I would just need $1 million.
- Put $500,000 in Muni Bond Ladders averaging about 3.5% per year
- Put $500,000 in Long Term CDs averaging about 2.5% per year
That's $30,000 every year which is "higher" than my entire annual personal expenses amount right now. Taxes would be minimal.
In my retirement thread on the finance forum I talked about how I thought I could retire on 2 million while relying only on savings account. I'll go over it again here. Yes, bonds and CD's have traditionally offered a better APY than savings account, but your money is locked away for years. Imagine if you were returning slightly less than a CD but had your portfolio RIGHT THERE in a savings account to do what you please? Maybe you prefer to earn 30% more and lock your money away, but I'm a convenience guy. I rent a "Corporate style" apartment where all my bills are covered in one payment. I like simplicity.
Fortunately, savings accounts
have begun to make a small comeback, it's just that most people don't know it. I'd say that 95% of people are investing in Chase, Bank of America, Wells Fargo and the other major banks, which are paying 0.01% interest. Anyone with 10 grand or more put away is leaving a LOT of money on the table per year banking at these places. Online-only savings account are averaging over 1% now because of the lower costs associated with fewer employees and no brick and mortar upkeep. I banked at one called Everbank which was returning 1.62% for a while (they eventually lower it without warning) up to $500,000. Some others offer 3% or 5% up to a certain balance (usually low - like $15,000) if you meet qualifiers like using Bill Pay and using your account 12 times per month. But ignore these and just go back to fixed rates.
So lets say you had 2 million. You are FDIC insured up to $250,000 per account. You'd need 8 savings accounts divided up equally and every penny you own would be fully insured. Let's say each bank was offered what Everbank was, which was 1.62% and they pay out monthly.
2,000,000 x 0.0162% = $32,400 a year in new money, paid out the last business day of every month.
That's $2,700 a month paid out across your 8 accounts. I said my monthly expenses total $1,350 plus food and gas. On $2 mil, with my current life style, I'd never work a day for 9-5 corporate job again. I'd work on my own projects because I'm not big on "Retirement", aka doing nothing, but I'd never HAVE TO work for SOMEONE ELSE ever again.
Sure those interest rates don't last. They are often promotional rates and the banks pull the rug without warning, but with all the free time you'd have your full time job would be to go on the dirt sheets websites and scout all the new promotions to keep up that APY. Not a bad way to make a living...
