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Author: whyohwhyoh Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Is $1 million enough? Date: 5/12/2007 3:39 PM
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Going over some numbers to see if we can stop working in 2010. Can a family of four live off $1,000,000 in savings?

One big thing I noticed is how little taxes we would be paying. So the money we spend from our nest egg is much more. No social security, CA SDI, federal taxes, california taxes. Also no savings.

Let's say we end up with about 25% in 401k, 25% in Roth and 50% in a taxable account, but a large portion will be cash in hand from the sale of our shack/$700k house, so no CG taxes to pay on $300k gain.

Let's say it's $1,000,000 in savings in 2010.

$300k in brokerage dividend stocks.
$50K in MM account
$150K in CD's
$250K in 401k, stocks.
$250K in a Roth, stocks.

Since we can always go back to work, we our young (under 40), I would unsafely withdraw 4.5% (45,000) max. That's $3750 per month, basically net. Some small amount of taxes in 5-10% bracket. I would not touch the 401k or Roth for now.

For us I think that may be doable. We won't have a mortgage payment for some time, as we plan to stay with family for a year or two. So we may be able to get by with much less than $3750/month, although traveling expenses will be the majority of the costs.

We would do this today, but we need another 11% CAGR out of the market and 3% CAGR out of our house over the next 3 years. We miss family and would like to get out of high cost California. But I'm tired of working and would like to stay home to take care of the kids etc. We have a toddler, and one on the way.

--
whyohwhyoh
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