Todays Take on Generational Money Where is That Line ?

[jwhit34]

2 years, $10 million contract total is $5 million a year. On the bulk of that one would pay NY and federal marginal income tax rates of 10% and 37%, respectively, add in the surtaxes and payroll taxes and you're easily at about 52%, maybe deductions take it down to 50% so for easy math you net 50% or $2.5 million per year or $5 million over 2 years. 

 

Even with a high cost lifestyle while playing maybe you're spending $400k/year so $10 million - $5 million taxes - $800k spend leaves a net $4.2 million. A relatively conservative investment strategy should be able to net you at least a 5% return which would be $210k/year. 

 

So that is not generational wealth but a nice amount to produce annual income to live on without touching principal. 

 

What would be considered generational wealth? Enough that you can pass on to the next generation and maybe next two generations where they would not have to work (not that you would want them to work, but they wouldn't have to). You also have to consider while you could probably live comfortably on $100k or so, I think the implication of "generational wealth" is that you are living a much more luxurious lifestyle without working. You're probably looking at a lifestyle that costs at least $500k per year. If you have 2 kids, you need assets that would generate $1 million of income per year. At a 5% return that would be $20 million. 

 

All in all a different realm than most of us live, hard to relate or fathom. 

 

 

[Jauronimo]

Why is this on mainboard?

[DrDawkinstein]

25 minutes ago, Jauronimo said:

Why is this on mainboard?

 

OFFSEASON BABY!

 

[Ed_Formerly_of_Roch]

5 hours ago, H2o said:

The question is what's your lifestyle and how do you spend that $$$? If you want to be out on the party scene rubbing elbows with the rest of the rich and famous, buying the latest Bentley, showing up to all these red carpet events, with $100K chains/watches, then it's going to be different than for those who live modestly. I could live off of $1M the rest of my life, but I'm 45 and live modestly. If you live within your means then $4-5M in your 20's could last you your whole life easily. But if your tastes are that of more extravagance, then you will need that $50M-$100M. Even then you see people mismanage that $$$ and end up broke. 

 

Exactly and these athletes, he mentions Harry are hanging out with these others who are also making $10 mil, it's hard not to some extent keep up with the Jones.  Maybe once every couple weeks all the D lineman go out to dinner someplace and the bill is $5k and this weeks it's Harrys turn to pick up the tab.  Doubt he's going to go live say on Grand Island either.

[mannc]

4 hours ago, NewEra said:

gen·er·a·tion·al

/ˌjenəˈrāSH(ə)nəl/

Learn to pronounce

adjective

relating to or characteristic of all the people born and living at about the same time, regarded collectively.

"generational differences in television usage"

relating to the different generations of a particular family.

"a compelling generational saga"
 

it’s a word.  Why is this even a thing?

But it’s not being used in either of the above contexts.  In the context of football, it’s an overused word that is now pretty much meaningless. And makes even less sense when applied to finances.

Edited February 28, 2022 by mannc

[ganesh]

8 hours ago, teef said:

as long as i was in physically good shape, and mentally still into it, i'd play as long as i could and earn as much as i could.  you can never have enough cash.  the only other way i'd consider walking away was if i had another passion that i wanted to follow.  

or consider broadcasting !!!!!

[1ManRaid]

8 hours ago, boater said:

If you put 10 mil into a CD (the ultra-conservative option) you would get $82,000 a year in interest with even touching the principle.

 

I know many of us here could live well on $82K.

 

We'd have to buy a Toyota instead of a Lexus.

 

$82k is more money than I'd know what to do with.  Especially since that's USD and I'm Canadian, I could live like a king since I have modest tastes.

[SoCal Deek]

4 hours ago, jwhit34 said:

2 years, $10 million contract total is $5 million a year. On the bulk of that one would pay NY and federal marginal income tax rates of 10% and 37%, respectively, add in the surtaxes and payroll taxes and you're easily at about 52%, maybe deductions take it down to 50% so for easy math you net 50% or $2.5 million per year or $5 million over 2 years. 

 

Even with a high cost lifestyle while playing maybe you're spending $400k/year so $10 million - $5 million taxes - $800k spend leaves a net $4.2 million. A relatively conservative investment strategy should be able to net you at least a 5% return which would be $210k/year. 

 

So that is not generational wealth but a nice amount to produce annual income to live on without touching principal. 

 

What would be considered generational wealth? Enough that you can pass on to the next generation and maybe next two generations where they would not have to work (not that you would want them to work, but they wouldn't have to). You also have to consider while you could probably live comfortably on $100k or so, I think the implication of "generational wealth" is that you are living a much more luxurious lifestyle without working. You're probably looking at a lifestyle that costs at least $500k per year. If you have 2 kids, you need assets that would generate $1 million of income per year. At a 5% return that would be $20 million. 

 

All in all a different realm than most of us live, hard to relate or fathom. 

 

 

If you never spend the principal isn’t that the very definition of generational wealth? Asking for my wife. 

9 minutes ago, 1ManRaid said:

 

$82k is more money than I'd know what to do with.  Especially since that's USD and I'm Canadian, I could live like a king since I have modest tastes.

Not if they keep raising the price of Sunday Ticket! 😉

[Don Otreply]

I think most folk have forgotten that the average income in America is around $50.000.00, annually, so ten million in a lump some, is generational money, provided ya don’t piss it all away buying land fill / living beyond your means, which sadly, most folk do exactly that. So by the time your kids are fifty years old the money you left them is gone.
 

