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That's only if you plan to leave your stock portfolio to your children when you die. You can take out more than 4% if your plan is to use up your savings while

• nly 4y ago
  Sadly this isn't the case. Volatility in the stock market will see your withdrawals deplete your equity at a faster rate during downturns and put you at risk of going broke early. A $1M stock portfolio may not service $50K/yr for 20 years, let alone the rest of your life. A 40% downturn in the early years will see you go kaput. If you want to leave nothing you probably need to provision for 40 years and build a bond ladder yourself (rather than buy in to bond funds). The problem with that though is you're exposed heavily to inflation, which equity will give you some protection from over the long term
  • prepend 4y ago
    4% of 1M is $40k, not 50. The idea is you withdraw $40k/year and invest in low risk income funds that yield 2-3%/year. So withdrawing $40k gives you about 40-50 years and that’s safe for most 65 year olds.
    • nly 4y ago
      A 3% nominal yield doesn't even cover inflation, so you're not getting more than 25 years out of that $1M if you draw it down at an adjusted $40K/yr