5 Reasons Why a Million Dollars Isn’t What It Used to Be


live off interest of a million dollarsIt used to be that having one million dollars was the mark of true wealth.  While it is still a lot of money, the truth is that having a million dollars no longer makes you rich.  In fact, as hard as is it to believe having a million dollars might not even be enough to retire.  With that in mind, here are five reasons why a million dollars isn’t what it used to be.

  • Healthcare

Even if you have ‘money’ being sick in the U.S. is not cheap and it is not just the poor who know this.  Before the Affordable Care Act, the cost of healthcare was the leading cause of bankruptcies in the country.

While this has changed in recent years the cost of care has continued to rise.  In fact, one day in an intensive care unit can cost $10,000 or more.  That’s intensive care.  Now imagine you needed to spend the last year of your life in a full-time care facility?  The bill could be $300,000 or more.

Let’s face it, we all want the ‘best’ care available.  But that care comes at a price and for most of us, it is something that we can’t afford.  As such, the high cost of healthcare is one reason why having a million dollars isn’t what it used to be.

  • Long-Term Care

Now if the cost of acute care – that is a healthcare emergency – wasn’t bad enough, imagine death by a thousand paper cuts.  That is basically what needing long-term care is like.

In 2016, a study from Genworth found that the average cost of one year in an assisted living facility was nearly $80,000.  This is more than what most people make in a year and remember it is the average, if you live in a high-cost area it could be much more.

Here is the deal with long-term care – most patients tend to remain there for five years or more.  That means that you could end up spending $400,000 or more and that does not include additional charges or expenses.

What does this mean for today’s millionaires?  For starters, don’t assume you have enough money.  Once that is out of the way, then you want to have a clear plan for how to handle healthcare-related expenses as you get older.  This should include supplemental and long-term care insurance as both will help you to hold on to your fortune a little bit longer.

  • Lifestyle

You’ve got a million dollars in the bank, you can drive a new car every year and you’ve got a McMansion to come home to every night.  You might think you have made it and are ‘living the dream’?

However, the reality is usually something different.  Even if you are lucky enough to have a million dollars sitting in the bank, odds are that your liabilities devour most of what you have saved up.

Translation – you can only afford to live the millionaire lifestyle if you keep earning enough money.  Many people learned this the hard way during the dot-com and housing bubbles.  So, learn from their mistakes and start making lifestyle choices which will help you to get the most out of that million bucks.

One such example could be a reverse mortgage.  While this is not for everyone, these vehicles will help you to effectively freeze your monthly mortgage payments for as long as you live in your home.  The upside is that you can take use the case that was going to service debt and invest it in a fund which will help you prepare for retirement.  If this sounds of interest, then you might want to check out this lender for more information.

  • The ‘I’ Word

What is the ‘I’ Word – inflation of course.  Even while it remains relatively tame, over time that 2% inflation rate will eat into your savings.  As such, you need to channel your money into investments which are safe and consistently outpace inflation.  This is not an easy thing to accomplish as the higher the expected return, the higher the risk.  However, you will need to inflation-proof your million dollars if you want it to last.

  • The Taxman

While the roots of the American Revolution might have been taxes, the truth is that there is no escaping the tax man.  It doesn’t matter if you are a millionaire or not.  You will need to work out a tax plan which lets you keep as much of your money as possible without getting into trouble.  If not, then all your hard work to get to a million dollars will be for naught.

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit
About the author

Join our newsletter

Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

ModestMoney.com Top Finance Blogs


SSCP   CAS-002   9L0-066   350-050   642-999   220-801   74-678   642-732   400-051   ICGB   c2010-652   70-413   101-400   220-902   350-080   210-260   70-246   1Z0-144   3002   AWS-SYSOPS   70-347   PEGACPBA71V1   220-901   70-534   LX0-104   070-461   HP0-S42   1Z0-061   000-105   70-486   70-177   N10-006   500-260   640-692   70-980   CISM   VCP550   70-532   200-101   000-080   PR000041   2V0-621   70-411   352-001   70-480   70-461   ICBB   000-089   70-410   350-029   1Z0-060   2V0-620   210-065   70-463   70-483   CRISC   MB6-703   1z0-808   220-802   ITILFND   1Z0-804   LX0-103   MB2-704   210-060   101   200-310   640-911   200-120   EX300   300-209   1Z0-803   350-001   400-201   9L0-012   70-488   JN0-102   640-916   70-270   100-101   MB5-705   JK0-022   350-060   300-320   1z0-434   350-018   400-101   350-030   000-106   ADM-201   300-135   300-208   EX200   PMP   NSE4   1Z0-051   c2010-657   C_TFIN52_66   300-115   70-417   9A0-385   70-243   300-075   70-487   NS0-157   MB2-707   70-533   CAP   OG0-093   M70-101   300-070   102-400   JN0-360   SY0-401   000-017   300-206   CCA-500   70-412   2V0-621D   70-178   810-403   70-462   OG0-091   1V0-601   200-355   000-104   700-501   70-346   CISSP   300-101   1Y0-201   200-125  , 200-125  , 100-105  , 100-105  , 1Z0-803  , 400-051   EX300  , CISM   100-105  , 000-106   400-201   642-732   220-902   70-410  , MB6-703   810-403   70-243  , CAS-002  , AWS-SYSOPS   70-462   70-410   2V0-621   LX0-103   70-461  , 220-902   1Z0-144   70-178   70-270   350-080  , 1Y0-201   1z0-808  , NSE4   102-400  , ADM-201   SSCP  , 200-125  , 640-911   000-104   640-692   300-320   350-060   000-089  , 000-017   1z0-808   700-501   1Z0-051  , 70-177   M70-101   300-209   70-461   3002   N10-006   VCP550   70-487   300-320  , 3002   700-501   NS0-157  , 1V0-601   CAS-002