$5MM is a Scary Number

Life is scary.  It’s Halloween after all.  You should be scared.

At this point, we’ve all heard the Suze Orman interview on Afford Anything.  And I’m also sure at this point you’ve probably read most of the very judicious responses:

Hell, even Paula herself gave a great rebuttal on her own podcast: http://podcast.affordanything.com/154-youll-need-at-least-10-million-to-retire-early-says-suze-orman/

So, Suze made a point that you need somewhere between $5 – $10 million to retire because life happens.  According to her, life is just a giant seagull that flies in on your beautiful beach day and shits all over everything.

I mean if it’s going to cost me $30,000 a month to put my parents in an old folks home, we can’t afford that even while we are working full time.  So, why should we even try?

But, just how out of touch is she?

I wanted to know how far out of touch this actually is.  I mean $5M – $10M is a LOT of money.  It’s more money that most people will ever see in their entire lifetime.

So, like most things in life… I built a spread sheet, so we can see how all this plays together.

Some quick things:

Anyway… Blah blah blah.  Enough with the disclaimers.

Let’s assume we start with $0 at age 20.  And we want to have $5MM saved up by the time we are 40, where does that leave us?

Get $5M in 20 Years

What does that say?

At a 50% savings rate and 8% returns, you need to be saving $9,000 a month to make it to $5MM in 20 years.

And, where does that put you on the income scale?

You need a household income of $308,000 for those 20 years to make that happen.  So, your income would need to be in the 98th percentile of all households in the US.

Now, let’s put that in perspective, that means that if you walk down the street and you pass 100 people, you are making more than 98 of them.

Yes, in order to make that happen, you by definition need to be in the top 2% of income earners in the US.  And not just for a little while, this is saying you have to start making that type of money at age 20, and maintain that income until you are age 40.

No wonder people freaked out when she started saying that!

There’s just no chance for a normal person to come even close to that.

Let’s put some more realistic numbers into our little model and see where it shakes out.

How about $500 a month, saving 15% of their income, where do they come out?

A Normal Person

Well, they build a considerable amount of wealth, if they retire at 70 like the Matriarch of Money suggests.  At 70, they will have ~$3.5M saved up.  And on a fairly modest salary of $57K, or 50th percentile, meaning 50% are below that number & 50% above.

Ok, good advice, I guess, but wait a minute, how much money is that going to generate??

Well, if I live on $57 a year, saving a portion of it while I’m working, why exactly do I need access to $143K a year in retirement?

That seems excessive, working until you are 70 to give yourself the biggest raise you have ever seen in your entire career.

I mean, there will be other expenses, medical care,  etc.  But, most of your expenses will go down, you’ll stop commuting, you’ll likely own your house, and you’ll likely have some form of insurance to guard against most things.

But, what about all the fire and brimstone that will come raining down from the heavens during our life time??

I’ll tell you what, getting run over by a car happens.  Retired or not, 30 years old or 70 years old.  This shit happens, so you gotta plan for it, but you also have to accept it.

Why does this FIRE movement make so much sense?

Here’s why I think this FIRE movement is grabbing hold of people’s attention.

On a modest salary, I can regain a large portion of my life to do what I want to do, granted I’m not a complete idiot.

Let’s see…

On that same 50th percentile salary, I can save $1MM in 26 years at a 30% savings rate.

Saving $1MM on $57k/year

What’s nice about this is spending is something that is completely in your control.

And this portfolio will output $40,000  based on the 4% rule to cover my spending of $28k/year.  Well that just makes sense, and seems reasonable and actually feasible to the average person.

So, what’s with all the vitriol??

With the FIRE community, we have a realistic solution to a problem that faces a large portion of people.

But, after years of messages saying this just isn’t feasible to the average person, the general public just doesn’t believe it’s possible.


There are products to sell!!!  A simple Google search show this:

PROBLEM questions help make your prospect aware of a problem that needs to be solved and identify problems that are often overlooked. These pain-points will be used to accelerate a deal.

Wow… if you have a product to sell, and your customer doesn’t need it.  Create a problem that your customer wasn’t aware they had.  Then sell them the product to solve that non-existent problem.

Don’t have $5MM in the bank to retire early???  Buy my book!

Don’t have a Private Jet and a Private Island???? Buy my BOOK!!!

Need better credit???? Buy my SHITTY pre-paid debit card that has exorbitant fees.

It’s sad in a way.  We just showed that a very large majority of people will never even come close to this, and yet here’s a person preying on the general public that is simply attempting to make their life better.  Selling them a solution to a problem, they didn’t even know they had.

A word to the wise

When ever you hear about a seminar, or a class or something that claims to “Teach you the way.”  Ask yourself a question:

If this is so successful, why aren’t they out doing it?  Why are they SELLING this method to other people? If they really wanted to help and teach, why not write it for freeOn the Internet?

If I found a way to make guaranteed money in the stock market, don’t you think I would just simply make ungodly amounts of money in the market??  I certainly wouldn’t be writing a book to let everyone else know my secrets.

