Everyone knows the classic song by the Barenaked Ladies. It goes on to talk about all of the things one could buy, if only they had a million dollars. It even ends the song by saying “If I had a million dollars… I’d be rich.” But what exactly does a million dollars get you in this day and age? Here are a few things you can get for a million bucks.
A decent house… maybe.
It depends on where you live. If you live in Toronto, you can afford to buy a slightly below-average house that probably needs some major renovations. If you live in New York… well, you can probably buy a broom closet for that price tag.
This is actually one of the lines in the song, but with the rate that home prices have increased in recent years, the line is becoming less truth and more pipe dream with each passing year. If you want to buy a house in the middle of nowhere, then yeah, go nuts. But in a major city? It’s going to be a tight race.
An iffy retirement for one.
Countless studies show that, in order to live off the interest only – which you’d have to do in order to retire on a million dollars – you can only count on a 4% withdrawal rate each year off your investments. That’s $40,000 if you invest a million dollars.
Keep in mind you’re being taxed on most of that, since your investments would have to sit in a non-registered account. So now you’re down to about $34,000 a year – not exactly making it rain, and definitely not enough for a couple to retire on. Even if you can get CPP and OAS, you’re only up to around $46,000 after tax, and where’s the fun in that?
Unless you’re on your death bed, it’s time to face the music: a million bucks just isn’t enough for a couple to retire on anymore. It might not even be good enough for one person’s retirement.
A really nice boat.
Man, how cool would it be to own a boat? You could hold epic parties, sail the open waters, and live the whole Grey Goose commercial thing where you crack oysters and sip vodka, all in black-and-white. Yep, a million bucks buys you a really nice boat.
What it doesn’t buy you are the maintenance expenses that come with owning that boat every year. Between moorage fees, repairs, gas and insurance, you’re looking at $12,000 to $18,000 per year or more. Whoops… guess a million bucks buys you a boat, but not the boating lifestyle.
Let’s not forget the income you’d be foregoing if you spent your million bucks on a boat. You’d be giving up the $40,000 each year in income you could be generating as well, making the decision to buy a liability that decreases in value with each passing day an even more expensive choice.
Wrapping it Up
Inflation has eaten away at the value of a million dollars each and every year since the song first came out (which was 28 years ago, by the way – how’s that for making you feel old?). It’s no longer the milestone it once was… or at least, it shouldn’t be.
For most people, a million bucks isn’t going to let you retire, it isn’t going to let you buy a brand new, mortgage-free home in a major city, and it isn’t going to be enough to blow on a bunch of material goods and allow you to maintain that lifestyle afterward.
But hey, if I had a million dollars, I would be better off than I am now. Not quite as catchy though, is it 🙂
