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Author: HornedToad10 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75381  
Subject: Re: Is $1 million enough? Date: 5/12/2007 8:00 PM
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No I don't not think $1 million will be enough to last 40-50 years(since you are young) with 2 very young kids, and needing to rent. Especially with the huge expenses that kids will be throughout their life with clothing, activities, school, college, etc.

And a 4.5% will most likely be way too much. It'd be fine in a bull market, but the next 40 years won't be a bull market, there will also be at least one bear market. What happens if the stock market drops 10% and you still need to take out your $45k.

You also need to be adjusting for inflation, $45k will only be worth about $20k after ~25 years of inflation, so you also need to be continually earning more money to keep the standard of living.

You say that if it doesn't work out then you can just go back to work. But are you really going to want to go back to work in 10-15-20 years after not working the entire time? Will your skills still be up-to-date and able to get you an acceptable job in your field?

Have you considered going down to a single income family if you would like to stay home? Have your spouse work and help supplement the income and you rely less on your saved nest egg. You could still move out of high cost California and have someone at home with the kids without raiding your retirement and hoping that it will last for 40+ years.

Hope this helps.
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