That is how Bill Gates and Elon Musk started out.

That’s a very good point.  In the 80’s, 90’s and 00’s, Teacher jobs paid pretty well in the high tax Democrat states.     However, Covid Inflation chopped them almost in half.

Same thing with Engineer jobs.   $100,000 - $120,000 used to be good money.     Not anymore.

Always live below your means.

Never borrow money for things that don’t make you money.

It isn’t a mater of what you make; it is a mater of what you keep.

It really is that simple.

To be a teacher in Atlanta?      It does pay better than Florida, but that’s nobody's idea of big money these days.

You must be trapped in a 1990’s mindset.

We used to joke about how inflation is making us all Millionaires.    But it turns out, that’s exactly what happened.  

Just a couple years ago, many of Arfcom’s underclass used to say:   “Oh, those Arfcom Millionairs are at it again, talkin a bunch of Bullshit!”

You don’t see that anymore.   You’d have to be pretty poor in money and spirit, to not to see how low a bar that is nowadays.

True.  And before men were beaten down to less than 40% of college students.  

My summer employer could do the same thing, but with copper instead of natural gas. Everybody needs copper nowadays and copper mining seems like it’ll be a good career path to start on.

BTW.
How?

A million ain't shit these days. Even saving a modest amount every family should easily have a million in retirement. He isn't wrong. It doesn't take a huge income. It takes discipline and knowing you need to invest in retirement to make it happen. Even investing 15% of the average American's earnings from 25 to 65 easily gets you millionaire status.

30? I’m not even 25 yet.

Ramsey's point isn't about having a million in retirement accounts, but having a net worth of a million. Those are two very distinctly different things and most of Ramsey's millionaires much of their worth is (probably) derived from their home values (which have soared in the past 5-10 years). I'd imagine if homes were removed from Ramsey's formula 50-75% of those making his list would fall off it.

BTW, this doesn't detract from your post's point, just a bit of clarification on context.

Had the same thought, I think he means tenured college professor at a large, probably land grant, university.

Here’s a degree, good job! Also, congratulations on graduating into a world that has completely shit the bed, good luck!

I kinda thought so, but you confirmed it.  Thanks.

Yeah, truth be told the only thing I would do different in my life as far as economically, is skipped my two years at CC and went straight to ASU for my ME degree. Living out of town was nice, but it’s only added two extra years to my college overall.

Disagree...that's only $100,00/yr income.  Not living anywhere nor flying business class.

You're assuming they have no other income sources to go with that $100k/yr.  Most people have SS, pension, etc.

Further, the $100k is ONLY if they never want to use the principal (4% Rule).  That's not realistic for most.  Most will take the $100k + some principal.  It's not hard to get to $200k/yr. with all the aforementioned.  Most people can live pretty damn well on $200k/yr.

Further further, many people continue to have side jobs, even into retirement.  So now we're at $200k+.

The 4% withdrawl rate is based on what you can take for 30 years, safely. The principal will go down even at 4%.

If you go higher than that your chance of running out of principal in 30 years goes up significantly.

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Yep, all the Ramsey dismissers & haters on this thread are likely idiot-renters.

I don’t agree with him 100% but his key points on how to accumulate NON-inherited wealth (investing, saving, and frugal spending habits) are completely valid.

That’s why it surprises the renters that doctors aren’t in the top five. Every Doc I know (and I know at least 20) do make an ass-ton of $$$, but they spend it right away on private schools for their kids, second homes, multiple high-end vehicles, boats, vacations, and a lot of other stuff that isn’t investing- or savings-related.

Teachers might not make much but public-sector educators have good pensions and their track record over time is they don’t spend $$$ on frivolous shit and they invest well. Makes a big difference over a 30+ year career,  … plus the pension.

Then they are not millionaires as the term refers to net worth which is calculated by subtracting debt from assets, The remaining amount is called equity or net worth so someone who has $0 after accounting for debt is not a millionaire, just broke.

just want to see if my new avatar stuck.

People don’t think inflation be what it be but it do. Million ain’t shit to live off these days. It’s the equivalent of a full time 20/hr job in today’s dollars. Your income is barely above Home Depot.

