- The "safest" combination of investments (the one that made the money last longest) was a combination of US equities, international equities and bonds, about 50%/30%/20%.
- Timing of the stock market is critical. When their accounts did well for the first 5 years of retirement, people did much better than those whose accounts declined due to a falling market in the first 5 years.
The 4% withdrawal rule means that you can withdraw 4% of the 2 million, which reduces that amount by $80000. It depends how much interest you are getting paid on the amount, and how much in fees you get paid, as to how long it would last. Ideally, if you want it to last a long time (say 30 or 40 years) you need to only draw out less than the deposit makes in interest, less fees. You also need to consider inflation. $2m now would not be comparatively worth the same in 10, or 20, or 30 years.
Did we flunk algebra class???? You GAIN by what the account earns, and decrease by what you spend.
$2m @ 1% in the bank (which is the lowest you can go) = $20,000 a year gain (before tax).
$2m will last you 40 years [even if you earn zero, but see above] if you take out $50,000 a year starting at age 60; so if you plan on living past 100, have no pension plan, no assets (like a house to live in), and get no social security, you are screwed. Otherwise you should be okay.
$2m / 80,000 = 25 years, even before making any money with the $2m.
P S You cannot take it with you, so feel free to spend it. Otherwise, your heirs will just have one heck of a party.
You can withdraw roughly 4% of the initial $2,000,000 and that balance should last your lifetime. During initial years, accrued interest could exceed your withdrawal rate. Some advisors say you can withdraw 5% per year/
See a certified FEE ONLY financial planner to help with your needs. Avoid anyone who is trying to sell investment products or who suggests annuities.
If I retire with $2MM, 4% of that is $80,000. So do I gain $80,000 or lose $80,000? Also, is it possible to make that $2MM last forever considering inflation? Meaning can I get $80k every year and still have 2MM?
