only make 50% of my salary is not doable w/ my current income and desired standard of living. If I could save 50% of my pre-tax income I'd be on the financial news, but doing my sowaling at the library before I biked home to my condemned single wide.
The automatic savings plan was a great suggestion from our office manager who was quite familiar w/ my procrastination tendencies and many good intentions that fall by the wayside once effort & distractions come into play ;-).
The automatic savings plan was a great suggestion from our office manager who was quite familiar w/ my procrastination tendencies and many good intentions that fall by the wayside once effort & distractions come into play ;-).
Beach Fanatic
I meant that living like I only make 50% of my salary is not doable w/ my current income and desired standard of living. If I could save 50% of my pre-tax income I'd be on the financial news, but doing my sowaling at the library before I biked home to my condemned single wide.
The automatic savings plan was a great suggestion from our office manager who was quite familiar w/ my procrastination tendencies and many good intentions that fall by the wayside once effort & distractions come into play ;-).
That's the kicker!!! None of us are willing to do that. We (Self included) want it NOW!!!! Damn the interest rate, full charge ahead!
As soon as we figure out that what is really important cannot be bought, we will all be much the better off.
End of rant, soap box back under bed.
SoWal Insider
As soon as we figure out that what is really important cannot be bought, we will all be much the better off.
With any luck, it will happen before one finds themself living in a broken-down minivan under a bridge subsisting on cat food and government cheese.
.
Beach Fanatic
"...With any luck, it will happen before one finds themself living in a broken-down minivan under a bridge subsisting on cat food and government cheese..."
!!!?????
How did you get my address ??
!!!?????
How did you get my address ??
SoWal Expert
As soon as we figure out that what is really important cannot be bought, we will all be much the better off.Very true! I put "desired standard of living" in as a qualifier because I do spoil myself a little bit - but I do it while still keeping my financial priorities in order, not by racking up debts and draining my bank accounts.
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