It’s been nearly two years since I saw my imaginary friend Riley.
Usually a gregarious type, he’s best known for living “The Life of Riley” – an easy life, unsullied by regular work or obligations. Were he in Ireland, he could be found at his traditional haunt, the local pub. He’d be drinking Guiness and happily massaging bloody knuckles.
But my imaginary Riley lives in Texas. He drinks margaritas. His scent is “Eau de BBQ.” Regular readers will recall that he doesn’t just avoid work. He eschews it. He can do this because he has investments and lives on investment income. Unlike the Ridiculously Rich, who get all the press attention, Texas Riley decided years ago that he just wanted to be “comfortable.” He spends accordingly.
Just More Income Than Most
That means no mega-yacht, for him. He’s fine with an aging bass boat. Indeed, his goal — defined with algebraic purity — is to have more income than most people. But not so much that anyone would be interested in what he does. Day or night.
He defines this as more income than 75 percent of all workers.
Sounds easy, right?
But it isn’t.
As I’ve demonstrated since 1985, to live the Life of Riley you need a particular income. But the income yield produced by your investments varies from year to year. So there are years when it is easy to retire from the world of labor. And there are years when it’s hard because you need a lot of investment money to start.
Here’s an example. Back in 1985, the S&P 500 provided a yield of 4.25 percent. (I’m not kidding!) A five-year Treasury earned 10.12 percent. (I’m not kidding about that, either!) A simple 50/50 Couch Potato portfolio provided a whopping yield of 7.19 percent.
Imagine that.
Better still, the required income was only $30,928. So any aspirant Riley could live the Life of Riley with an investment portfolio of $430,452.
Thirty-five years later, in 2020, investment yields had turned into a piddle – 1.95 percent for the S&P 500 and a mere 0.31 percent for the five-year Treasury. So providing the required $87,529 in income required a portfolio of $7.7 million (see chart below).
Yes, $7.7 million. That’s quite a difference. Instead of needing to be merely “mass-affluent,” you had to be genuinely rich.
Living the Life of Riley Gets Tough… Again
So far, the rise off the 2023 bottom has been modest. But a careful examination of the tea leaves suggests that rising inflation will require a higher income. That usually means a larger starting portfolio.
You should also know that the tea leaves have been confirmed by both the goat entrails and the cow patties — tools that have been at least as accurate as predictions by Wall Street, professional economists and the National Association of Slot Machine Players.
If fewer will be able to choose living the Life of Riley in the future, the usual suspects are likely to be the cause: rising federal spending and deficits, a declining dollar, less Treasury buying by other nations, and reduced home building. As I said, the usual suspects.
Can we protect ourselves?
My Life of Riley has been a tongue-in-cheek exercise for decades, but the numbers were serious. Indeed, earlier editions also featured an adjustment for Social Security income, since retirees could reduce the portfolio figure by 25 to 40 percent, depending on their lifetime earnings, marital status and earnings of their spouse if they were married.
But our elected representatives have done nothing to defer or avoid the projected need to cut Social Security benefits year after year. Now the crisis is projected for 2032, barely an eye blink away.
This worsens the likely future for just about everyone. Young and old. Professionals and blue collars. Private and public sector workers. Corporate workers and small company workers.
It is only irrelevant to the very rich.
This is not a left-wing statement. It is what the numbers say.
Related columns:
Scott Burns, “My Dinner With Riley,” September 8, 2024: https://scottburns.com/my-dinner-with-riley/
Scott Burns, “The Life of Riley Gets Even Easier,” June 17, 2023: https://scottburns.com/the-life-of-riley-gets-even-easier/
Scott Burns, “The Life of Riley, Now on Sale, July 30, 2022: https://scottburns.com/rising-yields-mean-you-need-less-investment-money-to-live-pretty-well/
Scott Burns, “Affording the Life of Riley, 2021: June 11, 2021: https://scottburns.com/affording-the-life-of-riley-2021/
Scott Burns, “Covid Blew Up the Life of Riley Index,” July 4, 2020: https://scottburns.com/covid-19-blew-up-the-life-of-riley-index/
Scott Burns, “Living the Good Life, Along with Riley, September 7, 2019: https://scottburns.com/living-the-good-life-along-with-riley/
Sources and References:
BLS.gov inflation calculator: https://www.bls.gov/data/inflation_calculator.htm
IRS.gov Statistics of Income: https://www.irs.gov/statistics/soi-tax-stats-individual-statistical-tables-by-tax-rate-and-income-percentile
U.S. Treasury Daily Treasury Par Yield Curve Rates: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=202608
Rachel Louise Ensign, “More Americans Are Breaking Into the Upper Middle Class,” 4/4/2026: https://www.wsj.com/economy/more-americans-are-breaking-into-the-upper-middle-class-bf8b7cb2
Stephen J. Rose, Scott Winship, “The Middle Class Is Shrinking Because of a Booming Upper-Middle Class,” 1/6/2026: https://www.aei.org/research-products/report/the-middle-class-is-shrinking-because-of-a-booming-upper-middle-class/
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo: Scott Burns, Maryland Marina scene, 7/2022
(c) Scott Burns, 2026
1. it would be useful to add a column for burn/spending rate, i.e., for 2026 it would be 111.6k/4071k or about 2,7%.
The burn rate tells you something about sustainability.
2. Would a burn rate of 2% suggest sustainability forever you think?
3.By the way, chatgpt indicates materially higher 75th percentile household income in both 2023 and 2026.
Are your required income #s biased downwards?
3. you use the phrase “very rich”: what household net worth (not including primary residence) would qualify in your mind for “very rich”?
4. According to your estimates what household income in 2026 would qualify for 99th percentile?
I would be interested in your response to these Qs, i hope you will respond, pls email me, Thx
To answer your questions in order:
1. A spending rate would be useful but you can’t get a rate from a snapshot. And surveys like the Feds Survey of Consumer Finances are just that, snapshots. Worse, since that survey is done every three years and we don’t get the first data release for a year, its also an aging snapshot.
2. A burn rate of 2 percent would definitely suggest forever. If you want to get into the weeds on this, http://www.portfoliovisualizer.com has the tools for this and regularly figures out a perpetual withdrawal rate.
3. My data for 75th percentile came from a regular analysis done by the IRS. They’ve got all our tax returns so they’re an original data source. Like the data from the Survey of Consumer Finances, however, it’s an aging snapshot. We can make guesses with inflation adjustments, but they are just that, guesses.
3. (again) “Rich”, like “middle class” has many academic definitions as well as public notions. You can empty most rooms by suggesting that those with less than $5 million in financial assets leave.
4. I don’t estimate, I go to data sources. One of the best for this kind of data work is http://www.dqydj.com
If you scroll down further in my posts, you’ll find two lists. One is related columns. Another is the data sources used for the column. It’s always good to remember that the Internet creates a “real time” illusion for everything. You can trade stocks, bonds and options in real time. But survey data always has a time lag. The more data gathered, the greater the time lag.
Thx for responding. The http://www.portfoliovisualizer.com website does not have a search box (did not see it) but my Q is: With an all-equity portfolio invested 80% in US total stock market index fund and 20% in Developed markets index fund, what burn/spending date would suggest sustainability forever.? How to find the info on that website? Thanks/Regards