4 ms·
> That is barely enough money to retire comfortably the rest of your life. Barely? Using the "safe withdrawal rate" of 4% after inflation if the money is inves
by maaaats 8y ago
> That is barely enough money to retire comfortably the rest of your life.
Barely? Using the "safe withdrawal rate" of 4% after inflation if the money is invested, one could spend 320k a year and probably not run out.
- edoo 8y agoI assume the OP has to be making about at least $130k salary, approximately $200k in total compensation. That gives 42 years at the current lifestyle at a lifespan of 85 years. That assumes wages track inflation. Lifespan should be higher by then too. I'd consider maintaining lifestyle as comfortable retirement.
- joshmlewis 8y agoThis is if you just let it sit in an account instead of investing it. The parent comment is saying if you invest it you will be able to take 4% each year and still keep the nest egg in tact.
- edoo 8y agoWouldn't you need about 4% per year to break even with inflation? Can you safely invest at 7-8%?
- maaaats 8y agoYou can search for "the 4 percent rule" or "trinity study" if you're curious about more. But basically, stock markets over long time average 7-8%. Subtracting inflation gives you a rule of thumb of 4% that historically would have worked. Of course, the future might not match. But the studies also use a fixed withdrawal rate throughout. One could further mitigate the risk by having a small side-income some years, reducing spending in down-years etc. Also, how much money one needs post-retirement is often less, for instance if the mortgage is paid down, not housing kids any more etc.
- edoo 8y agoSo last year based on new treasuries issuance the neutral rate was 6.2% before unbacked credit emissions like student loans.