Weekend Reading – More experts saying you need $5 million to retire
Hey Everyone!
Happy Holidays!
Welcome to some new Weekend Reading highlighting some favourite finds from the week that was, including a few posts/links of my own – before we get to the plight of more experts saying you need $5 million bucks to retire.
Sigh.
This week, I shared a few stocks or ETFs I hope to buy more of in 2025 – I would be curious to see what you’re adding to your shopping list and why!
And…a reader was curious about some of the top-ETFs I like, what I own, and why, so I directed them to this updated ETFs page here:
Weekend Reading – More experts saying you need $5 million to retire
Really?
Where does this nonsense stop?
According to Kevin O’Leary, retirement minimums are around “$5 million in the bank.”
Gosh, I would hope so.
Headlining this Weekend Reading edition was Kevin’s interview in the Financial Post (FP) (subscription). From the article and his reasoning:
FP: You have said that people need at least $5 million in the bank. Would you stand by that?
KO: It’s the minimum and it’s very, very, very hard to get. If you want personal freedom, and you want to not have to answer the phone and do whatever you wish with your time, you’re going to need $5 million in the bank. Not $5 million in housing, and not $5 million in stocks; $5 million liquid.
The absolute hardest is to get the first one, the first million, to have the discipline to save that first million. Then everything gets a lot easier after that because the only way you can save $1 million is to have the discipline back to the very first aspect, that you’re somehow making sure 15 per cent of everything you make is invested in yourself. It’s put aside, but nobody can do it. It’s really, really, really hard. People are weak: “Oh, I want those sneakers.” “Oh, I want those jeans.” “Oh, I want that. I want this.” The answer is “No, you don’t want that. You want financial freedom when you hit 65.”
Kevin’s suggestion, who has $400 million in net worth apparently, also aligns with Suze Orman who doesn’t live in the real-world either.
You might recall from this Weekend Reading edition that Suze Orman also mentioned $5 million as a starting point for retirement. From Suze:
“Things happen. . . If you have $20, $30, $50 or $100 million, be like me, okay? If you have that kind of money, and you want to retire, fine.” – Suze Orman.
And maybe worst of all (?), financial expert Dave Ramsey recommended that retirees invest 100% of their assets in equities, from which they could withdraw 8% per year from a portfolio’s starting value, with each year’s expenditures adjusted for inflation.
Thus, if inflation was running at 3%, the retiree could/should withdraw $40,000 in Year 1 from a $500,000 portfolio (8%), then slightly more in Year 2, and withdraw even more in Year 3….and so on.
The challenge of course with Dave’s thinking is you could literally run out of money within a decade at that high withdrawal rate based on sequence of returns risks.
Pretty dangerous stuff and advice.
I don’t follow it at all….
For fun, to test both Kevin’s and Suze’s claims that you need $5 million to retire, I used a simple calculator from my Helpful Sites page that shows how much you could spend and for how long, starting age 60, if you indeed had $5 million invested…
The results?
Using the FIRECalc tool, you can see that $5 million invested could not only last a VERY long-time but depending on any meaningful returns over a 30-year period, you could end up with A LOT more than that even after a lifetime of very high income spending $175,000 per year and rising every year. That’s being uber-uber conservative. See chart below.
To be somewhat realistic, $5-million invested well instead of “cash in the bank” as per O’Leary would likely allow you to spend $200,000 per year, every year, for 30+ years without fear of running out of money or about $16k per month every month on average.
Bonkers.
Source – Credit to: FIRECalc. Notes: Without any other information, FIRECalc will assume you want to keep your annual spending about the same for as many years as you specify, you aren’t planning on receiving any Social Security or pension, and your retirement portfolio is invested in a “couch potato” portfolio of 75% stock index and 25% bond funds, with a 0.18% fee to the fund.
Reading bad financial advice is often bad enough, although comical at times. Following bad, expert financial advice is even worse.
What do you make of these expert claims by Kevin, Suze and Dave?
More Weekend Reading…
A reminder if you want real help for those of us living in the real-world that will never need such lofty investment numbers to retire comfortably, you are welcome to contact me anytime for your personalized tailored retirement income projections reports at a discount as a thank-you for being a dedicated My Own Advisor reader.
A Wealth of Common Sense highlighted a hierarchy of investment mistakes:
- Annoying ones – things like “selling a winning position too early”.
- Self-inflicted ones – things like “paying egregiously high fees” or “confusing your time horizon with someone else’s….”
- Painful ones – like timing the market or trying it often.
- Endgame ones – getting sadly wrapped up in frauds or scams.
Dividend Growth Investor suggests for holiday giving, you should consider gifts that can keep on giving decades from now – dividend paying stocks for kids.
My friend Tawcan shared some dividend stocks he is considering to buy in 2025. A good list.
From The Globe and Mail (subscription), affluent retirees don’t need OAS and don’t need subsidies from younger taxpayers – suggesting some serious Old Age Security (OAS) program reform is needed. From the article:
“Public support is on the rise to reduce OAS benefits for affluent seniors, because there are so many better ways to spend tax dollars. My recommendation is to reduce OAS for retirees with six-figure incomes so that the savings are repurposed to eliminate seniors’ poverty, help younger generations and reduce the federal deficit – a shift supported by a large majority of Canadians.”
I would largely agree and I would support any government to simplify, merge GIS (Guaranteed Income Supplement) and OAS programs, including streamlining an overly complex tax system. I mentioned as much a few years ago.
Have a great weekend and I’ll be back for a post next week before the holiday break. 🙂
Mark
Mark
My name is Mark Seed – the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I’m looking to start semi-retirement soon, sooner than most. Find out what I did and how I realized Financial Independence to tailor your own path. Join the newsletter read by thousands. Always free.
