No. of Recommendations: 2

This is a great question, and surely all of us think about such issues whether they apply to us or our parents (mine are similarly aged).

There are a few more points that you have to examine to see what the longevity of your mother's 100k will be. Much has been written about safe withdraw rates by folks much smarter than I. Look above this message to the left and you'll see a link that says 'Also See: The Retire Early Home Page.'

The REHP has much detail about these. I'll give you a primer on safe withdraw rates. The previous respondant to your message indicated that a $750/month income stream is 9% of 100k. Correct. Also, dangerously high to expect, year over year.

The generally regarded safe withdraw rate is 4%. This would radically cut the income stream to $333 a month. Consider that this is conservative, as 4% is regarded as being the rate at which the principal will not be depleted. In other words, one can live to be 200 and never exhaust the principal at a 4% withdraw rate.

If mom takes 9% a year out of her investments, she may very well be able to continue this, using some of the investment vehicles mentioned in the prior posts (I have REITs myself). However, consider that her purchasing power will be reduced over time due to inflation. Also, if her investments return less than the 9% she withdraws, she will start depleting her principal. Tough stuff to think about, but it's realistic. Mom will need about 25 times her annual expenses in her aggregate investments in order to be able to keep that 4% rate and not have to lose sleep over depleting this. At 9%, I'm not confident that she will be able to have any reassurance of her 100k lasting very long.

Again, see the Retire Early Home Page. Search for 'safe withdraw rate' and similar strings, and you'll get much more information. Intercst is one particular Fool who has been very helpful and informative about this topic.

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