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That's nonsense. If you have 5M in the bank, you can take out 200K (4%) every year and still never run out of money. Surely you can get by with a little bit les
by johnswamps 16y ago
That's nonsense. If you have 5M in the bank, you can take out 200K (4%) every year and still never run out of money. Surely you can get by with a little bit less than that and still be financially independent? Honestly you can probably get by with just 1M if you're single, but 2M would be more realistic.
- wheels 16y agoThat ignores inflation, which is 3%-ish annually in the US. The number is less than $5m, but it's not $1m assuming you're reasonably young.
- johnswamps 16y agoThat does not ignore inflation. You need just 7% returns on your investments (stock market has historically returned around 10%, but some of your money will be in lower return assets) to be able to take out 4% per year (pre-tax). 1M would be theoretically possible, the problem is that a decade of bad returns could cause you to run out of money.
- jkent 16y agoBanks generally don't pay 4%. Stock market returns and capital isn't protected. Though I am sure 4% can be achieved for little risk...
- johnswamps 16y agoI was just repeating aditya's phrase. It's a common expression and does not literally mean that you have deposited the money in a bank.