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Yeah most say 10 million but everyone knows you can get by with 6 million.

What yearly income do you need to retire? Take that amount divide by 0.04 and you have your answer. I’m simple but goes by the 4% rule. Personally I play it safe so I would do 2% instead

Depends on the financial planner, but the 4% rule exists to basically cover most scenarios for people who might live very long (into 90s).

There's also people out there giving terrible advice who shouldnt be like Dave Ramsey telling people they can withdraw 10% every year if they are getting 12-13% annual returns. This is a good way to have little to no money by the time you hit 80 or so if you retire in early-mid 60s especially if there's a major market downturn in those 15-ish years, which guess what, there usually is in that kind of time frame.

4% is overall fairly conservative, because 4% of pre-tax investments is a different number in your pocket than 4% of ROTH investments. This is why I like to use more like 4% of pre-tax and 5% on ROTH. I mean the whole point of ROTH is so you dont have to pay any tax upon withdrawal ultimately so it shouldnt fall into the standard 4% rule.

The reason monte carlo analysis exists though is to see will your plan work under a ton of different scenarios that COULD happen, because unlike what Dave Ramsey wants people to have more hope that $1M is plenty to retire with, that you can take out $100k/yr without issue there according to him, a monte carlo will show much different...

Can run own analysis here

I did $1M portfolio, 100% in large cap (S&P 500 basically), all pre-tax, withdrawal of $8,333/mo ($100k/yr), inflated adjusted and used historical returns and....

- After 10 years you have an 82% success rate; this means in 18% of scenarios you have ZERO money after 10 years always taking out $8,333 (inflated adjusted over time) from a $1M portfolio

- After 15 years you have a 53% success rate; already almost at just a 50/50 success rate only 15 years into retirement....so think of it as a coin flip of you having NO money at around 80 (retiring at 65), doing it this way

- After 20 years it's a 37% success rate, living to 85-ish

- After 25 years its a 27% success rate, living to 90-ish


But, what happens if the very first year you retire, there's a market crash (think people who retired in 2007, then 2008 hit).

- After 10 years you have a 45% success rate, MORE than a coin flip you'll have ZERO money after 10 years

- After 20 years you have a 9% success rate, basically it's extremely likely you'd have ZERO money by the time you're 85 in retirement if the first year was a crash after you retire


So yeah, run the simulations and mess around. By the way, the grand majority of people retired do not sit 100% in the S&P 500, so thats a very aggressive portfolio for someone to stick with in retirement entirety like I did above, If you're more conservative than that, you'll have even greater chance of having no money earlier taking out 10% of initial value continually.

Yes, just read those threads on here

Destitute at 6mm? Wouldn’t that put you inside the top 1.5%?

Yeah, smartly done there is no need to ever touch the initial amount. Even with 2-3 million it would work for 99.9% of Americans.

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So yeah, run the simulations and mess around. By the way, the grand majority of people retired do not sit 100% in the S&P 500, so thats a very aggressive portfolio for someone to stick with in retirement entirety like I did above, If you're more conservative than that, you'll have even greater chance of having no money earlier taking out 10% of initial value continually.

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Why would anyone with only $1 million in retirement take out 10% every year. I get if you are going to buy a new car one year and travel a lot or have an expensive hobby, but there is no way you need to take that much out every year. Bad analysis.

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Especially if you did something like putting 60-65%% of your money in a fund like SCHD and then keeping maybe a couple of years of cash in a money market attached to your IRA (draw when market is down). Then maybe put the rest in a high flyer like TOPT.

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This is not what I do, but it's close in spirit. How many years of cash do you need to weather a downturned market? 5 years? 10? Okay, set that aside in whatever few funds you'd like -- a combination of money market, bonds, and maybe some other income-producing ETFs -- and rebalance on a routine basis as you draw income from it. Then have some assets invested in growth to take advantage of the market's growth.

If you have the means, why would you go into complete "defense" and not take additional risk with a portion of your investments if you have enough cash to weather a 10 year downturned market?

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Why would anyone with only $1 million in retirement take out 10% every year. I get if you are going to buy a new car one year and travel a lot or have an expensive hobby, but there is no way you need to take that much out every year. Bad analysis.

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I dont think you actually read my post. I was harping on financial "gurus" like Dave Ramsey telling people they can withdraw 10% of their portfolios and saying $1M is plenty to retire on because that give you $100k/yr. He intentionally is misleading people down a very bad path because he wants to make it seem like $1M is a lot of money in the future to not give up, etc...

I dont believe withdrawing $100k/yr inflated adjusted on a $1M is a good idea at all. You're going to end up with no money fairly quickly. There's a reason the actual experts would recommend more like $30k-$50k/yr in that kind of portfolio.