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12-10-2012, 12:09 PM
  #800
Beacon
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Join Date: May 2007
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Quote:
Originally Posted by fredrikstad View Post
After this year, he has made around 3 millions, which should be good to be set for life, but I don't know what kind of expenses he has in his life.

$3 doesn't set you up for life. Are you kidding me?!

1. The tax rate for a single guy making a lot of money annually is over 50%. That already takes him to under $1.5.

2. A small 2-bedroom condo in a middle class Brooklyn neighborhood like Park Slope (not near the park itself) will cost him over half a million. I'm not talking about buying a rocking pad in Midtown. I'm talking about a 900 sq foot apartment in Brooklyn. Throw in furniture, car, routine expenses, and he is down to a few hundred thousand dollars. That doesn't set you up for life.

3. There's inflation. Even if he has half a million saved up after buying and furnishing/fixing up his condo, that money will lose half its value every 20 years or so.

4. The saved up money he has may get him about $1k a month in revenue from a safe investment in his bank (a CD or something like that) or he can buy himself a small bar or another small business, but it certainly will not be enough for him to survive on for the rest of his life. Sauer will have to have a regular, middle class job if he retires today.

5. And that's why he will likely refuse to retire if he can help it. If he manages to make another million in post-tax income, he will be able to live a middle class lifestyle without having to scramble to get a middle-class job.

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