$5 million of spare money. Not net total wealth but actually $5 million investable dollars.
At that point, I’d you stick that money in a very conservative and safe brokerage account allocation, 5% return per year is $250k. That is a higher salary than almost anyone needs, meaning you can live very comfortably without working. You can’t buy a yacht but you can be “done” and so can your children and their children if they aren’t stupid.
If you choose to work, then you can just reinvest that $250k and let compound interest do its thing and get richer. Lucky you.
With 5% you run a serious risk of running out of money. The general rule is 4% at retirement age, but younger than that with a longer time horizon is even less.
E.g you can look at this FIRE calculator (Financially Independent, Retired) which runs simulations against historical data. It’s all inflation adjusted for the yearly withdrawal.
With $5,000,000 and a $250,000 withdrawal rate, you have a 53.2% chance of making it 45 years and not running out of money. 4% 200k is 79.8%, and 3.5% 175k gets you to 96.3%.
Take that same 5 mil though and do 4% for 25 years with a 65 year retirement age so money until 90, and it’s a 98.4% chance.
$5 million of spare money. Not net total wealth but actually $5 million investable dollars.
At that point, I’d you stick that money in a very conservative and safe brokerage account allocation, 5% return per year is $250k. That is a higher salary than almost anyone needs, meaning you can live very comfortably without working. You can’t buy a yacht but you can be “done” and so can your children and their children if they aren’t stupid.
If you choose to work, then you can just reinvest that $250k and let compound interest do its thing and get richer. Lucky you.
With 5% you run a serious risk of running out of money. The general rule is 4% at retirement age, but younger than that with a longer time horizon is even less.
E.g you can look at this FIRE calculator (Financially Independent, Retired) which runs simulations against historical data. It’s all inflation adjusted for the yearly withdrawal.
https://www.firecalc.com
With $5,000,000 and a $250,000 withdrawal rate, you have a 53.2% chance of making it 45 years and not running out of money. 4% 200k is 79.8%, and 3.5% 175k gets you to 96.3%.
Take that same 5 mil though and do 4% for 25 years with a 65 year retirement age so money until 90, and it’s a 98.4% chance.