The Expert Podcast

10 million dollars. Do you have that much? Are you gonna make that much? You're gonna need to. That's how much you're going to need to live the rest of your life. Are we exaggerating? Are we crazy? Well, let's take a look. Let's do some math. You see our calculator right on the screen. How do we come up with the fact that you need 10 million dollars—not a penny less—to live life? Well, let's take a look at the numbers.

So let's take 10 million dollars. First thing you do is take out taxes. Multiply that times point—let's say 0.72, because most people that are going to make that much money are going to be in about a 25 to 30 percent tax bracket. In current tax brackets, that percentage might go up. That leaves you with how much? 7 million two hundred thousand dollars. Seems like a lot of money, but how long is that going to last you?

Let's suppose you're mid-40s, mid-50s, late 50s, and you have about 40 years left on your life, right? If you're 50 years old, maybe you live to 90. If you're 55 years old, maybe live to 95. So if you're going to take that 7.2 million dollars and divide it by 40 years, that leaves you with a hundred and eighty thousand dollars per year. That seems like a lot of money too, right?

Well, how much is that per month? Divide that by 12 months. That gives you 15,000 a month to spend. Well now you're talking about numbers that you might be familiar with. Well, for fifteen thousand dollars, can't you live a pretty good life? You probably could. But let's look at what expenses might be.

Right about now, if you were going to buy a reasonably upscale home—you’re not buying a big huge mansion, you're not buying, you know, a castle in the Highlands—but you're also not buying a cheap shack either. In most significant markets in the U.S., to buy a nice house you're going to spend between six and seven hundred thousand. Can you find a house for 400, maybe 500? Probably can. But the median house right now is about 400,000—406 or 420 depending on what numbers you use. So if you're gonna buy a house that's a little bit above that, you're going to be spending, let's say 650. Let's call it right in the middle.

Well, if you put down 10% down payment, which is what most people do, and you finance about 580 or 590, your mortgage payment is going to be fifty-five hundred dollars for your mortgage on your home. So let's take 15,000, subtract 5,500—that leaves you with 9,500 a month. Well how do we come up with 5,500? Well, if you take the current price of a house in the 650 range, minus 10% and do a mortgage that's maybe eight or nine percent—because that's probably what you're going to be at—that's going to be your payment: 5,500.

That leaves you with 9,500. You're probably going to have a couple decent cars. Maybe you own one for cash, maybe you finance one. Well, an average car right now costs 45 to 50,000. For a nice car, a five-year loan on a 50,000 car is a thousand dollars a month. So let's take a thousand dollars off of that. That leaves you with 8,500.

Well, if you have that, you're probably gonna have your utilities—water, sewer, electric. You might have internet, you might have things like HOA fees. Those are going to be at least a thousand dollars a month. Let's take off 1,100 for that. That leaves you with 8,400.

Well, you need to buy food. Family of four might be, what, a couple hundred dollars a week for food? Take off 800 for food—leaves you with 7,600. Do you have any expenses for insurance? You have homeowners insurance, auto insurance, health insurance. Family of four—you might be fifteen to eighteen thousand dollars a year in premiums. So let's take off another 1,400 a month on average for premiums. That leaves you with 6,200.

You can eat out often. Do you eat out once a week? Twice a week? Let's say five times a month. Well, every time you go out—family of four—it's probably going to cost you a couple hundred bucks, right? So, times five times—there's another thousand. Take off a thousand. Now you're down to—wait, that was a hundred, so take off another 900. That leaves you with 5,200 left over.

Well, certainly if you're a family of four, you have holidays. You have four birthdays. You have Christmas. You have Mother's Day, Father's Day, anniversary. You're going to be buying gifts. That might cost you maybe three or four hundred—three or four thousand a year for gifts, maybe five thousand. So average that out. That could be 400 a month. Now you're down to 4,800.

Certainly, you're going to take vacations, right? So if you go on vacation twice a year, maybe it costs you three grand for a vacation. Maybe one you fly, stay in a hotel; one you drive, you stay in the lower-end place. So that's going to be—let's say—three thousand dollars times two times a year: six grand. Divided by 12, that's going to be another 500 a month on average for vacations. Leaves you at 4,300. It's about a thousand a week you have left over.

Are you going to be putting any money away for retirement? Are you going to be putting any money away for savings? Maybe you need to have a college fund set up. Maybe you need to have—you have elderly relatives that need help. So let's take 800 a month and put that away. Now you're down to 3,500.

Now, if you have a house—or even if you rent an apartment—you’re going to have certain upkeep and maintenance and repairs and furniture, replacing appliances. Well, let's average that out to say that's going to be 700 a month. Already you're down under 3,000—you're at 2,800 a month. In today's dollars. That's in 2022 or 2023 dollars, not counting inflation.

So you're getting pretty close down to zero. I am sure that in a monthly budget for an upper-middle-class family, there are going to be other expenses we haven’t even gotten into that are 2,800 a month. Clothing—you’re going to have to, every once in a while, get some new clothes. You're not wearing the same old thing over and over. What about real estate taxes on your home? What about special assessments for your neighborhood? What about school expenses for school trips, or for band practice, or for football uniforms, or for cheerleading fundraisers? Few hundred dollars a month, right?

What about external birthdays? You have at least 12 friends—meaning you have a birthday every month, right? That could be 50 bucks a month. So as you can see, this budget is very, very quickly eroding down to a thousand, two thousand dollars a month. That's with a 10 million dollar earnings over the rest of your life.

So 10 million sounds like a lot. But if you are an above-average family that wants to live a comfortable life—not lower class, not struggling, not paycheck to paycheck—but a comfortable life, you need to think about how are you going to accumulate, or earn, or generate 10 million dollars over the rest of your life.

Now granted, you have 40 years to do it. So you have some time. But you also can't delay the start of this. So it's either putting money away, increasing your income, starting a business, creating an enterprise. Think about that number every single day—10 million dollars. Don't let it scare you. Don't let it demoralize you. Because you know, 10 million may seem like a lot, but putting together 10 million over 40 years is doable as long as you start from day one.

Tell me what your thoughts are. Am I off my rocker with thinking you need 10 million? Is it maybe privileged to think that that's the life you need to lead? Is there other ways to skin the cat? Is my math wrong? What are your thoughts?