WWTBAM Bored

I've been pondering this ever since I began trying to be on WWTBAM:

Is 1 Million dollars really enought to just retire? The way I understand it, I think they give you 250,000 dollar lump sum and the rest of the money 750,000 dollars in a 20 year annunity (correct me if I'm wrong). I am 18 years old and I am in college, I don't like going to college and I don't want to have to work for the rest of my life. I was wondering, if I somehow managed to get on the show and by some miracle won 1 Million Dollars, would I be able to do this:

Buy a four bedroom, three bathroom house with the 250,000 (175,000 after taxes) dollar lump sum in a very low cost of living area like Arkansas or PA. Whatever remaining money I'd save, the annuity would give me 37,000 dollars a year for 20 years and after taxes that's like 30,000. Since I have no morgatage payments I could spend about 15,000 dollars a year on expenses of living (like food, cable, electic, phone, etc...) and put 15,000 dollars a year into a high intrest account. After 20 years of saving 15,000 X 20 is 300,000. and with the high intrest it may amount to as much as 600,000 dollars by the time my annuity payments run out. By that time I will be 38 years old, and I would have to live off of around 600,000 dollars until my death. Which I assume to be 72 years old. This means I'd have to make 600,000 dollars strech over 34 years. That means I could only spend about 15,000 dollars a year.

The way I see it, I just made it! Or am I wrong? Any comments, questions, criticisms?

Don't have an answer about the amounts etc, but at 18, you probably don't want to plan on not working for the rest of your life.

I think, winning the Million would be better put to allowing you to find out what you love, and do that without so much financial stress. When you find a job you love, it's not really work, it's another home.

Shade, I hate to sound like your mom, but stay in college.

A million dollars (or any significant portion thereof) is enough to make your life better at any age, but it's not enough for anyone under the age of, say, 55 or 60 to live on for the rest of his life. For one thing, inflation is likely to continue into the foreseeable future at one rate or another, perhaps making that $15,000 enough to pay your cable bill in 2057. Your planning, as expressed so far, also does not include inevitable major expenses, such as health insurance (since you won't have an employer to pay that for you), property taxes (which continue whether there's a mortgage or not), expenses for your family (when one comes along,) and "the unexpected," which you probably should expect.

Hey, I know of at least one previous Millionaire contestant who won a decent chunk of change, who nevertheless spent more than the after-tax winnings on three years worth of vet bills. (As I understand the situation, the circumstances that made those expenditures necessary are regrettable, but spending the money is not regretted.)

So, get your degree. Get on Millionaire. (I don't care in which order.) Get a job, preferably one with a pension plan and other good benefits. Get a new car, if that's what you want and the budget (or game show winnings) permit. Then, in 25 or 30 years, re-evaluate the standard of living you want to maintain throughout the remainder of your life and make new plans accordingly.

I'm not even one of the financial planners on the board. I suspect their advice may sound even more dismal.

Thank you both for your responses. They were well thought out. You're probably right 1 Million dollars is probably not enough to retire, and even if I won it, I wouldn't be able to retire. Unless I won on the Power of 10 then I could retire

I never thought about that, winning a Million dollars (or even 500,000 or 250,000 or even 100,000) it would give me more time to find what career I love. Right now I'm kind of stressing because I'm studying Psychology, not only am I uncertain whether I want to be a Psychologist, I'm stressing that it will take a lot of college and that means a lot of work and money.

I also didn't think about inflation either....boy a Million dollars isn't as much as it used to be, huh.

Shade wrote:I also didn't think about inflation either....boy a Million dollars isn't as much as it used to be, huh.

No, it surely doesn't. And I would add my 2 cents' worth and say that $1 million is not enough to retire on. When I was on BAM back in 2000 my wife and I pondered what we would do if I won the $1 million, but no matter how we figured it, there was no way that I could retire. For someone just starting out (so to speak), the $1 million does give you options and the luxury to take a little extra time to decide what you want to be when you grow up (as it were), but it's not enough to enjoy a life of leisure. Besides, income taxes will take a big chunk of that $1 million.

Yeah, I know. When I figure taxes, I usually think about 30%. Did you make it to the hot seat (I assume it was Regis Millionaire)?

$10,000,000 is the minimum for us to retire.

Then I guess you'll want to go on The Power of 10 And I think special editions of Deal Or No Deal have given as much as 6,000,000 so you could settle for that