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Taking a return of 7% on that, you get about $50K annual income (today's money)


I think you have your situation pretty well in hand, but this is the one point i think is fairly dangerous. A safe withdrawal rate (SWR) is generally considered to be about 3 to 4%. 7% is awful high. That may seem silly if the market will return 9%, but, let's say you have $2 mil and right after you retire the market (or whatever mix of funds you have)has three 10% down years, and you do $140K withdrawl for those 3 years (in future dollars) - that's $2 mil - $140K * .90 - $140K * .90 ....

Now you are reduced to $1.11 mil, and in order to maintaining your intended lifestyle your withdrawl has been upped to 12.6%, higher than the market average. A couple more bad years and you've gotta go back to work. Even if you keep the 7% and reduce the amount, you're down to $1.17 mil and have nearly halfed your annual income. The fact is with a 7% withdrawl rate, you're relying on a lot of timing luck.

You may want to reconsider some of your assumptions about a SWR. However, I'm not saying that $2 mil is wrong either. There are many reasons why you'll need less than the typical ~80% of gross income often mentioned.

You may want to check out the FIREcalc (Financially Independent, Retire(d) Early) calculator and some articles on

Finally, my two sense, I would recommend avoiding the retirment accounts if at all possible. And before you do, do some number crunching - take out the amount of money that you could gain on having it in an IRA, including all fees, taxes, gains, etc and compare it to the reduced mortage and how much that'll let you put away extra and what that will turn back into.
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