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If I had a million dollars


If I had a million dollars

Today, many of my blogger friends are writing on this topic – what you would do if you suddenly inherited a million dollars from long lost cousin Bertha who you haven’t seen since you were a baby? We’ll have a round up on Friday @ Yes, I am Cheap.

This is an easy one for me. If I inherit one cool million from cousin Bertha on Sunday, I wouldn’t show up to work on Monday. Even after the inheritance tax (10-20% from a quick Google?), the windfall will be enough of a shove for me to meet all of my retire by 40 financial goals. Here they are for a quick review.

  1. 1 Million dollars net worth Check
  2. Additional 100k invested in yield producing portfolio Check
  3. Additional 50k cash Check
  4. Even cash flow I’m pretty sure this will work.

Only #4 here is questionable. Take a look at my June cash flow report and you can see that we are very close to positive cash flow. We only really need an extra $1,000 in income at the most.


Let’s see what we can do with $1,000,000! Forget about tax right now as long as we are dreaming.

300k in safe dividend paying stocks and mutual funds. We’ll say the yield is 4% which will net us $1,000 cash each month.

500k in CD. We’ll put 100k each year into a 5-year CD. This way, we’ll have around 100k available each year with no penalty.

200k left is fun money! We can travel around the world in style and visit all the places we have always wanted to see. We’ll visit the Egyptian pyramids, Inca pyramids, Taj Mahal, and the Maldives to start. Hmm…. actually, this isn’t going to work because we would only get positive cash flow if Mrs. RB40 keeps working!

Can she quit her job too? We’ll have to replace about $2,600 in income + generate the extra $1,000. This is a taller order…


We’ll have to start over and see what to do with the $1,000,000! Goal = $3,600 cash flow.

270k to pay off the mortgage – This will free up about $1,500/month, almost half-way there!

400k in safe high yield investments @4% will give us about $1,300/month.

300k in 5 years CD @ 2.5% will net us another $600 per month.

Well, we are not all the way there. We are at $3,400/month, but I think that’s good enough. I would like to generate $3,600/month, but I think we can make it work. We’ll just save $200 less per month. I think that’s not a big deal at this point. I’m sure I can make $200 a month if I really need to.

All right! We have 30k play money. I’m pretty sure we can go see the pyramids, Taj Mahl, and the Maldives for 30k. We’ll have to stay at our usual 2- or 3-star hotels, but maybe we can book a night at the Four Seasons. 😉 I guess it’s a good thing because we need to avoid lifestyle inflation and stay frugal.

Well folks, there you have it. If a million dollars unexpectedly landed in our laps, you won’t see either Mr. or Mrs. RB40 in the office on Monday. This windfall would free us to explore our passions and enjoy some free time with baby RB40! What about you? What would you do? Can you quit working with only $1,000,000 extra? It’s a lot of zeroes, but it might not last 40 years without good planning.


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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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{ 35 comments… add one }
  • Eric September 17, 2015, 11:31 pm

    I would pay off all our debt sell my house and move Scottsdale AZ.

  • Bob August 22, 2011, 9:54 am

    If I were to get $1,000,000.00 dollars! I worked 41+ years at the same job I took 2 days after graduating from high school. I was forced to retire early due to kidney failure, however my wife has to continue to work so we can pay the bills and mortgage. With this kind of windfall we could pay off the mortgage and bills and have enough money so that my wife could stop working and stay home and help me with my medical needs. This would also open up a job for someone that is out of work.
    We would very much welcome any windfall!

  • Marie at FamilyMoneyValues July 16, 2011, 1:55 pm

    I agree with FS – would need the 5 mil!

  • youngandthrifty July 13, 2011, 5:07 pm

    Very sensible, RB40! I really enjoyed your last few paragraphs, going to the Maldives! $30,000 would be very very reasonable for all those places.

    Now all we need to do is get our hands on that million….

    • retirebyforty July 13, 2011, 9:23 pm

      hmmm… Maldives. I want to go to Bora Bora as well, but I don’t think 30k will cover all those destinations.

  • First Gen American July 12, 2011, 5:00 pm

    The way you have your plan setup I can “semi-retire”. I’m fortunate to have paid off my debts so I don’t have to worry about a big chunk being taken off the top to pay school loans, credit cards, etc.

    I think I’d take a year off at least and then go back to work part time until I could save a chunk for the kid’s college fund. That’s the major hole I’d need to plug before I felt warm and fuzzy about retirement. I could live off $30K a year at this point if I didn’t have work and daycare expenses.

    I think in reality we would move back to the ocean town my husband grew up in and that would require a big chunk of the $1MM to go towards housing, so I still would need to work for 5-7 years before I could feel okay ditching the day job.

    • retirebyforty July 13, 2011, 10:20 am

      I didn’t think too deeply about the kid’s college fund. We’re planning to send in a big chunk once or twice a year to the 529 so it doesn’t really show up on our monthly cash flow… Hopefully he’ll be smart and engaging so he can get a nice scholarship. Maybe he can take up golfing. 🙂
      We want to move to an ocean town as well, but it’ll be a struggle. We’ll probably have to keep working part time if we move to an expensive town.