I’ll end with something I try to live my life by:

Open your eyes, be a little skeptical, and follow the money…

You’ll be surprised where it might lead.

Wanna play with the spreadsheet, here: it’s free.  Change the Yellow Boxes.


  • Team CF October 31, 2018 at 4:37 am

    Oh this is good! Follow the money indeed, then go the other direction and keep it for yourself 😉

    “life is just a giant seagull that flies in on your beautiful beach day and shits all over everything”…… now that explains a lot!
    Team CF recently posted…Virtual vs Reality

    • Mr WoW October 31, 2018 at 7:14 am

      Follow the money, right into my investments. HA

      I firmly believe there isn’t a get (insert better life here) quick scheme out there that works. It’s all preying on people that wish it would. A magic pill, or a magic diet, or some weird machine you feed $100 bills into that spits back 5 of them.

      It’s all BS.

  • Dads Dollars Debts October 31, 2018 at 5:56 am

    Digging this post. also, while I make a high salary I did not start doing so until my 30s and was so burdened in debt that u still could not make your first scenerio work until I hit my late 50s. 5 mill sure would be nice though.

    Yup, don’t believe the street peddlers. Their product is likely a knock off.

    • Mr WoW October 31, 2018 at 7:12 am

      Oh don’t get me wrong. If someone was going to hand me $5MM… I’d take it and run and never look back. Hell, I do that with my paycheck now!

      Yeah, it just doesn’t make sense. But I think there’s a part of making something available to the masses that is terrifying to the “powers that be”.

  • [HCF] October 31, 2018 at 6:01 am

    I am happy that the Suze Orman generated reposts still goes on in the FIRE blogosphere. I almost spit my coffee at the seagull part. Genius. Well, I would ask her if she thinks that much needed to retire happily, how much would she think necessary for simply being alive. I bet that when we would hear the answer we can sign that most folks of the not western world are barely living… Maybe we do not exist at all. Or we are living in a simulation…
    [HCF] recently posted…10 Questions with Mr. 1500

    • Mr WoW October 31, 2018 at 7:09 am

      HAHA… That interview is like the herpes of the FIRE Community… The gift that keeps on giving!!

      Yeah I know, we’re all peasants. Scrounging to get by, begging for a crumb to sustain our meager lifestyle.

  • Steveark October 31, 2018 at 3:26 pm

    One thing that occurred to me is that unless your parents were unlucky or unwise then they will have taken care of their own retirement well before they are elderly. So you should not have to contribute anything to their care besides time, but rather should see a significant inheritance someday to add to your own savings.
    Steveark recently posted…“You Wrote Me a Letter”

    • Mr WoW October 31, 2018 at 7:41 pm

      I think you are absolutely correct, in an ideal situation. Unfortunately, I think the boomers are caught in a weird transition where they mostly were expecting defined benefit plans that have been pulled from under them and replaced with defined contribution plans, or left to their own devices. Which means I think they are a lot more un-prepared for retirement than we might think.

      It’s a terrifying thought, but I would like to think most everyone is thinking about their own preparations.

      I do like your optimism, but I know we are not going to be depending on or expecting any sort of inheritance, that would be an added bonus.

      • Steveark November 1, 2018 at 5:00 am

        Those are great points. My dad had a couple of pensions and my mom had one too and no doubt that is a big part of how they accumulated some wealth, paid for their own care and left an inheritance.

        • Mr WoW November 1, 2018 at 6:14 pm

          That works out well for all involved. I just know that I was at a company that had a pension plan where once you hit 20 years service you would get 50% of your ending salary. Well, the company sold off our division, and the investment group that bought the division did away with that plan. Can you imagine, working there for 19 years, waiting for that pension plan, to have it taken away? How awful, and I think this is happening more than we think.

  • Dave @ Accidental FIRE November 1, 2018 at 2:33 am

    Great stuff dude. The more I think about the whole Orman episode I’m honestly thinking she played us all. I think there’s a 90% chance she spouted all that crap just to sell her book and get more attention, and doesn’t necessarily believe it. She seems to be a master at media and let’s face it, most “TV people” and celebrities are disingenuous people, narcissistic, and self serving. They just want to keep paddling their stash and they’ll go to any length to do it.

    I could be wrong but either way – love the numbers and spreadsheet. Great stuff!

    • Steveark November 1, 2018 at 5:02 am

      I’ve seen her in private and although it was an isolated situation she treated service people kindly and with great patience even though they were rude and no one was watching. That’s pretty much impossible for a narcissist to pull off. But I think you are dead on as to her motives, all publicity is good!

      • Mr WoW November 1, 2018 at 6:16 pm

        I don’t know her personally, nor have I run into her personally. But, the whole damn thing might be an act. It could just be her public schtick and that’s the way she’s made her name, by playing a character. Similar to Stephen Colbert when he was on the Colbert Report.

    • Mr WoW November 1, 2018 at 6:12 pm

      I’m sure it was all about selling the book, and it was a calculating thing. That’s a big part of why I wanted to bring this up. Follow the money. The more she is in the public, the more the book is mentioned. Any publicity is good publicity as they say.

