An Update From the Wealthy Retiree

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Last week, we published An Interview With a Wealthy Retiree About His Taxes. Our interview subject, “George,” sent an update:

George: I’m happy to answer the questions in the comments, although since I want to stay anonymous I’ll have to be vague on some details.

I was able to retire because of a large windfall about ten years ago. Basically, the equivalent of winning a few million dollars in the lottery. I have a disability which was making it impossible for me to hold down a full-time job, and difficult to even hold down a part-time one, so the opportunity to quit working was very welcome. (My health has improved tremendously since then, simply because I’m finally getting enough rest.)

I want to start a creative business eventually, but I’m still developing my skills. I don’t expect to earn much money even once I’m finally working at a professional level, but I do want to do something productive with at least part of my time. That’s what I bought the second apartment mentioned in the article for, to use as a home office. Aside from that, I do basically what any other retiree does: travel, read, watch TV, and so forth. My day-to-day life is not particularly extravagant, but I don’t shy away from big spending—especially on travel—when it seems worth it. When you adjust for inflation, I’m about 3 percent richer than I was when I retired, so I’m spending pretty close to what my real income is. (Until I did the math for this article, I thought I was doing better than that. Inflation can be tricky. I’m still confident that I can maintain my current standard of living indefinitely, but I do have a bit less certainty.)

I agree that my federal taxes are too low. I don’t think someone living off of dividends and capital gains ought to be paying a lower rate than a middle-class wage earner. If my federal taxes doubled, I’d think that was only fair, even if it meant I had to cut back on some of my current expenses. (I did pay over $11,000 this year in extra taxes on my investment income, a surtax introduced last year that helps fund the Affordable Care Act, which I think is a good start towards tax fairness.)

This story is part of our Tax Month series.

Photo credit: StockMonkeys.com

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