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"I had a terrible epiphany the other night--if I won $4 million in the lottery tomorrow, I'd have to keep working. After taxes, that $4 million would become $2 million...and if I were to put all of it in an interest bearing account at today's measly rates (let's just say 2% for the sake of round numbers), that would get me $40,000 per year--not enough to support my partner and me now, let alone in 25 years post-inflation."

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Well, if you remember your Bernstein, or your asset allocation guidelines, cash seldom returns more than 2.3% inflation adjusted. So leaving your money in cash is never a good idea.

Second, the taxes on 4 million, depending upon where you live, would hit the 35% tax bracket, which I think is the biggest. I don't know if you would pay Medicare tax on it or not. Not 'earned income' so probably not. You might have to pay state income tax. or not. depending upon where you live.

So let us say you do wind up with 2.5%.

At a 4% SWR rate, that will give you 100K a year inflation adjusted, if you believe the future will be no worse than the past. You'd have to be at least 50% in equities - index funds.

That 4% should be good for a 30 year retirement.

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"But jeez, if $4 million doesn't even cut the mustard (and believe me, I don't have $4 million saved), how the heck does anyone ever retire??"

By investing in equities.

Second, if you have 25 years or more in SS, you and wife will get decent amount of SS, assuming it is still there when you hit 62 or 66 or whenever you elect to get it. That will be on top of your SWR.

The other thing you failed to consider is that you would gradually deplete your 2 million. At the end of 30 years, worse case, you would have zero bucks left. Likely you'd have much of it left, and maybe even more depending upon the economy and your investments.

My SS kicked in. It provides about half of what I really need in a worst case situation - which would be staying in my house, eating fine, all utilities maintained, heat and cool the house, maintain a car, etc. I also get 4.5K in a pension from a former employer a year. That helps even more. I don't have to take 4% out.

Most people might have some pension or SS to count for income

Heck, some married couples get more than 25K/yr in SS depending upon their earnings history.

Did you consider that?

That 2.5mil invested should get you way north of 50K a year additional income.

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