  • Denise @ The Single Saver July 12, 2011, 9:12 am

    I like your take on this. Although you might have trouble finding yields that high. Good luck though!!!! Here is my take: http://www.thesinglesaver.com/2011/03/how-to-spend-million-dollars.html

  • Barb Friedberg July 12, 2011, 7:54 am

    Not quite sure about the ability to generate $100k from $1million today. Maybe when yields geta a bit higher 🙂

    • retirebyforty July 13, 2011, 10:09 am

      100k from 1M is 10%, that’s really high. I doubt it would be a safe investment. I would rather be a bit more defensive when I have 1M. You don’t want to lose the principle right?

  • 101 Centavos July 12, 2011, 4:05 am

    I think I’m with you on this one… more of the same of what we’re doing. Except we’d be taking that two-week vacation to Italy sooner rather than later. And then pay off the house.

  • World of Finance July 11, 2011, 11:12 pm

    I love how you would invest and save the money. It still blows my mind to see how many people that win the lottery end up broke less than a few years later. Instead of investing the money like any finance-minded individual as yourself with retirement goals would, many people buy expensive cars, big houses that they have no clue how much it costs to maintain alone, etc. I would definately invest the money and use money to make money such as yourself. 🙂

    • retirebyforty July 13, 2011, 10:08 am

      Thanks for your comment! A million dollars wouldn’t be enough to completely change your lifestyle. I think many people lived large when they receive a windfall and when the money run out, they’ll be in trouble. It’s much more sustainable to spend the income generated from those windfall.

  • Marissa July 11, 2011, 8:05 pm

    I was going to say that I want a Lamborghini Diablo, but I am embarrassed about that now. Investing seems like the smarter route to take. That car is amazing tho.

    • retirebyforty July 11, 2011, 8:37 pm

      Woo hoo! A Lambo. 🙂 It’s all fun. I’ll take the Mercedes SL500, it’s cheaper than a Lamborghini. I can’t kick my frugal habit that quickly. 🙂

  • SB(One Cent At A Time) July 11, 2011, 7:31 pm

    I agree with Daniel, it won;t be enough for life, hence I can’t retire after windfall. I will buy a home and invest the rest. Continue to work as usual

  • Daniel July 11, 2011, 4:51 pm

    It probably wouldn’t be enough to live on for the rest of your life (if it was, it means you’d be able to keep the same standard of living as you have now, which would be hard with $1 million in the bank just sitting there).

    However, the advantage is that you’d be able to do the type of work you want. I would take an unpaid position in an area I loved and then work my way through the system doing something I loved rather than what I was otherwise doing.

    • retirebyforty July 11, 2011, 8:35 pm

      Yeah, we’ll have pretty much the same standard of living as now with the extra one million. It’ll be great to have a lot more time to explore our passion though.

  • Financial Success for Young Adults July 11, 2011, 2:54 pm

    I would have to say that 1 million wouldn’t be enough. I would be happy with 5 mil so I would take that million and invest in cash flow producing assets and pay off debt, and take one extravagant vacation to Dubai.

    • retirebyforty July 11, 2011, 8:32 pm

      I’ll follow you to see if you can get that 5 mil. It’s not easy. 🙂

  • Krantcents July 11, 2011, 2:40 pm

    I would set up an educational foundation for a portion of it to award scholarships. The rest I would invest to ensure a very comfortable retirement.

  • Lindy Mint July 11, 2011, 12:17 pm

    Can I have your $1,000,000 windfall life? I mean, I could have my own $1,000,000 (that IS a lot of zeros) life, but yours is so nicely organized!

  • Sandy - yesiamcheap July 11, 2011, 9:13 am

    So see, you CAN retire by 40. You just need aunt Bertha to keel over and leave that million bucks. And somehow so far all of up are traveling to exotic locations. Maybe we need to join Wandering Earl on his travels all over the place.

    • retirebyforty July 11, 2011, 8:30 pm

      Too bad we don’t have any aunt Bertha in real life. 😉
      We love traveling, but we love having a home to come back to as well. Mrs. RB40 wouldn’t handle a wondering life well…

  • Jeff @ Sustainable life blog July 11, 2011, 9:10 am

    I think I’d pay off debt, purchase a home outright, take a trip, then invest the rest in safe, income producing assets – probably split between dividend paying stocks and CDs

  • No Debt MBA July 11, 2011, 6:05 am

    A cool $1 million would be enough for me to retire and my SO as well. Wouldn’t it be nice? 😉 Realistically I’d use my million like you – safe, stable, cash producing investments for retirement. But I wrote about buying a half million dollar boat instead since it’s more fun to think about having a million to blow sometimes.

    • retirebyforty July 11, 2011, 8:29 pm

      Are you sure? One million might not last 40 years these days. 🙂

      • No Debt MBA July 12, 2011, 8:07 am

        No kids, no debt, living on the cheap, and with our existing savings it would be possible for us. There’d be no increase in standard of living from our grad school-level style, but hey, retiring before 30 I can always pick up some work if I want to live a little better. I’d still count it as retired with the basics covered and work optional.

        • retirebyforty July 13, 2011, 10:10 am

          No plan for kids? That’s cool. You can retire when you get to 30 and travel around the world. 😀

  • cashflowmantra July 11, 2011, 1:40 am

    I would pay off the mortgage on all my rentals and use the cash flow from those.

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