3 ms·
Using the 5% drawdown rule, 2M in savings is enough to have a 100k/year income in perpetuity without adding to savings. Idea being that average market returns
by Swizec 7y ago
Using the 5% drawdown rule, 2M in savings is enough to have a 100k/year income in perpetuity without adding to savings.
Idea being that average market returns are 7%. So if you use 5% per year, you will never run out.
- rhexs 7y ago5% is not a safe withdrawal rate for "in perpetuity". 3% is much more realistic if you want to be conservative.
- Swizec 7y agoYes it's a rule of thumb not the law of thermodynamics. Run your numbers with your own parameters for details.
- villahousut 7y agoThat's assuming you want to leave the whole 2 million principal in your will to your children. I don't see why - if you want to retire, you can consume the whole principal while you live.
- thedufer 7y agoYou can't plan to spend your last dollar on your deathbed unless you can predict every expense, the market, and the day you'll die, especially over a retirement that long (potentially 50+ years). Planning to leave something behind is really your only chance, unless you're comfortable with a very high chance of bankruptcy along the way.