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Incomes keep pace with inflation and generally don’t have crash years which diminish their future value. If you are taking the full 6% then inflation is eating
by lumost 5y ago
Incomes keep pace with inflation and generally don’t have crash years which diminish their future value.
If you are taking the full 6% then inflation is eating the asset, in 30 years the 60k will be equivalent to 24k. If you started this in 98 then you would have seen your assets halved twice, and would be living off of 15k or so in 2008.
- space_fountain 5y agoInflation adjusted the stock market has grown at 7% per year. I'm not sure what the proper return rate to assume is, but 6% doesn't seem far off it and that's before eating into the principle because none of us will live forever
- dlp211 5y agoThis is a common mistake and doesn't account for sequence risk. While it is true that the long run, inflation adjusted, DRIP average is about 7%, over the short run, those returns are not guaranteed and a few bad years can break your retirement. A much safer withdrawal rate is 3-4% with some inflation adjusted caps and floors so that in good years you grow your investments and in bad years you maintain a certain level of lifestyle.
- space_fountain 5y agoWell regardless 40k is still completely livable even ignoring the tax advantages we give capital right? I'm not saying a millionaire is wrong to want more, plenty of people can and do live on the passive income generated by that amount of money