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Thread: how much invested to yeild 36k/year income?

  1. #1
    poca-sita
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    Default how much invested to yeild 36k/year income?

    as my husband and my retirement plan stumbles ever forward i thought id ask ya'll a Q? we figure we'd need 36k/year income , after taxes and inflation (assuming 3% inflation?), to live on (in 4-5 years), or about 3k/month, $100/day. rite now all our assets are tied up in mutual funds (all stocks) and real estate. both of which arent doing too great but we're "buy and holders". when the time comes, in 4-5 years neither of us will be old enuf for SS so we're not counting on that. but we plan to sell our houses and move all our money into something pretty damn safe that can produce our 36k/year income and not work at all, just travel and chill (possibly in a cheaper country!). so, my Q is whatdaya think we should put our money in, and how much would we need to have in there to generate this kind of income?

  2. #2
    AudreyLeigh
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    Default Re: how much invested to yeild 36k/year income?

    I know my parents had $250K in a high interest account and were making around $1400 a month in interest to live on.... but as the interest rates started dropping because of the housing market so did their income... way down.... its a give and take.

    Youre going to travel and chill on $3k a month? Doesnt seem like enough but I guess if you're frugal then it could work.

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    Default Re: how much invested to yeild 36k/year income?

    inflation is way higher, incidentally. more like 7%. it'll be around there for likely a generation, and is rising even higher in the short term (next 1-3 years).

    what you should do is figure out how generate income from something other than stocks/bonds. An ongoing business or busineses is its own hedge and security. Three small businesses producing 15k a year in income (very doable for a small business owner)=45k per year. And they don't even have to be businesses you run personally.

    Anything else will leave you scrambling.

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    Default Re: how much invested to yeild 36k/year income?

    Ooooh, you're in Texas......

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    Default Re: how much invested to yeild 36k/year income?

    As others have pointed out, there are a number of issues involved. The first is clarifying your question to be 'how much do I need to have invested in order to achieve an after-tax income equal to the purchasing power of $36,000 2008 US dollars'.

    Right now the purchasing power question is a huge variable ... especially when you're referring to 'basic' costs of living ... because these contain a large percentage of costs which are based on food prices and energy prices which are now increasing by more than 10% per year.

    The after-tax question is a huge variable as well. Right now Texas gets by without the need of a personal income tax, financing most of it's expenditures via property taxes and personal 'consumption' taxes (i.e. cars / boats). But with rising social welfare costs, i.e. providing education / health care / social welfare benefits to 'recent immigrants' in the case of Texas, it's entirely possible that balancing future state budgets will force the state to institute a personal income tax.

    Agreed with Miabella that the best way to realistically meet your goal (assuming that you plant to stay in the USA / Texas) is to include some percentage of future income that is derived from a private business venture rather than 100% from stock / bond / CD investments.

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    Default Re: how much invested to yeild 36k/year income?

    I would recommend buying rental property. 2-3 rental houses could probably generate that kind of income. Now and the near future is probably a good time for investing in real estate.

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    Default Re: how much invested to yeild 36k/year income?

    ^^^ again this would depend on the future property tax rate picture, future insurance cost picture, available future mortgage interest rate picture, as well as future ability of renters to pay their rent and at the same time buy food and energy ! The safest 'target market' of course would be 'low income' renters, where state social welfare programs subsidize rent payments and essentially guarantee that the landlord will be paid.

    The sad situation about future mortgage financing is that EVERY potential mortgage lender is short of capital due to the losses they have taken on previously written mortgages (or derivatives of same). Every potential mortgage lender is also keenly aware of potential losses if real estate market prices continue to decline. Thus even though the market price may depressed i.e. the purchase price seems a bargain, actually investing in a commercial property in the near future is likely to require a 20-25% down payment, plus a 6+% interest rate, plus an excellent credit rating, for starters. This involves real 'risk' on the part of the investor, not only the risk that additional market price declines will cause losses re the down payment versus remaining equity, but with rental properties there is now also risk of losses via tenant theft i.e. stolen copper plumbing and wiring !!! There is also governmental risk ... i.e. if enough 'poor' people become vocal complainers the local gov't may freeze rent payment levels landlords can charge, while at the same time increasing the property taxes leveed on those landlords.

    I'm not making the case that commercial property is now a losing investment. I am only pointing out that, these days, commercial property CAN become a losing investment - and any potential investors need to do a whole lot of homework.
    Last edited by Melonie; 03-16-2008 at 09:36 AM.

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    Default Re: how much invested to yeild 36k/year income?

    section 8-type vouchers are not 'free money' for the landlord, if you rent to just anyone with a voucher. lots of such tenants will strip the place and otherwise destroy it to a point that makes it financially disastrous, even with the government kicking back the actual rent.

    and increasingly, one cannot be sure the government will subsidize that rent, at least in some states...

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    Default Re: how much invested to yeild 36k/year income?

    Section 8 fucking sucks. Here is my advice, take it however you want. If you own rental properties, rent to illegals if you have the choice between them and Section 8. They will take better care of your place. Unfortunately, that is the case down here in Texas, YMMV.

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    Default Re: how much invested to yeild 36k/year income?

    Your return is a function of your risk, and preservation of capital is imperative.

    I sell monthly iron condors on the $RUT to pay my mortgage. Roughly 12% a month.
    Rebecca Avalon







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    Default Re: how much invested to yeild 36k/year income?

    Well to note these are wild guesses.
    Assuming no withdrawal of the principal, I would guess you could earn 5.5% in a bond fund.
    I might guess 15% taxes on married income of 36K, not counting any social security payments.
    Ignoring inflation.

    You would need to make (36,000/.85) = $42,353 pretax income.

    $42,353/5.50% = $770,053


    But you should factor taking money out of the principal so you will be closer to 0 when you die and throw in social security also.

    Try this calculator. http://www.dinkytown.net/java/RetirementIncome.html

    http://moneycentral.msn.com/investor...etire/main.asp

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    Default Re: how much invested to yeild 36k/year income?

    An Iron Condor strategy is only appropriate for range bound markets and I would argue that we're pretty clearly in a bear market where you could easily be a big loser in a short squeeze rally. Particularly in low liquidity stocks like those in the Russell 2000. I'm not sure that's good advice for an investor seeking capital preservation right now. Your mileage may vary, of course.

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