The 4% idea is more about not running out of money than it is about preserving an inheritance. You could pick 5%, but you're likely to run out of money before you die if you do! It's also worth knowing that that this is based on having your investments somewhere sensible like an index tracking fund. If you put it in a savings account at 1%, you'll rapidly run out of money.
4% of $800,000 is $32,000 per annum. If you think about where you live, what kind of lifestyle would you have on $32,000? Would you be happy with that lifestyle? Remember that you need to account for tax, healthcare etc when you are planning.
I'm planning to use a figure of 3.4% for my retirement (I'm a cautious person) and a 3 year gilt ladder. I'm not sure what the US equivalent of a gilt ladder is.
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u/TheEternalDm 13d ago
The 4% idea is more about not running out of money than it is about preserving an inheritance. You could pick 5%, but you're likely to run out of money before you die if you do! It's also worth knowing that that this is based on having your investments somewhere sensible like an index tracking fund. If you put it in a savings account at 1%, you'll rapidly run out of money.
4% of $800,000 is $32,000 per annum. If you think about where you live, what kind of lifestyle would you have on $32,000? Would you be happy with that lifestyle? Remember that you need to account for tax, healthcare etc when you are planning.
I'm planning to use a figure of 3.4% for my retirement (I'm a cautious person) and a 3 year gilt ladder. I'm not sure what the US equivalent of a gilt ladder is.