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> Based off that, you can probably live off investments starting at around the 90th percentile ($61k annual income with 5% withdraw rate), if you live modestly

• dougSF70 4y ago
  The theory goes that a 4.5% draw rate from your capital will ensure your capital is preserved (relative to inflation average of 2.5%) for ever provided it grows at 7% a year in the long run. This is an achievable long term capital growth rate. If you can live of $61k a year then you will need 61,000 / 0.045 = $1,355,555 of investments to deliver $61k a year without degrading the value of the capital relative to inflation. I guess the 90th percentile refers to the fact that 10% of people in the US have this amount invested or more.
  • acdha 4y ago
    > I guess the 90th percentile refers to the fact that 10% of people in the US have this amount invested or more. I think the 10% number is referring to something a bit different. The stats referenced are net worth, which in most cases is significantly composed of someone’s house & other property which doesn’t easily provide a passive income and 401ks which aren’t accessible. I’d be surprised if the number of people who have $1.3M in normal investments is greater than 1%.