Hello Dehewie, I got lost in the math right away in your post. Could you re-do it showing your work for the first calculations.I believe you are saying that $500K at a 5% annual drawdown would only last 20 to 25 years counting for interest [inflation, maybe?] A 30 year Treasury Bond (now at 6.2%) pays 24% more than the needed 5% drawdown, but even if it were 5% it should provide $25K a year--over twice the $12.5K you referred to. But the real numbers are probably even better. According to the much-discussed Trinity study, for most (95% or so) retirees, a mixed portfolio of stocks and bonds should safely yield 5% indefinitely, no mater what happens to the market and will allow for a 4% annual inflation rise, and probably provide you with a substantial estate to boot. The inflation numbers look okay, but I would counter that SS dollars will be there as expected for people retiring in the next 10 years or so. It is for people who are less than 55 now that SS looks pretty shakey without more taxes on the remaining workforce. Thanks, -- JohnDehewie wrote:>>>but what about less than $500,00 for those who live below their means and don't need much?<<< If you think you can do it, then more power to you, but I don't see how it's possible not matter how frugal you are. If you had $500K, and took out 5%, that money would only last you around 20 years, maybe 25 taking account for interest. When do you plan on retiring? Even if you retire at 65, that money will not last if you live to be 90 or more. And I don't see how you could live on $12,500 a year either. That's $1,000 per month, and my necessities (heat, electricity, food, etc.) are about half that. I'm sure you won't be able to make you car(s) last that long, so there goes $10,000+ for one or more cars during that time. And you also need to take inflation into account. According to my calculations, with an average rate of 3% inflation, your $12,500 will be worth about $9,300 in 10 years, and $6,000 in 25 years. I don't think you could live on that unless you want to live in your car, eating cold beans. It could work if you are invested in the stock market, or if Social Security is still around, but I wouldn't count on that.
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