People need to understand that. 15 years ago it was a good amount of money. Today?  Can’t live on it as your income still puts you in the poor category.

I love to preach power of compounding interest/gains, blah blah. Guess what?  Inflation compounds. It is the wealth killer.

It’s so depressing that people don’t understand what net worth is. Assets-liabilities = net worth.

The goal is increase net worth.  Me personally I use liquid net worth. Then another column for illiquid assets (house). I prefer liquidity for planning purposes.  The illiquid assets are used for collateral to build more liquid wealth. The times of free money are over. But bet your ass I put up long term illiquid capital assets and locked dat shit in a 3%.

But spidey you bet against your house!!!???  No I didn’t. I bet on history at rates at/below historical inflation.  My goal is always increase net worth. Always, every decision I make is based on that. I didn’t bet against the home value. I used it to increase wealth.

Thanks for helping him out.  There were a couple retarded statements in this thread that I didn’t want to call out as retarded.  Turns out people beat me to it and squared them away better, and more politely than I would have.    

For some reason, the phrases “net worth” or “millionaire” are Trigger words which bring out irrationality in some people.  

There are three distinct “Classes” of people, which usually don’t mix socially (for good reason).      We do it online, because of the relative anonymity…

I’ve said it many times. The reason we can talk so openly about money is talking with real friends/family brings no good things.

My best friend, since I was 5 years old, makes a great amount of money as a small business owner. All he does is funnel money into annuity products. So I can’t really talk money sense into him. He’s bit the hook, the like, the sinker, swallowed the pole as well.

“What are the terms of your millions in this annuity product”

“I don’t know. But it gives me income”

But he’ll Still end up with a great retirement income.   Does he have children though?       Will he have anything to leave Them?

I enjoy talking with my peers at work, but I can’t talk about this stuff with my family.    1. They wouldn’t understand and 2. It would be cruel and possibly engender bad feelings.

I accidentally mentioned to my sister that I was looking to buy a second house.   She wasn’t outright hostile-negative, but she started talking about how much debt they still have etc.  It made for an awkward conversation.   ..makes me feel bad too, because I don’t have enough to help anyone outside of my wife and kids.

Correct.

A true “millionaire” has a net worth of a million dollars. (Total assets  -  total debt  =  net worth).

He is absolutely right, but becoming a millionaire isn’t all that special anymore IMHO.  With inflation a million bucks isn’t what it used to be and eventually everyone will be capable of becoming one quite easily because of how much money it will take to live.  Just think that a few decades ago a millionaire was nearly as wealthy and uncommon as a billionaire is today.  Now with just a paid off house a less than impressive retire fund gets you into the millionaire club.  It still takes some work, but will become more common.

It's even more depressing when you figure your going to spend 2% of the value of that median house on maintenance and taxes annually.

I spend 2% annually just on Taxes alone.    Luckily, the rate they can raise it, is limited by statute.    Maintenance is another issue.  It could Easily be another 2% annually, but I need to spend probably 8% just this year.

Today’s Millionaires are just middle-middle class.   In Argentina, a Millionaire is lower class.    The difference is only a matter of degree.

748 - Number of billionaires in the US today
1.3 million - Number of millionaires in the US 30 years ago.
748 people does not equal 1.3 million people.

$1 million inflation-adjusted today is 2.1 million dollars today.
2.1 million dollars does not equal 1 billion dollars.


Your comparison is so wrong, it is laughable.  More GD financial nonsense.

I don't grok your math - the bolded part.

If I buy nothing but CDs at 5%, and only withdraw 4% annually, how does my principal go down?

Further, nobody in their right mind only has CDs.  Anyone with a lick of sense has some exposure to the broader market.  It's not brain surgery to make 6-7%, annually, with modest exposure to the stock market + some stocks and bonds and CDs, over a 30 year period.  Given that, how does my principal decline over 30 years if I only withrdraw 4% annually?

Retiring at 40 because you have a million in assets? Yeah, not shit. Retiring at social security age with a million in the bank and no debt, paid off house? Not bad. Retiring at social security age with a pension, a million in the bank, and a paid off home? Pretty good.

My buddy retired at 65 with a paid off house and a few hundred a month pension. He didn't touch his 401k or savings until he had to take mandatory withdrawals.

