Gobankingrates had an interesting article on whether $1M was enough to retire on, based on the benefits/dangers of Geo-arbitrage in the US. The author has information on the estimated annual expenses that a retiree would pay, by state.
Obviously there are some issues with the analysis:
- The author just takes the $1M figure and divides by the annual average to get the number of years it would last. Does not deal with investments, 4% rule, or any other way to leverage the $1M. It just assumes you stick the money in something that matches inflation.
- A “state” average needs to be even further broken down. The difference in each state between its major cities, its towns, and its countryside are radically different. Think New York City vs. Upstate New York (where you can get a house in some places for $50K).
- Other factors that might be of interest to a person (outdoor sports, theater & symphony, great restaurants, etc.) aren’t really factored as well.
Well, it’s a simplistic article, but it does show a major point. Folks can really alter their FI timeline if they consider geo-arbitrage (moving to a lower cost area) as one of their strategies. Mrs. 39 Months and I are constantly “battling” over where we want to eventually move to, and when.
Something for everyone to consider
Mr. 39 Months