6 ms·

At least in the USA it is in no way FU money unless you are over 60 or something. Assuming you invested it all and didn't spend a single cent, that's 12K a year

At least in the USA it is in no way FU money unless you are over 60 or something. Assuming you invested it all and didn't spend a single cent, that's 12K a year from interest (generous 7%). You can probably spend 30-40K for 30 years if you decide to dip into the principal. But if you are young, you will have to get a main income source.

maxxxxx 9y ago
You probably can't live on it solely but together with the pension it gives you the freedom to find a job you like even if it's low pay.
- kasey_junk 9y ago
  Pension doesn't pay out until 55
sokoloff 9y ago
"Safe withdrawal rate" is usually pegged at 3.5% to 4%. On an initial lump sum of $1MM, that's $35K-40K/yr, not $12K per year. (I'm not sure where the 7% came from in your post.) Good scenario modeling tool: cFIREsim: http://www.cfiresim.com/# http://www.cfiresim.com/# You can login as HNHN : HNHNHN and look at the scenario I modeled using the information in this thread. That has a 100% success rate from now until 2080, assuming a 3.5% annual spend ($35K to start) AND ignoring any new money being added (from his mathematics or other work). It's not Maserati money perhaps, but it's absolutely a secure retirement for someone currently living on $25K/yr.
- vonmoltke 9y ago
  > On an initial lump sum of $1MM, hat's $35K-40K/yr, not $12K per year. (I'm not sure where the 7% came from in your post.) The original poster calculated the value off the $1.8MM (not the tax-deductible number), and simultaneously made a place value error ($12k/year is 0.7%, not 7%, of $1.8MM).
bohrv 9y ago
You put a decimal point in the wrong place. 7% of 1.8M is 126K, not 12.6K. Really it would be more like 77K from 1.1M once you factor in taxes, but for most people that's more than enough to live on without ever touching the principal.
beambot 9y ago
Some serious math errors here if you think 7% of $1.8M is only $12k / yr. (Even accounting for taxes.)

maxxxxx 9y ago

You probably can't live on it solely but together with the pension it gives you the freedom to find a job you like even if it's low pay.

kasey_junk 9y ago
Pension doesn't pay out until 55

sokoloff 9y ago

"Safe withdrawal rate" is usually pegged at 3.5% to 4%. On an initial lump sum of $1MM, that's $35K-40K/yr, not $12K per year. (I'm not sure where the 7% came from in your post.) Good scenario modeling tool: cFIREsim: http://www.cfiresim.com/# http://www.cfiresim.com/# You can login as HNHN : HNHNHN and look at the scenario I modeled using the information in this thread. That has a 100% success rate from now until 2080, assuming a 3.5% annual spend ($35K to start) AND ignoring any new money being added (from his mathematics or other work). It's not Maserati money perhaps, but it's absolutely a secure retirement for someone currently living on $25K/yr.

vonmoltke 9y ago
> On an initial lump sum of $1MM, hat's $35K-40K/yr, not $12K per year. (I'm not sure where the 7% came from in your post.) The original poster calculated the value off the $1.8MM (not the tax-deductible number), and simultaneously made a place value error ($12k/year is 0.7%, not 7%, of $1.8MM).

bohrv 9y ago

You put a decimal point in the wrong place. 7% of 1.8M is 126K, not 12.6K. Really it would be more like 77K from 1.1M once you factor in taxes, but for most people that's more than enough to live on without ever touching the principal.

beambot 9y ago

Some serious math errors here if you think 7% of $1.8M is only $12k / yr. (Even accounting for taxes.)