It’s historical statistics. 4% is the “safe” withdrawl rate. And what return were you getting on cap/income products the last 15-20 years?

It’s easy to say “well I can just draw 4%, make 5 in income products!”  Umm. Inflation?  

4% also takes into account inflation.

Inflation over 30 years isn't going to eat up the principal - say, $2.5 Million.  It will make it less valuable in real terms, but it doesn't disappear.  Your math makes no sense.

The 4% safe rate is called "safe" for a reason.  Under nearly all scenarios, the owner can withdraw 4% without touching the principal, assuming it is invested reasonably and prudently.

Show your math.

Of course it is taxable.  We are talking pre-tax numbers.  So, $100k in income from $2.5M is before taxes.  There is no way to avoid this.  Well, almost no way.  $2.5M in a Roth is $100k/yr completely tax free, and $2.5M in an IRA is tax-deferred, and it compunds tax free until withdrawn.  That's what I'm striving for - tax free income forevah.

Obviously, he was using hyperbole, but your Government inflation numbers are just as laughable.    

Look at the chart:    Notice how the mean housing price went from less than $100,000 to over $400,000 ?    

That’s a Life changing amount of inflation for most people.

My income more than quadrupled between ‘96 and ‘00, then quadrupled again, since I got my first good job in ‘01.

-and Still, Inflation in Land Prices has out paced my earning power, in most areas.     Through hard work and good fortune, I’m the living embodiment of the American Dream (and I even kept the same wife).  

And yet, Inflation has made it seem like I’m barely treading water.  
All I’m saying, is, for the stuff we need, inflation is more like 3-400%.  

We need a New term for Millionaire.   It should be QuadMillionaire at the very least.   Maybe OctoMillionaire.  
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Yup.
Self taught (no college or degree) Engineer here in the paper industry.  
I started at the bottom and with hard work and dedication I worked my way to the top
Will retire in 1.5 years with a few millions in my retirement account
I won’t say all engineers can retire millionaires
Like anything else you have to make smart decisions in life and live below your means
I know a few people in my company at the same age and years with the company that made poor decisions and are not in the same place as I am financially
So I will kind of agree with him about career choices
Though honestly it’s not that hard for anyone to become a millionaire if you live below your means and save early. Compounding interest is great over many years.
I have been saving for retirement for 38 years.

That's true for home prices, but most people only buy one home in their lifetimes.  Other items have gone down.  Hell, cars last 200k miles easy - in my yoot they lasted 100k and they were clapped out POSs at 100k.  Electronics are way cheaper.  You can get a damn nice AR for $400 inflated USD.  I paid 12% interest on my first home loan in the early 80s.  Now, it's 7%...in inflated USD.

I'm not saying everything is cheaper, but some things are, in real terms.  There is some averaging-out in inflation numbers.

Oh don’t I know it.   My next house will be built out of nothing but AR15’s and 80“ TV’s.     Salad dayz indeed.  

The house thing is a Big deal.   Not only are people going to be borrowing 4 times more, but Everything else is 4 times more.   Taxes, insurance, etc.   A regular asphalt roof went from $8000 to around $20,000.    

We covered Cars in another thread.   Apparently, they went up at roughly the same pace as official inflation.    They certainly didn’t get cheaper like TV’s and guns.

200,000 miles still makes for a shitty old car, just like it did in the 80’s.

There are some interesting points here.
When I see retirement age boomers living bottom barrel lives, it just makes me think WTF is wrong with them.
There were some fantastic times for them compared to the current economy.

The average boomer right now has about 190K in retirement savings, owes 200K on a home, and has another 25K of unsecured debt.  WTF did they do to end up like that?  

One issue with doctors not being in the top five-
Most doctors are not some 800K a year orthopedic spine surgeon or plastic surgeon pulling in 1.8M a year.
They are more likely a 350K a year ER doc or 250K a year pediatrician, family medicine physician, or internal medicine doctor.

They had four years of college, four years of medical school, then made like 50K a year for 3 to 7 years or so.
This means typically- somebody  was 17 or 18m spent a couple of hundred thousand on education- plus had basic living expenses, until they were about 26, then had sustenance level pay until 30 or more-
And now get a good salary.

