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Greetings, Dundav, and welcome.

<<You have a million $. You will stop working and limv on your investments 3-1-98. You plan to lime 30 years. You want an income of $70,000 per year to start. What would your portfolio look like to provide this income and take care of inflation going forward? Hopefullly you would leave at least the $million to your heirs.>>

Well, just ignoring inflation for a moment, you would need an annual rate of return of 7.53% per year to generate an annual payment of $70K for 30 years and still have your $1M starting capital. But if inflation ran 4% per year, 30 years from now that $70K will only buy you about $21.6K of today's goods. Thus, if you want to increase the annual payment by inflation each year (and if inflation is 4% per year over 30 years), then you need a return on your portfolio of about 11.83% per year. That's possible, but only if your portfolio is heavily weighted in stocks. Stocks imply risk, so you must also assess your ability to watch short term fluctuations in your stash. With stocks, that will happen, but over 30 years you should still come out far more ahead than in anything else.

You may want to skip back in this folder to 8/28/97 and read a series of posts under the subject "Retiree Portfolio" to see how various folks approach this issue.

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