   It’s a major problem with the American wage earners, they are spending themselves out of the middle class or higher,  thinking that showing off wealth is what well off people do, only the top of the top can afford to play that game. That is why Americans have high debt levels, they “spend” their lives screwing themselves. 

[Sierra Foothills]

5 hours ago, Jauronimo said:

A noble 4% return embiggens even the smallest portfolio.

 

Based on "The Rule of 72" a 4% annual rate of return would double your investment in 18 years. Not bad, not great.

[Augie]

16 minutes ago, Don Otreply said:

I think most folk have forgotten that the average income in America is around $50.000.00, annually, so ten million in a lump some, is generational money, provided ya don’t piss it all away buying land fill / living beyond your means, which sadly, most folk do exactly that. So by the time your kids are fifty years old the money you left them is gone.
 

   It’s a major problem with the American wage earners, they are spending themselves out of the middle class or higher,  thinking that showing off wealth is what well off people do, only the top of the top can afford to play that game. That is why Americans have high debt levels, they “spend” their lives screwing themselves. 

 

My first job post-college was in banking in 1982. It was eye opening. You could get a CD for 17% but a mortgage was about 22%. CRAZY times!

 

The people I thought were “wealthy”, the people in the beautiful houses with the fabulous cars, the flashy lawyers and brokers, taught me a lesson. My favorite house in Sea Pines (Hilton Head Island, SC) was bordering on foreclosure. The trophy wife would come in with tears streaming down her face several times a year, offering her jewelry if they could have another 30 days. The husband was a partner in one of the biggest law firms in town. 

 

My wife’s family probably had credit cards back then, but I never saw one. Lebanese family who said if you don’t have the cash to do it, you just don’t do it. Even if they took a couple dozen people to a nice restaurant, they paid cash. 

 

It’s a matter of mindset. Sadly, too many athletes grow up with little, and don’t understand that those giant paychecks won’t last forever. Put it aside and know you need a “second career” to make those earnings last. They went from zero to sixty in no time, and don’t understand they will soon go back to zero. 

[DCofNC]

18 hours ago, DrDawkinstein said:

 

$10M after taxes. How you got it is irrelevant for this hypothetical. The question is what could someone expect to make off it a year without draining the principal? Is a 4% draw reasonable?

You could do 4% off a life insurance policy, not a hard thing to do at all.

[T master]

17 hours ago, Jauronimo said:

Why is this on mainboard?

 

This post was in reference to a article that i had read about football that said in that article about Bills football that if Horrible Harry were to sign with the Bills for $10 million a year that that would not be generational money hence me asking exactly what was generational money . 

 

And seeing as it was about football & this being a football sight & the article i referenced was in fact about Bills football & a lot of people here knowing more about football than me i thought i would ask . 

 

I hope this answers your question - sorry if the original post was a little vague for you i hope this clears it up Thanks ...

[Jauronimo]

19 minutes ago, T master said:

 

This post was in reference to a article that i had read about football that said in that article about Bills football that if Horrible Harry were to sign with the Bills for $10 million a year that that would not be generational money hence me asking exactly what was generational money . 

 

And seeing as it was about football & this being a football sight & the article i referenced was in fact about Bills football & a lot of people here knowing more about football than me i thought i would ask . 

 

I hope this answers your question - sorry if the original post was a little vague for you i hope this clears it up Thanks ...

You really need to be a football expert to opine on how much $$ constitutes generational wealth.  

[BADOLBILZ]

40 minutes ago, Jauronimo said:

You really need to be a football expert to opine on how much $$ constitutes generational wealth.  

 

 

Should be in the "do you bitcoin?" thread OTW.

[BuffaloRebound]

I’d say $5m in investable money sets you and your family (3 kids or less) up for life without having to ever work again.  Not sure why anybody would want their kids never to have to work.  College and maybe a down payment on a house.  More than that and your probably doing more harm than good.  

[In Summary]

23 hours ago, dpberr said:

Aren't we really discussing generational "wealth"?  

 

I don't think there's such a thing as generational money.  Money is an input into wealth but it's not the only input.  It's just the income.  

 

You can make $10 million dollars a year.  The person who blows it all on conspicuous consumption is a different wealthy from the one that hides it all in the walls of his house as cash or the one who takes that same money and invests it into real estate, the stock market, etc.  

 

The wealthy in this country, even historically, weren't Scrooge McDuck swimming in a room full of greenbacks.  Their wealth was in lots of things. 

 

Any NFL player can be generationally wealthy - it depends on what he does with that income.   

Yes.  Any NFL player that invests heavily for a few years in their 20's should be set even if they work a common job the balance of their working years.  The time value on say $100k invested before you're 26 would be tremendous.  

[SoCal Deek]

It's a really simple concept. If you live off the earnings (never spending the principal) then by definition, you're going to pass that money on to the next generation, who if properly coached should be able to do the same thing. What's interesting is that you don't have to have generational money to apply these same principles. Put yourself on a diet in your early years, get completely out of debt as fast as humanly possible, and the rest becomes a piece of cake. Sadly, most people look to reward themselves too early in life and then spend the rest of it playing catch up.

[Poleshifter]

2 hours ago, BADOLBILZ said:

 

 

Should be in the "do you bitcoin?" thread OTW.

The crypto world is a place where they often talk about "generational" wealth, meaning the wealth you make will affect the lifestyle of future generations of your family.

 

I know a couple people who will be facing a sudden influx of wealth due to crypto investments.

 

In terms of football salaries, the term "generational" does not make much sense.