And let’s say they make 350K a year - with typically 200K in the hole of loans-
Plus-
Keep in mind this is an affluent salary- it is not in the realm of the wealthy with tax shelters, foundations, trusts, etc.-
After federal income tax, state income tax, FICA- they likely have a take home pay of 200-250K depending on where they live.  A lot of them will be employees, not running a business with write offs, etc.  They will have professional, licensing, insurance, etc. of varying types depending on if employee or self-employed.

Now, let’s compare this with teachers.  Sure, it can be really crappy in some parts.
But, start at 40K a year, for 10 months work a year.  With a student loan repayment.  Annual raises.
Four years later they are at 44K a year plus obtained a cert so now, it’s -
50K a year.  Plus the system paid for their lame internet masters,
So- let’s say after 8 years, no loan debt, they have pulled in 200K.
They ave 60K for another 4 years.  Another 240K.  
They have also knocked out an internet D.Ed.  They are now 75K a year.
At some point if they go admin …

And this is in a crap state.  There are some cities and counties with drastic better pay.  And pensions.

I’m certainly not saying doctors are poor and teachers are rich.

I’m saying the loan debt dynamics, years to start getting pay, effective tax rates, lack vs presence of a pension, month worked, let alone hours per year objectively make for a delta not as drastic as at first glance.

200k on a modern car is still a car that runs pretty well.  In real terms, after inflation, and considering durability and lifetime costs, modern cars ARE cheaper.

And don't forget salaries.  My first professional job, in 1980-ish, paid a whopping $14.4k.  Now, that same starter job pays $80-$100k.  That's not 4x more, it's 6x-7x more than I made for the same work.

I bought my first home in 1983, interest rate was 12%.  In UNINFLATED USD.  Now it's 7% in inflated USD.  In a few years I refi'd to 9% and thought I had died and gone to Heaven.

Whining about the cost of a home, without considering everything else, is still just whining.

That's not what a "safe 4%" withdrawal rate means.  It means that a stock/bond portfolio should not go to zero over a 30 yr time frame, if you withdraw 4% the first year and inflation adjusted 4% in subsequent years.

Let's assume 2% inflation for your 5% CD example.  Of that 5%, lets subtract 1% for taxes and then the 2% for inflation.  You're left with 2%.  What happens when you try to adjust your subsequent withdrawals for inflation, you eat away at the return some more.  So, yes, you will still have you're 2.5 million at the end of the 30 year CD holding, but you will have lost purchasing power every year of retirement.  Sure, $100,000 retirement income is nice in year 1...but what kind of lifestyle will that support 30 yrs in the future?  Just look how much different a $100k salary was in 1994 compared to today.

But a $2.5m 50/50 stock/bond portfolio should give you an inflation adjusted $100,000 income for 30 yrs and still have $ left over.  Don't over mitigate one risk while ignoring the others.

We don't disagree.  The $2.5M will be worth less after 30 years but it's STILL $2.5M.

Falarak said that the $2.5M would be substantially less than $2.5M after the 30 years.  I want to see the math on that, assuming 4% withdrawal and a reasonable, diverse portfolio during the 30 years.  I'm just not seeing it.

Once again, I'm NOT advocating a 100% portfolio of CDs at 5%.  But even that would throw off 5%, which is 1% more than the 4% withdrawal.

I did?  Where?

A million can barely buy you a burger at most places anymore. Making a million a year is the "6 figures" of a decade ago.

Mines nearing 300k and I have no plans to retire it.

I apologize. Please forgive me!  Spidey07 said that.  Here's the exact quote:
The 4% withdrawl rate is based on what you can take for 30 years, safely. The principal will go down even at 4%.

I want to know how the $2.5M portfolio balance will decline with a 4% withdrawal rate, assuming a balanced portfolio, over 30 years.  Of course, we have to assume it's not invested in fidget spinners or beanie babies.  We have to assume that someone who is smart enough to amass $2.5M in liquid assets, and has a 30 year time horizon, is smart enough to have a balanced portfolio yielding, say, 6% on average.  This is a pretty conservative scenario.

I'm still waiting on the maths.

Nor should you, unless you want a brodozer + boat + jet ski which everyone knows is a great investment.