Hypothetical - retire at 65 with 3 million in IRA, what do you do?

This hypothetical is a better retirement scenario than most individuals will ever achieve...so yes, highly feasible to live off.

There are a number of ways that you can create cash flow. The simplest is using bonds with coupon payments. TIPS ladders could be another effective vehicle. Plenty blue chips pay quarterly dividends but they have more volatility to manage.

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How well could a person live with 3,000,000 in a SEP IRA if they retire at 65? How could they get that money to make them income to live off of while not touching the principle? Is this even feasible?

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It's not how much you make, it's how much you don't spend...

How much do you need a year from your investments? Remember too, that at 70 1/2 you have to start RMD from your tax deferred accounts.

Covered calls

In today’s dollars? I don’t see how you COULDNT live on that.

That can easily be done.

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n today’s dollars? I don’t see how you COULDNT live on that.

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In 2045 dollars.

Buying almost 100K shares of a single company would be pretty irresponsible.

To another poster’s point on “it depends how much you spend”...yes, without a doubt this is an equally important piece of the equation but likely not an issue with the cash flow $3M can generate.

With that said, I did listen to a show this week where the guy calling wants to spend $120K a year and is looking at retiring at 45. That kind of spending creates a more complicated scenario.

Surprised no one has mentioned 4% rule yet. You could use 4% or a more conservative 3% and draw $120k-$90k if you keep it invested with low risk of depleting the entire principle based on historical returns.

Another method, just based on a life expectancy of 90 year you could take out $120k annually for 25 years with zero growth.

$120k would be the equivalent of $55k in 26 years based on (3% inflation) and that 3MM would be like 1.4MM. There's no telling what Social Security will look like by then but I'd bank on severe means testing. Also, don't forget to consider the tax rate on withdrawals unless it's all ROTH. If you haven't got a paid off mortgage and limited expenses you likely won't be living large on 3MM in 2065.

ETA: typo 3MM in 2045 not 2065

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$120k would be the equivalent of $55k in 26 years based on (3% inflation) and that 3MM would be like 1.4MM. There's no telling what Social Security will look like by then but I'd bank on severe means testing. Also, don't forget to consider the tax rate on withdrawals unless it's all ROTH. If you haven't got a paid off mortgage and limited expenses you likely won't be living large on 3MM in 2065.

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Good points to consider inflation. Inflation is a huge unknown. It could be more in the 2% avg we have seen the past 20 years or it could be 4-5%, in which case good luck to all retirees.

I doubt $1.4 million in today's dollars would be "severely means tested".

OP the 4% rule is pretty standard. Here is a good reference from the Bogleheads website... [link=(www.bogleheads.org/wiki/Safe_withdrawal_rates)]Bogleheads wiki on SWR[/link]