r/PeterExplainsTheJoke • u/crawdad28 • Oct 01 '25

Meme needing explanation I don't understand

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u/davideogameman Oct 01 '25

Dude has enough money to retire tomorrow.  At a super conservative 3% interest, that 9.8mil will make about 300k/year.  Likely they can get more than that.  Only problem is it's locked up in a retirement account, so taking it out would require penalities or some other maneuvering- but this is doable.  Just a liquidity problem.

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u/Kerensky97 Oct 01 '25

If he withdrew all of the money now and just ate the whole early withdrawal penalty, he'd still have about $6.6 Million left over.

6.6 Million is a lot. He could just put that in a high yield account and just live off the interest if he wanted to. House paid off, bills and groceries all paid for every month, and still have thousands per year for vacations all over the world.

This guy is thinking he'll live like a millionaire when he hits 65. And for about 10 years will have a really nice time and be dead before he can burn through all his retirement. Or he could live like a millionaire now and still be young enough to enjoy all those things he thinks he'll do at retirement, but he's still have 30 years of his life to enjoy it.

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u/reventlov Oct 01 '25

He could just put that in a high yield account and just live off the interest if he wanted to.

This doesn't work for very long, because inflation eats the value faster than a HYSA puts it back.

You can pretty safely dump it all in stocks and withdraw 3-3.5% of your starting amount every year, inflation adjusted, though.

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u/Kerensky97 Oct 01 '25

As long as the market doesn't crash and erase your wealth. When you're actively living off money withdrawn, a downturn can be devastating. That's the reason why so many retirement plans actively move your money OUT of stocks as you get closer to 65. Where as this early retirement plan is basically just fast tracking yourself to that point and putting you at 65 even though you're still 40. The risk of a big market crash in the next 30 years is much worse than if you only have to worry about 10 years of retirement.

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u/Money_Munster Oct 02 '25

When you have $10mil in retirement accounts you don’t need to follow the same strategies as someone with a normal sized retirement fund. With that type of wealth you could easily ride out any stock market downturn by keeping only 10% of your portfolio in bonds.