      I hate to paint a group of people with such a broad brush. Because when it comes to self-serving folks just looking to pad their stash, I don’t think that’s isolated to celebrity.

      Glad you liked the spreadsheets!

  • freddy smidlap November 1, 2018 at 10:02 am

    i have but one tattoo. it’s a question mark. it means keep skeptical towards any guru, expert, boss, etc. i don’t mean dismiss out of hand, just take a closer look and think for yourself.

    medicaid takes care of nursing home care for broke americans. if they’re smart and had 20k or more entering the home they can usually pick the place nearest to loved ones and won’t get kicked out. i learned that from a real life coworker.
    freddy smidlap recently posted…Freddy’s Wine School for Rubes (Beginners) – Part I

    • Mr WoW November 1, 2018 at 6:18 pm

      “I don’t mean dismiss out of hand, just take a closer look and think for yourself.”

      This is so brilliant in its simplicity. Don’t dismiss, question! Who was it that said, “Trust, but verify”? Also, just because everyone is doing it, doesn’t mean it’s right and even if it’s right, it doesn’t mean it’s right for you.

      So we have to open our eyes and think. Don’t just buy everything at face value. Well said, and awesome tattoo by the way.

  • Mr. Tako November 1, 2018 at 2:12 pm

    Very well said Mr. Wow!

    Those who fear monger should not be enriched. $5 million is an impossible goal for many (at a 50% savings rate) and shame on Ms. Orman for suggesting it’s required.
    Mr. Tako recently posted…Struggle Makes You Stronger

    • Mr WoW November 1, 2018 at 6:22 pm

      Unfortunately, I think fear sells. I think it motivates, and it’s the easiest way to get someone to take action. It seems to be that we are hard wired that way. Human nature I guess.

  • Revanche @ A Gai Shan Life November 1, 2018 at 4:12 pm

    LOL seagulls. Even though I never followed or liked her, I apparently have Suze level conservatism that I have to fight to consider FIRE an attainable thing. I absolutely set my number at $5-10M without running the numbers 😀

    In part (the growth part of my mindset) because we have dogs and a kid and I want to have the freedom to choose early retirement AND support our dog rescues AND give our kid a reasonable start into life without too much debt. In part (the scarcity part of my mindset) because I just came off 18 years of supporting my parent(s) and feeling like half of that was a waste because I was being conned and now my Dad and I are estranged and I don’t know what he’s doing for income. Probably some Social Security since he’s been milking us dry while waiting to claim SS but I am sure it’s not going to be enough to cover his needs. I don’t want to be in that situation where at age 70, I’m on my own with insufficient income to live. But realistically, I know how to live frugally so I SHOULD be ok in most cases.

    Thankfully, I have Tanja reminding me I’m too pessismistic and I’m willing to listen.
    Revanche @ A Gai Shan Life recently posted…Just a little (link) love: Thanks, Cap edition

    • Mr WoW November 1, 2018 at 6:26 pm

      Wow, you have overcome an intense situation. So Kudos!

      Like mentioned by Freddy above, Don’t dismiss outright, but question and make up your own mind. Don’t blindly follow.

      All this finance stuff is called “personal finance” for a reason. It’s just that… Personal. Your situation is different than mine, so you should take some of what we say and apply the parts that make sense. Then I take part of what you say and apply the parts that make sense for me.

      If you want to live on a private island with a private jet and 6 houses, then yeah, you probably need at least $10MM to make that happen. But, you can’t just project that onto everyone. It doesn’t work that way.

  • NWA-anon November 1, 2018 at 9:13 pm

    More than the self proclaimed guru, I think it is Paula who is playing us all! Think about it, she gets to interview SO knowing well that the guru is going to spout off some nonsense and generate enormous buzz in the FIRE community … 🙂
    NWA-anon recently posted…October 2018

    • Mr WoW November 3, 2018 at 10:10 am

      Hey neither one of them are dummies. And this is why we are still talking about it, many weeks later. HAHA

  • FIRECracker November 4, 2018 at 9:29 am

    Well said, Mr. Wow! The thing I love about the FIRE community is that FIRE people don’t need the money, so there’s nothing to sell. Not true with Suze–clearly private islands don’t pay for themselves. What I don’t get though is why would anyone buy her book to get the advice “just keep working if you die” because “it’ll never be enough”. No one needs a book to tell them that. Doing nothing is super easy.

    • Mr WoW November 4, 2018 at 8:08 pm

      Well… follow the money. The intentions will usually present themselves if you ask enough questions. How does it go? Isn’t there the rule of “5 Whys” in software engineering???

      And, keep up the good stuff! Hope Greece was a good time! A whole new crop of evil villains to take over the world!!

  • The Sunday Best (11/18/2018) - Physician on FIRE November 18, 2018 at 12:56 am

    […] Can you work those numbers to come up with a fatFIRE portfolio worth $5 Million? That’s a lot of money, says Mr. Waffles on Wednesday. Yes, it is. $5MM is a Scary Number. […]


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