$400k

Here's another calculation, using Vanguard's Managed Payout Fund:Vanguard Managed Payout Fund | Vanguard

The idea with those is that you make a one-time contribution and the fund disburses 4% of its assets every year. The money is invested more conservatively than all stocks, as it must be, but it still enjoys some growth that will help keep up with inflation. Moreover, you always have the option to withdraw money from or add to the account. (The fund fees of 0.34% seem high, but that's not unusual because of the large amount of money being distributed every month... an annuity would be far costlier in expected terms.)

In that scenario, investing $400k would net you $1,200/month initially and the amount should grow (though probably somewhat less than inflation) every year. So suppose that someone invested in a safe asset that tracked inflation (TIPS), then they could convert their savings at the time of retirement into one of these funds and expect to get that much (in inflation-adjusted amounts) per month throughout retirement. It's not nothing, but it's also worth noting that this is still a fairly small amount.

If you wanted to supplement your social security income by an extra $6,000 or so per month (which would get you a nice upper middle-class income -- the median household income is about $4,500/month), you'd need $2m in savings (which means you'd have to plan for $4m in 25 years). That gives you a sense of how little it means even today to be a "millionaire" when you also take into account retirement assets: that's $3,000/month of supplemental income to social security, which doesn't make you wealthy.

Lots of posts on here I would just ignore. Basically anyone suggesting a strategy that they think is "good" should probably be ignored.

I think you should probably read this:Managing a windfall - Bogleheads

Your gut instinct with going with Vanguard is a good one. Keep the money fairly secure while you figure out next steps and then invest it appropriately once you have a strategy. I would also recommend 4 pillars by Bernstein. There's also an investment thread on something awful which generally has a lot better advice than you'll find here.

I'd suggest looking into duplex or quads in your area. You can earn an excellent ROI just from rents, have reasonable capital appreciation and it's a safe long term investment.

Then insure them and set them on fire. Make that mad bank yo.

Friends of mine who own a few three families just had one of them burn down. The house is going to be a lot nicer if they decide to rebuild with the insurance check. Problem is they have to cover hotel/housing replacement bills for all of their tenants (homeowner's insurance covers that up to a certain amount, but it's a reimbursement transaction, not a direct payment) in the interim. And since it's section 8 housing it'll just get destroyed again anyway. They are contemplating taking the money and selling the lot/land after cleanup.

Khane_sl said:

Friends of mine who own a few three families just had one of them burn down.

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At first I thought your friend owned three families as slaves, then I realized that you don't know to hyphenate compound nouns.

Don't worry about Gadrel. I knew what I meant.

Barraco Bisi_sl said:

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Brad has some DSLs on him. I bet he could earn some of that 400k.

Vilgan_sl said:

Dumping it in Vanguard or Betterment is fine. I would be super hesitant about going to Schwaab and telling them you have 400k or whatever. Anyone that suggests managed funds or funds with ER above 50 basis points should probably be ignored immediately.

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This was my thought as well. And it's why Vanguard is kind of a can't miss, because all their funds have such low fees (although be careful, because some are higher than others). I think most people that are willing to sit down and do some reading for a few days should avoid a financial advisor. It's paying for a luxury that more often than not is no better than doing it yourself at random.

Cad_sl said:

My mom went to a financial advisor (she is at retirement age) and they told her nothing revelatory. It was basic "here's what you'll make based on your assets and here's how much you can withdraw" type of stuff. Also recommended delaying social security to 69 because she'd get like 500 more a month if she waits... which is pants on head retarded it comes out as a wash even if she lives to 85+.

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On SSI - for women it's pretty normal to suggest waiting until max benefit if you can wait - women usually win on the math involved.

Unless there is family /personal history which says otherwise that is actually good advice on the social security front.

Cad_sl said:

She's already had 3 types of cancer @ 63.

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Aren't terminal cancers one of the few ways to get an early accelerated benefit? (I know a few terminal things are, would really be weird to me if cancers aren't...)

I know with the terminal clauses I've heard of people getting full benefits at like 55 or something before.

Doesn't it take something like 12 years to hit the break-even point on early vs full retirement payments on SSI? That is quite a long time. I should have plenty in 401k to not even have to worry about SS, so I will certainly be taking the early payment. On top of that, longevity is not in favor in the men in my family. The last 3 generations of the women in the family have been 90+.

Cad_sl said:

Well it obviously wasn't terminal, she's still alive and in remission.

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It's just called a terminal clause - it refers to plenty of non-lethal stuff (i.e. blindness falls under the lethal clause - which blindness never kills you directly to my knowledge)

Jysin_sl said:

Doesn't it take something like 12 years to hit the break-even point on early vs full retirement payments on SSI? That is quite a long time. I should have plenty in 401k to not even have to worry about SS, so I will certainly be taking the early payment. On top of that, longevity is not in favor in the men in my family. The last 3 generations of the women in the family have been 90+.

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Social security can be complicated. There are a lot of options and reasons to do things.

1. If your sick or dying then obviously the gamble to wait is probably a bad bet.

2. If you have decent health and a healthy savings then waiting is fairly trivial. If they do end up having to cut benefits you'll be happier with the higher benefit. Especially if you live a long time and savings starts to run dry. I'm frankly less worried about dying early and having money to leave my kids than I am living to 100 and running out of money or not being able to do anything because of lack of funds.

3. You can play with spouse benefits as well. Since you can take half of your spouse and let your benefit accrue to full age it might be trivial to let one benefit accrue to 70 for a higher payout while still delaying your own. This will also help if you pass on and your spouse only has one check to live on.

4. Watch the family maximums. This can be especially helpful for self employed people if both people make good money. No reason to pay in if you aren't going to get anything back.

5. You can claim your divorced husbands benefit as well assuming you were married for 10 years and you don't remarry.


Anyway, there is no such things as too much money. Since you don't know how long you'll live that "large amount" might not be so big as you draw it down over 25 or 30 years. Costs will rise, markets can fall, your needs might change etc. The safe bet is to hold off and wait and if you have the savings to do so people should unless they are are pretty sure they aren't going to make it.

Once you get that age your investment outlook obviously changes. Obtaining that kind of guaranteed return is a difficult thing to pass up.