Have you ever daydreamed about what you’d do if you won the lottery? Maybe take that trip around the world you’ve always wanted to take.  Buy that little red sports car.  Retire early.

For some reason, we’re conditioned to think that there isn’t a dream, desire or problem that a seven figure payday couldn’t solve.  We’re guilty of this same thinking when it comes to retirement.  We have a million things we want to do, but we tell ourselves that we can’t really do them until we’re worth millions.

Well, today is your lucky day, because you just won $10 million in the Intentional Retirement Lottery*.  Woo-hoo!  Time to call work and tell your boss you won’t be coming in today (or any day for that matter).  Go ahead.  I’ll wait.

OK, with that pesky day-job out of the way, let’s get down to business.  Like most lotteries, we give you the option for a lump-sum payment rather than a lifetime annuity.  If you take the lump-sum (which most do), you end up with half of the jackpot amount, which in this case is a cool $5 million.

Of course you need to pay taxes too.  Now that you are officially part of the 1 percent, you are in the 35 percent tax bracket (congratulations!).  That, combined with a typical state tax of around 5 percent, will lop another 40 percent from your winnings.  Painful, but hey, that still leaves you with $3 million.

Of course your extended family is going to come out of the woodwork and want you to spread the wealth a bit.  You’ll probably also want to take care of a few of your favorite charities.  Drop around $500,000 on those and you end up with $2.5 million in the bank.

Since you just quit your job, you want that money to last.  To make sure that happens, I would advise you to take no more than 4 percent per year from your portfolio.  That comes out to $100,000 per year.  “Hey, wait a minute,” you might be saying.  “That’s close to what my spouse and I make right now.”

Exactly.  You may not have a seven figure nest egg, but if you make at least $40,000 per year, you have the income that a seven figure nest egg can generate.  What’s my point?  Don’t use your portfolio as the scapegoat that keeps you from pursuing your goals and dreams.

You likely have the same income now that you’d have if you had millions in the bank.  The only difference is in who signs your checks.  Said another way, you have the same (or better) income now that you’ll have in retirement.  Are you living that way?  If not, then maybe—just maybe—money isn’t the key problem after all.  Maybe it’s deciding what you really want to do with life and getting intentional about making it happen.  Don’t defer the very best until the end.  Keep building that portfolio, but until you get there, let your paycheck be your portfolio.

~ Joe

* Not really, but go with me on this one.
Photo by Paul Sapiano.  Used under Creative Commons License.
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